Tuesday, June 24, 2014

Yelp, Inc. – The Online Review Saga Continues

I found this summary of a local northern Virginia business suing Yelp for leaving up false and damaging user reviews to be fascinating and I would love to see what the outcome is.  It has big implications for the whole online review process.  I'd like to see "trolls" get their come-uppance.

Yelp, Inc. – The Online Review Saga Continues
(By Matthew A. Lafferman, Alexandria Chamber Of Commerce newsletter)

In our March issue, we reported on two recent Virginia court cases dealing with false and damaging online reviews. There has been an important development in one of these cases, as of the parties, the online review website Yelp, has filed an appeal with the Supreme Court of Virginia.

Hadeed’s Defamation Suit
In Yelp, Inc. v. Hadeed Carpet Cleaning Inc., a carpet cleaning business based in Alexandria, Virginia, Hadeed Carpet Cleaning (“Hadeed”), filed a defamation lawsuit against seven anonymous individuals who posted on Yelp negative reviews about Hadeed. A day after filing suit, Hadeed issued a subpoena to Yelp to require it to identify those persons who posted the allegedly false statements. After Yelp refused, the trial court ordered Yelp to identify the individuals.

Court of Appeals Decision
Subsequently, Yelp appealed the ruling to the Virginia Court of Appeals on the grounds that permitting subpoenas requesting the identity of anonymous online posters violated the free speech clause of the First Amendment to the U.S. Constitution. In January 2014, however, the appeals court upheld the trial court and ordered Yelp to identify the individuals to Hadeed. In doing so, the court explained that anonymous speech is not entitled to First Amendment protection when the speech is false or defamatory.  

Furthermore, the court of appeals found that Hadeed had met the standard for issuing the subpoena by showing it had a legitimate, good faith basis for believing that the reviews were false. The court relied upon the fact that Hadeed had submitted evidence to the court that the persons who had posted the reviews had not even been Hadeed’s customers. 

Appeal to Virginia Supreme Court 
Yelp has now filed a petition for appeal with the Supreme Court of Virginia, asking the Supreme Court to overturn the Court of Appeals’ order. Yelp contends that allowing the appellate court’s order to stand would allow a company to discover an anonymous online poster merely by telling a court that the business’ “critics are not customers.” Yelp further argues that in many other states where courts have considered the issue, the state courts have protected the identity of anonymous posters unless the party seeking the information can produce evidence that the online posting is false, which Hadeed has failed to satisfy.

In opposing Yelp’s appeal, Hadeed argues that Virginia law correctly balances the interests of anonymous speakers with the interests of a person or business responding to false online postings.  Requiring a party to prove falsity before learning the identity of those who posted the reviews, Hadeed argues, would give anonymous online posters a “license to defame.”

Impact of the Appeal
Either way, a Supreme Court decision will shape how businesses keep customer records and utilize online review platforms. If the Supreme Court overturns the Court of Appeals’ decision and requires greater proof of falsity before a business can learn the identity of online posters, many businesses may require more detailed information from customers in an effort to more effectively identify and respond to false reviews. On the other hand, if the court upholds the decision, some former customers may be discouraged from posting negative reviews on websites out of fear of potential lawsuits. This could substantially reduce the usefulness of these online review websites for businesses to promote their products and services. Accordingly, all Virginia businesses need to keep abreast of further developments in the case.

Matthew Lafferman is an associate attorney in the Alexandria law firm of DiMuroGinsberg, P.C. 


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