The Latest Social Media Issue for Employers: Who Owns a Twitter Account?

There's a particularly interesting case percolating in federal court in the Northern District of California, where an employer is suing a former employee over the content and value of a Twitter account.

The company, going by the unlikely moniker of "Phonedog", is in the business of reviewing wireless and mobile electronic products and services and provides users with resources needed to shop for mobile carriers. The former employee worked as a product reviewer and video blogger and used a Twitter account with the Phonedog moniker, via which he transmitted his reviews and other content. The account was accessed through a password, and disseminated information to promote Phonedog services. This particular former employee was apparently adept at his job and his Twitter account had approximately 17,000 followers at the time he resigned. Following his resignation, the former employee switched the account handle to his own name, and begin using the account to promote another company, TechnoBuffalo.

I can only hope that Phonedog impleads TechnoBuffalo into the case, just for the name.

Phonedog sued the former employee for theft of trade secrets and interference with business relationships. In a recent decision, the court allowed the case to go forward, but what's particularly noteworthy are the issues that the court will be resolving through the course of the litigation. Issues such as: who owns a Twitter account? The short answer is that Twitter does, but is there a property interest when a company licenses an account from Twitter that is then used exclusively by an employee in the pursuit of his duties? And who actually owns the Twitter followers? Or, more appropriately, who has an economic right to continued access to those Twitter followers? The company, of course, argues that the list of followers is akin to a business customer list, but since these people aren't buying anything from the company (Phonedog derives its income from the advertising that it sells based on the number of people that use its site for mobile carrier reviews), does the customer analogy apply? And finally, what's the appropriate measure of damages for loss of such a Twitter account? Is it the loss of advertising, or is it possible to fix a definitive monetary number based on each follower of the account over a set period of time? How far into the future do you have to project that these followers would stay with the account, and can you project increases with enough particularly and reliability?

I'll provide updates on the litigation as I get them.  As the definition of economic activity expands through social media, this case may be a bellwether.  At the very least, it raises some compelling legal questions.

And here's another SM decision involving LinkedIn--similar issues.

No Harm, No Foul (Lawsuit)

Say you're a large employer using an electronic payroll system that is hacked by nefarious persons unknown. Suddenly, your employees' Social Security numbers, birth dates, earnings history, withholdings, and home and business addresses are now presumed to be open to exploitation. What's worse, the hack occurred as a result of a heretofore unknown but readily discoverable flaw in your corporate IT firewall that, once it was exploited, opened all of the employees' personal data to review by third-party.

Eschewing the traditional pitchforks and torches, a group of your employees file suit alleging potential identity theft, increased costs to monitor credit activity and significant emotional distress as result of the threat of having their financial futures ruined. Big trouble for you, right?

Probably not. A recent decision of the Third Circuit discusses a very similar situation involving a contract payroll processing firm that also suffered a significant breach of security, resulting in tens of thousands of employment records being opened to unauthorized review. But, as the District Court found and the appellate court affirmed, the plaintiffs in this case did not have standing to sue because their allegations of hypothetical future injury were not sufficient to satisfy the requirement that there be an actual injury in fact for a lawsuit to proceed. Or, as the court noted with respect to the plaintiffs' still speculative claim that a hacker took their personal information with the intent to commit a future criminal act involving their identity, "unless and until these conjectures come true, appellants have not suffered an injury; there has been no misuse of the information, and thus, no harm." 

This is probably music to the ears of many companies that maintain large amounts of sensitive personal data that is always under the threat of revelation. The short answer is that simply suffering a data breach like this does not open the door to liability; there has to be some manifestation of harm before court will agree to review the case or award a remedy.

No Damages Windfalls

Here's a brief note on a case with a limited but important holding.
The Fifth Circuit recently joined the Sixth, Seventh, Tenth and the DC Circuit Courts of Appeals in holding that the damages caps under Title VII apply to all the claims brought by an individual, rather than to each separate claim of discrimination or retaliation.
The case involved a plaintiff who filed three Title VII claims against her employer, two for gender discrimination and one for retaliation. The plaintiff prevailed on all three of her claims and the jury awarded her $200,000 in compensatory damages for each, or a total of $600,000. The Fifth Circuit affirmed the trial court's decision to reduce the total compensatory and punitive damage award to $200,000 based on the size of the employer (Title VII damages caps are tied to the size of the employer--$50,000 in compensatory and punitive damages for employers with less than 101 employees, $100,000 for employers with less than 201 employees, $200,000 for employers with less than 501 employees, and $300,000 for employers with more than 500 employees). The employee argued that she was entitled to the full $600,000 because the caps should apply to each claim, rather than to all of her claims under. The Fifth Circuit disagreed, noting that the language of the Civil Rights Act of 1991, in amending Title VII of the 1964 Act, plainly said that the damages were limited for "each complaining party".
This is a relatively straightforward issue, but one that further limits what seems to be an increasing exposure under Title VII.

Hardball?

It's an axiom of employment discrimination cases that plaintiffs who win get their attorneys' fees as part of a damage award.  In fact, frequently the attorneys' fees are as much or more than the back pay and other compensatory damages recovered by the plaintiff. Most employment statutes do not provide for recovery of attorneys' fees if the company prevails, an inequity that frequently grates on my clients when we are discussing litigation strategy. During these discussions, I often hear general counsel bemoan the fact that American courts do not operate under the rules applicable in English jurisprudence, where the loser usually pays the other sides attorneys' fees, as well as the traditional costs associated with depositions, photocopying, filing fees, etc.
Title VII of the 1964 Civil Rights Act, however, allows for the prevailing party to seek attorneys' fees. Given the financial inequities between the parties, courts are normally loath to award attorneys fees to a prevailing company unless the employee plaintiff either brought her case in bad faith, or had virtually no evidence to support her claims. Some courts consider it "bad form" for a prevailing company to go after a former employee for attorneys' fees in this situation, in fact. But more and more, especially given the extremely high cost of litigation, companies are looking to ways to recover anything they can from an unsuccessful employment plaintiff. This is especially true when the plaintiff's demands are so significant (or extravagant) that settlement is virtually impossible, or when the case has been extensively litigated in the media, where the company has virtually no chance to fight back without looking even worse than it does already.
So it shouldn't be a surprise that defense contractor KBR, which had been publicly raked over the coals for the last 5 years in a highly publicized case involving claims by a former employee of rape, hostile work environment and gender discrimination, is going after fees from the individual plaintiff after the company prevailed in a jury trial. The plaintiff sought $145 million in damages, and took her case to the media and Congress in an effort to force the company to pay.
KBR is now asking for more than $2 million in legal fees and court costs of $145,000. Plaintiff's counsel, of course, is crying "foul", and while I'm sure he didn't expect to lose completely, at some point he must have advised his client that she was facing a significant financial risk if things didn't go as planned. He's also claiming that this is an effort by KBR to chill people from bringing legitimate claims. But from my perspective, if KBR successfully recovers just its costs, the knowledge that plaintiffs have some financial exposure themselves will go some way to making settlement of these types of cases a little more likely.

UPDATE:  And, BAM!  This will be an expensive lesson in US jurisprudence, although not nearly as bad as it could have been.