Legal activity continues to surround Yelp regarding disgruntled business owners who have sued the online ratings service. These owners say that Yelp is responsible for their businesses’ substandard ratings – even though recent court rulings suggest otherwise. Some businesses have turned their attention away from the ratings service and are instead going in another direction – by taking legal action against individuals who have disparaged their enterprises through Yelp. Although some of these cases have been dismissed, Yelp is warning its users that even though they have free speech rights when it comes to rating businesses on its website, that fact may not stop some business owners from claiming that those negative ratings are libelous.
Users have free speech rights on Yelp, but businesses may still claim that poor ratings are libelous.
Section 230 of the Communications Decency Act (CDA) shields web presences and their host ISPs from liability for content published by third parties. For sites like Yelp, this means that they are granted a safe harbor from lawsuits with respect to negative customer reviews posted about companies on its website; court rulings, however, continue to define how the CDA is applied.
The most recent ruling by the Ninth Circuit Court of Appeals in September affirmed that Yelp’s rating system is not content created by the company itself, but by third parties (consumers), which makes Yelp and its hosting provider not liable for such negative content. In that case, Douglas Kimzey, a locksmith in Redmond, Washington, brought a libel suit against Yelp after receiving a negative review on the site in 2011. The Yelp reviewer gave Kimzey’s business a one star rating out of a possible five, accusing his company of a slow response time after she was locked out of her car, and then overcharging her. The truthfulness of the negative rating was not an issue addressed by the court. Kimzey is appealing the ruling.
Curiously enough, two state appeals courts, one in California, and the other Florida, ordered the removal of defamatory online rating statements about law firms this year after both firms experienced deteriorations in attorney-client relationships. In both instances, the clients gave negative reviews of the firm. The Florida case awarded punitive damages to the law firm after the defendants admitted that portions of the claims they made in their review were false.
In the above-mentioned cases, the First Amendment’s free speech right seems to be butting heads with information that is clearly false rather than honest, truthfully-based opinions. So the question remains: how can the Yelps of the world separate objectivity from malicious intent when publishing an online review? And should they vet the truth of millions of reviews on their websites? This is, of course, a patently impossible task.
How can Yelp separate objectivity from malicious intent when publishing an online review?
It should be noted that in 2011 – around the time that Kimzey received his review – the landscape for Yelp ratings was remarkably different than it is today. Back then, a lot of businesses hired third parties with the express purpose of creating large numbers of positive reviews for their companies, thereby presenting a more positive impression of their businesses than might have been deserved. Yelp has since cracked down on this practice and in so doing, markedly improved its perception as a neutral information provider. Recently, it has also begun adding a warning that it is a neutral third party and is not responsible for the ratings or reviews it publishes. This action has been in response to recent legal activity against Yelp itself and similar websites.
States like California, and most recently Maryland, have taken strides to protect the users of Yelp and its competitors from retribution for bad consumer ratings. With other states seemingly desiring to follow suit, the question has been raised about whether such sites should go one step further and warn their users that they could be targeted by businesses for their postings.
After the outcome of a Texas ruling in August, Yelp seems to be moving in this direction. Like the Florida law firm, a pet-sitting company in a Dallas suburb filed a $1 million defamation lawsuit in state court against one of its customers. Said customer had written a scathing review of its business and given it a one-star rating. Even though the business maintained a median rating of 4.5 out of a possible 5 stars, the negative review (like Kimzey’s), according to the plaintiff, is responsible for lost business. The lawsuit was eventually dismissed after the court found that the review was not malicious.
Yelp added a consumer alert on the company’s Yelp page warning users that the business “may be trying to abuse the legal system in an effort to stifle free speech, including issuing questionable legal threats against reviewers.” Users must click past the warning to leave a review.
So, while judges across the country continue to define how the CDA is to be applied, one thing is clear. Even though the majority of the above-mentioned defendants – after paying law firms to defend them – ended up on the winning side, the rule of “practical” law seems to be that the only rights such parties actually have are those they can afford to defend, even when they speak truthfully.