Tuesday, November 19, 2013

SLAPPed With a Fine

Thank you to my UConn colleague, Robert Bird, for sending in this news item.

Well, it is not quite a SLAPP suit, but it employs the same principle.  You order a product online and get bad service. You write an online review expressing your opinion of the service.  Then the Seller informs you of a "fine" in the thousands of dollars because your "contract" contained a "non-disparagement" provision.  Don't pay the "fine" and the Seller reports the charge to credit agencies as if it were a debt. Watch the video for the whole story.

You can read the "non-disparagement" provision here: http://web.archive.org/web/20130817144417/http://www.kleargear.com/termsofuse.html
Thanks to Terence Lau at Univ. of Dayton, for providing the link

Here are only a few of the issues that come to mind for me:
1. You can't be fined for breaching a contract.  There can be a liquidated damages provision, but that is enforceable only if the provision is NOT a fine and IS a fair attempt at estimating damages.
2. If the Seller materially breaches the contract by not performing its obligations, then the Buyer's obligations under the contract are excused.
3. No court would enforce the contract provision as to do so would be government censorship of speech.
4. This is an attempt at SCOBUF (Strategic Censorship of Opinion by Unilateral Fine) (I just made that up.  Do you think it will stick?) It is along the same lines as SLAPP which is outlawed by legislation in many states.
5.  Perhaps the Buyers cannot get a lawyer to take their case, but where are the state regulatory agencies?  Is this not a classic "Unfair and Deceptive Acts and Practices" case?

The company seems to be attempting to name itself as both judge and jury in a defamation claim without bothering to actually file one.  See post on internet defamation.

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