Real estate agent sues brokerages over social media defamation by competing influencers

The Ontario Superior Court of Justice recently dealt with motions to strike claims brought by a real estate agent against two brokerages and their supervisors. 

The agent alleged that competing agents defamed her by posting content on social media to promote their employers' businesses. 

The competing agents were employed at separate real estate brokerages where they used social media to attract clients and facilitate sales. 

The brokerages and their supervisors brought motions to strike the claims against them for disclosing no cause of action.

Background and social media activity

The agent is an experienced real estate professional who uses social media to promote her expertise. She marketed services to followers, built engagement with potential clients, and networked with other realtors for referrals. She had approximately 9,000 followers across multiple social media platforms.

The first competing agent worked at one brokerage and used social media to market her services. She had over 140,000 followers across two major platforms.

The second competing agent worked at another brokerage and used social media to attract clients. 

She had over 17,900 followers on one platform and was the administrator of an industry group with over 1,000 subscribers.

The agent claims the competing agents did not like her social media posts on market trends and industry statistics. She alleged they posted content to disparage her and her social media content. 

The agent and the second competing agent argued in online exchanges. They once competed for a client who ultimately retained the agent.

Alleged defamatory posts and conspiracy

The agent claims the competing agents were well acquainted and conspired to defame and injure her reputation on social media. The second competing agent posted that a person, later identified as the agent, had harassed and bullied her. 

Shortly after, the first competing agent made a video claiming she was bullied by a realtor who resembled the agent. The second competing agent made another post containing similar allegations.

The first competing agent later sent an email to the agent and supervisors with allegations that the agent was criminally harassing her. The email claimed police and regulators had enough evidence to bring criminal and regulatory cases against the agent. 

Disclosure later obtained through freedom of information requests revealed that police never had evidence of criminal activity. The agent claims the email defamed her by making outright lies to maliciously injure her reputation.

The second competing agent made additional posts claiming to be criminally harassed by envious agents with little business.

She posted an altered video played in a misleading way. The agent alleged that this falsely suggested she was bullying the second competing agent. 

The first competing agent posted content claiming to have been bullied by someone she reported to the authorities.

Further allegations and a podcast appearance

A close colleague of the second competing agent posted a video negatively portraying the agent. The agent claims the second competing agent incited the colleague to disparage her. 

The first competing agent posted another video stating she was "bullied nonstop online" by other realtors. She claimed this stressed her despite authorities finding the claims false.

The first competing agent appeared on a podcast and publicly made the same allegations she previously raised in a dismissed regulatory complaint.

Promotional clips repurposed for social media garnered tens of thousands of views. They were recirculated to hundreds of thousands of viewers.

The agent asked the podcast host to remove the defamatory material. Shortly after, one supervisor made a regulatory complaint accusing the agent of directing harassment towards the podcast host and the first competing agent. The first competing agent made a complaint accusing the agent of intimidating and pressuring the podcast host.

Claims against brokerages and supervisors

The agent alleged the competing agents were acting within the scope of their employment when making the posts.

She claimed the supervisors had a duty to maintain professional standards among their agents. She alleged they had a duty to address complaints diligently. The agent claimed this duty was not upheld.

The agent claimed the supervisors were notified of the defamation but did nothing to address the issues. She alleged they made no effort to investigate or resolve the matter. 

The agent claimed the supervisors did not respond to her attempts to discuss the matter. She alleged they didn't advise the competing agents to refrain from making further public comments.

The agent claimed the brokerages are vicariously liable for the negligence of their supervisors. She also claimed vicarious liability for the defamatory statements made by the competing agents. The brokerages and supervisors brought motions to strike the claims. 

They argued the claims disclosed no reasonable cause of action. They submitted that posting content to social media without more should not give rise to a duty of care. They argued that imposing liability would be tantamount to imposing indeterminate liability.

Court's analysis of negligence claim

The court examined whether the agent had adequately pleaded a cause of action in negligence against the supervisors. To succeed with a negligence claim, a plaintiff must establish four essential elements.

The defendant owed a duty of care to the plaintiff. The defendant's conduct breached that duty. The plaintiff sustained damage. The damage was caused by the defendant's breach.

The court found that the duty of care proposed does not fit within an established category. The parties did not refer to any cases for the proposition that an employer with an employee using social media to promote its business owes a duty of care to a competing influencer. The court accepted that this duty does not fall within an established or analogous category.

The court stated that a positive duty of care may exist if harm is foreseeable and other aspects of the relationship create a special relationship of proximity. A special relationship of proximity is recognised in three situations. 

The first arises where the defendant intentionally attracts third parties to a risk they created or control. The second concerns paternalistic relationships of supervision and control. The third involves defendants who engage in a commercial enterprise with attendant responsibilities to the public.

Finding of proximity and duty

The court found that by having the competing agents actively use social media to promote commercial activities and compete for clients, the supervisors arguably created and engaged in a commercial endeavour. The court stated they did so with the intention of attracting other realtors to participate in online exchanges. 

The court accepted that the competing agents are alleged to have competitively promoted their brokerages by making provocative posts. The court stated this arguably created a risk of harm.

