by Paul Alan Levy
Following the recent decision of the Virginia Court of Appeals affirming the enforcement of a subpoena to Yelp by Hadeed Carpet Cleaning, demanding the identities of seven anonymous reviewers, and our petition to the Virginia Supreme Court seeking leave to appeal, Hadeed has been trying to organize a broader crusade against Yelp by appealing to other business owners who are frustrated by negative reviews Hadeed has obtained coverage for one claim that one sometimes hears from businesses hoping to explain away their negative reviews: Because Yelp runs its service on an advertising model, rather than the Angie’s List type subscription model, and because Yelp is not shy about soliciting advertising from businesses that are reviewed on its web site, a number of businesses simply blame Yelp for their negative consumer reviews, claiming that the negative reviews appeared only after they refused Yelp’s invitation to advertise, and represent Yelp's retaliation.
The Problem of Pay-for-Play Consumer Commentary Web Sites
I take these contentions seriously. We are generally glad to provide pro bono representation to sites that host consumer criticism because they allow consumers to explain their good and bad experiences with local or other businesses, thus giving other consumers more information that they can assess in deciding where to do business. But although we provide pro bono representation to consumer commentary sites like 800Notes that accept advertising, we will not represent another type of host, which takes money to exempt companies from criticism, as a number of other companies do (we do participate as amicus curiae in cases about the section 230 immunity rights of companies with a less salutory business model, when the plaintiff's theory would if successful threaten impartial sites as well). If we concluded that Yelp was operating on the Ripoff Report model, we would not be providing it with pro bono representation, even on the important free speech issues presented by subpoenas.
Assessing Complaints
It is easy to accuse a hosting company of extortion. The accusation used to be made with frequency against 800Notes, for example. When a plaintiff made this assertion about 800Notes (based on an anonymous Internet posting!) as a basis for granting a preliminary injunction in litigation I was handling, I reviewed enough of the relevant financial records to be confident that the accusation was false (and in any event, 800Notes' advertising is too generic to present issues similar to the claims made against Yelp). That criticism against 800Notes appears to have died down.
I am not in a comparable position to say with certainty that accusation is false as far as Yelp is concerned; I do not have access to Yelp’s financial records to evaluate the question and, indeed, given Yelp's size, its books would likely be much too complex for me to make a sound assessment. There is a modest rebuttal of the assertion in a study that found no statistical relationship between Yelp’s filtering of reviews of a particular business and whether that business was a Yelp advertiser. (See section 3.4 on pages 11-12, discussed here.) But extortion for filtering is not the entire issue here. In one case where the plaintiff alleged that false reviews appear on Yelp to punish non-advertisers, the claim was dismissed, although Yelp’s denial of plaintiffs’ claims was never tested by discovery because plaintiffs were unable to allege the extortion theory with sufficient specificity. So although we take note of the persistent complaints about Yelp, as far as I can see they remain insufficiently substantial to warrant concern (and of course they are generally advanced by businesses with an ax to grind).
The Wall Street Journal's Angus Loten recently received under the FOIA a packet of complaints about Yelp that had been submitted to the FTC. Less significant than the number, which received the greatest public attention, is whether there are significant patterns among the complaints, and whether the complaints prove to be substantial. From a neutral perspective, we can hope that either Loten, or indeed the FTC, will enlighten us about the substance and veracity of the complaints, and not just their number.
Hadeed's Accusations Against Yelp
But there is one business whose accusations about Yelp I am in a position to assess. Joe Hadeed has been telling the press that his "problems [with negative reviews] began when he refused to pay a rate increase and pulled his advertising.” The record in Hadeed v. Doe squarely contradicts this contention. (Although I could not contact Hadeed about this matter, given my current representation of Yelp, I solicited a response by alerting Hadeed’s counsel to my plan to address this issue; Hadeed declined to take the opportunity to show that it has any basis for its contentions about Yelp).
The record of the case reveals that it was on September 15, 2011, that Hadeed signed up for a one-year advertising contract beginning October 1, 2011. The contract set the rates for that one-year period of time; it was not renewed.
Hadeed sued seven anonymous reviewers on July 2, 2012, before the advertising contract ended. The reviews over which Hadeed sued were dated December 14, 2011, December 19, 2011, February 29, 2012, March 20, 2012. April 2, 2012, April 5, 2012, and April 10, 2012. So unless Hadeed is claiming that it faced a rate increase less than two months into the contract term, there could not have been any relationship between the supposed rate increase and his ending of the advertising contract, and the negative reviews that he claims are false in his litigation.
A review of the Hadeed page on Yelp, including the “Reviews Not Currently Recommended,” show that negative reviews continued throughout the year 2012, including after the advertising contract ended. Moreover, there were a large number of one-star and two-star reviews for his business even earlier in 2011 than the date on which Hadeed’s representative signed the advertising agreement. They can be seen on the web page currently, and are reproduced in the appendix from the Court of Appeals: from March 2011 to September 2011 on pages 104 to 106 of the Appendix in the Court of Appeals, from 2010 (plus January 2011) on pages 107-109, and from 2009 on pages 109-111. So the fact is that Hadeed signed up for an advertising contract despite the fact that it was experiencing a spate of negative reviews, and those negative reviews continued throughout the advertising contract. The negative reviews did not end after the advertising contract did, but there appears to be no statistical relationship between the negative reviews and the advertising contract.
Indeed, the negative reviews on Yelp are consistent with Hadeed's low rating with the Better Business Bureau, and the unusually low percentages of customer satisfaction reported by Washington Consumer Checkbook. Hadeed also fares poorly among the members of Angie's List. Thus it appears that in blaming Yelp for the existence of negative reviews, Hadeed is just blaming one of the several messengers that have brought bad tidings.
There are important First Amendment and policy issues presented by the enforceability of the subpoenas at stake in Yelp v. Hadeed (the case name on appeal). It seems to me that Hadeed would be better off arguing his side of those issues, rather than embellishing them with false accusations about Yelp.
