Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 8

Yelp, Inc. v. Hadeed Carpet Cleaning, Inc.
Court of Appeals of Virginia, 62 Va.App. 678, 752 S.E.2d 554 (2014)
FACTS Yelp, Inc., operates a social networking Web site that allows users to post and read reviews on local businesses. The site, which has more than 100 million visitors per month, features about 40 million local reviews. Yelp records and stores defamation. Hadeed alleged that the reviewers were not actual customers. Their statements that Hadeed had provided them with shoddy service were therefore false and defamatory. When Yelp failed to comply with a subpoena seeking the users' identities, the court held the site in contempt. Yelp appealed, arguing that the subpoena violated the users' First Amendment rights.
ISSUE Does requiring Yelp to reveal the identities of some anonymous users who posted potentially defamatory statements violate those users' First Amendment rights?
DECISION No. A state intermediate appellate court affirmed the lower court's ruling. "The judgment of the [lower] court does not constitute a forbidden intrusion on the field of free expression."
REASON Under the First Amendment, "Congress shall make no law … abridging the freedom of speech." Internet users do not lose this right "at the log-in screen." Thus, the Doe defendants had a constitutional right to speak-or post-anonymously over the Internet. But their right must be balanced against Hadeed's right to protect its reputation. The First Amendment protects a user's opinion about a business if the user was a customer of the business and the post was based on personal experience. If the user never patronized the business, however, the post is a false statement of fact. "And there is no constitutional value in false statements of fact."
Here, Hadeed was unable to match the Doe defendants' reviews with the actual customers in its database. Hadeed asked Yelp to identify the defendants, but the site refused. Thus, a subpoena became necessary. "Without the identity of the Doe defendants, Hadeed cannot move forward with its defamation lawsuit. There is no other option."
FOR CRITICAL ANALYSIS-Ethical Consideration Why would someone post a negative review of a business that he or she had never patronized? Discuss the ethics of this practice.