Posted : 03/04/2013
After a dispute with a Washington, D.C., contractor, Jane Perez of Fairfax, Va., did what many dissatisfied customers do these days: She posted negative reviews on Yelp and Angie's List.
Among other things, she said the contractor's work damaged her home and that some jewelry went missing at a time when he was the only other person with a key to her townhome.
Months later, Christopher Dietz and his firm Dietz Development filed a $750,000 defamation suit against her. Dietz claims Perez owes the firm money for the work it did and that she made false statements online. The suit estimates the reviews could cost him $500,000 in lost work opportunities, and he seeks another $250,000 in punitive damages.
Whether the lawsuit, filed in October, has any merit has yet to be decided, but it serves as an important reminder if you want to be an online critic: If you can't say anything nice, check your insurance coverage to make sure you're protected in case you're sued. And don't give someone legitimate grounds for legal action.
Consumer reviews are serious business
Although rare, such lawsuits are becoming more common as consumers take to sites like Yelp to voice their praise and gripes about everything from restaurants to dentists.
Businesses take the reviews seriously for good reason. A 2011 Harvard Business School study looked at the effect of Yelp on Seattle-area restaurants. It found that a one-star increase in a Yelp rating led to a 5 percent to 9 percent revenue increase for the eatery.
The Dietz case is pending in Fairfax County Circuit Court. Initially the judge ordered Perez to remove parts of her review and not to post anything more about one of her complaints. But the Virginia Supreme Court reversed that order after Public Citizen and the American Civil Liberties Union of Virginia filed an appeal on Perez's behalf. (See: "How much umbrella insurance should you have?")
Although some defamation lawsuits may have merit, others are filed simply to shut up critics. The latter are called SLAPPs -- -Strategic Lawsuits Against Public Participation, a term coined 20 years ago by University of Denver law professor George Pring and sociologist Penelope Canan. They wrote the 1996 book, "SLAPPS: Getting Sued for Speaking Out." Now that anybody with a computer and an Internet connection can write for the masses, a growing number of SLAPPs are aimed at consumers.
Some states have anti-SLAPP laws. In California, for instance, a SLAPP defendant can recover legal fees, court costs and other expenses if the judge finds at the outset that the plaintiff has no shot at winning.
Proponents of anti-SLAPP laws are pushing for federal legislation.
"Nearly half the states don't have anti-SLAPP laws," says Evan Mascagni, legislative assistant for the Public Participation Project in Berkeley, Calif. "Among states that do have anti-SLAPP laws, they vary in strength."
The uneven playing field encourages plaintiffs to sue in states where anti-SLAPP rules are weak or nonexistent.
"A federal law would prevent forum shopping and provide unified protection for all," he says.
So what if I'm SLAPPed?
Don't expect the liability insurance on a standard home insurance policy to protect you. Typically standard home insurance doesn't cover your legal costs for defamation of character, slander and copyright violation claims. (See: "Alphabet soup: 6 types of homeowners insurance and what they cover.")
However, you can purchase personal injury insurance as an endorsement on a standard home insurance policy for as little as $10 a year, says Tully Lehman, a spokesperson for the Insurance Information Network of California. The endorsement would offer coverage equal to the home insurance policy's general liability coverage.
Some high-end home insurance policies and some umbrella liability policies include personal injury coverage as well. Review your policy and talk to your insurance agent. If you're a professional blogger, you'll need a business liability policy. (See: "What is an umbrella policy? How much coverage do I need?")
"Remember, though, just because you have the coverage doesn't mean you can start blogging, tweeting, and posting whatever you want," Lehman says. "Intent matters, so if you knew what you were doing was wrong, the policy may not cover you."
Use common sense
Lawsuits like the one in Virginia are few and far between, compared to the millions of reviews on sites like Yelp.
"Eighty percent of our reviews are three stars or higher," says Darnell Holloway, Yelp's manager of local business outreach. The highest rating is five stars.
The site advises consumers to be accurate, avoid embellishment and broad generalizations, and to relate only their firsthand experiences. The site also offers free tools for businesses to interact online with reviewers.
"Courts have consistently ruled that consumers have the right to share their truthful experiences. As a result, businesses that choose to sue their customers to silence them, rather than address their comments, rarely prevail and often bring additional unwanted attention to the original criticism," the company states.
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