Appellate Court Continues Protecting Online Reviewers from Defamation Claims

Businesses these days often find themselves targeted – sometimes unfairly – by negative online reviews. Sometimes, the authors are not actual dissatisfied customers but rather, for example, competitors or other individuals with a grudge unrelated to the quality of the company’s goods or services. At times there are even coordinated efforts to post numerous negative reviews at once so that readers are less likely to dismiss them as outliers.

The federal Seventh Circuit Court of Appeals recently rejected a Chicago law firm’s effort to fight back in the case, Law Offices of David Freydin v. Chamara. The issues started when Mr. Freydin made Facebook posts allegedly containing offensive comments about Ukrainians (the posts predated the current war). In response, numerous individuals posted negative reviews of Mr. Freydin’s law firm on the firm’s Yelp, Facebook, and Google pages.

While some reviews focused on Mr. Freydin’s Facebook comments, others bashed Mr. Freydin’s and the firm’s legal work or customer service despite the reviewers not being actual clients of the firm. Comments included that the firm provided a “terrible experience,” “awful customer service,” was “disrespect[ful],” “unprofessional,” and “unethical,” that Mr. Freydin “has no right to practice law” and prospective clients should not “waste your money.”

The court found these comments not actionable as defamation because they “do not have precise and readily understood specific meanings.” The court asked, rhetorically, “what objective indicator defines whether a given customer service experience was good or bad? Or whether a service or good was worth the money?”  Although there was already a long line of similar cases holding “loose” or “figurative” language non-actionable, the court implied that defamation claims arising from online reviews may face an even higher bar: “We trust that readers of online reviews are skeptical about what they read, both positive and negative.”

As FVLD covered last year, the Seventh Circuit has also rejected claims arising from reviews by competitors when the alleged false statements were not objectively verifiable: “a bruised (corporate) ego should be dealt with by hiring an advertising agency, not by hiring a lawyer.” 

Of course, some online reviews do state materially false facts that may be actionable as defamation notwithstanding the decision in the Freydin case. False reviews or comparisons by competitors (especially when posing as customers) can be actionable under the Lanham Act as well as false advertising and consumer fraud laws. Still, (a) the average Yelp reviewer may not have deep pockets to pay a judgment, (b) many reviewers post under pseudonyms and requesting a court “unmask” them requires additional procedural steps that add significant costs to already expensive litigation, and (c) the reputational damage from suing customers may be more harmful to a business than the initial defamation.

Another option that should be explored with legal counsel is making a takedown request.  Platforms are sometimes receptive to well-founded takedown requests that advance the platform’s interests in preserving their own integrity.  Absent a legal obligation, however, responses to takedown requests can be arbitrary and unpredictable.

Plaintiffs are also unlikely to successfully sue sites that host reviews (e.g. Yelp). This is because, under Section 230 of the Communications Decency Act, those sites are immune from liability for third party content posted on their platforms to which the website did not materially contribute. Both political parties have expressed interest in repealing or reforming Section 230 but there is no telling whether whatever legislation (if any) is eventually signed into law will provide recourse against sites that host online reviews.

Absent a material change in the law, companies seeking to respond to (or, better yet, proactively avoid) negative reviews should also consider pursuing brand management strategies rather than litigation. Our April, 2020 Legal Update discussed several such strategies

That said, online reputation management strategies come with their own legal pitfalls. For example, companies using paid endorsers or influencers to tout their products online face disclosure requirements enforced by the Federal Trade Commission. And companies responding to unfair attacks by purported customers or competitors might cross the line into defamation, or even consumer fraud, even if the initial reviewers did not. Companies should consult legal counsel, as well as other appropriate professionals, to develop strategies that work for them.