Recently in Social Media Policy Category

I'm all for getting your company's name in front of as many people as possible - after all, isn't that part of the goal of engaging in social media? However, there's one thing I continue to see over and over that really bugs me.

Imagine you're out with a few friends, talking about a restaurant you recently visited. Out of nowhere, someone comes up to your group and says, "You're talking about ABC Restaurant? Let me tell you about my restaurant instead - it's great!" and continues to talk about their restaurant and why you should go there.

You'd be a little creeped out, right? It would feel like an invasion on your personal conversation, and an unwelcome intrusion.

This is how businesses need to see social media - intruding on one's conversation to pitch your own business is a no-no, and likely turns many people off.

I've seen this most times on Facebook - a good example is when I followed the conversation regarding a live chat with GoDaddy and the Honest Toddler. In the middle of the conversation, which revolved around the hilarity of the comment and speculation on what the representative was thinking, someone chimed in about how their business, a competitor to GoDaddy, was better and suggested that people who are customers of GoDaddy leave them and go to this company.

Another place I've seen this happen is on Facebook pages for news sites. The conversation could be surrounding a current news topic, and sure enough, there is always one or two that will try to pitch their business. In this case, it's mostly unrelated to the topic at hand.

Companies who do this may be trying to gain exposure; instead, they are sending the wrong message to people. This is something that I've seen all too often and for whatever reason, has become a pet peeve of mine.

If you want to get your company exposure in social media sites, join conversations that are relevant to your business, and don't "sell" your company. Post from your business page on Facebook, for example, so if people are interested in what you have to say, they can visit your page to learn more about your business.

If you want to get company exposure, use LinkedIn.

Join groups and offer relevant, insightful comments related to your industry so people can get to know the "person" behind the company.

way to do this is to monitor news articles and blogs in your industry and comment, using your real name and perhaps a link to your company website.

The two tactics mentioned above will go further in gaining exposure, credibility, and interest than intruding on other people's conversations.

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Section 7 of the U.S. National Labor Relations Act ("NLRA") states,

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . .

U.S. Code, Title 29, Section 157.

This provision and the balance of the NLRA, which was enacted during the Great Depression of the 1930's, are primarily focused on the right to join a union and collectively bargain. As the percentage of U.S. private sector employees represented by unions has dropped substantially over recent decades, the NLRA has become a much less prominent part of the discussion of employment-related legal matters.

However, through its recent activities the current National Labor Relations Board ("NLRB") has indicated its determination to make the NLRA relevant to all U.S. employees (and employers), by focusing on the last part of the quoted portion of Section 7, "Employees shall have the right . . . to engage in other concerted activities for the purpose of . . . mutual aid or protection."

Among the areas where this emphasis is being shown is the ability of employers to limit employees' use of social media networks such as Facebook. The "social media policies" area is particularly interesting because many (if not most) of employees' online posts relating to their employers cannot be construed as "concerted activities for the purpose of mutual aid or protection."

Nevertheless, the NLRB has authority to stop an employer from maintaining a "work rule" that if that rule "would reasonably tend to" discourage employees from communicating with other employees "for the purpose of mutual aid or protection."

If the "social media policy" does not clearly restrict protected activities, such as by forbidding employees to "friend" each other on Facebook or to write posts about wages, hours or working conditions, then the policy only violates the NLRA if: "(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights."

In several cases, the NLRB has found that an employer's social media policy has in fact been applied to restrict the exercise of Section 7 rights, and required the employer to reinstate employees terminated due to their Facebook postings and subsequent responses by Facebook friends.

For example, after an employee of a collections agency was transferred to a different position that would substantially limit her earning capacity, she posted on her Facebook page that her employer had "messed up" (using expletives) and that she was "done with being a good employee."

The employee was Facebook friends with approximately 10 current and former coworkers, including her direct supervisor. An extensive exchange ensued among the coworkers regarding the employer's management methods and preference for cheap labor, culminating with one of the former employees calling for a class action among the disaffected workers.

