Introduction

Fraternities and Sororities [Chapters] used to send newsletters to their alumni by mail and posted photos from their parties on the bulletin board at the Chapter House. Today nearly every Chapter has its own website. Typically a Chapter’s website contains contact information, a calendar of events, a photo gallery and a chat room. This all sounds innocuous enough, but consider this. There are a number of risks associated with a Chapter’s website that most members simply do not consider. For example: copyright and trademark infringement, defamation and violation of another person’s right of privacy. And if the Chapter is not careful, offi cers, individuals and the Chapter itself could be sued for damages. What follows is not intended to be an all-inclusive analysis of the law on each topic. Rather, it is intended to identify some of the primary issues of concern so the Chapter and its Risk Manager can be more pro-active and avoid claims in the fi rst place.

Copyright Infringement

You have just found a great article, photo or recording on the Internet and you want to download it to your Chapter’s website. No problem, right? Wrong. Unless you have the author’s permission, you may be liable for copyright infringement.

The owner of a copyright has the right to exclude any other person from reproducing, preparing derivative works, distributing, performing, displaying, or using the work covered by copyright for a specifi c period of time. 1

Copyrighted work can be a literary work, musical work, dramatic work, pantomime, choreographic work, pictorial work, graphic work, sculptural work, motion picture, audiovisual work, sound recording, architectural work, mask works fi xed in semiconductor chip products, or a computer program.

2The plaintiff may elect to recover either actual damages or statutory damages. 3 The copyright owner is entitled to recover the actual damages suffered as a result of the infringement. Actual damages means the amount of money adequate to compensate the copyright owner for the reduction of the fair market value of the copyrighted work caused by the infringement. The reduction of the fair market value of the copyrighted work is the amount a willing buyer would have been reasonably required to pay a willing seller at the time of the infringement for the actual use made by the defendant of the plaintiff’s work. That amount also could be represented by the lost license fees the plaintiff would have received for the defendant’s unauthorized use of the plaintiff’s work. 4

Under actual damages, the plaintiff is entitled to recover the actual damages suffered as a result of the infringement. In addition, the plaintiff is also entitled to recover any profi ts of the defendant attributable to the infringement. Under statutory damages the plaintiff may recover from $750, to $30,000 for each act of infringement. If the infringement was innocent, the damages may be as low as $200 for each act of infringement. Note: if the infringement was willful, the damages can be as high as $150,000 for each act of infringement.5

The copyright owner is entitled to recover the actual damages suffered as a result of the 1 17 USC § 101, et seq.; Ninth Circuit Court Model Jury Instructions 17.02 Id.3 17 USC § 504; Ninth Circuit Court Model Jury Instructions 17.224 17 USC § 504; Ninth Circuit Court Model Jury Instructions 17.23, 17.24; Wall Data v. Los Angeles County Sheriff’s Dept., 447 F.3d 769, 787 (9th Cir.2006).5 17 USC § 504; Ninth Circuit Court Model Jury Instructions 17.25

FRMT NEWSThe FRMT Risk Management Newsletter, prepared by Willis North America Volume 26 Spring Semester 2010

Chapter Website Risksby Stuart Jones, an initiate of Chi Phi and a Member of the Fraternity’s Board of Governors

Page 1

infringement. Actual damages means the amount of money adequate to compensate the copyright owner for the reduction of the fair market value of the copyrighted work caused by the infringement. The reduction of the fair market value of the copyrighted work is the amount a willing buyer would have been reasonably required to pay a willing seller at the time of the infringement for the actual use made by the defendant of the plaintiff’s work. That amount also could be represented by the lost license fees the plaintiff would have received for the defendant’s unauthorized use of the plaintiff’s work.

As you can see, a simple act of copying the work of another can result in a signifi cant damage award against the Chapter or its members. Left unsaid is the cost of defense, which could exceed $100,000 or per claim.

Trademark Infringement

Next you found a company logo and you want to use it during recruitment. For example: you download the John Deere logo from the company’s website and you paste it on a T-shirt with the text: Nothing Runs like an Alpha Beta Chi. No problem, right? Wrong. Unless you have the permission from John Deere, Inc., you may be liable for trademark infringement.

A trademark is a word, a name, a symbol, a device, or a combination of

them that indicates the source of goods. The owner of a trademark has the right to exclude others from using that trademark.6 Here, John Deere, Inc., has two registered trademarks: 1. The John Deere Logo and 2. The word mark: Nothing Runs Like a Deere. Both are protected.

(continued on page 3)6 15 USC § 1051, et seq.; Ninth Circuit Court Model Jury Instructions 15.0

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Need Property or Liability Insurance?Our FPMA Insurance Program is just what you need!

