Insurance coverage scholarship discussing cyber-liability and cyber-coverage has recently exploded, with authors catastrophizing the lawsuits arising out of social media and Web 2.0 (social networking sites and online platforms including Facebook, MySpace, and Twitter) and prophesying that insurers are somehow ill-equipped to respond to these claims. Granted, we are seeing an increase in cybertort claims, likely due to the proliferation and tremendous growth of social networking sites and Web 2.0 media. Cybertort claims may include a defamation claim based on insulting words posted on a Facebook page, a "bodily injury" claim against an online dating service, a disparagement claim based upon rumors and grievances aired by a consumer against a restaurant or automotive repair shop on Yelp.com, sexual harassment/hostile work environment claims arising out of inappropriate emails, products liability claims as a result of drug purchases over the Internet, and critical comments about one’s law firm on Abovethelaw.com.
However, like "The Law of the Horse", cybertort claims are not all that different than those involving brick-and-mortar institutions and live persons that coverage practitioners have analyzed and evaluated for centuries. While there are certain aspects of these cybertort claims that may lead to an uptick in number of suits filed, given how much easier it is to establish that the defendant published the words at issue, the coverage framework for addressing these suits remains the same-- and correctly so. Based on well-established Coverage B jurisprudence, combined with a smattering of time-tested tort principles, insurers should know that they have all the needed tools at their disposal to determine coverage for these cybertort claims.
"The Law of the Horse" is a helpful analogy to understand why insurers should not be overly concerned about cybertort claims. In the mid-1990s, as the Internet started gaining mainstream prominence, academics opined whether "cyberspace" would radically transform the legal landscape, e.g., employment contracting, antitrust and trade regulation, privacy law, international trade, consumer protection, healthcare, taxation, securities regulations, etc., and thereby require a legal framework with new and different rules and norms to account for its unique aspects. Some academics even pushed for courses, textbook, treatises, and scholarship devoted entirely to "cyberlaw".
Judge Frank Easterbrook of the Seventh Circuit vociferously disagreed with the notion of a unique legal framework for "cyberlaw" and compared it to "The Law of the Horse". Judge Easterbrook analogized that centuries ago, when the problems du jour were disputes involving horses, legal scholarship devoted to horse law, i.e., disputes regarding the sale of horses, the care given by veterinarians to horses, and injuries suffered by individuals kicked by horses, would have been intellectually irresponsible. Rather, an academic discipline of property law, tort law, and commercial transaction law would have provided the necessary knowledge to understand horse disputes as well as transactions and torts involving other common goods and services. Likewise, Judge Easterbrook explained that cyberspace disputes are best understood through the prism of property, torts, and contracts, rather than a new and distinct legal framework. Fifteen years later, these suggestions provide much needed guidance as coverage practitioners grapple with the disputes arising from social media and Web 2.0.
Although the new developments in connection with the Internet are exciting and may seem to be groundbreaking, given the idiosyncrasies of Web 2.0, the coverage questions are highly similar to those pre-Facebook. For instance, whether someone slandered or libeled another; disparaged a business' goods, products, or services; or violated a person’s right of privacy (i.e., definitions d. and e. of the ISO definition of "personal and advertising injury") is not all that different now with sending Tweets than it was a century earlier with signs posted in the town square (obviously, the speed and distance this material travels is exponentially greater now). E.g., Hoffman, LLC v. Community Living Solutions, LLC, 795 N.W.2d 62 (Wis. App. 2010) (where website did not mention or reference the plaintiff, there can be no libel or disparagement). Further, the decision calculus for whether an act was an "accident" or whether a publication was made with knowledge of its falsity is no different for cybertorts and brick-and-mortar torts. E.g., Four Corners Comms., Inc. v. Graphic Arts Mut. Ins. Co., 25 Misc. 3d 1236A, 906 N.Y.S.2d 772 (2009) (use of a website to compare a competitor to a douche product was an opinion and did not implicate the knowledge of falsity exclusion); Baxter v. Doe, 868 So. 2d 958 (La. App. 2d Cir. 2004) (publication of knowingly false and defamatory statements on an Internet website was uncovered intentional conduct). The medium in which these claims arise may change, but the governing principles remain the same.
Web 2.0 should nonetheless have a pronounced impact on "advertising injury" coverage. At a minimum, the Internet should make satisfying the ISO definition of "advertisement" much easier because these sites substantially lower the barriers to disseminating material to a large, geographically diverse swath of people. Virtually every comment, posting, or submission on these sites is capable of being viewed by a large audience, even though the material may be intended for one person.
One thing is certain: Web 2.0-based claims will continue to present challenges for insurers. Still, insurers should feel confident that standard policy language and the existing legal framework applicable to brick-and-mortar institutions provide an adequate framework for addressing coverage for these emerging claims.