The employee who had prompted the exchange was fired the next work day explicitly because of her Facebook posts and the responses they triggered. The NLRB found the discharge to be a violation of the NLRA because (a) the employer had an unlawfully broad "non-disparagement policy," the violation of which was the basis for the termination, and (b) the employee had been fired for "engaging in conduct that implicates the concerns underlying Section 7 of the Act."

In other recent cases brought before it, the NLRB has concluded that, while the complaining former employee was not unlawfully discharged due to his or her online postings, the employer's policy itself violated the NLRA and needed to be modified.

In response to this, the NLRB recently issued a report summarizing its decisions specifically on acceptable social media policies, and perhaps most importantly, has in essence provided a sample policy that it has deemed to be lawful.

The policy, as amended by Wal-Mart after the initiation of an NLRB complaint regarding its prior policy, focuses fairly narrowly on refraining from posts that "include discriminatory remarks, harassment and threats of violence" or are "meant to intentionally harm someone's reputation." While the policy forbids dissemination of the company's confidential information, it provides a sufficient specific definition of "trade secrets" to put employees on notice that the policy (probably) does not include internal reports or procedures specifically touching on conditions of employment. Perhaps most importantly, the policy expressly acknowledges that employees may post work-related complaints and criticism, even while discounting the possibility that such posts are likely to result in changes that the employee seeks.

If your company has a social media policy, we can review it for purposes of conforming it to the NLRB's latest guidance on acceptable policies and help you avoid future problems that could result from overly broad restrictions on employee's online conduct. Of course, as specific situations arise we are available to counsel you as to legally appropriate measures to take in response to employee's online conduct.

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Last month, the State of California filed its first enforcement action under its privacy laws against Delta Air Lines, seeking potentially millions of dollars in fines. Under California's consumer privacy law, all parties that collect personal information from California residents are required to include a privacy notice on their websites and mobile applications.

This law applies to all companies - not just those based in California. Failure to comply with California's privacy notice requirement carries a fine of up to $2,500 per violation.  

Although Delta included a compliant privacy policy on its website, California alleges the airline did not state that the policy covered its "Fly Delta" mobile application nor did it include access to the policy on the app.

This case could signal increased scrutiny and regulatory enforcement by the State of California (and possibly other governmental authorities) against large and small companies that fail to comply with consumer privacy notice requirements.

It also serves as a good reminder for website and mobile app owners, who collect personal information, to:

  • Ensure that they have a privacy policy that complies with both federal and state law.
  • Verify that the manner in which the privacy policy is posted complies with federal and state law.
  • Confirm that the privacy policy applies to its mobile applications and, if possible, that it is accessible from the mobile applications.
  • Confirm that the privacy policy reflects the actual practices of the company.
  • Respond promptly to any notice received from a governmental authority regarding potential violations.

This filing reminds franchise companies of the importance of ensuring that your website and mobile apps include access for consumers to your privacy policy. 

If you are a franchisor or other company and would like any assistance in reviewing your website, mobile applications and related privacy policy to determine whether they satisfy legislative requirements, please feel free to contact Armstrong Teasdale attorneys Joan ArcherJennifer Byrne, or Tiffany Schwartz.

On November 9, 2012, a federal district court in the State of Washington certified a class action against Papa John's pizza and some of its franchisees, with the potential for enormous damages, for sending unsolicited text advertising messages.

The case involves alleged violations of the federal Telephone Consumer Protection Act ("TCPA") based on texts sent to customers by Papa John's franchisees. It is significant because, among other things, it threatens Papa John's, a franchisor, with very significant potential damages -- direct or vicarious -- for the acts of franchisees.

The decision also vividly reminds all businesses that the TCPA applies to unsolicited text messages just as it does to unwelcome faxes.

Papa John's International, Inc. and Papa John's USA (collectively, "Papa John's"), enter into agreements with independent franchisees, who then own and operate Papa John's restaurants.

As franchisor, Papa John's imposes certain requirements; however, the franchisees generally control the operations of their own restaurants, including advertising.

But Papa John's employs Franchise Business Directors ("FBDs") to work with and assist the franchisees. Papa John's asserted that neither it nor the FBDs controlled the franchised businesses and, specifically, they had no control over advertising. Rather, the franchisees make all marketing decisions on their own.

