How to Protect Your Co-op's Online Reputation

Nov. 3, 2015 — A large former Mitchell-Lama cooperative went through a series of highly contested elections in which a small and vocal group of dissenters made a number of accusations regarding current and elected board members. After an election in which none of the dissident candidates won seats, the attacks continued and began to include personal diatribes about board members and derogatory comments about the cooperative and its operations.

The dissenting shareholders created a website that contained the name of the cooperative. The attacks on the co-op and its board members continued and became much more personal. After a particularly vicious set of postings that questioned the operation and honesty of the board and management, the cooperative was compelled to start litigation to shut down the website and pursue libel and slander charges.

The problem, of course, was that, although the actual individuals were known, many of the postings were anonymous. In response to the lawsuit, the dissidents were able to interest a large law firm in representing them, pro-bono, based on freedom of expression issues. That firm moved to dismiss the action. The court held that board members are not public figures and are entitled to protection from anonymous attacks, and refused to dismiss the proceeding. The court based the decision primarily on the fact that the website in question was open to the general public and was not limited to shareholders of the cooperative or in any way password-protected. The legal action is continuing; however, the number of negative posts has decreased substantially.

Takeaway

The case brings to the legal forefront a growing concern for all cooperatives: their online reputations. More and more cooperatives have their own websites whose access is limited solely to shareholders or other authorized users — password-protected pages. But unauthorized websites have flourished as well. The internet, despite all its positive features, has also created a forum where a small minority can broadcast negative and derogatory information about cooperatives and their boards to a large audience, which in turn can negatively affect the cooperative and the value of apartments. It is our experience that more boards are beginning to attempt to defend themselves against these types of attacks. In turn, the issue is becoming more prevalent and we expect further litigation that will eventually produce case law governing on what is acceptable behavior on websites affecting cooperatives.

Dean M. Roberts is a partner at Norris McLaughlin & Marcus.