Two immediate applications for the Consumer Review Fairness Act

by Paul Alan Levy

Now that both houses of Congress have passed the Consumer Review Fairness Act,  which invalidates the inclusion of clauses barring consumer reviews in form contracts, and sent the bill to the President for his signature (this happened last Friday), we will be looking for situations in which to apply it.  There is a case currently pending in Southern District of New York, where the owners of some Paris apartments have sued an Oregonian couple based on clause inserted into the forum-selection provisions of the form contract.  And, in a situation near and dear to my own consumer heart, my home-town soccer team is demanding that fans promise not to post descriptions of games, photos or videos “in any media” as a condition of getting season ticket packages.

May Landlords Forbid Posting Consumer Reviews on VRBO?

The first situation to which we have in mind to apply the new law is currently pending in the federal court; it was the subject of a blog post by Eric Goldman when the trial court refused to dismiss the complaint early last year.  The case involves a Paris apartment offered for rent on VRBO (an acronym for Vacation Rentals by Owner).  But when James and Judi Johnston arrived at the apartment that they thought they had reserved, they found it already occupied by a different couple, and they found the apartment itself and the building itself to be in a state of disrepair.  They described their adverse experience in a review on VRBO itself so that other prospective renters could take the issues into account in deciding whether to choose that rental, just as the Johnstons had assiduously studied the reviews in choosing that rental for themselves.

Claude and Violane Galland filed a pro se lawsuit claiming both defamation and breach of contract, relying on the following clause in the section of the rental contract providing for Paris-based arbitration of any complaints arising during the rental and for litigation in New York breach of contract claims.  Among these strictures was the following sentence:  “The tenants agree not to use blogs or websites for complaints, anonymously or not.”  The Johnstons’ pro se motion to dismiss did not mention the First Amendment or contest the legality of the clause, and the magistrate judge, although dismissing the libel claims on the ground that they were merely statements of opinion, similarly did not address the legality of the clause.   The judge recognized that the review might not be a “complaint” within the meaning of the contract clause but refused to dismiss the complaint while at the same time denying the Gallands’ motion for summary judgment on the contract issue.  

The progress of the case has been stymied by discovery disputes (which is the occasion for a pending motion to dismiss filed by the Johnstons’ daughter, an Oregon attorney who entered the case after dismissal was denied), but we agreed to take over the case for summary judgment purposes. Our plan had been to invoke both unconscionability and illegality under New York’s consumer protection laws,  and to cite the First Amendment as a defense.  In the latter regard, the argument is that the very ambiguity of the clause and the uncertainty about whether a VRBO review is a “complaint” within the meaning of the contract provision, on which the magistrate judge based refusal to grant judgment for either side, is a basis for ruling that the clause is not a sufficiently clear and unmistakable waiver of the First Amendment right (echoing arguments that recently succeeded in Prestigious Pets v. Duchouquette).   But because the plaintiffs have characterized the review as one that forbids any online criticism, the enactment of this new statute gives additional ground for attacking the plaintiffs’ claim – or at least it will do so assuming that the Galland’s are still claiming a valid contract in three months when the law takes effect.

May DC United Bar Fans from Posting Social Media Images and Comments on Games?

Readers of this blog may recall an article that I posted in late September, taking issue with a proposed contract that the local professional soccer team has transmitted to season ticket holders who are in the process of renewing their season tickets for the coming season.  My concern that the contract includes language in which fans waive the right to post “in any media any description, account, picture, video, audio or other form of reproduction of any D.C. United game or any surrounding activities.”  Regrettably, despite many fans having objected to the proposed contract, to the extent of telling team sales people that they won’t be renewing if signing this contract is required, and even though the team tried to deflect the adverse coverage by saying that its lawyers would be looking at possible changes to the contract language.  However, late last week the team sent out the same contract for signature, and told me privately that the lawyers had decided not to make any changes because the language is “industry standard.” A web site at DC United Season  addresses the issue.

DC United Crying Eagle

And standard or no, the contract language flies in the face of the Consumer Review Freedom Act.  Although the law has generally been discussed as a ban on non-disparagement clauses, the language of the statute reaches more broadly: it forbids a form contract that “prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication,” Section 2(b)(1)(A), and defines “covered communication” to include any “ written, oral, or pictorial review, performance assessment of, or other similar analysis of . . . the goods, services, or conduct of a person by an individual who is party to a form contract.”  Section 2(a)(2).  The DC United contract that forbids fans from posting written descriptions or pictures of a game (that is, a review or performance assessment of the team’s conduct) is squarely within the law’s prohibition. To the extent that DC United’s proposed language reflects what many other sports teams prohibit on the part of their fans, the statute appears to require a reassessment of how these limits are being phrased.

0 thoughts on “Two immediate applications for the Consumer Review Fairness Act

  1. Gregory Gauthier says:

    Also, it appears that arbitration gag clauses prohibiting the parties from disclosing information about arbitration proceedings are clearly within the scope of the Consumer Review Freedom Act’s prohibitions. It would be very interesting to see a test case.

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