Online Reviews and Defamation

Online reviews of businesses and professionals on sites such as Yelp are standard practice these days. The explosion of easily searchable information on everything from your local coffee shop to a dentist to perform your root canal can be very beneficial for consumers and businesses alike. Consumers can find out what they need to know before they make a decision about where to take their business, while businesses get publicity for their brand and services that consumers can easily find.

Negative reviews can alert consumers of issues, and alert business owners on areas they need to improve. However, significant litigation has arisen over negative reviews that business owners claim to be defamatory. Reviewers argue that their statements are protected by their right to free speech. Where is the line? At what point can a negative review subject the author to liability for defamation?

Defamation Basics

While defamation is governed by state law, it generally consists of, among other things, a false and unprivileged publication, which has a tendency to injure a party in its occupation. Libel is a form of defamation and covers false statements communicated in writing or in print that injure another person's reputation or business. There are no special rules that apply to the Internet or social media. In other words, traditional defamation analysis applies to online content as it would to any other written publication.

Defamatory Statement v. Opinion and Hyperbole

The main issue that arises in these cases is whether or not the published statement is false. As anyone who has perused an online review site knows, reviews are often couched in terms of opinion with a dose of hyperbole for good measure.

Take the case of Dietz v. Perez, a well-publicized lawsuit from Virginia. There, Dietz, a contractor, sued Perez, a woman who posted negative reviews on Yelp and Angie's List about his services. Her statements included allegations that Dietz overbilled her for work that was not performed and was the only other person who had a key to her home when jewelry disappeared. Dietz posted responses on the review sites, saying that Perez had stolen goods and services, since she reportedly never paid him for the work.

The Virginia Supreme Court vacated the trial court's order that would have required Perez to remove the reviews, stating that the injunction wasn’t justified and that Dietz had an adequate remedy at law. Ultimately, however, a jury found that both parties had defamed each other and awarded no damages. The judge denied Dietz's request for a retrial, and his request for an injunction, apparently for the sole reason that Perez had already taken down the reviews. The judge had harsh words for Perez at the hearing, noting that the conflict would’ve been avoided had she simply posted the truth and warning that similar cases would indeed chill free speech.

In the case Bently Reserve LP v. Papaliolios, which arose from Papaliolios's negative Yelp review of an apartment building, a California appeals court clarified that in determining whether a statement expresses or implies a provably false assertion of fact, the court will look to the totality of the circumstances. The court found that Papaliolios's statements could reasonably be interpreted as defamatory. Although he used some hyperbole and name-calling, such as calling his landlord a "sociopathic narcissist" who "celebrates making the lives of tenants hell," he also asserted specific facts about the building at issue, including alleged activities by the plaintiffs that “likely” contributed to the deaths of three tenants. The court rejected Papaliolios's argument that the use of the word "likely" insulated him from liability and noted that Papaliolios’s statement was presented as a "first-hand experience."

The case reached the Court of Appeal after Papaliolios filed an anti-SLAPP (Strategic Lawsuit Against Public Participation) motion under California law. Anti-SLAPP motions allow defendants to move to dismiss a case brought against them on the basis that it would chill speech on an issue of public interest. Twenty-eight other states have enacted anti-SLAPP laws. Had Papaliolios been successful, he would’ve been able to dismiss the case without having to proceed to trial. However, the court found that plaintiffs had made the requisite minimal showing as to the merits of their libel claim, so Papaliolios's anti-SLAPP motion was properly denied.

The Problem of Anonymous Users

The courts are also dealing with the issue of anonymous users. In the case of Yelp, Inc. v. Hadeed Carpet Cleaning, Hadeed served a subpoena on Yelp seeking the identity of seven anonymous Yelp reviewers who had written negative reviews of the carpet cleaning service. Hadeed alleged that it couldn’t match the reviews with its customer database, and therefore believed that the reviewers were not in fact actual customers. Hadeed further alleged that the reviews were defamatory because they falsely stated that Hadeed provided poor service to each reviewer.

The Virginia Court of Appeals recognized that anonymous speech is protected by the First Amendment, and "an Internet user does not shed his free speech rights at the log in screen." But the right is not absolute. If the reviews were lawful, then the reviewers could remain anonymous, the court noted. Ultimately, however, the court found that Hadeed established a legitimate, good faith basis for its belief that the reviews were defamatory, because it had no record of providing services to these posters. If the reviewer is not in fact a customer, then the review cannot be an opinion; the review is based on a false statement of fact, held the court. The subpoena was therefore proper, and Yelp was required to comply with it.

Concluding Thoughts

The number of defamation cases arising from online reviews continues to increase, as the value of online reviews is critical to any business. While there are no special rules that apply to the Internet or social media when it comes to defamation, how the courts apply traditional defamation rules to online behavior and anonymous users will be important to monitor.