The court found that posting content for others to view and share meant that a special relationship of proximity arguably arose. The supervisors had an attendant responsibility to act with care and take reasonable precautions. 

They had a responsibility to avoid or minimise associated risks. They also had a responsibility to take appropriate action if the risk materialised.

The court rejected the argument that posting content to social media without more should not give rise to a positive duty of care. The court found the claim sufficiently pleaded that the supervisors created or enhanced a risk of defamation. 

The court stated this was done by having the competing agents make edgy or provocative posts. The court found that this arguably establishes the degree of proximity required.

Consideration of policy factors

The court found the parties arguably were in sufficiently close proximity to make it just and fair to impose a duty of care. The court accepted it was arguably foreseeable that the alleged failures by supervisors to put policies in place or investigate complaints materially increased the risk of harm. 

The court noted that a failure to have a policy or procedure has been found to support a negligence claim in a different context.

The court then considered whether there are residual policy concerns that should negate the prima facie duty of care. The court was not persuaded that jurisprudence relieves the supervisors of a duty of care. 

The court rejected the argument that imposing liability would be tantamount to imposing indeterminate liability. The court noted the agent has pleaded that supervisors arranged for competing agents to post content to promote their businesses.

The court stated it was not persuaded that the duty of care should be narrowly construed on residual policy grounds. The court found that on a motion to strike, pleadings are read generously and pleaded facts are taken to be true. 

The court stated that the assertions are that the supervisors knew of the misconduct and negligently failed to intervene. The court found that by owing a duty of care and failing to discharge it, the supervisors are alleged to have breached their duty.

Viability of negligence claim

The court noted the supervisors submit that the only act or omission alleged occurred after the posts were made. However, the court found the defamatory posts arguably continued to cause harm until they were removed. They continued to be accessible in the public domain.

The court stated that although the claim is novel and based on unsettled law, it does not find it plain and obvious that the claim should be struck. 

The court found the negligence claim is not doomed to fail and should be allowed to proceed. The court was satisfied that the claim arguably raises a tenable cause of action.

The court stated it does not find that residual policy considerations should prevent the claim from continuing at the pleadings stage. The court noted these types of policy considerations should rarely be sufficient to dismiss a claim at the pleadings stage. 

At this stage, the court was unable to find that imposing the novel duty of care would improperly trigger indeterminate liability. The court stated it cannot properly assess the potential concerns on the pleadings alone.

Vicarious liability analysis

The court examined whether the claim pleads an arguable cause of action in vicarious liability against the brokerages. An employer may be vicariously liable for the acts of an employee that are authorised by the employer. 

An employer may also be vicariously liable for unauthorised acts so connected with authorised acts that they may be regarded as modes of doing an authorised act.

There is a three-step analysis for deciding whether vicarious liability should be imposed. The agent must show that the relationship between the wrongdoer and the person against whom liability is sought is sufficiently close. 

The wrongful act must be sufficiently connected to the conduct authorised by the party against whom liability is sought.

The court noted that neither side cited any precedent that conclusively addressed whether an employer should be vicariously liable for defamation arising from an employee's social media posts promoting business activities. The court was unable to find such jurisprudence. It appears the vicarious liability claims are of first impression.

Connection to authorised conduct

The court was satisfied that the agent had shown the employment relationships were sufficiently close. The court found the claim pleads a sufficiently close relationship between the agents and brokerages that authorised or permitted the alleged defamatory conduct. 

The court accepted, on a generous reading, that the alleged defamatory conduct and corresponding failures by supervisors to intervene are sufficiently connected to the conduct authorized by the brokerages.

The court stated that the claim pleads little about the brokerages' alleged conduct. However, on a generous reading, the court accepted the claim that both brokerages created the risk by giving competing agents the opportunity to engage in defamatory conduct. 

The claim also pleads that both agents used social media to attract clients and compete with other realtors. 

The court was satisfied that the claim effectively pleads that the brokerages gave their agents a significant opportunity to abuse powers by engaging in defamatory conduct to compete for business.

Given the commercial competition associated with social media activity, the court accepted that the alleged defamatory conduct arguably resulted from friction or confrontation.

This was inherent in the posts the competing agents made to promote the brokerages. 

The court found the agent arguably was vulnerable to the improper exercise of the agents' influencing power. The brokerages conferred this power without policies or oversight. The court accepted that the brokerages arguably increased the risk of harm in a material fashion.

Damages claims and final orders

The court examined claims for aggravated and punitive damages. Aggravated and punitive damages may be awarded for defamation if the defendant's conduct has been high-handed and oppressive. Aggravated damages are compensatory and require actual malice. Punitive damages are available in only exceptional circumstances for highly reprehensible misconduct.

The court found the claim does not clearly plead high-handed or oppressive conduct. However, on a generous reading of the claim, the court was persuaded that the agent had a proper basis to plead high-handed or oppressive conduct. The court found that leave to further amend the claim to plead aggravated and punitive damages should be granted.

The court was satisfied that punitive damages are not available against the brokerages on a theory of vicarious liability. The agent conceded this in submissions. The court found it plain and obvious that this claim has no reasonable prospect of success.

The claims for punitive damages in respect of vicarious liability against the brokerages were struck. Leave was granted to further amend the claim. The motions were otherwise dismissed.