Taking franchise disputes to the internet: judicial absolute immunity does not apply
A Florida appellate court recently held in Ball v. D’Lites Enterprises, Inc., 2011 WL 3109733 (Fla. 4th DCA July 27, 2011), that a franchisor was not entitled to judicial absolute immunity for allegedly defamatory statements made regarding several franchisees on its corporate website, even though the franchisor and franchisees were currently engaged in litigation and the statements were related to the issues underlying the dispute. In light of this decision, franchisors, franchisees and franchisee associations should be aware that, when posting statements on the Internet related to pending litigation, they will not likely be protected by judicial absolute immunity.
Background and the Trial Court’s Decision
Ball v. D’Lites Enterprises, Inc. involved a dispute between D’Lites Enterprises, Inc. and several franchisees that had obtained the right to sell the franchisor’s frozen dietary ice cream treats. The franchisees alleged they were induced to enter into the franchise agreements by misrepresentations about the nutritional content – specifically that the products were low in calories. When the franchisor refused to modify its formula to conform with the franchisees’ expected nutritional requirements, the franchisees sued the franchisor, asserting various causes of action, including breach of contract and fraud. After the lawsuit was filed, D’Lites Enterprises placed warnings to the public on its website that the franchisees were selling non-approved products under the “D’Lites” label. Specifically, the website stated in relevant part: “you need to know the product they are passing off as D’Lites Emporium ice cream is in fact a hoax.” The franchisees then amended their complaint to allege defamation by the franchisor. The franchisor responded that the allegedly defamatory statements were protected by judicial absolute immunity.
The trial court found that the franchisor’s statements were “directly related to the litigation.” Accordingly, the court held that the statements were absolutely immune and dismissed the franchisees’ defamation claims.
Florida Appellate Court Holds Statements on Website are Not Entitled to Judicial Absolute Immunity
The Florida District Court of Appeals reversed the trial court’s decision, holding that the franchisor was not entitled to judicial absolute immunity because, although the statement was related to issues in the pending litigation, the statement was not made “in connection with judicial proceedings.”
Generally, potentially defamatory statements made in the course of judicial proceedings are absolutely privileged, regardless of how false or malicious the statements may be, so long as the statements are relevant to the subject of the inquiry. This rule reflects a public policy favoring the free and full disclosure of facts in the conduct of judicial proceedings.
However, the court observed that the scope of judicial absolute immunity should extend only to the extent necessary to promote the underlying policy of free expression. Statements made in connection with the judicial process, such as interviewing witnesses, obtaining discovery and settlement negotiations, further the underlying policy and therefore are entitled to absolute immunity. Similarly, statements that are “necessarily preliminary” to a judicial proceeding or to a step in the judicial process, such as a statement made to a judge in order to obtain a warrant, are protected by judicial absolute immunity. Public statements, on the other hand, such as statements made in newspapers or at press conferences, “have no part in the judicial proceedings” and therefore are not entitled to immunity.
In drawing this line the court cited to precedent from various jurisdictions holding that judicial absolute immunity does not extend to statements made to the press. Notably, the court relied on Buckley v. Fitzsimmons, 509 U.S. 259 (1993), in which the United States Supreme Court held that a prosecutor was not entitled to judicial absolute immunity for making defamatory statements at a press conference regarding a criminal prosecution because his comments to the press did not have any functional tie to a judicial proceeding.
Here, the court analogized the statements made by D’Lites Enterprises on its website to the calling of a press conference. The franchisor’s statements were not connected to any judicial proceeding or any step in the judicial process. Rather, the statements “were made to the world at large through the website and accused the plaintiffs of fraud and perpetrating a hoax on the public.” Extending immunity to statements made on a party’s website, the court found, would not enhance the policy of the free and full disclosure of facts, but would undermine it, because “information relevant to lawsuits may be less likely to be shared for fear that it will be posted on the internet.”
All Is Not Fair in Love and War
Websites are modern day soapboxes. Some website owners treat their postings informally and do not vet the information with the same care or attention that would be afforded to a press release or a formal communication. Parties involved in disputes, particularly disputes that have resulted in litigation, increasingly make comments about or relating to the pending litigation on their websites. The Ball decision provides a warning that statements by litigants on a website are not protected by judicial absolute immunity by virtue of the pending litigation. Franchisors, franchisees and franchisee associations – as well as other entities and persons – ignore this warning at their peril.
However, Ball does not preclude parties from publicly commenting about ongoing litigation under appropriate circumstances. Ball was limited to the issue of judicial absolute immunity. Other defenses to defamation, including the truth of the statements, remain viable. Litigants are merely advised that judicial absolute immunity will not apply to statements posted on a website. The media can be a powerful and useful channel of communication. There may be times when it becomes necessary to use the media – including the Internet – to communicate to the public about critical litigation in order to protect the brand. However, litigants should not count on judicial absolute immunity as a substitute for carefully vetted communications, including website postings.