Saturday, January 11, 2014

Ferreting out the Frauds: a Virginia Court Orders Yelp to Identify Anonymous Users

Social media is widely-used in the hospitality industry for everything from promoting sales to recruiting new talent.  Facebook, Twitter, Pinterest, Foursquare, and a number of other sites provide hoteliers and restaurateurs with nearly limitless access to local, national, and international audiences.

In recent years, sites like Yelp have emerged to provide customers with an anonymous, online platform to post reviews of businesses, and its impact is far-reaching.  In the first quarter of 2013, Yelp allegedly averaged nearly 102 million unique visitors per month.  

Many businesses understand the importance of widespread feedback, monitor Yelp and other sites for both positive and negative reviews, and interact with reviewers about their experiences.  Cyber-saboteurs are an unfortunate risk to companies with an Internet presence, and a number of employers have undoubtedly been the subject of anonymous, negative and disparaging attacks by competitors or disgruntled employees. 

The lawsuit

A carpet cleaning company in Virginia filed suit against seven, anonymous individuals who posted allegedly defamatory statements about the company on Yelp.  To identify the posters, the company served Yelp with a subpoena duces tecum asking it to produce documents revealing the identities of the seven individuals.  Yelp refused, based in large part on its argument that the First Amendment to the United States Constitution protects the individuals' rights to anonymous, free speech.  The Circuit Court disagreed with Yelp, and held it civil contempt.  Yelp appealed to the Court of Appeals of Virginia.  See Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., Court of Appeals of Virginia, Record No. 0116-13-4, January 7, 2014.

The appellate decision

The appellate court agreed that Yelp was in contempt for failing to comply with the subpoena.  In affirming the lower court's ruling, the Court of Appeals made the following observations:

  • The State of Virginia has enacted a statute that includes specific procedures designed to "unmask" people communicating anonymously over the Internet.  
  • Free speech is protected by the First Amendment.
  • Anonymous free speech is protected by the First Amendment.
  • "An Internet user does not shed his free speech rights at the log-in screen."
  • The freedom of speech, and the right to speak anonymously, is not absolute.
  • Defamatory speech is not entitled to constitutional protection.
  • "Commercial speech" is afforded less protection than literary, religious, or political speech.
  • Matters of opinion are protected as free speech.
  • "Factual statements made to support or justify an opinion…can form the basis of an action for defamation."
  • "Generally, a Yelp review is entitled to First Amendment Protection because it is a person's personal opinion about a business they patronized…" but if the customer never visited the establishment, then the review is not an opinion, and instead, is based on a false statement of fact.
In this case, the Court found the company had met the requirements of the unmasking statute by showing, among other things, that the communications by the anonymous Yelp users (which included statements that the company overcharged for services) are or could be tortious or illegal.  Persuasive to the Court was the company's evidence that it had conducted an independent investigation in an attempt to match the negative reviews with customers in its database.  Despite its efforts, it was unable to do so.  

The implications

The line between free speech, including opinion speech, and defamation, remains a fine one.

Although Texas currently does not have an unmasking statute, the Hadeed opinion's rationale for revealing the identities of potentially defamatory Internet users may prove persuasive to Texas courts.  Hospitality employers should keep a watchful eye on comments and feedback from social-networking sites and discuss with counsel any potential defamation issues.