You don’t like me, you just want my coupon . . .

The Fourth Circuit Court of Appeals is wrestling with the question of whether liking something on Facebook is protected First Amendment activity in the case of Bland v. Roberts.  A jailer in Virginia liked his boss’s opposition during a campaign for sheriff.  The incumbent won and the plaintiff was fired.  The sheriff said it was for competency issues, but the plaintiff said retaliation was the motivating factor for the termination.

Public employers, and some private employers in some states, cannot retaliate against an employee for taking part in Constitutionally protected activity that does not interfere with work.  In other words, you can’t fire a public employee just because they spoke out on a issue or supported a candidate.

So, it seems like a slam dunk case for our fired jailer.  The district court dismissed his case because the court ruled “liking” something on Facebook did not amount to a “substantive statement” worthy of protection.  The court determined that without more, the simple act of making one-click on Facebook does not reveal that someone is engaging in protected speech.  While it is true half of the people on Facebook would like Osama bin Laden to get a 15% discount at Target, “liking” a candidate or a cause is political speech.

It’s dangerous to predict the outcome of an appeal based on oral argument, but according to this report from Bloomberg, I would put my money on a reversal.

“Carter clicked the Like because he liked something,” U.S. Circuit Judge Stephanie Thacker said to a lawyer for Hampton Sheriff B.J. Roberts during the 40 minute hearing. “How is that any different than perhaps putting a sign in the yard saying ‘I Like Ike’?” she asked.

Facebook, which got a few minutes at the hearing to argue for a reversal, made similar arguments.

The opinion should be issued in a few months and will tell us whether the over 3 billion “likes” a day on Facebook are entitled to First Amendment protection.

It is not likely your “like” will make its way to the Supreme Court.  The lesson is to be careful of making employment decisions based on what you see on Facebook.  The issue is more problematic for public employers, but as we have discussed before even non-union private employers need to make sure their social media policies and employment decisions do not upset the NLRB.  ”Liking” a complaint from a co-worker about working conditions cannot be the basis of a termination.  ”Liking” Coke when you work at Pepsi in an at will state probably can be.

MAKING “FRIENDS” WITH THE JUDGE

Meanwhile, the court of appeals here in Texas held that being “friends” with a judge on Facebook should not be the basis of a criminal conviction reversal.

In Youkers v . Texas, the criminal defendant was accused of violating the terms of his parole supervision which sent him to jail for eight years.  On appeal, Youkers argued the father of the victim in the underlying crime was Facebook friends with the judge and sent the judge a Facebook message.  Therefore, the defendant argued, there was an improper bias and the conviction should be overturned.

The Facebook message

When you only hear part of the story, things look bad.  Yes, there was an ex parte Facebook message from the victim’s father to the judge.  The message, however, sought leniency for the defendant.  The judge also disclosed the message to everyone without any objection and warned the father not to do it again.

The Facebook “friendship”

The more interesting question is whether merely being friends with a judge on Facebook provides even an appearance of impropriety.  I’ve had interesting discussions about this topic at various ethics CLE’s with judges and private practitioners.  And, yes, I am Facebook friends with several judges.

The court of appeals ruled judges are not prohibited from using social media.  In Texas, unfortunately, we elect our judges.  The court realized the judges need to be on social media.

As pointed out in Professor Goldman’s Technology and Marketing Law Blog:

Merely designating someone as a “friend” on Facebook “does not show the degree or intensity of a judge’s relationship with a person.” ABA Op. 462. One cannot say, based on this designation alone, whether the judge and the “friend” have met; are acquaintances that have met only once; are former business acquaintances; or have some deeper, more meaningful relationship. Thus, the designation, standing alone, provides no insight into the nature of the relationship.

Without more, the defendant could not prove there was an improper evidence.

The ABA cautions judges to use social media within the existing ethical rules (endorsing political candidates is a tough one) and this case should give lawyers here in Texas a little more comfort about friending judges.  The practicing bar has a little more freedom.  Yet, the existing ethical rules still apply to our social media use.  For instance, we cannot imply we hold any sway with a particular jurist and a simple Facebook friendship does not do that – particularly when the elected judge is friends with hundreds of lawyers.

