Case Summary and Outcome

The England and Wales High Court (Queen’s Bench Division) found that the defendants defamatory internet and phone campaign had passed the “serious harm threshold” of the Defamation Act 2013 and that the complainants were entitled to damages. In rendering its decision, the Court presumed the untruth of the words in favor of the claimants. Further, the court wrote that to avoid a violation of Article 10 of the European Convention on Human Rights “an award of damages must be proportionate to the legitimate aim of providing vindication.”

Facts

The claimants are two companies within a U.S. incorporated parent company. ReachLocal Inc, the first claimant, is a European and UK subsidiary. ReachLocal and it’s subsidiaries provide marketing and online advertising services to clients in various countries. These services include the use of keywords to boost customer’s rankings on search engines, which is a technique called “search engine optimization.” [para. 2] There are five named defendants in the case, none of which were represented by counsel. The first defendant is the managing partner of “Your Online Digital Agency Ltd.” This company is also one of the named defendants and is “a boutique online marketing agency providing search engine optimisation, social media marketing, pay per click, and other marketing services.” [para. 2] The third and fourth defendants are registered directors of “Your Online Digital Agency.” The second and final defendant is “the name of the person who appears to have been directly responsible for the publication of many, if not most, of the words of which the claimants complain.” [para. 2] However, the claimants assert that the second defendant is an alias of the first defendant.

In early 2014, the defendant launched a campaign, which was largely directed at the claimant’s customers and “consisted of emailed material, backed up by telephone calls, and it resulted in substantial losses to the claimants by way of lost business.” [para. 8] Claimants estimate, based on defendants’ own claims, that the defendants sent out 500 e-mails using bulk mail service called “MailChimp.” E-mails were also posted on the fifth defendant’s website. The claimants assert that the defendants could not have achieved this campaign unless they had been in possession of the claimant’s database and customer list. The claimant’s assertion was admitted to by the second defendant during a phone call with one of the claimant’s representatives, and the second defendant admitted to contacting 50 companies with information about ReachLocal. The slander claim is in reference to telephone calls made by at least one of the defendants to claimants’ customer. The claimants offer as evidence voicemails that the second defendant left on various claimants’ customers answering machines. The first defendant is tied to contacts of the claimants’ customers based on the wording, which often included references to Star Wars. The case also involves a breach of contract claim, which relates to an “affiliate agreement” between one of the claimants and the fifth defendant. [para. 9] Under this agreement, this defendant would refer potential customers to this claimant. The breach of contract claims relates to the agreement’s non-solicitation clause.

The claimants also brought an action alleging defamation, for both libel and slander, as well as claims for breach of confidence, breach of contract, and falsehood. Under these claims, the claimant seeks both damages and an injunction. The Court issued an interim injunction, which restrained the defendants “from any further publication of the defamatory allegations complained of, and they were ordered (inter alia) to hand over all details held by them of the claimants’ customers, together with any database or memory stick which stored that information electronically.” [para. 4]

Decision Overview

The Court presumed the untruth of the words in favor of the claimants. When evaluating the repercussions of defendants on ReachLocal, the Court looked to the standard from Defamation Act 2013, and the Court stated “By virtue of s.1(1), Defamation Act 2013, a statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant; and by s.1(2), harm to the reputation of a body that trades for profit is not ‘serious harm’ unless it has caused or is likely to cause the body serious financial loss.” [para. 34] The Court concluded that the “serious harm threshold” was passed and that the second claimant was entitled to damages for the published defamatory words. [para. 34] Therefore, the Court also ruled the second claimant was entitled to general damages in the form of a nominal sum. The Court considered special damages for defamation, given that the claimants asserted they experienced “very substantial loss of business and revenue” as a result of the defamation. [para. 35] The Court considered which losses actually flowed from the publication of defamatory material and evaluated evidence relating to damages for each claimant. The Court awarded sums of £60,728 and £66,600 in special damages for claimants.

In determining the standard of reasonableness, the Court looked to Banco de Portugal v. Waterlow, in which the court stated, “The law is satisfied if the party placed in a difficult situation by reason of the breach of the duty owed to him has acted reasonably in the adoption of remedial measures and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.” [para. 50] In considering general damages, the Court noted that the first purpose of general damages for libel is “to act as a consolation to the claimant for the distress and embarrassment which he has suffered from the publication of defamatory words,” [para. 53] which the Court feels did not apply in this case. The Court also emphasized that, to avoid violations of Article 10 of the European Convention on Human Rights, “an award of damages must be proportionate to the legitimate aim of providing vindication.” [para. 53] The Court referenced national case law regarding the determination of general damages, as well as cases addressing defamatory internet campaign. In assessing general damages, the Court placed the greatest importance on the “gravity of the allegations,” and the Court awarded the first claimant £75,000 and the second claimant, which was never traded in the UK, a nominal award of £100. [para. 62] The Court also issued a final injunction in defamation for the first claimant.