For more information/quotation contact:Tiffanie Havelka

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Fraternity claim Statistics: What Are We Seeing?By Mick McGill, Vice President - Client Advocacy, Willis North America and an initiate of Kappa Sigma

An effective loss control strategy involves examining areas of greatest risk and attempting to prevent future losses in those areas. We recently looked at 1,779 reported Fraternity and Sorority liability claims. We evaluated those claims on the basis of frequency and severity. Claim frequency refers to the number of claims that occur , while claim severity addresses the ultimate cost of incidents focusing on catastrophic losses. For our analysis, severity was defi ned as a loss where the paid and reserved value exceeded $100,000. Only 83 of the 1,779 (5%) claims exceeded this threshold but represented 81% of all claim dollars paid and/or reserved.

Of the claims we examined, 23% involved an act of assault and battery. However, auto accidents were the most frequent type of loss involving claim payouts that exceeded $100,000. Clearly, auto exposures represent great risk for fraternities and sororities.

These safeguards can be implemented to reduce auto exposures:

Loss Control –Automobile Losses

Take a position on Designated Driver Programs.• Encourage professional transportation.• Eliminate the use of leased/rented vehicles operated by members for the • purpose of providing safe transportation. Avoid events that lead to potential sleep deprivation.• Partner with University/College in the use of Safe Car Programs. • Charter buses when chapter event exceeds a certain mile radius from • chapter location.Don’t overlook staff. •

Pre-hire MVR• Minimum required personal auto policy insurance limits•

For more information or resources to help you reduce your risk in this area, visit our website at www.WillisFraternity.com.

Frequency of Losses Exceeding $100K

19

14 13 13

7

0

5

10

15

20 Auto Accidents

Fall from Heights

Hazing

A & B

Sexual Assault

Fraternity Claims - Frequency

23%

15%

10% 9%7% 7%

0%

5%

10%

15%

20%

25%

A & B Sexual Assault Slip & FallFall from Heights Auto Accidents Hazing

FRMT, Ltd.A Vermont Reinsurance Company in partnership with the RSUI Insurance group to complement the risk management programs of each member fraternity, such as the Risk Management College and providing the following member fraternities with a comprehensive liability insurance program: AcaciaAlpha Chi RhoAlpha Epsilon PiAlpha Gamma Rho Alpha Kappa LambdaAlpha Sigma PhiAlpha Tau OmegaChi PhiChi Psi

Delta ChiDelta Kappa EpsilonDelta PhiDelta Tau DeltaDelta UpsilonFarmhouseKappa Alpha OrderKappa Delta RhoPhi Kappa PsiPhi Kappa Tau

Phi Kappa � etaPi Kappa PhiPi Lambda PhiPsi UpsilonSigma Nu� eta Chi� eta XiZeta Beta TauZeta Psi

Page 3

For reproduction, comments, or thoughts on future educational columns, please contact the editor at:

edconsultant@willis.com

Chapter Website Risks (continued from page1)

The plaintiff’s actual damages are measured by any direct injury that plaintiff proves and any lost profits plaintiff would have earned but for the infringement. See Lindy Pen Co, 982 F.2d at 1407 (where proof of actual damage is difficult, a court may base damage award on defendant’s profits, on a theory of unjust enrichment). However, the fact that the infringer did not profit from the infringement does not preclude an award of damages. See Intel Corp., 6 F.3d at 621 (court determination of damages for mislabeling computer chips as those of faster manufacturer properly calculated by multiplying infringer’s sales by plaintiff’s lost profits and taking 95% of the product, based on inference that great majority of chips were counterfeit.)7

Assume the Chapter used the John Deere logo and word mark on T-shirts for a rush event. The T-shirts cost $3.00 to make and were sold for $10.00. John Deere would be entitled to recover all profits from the sale of the shirts and would probably be entitled to an injunction to prevent future sales. Once again, the cost of litigation would far exceed any profits from the sale of the T-shirts and could bankrupt the organization.

Defamation: Libel and Slander

Next, you decide to trash the members of a neighboring fraternity in your Chapter’s chat room. Your post states the Alpha Beta Chi’s are all a bunch of thieves and drunken scoundrels. No problem, right? Wrong. By posting this text with the knowledge that it is false, you may be liable for defamation.

“Defamation is an invasion of the interest in reputation. The tort involves the intentional publication of a statement of fact that is false, unprivileged, and has a natural tendency to injure or which causes special damage.”8 Defamation is commonly referred to as libel [a written form of defamation] or slander [an oral form of defamation]. 9

Damages for defamation can be substantial and may under certain circumstances include exemplary or punitive damages. For example: California Civil Code section 48a(4)(b) provides: “ ‘Special damages’ are all damages which plaintiff alleges and proves that he has suffered in respect to his property, business, trade, profession or occupation, including such amounts of money as the plaintiff alleges and proves he has expended as a result of the alleged libel, and no other.” Private-figure plaintiffs must prove actual malice to recover punitive or presumed damages for defamation if the matter is one of public concern. They are required to prove only negligence to recover damages for actual injury to reputation. (Khawar v. Globe Internat. (1998) 19 Cal.4th 254, 273–274 [79 Cal.Rptr.2d 178, 965 P.2d 696].)

Once again, the risks are high and the defense costs could be enormous. Fortunately, the Chapter’s liability insurance may provide a defense if an action is brought for defamation. However, that will depend upon the conduct and the damages sought. In California, for example, punitive damages are not covered by insurance.

