Companies Can Now Fight Back Against Anonymous Online Criticism

It is every company’s worst nightmare: An anonymous poster goes online and makes negative and disparaging statements about the company.  In the social media age we are in, this unfortunate scenario has played out countless times on such sites as Yelp, Rip-Off Report, and other online review sites.  Companies faced with this situation have largely felt powerless to counteract anonymous posters or even find out who the posters are.  But a recent decision by the Virginia Court of Appeals will now give companies some much needed leverage to fight back.

Yelp was forced this week by the Virginia Court of Appeals to “unmask” anonymous posters who posted negative, and possibly false, reviews about a local Virginia carpet cleaning company, Hadeed Carpet Cleaning. Hadeed believed that seven negative Yelp reviews of its services were false, and so it filed a defamation lawsuit against the anonymous posters, naming them as “John Does.” In order to unmask the anonymous posters, Hadeed then sent a subpoena for documents to Yelp, which Yelp objected to on First Amendment grounds.

The Virginia Court of Appeals ruled that Yelp had to comply with the subpoena and provide information about the identities of the online posters.  The Court balanced the First Amendment rights of the anonymous posters versus the rights of companies to protect their reputations, and stated that false statements are not protected by the First Amendment. Yelp argued that Hadeed Carpet Cleaning had to prove its defamation case before Yelp could be forced to unmask its posters – even though Virginia law does not require companies to meet that burden. The Court clarified that Virginia’s unmasking procedure only requires a company to have a legitimate good faith basis to contend that it has been a victim of defamation. Yelp now has to produce the records and disclose the people who posted the negative reviews.

This is a very significant decision in the social media arena, and provides some much-needed leverage for businesses seeking to protect their online reputations against false and often faceless posters. Businesses often need to protect themselves against online attacks by posters who post false reviews, and this recent decision clarifies the legal avenues available to companies in Virginia and potentially elsewhere to protect against malicious posters seeking to damage business reputations.

Seth Berenzweig is a managing partner at the DC regional business law firm, Berenzweig Leonard, LLP. Seth can be reached at sberenzweig@berenzweiglaw.com. Katie Lipp, an attorney with the firm, co-authored this post. Katie can be reached at klipp@berenzweiglaw.com.

Venue Selection Clauses Give Companies Leverage in Litigation

Many contracts, especially those between sophisticated parties, contain clauses specifying the state in which disputes arising out of the agreement must be litigated.  For instance, a company headquartered in Virginia would want to specify that all disputes be litigated in a predetermined county or federal court in Virginia.

While many courts have historically enforced forum selection clauses as written, others have been reluctant to enforce the provisions where doing so would compel litigation in a state that seemed extremely unfair based upon a consideration of “the convenience of parties and witnesses” and “the interest of justice.”  Resolving that circuit split, the Supreme Court of the United States recently decided the case of Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, addressing for the first time the extent to which forum selection clauses are enforceable and ultimately concluding that courts should enforce such clauses as written, in all but the rarest circumstances.

The Court’s decision alleviates an uncertainty previously faced by contracting parties.  In the wake of Atlantic Marine, parties can now confidently rely on the enforceability of the forum selection clauses contained in their agreements, and accurately predict the state in which they will litigate.  By resolving the circuit split in favor of the majority view, the Court has created an environment where parties are able to bargain over forum selection as efficiently as any other contract term; a party may, for instance, stipulate to litigating in a less convenient state in exchange for receiving a discounted contract price, or offer pay additional consideration in order to guarantee the opportunity to litigate somewhere they consider favorable.

Atlantic Marine marks an important point in High Court jurisprudence, and one that business leaders and other contracting parties should be aware of.  In addition to promoting the freedom of parties to bargain with one over contract terms going forward, this decision also provides certainty and predictability to forum selection clauses contained in existing agreements.  This predictability allows companies to keep costs down by litigating in a friendly state and being able to efficiently fend off motions to transfer venue.  “When the parties have agreed to a valid forum-selection clause,” Justice Alito writes in Atlantic Marine, “a district court should ordinarily transfer the case to the forum specified in that clause.”  Excepting “extraordinary circumstances unrelated to the convenience of the parties,” the Court’s decision allows contracting parties to place unprecedented confidence in their forum selection clauses, and maintain more control as they resolve business disputes.

Frank Gulino joined Berenzweig Leonard as an associate attorney in September 2013.  He can be reached at fgulino@berenzweiglaw.com.