Damages for harassment of a PLC director who was harassed by a shareholder
In the case of Red Rock Resources v. Gary Carp, solicitor Yair Cohen sued a disgruntled shareholder who harassed the Chairman of a Public limited company following his disappointment with the performance of his shares. With online defamation and harassment of officers of the company, a single investor can cause a huge amount of reputational and financial damage to the company and to its directors.
The chairman of a gold minding company was harassed on various investors and review websites. The harassment had caused the chairman of the company substantial distress. After refusing to cease and desist his harassing activities, the disgruntled shareholder was taken to court for defamation and harassment. The case was eventually settled in court with an apology and substantial damages, as well as an undertaking by the defendant to refrain from repeating his defamatory and harassing activities.
Mr Carp was a small investor in a gold mining company - Red Rock Resources PLC, and as an active investor, he was also involved with posting on online investment forums. For reasons unknown, over a number of weeks, he started to post online defamation about Red Rock on a number of online investors’ forums and then promoted these posts and speculative rumours via his Twitter account.
The intensity of the defamatory posts created heated discussions amongst other shareholders and the more attention they received, the more they were shared and because they were then so prominent online, some investors started to believe the unfounded accusations and defamation made against the large gold mining company by this one small investor. They shared their concern with other investors and soon, the online defamation posts began appearing on the first page of Google search results. This resulted in a decline in investment and a sharp reduction in the value of the company's shares.
How did the company respond to the online harassment
Initially, the company took no action in relation to the online defamation because the Board of Directors were yet to appreciate the potentially disproportionate damage that one small investor could cause a large PLC by posting online defamation comments. However, after they received numerous messages from concerned investors and after contacting Gary Carp, their requests to stop the harassment and online defamation were being ignored, they were resolved to take action to save the company's reputation.
It was important for the company to act immediately, yet delicately, due to the potential additional reputational damage that legal action against an investor could have caused. In online defamation cases like these, there would have been inevitable media interest, so acting swiftly and strategically in order to protect the company's reputation and to avoid negative publicity, was paramount to the success of this case. The decision how to handle their online harassers had to be taken rapidly and then reviewed as matters progressed. The early appointing an internet law firm to deal with the matter is imperative.
Red Rock Resources Plc chose Cohen Davis to handle the matter because of the unique and creative approach we handle online defamation matters of this nature and the due consideration and advice we give our clients in relation to reputational risks and reputational outcomes, however comprehensive and complex.
We had no choice but to issue defamation proceedings against Gary Carp, in order to protect the investment of thousands of investors and to rescue and protect the company from reputational damage.
Gary accepted that all his allegations were unfounded, sent a letter of apology to the Chairman of Red Rock Resources Plc and agreed to pay compensation, which was donated to a charity.
What can be learned from this case of harassment of company director
A single investor can cause a huge amount of reputational and financial damage, even to a PLC, by posting untrue stories and unfounded speculations on the internet. A PLC, despite its size, might become vulnerable to online defamation as much as a small, private limited company. The influence of online investment forums on individual and corporate investors must never be underestimated by companies of any size. The cost of online defamation to a large, public company is likely to be far higher than it is to a small private company because it has so much more to lose. The company's board did the right thing by instructing Cohen Davis, a niche law firm that specialises in online defamation and reputation law, to handle this matter promptly and delicately from all angles.
It is important to not ignore any online defamation which intends to harass company directors, to act quickly and to obtain the appropriate expert legal advice. It is not always the case that a confrontational approach will necessarily work. Each case of harassment of a company or its directors must be assessed together with an potential PR implications.