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Apr 4, 2013

Social Media Goes Legit

(cross posted at the Digital Media Law Project)
There have several recent developments which mark a milestone in the evolution of social media platforms: their acceptance as mainstream forms of communication, on equal footing with older forms of communicating official or "important" messages.

In late February, a bill was introduced in the Texas legislature (H.B. No. 1989) which would allow service of process -- sending initial notice of a lawsuit to the defendant -- via a message sent through a social media site.

This is a new innovation in the United States, with only a few cases like Rio Props. v. Rio Int'l Interlink, 284 F.3d 1007 (9th Cir. 2002) (approving service via e-mail as a secondary method) and Mpafe v. Mpafe (Minn. Dist. Ct. May 10, 2011) (allowing service online, via social media websites and e-mail). Last year a federal judge in New York denied a request to serve notice via Facebook, since it was unclear whether the account to which the message was to be sent actually belonged to or was accessed by the defendant. Fortunato v. Chase BankUSA, No. 1:11-cv-06608-JFK (S.D.N.Y. June 7, 2012).


Last month another federal judge in New York held that the Federal Trade Commission could notify several defendants in India about a civil suit brought by the agency via both e-mail and Facebook. Federal Trade Commission v. PCCare247 Inc, No. 12-07189 (S.D.N.Y. Mar. 7, 2013). 

In the his ruling, District Judge Paul A. Englemayer emphasized that he was allowing service via Facebook did not violate due process, particularly because because notice would also be sent via e-mail. He added that "history teaches that, as technology advances and modes of communication progress, courts must be open to considering requests to authorize service via technological means of then-recent vintage, rather than dismissing them out of hand as novel."

Social media as a medium of legal notices received another boost this week when the Securities and Exchange Commission issued a report (summary) clarifying that public companies can fulfill public disclosure requirements via social media, as long as investors are made aware of where the information is available. The report stemmed from a SEC investigation of Netflix chief executive officer Reed Hastings' use of his personal Facebook page to annonce that the company had streamed one billion hours of content in the month of June 2012. In general, the SEC report concluded, personal sites of corporate executives should not be used for such purposes.
Although every case must be evaluated on its own facts, disclosure of material, nonpublic information on the personal social media site of an individual corporate officer, without advance notice to investors that the site may be used for this purpose, is unlikely to qualify as a method "reasonably designed to provide broad, non-exclusionary distribution of the information to the public" within the meaning of Regulation FD.

Other types of required legal notices would move online under bills proposed in several states. Such bills, which would allow legal notices to be published online rather than in local newspapers, are pending in Arizona, California, Connecticut, Florida, Maryland, North Carolina, and Virginia. (Hattip to the legal-notice.org blog, which follows this issue.) A Tennessee bill would require publication both in print and online. Such bills are generally opposed by newspaper publishers, which rely on the income from the rates they charge to publish legal notices.

Facebook and other social media have infiltrated our daily lives, often taking the place of older forms of communication. So it is not surprising that the government processes are taking these new media into account as legitimate substitutes for traditional ways of doing things.

2 comments :

Eric P. Robinson said...

In reaction to the SEC report, Netflix has filed a notice that while it will continue to make "material disclosures" via traditional methods such as press releases and SEC filings, it may also make such disclosures via its blogs, Facebook page, and Twitter freed, and founder and CEO Reed Hasting's Facebook page.

Stephan White said...
This comment has been removed by a blog administrator.

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