(Reuters) - For people who post anonymous reviews online – and for consumers who rely on those reviews – there’s both good and bad news in a decision Monday from the 4th Appellate District of the California Court of Appeal in Yelp v. Gregory Montagna.
The good news? The appeals court ruled internet companies can stand up to oppose the unmasking of anonymous reviewers who have posted on their platforms. The 4th District judges in the Yelp case – Kathleen O’Leary, Raymond Ikola and David Thompson – agreed with colleagues from the 6th District who said in last March’s Glassdoor v. Superior Court that companies hosting online reviews have a right to litigate to shield the identity of anonymous posters because their interests are entwined.
The appeals court rejected arguments by Gregory Montagna, a Newport Beach accountant who alleges he was defamed in an pseudonymous review on Yelp, that internet companies are not like traditional publishers, who have a well-established First Amendment right to protect anonymous speech. Montagna lawyer Steven Krongold of Krongold Law Group contended, among other things, that because Congress gave internet companies a safe harbor from liability for users’ posts, those companies have a perverse incentive to encourage controversial and offensive comments.
The 4th District was not persuaded. “Even if that were true, Montagna fails to explain how that distinction would affect the providers’ standing to assert the First Amendment interests of their users,” Judge O’Leary wrote for the panel. “And we cannot see how it would.”
Now for the bad news, which seems to me to overshadow the good: Yelp couldn’t convince the 4th District to shield the identity of the reviewer who blasted the California accountant. Under the Yelp court’s reasoning (which echoes a similar interpretation from another state appeals court this summer), anonymous reviewers in California ought to start worrying they’ll be exposed if they’re sued for defamation.
California courts seem to be developing a consensus that rejects the widely-accepted unmasking test known as the Dendrite standard, which was established in a 2001 New Jersey appellate decision, Dendrite International v. Doe. The multistep Dendrite test calls for courts, in the final step of their analysis, to balance the First Amendment rights of anonymous posters against the necessity of exposing their identities. But in Monday’s Yelp decision, the 4th District said the final balancing test is unnecessary.
The Yelp court sided with California’s 1st District, which said in last July’s ZL Technologies v. Doe that the other prongs of the Dendrite test adequately protect posters’ First Amendment rights. Both appellate courts said plaintiffs seeking to unmask anonymous posters need only make a prima facie showing that the anonymous statements are libelous and that they cannot pursue their claims without establishing the poster’s true identity.
The appeals court in the Yelp case acknowledged that California law on unmasking anonymous critics is unsettled and evolving. Three of the cases that guided the judges’ analysis, as they pointed out, were decided in 2017. And the California Supreme Court has yet to offer specific guidance on when anonymous online critics can be exposed. But the 4th District said recent precedent from the state Supreme Court, in last July’s Williams v. Superior Court, confirms litigants’ broad discovery rights, including the right to uncover “the identity and location of persons having knowledge of any discoverable matter.”
The Williams case involved a discovery dispute over employment records, not defamation claims against an anonymous critic, but the Yelp judges said they were guided by the Supreme Court’s admonition that discovery rules “must be construed liberally in favor of disclosure unless the request is clearly improper by virtue of well-established causes for denial.”
Yelp, which was represented by the Law Offices of Adrianos Facchetti, made a last-ditch argument that accountant Montagna hadn’t made a prima facie case of defamation against a Yelp reviewer using the pseudonym Alex M. The review said of Montagna’s firm: “Too bad there is no zero star option! I made the mistake of using them and had an absolute nightmare,” according to the appeals court’s opinion. The reviewer also claimed to have hired a different accountant to redo Montagna’s work. The second accountant, the reviewer claimed, doubled the refund.
Yelp said most of the review was opinion and therefore not subject to a suit. The appeals court disagreed because the post contained statement of fact that, if disproved, could support Montagna’s claim. Moreover, the court said, Montagna could only prove the falsity of the poster’s allegations by addressing his work for the anonymous reviewer. He could not do that, the 4th District said, unless the reveiwer’s identity was exposed.
Yahoo sent me an email statement: “Yelp fought this case 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,” it said. “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.” Montagna counsel Krongold didn’t respond to my phone message.