A lot of the judges are our friends.  Before they got on the bench, they were our colleagues.  Once on the bench, they are still our neighbors, our kids’ coaches and friends.  We socialize with them outside the courthouse.  With Facebook, there is just a record.

The DMCA

The DMCA provides web hosts and internet service providers a “safe harbor” from copyright infringement claims resulting from content provided from others if certain procedures are followed. If the safe harbor qualifications are met, only the customer or user can be liable and not the actual website operator.

To qualify for the safe harbor protection, the site must: (1) notify the customers of its policy; (2) follow proper notice and take down procedures; (3) designate a copyright agent with the U.S. Copyright Office; (4) not have knowledge that the material or activity is infringing or of the fact that the infringing material exists on its network.

For a new web-based start-up that is going to have UGC, taking advantage of the DMCA is a no brainer.

Was that Sly and the Family Stone in the Background?

A recent decision against music-sharing website Grooveshark suggests that sound recordings prior to 1972 may not be covered by DMCA safe harbor protections.  Universal Music Group sued Grooveshark in New York state court for copyright infringement.  The trigger legal response is that the DMCA means Grooveshark is immune.

Easy, case dismissed.  Then, the New York appellate court reversed the dismissal late last month.  The legal issue hinges on whether the DMCA provides for a “safe harbor” for sound recordings before 1972 because these recordings are governed by state law and not U.S. copyright law or the DMCA.

If you want the legal details which focus on the definition of copyright, you can read this post from Professor Goldman’s Technology and Marketing Law Blog.  The simple answer is the DMCA needs to be fixed by Congress.  This recent decision directly conflicts with another prior decision so it is likely there will be further appeals that may take several years to resolve absent Congressional action.

What you need to know if you have a website with UGC sound recordings is that you may have a problem.  Is it feasible for you to determine whether the uploaded sound recording is Isaac Hayes’ Theme from Shaft (1971) . . .

Marvin Gayes’ Let’s Get it On (1973) . . .

or Don McLean’s American Pie which was recorded in 1971, but became a hit in 1972?

If you start pre-screening for pre-1972 sound recordings do you now have knowledge that the material or activity is infringing or of the fact that the infringing material exists on your network taking you outside of the DMCA safe harbor?

The good news is this case appears to be the outlier.  As long as you know and are willing to accept the risks, you probably do not need to make any wholesale changes.  You have the recent pro-DMCA case in Viacom vs. YouTube, a federal New York decision and a Ninth Circuit Court of Appeals decision that reaches the exact opposite result.

At least I don’t have to worry about defamatory UGC because of Section 230, right?

Section 230 of the Communications Decency Act provides immunity to websites for defamation and related claims based UGC.  It states:

no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

This is the law that prevents Facebook from being sued relentlessly for alleged defamatory posts and also allows sites like RipOff Report and The Dirty to survive.  Based on Section 230, we generally advise sites not to worry about liability for anonymous commenters – at least for now.

The United Kingdom recently passed the Defamation Act 2013 which sets up a notice and take down process for website operators to protect themselves from UGC defamation claims in the UK.  Basically, a plaintiff cannot sue unless the plaintiff sends notice to the website and the website refuses to take it down.

Although ripe for abuse, it does not sound too bad until you get to the part of the law that says websites can only take advantage of this protection if the plaintiff can identify the person who actually posted the offending content forcing websites to authenticate its members.  There goes anonymity.  You can read more details on the law here.

It does restrict “libel tourism” so the local pizza shop in Sugar Land can’t take advantage of this against Yelp for the review by the interloper in New Territory.  But, if the offended person can convince a court in the UK the case should be there, you could be subject to a UK judgment.

So, should you require authentication of all users?  Can you set up your site so that all users from the UK have to authenticate their identities?

The answers are no longer so easy.  For example, what do you do if a UK citizen slanders Roberta Flack on your American-based website while uploading a copy of The First Time Ever I Saw Your Face which was originally a 1957 folk song but recorded by Flack originally in 1969, but re-released in 1972 when it became a number one hit?

It could make your head spin, but that’s why lawyers make the big bucks, right?

