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Holt them. That's a bloom Bred business flash. You're listening to Jaking Stock with Kathleen has and bim Box on Bloomberg Radio and its twenty study by the marketing research firm Mintel found that nearly seventy percent of Americans seek out others opinions online before making a purchase. While some of those online reviews can lead to some unintended consequences, one Dallas couple who wrote a review about a pet company was sued for over a million dollars for the review.
It was a negative review, and the suit alleges that had violated the non disparagement cause in the contract. To find out more, I want to bring in Patrick Gregory. He is Legal editor for Bloomberg b n A. Bloomberg Dyna is a wholly owned subsidiary of Bloomberg. It's a leading source of legal, regulatory and business information for professionals, and Bloomberg Byenna's authoritative coverage spans a range of legal practice areas including tax and accounting, labor and employment. I
want to bring in Patrick Gregory. Patrick, thanks very much for being with us. Explain exactly what is going on here. When people write a review on a website such as yelp, what kind of liability are they subject to? This is generally about defamation lawsuits. So, for example, you write a review on Yelp, you say the flower company that I hired for my wedding brought flowers that we're wilted, and then you might get a demand letter saying we think that you are the saming us. We don't think the
flowers were wilted. You lied about us. And of course it's not the lawsuits that are the problem, so as the threat of the lawsuits, because how many people are going to go to court over a Yelp review that they might have spent ten minutes writing, even if they're telling the truth or just giving a matter of opinion people. No, lawsuits are expensive to defend. Of course, we know the UK,
for example, makes it much tougher. There's a much tougher hurdle seems to me to prove defamation or something like that. If I'm a business though I'm a small business. Are people who have claimed that these reviews were put in by people who were exaggerating or at a bone to pick,
they were not valid. Uh. In fact, you even mentioned in your story give us uh the example that could not really it wasn't held up by the Virginia courts of a company that asked to have the negative reviews unveiled who the people really were, because it seemed that they couldn't. Their views came in negative, but these weren't really people. Maybe, so there was something going on that I can understand why a small business might want to
protect against. Absolutely nobody wants their livelihood destroyed by a couple of reviews that may be false. What happened in Virginia there were actually two courts that said Yelp needed to unmask the reviewers of this carpet company. The carpet company said that these reviews that were posted online don't match match up with the service states that we have in our online records, and so two of the courts said, Yelp,
you're going to have to unmask those anonymous reviewers. And that's a big component of this whole issue, is you're right to anonymous speech that's something that goes way back to the founding of the country. UM. But some disagreed with those courts, saying this was really just a bare bones claim and it shouldn't have been enough to make
unmask the reviewers. And that decision did get vacated, but it was on procedural grounds, so it wasn't something that would give YELP reviewers much comfort in Virginia in the future. Can you tell us a little bit about the Consumer Review Freedom Act and whether that is something that will in a sense derail these lawsuits. There's so what we're talking about here, strategic lawsuits against participation UM, so participating in online speech. Uh. We have federal legislation UM called
to Speak Free Act. I'm not sure about the specific legislation you mentioned, but there is a legislation called to Speak Free Acts that the House is holding a hearing on on Wednesday. Was sponsored by Blake Ferenshold. He's a Republican, but he's actually joined by twenty Democrats and twelve Republicans. And this is an anti slap statute. The way that anti slap statutes work, it lets you dismiss litigation early. So,
for example, under California's state anti slap law. You file an anti slap motion and then the plaintiffs must show a likelihood of success or the suit is dismissed. And if it's dismissed, the defendant can even get attorneys fees, which changes the whole economics of the litigation. It deters planeffs, and then you may even have attorneys taking on slap defense lawsuits at new cost to the defendant. So big
hearing coming up. Patrick directly addressing this issue. A House subcommittee holding a hearing June twenty second, that's Wednesday, on a bipartisan federal anti slap bill that Speak Free Act. Yeah, and that's that's what I mentioned with you have twenty Democrats and thirteen Republicans supporting this. So it looks like if this is if you believe an anti slap legislation,
then for you, this is an encouraging development. Certainly, about twenty eight states and incidentally have anti slap statutes currently California, Texas, Florida, New York, but there's plenty that don't, such as Virginia, Connecticut, New Jersey. Will companies such as yelp, those that host these online reviews will they indeed have to or want to let their potential reviewers know whether a business has
already initiated a lawsuit. Absolutely, and for example a glass door UM at a panel discussion I want to glass Wars vice president was talking about how she gets two D fifty demand letters a year from employers, and they've said that they're willing to go as far as they can to protect their users identities and filing as many appeals as possible. YELP is in very much in favor of this type of legislation and their director of litigation is going to be one of the witnesses that this
hearing on Wednesday. So how big of an issue is this for online sites like that? Not just yell but there's so many things, there's Angie's. This seems to me you could extend this the scope of this kind of complaint UH much further if the courts allow. They don't. They don't come to something that that sets the limits, sets the parameters. Absolutely, there are so many businesses online
that are affected. UM. The one that I mentioned glass doors of website where employees can review their employers or past employers. You know, you have trip Advisor have so many um websites designs um to get information, you know, from reviewers, even Amazon dot Com, and plenty of people leave reviews on there and rely on those reviews to buy products. People also rely on reviews to determine the applications that they want to download for their smartphone or
for their computer. Would this also have any bearing on let's say, the Android Google Play service as well as the Apple iTunes and Apple App Store. Absolutely, because you know, any type of defamation lawsuit, they simply just need to allege that you said something that was false and that it's caused a business harm. So you can certainly think of a situation where you say something about an app that may or may not be true and then you get a demand letter threatening to teach you to court.
All right, Patrick Gigory, thank you so very much for joining us. We'll be will you be covering the hearing on I'm hoping too, yes, what we'll be looking forward to your report. It's one of those things that's brewing out there that we don't always think about, but that's why we always like to turn to Bloomberg b n A and a legal editor like Patrick Gregory to let us know what is going on in Washington, you see him because certainly with legislation, there's so many specifics these days.
And of course I'm looking forward speaking of online Facebook, We're going to be looking at their annual conference in the show today. Yeah, their annual shareholder at meeting, at which I believe the issue whether there's a new class of stock the Mark Zuckerberg wants to create will in fact be voted on by the shareholders, and also keeping
Peter Teel on Facebook's board of directors. And of course now you explain to our listeners because this new class of stocks, which was actually something that was announced a few weeks ago, will allow Mark Zuckerberg to retain power,
retained control of the company. Yes, the idea is that there will be a stock split, and that would affect investors mainly because not in terms of their their value, but it would just affect their ability to control the actions, the corporate actions of the firm, because Mark Zuckerberg would
still retain the majority of the voting shares. So you think that no matter what it does to the current value of the existing shares for investors, the fact that Mark Zuckerberg, who most would say has an obviously terrific job is Founders CEO, the guy who runs Facebook. They like to see him retain control and say, well, that certainly is what many investors would agree to. I mean, the shares of Facebook are up about nine percent so
far this year. And taking a look at the ownership of Facebook, well, take a look that Mr Zuckerberg, through a variety of entities UM still owns a controlling interest. You listen, need to taking Stockheim pim Fox. My co host Kathleen Hayes coming up a look at Facebook, and also we'll take a check on global economics and the preview of Janet Yellen's testimony before Congress. This is Bloomberg Radio.