Hospitality industry stakeholders who host sites for online reviews or rely on review sites such as Yelp, Trip Advisor, Urban Spoon, or Oyster, may take comfort in the recent Ninth Circuit decision regarding the liability of the publishers of those reviews. See Kimzey v. Yelp! Inc., No. 2:13-cv-01734 (U.S.D.C. Wash. Sept. 12, 2016). But, there is an argument to be made that the protections afforded under Section 230 of the Communications Decency Act (“CDA”) may be wearing thin. As the industry looks for more ways to leverage data harvested from online reviews, it is slipping out from the protective umbrella afforded to “passive hosts” of user generated content.
As featured in her previous blog posts regarding the battle over negative online reviews, Hospitality, Travel and Tourism practice team member, Judy Endejan, updates us on the results of Yelps! latest case. Thank you, Judy! – Greg
In the past twelve months we have reported on a Virginia case, Yelp!, Inc., v. Hadeed Carpet Cleaning, Inc., (“Hadeed”) that was closely watched because the case dealt with whether a business owner could unmask an anonymous blogger that posted specific critical reviews on Yelp! of his carpet cleaning company. This week the Virginia Supreme Court said, “No”. Hadeed had subpoenaed Yelp! to provide information in Virginia that would identify the authors of the reviews under a new Virginia statute, that requires only that a business prove that a negative review is, or “may be defamatory” or that it has a legitimate good-faith basis for believing that the review is defamatory in order to learn the identity of the reviewer. Hadeed presented evidence that could prove that the seven negative reviewers were not actual customers of the carpet cleaners, which a lower court found could mean that the reviews could be defamatory.
The Virginia Supreme Court in a fairly short, succinct opinion, held that the lower courts were wrong because Virginia courts do not have subpoena authority over nonresident non-parties like Yelp!. Even though it was registered to do business in Virginia, that is not enough for a court to require Yelp!, a non-resident, to respond to a Virginia subpoena. Yelp!, a Delaware corporation, has its primary headquarters in California. Thus, Hadeed might be able to subpoena Yelp! to produce documents in California but the business could not require Yelp! to respond in Virginia. The Uniform Depositions and Discovery Act allows litigants to get discovery from non-parties in the states where the non-parties reside.
A recent Virginia court of appeals’ decision, including allegedly false reviews on Yelp!, have drawn a lot of attention to false reviews and hoteliers and restaurateur’s options for responding. Our newest post from recent Garvey Schubert Barer addition, Judy Endejan, looks at the Virginia decision and offers vendors some practical advice on managing their social media reputations. We are thrilled to welcome Judy and the extensive communications and First Amendment expertise she brings to GSB. Welcome Judy! - Greg
A common modern headache most hoteliers and restaurateurs face is a negative review that torpedoes the room, the food, or the room service to be posted by an anonymous blogger on Yelp!, or any one of the other well established user review websites or blogs. How should you react?
First, do not overreact. If the negative review is far outweighed by positive reviews, most readers will give little weight to an outlier, concluding that the poster either had a fight with his or her partner or a cosmic headache.
Second, analyze the review. If the review appears to contain false information that needs to be corrected, you have a different path than if the review, viewed overall, appears to be nothing but a statement of opinion. In the latter case, frankly, there is little that you can do because the First Amendment protects a statement of a personal opinion about a business that they patronized. The review must tell the reader, however, the factual assumptions upon which the opinion is based. The First Amendment does not protect a statement of opinion that is based upon an undisclosed or false statement of facts.
Defamation litigation is problematic from many standpoints. First, defamation litigation might cause a “Streisand Effect” – meaning that your lawsuit against an anonymous blogger might generate far more publicity than any publicity possible from the negative review. This could be bad for business.
