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Online Business Review Leads to $25,000 Lawsuit

Written by Lawrence Opalewski on October 14, 2014 Category: Business Law & Transactions, Civil Litigation, Free Speech

Many of us have posted business reviews on the internet. Maybe you just did so over the weekend. Whether it was that amazing steak or that lousy service, it was something you felt that future customers should know about that particular business. Maybe you use Facebook, Google + or the extremely popular Yelp. Services like these are relied upon by many people when deciding whether or not to try a particular business. Many posters enjoy impacting the rating of a business while retaining the ability to remain relatively anonymous, if they wish. One issue for business owners is how to deal with negative reviews. While many negative reviews are legitimate, and some services such as Yelp use a screening process to allow only legitimate reviews, some reviews are clearly the work of someone with an agenda. And these reviews can be devastating to businesses. One Michigan business recently took issue with a particularly negative online review and has now brought the matter to court.

In Five Sparrows vs. Spot Shooter Archery, Jim Beasley, the owner of an archery store in Holly, MI posted a negative review on the Google + page of a web developer from Livingston County, MI. In July 2013, Beasley hired Five Sparrows to redesign his company website. Apparently, Beasley was not pleased with the results of the relationship and posted this review of Five Sparrows:

Please do not deal with this company. After almost five months and several thousand dollars, our e-commerce store is still not done and we have zero return on our investment. They talk a great game but you will lose your money. Five Sparrows has hurt our store’s finances. We have tried to work with them but I’m giving up! PLEASE STAY AWAY!

Beasley also sent a letter to the head of a business networking group which contained much of the same information and accusations. In an interview with the Oakland Press, Beasley claimed that the website that Five Sparrows built for him does not work properly and has caused him to lose thousands of dollars. Five Sparrows asked Beasley to remove his Google + review, but he refused to do so.

For its part, Five Sparrows claims to have performed “all aspects it was required to under the contract.” In bringing the business defamation lawsuit against Spot Shooter Archery, Five Sparrows claims that Beasley’s statements are “inflammatory” and “defamatory.” Five Sparrows also claims that the review has “a tendency to and did prejudice [Five Sparrows] in the conduct of its business and deter others from dealing with [Five Sparrows].” Five Sparrows also brought claims of interference with a business relationship, and two contract-related claims. As a result, Five Sparrows now seeks over $25,000 from Spot Shooter Archery. In addition, Spot Shooter Archery has now filed a counterclaim against Five Sparrows.

Despite the strong language used in the online review, it will not be easy for Five Sparrows to win on its claims here. In a defamation case, the truth of the statement is a valid defense. In other words, if what the review described is accurate, there is no defamation here. Also, defamation typically requires that the speaker act with actual malice or with reckless disregard for the truth. That means that Five Sparrows would have to show that Beasley knew the statements were false and published them anyway. This is a difficult task, to be sure.

While it will be difficult for a defamation claim of this nature to succeed, stranger things have happened in the law. Whatever the outcome, it would be interesting to see a Michigan judge’s opinion on this area of the law as it relates to online business reviews. Any openings provided by the judge could lead to a huge amount of activity in this area. However, with the level of proof required, this outcome seems unlikely.

The attorneys at Dalton & Tomich, PLC specialize in business law and matters relating to free speech. If you have any questions relating to these areas of law, or you think you may have a claim to make, please do not hesitate to contact us. We would be happy to speak with you.

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