Whole Foods May Be Liable, Uninsured for CEO’s Postings

The Mackey episode raises “fascinating agency-law issues,” President Michelle Worrell-Tilton of OneBeacon Insurance’s First Media Inc. said on a panel with the Whole Foods CEO at the American Bar Association conference that ran through Tuesday. A blogger whose postings raise questions of corporate liability is “typically not the person who sits in your corner office,” she said. The company could be held responsible for some consequences of Mackey’s writings even if they are found to be outside the scope of his employment, disqualifying him from coverage under Whole Foods’ insurance, Worrell-Tilton said.

Companies’ efforts to cover blogging in their corporate and general liability insurance policies is “almost certain to result in years and years of litigation and inconsistent results,” Furlow said, predicting that the Supreme Court will to resolve the matter. That means businesses outside media industries but publishing company blogs should consider taking out specialized media policies, he said. That includes law offices, which also must appreciate that blogs may violate advertising rules under the ethics standards of states including New York, Furlow said. But Whole Foods might not be covered under either a general insurance policy or a media policy for Mackey’s unscheduled postings on Web sites that the company doesn’t run, Worrell-Tilton said.

Chubb insurance has said its malpractice policies cover lawyers’ blogs. But the company also has said it will be more apt to write coverage for “informational” than “advisory” blogs, out of concern over accidental creation of client relationships with litigious Web site users, Furlow said.

The vast majority of bloggers lack organizational backing, “and I suspect most people who blog will go bare,” not insuring their work, “if they even know about the situation,” Furlow said. Panelist Randolph Sergent, a Baltimore lawyer, said bloggers may find coverage in homeowners insurance.

American Bar Association Notebook…

When click-fraud exploded, Yahoo blew it, said Reggie Davis, vice president of network quality. Company lawyers told executives not to discuss the matter as it became the topic of a growing number of lawsuits in 2006 and 2006, he said. Instead, the company should have been “proactive” in explaining that “we're victims of the click fraud” no less than advertisers, Davis said. The greater the fraud, the less would-be advertisers will bid to Yahoo for messages, he said. But no lawsuits have been filed against the company since last year, when it acted against the problem, and it has “turned the tide,” Davis said. He said he moved from legal affairs to the new vice presidency to accomplish exactly that. ----

Congress should bar use of the state secrets doctrine to seek dismissal of federal lawsuits, said the American Bar Association’s House of Delegates. The Bush administration has asserted the doctrine in fighting challenges to National Security Agency surveillance of phone calls and e-mail, an issue on which the 9th U.S. Circuit Court of Appeals will hear arguments late Wednesday. In a resolution adopted late Monday by voice vote, ABA delegates urged that: (1) The government be allowed assert the privilege without taking a position on a lawsuit’s allegations and without “adverse inferences” being drawn against the government. (2) The government be required “to provide a full and complete explanation of its privilege claim and to make available for in camera review the evidence the government claims is subject to the privilege.” (3) Judges be allowed to classify evidence as privileged only “based on specific facts” showing “that the government has reasonably determined that disclosure” would significantly harm the national defense or U.S. diplomatic relations. (4) Steps be established for government production and admission of nonprivileged evidence. (5) Motions to dismiss or for summary judgment be put off until discovery of related evidence is finished and the judge resolves privilege claims. “Part of the NSA program seems to be that VoIP calls are being intercepted,” though “most carriers will tell you that they are two or three years away from being able to intercept” such calls to comply with the Communications Assistance for Law Enforcement Act, said panelist Konrad Trope, chair of the new VoIP Committee. When challenged on the eavesdropping, the government will rely on the “plain view doctrine” and “inevitable disclosure” theory developed to justify warrantless physical searches under the Fourth Amendment, arguing that it should be able make use of calls inadvertently swept up in surveillance of unrelated intelligence targets, he said. ----

An ABA committee debuted a site on practical e-commerce matters. SafeSelling.org is a companion to SafeShopping.org; both were developed by the Cyber Law Committee. “From obtaining a domain name to protecting customer privacy, our SafeSelling.org site offers a complete range of logically listed mini-topics to help our target audience find the facts they need,” said SafeSelling Editorial Director Jonathan Rubens. The site offers information on payment processing, delivery and fulfillment, selling out-of-state or internationally, advertising and marketing and customer authentication and security. ----

Ethics decisions in several states imply that lawyers have a duty to understand implications of their offices’ or their clients’ adopting VoIP, said Cecilia Gassner, an Idaho lawyer who earlier worked at the state Attorney General’s Office and the Public Utilities Commission. “I don’t think they [judges] expect us to be computer programmers or network administrators,” but lawyers must know enough to get the information they need from technologists to ensure that requirements for retaining, reporting and producing information are met, she said.