The text message advertising program was offered and run by a third-party marketer, OnTime4U ("OnTime"), also a defendant. OnTime told the Papa John's franchisees that it was legal for them to send text message advertisements to their customers, without the customers' express consent, because of an existing business relationship.

Franchisees who signed up for the program provided OnTime with customer telephone numbers, derived from their point-of-sale system database of those who had bought pizza from them.

The POS System is a proprietary data system mandated for use by Papa John's. OnTime scrubbed the land lines and sent text advertisements to the remaining cell phone numbers, offering discount codes and soliciting the purchase of Papa John's products. 

The plaintiff sued Papa John's, the franchisor, asserting that certain of its franchisees and OnTime violated the TCPA by causing text messages advertising pizza to be sent to her cell phone without obtaining her prior consent. The plaintiff claimed Papa John's was also liable for any TCPA violations because of its alleged involvement in the marketing campaign.

Papa John's denied it had any involvement with OnTime or the text message advertising campaign. It denied having any contract with OnTime, and thus asserted that the plaintiff's injury could not be fairly traced to it. Plaintiff alleged, however, that Papa John's had directed, encouraged and/or authorized its franchisees to use OnTime.

In granting certification of a class action, and refusing to dismiss Papa John's from the case, the court found sufficient evidence to support the plaintiff's allegations, including testimony and emails suggesting that Papa John's, through its FBDs, had encouraged franchisees to try OnTime's text marketing service.

The court also found evidence that Papa John's had allowed OnTime to promote its services to its franchisees at a Papa John's "Operators Summit." Based on that information, the court refused to dismiss Papa John's at this preliminary stage.

Importantly, we note that the court did not decide the case on the merits, but simply allowed it to proceed as a class action on the claim of TCPA violations.

However, while Papa John's may appeal, the decision presents significant risks to Papa John's.

The TCPA enables a private litigant to recover actual damages or statutory damages of up to $500 per violation. 47 U.S.C. § 227(b)(3). The plaintiff alleges that franchisees provided OnTime with more than 68,000 phone numbers, and the case potentially involves thousands of calls; accordingly, potential damages total well into the millions.

There are multiple lessons to be drawn from the case:

  1. Know the rules about text messaging and any form of unsolicited telephone contact. The TCPA prohibits making calls to any cellular telephone number using an automatic telephone dialing system, with only minor exceptions (emergencies and calls made with the customer's express prior consent). 47 U.S.C. § 227(b)(1)(A). Multiple courts have ruled that text messages are covered, and the penalties, as noted, are significant: as much as $500 for each call.

  2. Use caution to avoid taking on liability for the acts of your franchisees. It is too early to know whether Papa John's limited involvement will be sufficient to hold it liable, but even limited involvement in franchisee advertising, or other activities, may be sufficient for a court to find liability. It is alarming that OnTime's presence at Papa John's franchise convention promoting its advertising services was considered evidence that Papa John's controlled the text advertising and could be liable for OnTime's apparent advertising mistake. Also alarming is that the court cited local business development managers encouraging email to franchisees to try OnTime's services as support for Papa John's alleged control over the actual advertising.

  3. Be wary of legal advice from third-party vendors, particularly those who stand to profit from your business. Here, according to the court's decision, OnTime reportedly told Papa John's franchisees that it was legal to send texts without express customer consent in light of the pre-existing restaurant/customer relationship. This issue is in dispute, and the risk of a contrary finding is significant.

  4. If you are sued for an advertising violation, check your insurance policies for potential coverage. Legal fees can be enormous in such cases, but Commercial General Liability policies typically provide coverage for certain "personal and advertising injury" offenses, including the cost of defense. As always, coverage will depend on the specific policy language.

When in doubt, call us with your questions regarding advertising programs and best practices. The case is Maria Agne et al. v. Papa John's International et al, 

Case No. C10-1139-JCC (U.S. District Court for the Western District of Washington).

For more details on this case, please contact Greg Everts at (608) 283-2460 / [email protected], David Beyer at (813) 387-0264 / [email protected] or your Quarles & Brady attorney.

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