Yoda firm takes defamation to the ‘Dark Side’

Monday 30 March 2015

In one of the first cases to be heard under the Defamation Act 2013, the High Court has awarded £444,000 in damages to the online marketing and advertising company, ReachLocal UK Ltd (ReachLocal) who fell victim to a defamatory campaign led by rivals on the “dark side”, Your Online Digital Agency Ltd (Yoda).

With a 23% rise in defamation cases in the UK over the past year, one can only blame the rise in defamatory material published through social media and websites. However, when information is so easily transmitted to thousands of people with just the click of a button it can be difficult to show consequential and quantifiable loss (i.e. special damages). This case provides useful guidance to the approach the Courts will take when awarding special damages in claims of defamation.

Facts

Yoda launched what the Court described as a “cynical and hypocritical campaign of denigration” against ReachLocal who were novel to the market of advertising.

In a bid to try and steal ReachLocal’s clients, Yoda obtained a database in breach of confidence from ReachLocal revealing the contact details for each and every one of their customers. Yoda then conducted what ReachLocal described as a “mass dissemination of emails and telephone calls” alleging that ReachLocal were a fraudulent scam and were profiting by misrepresentation and inflating their prices.

Yoda didn’t stop there with their “Jedi attack”, these emails were followed by blog spots and similar allegations on social media sites such as Twitter, LinkedIn and Facebook. The damage caused by Yoda was far-reaching with one defamatory tweet being re-tweeted by a user with over 90,000 followers.

Damages Awarded

The Court awarded the following specific damages to ReachLocal;

• £75,000 in general damages to compensate for the damage ReachLocal had suffered to their reputation.
• £300,000 in special damages for loss of business. The Court however gave a 20% discount to take into account other explanations for loss of business.
• £60,000 in special damages for the payments that had been made to customers to encourage them not to cancel their contracts as a result of Yoda’s allegations.
• £66,000 in special damages for the cost of a public relations consultant hired by ReachLocal to help mitigate reputational damage in the marketplace.

The case is good news for companies who wish to mitigate reputational damage. A public relations consultant, even at the insignificant sum of £66,000, was deemed as reasonable mitigation. As long as the loss can be demonstrated to have clearly arisen from the Defendant’s wrongdoing the Court will have no hesitation to award special damages.