The Tax Man Cometh to Cyberspace

Rose Pettle is the owner of Florist Gump, a chain of flower shops throughout Texas.  Ever the entrepreneur, Rose launched Bloomarama.com, an internet business selling many floral items in her brick and mortar stores.  Bloomarama.com is a separate Florida corporation with no physical location or offices in Texas.  However, for the convenience of its customers,  Bloomarama.com  has a special relationship with Florist Gump that permits merchandise returns, warranty issues or other complaints to be handled at any Florist Gump store.  Rose is excited to receive her first order through KaBloom.com for a customer in Austin.  Since Bloomarama.com is a separate Florida entity with no physical presence in the State of Texas, Rose does not intend to collect Texas state sales tax from her Austin customer.  Is Rose right?No.  Online retailers have long been able to offer their customers tax free shopping because they do not maintain a physical presence (e.g. employees, warehouses, offices) within the state where the order was placed.  The State of Texas will look to whether some “nexus” or relationship exists between the business and the state.  Because KaBloom.com’s Texas customers may return or exchange purchases at Florist Gump in Texas or have other claims issues handled there, KaBloom is treated as having corporate representatives or affiliates within Texas (a “physical presence”) and must collect Texas sales tax.

Tilting the Scales in Your Favor

Make sure to consult a tax attorney or CPA if you have a “sales” relationship with any entity outside of Texas to make sure that the proper procedures are followed for collecting, reporting and paying state and county sales taxes. Rose’s penalties and interest for not collecting sales tax will be at least 9.25% if paid in 30 days and at least 14.25% if not paid within 30 days.

The Future of the Taxing of Internet Based Stores

Susan Combs, the Texas Comptroller of Public Accounts says Texas loses roughly $600 million a year from untaxed online sales.  Taxation of internet sales is certain to gain increasing scrutiny from taxing authorities.  Brick and mortar stores have long complained that online retailers have an unfair competitive advantage because of their ability to offer tax free purchases.  States initially turned a blind eye to taxing of online sales and yielded to the complaints of online retailers about the complexity of collecting sales tax in 9,600 jurisdictions. Increasingly, states have become interested in this revenue source to augment shrinking state coffers with some of the hundreds of billions of dollars that Americans spend each year on on-line purchases.  Recently, Amazon.com agreed to start charging sales tax in a number of states including Texas.  The online giant, that had long opposed the requirement that online retailers collect sales tax, believes the issue should be decided at the federal level and has thrown its support behind the Marketplace Fairness Act which seeks to allow states to collect taxes from out-of-state businesses.  While other online retailers, such as ebay and Overstock, oppose the legislation, it appears as though the age of tax free clicks is coming to an end.

As we originally reported, on December 21, 2012, HB 318 was prefiled and the senate considered the similar SB 118.  You can read my original post for the original version of the bill and my original comments. 

Now that it is through committee, the bill specifically excludes those in the “financial industry.”  It also includes an exception for employers to investigate wrongdoing.  Specifically, it now states:

(c) An employer may access a personal account of an employee if the employer holds a reasonable belief that the employee has violated:

(1) state or federal law, including a federal regulation or any regulatory policy or guidance issued by a federal agency; or

(2) an employment policy of the employer, including a policy governing:

(A) employee usage of an electronic communication device for work-related communications;

(B) the storage of potentially sensitive, nonpublic consumer information or of employer proprietary information;

(C) employee cooperation in a workplace investigation; or

(D) the safety and security of employees and customers of the employer.

While addressing two of the issues we spotted with the original bill, it still does not apply to college or other students.  It also does not provide any immunity for employers for failing to investigate social media profiles.

As explained in this article by Jessica Mendelson of Seyfarth Shaw, Texas looks to join the states of Utah, New Mexico and Arkansas that recently passed similar laws.

From the Texas Lawyer’s Event Website:

Texas Lawyer’s Technology Summit presents sessions on the best practices to incorporate at your law firm geared toward information technology professionals, chief technology officers and cutting-edge litigators at mid to large law firms. This live, 3.75 hour CLE program will provide you with insight and practical advice from leading technology experts on how to manage your caseload in a cost-effective way.

Includes breakfast, networking time and audience Q&A at the end of each session. 

The event is at the Magnolia Hotel Thursday, May 2, from 7:30 to 1:30.  I have the dreaded right after lunch spot forcing people to stick around to get their ethics credit.  My goal is to avoid the food coma.

