Review Website Gets Hammered In Court–Consumer Cellular v. ConsumerAffairs
This is not a good opinion for the review website industry. However, the court’s harshest treatment turns on the idiosyncratic practices of ConsumerAffairs.com, which set a key Fourth Circuit Section 230 precedent in 2009 but whose current business practices probably aren’t going to impress you. Although I’m not normally an optimist, I’m hoping this opinion will create minimal collateral damage for review websites that have more traditional editorial and commercial practices. Still, it’s a bad opinion and can be counted as another entry in Section 230’s grim year.
A preliminary note about the ruling’s procedure
ConsumerAffairs brought an anti-SLAPP motion to strike pursuant to Oregon’s anti-SLAPP law, a robust law similar to California’s. The court denied the anti-SLAPP motion entirely. Losing an anti-SLAPP motion to strike normally doesn’t dictate that the defendant will ultimately lose the case. However, in this case, the magistrate report is so harsh and unforgiving towards ConsumerAffairs that it has to be wondering how it can win in the district court.
My blog post analyzes the magistrate’s report from the end of February. Two weeks ago, the trial court summarily affirmed the magistrate report.
Consumer Cellular (CCI) is a cellphone provider. ConsumerAffairs claims to be a review website:
ConsumerAffairs is a consumer news and advocacy organization founded in 1998 by James R. Hood, a veteran Washington, D.C. journalist and public affairs executive. Our website includes consumer news, recall information and tens of thousands of pages of consumer reviews.
However, as recapped by the judge, ConsumerAffairs’ alleged operations sound odious (these are allegations; and paragraph returns added for clarity):
(i) Consumer Affairs conspicuously characterizes customer reviews of the products and services offered by paying accredited members as “Reviews and Complaints” whereas it equally conspicuously characterizes the reviews of other entities’ products and services as “Complaints and Reviews,”
(ii) ConsumerAffairs permits accredited members to challenge or otherwise respond to negative reviews, eliminating such reviews where members assert that the complaints are not based in fact or where the consumer who originally posted the negative review fails to rebut the members’ response, whereas other entities are not given any opportunity to challenge or respond to negative reviews,
(iii) the pages dedicated to reviews of non-accredited members’ products and services all include a section containing the text “Not Impressed With [the entity whose products or services are under review]? Find a company you can trust,” followed by a link to “Top Alternatives” headed by an accredited member, whereas the pages dedicated to reviews of accredited members contain no such sections, and
(iv) reviews are presented in reverse chronological order on the pages dedicated to review of non-accredited members’ products and services, whereas positive reviews are moved to the top of the display of reviews of accredited members’ products and services.
CCI alleged that ConsumerAffairs sales representatives pitched it repeatedly, citing the high search engine visibility and heavy traffic to its negative reviews on ConsumerAffairs and offering to help turn CCI’s reputation around. ConsumerAffairs allegedly quoted a fee of $15k for the first month and $5k/month thereafter and represented that a rehabilitated reputation would generate “$7,200 a month in customer lifetime revenue” which would eventually grow 10x (later, a sales rep said the relationship would “pay for…itself and then some”).
Despite that alluring promise, CCI declined, after which ConsumerAffairs allegedly redirected a link to a positive CCI review to its CCI “complaints and reviews” page; and declined to post other positive reviews. Further, ConsumerAffairs allegedly had a 5 star rating for the one paying member in the cellphone category but the other 39 vendors all had less than 2 star ratings.
CCI brought the following claims: Oregon’s Unlawful Trade Practices Act (“UTPA”), (ii) intentional interference with prospective economic relations, (iii) RICO, and (iv) defamation.
Before getting to the merits, the court makes two moves that benefit the defense. First, it says a federal court can apply a state anti-SLAPP law, although state anti-SLAPP laws don’t apply to federal claims (in this case, the RICO claim). These propositions have plenty of supportive precedent.
Second, as a review website, ConsumerAffairs generally qualifies for anti-SLAPP protection because of the public interest in reviews. The court says: “hosting a consumer reviews website accessible to the public constitutes a public issue or issue of public interest;” “there can be no serious argument that the expression of opinion regarding the quality of services provided to the public is not conduct in furtherance of the exercise of the constitutional right to free speech”; and “defendants’ complained-of actions – removing positive reviews, increasing the salience of negative reviews, etc. – constitute elections made in the course of editing, curating, and presenting the consumer reviews submitted to the ConsumerAffairs website. As such, that conduct, too, is necessarily conduct in furtherance of the exercise of the constitutional right to free speech.” These propositions are also well-grounded in the precedent.
This represents the high-water mark for ConsumerAffairs’ defense. It’s all downhill from here.
Per the anti-SLAPP statute, the burden shifts to CCI to show a probability of prevailing on its claims. The court says it meets the burden.
Oregon UTPA. This unfair competition law generally protects only consumers, not business rivals. The court emphasizes “the legislative history of the UTPA leaves little room for the conclusion that a non-consumer may bring a private cause of action under the statute.” Nevertheless, the court says CCI has met its burden because it may have lost money due to ConsumerAffairs’ scheme, it’s not a business rival, and ConsumerAffairs tried to sell its membership to CCI.
