Is the Exposure of a Company's Representative Director's Affair Defamation (Infringement of the Right to Honor)?

There are cases where information about the infidelity of a company’s CEO is ‘exposed’ by online media or individuals. Is such ‘exposure’ legally permissible? In other words, does the party being ‘exposed’ have to tolerate the publication of such information because they are the CEO of a company? Is it not possible to request the deletion of the article, identify the poster, or claim damages against the publisher?

Regarding this issue, there is no Supreme Court decision that provides a clear criterion. However, various lower court decisions have provided certain ‘criteria’. The conclusion is as follows:

• The exposure of a listed company CEO’s infidelity is, in principle, legal (requests for deletion, identification of the poster, and claims for damages are not recognized).
• The exposure of an unlisted company CEO’s infidelity is, in principle, illegal (requests for deletion, identification of the poster, and claims for damages are recognized).

It is believed that this is the case. This article will explain this ‘criterion’, including what kind of cases would be ‘exceptions’ to the above ‘principles’.

Framework for Judging Defamation and ‘Public Interest’

The exposure of a company’s CEO’s affair has been a topic of concern in past court cases, mainly in relation to defamation (infringement of the right to honor). In simple terms, defamation (infringement of the right to honor) is established when:

1. A specific matter is exposed,
2. That matter is such that it can lower the ‘social evaluation’ of the person written about, and
3. There is no ‘public interest’ in the matter, or the content is not ‘true’

If the topic is ‘the CEO’s affair’, then:

1. The matter of ‘the CEO is having (or had) an affair’ is sufficiently specific,
2. An affair, as a so-called act of infidelity, is illegal under the Japanese Civil Code, and the fact that one is having (or had) an affair is something that lowers ‘social evaluation’, and
3. If the affair is true, defamation (infringement of the right to honor) is established only if ‘public interest’ is not recognized

It should be noted that if the affair itself is not true, defamation (infringement of the right to honor) is established regardless of the presence or absence of public interest. However, this case is omitted in this article. For a detailed explanation of the overall picture of defamation (infringement of the right to honor), please refer to the article below.

https://monolith.law/reputation/defamation[ja]

‘Public interest’, in a nutshell, is the issue of whether there is a ‘necessity’ for the article to be published to an unspecified number of people on internet media articles or social media posts.

Exposure of an Affair by the President of a Listed Company is Generally Legal

In defamation lawsuits related to the infidelity of a company’s CEO, as indicated at the outset, whether the company is a listed or unlisted company is considered a crucial factor in the judgment.

In the case of listed companies, for example, there is a provisional disposition decision as follows, regarding a case where the plaintiff, who is the CEO of a company listed on the Tokyo Stock Exchange Prime Market, was “exposed” for providing financial support in return for dining and dating a woman, a practice known as “sugar dating,” and for staying at a hotel with her.

Considering that the (Corporation), where the creditor serves as the CEO, is a listed company that offers its shares to institutional and individual investors for trading, and moreover, that its market is the prime market where leading companies in our country are listed, it can be said that the personal background, career, and actions of the creditor, who is the CEO, are of significant public interest to the shareholders of the (Corporation), institutional and individual investors, and other public entities. In addition to this, given that infidelity is socially condemned, the content of this article can be said to be a matter of public interest.

Tokyo District Court Decision, August 19, Reiwa 4 (2022)

The basic logic is as follows:

1. Infidelity is a private matter
2. However, in the case of a listed company, its shares are the subject of trading by investors, and the actions of its president are of significant interest to the general public through the fact that the shares are the subject of trading
3. Therefore, infidelity is also a matter of significant interest to the general public, and its public nature is recognized (therefore, defamation does not occur)

This is the reasoning.

Exposing the Affair of a Private Company’s President is Generally Illegal

In the case of private companies, the principle of “public interest” is generally denied. Therefore, exposing an affair can be considered defamation (an infringement of the right to honor).

For example, the Tokyo District Court on August 20, 2013 (Heisei 25) stated, “It is clear that the fact of an affair or other private life matters cannot be considered matters of public interest, given that the plaintiff is the representative director of a private company,” thereby denying public interest.

Also, the Tokyo District Court on March 20, 2015 (Heisei 27) regarding the affair of a dental clinic director, stated, “Even if the person is the director of a dental clinic and has a certain social status, the fact that the person is having an affair has nothing to do with his or her skills as a dentist or treatment at the dental clinic, so it is difficult to recognize the facts stated in this post as matters of public interest,” similarly denying public interest. We have provided an explanation of this case in the following article.

