Company Sues Customer For $1 Million, Claiming Yelp Review Was 'Defamatory,' Violated Non-Disparagement Clause

from the wrong-on-both-counts dept

A Dallas pet-sitting company had a small problem. HAD. But it approached it badly and now it has a much larger one.

It tried to enforce a “non-disparagement” clause to silence an unhappy customer. Copied nearly word-for-word from what is now known as “KlearGear boilerplate,” the clause forbade customers from uttering a discouraging word under pain of whatever Prestigious Pets might come up with (including wholly made-up damages on top of legal fees, etc.), and awarded itself “sole discretion” to determine what words/actions would trigger the clause.

An unhappy couple posted a review to Yelp with some mild criticisms of the company — the worst of it being that the “independent contractor” the company provided had not taken care of the customer’s fish particularly well and that Prestigious Pets was difficult to get ahold of.

First, the company’s legal rep sent a letter to the customers disputing every claim made in the Yelp review and informing them that their refusal to discuss the issues with Prestigious Pets “violated the spirit” of its bogus non-disparagement clause.

Then it filed a claim for $6,766 against the couple in small claims court, listing everything from “lost work opportunities” to “libelous and slandurous [sic] harm” to violation of the non-disparagement clause. This action produced completely predictable results. The couple aired their grievances even more publicly as the story of Prestigious Pets’ clause and retaliatory legal actions began to make its way from local news stations to nationally-read websites.

The couple retained counsel to file an anti-SLAPP motion against the company’s claims. But Prestigious Pets, stung by the backlash to its attempted enforcement of its clause, withdrew its small claims court filing (instantly mooting the anti-SLAPP motion) and filed a million dollar lawsuit instead.

Its new lawsuit may contain more detail than its small claims court filing, but it’s not any more valid than its earlier effort. And its reasons for filing a “larger” lawsuit are questionable, as Paul Alan Levy of Public Citizen (who is assisting in the legal battle against Prestigious Pets) points out.

The company claims that the relief in its new lawsuit is justified because its business dried up in the face of the publicity about its lawsuit, and it brought new claims against Robert Duchouquette because he had appeared in media interviews where he objected to having been sued in the first place.   But at this point, the Duchouquettes were not only defendants in a lawsuit for a potentially bankrupting amount of damages, but they had to consider the significant up-front expense of having to pay their lawyers for the hourly expense of defending themselves against a SLAPP suit – the small claims suit alone had subjected them to a ten thousand dollar legal bill.

The statement made by the Duchouquettes that seems to most offend the pet sitting company deals with simple facts. The allegations by Prestigious Pets contain phrases never used by the Duchouquettes (“[T]he Duchouquettes have made it an ongoing campaign to tell the world that Prestigious Pets and Kalle almost killed their fish or at least potentially harmed it (without any evidence to support such a claim)…”) and indisputable facts: there was excess food on the bottom of the aquarium, the water was cloudy, and overfeeding is almost always bad for fish, no matter what breed.

The couple’s motion to dismiss [PDF] attacks Prestigious Pets’ use of a non-disparagement clause that gives the company the “right” to severely limit its customers’ speech.

Prestigious Pets’ standard contract—which includes a non-disparagement clause—is shockingly one-sided. It strips consumers of their fundamental rights of free speech, arguably going so far as to even bar consumer actions protected by law such as filing a lawsuit in response to egregious wrongdoing by the company. It provides for the recovery of attorneys’ fees—only against the consumer. It sets Prestigious Pets up as the sole judge and jury to determine whether the non-disparagement clause has been violated. Perhaps worst of all, the contract even goes beyond simply barring speech that injures Prestigious Pets, and actually seeks to bar “any action” that in any way—in Prestigious Pets’ sole estimation—harms the company.

What’s really bizarre about this entire debacle is that Prestigious Pets tried to distance itself from this non-disparagement clause by claiming it was inserted by “professionals” who assisted with crafting the company’s service agreement. This bizarre post-blowup stiffarm attempts to imply the company is somehow blameless, if not entirely powerless to halt the events set in motion by a service agreement the company apparently had no direct input in compiling. Having such a clause in a service agreement is just stupid. Trying to enforce it to shut up critics is suicide. And, as is noted by Levy, Prestigious Pets has already tried to use the clause against another unhappy customer.

There appears to be almost no chance this lawsuit will survive a motion to dismiss. But if anyone’s going to learn what needs to be learned from this experience, the anti-SLAPP motion will also need to be granted, along with a fee shift that compensates these customers for enduring a particularly inept defamation suit.

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Companies: prestigious pets, yelp

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Comments on “Company Sues Customer For $1 Million, Claiming Yelp Review Was 'Defamatory,' Violated Non-Disparagement Clause”

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Avatar28 (profile) says:

Texas law

Texas apparently has one of the better anti-SLAPP statutes out there. Here’s the dirty if anyone is interested.

Basically, if the Duchouquettes win their motion (and they almost certainly will), they must be awarded court costs, legal fees AND additional damages such that justice is served. I suspect the bigger your pockets the more you’re going to have to pay to make sure that it hurts. From the site above:

If you prevail, in whole or in part, in your motion to dismiss under the Citizens Participation Act, the court “shall” award you “court costs, reasonable attorney’s fees, and other expenses. . . as justice and equity may require.” The court “shall” further award you damages from the plaintiff “sufficient to deter the party who brought the legal action from bringing similar actions.” In short, the court will tailor your total monetary award to suit both your costs and the specific attributes of the individual plaintiff.

Robert L says:

Too many lawyers...

I contend that this type of thing is the consequence of there being too many damn lawyers. If we had fewer lawyers, the ones we had would be doing ‘real’ legal work rather than trying to come up with ‘novel’ ways to extract money from people who’ve done nothing more than complain about substandard service.

Anon E. Mous (profile) says:

I wonder if the owners of Prestigious Pets ever thought “Paul Levy, I wonder who that is” and did a google search.

It would seem this ham fisted attempt to bully these folks into submission and get cash out of the deal is going to go over about as well as Kleargear attempt to do the same a while back.

Well this wont be a cheap lesson to learn that these clauses usually never stand up when in court and that Paul Levy doesn’t usually lose them either and gets costs awarded to him.

David says:

Our little petsitting company is all grown up

One day, they are meddling in small-fry business but then they come of age and do their ILO (Initial Legal Offering) and are wholly responsible for their own fate.

“We were young and needed the money and didn’t know better” is a recipe for getting in bed with the wrong people. But at some point, consenting adults need to make their own decisions and be responsible for them.

And the market for the pout-and-sulk act, although impressive overall, is still not high on the agenda for most … judges.

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