To summarize the decision, the district court ruled that unless Viacom can prove YouTube has actual knowledge that each uploaded clip is a copyright violation, Google is entitled to the immunity granted it by the Digital Millennium Copyright Act, the DMCA.

DMCA BASICS

The DMCA provides web hosts and internet service providers a “safe harbor” from copyright infringement claims resulting from content provided from others if certain procedures are followed. If the safe harbor qualifications are met, only the customer or user can be liable and not the actual website or ISP, i.e., YouTube.

To qualify for the safe harbor protection, the site must: (1) notify the customers of its policy; (2) follow proper notice and takedown procedures; (3) designate a copyright agent with the U.S. Copyright Office; (4) not have knowledge that the material or activity is infringing or of the fact that the infringing material exists on its network.

Summary of the Ruling

This case has centered on the last prong.  Viacom has been arguing YouTube generally knows copyrighted videos are uploaded and has benefited from a willful blindness to the infringement.  The court ruled there needs to be evidence that YouTube knows each and every individual clip is copyrighted at the time it us uploaded rather than knowing that it generally happens.  Specifically, the court wrote:

knowledge of the prevalence of infringing activity, and welcoming it, does not itself forfeit the safe harbor. To forfeit that, the provider must influence or participate in the infringement.

Viacom admitted there is no technology in place that would give YouTube actual knowledge regarding the copyrights attached to each individual video at the time it is uploaded.

What does it mean?

This ruling confirms the burden to track copyrighted material is on the copyright owner and not the website.  If you have a website that takes user-generated content, you should feel better.  Even if you know you some of your users often upload copyrighted materials, you will not be deemed to “have knowledge that the material or activity is infringing or of the fact that the infringing material exists on its network” until the copyright owner tell you.

As long as you satisfy the other safe harbor requirements, you should be safe.  Viacom may appeal and try to resuscitate the “willful blindness” argument.  There is also some concern that the words “influence” or “participate” in infringement may leave open a hole for copyright owners to go after certain websites more active in seeking and pushing the content.

[Update 4-22-13]  I should have put this ruling in context with the recent Ninth Circuit ruling in UMG v. Veoh.  The Ninth Circuit originally ruled in favor of Veoh, the online video site against the record company UMG, but decided to revisit the decision in the wake of the Second Circuit Court of Appeals’ decision in Viacom which took a slightly more narrow view of the immunity protections.  Last month, the Ninth Circuit ruled again in favor of Veoh affirming a broad support for the initial free flow of information on the Internet.  The Ninth Circuit detailed, however, the precautions Veoh used to prevent the initial downloading of copyrighted materials which raises the questions of whether there is a requirement to employ reasonably available methods to prevent the uploading of copyrighted material in the first place.  You can read more details in this post from Kimberly Herman of Sullivan & Worcester.

In the interest of levity and to show how long this case has been going, enjoy this clip from the Daily Show in 2007 that discussed the case.

Yes, you can use social media to make material public disclosures.  The SEC did not punish Netflix CEO Reed Hastings.  The reality is, however, the SEC gave a warning to executives: we are not going to do anything this time because our rules weren’t clear, but now you are on notice.

The Netflix CEO Facebook Post

On July 3, 2012, Hastings posted on his personal Facebook page:

Congrats to Ted Sarados, and his amazing content licensing team.  Netflix monthly viewing exceeded 1 billion hours for the first time ever in June . . . Keep going, Ted, we need even more.

The Problem

Generally speaking Reg FD prohibits selective disclosure of material information.  We don’t want a select group to get information ahead of the general investing public.  Therefore, material information must be publicly disclosed.  My original post on the SEC investigatation is here.  Reg FD focuses on the terms “public” and “material.”  To comply, most companies issue press releases or make SEC filings to announce material milestones and financial results.

Public?

Yes, Hastings’ Facebook profile was open to the public and he had more than 200,000 friends, many of whom were the same journalists who would have received a press release.

Material?

Materiality generally means it is reasonably foreseeable a person may make a trade based on the information.  For the 30 hours after the Facebook post, the Netflix stock rose almost 16%.  Earlier in 2012, Netflix had touted the number of streaming hours as an important metric of user engagement and therefore an indication of value.  The news was picked up by the mainstream press and analysts.  There was, however, also a Citigroup research report touting the stock just prior to Hastings’ post that also likely affected the stock price.

