Employee Working For You? You Say “No”, LinkedIn Says “Yes”

Those loyal readers of this blog know that the focus tends to be on what your company can and cannot do regarding social media use by potential employees (i.e., applicants) or current employees.   But there is a third category of employees that warrant a share of the spotlight here:  former employees.

Like some of the prior issues in this blog, such as addressing who maintains ownership of social media accounts and followers upon an employee’s separation, how your company proceeds with respect to what an individual who no longer works for your company says or does through social media is of vital importance for you to consider as well.

Which brings me to the interesting decision in Jefferson Audio Visual Systems, Inc. v. Gunnar Light from a federal court in Louisville, Kentucky.   The defendant Light was a Managing Director of International Sales for JAVS (the plaintiff employer).   JAVS asked Light to meet with the company’s sales agent in South Africa to arrange for a potentially lucrative sale of audiovisual systems.  Unfortunately, according to the complaint, Light made several defamatory statements to the sales agent about JAVS during his meeting, which resulted in a mere $150,000 sale, rather than the $20 million in gross revenue that the company had anticipated.   Shortly after, JAVS fired Light and then filed a lawsuit against Light alleging fraud, defamation, and other claims.   Light sought early dismissal of the lawsuit.

Of interest here is JAVS’ claim for “fraudulent misrepresentation”:

“JAVS claims that for several months following Light’s May 9, 2011 termination from JAVS, Light falsely represented on social media outlets, such as LinkedIn, that he held the positions as JAVS’ International Managing Director after his date of termination.”

It apparently took three company requests (and threats) before Light changed his profile page to remove any representation as to his then-employment status with JAVS.

Seem clear cut?    Not necessarily from a technical law standpoint (why does the law so often get in the way of you running your business?), as the court dismissed the fraud claim despite Light’s reference to being an employee of JAVS even after his termination.  The problem was that, under Kentucky law, a fraudulent misrepresentation claim required proof that the company was defrauded by the LinkedIn representation.  Here, at best, JAVS was alleging that third parties and the public would have been defrauded.  As a result, Kentucky law offered no legal solace.

Employer Take Away:   What should you as an employer take away from this development?   

If your company’s office is in Kentucky, maybe not much.   But for the rest of you, there are some valuable reminders here.

Whether or not you ultimately take any action based on what you learn (and that should be the subject of a different, and detailed discussion), your company should continue to mine the social media trails of any employees who leave your employ.   First:  just because they don’t appear to be disgruntled when they leave, it doesn’t mean that your valuable interests are not put at risk, even unintentionally.    Has your employee disclosed information online that the company considers to be highly proprietary or trade secret information?   Has your employee made statements that would be considered defamatory, or in violation of a non-compete or non-solicitation agreement?

Second:  just because Kentucky law may not provide a common law remedy to the problem in this case (at least based on the arguments raised by the parties in this case), it doesn’t mean that the jurisdiction in which you conduct business does not.    There are many reasons not to be complacent (or even complicit?) when a former employee says or does something through social media that threatens your trademark or trade secrets.   Your jurisdiction may recognize a fraud-based claim under these facts, or perhaps an alternative common law or statutory theory worth pursuing.  

For as we have said before, the worst thing you can do is close your eyes and pretend that social media does not exist.

About Michael Schmidt

Michael C. Schmidt is the vice chair of the firm’s Labor & Employment Department, and the office managing partner, vice chair, of the New York Midtown office, where he is resident. For more than two decades, Mike has concentrated his practice on representing companies and management in all facets of employment law, such as: (i) defense in litigation involving wage and hour (overtime and unpaid compensation), discrimination, harassment, retaliation and whistle-blowing, non-competes and trade secrets, and disability and other leave-related issues; (ii) day-to-day counseling and in-house training on issues from hiring to firing, and other questions unique to his client’s industries and business; and (iii) drafting and reviewing employment agreements, termination and severance agreements, confidentiality and non-competes, and employment policies and manuals.