Can a Business Sue for a Bad Review?

The Confluence of Free Speech and Free Enterprise

In the digital age, the culture surrounding how a business is “reviewed” by a customer or patron has become one of the most determining factors of a businesses’ success. The growing popularity of websites such as Yelp, Google, Bing, and other services which allow people to rate and review businesses has in turn resulted in a surge in the importance and impact that these reviews can have. With reviews now becoming the driving force behind influencing where consumers choose to take their business to, it is more essential than ever to understand what options a business has after receiving a negative review.

Defamation

One of the more common causes of action which businesses bring forth against the poster of a negative review is for defamation. Although the definition of “defamation” varies from state to state, it generally encompasses a false and unprivileged publication which “exposes a person to hatred, contempt, ridicule, or which is injurious to such person’s occupation.”[1] Defamation can be in the form of a written publication, known as libel, or a spoken publication, known as slander.[2] In the context of reviews that are published about a business, the applicable form of defamation is “libel.” Although bringing a libel case against someone typically requires a plaintiff to show damages which result from the libelous statement, such as showing is not required if the statement is defamation per se.[3] Examples of libel per se are statements that: “(i) relate to the person’s business or profession to the person’s detriment; (ii) falsely claim that the person committed a crime of moral turpitude; (iii) imputes unchastity on the person; or (iv) claim that the person suffers from a loathsome disease.”[4]

Often, a negative review that is published about a customer’s experience with a business could constitute defamation per se, as such a review would relate to the plaintiff’s business or profession. However, there are several privileges and defenses that a defendant has available with regards to defamation claims making an effective defamation case difficult. In the context of a negative review, statements that are merely one’s opinion, hyperbole or which are understood as mere ridicule, rather than an allegation of fact, are subject to the “Opinion and Fair Comment Privileges” and are therefore not deemed to constitute a defamatory statement.[5] Additionally, truth and the substantial truth are absolute defenses against a finding that a statement is defamatory.[6]

Despite the potential availability of certain privileges or defenses, in cases where the person who published statement had fabricated the events surrounding the review or had otherwise falsified parts of the review, there is a greater likelihood that an injured business owner may prevail in a defamation claim against the reviewer. One such example occurred in 2016 when Florida’s Fourth District Court of Appeal awarded a business owner $350,000 for a negative review in which the business owner was able to prove that the reviewer had falsified information related to the review.[7]

First Amendment Protection

The First Amendment to the Constitution of the United States prohibits the making of any law which abridges the freedom of speech.[8] When one party sues another in response to a party’s publication of speech, such suit is often referred to as being a “strategic lawsuit against public participation” or “SLAPP”. In an effort to defend the citizen’s right to the exercising of their freedom of speech, states across the country have in turn passed what are generally referred to as “Anti-SLAPP” statutes, which are intended to provide protection in cases where a lawsuit has been brought against a party primarily to chill the valid exercise of the constitutional rights of freedom of speech.[9] In such cases, where a defendant is able to prevail on an Anti-SLAPP motion, the plaintiff would in turn be liable for the defendant’s attorney’s fees, court costs, and other expenses.[10]

The Consumer Review Fairness Act of 2016

Considering the increased vulnerability that businesses had become exposed to as a result of negative reviews, businesses have often turned to including or embedding non-disparagement clauses within certain agreements and licenses. The intent and effect of such clauses are to restrict a consumer’s ability to publicize negative and disparaging statements against a business. As a response to such oppressive actions against consumers, the Consumer Review Fairness Act of 2016 (CRFA)[11] was passed which solidified consumers’ “right to Yelp” and effectively invalidated non-disparagement clauses in certain “form contracts.”[12] Additionally, the CRFA makes it unlawful for a person to offer or enter into a form contract containing a non-negotiable non-disparagement clause.[13] The CRFA further empowers the Federal Trade Commission (FTC) with investigating and enforcing the act by providing the FTC with the ability to bring forth an action against a party who has violated the CRFA with causes of action such as unfair or deceptive acts or practices.[14]

Dealing with the Review Platforms

Besides dealing with the actual poster of a negative review, another common avenue that business owners looked to are the platforms in which the review is published on. Before the CRFA was passed, certain business review platforms such as Yelp had begun taking matters into their own hands. In 2012, Yelp starting issuing “Consumer Alerts” through it’s “Yelp’s Consumer Protection Initiative” which alerted visitors to a businesses’ profile that the business owner had previously threatened a reviewer with legal action.[15]

Additionally, business owners had often sought out to obtain the identity of anonymous negative review posters through subpoenaing records which would reveal such poster’s identity. Although ultimately reversed on jurisdictional issues, the Court of Appeals of Virginia held that the anonymity of the poster of a review can in fact be upheld if the reviews were in fact lawful.[16] However, such anonymity may not be upheld in cases where a plaintiff has a legitimate, good faith belief that such reviews are defamatory, such as is the case when the reviewer had not actually been a customer of the business.[17]

Lastly, have been the attempts for business owners to sue the review platforms themselves for having the published defamatory statements against them. However, after years of litigation, the California Supreme Court held in the landmark case Hassel v. Bird[18] that review platforms, such as Yelp in this case, are not liable for defamatory statements posted on their service due to the immunity granted to content service providers under Section 230 of the Communications Decency Act.[19]

Ultimately, it is an uphill battle for businesses to sue for a bad review. While some have been successful, case law, the burden of proof, and the level of anonymity make it difficult to sustain even a bona fide claim for defamation as a result of a falsified bad review.

[1] Cal. Civ. Code §§ 45-46. [2] Cal. Civ. Code § 44. [3] See Yow v. National Enquirer, Inc. 550 F.Supp.2d 1179, 1183 (E.D. Cal. 2008). [4] Restatement (2nd) of Torts, §§570-574. [5] See Leidholdt v. L.F.P. Inc., 860 F.2d 890 (9th Cir. 1988). [6] See Time Inc. v. Hill, 385 U.S. 411 (1967). [7] See Blake v. Giustibelli, Case No. 4D14-3231 (Florida 4th DCA, January 6, 2016). [8] U.S. Const. amend I. [9] California Code of Civil Procedure § 425.16. [10] Id. [11] 15 U.S. Code § 45(b). [12] 15 U.S. Code § 45(b)(a)(3). [13] 15 U.S. Code § 45(b)(c). [14] 15 U.S. Code § 45(b)(d). [15] Vince Sollitto, Protecting Free Speech: Why Yelp is Marking Businesses That Sue Their Customers, Yelp Official Blog (July 25, 2016)  https://blog.yelp.com/2016/07/protecting-free-speech-yelp-marking-businesses-sue-customers [16] See Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 752 S.E.2d 554 (2014). [17] Id. at 560. [18] Hassell v. Bird, 420 P.3d 776 (Cal. 2018). [19] 47 U.S.C. § 230.