Tortious Interference. CCI alleged that ConsumerAffairs’ review manipulation scared off prospective customers. Normally, tortious interference doesn’t apply to the general loss of customers coming over the transom, but this court bends that rule substantially:
a finder of fact could reasonably conclude that such a prospect of economic relations between CCI and persons searching for reviews of CCI’s services existed, and that defendants were aware of it at the material times. Specifically, the record contains both Marick’s declaration testimony that an ascertainable percentage of members of the public who choose to access CCI’s website ultimately elect to do business with CCI and evidence that defendants, by and through their employee Polacek, admitted to CCI that they were able to ascertain as a matter of statistics both the percentage of persons affirmatively searching for consumer reviews of CCI’s services who ultimately elected to do business with CCI and the expected increase in that percentage should CCI become an accredited member of ConsumerAffairs…CCI has adduced evidence on the basis of which a finder of fact could reasonably conclude that defendants intentionally and improperly manipulated the consumer reviews hosted on its page in a manner calculated to create a more negative impression of CCI’s services than would have been the case had the reviews been unmanipulated
Defamation. The court treats ConsumerAffairs’ star ratings as potentially defamatory. The court acknowledges opinions aren’t defamatory but this case involves “defendants’ own affirmative statements, primarily – perhaps exclusively – defendants’ statements regarding the aggregate ‘overall satisfaction rating’ that it calculates on the basis of all of the reviews of CCI’s services hosted on its site, and presents in salient fashion on the same page as the reviews themselves.” The court amplifies by saying CCI proffered sufficient evidence that “defendants knew the statement was false when they published it, in that defendants knowingly failed to include positive reviews in their calculation of the rating.”
Similarly, the Section 230 defense for the star ratings doesn’t work “because the statement(s) actually at issue are not those of third parties to this action that are merely hosted and curated by the defendants but rather the defendants’ own factual representation(s) regarding those third-party expressions of opinion.” Unfortunately, the judge provided no citations with this analysis. In fact, star ratings have routinely been protected by Section 230, see, e.g., Gentry v. eBay (from 2002!), Levitt v. Yelp, Kimzey v. Yelp, Roca Labs v. PissedConsumer. The Roca Labs v. PissedConsumer case went further and applied Section 230 to other types of remixing and abstractions of user content.
So here’s my main problem with the court’s defamation/Section 230 discussion. If ConsumerAffairs’ star rating is, in fact, pure fiction because ConsumerAffairs arbitrarily makes up a low number to help its B2B sales team, then it’s fair to say that the rating comes from ConsumerAffairs, not a third party, and it doesn’t represent ConsumerAffairs’ “opinion” but is instead some kind of “fact-ish fiction” (i.e., false information presented as if it were fact). However, every plaintiff suing a review website *always* alleges that the site suppressed positive reviews/ratings or otherwise manually monkeyed with the algorithms to its detriment. If those allegations are enough to defeat a Section 230 motion to dismiss/motion to strike, then Section 230 becomes less useful to review websites.
Here, CCI marshaled some concrete allegations that something was fishy with ConsumerAffairs’ ratings, including the disparate favorable treatment of the one cellphone company paying ConsumerAffairs; the redirection of the link away from a positive review; and the incongruity between ConsumerAffairs’ star rating for CCI and CCI’s star ratings on other comparable review websites (although this last point is worthless to me–every site has its own editorial practices, and perhaps ConsumerAffairs does a better job getting to the truth than its competitors). Arguably, CCI wasn’t just making bare unsupported allegations to work around Section 230. Yet, plaintiffs suing review websites can *always* find some metric or basis of comparison to suggest they should have gotten more love from the review website (it’s a little like how someone always gives 5 star ratings to the turdiest movies). So if plaintiffs can get around Section 230 by presenting a few seemingly objective but easily manufactured statistics, Section 230 will get bypassed in every case.
RICO. Every time I see a RICO claim in a pure commercial dispute like this one, I scratch my head wondering exactly what RICO means. The court says RICO claims aren’t covered by anti-SLAPP, so the court treats the discussion as a 12(b)(6) motion to dismiss.
The court says the defendants allegedly directed the illegal behavior via “Polacek’s email messages to CCI’s employees and officers and the maintenance of a collection of consumer reviews hosted by a purportedly unbiased consumer advocacy organization that in reality presents an unwarrantedly positive impression of defendants’ paying customers and an unwarrantedly negative impression of entities who refuse to become paying customers of the defendants.” The alleged “pattern” of racketeering is how “defendants continue to suppress positive reviews of CCI’s services, continue to hold out their organization as one dedicated to unbiased consumer advocacy, and continue to offer relief from their improper manipulation of third-party consumer reviews to reviewed entities that pay significant sums of money to become accredited members” plus “several instances of efforts to use the threat of economic harm to CCI’s business to extort payments from CCI and the deception of the public at large, effected via the internet, regarding the unbiased nature of the third-party reviews hosted on defendants’ webpage.” The alleged wire fraud is that “defendants maintain a website which purports to host consumer reviews of CCI’s products without regard to whether such reviews may be characterizable as reviews or complaints, but which in fact does not include all positive reviews of entities which refuse to become defendants’ accredited members.” The acts of extortion allegedly came from how “defendants attempted to extort tens of thousands of dollars in accredited membership fees from CCI under threat of improper hmm to its reputation and to its business.”
I’m not an expert in RICO law but I think several of these conclusions are novel. For example, Yelp defeated “extortion” claims based on similar factual allegations. At minimum, similar to the Section 230 workaround, these allegations can be lobbed at virtually every review website that makes sales to the reviewed businesses.
This opinion sucks for review websites, but its long term effects depend in part on whether other courts treat this as a bad-facts/bad-law case.
In my opinion, pay-to-play review websites aren’t credible. Any review website that is paid by the businesses being reviewed has an unavoidable conflict of interest that infects every aspect of its editorial decisions.
Google should reduce the search engine visibility of pay-to-play review websites because of their dubious credibility. If Google dried up the traffic to some of the venerable but questionable review websites, many of shady practices in the review website industry would magically resolve themselves.
Some of the court’s analysis could extend to other pay-to-remove websites, such as nonconsensual porn archives, mugshot websites or online profiles. Perhaps this opinion provides a useful barometer of judges’ intolerance for pay-to-remove businesses.