Consumer Complaints: To sue or not to sue?
Gehres Law Group, P.C. offers insight on how California’s Anti-SLAPP Laws increase risk when suing is based on consumer complaints.
Any business can be affected by consumer complaints whether the comments are factual or not. In a hypothetical sitution let us consider Adam X as the owner of “Fast & Healthy Eats”, (F&H) a business incorporated in the state of California which owns two restaurants in San Diego, California. Only 30 years old, and having grown up with computers and cellphones, Adam is multi-media hip and understands the importance of having an internet presence for his business. He hired a marketing consultant to meet with monthly to help brand and market F&H. He also paid close attention to customer comments on consumer websites like Yelp, Angie’s List, Citysearch, etc., and was vigilant in responding to negative reviews, and addressing what he considered legitimate consumer complaints.
Shortly after a new restaurant by the name of “Homegrown Raw” (Homegrown) opened on the same block as F&H’s flagship restaurant in Pacific Beach, Adam thought he noticed an increase in the number critical consumer complaints about F&H on the consumer websites. Apart from complaints about wait times and flavor, a common theme of the complaints was that F&H’s food was not really healthy because, for example, they used genetically modified soy and other GMO ingredients, pasteurized milk products, and vegetable oils high in Omega 6. Adam responded as best he could to these consumer complaints, but business at F&H dropped precipitously and he was annoyed at what he suspected might be a covert campaign by Homegrown. Like F&H, Homegrown was a “healthfood” restaurant, and thus a very direct competitor.
When a friend of Adam’s told him he recognized a “customer” who had posted a criticism of F&H on Yelp, through his photo and his name “Tim Z”, and knew that his real name was Tim Zimminz, and that he was a close friend of the owner of Homegrown, Adam believed his suspicions were confirmed. He determined to “make an example” of Tim Zimminz, by suing him. He also hoped, through discovery in his lawsuit against Tim Zimminz, to find evidence to proceed directly against Homegrown for unfair competition. (Adam’s friend did not want to testify or provide an affidavit and Adam agreed not to involve him in the action. Adam hoped to uncover evidence of Zimminz’s relationship with Homegrown through discovery.)
Adam hired a San Diego business litigation attorney who agreed to file a defamation complaint against Tim Zimminz. The plan was to depose Zimminz, to expose his relationship with Homegrown, and to subpoena and depose Homegrown.
The decision to sue Tim Zimminz turned out to be a nightmare mistake. The complaint was based solely on the alleged defamatory statements he had posted on Yelp, to the effect that F&H’s food was not healthful, and that F&H was deceptive for not advertising the fact that they used GMO foods, hydrogenated oils, and pasteurized milk. Zimminz responded to the complaint with a motion to strike under California’s “Anti-SLAPP” statutes, Code of Civ P. Sections 425.16 et seq. Discovery was immediately stayed pending resolution of the motion, and Zimminz filed a memorandum arguing that his complaints and criticisms of F&H on Yelp were all protected speech, concerning a matter of public interest, to wit, his evaluations of a public restaurant. Lacking “admissible evidence” to show that it was probable he would prevail on his defamation claims, the Court dismissed the lawsuit Adam had filed and ordered F&H to pay Zimminz’s attorney fees in bringing the motion, which were over $20,000.00.
California’s Anti-SLAPP laws
California anti-SLAPP laws are found at Code of Civil Procedure Section 425.16 et seq. They are designed to protect the public right to petition and free speech in matters of public interest and concern, including in connection with lawsuits, legislation, in public forums and discussions, and generally in matters of public interest. There are various related statutes, including but not limited to the law of privilege codified in Civil Code Section 47, along with a large body of case law comprising and interpreting California’s anti-SLAPP laws, and its application to a particular fact scenario can be complicated. Where anti-SLAPP law applies, however, it can spell disaster for a plaintiff who is found to have filed a contravening lawsuit.
If a complaint for defamation, for example, arguably involves “protected speech”, a defendant can respond by filing a motion to strike under anti-SLAPP provisions and discovery will be immediately halted pending ruling on the motion. This can be a significant impairment to a plaintiff who filed suit expecting to utilize the discovery process to obtain the evidence he needs to prove his case.
If the defendant can meet the initial burden of showing, with declarations and other competent evidence, that the complaint is based on alleged conduct within the protection of the anti-SLAPP legislation, i.e. protected speech, then the burden shifts to the plaintiff to show, by admissible evidence, (without the benefit of formal discovery) that plaintiff has a probability of prevailing on his claims. If plaintiff cannot meet that burden, the case will be dismissed and the plaintiff will be ordered to pay the defendant’s attorney’s fees in bringing the motion. Because anti-SLAPP motions to strike usually involve significant attorney time, the sanctions against losing plaintiffs are often substantial.
An Experienced Business Litigation Lawyer Can Help You Avoid an Anti-SLAPP Motion
In the scenario above, the litigation lawyer Adam consulted should have anticipated the Anti-SLAPP motion and advised Adam not to proceed with the lawsuit without additional evidence. Indeed, rarely is it advisable to institute formal litigation against customers who post complaints on consumer websites without considering the possibility of an Anti-SLAPP motion being filed by the defendant and planning ahead for such a situation. It is critical for business owners to get solid advice from experienced business litigation lawyers with an understanding of defamation law and the law of unfair competition.
As is made clear from this example, being aware of the potential for an Anti-SLAPP motion in his case could have saved Adam significant time and expense. If you are faced with negative consumer reviews or another situation where the Anti-SLAPP and related provisions of California law may apply, find out more by consulting with an experienced business litigation attorney so you can avoid the disaster of having your case dismissed based on these statutes.
Stephen S. Lux
Business Litigation Lawyer
ABOUT THE AUTHOR
Stephen S. Lux handles business-related disputes and litigation on behalf of Gehres Law Group, P.C., which serves clients throughout California and is a four attorney full-service business law firm headquartered in San Diego, California. Mr. Lux has been an aggressive, zealous advocate for clients for over 30 years and enjoys an excellent reputation for courtesy and professional integrity in the legal community. To contact the Gehres Law Group or Mr. Lux, call toll free (877) 333-2420 or locally in San Diego at (858) 946-2314, or visit our website at gehreslaw.com.