Jul 16 2014

Bad Online Reviews of Your Business: Harmful? Absolutely. Defamatory? Not Necessarily.

If you own a small business and have customers and clients, there is a good chance that someone, somewhere has published an online review of your company and its goods or services. From Yelp to Angie’s List to TripAdvisor to any number of websites tailored to particular interests or industries, online reviews have proliferated in the past 5-10 years and can have a profound impact on your business. Even one negative review can be devastating because it may be seen by anyone doing even cursory research about your company.A 2011 Harvard study quantified just how big an effect negative Yelp postings can have: A one-star increase among reviews of Seattle restaurants led to a 5 to 9 percent growth in revenue.

You can find a lot of tips and dos and don’ts online about how to handle such negative reviews from a strategic and business perspective. But can you prevail on a lawsuit for defamation against the author of the negative review? The answer is, of course, that you can sue “IHateYourBusiness24/7” or whomever made the post, but the reality is that much of what is written in even the most scathing negative review will likely not qualify as actionable defamation. Furthermore, such lawsuits themselves can open up the business owner to further scorn, ridicule, and bad publicity in the fickle social media world.

As a preliminary matter, under federal law the owners of most online review sites and other platforms, such as Facebook, Yahoo, Google+, etc., where comments and reviews may appear, are immune from liability for defamatory comments. Section 230 of the Communications Decency Act shields such sites from claims based on comments posted by third parties. But what about under California law?

What is Defamation?

In California, in order to prove defamation, including a claim based on an online review, a plaintiff must prove:

  1. That the defendant made factual (not opinion) statement(s) to someone other than the plaintiff;
  2. That the person reading the statement reasonably understood that the statement(s) were about the plaintiff;
  3. That because of the facts and circumstances known to the readers, the statement(s) tended to injure the plaintiff in his or her occupation or business.
  4. That the statement(s) were false;
  5. That the defendant failed to use reasonable care to determine the truth or falsity of the statement(s); and
  6. That the plaintiff suffered actual harm to his or her property, business, profession, or occupation and that the statement(s) were a substantial factor in causing that harm.

Provable Fact v. Opinion

In cases involving online reviews, whether a defamation claim is actionable or likely to fail most commonly turns on whether or not the statement was opinion or fact, and if it was fact, whether it was false. Only false statements of fact can be the basis of a defamation claim. Opinions, no matter how wrong, negative, or harmful, can never support such an action. A statement is factual only if it can be objectively proved or disproved.

For example, in a 2013 California case involving a disgruntled tenant commenting about his former landlord on Yelp, the comment that the landlord was “a sociopathic narcissist — who celebrates making the lives of tenants hell” was held to be non-actionable opinion. However, other statements, such as that the landlord sought to evict six tenants, including one who had made substantial improvements to the apartment, and that the landlord likely contributed to the deaths of three tenants were determined to be factual. According to the court, those statements “could reasonably be understood as conveying facts – each provable, and each meant to be used by prospective tenants to evaluate the [the landlord’s building] as a future residential choice.”

There are many nuances to the broad distinctions between statements of facts and statements of opinion. As the court in the case mentioned above noted:  “The key is not parsing whether a published statement is fact or opinion, but ‘whether a reasonable fact finder could conclude the published statement declares or implies a provably false assertion of fact.’”

The bottom line for business owners is that a lawsuit in response to outrageous internet reviews and comments that make their blood boil and their businesses suffer may not be the best course of action. While certain false statements of fact in such comments can be the basis of a defamation claim, business owners should carefully consider how to proceed lest their response make a bad situation worse.

If you would like to make an appointment to discuss your legal issue, please call the Cohen Law Firm today at (805) 267-7147 or send an e-mail to Randall Cohen at racohen@racohenlawfirm.com.

This article has been prepared by the Cohen Law Firm for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

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