As for the comparison with listed companies, as mentioned above, listed companies have the personalityistic of “their stocks being the subject of buying and selling for an unspecified number of people,” but this personalityistic does not exist in private companies. Therefore, the argument is that there is no “public interest” in matters related to the private life of the representative director (or hospital director), who is a private individual.

https://monolith.law/reputation/semi-public-figure-right-to-privacy[ja]

What are the exceptions to the ‘principle’?

Judicial precedents take into account detailed circumstances

However, many judicial precedents consider not only whether a company is listed or not, but also take into account certain detailed circumstances. This suggests that depending on these circumstances, the above principle may be overturned, and the conclusion may differ from the simple dichotomy of ‘listed or unlisted’.

Even if it is unlisted, it has a significant impact on society

The Tokyo District Court’s decision on March 4, 2014 (Heisei 26) (2014) regarding the ‘exposure’ of a daily newspaper company’s representative director having an affair with a female employee,

Since the daily newspaper has a significant influence not only on the business world but also on Japanese society as a whole, the representative director of the newspaper company (the plaintiff) who publishes it has a significant influence on Japanese society, including the business world, due to his position. In particular, it is strongly condemnable for a member of society to have an inappropriate relationship with a female employee who is his subordinate, and the actions of the plaintiff affect society regardless of public or private, and are related to the public interest.

Tokyo District Court, March 4, 2014 (Heisei 26) (2014)

It affirms the public nature and therefore denies defamation (infringement of the right to honor).

Although there is some ambiguity in the meaning of ‘significant influence’ mentioned here, it seems that the judgment focuses on the nature of the ‘newspaper’ business, which delivers speech to an unspecified number of readers, rather than simply the size of the business (sales, number of employees, etc.).

Conflict of interest transactions with the mistress, etc.

The Tokyo District Court’s decision on April 25, 2018 (Heisei 30) (2018) is a judicial precedent regarding the affair of a representative director of a listed company, but it is not just an ‘affair’, but a case where a conflict of interest transaction is being conducted with the mistress. The judgment states that this ‘exposure’ is clearly a fact related to the public interest as it points out problems in the company’s business management and compliance.

If an affair is not just a private act but involves a conflict of interest transaction, etc., which also affects the company’s compliance, that element is considered to enhance the ‘public nature’.

The affair is being conducted with an internal employee

Also, in the same judgment, it is mentioned that

• The mistress has been appointed as a director of the listed company
• He had physical relationships with several women he liked within the company

These points are also raised.

The case of the daily newspaper company mentioned earlier was also a case where ‘exposure’ was made that the affair was with an employee, favoritism based on a male-female relationship was practiced, and other employees who criticized the woman were demoted.

If an affair is being conducted with an internal employee, it is harder to say that it is ‘purely private’ compared to when it is not, and that element is considered to enhance the ‘public nature’.

Exposure of Infidelity and Infringement of Privacy Rights

As a side note, the exposure of infidelity can also be a problem in relation to the infringement of privacy rights.

Whether the exposure of infidelity is illegal as an infringement of privacy is determined by the Supreme Court precedent (Supreme Court decision on March 14, 2003 (Heisei 15) Minshu Vol.57 No.3 p.229), which compares “the legal interest of not having the fact disclosed” and “the reason for disclosing it”, and judges whether the former outweighs the latter.

There are some cases where the legality of articles about the infidelity of a company’s CEO has been disputed, and the plaintiff has claimed an infringement of privacy rights, and the court has made a judgment on this point.

As for whether privacy is illegally infringed, as mentioned above, a comparative consideration is made between the need for privacy protection and the benefit of disclosing it. In this judgment, factors such as the attributes of the subject, such as being a company’s CEO, and the nature of the company’s business, are taken into account. However, there is basically no qualitative difference from the case of infringement of the right to reputation, and it is believed that this legal difference does not result in a qualitative difference in the conclusion.

Conclusion: Consult a Lawyer for Removal of Adultery Articles

As stated above, it is not necessarily inevitable that, just because one is a representative director of a company, they should be subjected to “exposure” regarding their adultery. At least in the case of unlisted companies, it is a principle that there is no reason to tolerate such exposure, and even in the case of listed companies, it is conceivable that there could be cases where such “exposure” becomes illegal depending on other factors and the content of the description.

Since the judgment of defamation (infringement of the right to honor) and invasion of privacy rights is specialized, it is important to consult with a lawyer who has experience and know-how when you have been subjected to such information exposure.

Introduction to Our Firm’s Measures

Monolith Law Office is a legal office with high expertise in both IT, particularly the internet, and law. In recent years, information related to reputational damage and defamation spread on the internet has been causing serious harm as a “digital tattoo”. Our firm provides solutions for dealing with these “digital tattoos”. Details are provided in the article below.

Areas of practice at Monolith Law Office: Digital Tattoo[ja]