Media Liability Claims: Tricky, Expensive and Evolving

Oprah Winfrey may be the queen of talk show TV and the ruler of her own media/entertainment universe, but that didn’t keep her from being dragged into court, accused of libeling the beef industry in one of the most well-known cases of media liability peril in recent history.

“Free speech…rocks!” and “Free speech rocks again!” was Oprah’s mantra after winning the initial suit and the appeal in the so-called “veggie libel” case brought against her by a group of Texas cattlemen.

The suit centered on comments Oprah made on her television show in April 1996 in reaction to a guest’s discussion of the risks associated with mad cow disease. Oprah said she’d never eat a hamburger again, cattle futures plunged and the cattlemen sued Winfrey for defaming the industry. While the courts decided in Oprah’s favor, her victories did not come without cost. Between the trial in an Amarillo federal court and the plaintiff’s appeal to the 5th U.S. Circuit Court of Appeals in New Orleans, Oprah’s defense team rang up legal costs in the hundreds of thousands of dollars, according to the Amarillo Globe-News. Other sources say the figure was closer to $1 million.

Regardless of the exact figures, the fact is, she won and still had to pay. That’s where having a good insurance carrier comes in, according to Pete Kennedy, an attorney specializing in libel and copyright infringement issues for the Austin law firm of George & Donaldson L.L.P. “If anybody asks me, I tell them to get insurance,” Kennedy said, adding that an effective carrier is one that understand the media business, supports free expression and is sensitive to the specific needs of a media organization. “These are not like slip and fall claims,” Kennedy said, noting that insurers can’t “make them go away for the cheapest amount.”

It is important for the client to have control over the choice of counsel because “these are not cookie cutter cases,” Kennedy said. He added that not all lawyers are equipped to handle media liability issues because, like governmental entities, media organizations are protected by many constitutional and judge-made protections that don’t apply to all businesses.

Leib Dodell, vice president of media and intellectual property for Chubb Specialty Insurance, echoed that opinion. A lawyer with expertise is “critical because there are lots of tricky areas of media law that aren’t necessarily intuitive,” Dodell said. “You really need legal advice to help guide your way through.” He added, “In this line of insurance, defense expense often is the larger of the exposures, because the cases can be very difficult to litigate. You can often win because of the great constitutional defenses…but they can be very expensive claims to litigate.”

News gathering
“It used to be that the biggest threat to a news organization was a libel suit. That’s still, obviously, a huge exposure,” Dodell said. “But in the last few years, what we’ve started to see is the focus shifting a little bit towards the news gathering activities. In other words, what are the techniques that the media are using to get a story? Are they trespassing on somebody’s property? Are they being too aggressive? Are they invading somebody’s privacy, etc.?”

News gathering claims concern the activities involved in gathering the news rather than the content of a publication. They often stem from situations in which news organizations have gathered information through methods such as undercover operations, “ride-alongs” with the police or being present when an arrest is made, accepting the fruits of illegal wiretapping, trespassing or gaining access to information through false pretenses.

Dodell said the reason plaintiffs lawyers are choosing to pursue these types of claims is that constitutional defenses, such as the First Amendment, that are available to news organizations in a libel suit make it difficult for plaintiffs to win against them. “But when they bring a claim that’s not focused on the content but is focused on the activities of the news gatherer, it becomes easier for the plaintiffs to prove their case,” Dodell said. “It becomes more difficult for the media to raise First Amendment defenses. It’s one thing to say you have a first amendment defense in the content of your article, it’s a lot more difficult to say you’ve got a First Amendment defense for climbing over somebody’s fence to get a story or something like that. That’s why that focus has shifted.”

Traditional media liability insurance policies may not adequately cover these new types of claims, especially if coverage is provided only for specific “named perils,” such as a libel, copyright infringement and invasion of privacy. With some types of policies, if a claim made against the insured is not specifically named in the policy, the policyholder may be left out in the cold when it comes to protection for legal expenses and unfavorable judgments.

“It is…important for a media organization to take a close look at its insurance policy to make sure that it’s covering not only content-based claims, but also news gathering claims,” Dodell said.

Other perils
While all of the numerous media outlets in the U.S. may not all be subject to news gathering claims, that doesn’t necessarily mean they are home free. According to Mary Schust, senior vice president for underwriting with Kansas City-based Media/Professional Insurance, agents need to be aware of the risk and exposures media organizations face. “Sometimes a broadcasting station will say, ‘I just play music, I have no exposure,’ but if they advertise, they have E&O (errors and omission) exposure – if they advertise the wrong price or offer information or advice,” Schust said.

Often, basic liability policies cover libel, copyright, defamation, invasion of privacy etc. but do not include E&O coverage, Schust said. In most cases, it should be added.

Schust said the problem of intellectual property is an increasing peril for media organizations in this century, more than defamation and libel. The rise in intellectual property claims is probably due, at least in part, to the increase in dissemination of information through electronic media. Changes in the structure of media organizations and consolidation of media entities means that electronic versions of traditional media are easily available over the Internet.

“The Internet now is making virtually everybody a publisher,” said Dodell. “Commercial companies that never would have thought of themselves as media organizations – if they have a sophisticated website with lots of content on there, all of the sudden they’re finding themselves facing a lot of the same exposures that in the past only a media organization would face. We find ourselves talking to a lot more ‘non-media’ organizations about their media exposures.”

Agents “need to look at the risk itself and determine what the exposures are,” Schust said, adding that her company helps agents tailor a policy to cover special and unique risks.

Policies and programs
In its “Media Liability Plus” program, Media/Professional offers at least 10 different policies for various types of media needs, but for organizations that have numerous outlets for sharing information Schust recommends the company’s multimedia form, which she says “encompasses it all including electronically transmitted information over the Internet.”

Chubb’s “news media policy would specifically say it covers all modes of communication,” said Dodell. “So if you’ve got a magazine, a newspaper, a website – they would all be embraced in one media coverage.” Dodell added that Chubb has developed a new policy, called the “Safety Net,” that amends the media form and makes it applicable to risks and exposures that all companies face when they go online.

Both Media/Professional and Chubb media policies provide coverage for the cost of the defense for the insured. Both programs also have options through which the insured can either select its own counsel or assign the duty to defend to the insurance carriers.

Policies, premiums and retentions vary widely according to the risks, exposures and size of the insured. At Chubb, retentions (similar to deductibles) can range from $5,000 to $1 million, said Dodell, depending on the type of insured. Limits range from $1 million on the low end and go up to $25 million. Chubb’s minimum premium is $2,500 but Dodell said that amount would be unusual, noting that the average premium is in the $15,000 to $40,000 range. He said he’s seen premiums as high as $700,000 or $800,000.

Schust said Media/Professional has the capacity to offer up to a $10 million limit with a self-insured retention of $2,500. The minimum premium for their policies is $1,500 and the average policy limit is $5 million or less. Schust said the Media/Professional policies are written through National Casualty Co., and Scottsdale Insurance Co. and its affiliated companies. Media/Professional uses Gulf Insurance Companies for excess insurance for media firms that need higher limits.

One of the complicating factors in placing media liability insurance is that there aren’t many brokers and underwriters with expertise in the area and only a handful of carriers that offer media-specific policies. According to Dodell, one carrier – Employers Reinsurance Corporation (ERC) – had been offering media coverage for about 60 years but exited the market over a year ago.

Still, media organizations need the insurance and are buying it. “For the most part I would say all major media organizations buy this coverage in some form or another,” Dodell said.

Topics Carriers Claims Chubb