Ruling: Yelp justified in trying to protect user’s rights

Websites have standing to assert the First Amendment rights of their anonymous users, the 4th District Court of Appeal ruled, expanding case law in a way that attorneys believe has broad implications for litigation and investigations.

The 3-0 ruling published Monday reversed nearly $5,000 in sanctions against Yelp Inc. The company’s opposition to a motion to compel it to identify a reviewer was substantially justified “given the dynamic nature of this area of law,” the court of appeal ruled.

The First Amendment finding for Yelp mirrors a March ruling by the 6th District Court of Appeal, and sets the stage for internet websites to fight subpoenas seeking the identities of users.

Nevertheless, the panel said Yelp must turn over information that could identify one its users. The justices determined the plaintiff in the underlying libel case established that the user’s statements were defamatory. The order confirmed a decision last year by Orange County Superior Court Judge Andrew P. Banks.

In reversing Banks on the First Amendment question, the justices noted that the law has continued to evolve after the trial court’s rulings.

Presiding Justice Kathleen E. O’Leary wrote the opinion. Justices Raymond J. Ikola and David A. Thompson concurred. Yelp Inc. v. The Superior Court of Orange County, G054358 (Cal. App. 4th Dist., Nov. 13, 2017).

Steven L. Krongold, who is representing an accountant in the libel lawsuit against an unidentified Yelp commenter, said it was troubling to see Yelp reviews, which he believes are commercial speech, given the same protection as speech on political, religious and social issues.

“It’s much broader than just trade libel,” Krongold said.

Referring to the rise of fake news and investigations into alleged foreign postings about U.S. election campaigns, he said, “There’s subpoenas going out to websites to divulge who the sponsors are of these websites. Do these people have First Amendment rights?”

Yelp’s attorney, Adrianos M. Facchetti of Pasadena, directed questions to Yelp. A spokeswoman, Anna Paladini, said the company pursued the appeal “to confirm its right to stand up for users in response to subpoenas seeking to identify them, and we are glad the court agreed with us on that critical issue.”

“Businesses should never turn to the courts as a substitute for customer service, and doing so risks anti-SLAPP motions, awards of attorneys’ fees to reviewers, and consumer distrust,” her statement read.

The appeal stems from a trade libel claim Krongold filed on behalf of Irvine accountant Gregory M. Montagna over a scathing review of his services posted on Yelp by a user identified only as Alex M.

Krongold sued several anonymous defendants as well as Sandra Jo Nunis, a former client whom Montagna suspected of writing the review. The review contained four false statements, including that Montagna prepared an inaccurate tax return and caused her to hire another firm to redo his work, Krongold said.

Banks turned to a 2006 decision by the 6th District to argue that Yelp could not make a First Amendment defense for a user: Matrixx Initiatives Inc. v. Doe (2006) 138 Cal.App.4th 872. But by the time the 4th District got to Yelp’s writ petition, the 6th District had issued Glassdoor Inc. v. Superior Court (2017) 9 Cal.App.5th 623., which distinguished Matrixx in ways applicable to Yelp’s argument.

In Matrixx, a pharmaceutical company seeking the identity of the author of defamatory online messages traced the posts to the office of a San Francisco hedge fund, but the fund manager cited the author’s First Amendment right and refused to answer questions in a deposition. The 6th District ruled that the manager lacked standing as he claimed to have no relationship at all with the users. Glassdoor distinguished Matrixx by noting Glassdoor’s close relationship with its anonymous users, including its corporate counsel’s declaration that its business model “relies on maintaining its users’” anonymity.

The same is true about Yelp, the 4th District found: “If Yelp reviewers believed it would reveal their identities to any plaintiff who demanded it do so as part of discovery in a lawsuit, we have no doubt it would lose a segment of those reviewers.”

The court also rejected Krongold’s argument that Yelp reviews are commercial speech.

“In short, the type of ‘commercial speech’ that is accorded less First Amendment protection is comprised largely of statements made by those engaged in commerce relating to their business — not statements made about them by consumers,” O’Leary wrote. “That does not describe the speech at issue in this case.”

Krongold is set to get what he wanted in the first place: information from Yelp that could reveal Alex M’s true identity. Nunis, the suspect identified by Montagna, has said in a sworn deposition that she is not the user and had nothing to do with the posts.

“I guess we’re going to find out,” Krongold said.