Right of Privacy

In California, the four types of privacy torts are (1) intrusion upon one’s physical solitude or seclusion, (2) public disclosure of private facts, (3) false light in the public eye, and (4) appropriation of the plaintiff’s name or likeness.10 In the interest of time, we will only cover two of these four torts.

Misappropriation of Another Person’s Likeness or Image

Next, you decide to post some photos from the last big party at the Chapter House. Among those photos are images of some guests. A Chapter, like any other business uses its web site as an advertising vehicle to recruit new members. This 7 5 USC § 1117(a); Ninth Circuit Court Model Jury Instructions 15.258 Smith v. Maldonado (1999) 72 Cal.App.4th 637, 645; California Civil Instructions 17009 California Civil Code §§ 44-4610 Forsher v. Bugliosi (1980) 26 Cal.3d 792, 808; California Civil Instructions 1800, et seq.

is essentially a commercial purpose. So unless you have permission from your guests, you may be liable for misappropriating their likeness or image.

“A common law cause of action for appropriation of name or likeness may be pleaded by alleging (1) the defendant’s use

of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.”11 The remedies for the plaintiff may include monetary damages and injunctive relief. Punitive damages may also be appropriate.12

Casting Another Person in a False Light

Finally, you decide to post a series of photos from the party. Each photo shows your roommate and his girlfriend in a compromising situation. The implication is that both your roommate and his girlfriend have checked their morals, and their clothes at the door. No problem, right? Wrong. You may be liable for casting these two people in a false light.

In California, a common law cause of action for appropriation of name or likeness may be pleaded by alleging (1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.”13 Civil Code section 3344 complements the common law tort of appropriation.14

The remedy for the plaintiff may include monetary damages and logically could include an award for mental suffering and anguish.15 Under certain circumstances exemplary or punitive damages may be appropriate. See discussion above regarding punitive damages.

Conclusion

A Chapter’s website is an important tool for recruiting both New Members and keeping your Alumni involved in the Chapter. But even the simplest of actions may result in a lawsuit against the Chapter. A long time ago a friend once said: Think before you do! It may sound trite, but perhaps this is the best advice one can give a Chapter. What are you going to post? Where did it come from? Who owns it? Do you have permission to post it? Is the information true and accurate? Do you have permission from the people who are depicted in the photos to post them on the website? Do the photos depict people in a compromising scene? If you think before you post, the Chapter can avoid a number of serious claims, and in the end, it may avoid a lawsuit.

Stuart E. Jones lives and works in San Francisco, CA. He graduated from UC Berkeley and is a member of the Chi Phi Fraternity. Mr. Jones received his JD and LLM degrees from the University of San Francisco School of Law. Mr. Jones has served as a member of his local alumni board of directors for over 20 years. Mr. Jones has also served as a member of the Chi Phi Fraternity’s National Board of Directors for 8 years and is currently a member of the Chi Phi Fraternity’s Board of Governors.

11 (Eastwood v. Superior Court (1983) 149 Cal.App.3d 409, 417 California Civil Jury Instruction 1801, Com-ments. 12 Civil Code section 3294 provides, in part: “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”13 Eastwood v. Superior Court (1983) 149 Cal.App.3d 409, 41714 (Eastwood, supra, 149 Cal.App.3d at pp. 416–417.)15 (Miller v. National Broadcasting Co. (1986) 187 Cal.App.3d 1463, 1483–1484, citing Fairfield v. American Photocopy Equipment Co. (1955) 138 Cal.App.2d 82; California Civil Instructions 1800, et seq.

Make plans now to attend the 2010 Durward W. Owen Risk Management College presented by Pennington & Co., June 21-23 in Indianapolis, Indiana. The College will be held at the University Place Conference Center on the campus of Indiana University/Purdue University at Indianapolis. Two Tracks will be offered: Track I is designed for consultants and other front-line fraternity and sorority professionals. Track II is designed for executives and director-level staff. Volunteers and university professionals are also invited.

Featured speakers for 2010 include Linda Wright of Engle Martin Claims Administrative services, Dave Westol of Limberlost Consulting, Lori Hart Ebert, of Pi Kappa Phi Fraternity and CAMPUSPEAK, Jim Ewbank and Art Hoge, attorneys-at-law, and Tracy Maxwell of HazingPrevention.org.

Pre-conference programming will be presented by Dave Westol on Monday, June 21. Topics to be cov-ered include working with diffi cult chapters, rallying alumni support, and chapter closure.

Additionally, the College is pleased to provide an op-portunity to participate in supplemental education. Dr. Jason Kilmer will provide The Alcohol Skills Training Program on June 23. This popular program is offered during even years. Participants will learn about inter-vention content, curriculum, and delivery strategies.

For more information, including registration materials, please visit our website, www.frmtltd.org, or contact Bobbi Larsen, Education Consultant for Willis at (800) 736-4327 ext. 216 or blarsen@willis.com.

2010 Durward W. Owen Risk Management College presented by Pennington & Co.

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