Second, you will face several hurdles in a defamation action. The first hurdle will be to discover the identity of the anonymous negative reviewer. Yelp! defends against disclosing the identity of its users quite vociferously. Recently it lost a case at the Court of Appeals of Virginia (Yelp!, Inc. v. Hadid Carpet Cleaning, Inc., Record No. 0116-13-4). There, the Court applied a special Virginia procedural statute targeted at unmasking anonymous bloggers and upheld a contempt order against Yelp!, when Yelp! refused to identify seven anonymous bloggers that posted specific critical reviews of the carpet cleaning company. The Virginia statute has a lower standard for protecting anonymous speech than those adopted in other leading cases regarding unmasking internet bloggers. The Virginia Court did not follow these leading cases, Dendrite International, Inc. v. Doe #3, 775 A 2d 756 (N.J. Super Court App. Div. 2001) or Doe v. Cahill, 884 A. 2d 451 (Del. 2005), which impose a fairly strict standard for a defamation plaintiff to pass. Under Dendrite and Doe, the plaintiff has to provide evidence that substantiates that the speech was tortious (i.e., defamatory) or otherwise illegal to overcome First Amendment protection of anonymous speech, which requires a compelling state interest. The Virginia Court applied the Virginia statute, which has a lower burden, requiring only that you prove, among other things, that the review is or “may be” defamatory, or that you have a legitimate, good faith basis for “believing” that the review is defamatory. In the Virginia case, the plaintiffs presented evidence that could prove the seven reviewers were not actual customers of the carpet cleaner. The Court reasoned that if the reviewers weren't customers, then whatever they said must have been false, hence defamatory.
While the Virginia case may indicate some easing of the burden for getting redress against a negative Yelp! review, that case is based on a specific state statute and should not be viewed as having universal application in other parts of the country.
Even if your business could succeed in unmasking the identity of a negative reviewer, you still face the considerable burden of proving that the speech was libelous, which is subject to other constitutional burdens. In some states, like Washington and California, anti-SLAPP statutes allow a defendant to test the strength of a plaintiff’s case for defamation by requiring the plaintiff to prove why it will win at an early stage of the litigation. If the plaintiff can’t do that,the plaintiff has to pay attorneys’ fees and a possible penalty to the defendant.
In sum, before considering a litigation option, your business will need to think long and hard before undertaking the burdens associated with it. In the end, the best way to deal with a negative review is to bury it among positive reviews.
Hunting for a top-rated hotel or searching for the perfect dim sum restaurant? Chances are you will turn to sites such as Yelp, Citysearch, or TripAdvisor to guide you through the mass of options most locations have to offer. As the Huffington Post recently noted, “In an increasingly tech-reliant world, most of us do not step foot in a restaurant or buy anything online without doing at least a modicum of Internet research.”
Hoteliers and restaurateurs have long known that positive online reviews equal greater occupancy rates, increased bookings, and greater revenue for their businesses: An influential 2011 Harvard Business School (HBS) study found that “a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenue” for restaurants, while researchers at Cornell found that a one-star swing in a hotel's online ratings on travel sites equate to a 11% sway in room rates.
So how trust-worthy are those 4-star online reviews? Turns out, unsurprisingly, caveat emptor.
A 2013 HBS report estimates that the number of fraudulent reviews on Yelp rose from 5% in 2006 to 20% in 2013.
While businesses may think that asking clients or friends to post positive reviews online is simply the cost of doing business in the internet age, the law says otherwise. Regulators are catching on to businesses that artificially inflate their online reputations and are seizing the opportunity to bust companies that hire or solicit positive “fake” reviews. Recently, the New York Attorney General’s office announced it had reached agreements with 19 companies to cease their misleading practices of posting fake reviews online. To the tune of $350,000 in penalties. This was after New York Attorney General, Eric T. Schneiderman, conducted a year-long investigation into consumer-review sites, finding that New York businesses had bribed clients to write fake reviews in exchange for gift certificates, hired overseas bloggers to post positive reviews, or took to the message boards themselves to defend their “false advertising” practices. Schneiderman calls this practice of disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party review is a form of false advertising called “Astroturfing.” And Schneiderman suggests that prosecutors should step up and help put an end to the practice.
In addition, review sites are fighting back in an effort to protect their reputation. Yelp, for example, has a page dedicated to explaining its policy of outing false reviews by using sophisticated software to weed out spammers. Yelp has even sued a California law firm for posting bogus reviews.
The end game is that by producing fake online reviews, businesses may not only violate state laws prohibiting false advertising and illegal and deceptive business practices, but they may also incur significant penalties and their reputation may be irreparably harmed. (Schneiderman listed the names of all of the business online who were involved in the New York sting operation.)
If you are a hotel or restaurant owner, resist the urge to spruce up your online reputation by solicitation of—or by penning your own!—positive reviews, no matter how benign you think the practice may be. And if you are a consumer, remember: not everything you read on the internet is true.
If you have questions about how your online practices may violate state law, contact Greg Duff.
Greg Duff, Editor
Greg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.