Indemnity clauses leave freelancers open to lawsuits
Forbes contributor Dolia Estevez is on her own.
Two years ago, Estevez identified a former spokesperson for Mexican president Felipe Calderon as one of the “10 most corrupt Mexicans of 2013” in a story she wrote on the Forbes website. The spokesperson sued Forbes and Estevez under New York law.
The claims were various: one for defamation, against Forbes and Estevez together; one for intentional infliction of emotional distress, against Estevez only; and two for interference with business relations, against Estevez only. The spokesperson demanded money damages.
Instead of defending its contributor, as it would have if she were a staff writer, Forbes told Estevez she was on her own, invoking a provision of its standard freelance contract stating that web writers are “responsible for any legal claims arising” from their work. Another provision says that web writers must “indemnify Forbes and hold (it) harmless against any liability, cost or expense…incurred as a result of” their work.
Unsure what to do, Estevez reached out to Charles Glasser, a consultant and former global media counsel at Bloomberg News, and together they persuaded Ronald White, a litigator at the Morrison Foerster law firm, to take the case—which is ongoing. Glasser and White are handling it pro bono, with the support of White’s firm.
“[Estevez] needed help,” Glasser said. “She was suddenly on her own, and the other side has aggressive, skilled lawyers—and we believe her story was accurate and that its posting was in the public interest.”
When contacted, Mia Carbonell, senior vice president of corporate communications at Forbes said in an email that, "Forbes’ counsel is cooperating with Ms. Estevez’s counsel in defending these claims against Ms. Estevez and Forbes Media LLC. Our joint motion to dismiss the complaint was filed with the court on April 16, 2015."
(That they are "cooperating" and filed a joint motion does not mean that Forbes chose to defend Estevez and does not change the fact that Forbes could require Estevez to indemnify the company for any costs.)
Even if Estevez wins, the next journalist might not — in part because the next one might not be lucky enough to land a white-shoe legal team, pro bono. And, regardless of its outcome, the case exemplifies a problem in the freelance market: the pervasive use of liability waivers and indemnity clauses.
A small domino
Those clauses tell a freelancer that if the outlet gets sued, the freelancer will hold it harmless and make it whole financially; and that the freelancer is on her own if she gets sued. It’s nothing new for contracts to include that kind of language, but as more outlets adopt freelance models for content, and more laid-off journalists and newbie bloggers enter the market, some worry that it would take a small domino to knock down a person’s life.
"Other than making sure you get paid, these clauses are the biggest danger for freelancers, the biggest thing they should worry about," said Randy Dotinga, president of the American Society of Journalists and Authors, which represents more than 1,000 freelance writers.
"The risk that something could go wrong is small, but the damage could be very high," he added.
And the clauses are ubiquitous. Consider the handful featured below, excerpted from standard agreements used by (1) Hearst, (2) The New Republic, (3) Columbia Journalism Review, (4) and the Huffington Post. The terms vary slightly, but the general idea holds from one to the next.
Some writers ask publications to remove the clauses and even walk away if they refuse. But Dotinga, who freelances for Voice of San Diego and Kaiser Health News, among others, worries that many writers simply sign the contract, unaware of the liability and simply grateful to have a job.
“It is possible to negotiate them and make them go away, but writers have to figure out how much of a risk they may be facing and whether it’s worth it to fight that fight,” he said.
Barry Yeoman is a full-time freelancer recognized for his investigative reporting on the poultry industry, for-profit colleges, and abortion issues. He knows those topics are controversial, and so do his editors. Whenever he gets a new contract, he asks for the liability and indemnity clauses to read:
The Writer guarantees that the Article will not contain material that is consciously libelous or defamatory. In return, the Publisher agrees to provide and pay for counsel to defend the Writer in any litigation arising as a result of the Article.
Some editors have never even read their own freelance contracts, Yeoman said, and they are often surprised by the reach of the clauses. The worst, he added, require the author to cover his own legal costs and those of the publication—for all claims, not just reasonable ones.
“If a freelancer is going to take an assignment with any investigative component, or is in any way controversial, anyone can huff and puff and threaten a lawsuit even if there's no basis whatsoever,” Yeoman said. “So, to require a journalist to pony up at the first threat, no matter how baseless, is not only unethical for the publication but completely impractical. It's prohibitive for the freelancer.”
Despite emails to editors at The New Republic, BuzzFeed, the Huffington Post, Slate, and Wired—to discuss their use of liability waivers and indemnity clauses—the editors either said they were not in a position to discuss their outlet’s contracts or did not respond.
Dennis Giza, the deputy publisher of the Columbia Journalism Review, said that indemnity clauses are standard in Columbia University contracts with freelancers, including CJR. He said they are conducting an internal review of all writer contracts to strike the “proper balance of rights and protections for both CJR and our writers.”
“We do work with writers who are uncomfortable with any portions of our contract to work out reservations if possible, but to be honest such requests have been rare,” he wrote in an email.
Amy Ginensky is chair of First Amendment and communications practice at Pepper Hamilton in Philadelphia and is the outside First Amendment counsel for The Philadelphia Inquirer. She said she did not recall indemnity clauses coming up in litigation she has handled, but believes generally the clauses would hold up in court. "Reporters are intelligent people, and they sign the contract," she said. "When people sign the contract, they are agreeing to what's in it."