The SEC Speaks

So last week, the SEC decided they needed to provide guidance on the use of social media.  You can read the report here.  To summarize, the SEC authorized companies to use social media to announce material information, BUT only if the company has notified investors that the company intends to use specific identified social media channels.

Hastings escaped an enforcement action because the SEC realized the novelty of the issue and the absence of clarity.  The next guy may not be so lucky.  The SEC wrote:

Neither Hastings nor Netflix had previously used Hasting’s personal Facebook page to announce company metrics, and Netflix had not previously informed shareholders that Hastings’s Facebook page would be used to disclose information about Netflix. The page was not accompanied by a press release, a post on Netflix’s own web site or Facebook page, or a Form 8 K.

A Few Lessons

Train.

Obviously, disclose what social media channels you intend to use.

Just because it is possible, it does not mean publicly-traded companies should exclusively rely upon social media channels to make material disclosures.  Should a company supplement the traditional approach with social media, the company needs to disclose what social media platforms it will use.  This announcement needs to be done often and through the more traditional channels giving investors time to find and set up their access to these outlets.  No magic language is required, something like:

We routinely post information that may be material investment information on our Investor Relations tab on our website found at ______, on our Facebook page found at __________ and on our Twitter account at @________.  We encourage you to visit these sites and follow them regularly.

Make sure people know where to go so they can register, subscribe or do whatever is necessary to get the information without forcing them to “like” or “friend” any company or individual.  If your company account has very few readers, then it probably would not qualify as a “broad, non-exclusionary distribution of . . . information to the public.”  Build your profiles before you use them to make disclosures.

Use Official Company Accounts.

Official company channels are preferred over individuals.  Presumably, the people authorized to use the official channels have some training and are more equipped to know the limits.  Your investor relations, compliance and legal teams should be involved and monitor the official social media channels.  During the training for the social media team, the adage that if you have to hesitate and ask yourself whether this is material information that could affect our stock price, it probably is, or at least it should be vetted through the entire team.  When it comes to material information, the same rules would apply to Facebook or 140 characters on Twitter that would apply to the more formal press releases.

By using the official company account rather than the individual CEO account, you also keep it easier to separate what accounts belong to the individual and which belong to the company.

Wouldn’t it be easier to ban the executives from discussing any business on social media?

This is the safe way out.  Let the executives talk about their personal life, but don’t let them say anything about the business.  I am guessing that some of my non-legal readers are pulling their hair out and screaming that you have to have your CEO engaged in social media.  David K. Williams and Mary Michelle Scott opined in this Harvard Business Review blog post ”that using social technologies to engage with customers, suppliers, and even with their own employees enables their companies to be more adaptive and agile.”

Regardless of your engagement strategy, even blanket prohibitions against discussing business can create some confusion.  Would commenting that you are on the way to the company Christmas party to celebrate the best year yet violate a blanket ban on business talk?  Would that violate Reg. FD?  Even if you take the more cautious approach, your executives need to be trained on the rules.

Train.

So, does legal have to review every post or Tweet before it goes out?

After all, press releases are closely reviewed before they go out.  This approach goes too far.  The better practice is provide adequate training and implement policies on the front end.  The company policy should allow investor relations/legal/compliance to monitor executive social media accounts.

Do we need to train everyone including the new intern?

Everyone should be trained, or at least aware of the social media policy.  Reg FD really applies only to persons acting on behalf of the issuer or company which includes ”any senior officer of the issuer or any other officer, employee, or agent of the issuer who regularly communicates with securities market professionals or with security holders.”  These folks also need to be aware of the company’s Reg FD policy and training.

Train.

Should we just identify all official channels and the social media profiles of the top executives?

To be safe, a company could identify all of the various social media accounts of all the people listed above.  This would not be a good idea because it make proper disclosures meaningless if you make the information difficult to find.

The identified channel needs to be “a recognized channel of distribution.”  The company Facebook page may apply.  Your CFO’s Pinterest page full of recipes probably does not.  If the disclosures are sporadic, the account won’t garner the broad audience for financial information required by the SEC.  Moreover, to qualify, the account must allow for unfettered access and your executives may not want to open their Facebook accounts.

Train.

Fix it.

