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May 29, 2014

Nick Rozansky Writes Article On CA AB 2365 (Yelp! Bill) For Daily Journal

Bill will protect customers’ right to vent

Have you ever stayed in a hotel room that warranted a scathing review on TripAdvisor? Purchased a TV that crapped out after a year and wanted to take to CNET or Amazon about the quality of the product? Online reviews apparently influence other buyers’ decisions so much that some companies require customers to sign a “waiver” or “contract” that they will under no circumstance write a bad review about their experience (imagine having a small contract on your hotel receipt stating that you won’t post about the small bathroom shower). In fact, some companies and service providers require customers to assign their valuable copyrights in online reviews to the service provider allowing them to sue for copyright infringement when a negative review is posted. Specifically, a group called Medical Justice, has championed this policy to “protect” doctors from negative reviews online.

Enter Assembly Bill 2365, introduced in February 2014 by Assembly Speaker John A. Perez (D-Los Angeles), which would deem a contract unlawful “if it includes a provision requiring the consumer to waive his or her right to make any statement regarding the consumer’s experience with the business, or to threaten or seek to enforce such a provision … unless the waiver of this right was knowing, voluntary and intelligent.” Section (b) of the bill states that “The party that drafted the waiver provision has the burden of proving that the waiver was knowing, voluntary, and intelligent.” Regardless of the burden of proof, the “knowing, voluntary and intelligent” language opens the bill’s text to ambiguity arguments and different interpretations.

A bit of history. Over a decade ago, in People v. Network Assoc. Inc., a New York court ruled that popular antivirus and computer security software company Network Associates could not make its customers ask permission before publishing product reviews. Now, 10 years later, the California Senate will take up AB 2365, which seems to stem from last year’s “KlearGear Incident.” Kleargear fined – under an anti-disparagement clause of their site’s terms and conditions – customer Jen Palmer $3,500 for posting a negative review on “Ripoff Report” after Palmer failed to receive an order from KlearGear. When Palmer and her husband refused to pay the $3,500 fine, Kleargear reported the fine for collection, which had negative impact on the Palmers’ credit. Apparently this incident led Perez to say “enough is enough,” and he worked up a bill that tells companies and service providers they cannot stifle a person’s ability to review online.

Now back to “knowing, voluntary and intelligent.” The problem is it will not prevent companies from burying waivers in online contracts that consumers click through and sign without reading. When is the last time you read through such language (that you might have written) before impatiently checking “I agree” because you are that much closer to downloading your new iTunes update? Or read through such language before clicking “I agree” at the car dealership because you want to drive your new car off the lot as soon as possible? Companies and service providers will hide behind the assumption that intelligent people are clicking or checking “I agree,” and battles regarding “knowing, voluntary and intelligent” will rage in court.

A related issue concerns people who write false, negative reviews to disparage a good service provider or give a competitor the leg up. How many lawyers out there have fallen victim to a client who has taken to Yelp! or Avvo after a less than perfect experience? Sometimes a consumer will allow emotions to overtake them and bash a service provider even though, objectively, the experience wasn’t that bad. To address this, in January, the Virginia Court of Appeals ruled that Yelp! must reveal the identities of seven pseudonymous reviewers so that Hadeed Carpet Cleaning could sue the reviewers for defamation. After receiving negative reviews on Yelp!, Hadeed singled out seven reviewers that it suspects were not customers. The company brought a defamation claim against them, subpoenaing Yelp! for their identities. Yelp! refused to disclose their identities and, instead of following Dendrite International v. Does 1 through 14, a New Jersey case requiring that courts balance the defendant’s rights against the strength of the plaintiff’s prima facie case, the court followed Code of Virginia Section 8.01-407.1, which provides its own procedure for revealing the identities of anonymous speakers. Yelp! was forced to disclose the identities of the false reviewers so Hadeed could pursue the defamation claims.

It is clear that AB 2365 is a consumer friendly bill. It protects a consumer’s freedom of speech regarding an experience. It falls short because it includes the “knowing, voluntary and intelligent” language, which companies and service providers will hide behind. A better bill would be stripped of that language and say that a company or service provider cannot, under any circumstances, require a client or customer to sign away their rights to post reviews of any kind. AB 2365 is a valiant effort, and eventually Congress will have to take up this issue given the multi-jurisdictional reach of online reviews. At that same time, Congress will need to take up the issue of pseudonymous reviewers disparaging competitors or taking personal vendettas to the web.

In short, slight modifications to AB 2365 will be needed to ensure consumer protection with regard to online reviews, and Congress should take up the issue, along with pseudonymous reviewers, given that online reviews are accessible in multiple jurisdictions.

Nicholas Rozansky is a partner with Brutzkus Gubner LLP.

He can be reached at nrozansky@bg.law.

Source: Los Angeles and San Francisco Daily Journal

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