Ginensky said a content portal, like YouTube, simply publishes whatever someone uploads. But that's not the same with freelancers who work with editors, because then the publication is directly involved.
Practically, the indemnity clauses may not give employers much protection, simply because most reporters can't financially afford big payouts. And if there is a suit, both the publisher and the reporter, regardless of the clause, will be at risk against the party who is suing.
"I see the point of the clause, because as a writer, you should feel very responsible—that you are on the hook for putting this story out there," she said.
“Freelancers just get left out”
To be a freelancer today is not a monolithic concept—it encompasses Huffington Post bloggers, Forbes contributors, and journalists who are employees in all but their benefits package. There is a spectrum here.
In fact, the Forbes agreement also includes language that says the media company is trying to treat its freelancers as users and itself as a mere content host—to minimize the company’s liability for that content. In other words, contributors are to Forbes what uploaders are to YouTube.
Insurance is part of the equation, too. First, the freelance market is somewhere between uninsured and underinsured. Which means if the average freelancer is sued, she might not be able to afford a defense. And if she loses, it could jeopardize her home, car, and future wages. Correspondingly, the fear of risking those things could have a chilling effect on critical reporting.
(Some homeowner’s insurance policies include libel coverage, but those policies normally aren’t effective for a full-time journalist, who gathers and reports the news for significant financial gain. That’s relevant because many such policies include a “business activities” exclusion that precludes coverage if the insured person makes an allegedly defamatory statement in the course of an activity done for significant economic gain.More information on liability insurance for freelancers can be found in this Forbes article.)
Second, traditionally media outlets that get sued have preferred to control the defense and to keep the outlet's interests aligned with those of the journalist. However, if the outlet's liability insurance doesn't cover freelancers, it could decide not to foot the bill for a freelancer’s separate defense.
“It's quite typical for media policies to cover defense costs of individual employees and judgments against them personally,” said Jeff Hermes, deputy director of the Media Law Resource Center. “Freelancers just get left out.”
Why is that?
Hermes said it’s probably an underwriting judgment.
“[It’s a reflection of] whether it's more likely that freelancers will need separate counsel, given the increased potential for a divergence between the interests of the outlet and the freelancer,” he said. “It's significantly more likely that a freelancer will point a legal finger at an editor than an employee will, and vice versa.”
As noted above, Estevez's legal team filed a motion to dismiss, with Forbes, on April 16, and Glasser said he’s confident that the story will be protected by both the federal and New York constitutions. He added that there is no animosity between Forbes and Estevez.
“She understands the agreement she signed, and her relationship with Forbes is great,” Glasser said. “We’re proceeding separately, but we’re working with Forbes to some degree. We have mutual interests in defending the story and the First Amendment principles.”
And yet Forbes apparently has no interest in defending the story’s author, the person exercising those principles.
Examples of indemnity clauses
1) Hearst: "You hereby agree to indemnify Hearst and its licensees and assignees from any and all claims, demands and liabilities (including reasonable counsel fees) arising out of or resulting from the breach or claimed breach of the foregoing representations and warranties and you further agree to assist and cooperate with Hearst in its defense of any claims pertaining to the Work. You further agree that this Agreement shall be binding upon you and your heirs, successors and assigns."
2) The New Republic: In the event any complaint or claim relating to the Article/Blog is made by any third party at any time, whether by a formal legal complaint or otherwise, Author shall fully indemnify Publisher and hold Publisher harmless with regard to all costs, expenses, damage, and losses (including reasonable attorneys fees) arising from that complaint or claim, and will fully cooperate with Publisher in responding to and defending against such complaint or claim.
3) Columbia Journalism Review: You hereby agree to release, discharge, indemnify and hold harmless CJR from any and all claims and demands arising out of or in connection with breach of any of the warranties and representations set forth herein or the use of the Articles, including without limitation any and all claims for copyright or trademark infringement, libel or invasion of privacy. CJR shall be entitled but not obligated to assume and control the defense and settlement of any such indemnified claim.
4) Huffington Post: If you violate any of the Blogger terms, or we receive an inquiry or complaint about your post, you agree that you are responsible, and you agree to indemnify and hold harmless Huffington Post for all resulting claims and liabilities. This agreement is governed by New York law, and if we have a dispute about it, or about any content that you submit to us, the dispute will be resolved only in the courts of New York. We may provide you notices about the Huffington Post Blogger Program and these terms by e-mail. These terms make up the entire agreement between you and us and cannot be changed unless we agree to it in writing.
5) Philadelphia Inquirer: You agree that you will be the sole author of the works
transferred to PNI, which will be original works of authorship by you,
free of plagiarism. You agree to use reasonable care to ensure that
all facts and statements in the transferred works are true and that
they do not infringe upon any copyright, right of privacy, proprietary
right, right of publicity or any other right of a third party.
Disclosure: Poynter.org is currently creating an updated independent contractor agreement for freelancers, and it currently plans to include an indemnity clause.
Dawn Fallik is a visiting professor at the University of Kansas. She was a staff medical reporter at The Philadelphia Inquirer and freelances for The New Republic, The Wall Street Journal and Al-Jazeera America, among others.
Jonathan Peters is an assistant professor of journalism at the University of Kansas, where he teaches media law and holds a research position in the Information & Telecommunication Technology Center. An attorney and the press freedom correspondent for the Columbia Journalism Review, Peters has written on legal issues for Esquire, The Atlantic, Slate, The Nation, Wired and PBS.