Virginia Supreme Court Agrees to Hear Appeal in Yelp Users Defamation Case

by Holland & Knight LLP
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Yelp.com (Yelp) labels itself an "online urban guide." Specifically, the website allows users to write reviews about experiences at businesses they've visited. It also permits users to browse the posted reviews.

The service Yelp provides has become increasingly lucrative. The company revenues grew to over $232 million in 2013, and it is expected to be a prime beneficiary of the burgeoning market for online mobile search advertising.

Legally, Yelp's business often finds itself at the intersection of two often competing doctrines: the prevention of defamation versus the continuance of the robust speech protections manifest in the First Amendment. A recent case, and its subsequent procedural history, illustrates the difficult questions courts must confront when presented with this specific scenario. Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 752 S.E.2d 554 (Va. Ct. App. 2014) concerned a subpoena duces tecum served upon the website from a business claiming that certain anonymous reviews were defamatory. The subpoena ordered Yelp to reveal information about users who had authored seven negative reviews of Hadeed Carpet Cleaning (Hadeed). Hadeed claimed that it could not match these negative reviews with actual customers, thereby rendering them in violation of Yelp's Terms of Service which mandated that users must actually have patronized a business prior to writing a review.

The state circuit court granted Hadeed's subpoena, and after Yelp's subsequent refusal to comply, it was held in contempt. On appeal, Yelp argued that pursuant to the First Amendment, this subpoena could not be issued without a showing of merit on both law and facts antecedent to its issuance. The Court of Appeals of Virginia disagreed with Yelp, and upheld the validity of the subpoena issued by the lower court. It noted first that according to the Supreme Court, "there is no constitutional value in false statements of fact." See Gertz v. Robert Welch, 418 U.S. 323 (1974). Moreover, although pure expressions of opinions are not actionable, "factual statements made to support or justify an opinion" can form the basis for a defamation claim. See Raytheon Tech Servs. Co. v. Hyland, 641 S.E.2d 84 (Va. 2007) (emphasis added). In the instant case, whether the customer had actually received a service from Haddad was considered a fact. Since this "fact" was in doubt due to Haddad's inability to corroborate the existence of these customers, it could therefore be false, and thus form the basis of a defamation action, irrespective of the existence of opinions flowing from the existence, or lack thereof, of the fact.

Virginia has a statutory provision that enumerates the procedures in place to ascertain the identity of an anonymous individual engaging in Internet communications alleged to be illegal. See Va. Code § 801-407.1 et seq (2002). After concluding that Haddad had complied with the notice requirement and other procedural requirements, the court focused on whether the statements were tortious and whether the identity of the anonymous communicator is important to advance the claim. First, it held that the statements of the anonymous Yelp reviewers were tortious because Haddad could show in good faith that the pejorative statements in question were not actually opinions of customers, but by individuals falsely representing themselves as such. Second, it held that but for compliance with the subpoena, Haddad could not pursue a defamation claim against anonymous defendants. Couple this factual background indicating Haddad's compliance with the statute with the overarching principle that there is a "strong presumption of constitutionality" of statutes writ large, and the court a fortiori had reason to uphold the validity of the subpoena. See FFW Enters. V. Fairfax Cnty., 701 S.E.2d 795 (Va. 2010)

However, the case did not end at the appellate level. In late May of 2014, the Virginia Supreme Court agreed to hear Yelp's appeal.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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