Monitoring is important because companies can try to fix mistakes that fall through the cracks.  Reg FD allows for a process of “prompt” disclosure for non-public inadvertent disclosures.  When in doubt, call your lawyer.

Train.

Did I say something about training?

UPDATE ON 4/11/13

Netflix decided to jump right into the mix.  It filed paperwork with the SEC identifying the social media channels it plans on using and Reed Hastings announced on his Facebook page that users had streamed more than 4 billion hours over the last three months. Read more at the Wall Street Journal’s Digits blog here.

The News

The headlines come from two SEC actions that appear to allow AngelList and the fundersclub.com the ability to operate as crowdfunding sites.   The SEC no action letters are linked here for thefundersclub.com and here for AngelList.

Technically, the SEC authorized AngelList and the fundersclub to receive a carried interest in the companies without having to comply with rigorous broker-dealer rules.   These sites are not simply taking 3-10% of whatever is raised by the company like some broker-dealers registered with FINRA might.  Instead, they are now allowed to take a carried interest in the companies to compensate them for raising money in what are essentially investment vehicles or funds to invest in start-ups.  This costs the founders much more out of the profits (anywhere between 20-30%) and the carried interest takes it out of the broker-dealer rules.  To read more, check out this blog post from Stephen Quinlivan of Leonard, Street and Dienard.

Both sites pre-screen and approve the companies seeking funds (although AngelList appears to have a lot of start-up that you can peruse without registering).  The investors don’t invest directly into the companies, but into investment vehicles (like a separate limited partnership or fund) which then manages the investment on behalf of all of the investors.  Therefore, it is not likely the individual investors get to vote their stock or impact management, other than through the collective investment vehicle.  Finally, both sites only allow accredited investors to participate.

What does it mean?

This is big news.  It does not mean, however, you can post your idea on Facebook and start asking for small contributions from your 2,000 Facebook “friends” of $100 each in exchange for stock in your company.

While the ruling focused on the broker-dealer exemption, it did not provide any guidance or loosen the restrictions against general solicitations of equity which is still against the law.  Importantly, the SEC’s tepid authorization of these sites was conditioned on the representation that all of the investors using the site would be accredited investors, registered and pre-screened.   Finding accredited investors interested in start-ups is easier said than done.

With regard to individuals, to be an accredited investor, the individual must:

• Have a net worth that exceeds $1 million at the time of the purchase, excluding the value of the primary residence; or
• Have an income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

Both sites claim to abide by Rule 506 of Regulation D which still prohibits “general solicitations.”  Rather than a true crowdfunding site that allows you to peruse various companies, you agree to invest in certain funds to be sued on start-ups and then state your interest in certain pre-screened startups.  

In the letter to the SEC, AngelList says it does not engaged in general solicitation because:

AngelList Advisors’ activities with respect to the qualification and approval of Investors should not be deemed a solicitation for any securities transaction. In particular, AngelList Advisors is proposing to impose a thirty day waiting period from the time a potential Investor submits an RFI and questionnaire until he or she closes on an investment. Consistent with the Staff’s guidance in Lamp Technologies Inc., this waiting period is designed to ensure that Investors do not join the AngelList Advisors platform to invest in a particular Investment Vehicle, and accordingly is sufficient to ensure that AngelList Advisors’ qualification of the potential Investor is not deemed to be a solicitation of an investment in the applicable Investment Vehicle.

The Fundersclub.com website is silent on the solicitation issue, but explains their process as follows:

FC Inc. and FC Management collectively identify and perform due diligence on start-up companies for which FC Management may wish to form investment funds. Once they have identified such a company, FC Management enters into a non-binding term-sheet agreement with that company on a target amount of capital which a limited liability investment fund managed by FC Management would invest in that company. FC Inc. then posts information about that start-up company, provided by the start-up company, on its thefundersclub.com website. The name of and information about a start-up company is available online only to FundersClub members who have already been qualified as accredited investors. FC Inc. makes available the investment fund which will invest in that company for its members to offer non-binding indications of interest. FC Inc. provides those members who express indications of interest in an investment fund with standardized legal documentation through which they will invest in that investment fund. When an investment fund reaches indications of interest sufficient to fund the target amount originally agreed upon between FC Inc. and the start-up company (or if the company agrees to increase the target level of capital), then FC Inc. closes the indication of interest process. FC Inc. then reconfirms the indication of interest with each member who has offered the indication of interest and reconfirms the accredited investor status of each of those members. Simultaneously, FC Inc. negotiates the final terms of the investment fund’s investment with the start-up company. That negotiation may include the management rights that FC Management will have in the start-up company after the completion of the investment fund’s investment in the start-up company.

