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Negative online reviews and the limits of litigation

A business that used litigation to address an online Yelp review has to pay sanctions to the customer who posted the review. And the case still is not over!

I remember an old saying about being focused on the cheese and forgetting about the trap. The idea is that at some point you need to re-evaluate the initial goals and objectives in light of new information or circumstances.  You know that you need to forget about the cheese and start worrying about the trap when you start using words like quagmire and phrases like “exit strategy” and “cut your losses.”

Litigation can be a classic example of being focused on the cheese and forgetting about the trap.  The Fifth Court of Appeals, Dallas, Texas issued an opinion this week involving a Yelp review and the Texas Citizens Participation Act that shows how litigation can create problems that did not exist prior to going down the litigation path.

The case is Duchouquette v. Prestigious Pets, LLC.   The Douchouquettes hired Prestigious Pets to feed their fish while the Douchouquettes were out-of-town.  On their fish webcam, the Douchouquettes saw Prestigious Pets’ pet sitter over feed the fish. The Douchouquettes posted a negative review on Yelp.com.  Prestigious Pets filed a lawsuit in justice court against the Douchouquettes over the Yelp review.  The Douchouquettes responded with a motion to dismiss under the Texas Citizens Participation Act, and requested attorney fees and sanctions against Prestigious Pets.

The Texas Citizens Participation Act “encourage[s] and safeguard[s] the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law. . ..”  The TCPA allows a part to file a motion to dismiss a legal action if the legal action is “based on, relates to, or is in response to a party’s exercise of the right of free speech, . . ..”  A TCPA motion to dismiss must be filed within 60 days after service of the legal action, and all discovery is suspended until the court decides the motion to dismiss.  If the court grants the motion to dismiss under TCPA, the court must award court costs, reasonable attorney fees, and sanctions against the party who brought the legal action.

The TCPA raises the stakes anytime the legal action relates to free speech, and especially for parties like Prestigious Pets who file legal actions over negative online reviews.

Getting back at the Douchouquettes for the Yelp post was the cheese.  The TCPA was the trap.  Recognizing that it should forget the cheese and worry about the trap, Prestigious Pets dismissed its claims against the Douchouquettes in justice court and thereafter the justice court denied the Douchouquettes’ TCPA motion.

The Douchouquettes appealed the denial of their TCPA motion to county court.  At the same time, Prestigious Pets filed a separate legal action in district court, and the Douchouquettes filed another TCPA motion in the district court.  The county court dismissed the case for lack of jurisdiction. In the district court case, the district court granted the Douchouquettes’ TCPA motion and sanctioned Prestigious Pets $7,000 under the TCPA.  Despite the mandatory language in the TCPA, the district court denied the Douchouquettes’ request for $10,415 in attorney fees.

The Douchouquettes were not finished.  They appealed the county court’s dismissal on jurisdictional grounds to the Dallas Court of Appeals.  The Dallas Court of Appeals reversed the county court, and remanded the Douchouquettes’ TCPA motion for consideration by the county court.

What happens next in the county court with the Douchouquettes’ original TCPA motion is anyone’s guess.  The county court could rule that the district court already decided the issue when it granted the Douchouquettes’ TCPA motion and awarded them $7,000 in sanctions against Prestigious Pets. Or the county court could revisit the Douchouquettes’ request for attorney fees, which now will include appellate attorney fees.

Prior to filing the legal action against the Douchouquettes for the Yelp review, Prestigious Pets’ primary problem was how to overcome the Yelp review.  After filing the legal action, Prestigious Pets had the Yelp problem, and the Douchouquettes’ TCPA motion.  If nothing else, this case is a cautionary tale of how the TCPA imposes limits on addressing online reviews through litigation.

Thunderdome 2017: Read it or don’t, but you still are bound by what you sign

Under the law of the Thundedome, if you bust a deal then you face the wheel. That’s clear enough.

Recently the Fifth Court of Appeals at Dallas paraphrased and expanded Thunderdome law in a case involving an arbitration clause and allegations by the employee that he did not read or speak English, and allegations that employer tricked the employee into signing an acknowledgment that the employee understood the employer’s policies and procedures (which included the arbitration provision).

The case is MiCocina Ltd. d/b/a Taco Diner v. Jose Balderas-Villanueva.  The case has some good Thunderdome-esque contract law sound bites like: “A party to an arms-length transaction is charged with the obligation of reading what he signs,” and “It will not do for a man to enter into a contract, and, when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained.”

The case also is significant because the Dallas Court of Appeals enforced the arbitration provision, even though the employer reserved the right to modify or terminate the provisions of the policy manual, and even though the employee alleged that the employer misrepresented the contents of the policy.

From time to time I get questions from clients about whether they are bound by terms they did not know about in a contract that they signed.  The Dallas Court of Appeals says yes. There are exceptions to the general rule, but exceptions are not automatic.

If you have an arbitration clause and you want to ensure that it stands up to judicial review, this is an excellent case to evaluate whether your arbitration clause is in step with the Dallas Court of Appeals’ most recent statement of the law.

What do you do with an OSHA citation?

You have an employee who is seriously injured in the workplace.  The Occupational Safety and Health Administration (OSHA) investigates the incident and issues one or more citations and proposes one or more penalties. OSHA also will direct you to post the notice of violation so that all of your employees can see it, and give you a hard deadline by which the cited condition must be abated.  What do you do next?  You contact OSHA and try to resolve the citation and penalties, right?  Maybe.

The maximum penalties for serious and other than serious violations is $12,675 per violation and $126,749 per violation for willful or repeated violations.  For failure to abate, the penalty is $12,675 per day beyond the abatement date.  The penalties can really add up fast.

As part of the citation packet, you probably will receive an invitation to engage in an informal conference with OSHA to resolve the citation.  OSHA also may make a preliminary offer to reduce the penalty and enter into an expedited settlement agreement.

Considering the potential expenses involved in contesting the OSHA citation, the offer to engage in an informal conference with OSHA to reduce the penalty sounds appealing.  Even the initial offer from OSHA to reduce the proposed penalties is cause for optimism.   However, as part of any informal settlement, whatever you ultimately agree to with OSHA regarding the cited condition will become a final order not subject to review by any court or agency.  This means that if there is a future incident in your workplace you may be cited for a willful or repeated violation and hit with the substantially higher penalty.  Then there is the issue of the admissibility of OSHA citations in subsequent litigation.  In Texas there is case law establishing that OSHA standards represent the standard of care.

And to make the decision more complex than it needs to be, OSHA only gives you 15 business days to engage in the informal settlement process.  Considering (1) the ramifications of admitting to a violation and having a record of the violation on future citations and penalties; and (2) the potential impact of the citation on subsequent litigation, 15 business days is not a whole lot of time to make a reasoned decision.

So you fight it, right? Keep in mind that the citation from OSHA is not conclusive.  The citation is what OSHA hopes to prove by a preponderance of the evidence before an administrative law judge.  And yes, OSHA tends to do very well at the administrative level.  However, once the case moves to the appellate level, the results tend to even out somewhat. Fighting OSHA can be time-consuming and expensive, but it may be the best option for you when you consider the impact that settling with OSHA may have on the bigger picture down the road.

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