Standoff over social media passwords breaks new legal ground

HOUSTON (AP) — A Texas man used social media to promote his gun store, posting politically charged messages that criticized the president and promoted Second Amendment rights.

But after losing ownership of his suburban Houston store in bankruptcy, Jeremy Alcede spent nearly seven weeks in jail for refusing a federal judge’s order to share with the new owner the passwords of the business’ Facebook and Twitter accounts, which the judge had declared property.

“It’s all about silencing my voice,” said Alcede, who was released in May after turning over the information. “… Any 3-year-old can look at this and tell this is my Facebook account and not the company’s.”

Alcede’s ultimately failed stand charts new territory in awarding property in bankruptcy proceedings and points to the growing importance of social media accounts as business assets. Legal experts say it also provides a lesson for all business owners who are active on social media.

“If your business is something you feel very passionately about, it can be hard to separate those things,” said Benjamin Stewart, a Dallas-based bankruptcy lawyer. “The moral for people is you have to keep your personal life separate from your business life.”

U.S. Bankruptcy Judge Jeff Bohm, who handled Alcede’s case, acknowledged “the landscape of social media is yet mostly uncharted in bankruptcy,” and cited a 2011 New York bankruptcy court case that treated such accounts like subscriber lists, which “provide valuable access to customers and potential customers.”

Other cases in the U.S. and abroad have touched on similar issues. In 2012, a South Carolina Internet company settled a lawsuit filed against a former employee it had said cost them thousands of dollars in lost business when he took 17,000 Twitter followers with him. A Pennsylvania federal court in 2013 ruled in favor of a woman who had sued after her former employer took over her LinkedIn account following her firing.

That same year, a British court approved a company’s request to temporarily stop a group of ex-employees from using the firm’s LinkedIn contacts to start a rival business. The employees claimed the LinkedIn accounts and contacts were personal.

Villanova University School of Law professor Michael Risch said Facebook and Twitter accounts, among other social media platforms, are now seen as property by companies.

“I suspect that’s what the judge was looking at, is this primarily an asset being used for business advertising to get customers to talk about what is going on with the company,” said Risch, who specializes in Internet law. “It might have started out as a personal (account) but turned into a business property.”

Alcede, however, remains defiant, even after his release from jail, saying his refusal to hand over the passwords was not about keeping his Facebook page but fighting tyrannical big government.

He said his Facebook posts and tweets criticizing President Barack Obama and supporting gun owners’ rights were his personal views and not done to promote the business. But Bohm ruled in April that the gun store’s social media accounts were not personal but used to boost sales, citing a tweet in which Alcede told his followers he was at a gun trade show as an example of something that would attract customers because it showed him as a “connected insider in the gun-buying community.”

Control of the store and social media accounts was given to Steven Coe Wilson, Alcede’s former business partner. Bohm’s ruling described Alcede as a “disgruntled former business partner” trying to control assets that no longer belonged to him.

Alcede, who in June filed a motion to revoke the bankruptcy plan, had argued the accounts weren’t listed as assets in the bankruptcy court filings. He told The Associated Press he only turned over the passwords so he could deal with various personal issues, including health problems he developed while jailed.

Wilson said in an email he couldn’t comment until Bohm releases the company from bankruptcy. Richard Kincheloe, Wilson’s attorney, did not return phone calls seeking comment, but said at an April court hearing that the issues related to the social media accounts were “not about what someone is allowed to say. It’s about paying creditors.”

If the new owners could not access the business’ accounts and send messages to followers, it could impact the store’s profits, making it less valuable, Stewart said. While having Alcede spend seven weeks in jail over the passwords was “harsh,” Stewart said that in the end, Alcede held the key to his freedom.

“You have to strike a balance between making sure people respect the court’s authority and giving people the right to make their own decision and accept the consequences if that is the way they want to go,” he said.