Better think twice before leaving your advice

Businesses take steps to fight negative online reviews of their products and services, causing some to rethink their online activity.

New technologies continue to produce novel legal questions, and one of the most recent revolves around the posting of negative product and service reviews online.  Websites such as Yelp, Angie’s List, and RateMDs are seen by users as a convenient place to provide positive reviews of meals, home repairmen, and professionals, but these sites have also become a place for users to give negative reviews of their experiences.

Businesses and service providers have not reacted kindly to these virtual criticisms. Some have even resorted to legal action – and won damages – in an effort to remove the negative reviews from the internet.  A 2011 Harvard Business School study found that an increase in ratings of one star (up to a possible five) on the website Yelp raises a restaurant’s revenue by five to nine percent, providing good reason for businesses to be concerned when negative reviews are posted about them online.  But are lawsuits and legal threats the best approach for businesses in trying to eliminate, or at least mitigate, negative reviews?

Different jurisdictions handle these lawsuits differently, but most have been largely unsuccessful.

The spread of social media has led to expansive growth in online reviews of people’s experiences with everything from restaurants and handymen to doctors and lawyers. Though one negative review by itself probably will not harm a business, a trend of negative reviews can.  Over the last five years, businesses and individuals have filed lawsuits in an effort to bring down negative posts and even, in some cases, have sought damages.  Due to the novelty of the law in this area, however, and the economics of bringing a lawsuit for a single negative review, there has yet to be an outbreak of similar lawsuits.

Different jurisdictions handle these lawsuits differently, but, thankfully for online reviewers everywhere, most have been largely unsuccessful.  Reviewers have the right to free speech afforded by the First Amendment, and airing their legitimate grievances over their experiences falls within their right to express their opinion.  Most of the courts faced with these lawsuits have come to this same conclusion and thrown out the cases.

The Minnesota Supreme Court recently dealt with a case involving the online statements of a man whose father had been treated by a doctor.  In McKee v. Laurion, a man posted on various websites that when he mentioned the doctor’s name to a nurse, she called him a “real tool.”  The doctor brought a defamation lawsuit against the man, but the Minnesota Supreme Court reversed the court of appeals’ reversal of the district court’s summary judgment ruling in favor of the online poster.  The Court found (pdf) that calling someone a “real tool,” among other things, was pure opinion; it cannot be reasonably believed to state a fact or be found to be true or false.  Because the allegedly defamatory statement was pure opinion, it was protected by the First Amendment and was not actionable.

This case provides a forecast of future cases involving negative online statements: one of the main issues will be whether the statements can be proven by the plaintiff to be defamatory.  The statement must be shown to have negatively affected the plaintiff’s reputation or standing in the community.  Negative statements, which are either true or pure opinion, are, however, a defense to defamation claims.

This is illustrated by Dietz Development, LLC v. Perez, a Virginia case involving a woman who was unhappy with the work of a home contractor she had hired.  The contractor sued her in October of 2012 for $750,000 in damages for her online statements and pursued a preliminary injunction to have the review removed.  The trial court agreed with the plaintiff and entered a preliminary injunction against the defendant, forcing her to take down certain portions of her review.  Following the injunction order, the story gained traction in the media, and several organizations aided the defendant in applying to the Virginia Supreme Court for a petition of review.  The Supreme Court sided with the defendant and ordered the trial court to vacate its prior order (pdf).  The Court found that the contractor would still be able to pursue his defamation claim and seek damages, but an injunction was not proper because damages were still available to him.

Those businesses that believe a lawsuit is the best response to negative online reviews should consider several factors.

Those business owners and individuals who believe that a lawsuit is the best response to negative reviews online about them or their businesses should consider several factors.  First, lawsuits are expensive.  Is getting a review taken down or potentially winning damages worth the amount of money you will spend in court costs and lawyers’ fees?  Second, businesses who sue over negative online comments could be subject to increased ridicule and even more negative online comments.  For example, after the suit was filed in Dietz Development, LLC, many users voiced their disbelief  via review websites over the company suing a dissatisfied customer for $750,000.  These low ratings and negative comments stemming from consumers’ reactions to their legal actions, rather than poor products or services, could significantly impact the revenues of these businesses-turned-plaintiffs.

Some professionals, particularly in the medical field, attempted to use agreements or contracts that were to be signed by the patient before the doctor provided services in order to protect their reputations.  Around 2010, these agreements were rapidly spreading in the medical field and were generally referred to as mutual privacy agreements.  Interestingly, many of these contracts were based on a contract created by a North Carolina company, Medical Justice.  The agreements stated that in exchange for the doctor not selling the patient’s name to marketers, the patient would not post anything online about the doctor or the patient’s experiences.  HIPAA, however, already prevents doctors from selling patient information without their prior approval.

Late in 2011, the Center for Democracy and Technology filed a Federal Trade Commission complaint against Medical Justice for their creation of this contract.  They alleged the contract was not only unethical but also an illegal prior restraint on the patients’ right to speak and unenforceable under contract law.  In response to this complaint, Medical Justice, based out of Greensboro, stated that they advised everyone to stop using the contract.  Since then, Medical Justice has changed their approach, now encouraging patient reviews and providing services to doctors to more effectively manage their online reputation without resorting to forcing patients’ silence.

Being more receptive to negative comments is the better policy for businesses and individuals moving forward.

Medical Justice’s change of heart and strategy regarding online reviews hopefully foreshadows the way all businesses and individuals will move forward in this area. Lawsuits trying to remove single posts probably cause more problems than they solve, as do attempts at quieting individuals before they post online.  Being more receptive to negative comments is the better policy for businesses and individuals moving forward. Not only does it eliminate the bad publicity created by lawsuits and prior restraints, reaching out to aggrieved consumers can also improve both businesses’ and consumers’ experiences.  Businesses can find out what they may not be doing well, while also trying to rectify bad experiences that the reviewer had, creating positive publicity instead of negative.

Finally, it is important to remember that when posting online, you should stick to the facts and your opinion.  Your reviews can help not only other potential consumers but also the businesses and individuals you have reviewed in improving their products and services.  Exaggeration and outright lying, however, can be defamatory and are actionable in the court of law.  This is an extremely new area of the law but one that likely will continue to grow as more people post reviews online and even more rely on them in making daily decisions.

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About Parker Dozier, Former Senior Staff Writer (13 Articles)
Parker Dozier served as a Senior Staff Writer for the Campbell Law Observer. He graduated from the University of North Carolina at Chapel Hill in 2011, where he majored in History and Geography. During law school he externed with the NC Department of Justice, Transportation Section, and Disability Rights NC. Parker graduated from Campbell Law School in May 2014.
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