Yes, this is a big step.  It may even be the first step toward loosening general solicitation restrictions.  It does give guidance on broker-dealer requirements, but almost no guidance or even clearance of where the line is on general solicitation restrictions. 

Take a lesson from Coyote Ugly that does not involve dancing on the bar.  The lesson is — don’t go to the Internet to rail on your former employees when they file a Fair Labor Standards Act minimum wage case against you.

About a month after a group of employees filed suit against the Coyote Ugly Saloons, the president of the chain of Coyote Ugly Saloons went to her “Lil Spill” blog and wrote:

This particular case will end up pissing me off[,] cause it is coming from someone we terminated for theft. I have to believe in my heart that[,] somewhere down the road, bad people end up facing bad circumstances!

I have been reading the basics of Buddhism[,] and am going to a class on Monday. The Buddhist way would be to find beauty in the situation and release anger knowing that peace will come. Obviously, I am still a very new Buddhist[,] cause my thoughts are “[f***k] that [b**ch.]” Let me do my breathing exercises and see if any of my thoughts change. Lol .

A slightly different take then, say, Warren Buffet may have taken.  The subject of the post had already been reinstated by the time the blog post was published.

To add to the fire, a supervisor allegedly posted on Facebook when drunk about another plaintiff who was still employed but had joined the suit:  ”Dear God, please don’t let me kill the girl that is suing me . . . . that is all . . . .”

The result of these diatribes was a retaliation claim in addition the underlying minimum wage claims.  The federal district court in Tennessee recently allowed both claims to continue.  You can read the opinion here.

I am not an employment lawyer, but I know enough to warn clients you can almost get into more trouble for retaliating against an employee for making an overtime, workers’ compensation, minimum wage, harassment or discrimination complaint than you can for the underlying complaint.  My colleague Michael Kelsheimer has written on retaliation on his Employer’s Handbook blog.

The emedia law lessons seem almost too obvious.  I’ve never thought to add ”don’t let your supervisors post to about your employees while drunk” to my social media policies.  The real lesson is to train your employees and have policies.  Considering the founder was the first to take to the Internet, I’m not sure there was much respect for policies or compliance.  Your business, I am guessing, is probably different.  You should have policies and plans in place regarding who can say what about pending claims and what is and is not appropriate to do on the Internet.

Author Andrea Weckerle gave me a free copy* to look over Chapter 9 entitled “Legal Aspects of Online Disputes and Conflicts.”  The legal basics are adequately covered, but I found myself more intrigued by the rest of the book for good reason.

I would encourage any brand manager, PR professional, lawyer that work with brands and social media, dispute resolution professionals and marketing people to read this book.  This is a rare book that looks at how to handle online criticism from all of these angles with a nice mix-in of sociology and psychology as well.

I was able to implement some of the gems while reading the book.  Being an attorney and counselor at law requires more than simply explaining and advocating a client’s legal rights.  There is meaning behind the “counselor” aspect of our profession and this book helped me advise of ways to quietly and quickly handle and resolve more than one online issue before it reached a full-blown crisis.

There are lists of resources you can immediately use, sample policies and plans.  Before the book culminates with a 30-day action plan to “for better conflict management online,” it includes a chapter with real world good and bad examples along with hypotheticals to implement the concepts and strategies explained in the book.

This book is not a cure-all and by reading it, you will not avoid online criticism or disputes.  It also won’t let you lose 20 pounds without exercising or eating less either.  By reading it though, you and your organization, will be better equipped to react to online issues and even better yet, be proactive to manage conflict and criticism.  I plan to keep the book handy to share its insights with clients and colleagues.

When not writing books, Andrea runs Civilination.org which is a non-profit that promotes more civility in our online discourse.  When trying to resolve some of our online bullying disputes, we often discuss a donation to a non-profit entity to show the aggrieved party is not after the money.  Civilination is now on that list.

*Notice the online disclosure – practicing what we preach about online endorsements.