A construction contractor and its owner recently filed a defamation lawsuit in Virginia state court against their former customer (Dietz Dev., LLC v. Perez, No. 2012-16249 (Va. Fairfax Cty. Cir. Court)). The suit stemmed from the customer’s reviews of their work that she posted on the Internet through Angie’s List and Yelp, two high-traffic business rating and review websites. The plaintiffs seek $500,000 in damages and $250,000 in punitive damages, and the judge reportedly granted a preliminary injunction requiring that certain accusations in the reviews be deleted.
The case has received a great deal of (predominantly negative) media attention, likely due to the large damages claim. However, most articles ignore the plaintiffs’ alleged facts that may explain the judge’s preliminary injunction ruling. At any rate, the case provides an opportunity to look at the impact and potential consequences of online commentary, as well as lessons for businesses, people who post reviews, and consumers generally. Dealing with negative customer reviews is quickly becoming a significant and delicate issue for businesses, while consumers increasingly look to those online reviews for information about a business’ products or services before purchasing or hiring.
The plaintiffs in the Virginia lawsuit filed a short complaint to support their defamation and preliminary injunction claims. The background allegations included:
- Both plaintiffs (the company and its owner) previously maintained good reputations;
- The plaintiffs’ reputations overlap;
- The company depends on its reputation for the development of additional business;
- The company’s owner and the defendant were high school classmates;
- The defendant hired the company to perform some cosmetic repairs to her home;
- The company performed the work in a workmanlike manner during the time it was permitted on the defendant’s property, but the defendant failed to pay any money for the work performed;
- The defendant demanded that the company perform additional work—beyond what was in their agreement—for free;
- The defendant became upset when the company refused to perform the additional work, and she locked the company out of the job site; and
- The company’s owner, individually, filed a lawsuit against the defendant for unpaid invoices, but, because he failed to file a Bill of Particulars, the court granted the defendant’s motion for summary judgment.
Over half a year after the plaintiffs performed the work on her home and after the unpaid invoices lawsuit ended, the defendant then posted her negative reviews on Angie’s List and Yelp. According to the plaintiffs, the defendant’s reviews stated: plaintiffs had committed the crimes of theft and trespassing, were intentionally untruthful in billing, were unprofessional, caused unrepaired damage to her house, were unable to perform their work, and a court had found there to be no merit in the owner’s claim that defendant owed money for the work. The plaintiffs claimed that those statements in the reviews were false and that the defendant made them out of malice toward plaintiffs due, at least in part, to her desire to avoid paying for their work.
Finally, the plaintiffs claimed damage from the defendant’s statements, including lost work opportunities, insult, anxiety, harm to their reputations, mental suffering, and being placed in fear. They seek compensation for loss of work opportunities in an amount estimated at $500,000, as well as punitive damages in the amount of $250,000. The plaintiffs also alleged that it is in the public’s interest to preserve the business reputation of a party to a contract against the wrongful accusations of the other party.
Lessons for Reviewers, Consumers, and Businesses
The Virginia lawsuit is not unique and will certainly not be the last case that pits a reviewer against a reviewee. However, it provides some useful general lessons for all parties involved in online reviews. It also is relevant to virtually every business and anyone who posts a review on the Internet.
First, individuals who post reviews should be aware that they are not immune from defamation lawsuits and that they need to think before they post. It sounds simple, but emotions can run high, as was obviously the case in the Virginia lawsuit. The Internet is incorrectly perceived by some individuals as a virtual bulletin board where one can freely speak his or her mind without any possible consequences. The Virginia lawsuit is an example that vividly demonstrates how there may in fact be severe consequences. However, the damages sought by the plaintiffs in the Virginia lawsuit are likely inflated. There is little in the complaint to support the specific amount sought, and it is necessarily based upon hypothetical estimates of lost business. In fact, in plaintiffs’ injunction claim, they allege that entering an injunction to cause plaintiff to remove her statements would prevent a situation where plaintiffs would be forced to estimate speculative future losses.
Second, consumers should remember that online review sites can be abused—both by reviewers and businesses. Competitors or the business itself can post fake reviews. Therefore, as with virtually everything on the Internet, consumers should take a measured view when considering the veracity of online reviews.
Third, businesses should think about periodically monitoring sites that review them, especially those that allow users to post reviews. Yelp states on its website that it “had an average of approximately 84 million monthly unique visitors in Q3 2012″ and that “Yelpers have written over 33 million local reviews.” Angie’s List states on its website that “[o]ver 1.5 million households check Angie’s List before they hire” and that their “[m]embers submit 65,000 new reviews each month in” various service categories. Businesses should obviously take an interest in how they are being portrayed on these high-traffic websites.
Additionally, businesses should investigate the various avenues for dealing with a negative review. Avenues could include improving their business practices, posting a response (if possible), or asking that the review be removed. In some instances, it could also include contacting an attorney to discuss options, up to and including filing a lawsuit. The evolving area of online reviews is affected by a number of laws, including the Communications Decency Act, state anti-SLAAP statutes, varying state defamation laws, and the constitutional right of free speech. However, businesses must also think about the potential negative consequences of any actions they take. For example, news articles have negatively portrayed companies who decide to file such lawsuits (whether justified or not) and the plaintiffs in the Virginia lawsuit reportedly received some consumer backlash for filing their complaint. At the least, businesses should stay tuned.
(The author of this post is admitted to practice law in the state of Illinois.)
January 17, 2013