Friday, September 10, 2021

getting friends to leave fake reviews isn't enough for direct liability

BHRS Gp., LLC v. Brio Water Technol. Inc., 2020 WL 9422352, No. 2:20-CV-07652-JWH-JCx (C.D. Cal. Dec. 14, 2020)

BHRS, which makes water cooler products, sued its competitor Brio for state and federal false advertising and trade libel.  BHRS alleged that studies showed that online product reviews, especially Amazon reviews, have a significant impact on consumer decision-making. BHRS alleged that multiple customers who posted negative Amazon reviews of BHRS products and positive reviews of Brio products are connected (through social media, family, school, or geographic location) to individuals in Brio’s management and other individuals employed by Brio.

Reflecting the continuing confusion in the courts about fake reviews, the court dismissed the claims.

First, BHRS didn’t sufficiently allege that Brio itself made the challenged statements. For example, BHRS alleged that one of the reviewers attended high school with the son of Brio’s CEO, and that the two were currently classmates at the University of Southern California and Facebook friends. However, there were no allegations that any individual acting on behalf of Brio “instructed or otherwise engaged” him with respect to his review of the BHRS product. These allegations didn’t satisfy Rule 9(b) or establish any legal relationship between Brio and the reviewers.

Also, BHRS didn’t adequately allege “how” the statements were false, because the reviews contained “vague, generalized statements of opinion about the quality of, and the respective reviewers’ experience with, the BHRS product.” (I didn’t reproduce them, but some of the statements might have been found to be factual by a different court, such as claims about quality of manufacture or comparative ease of use, but the real question is of course whether these were actual reviews of the product at all--that's the key alleged falsity, and it is falsifiable.)

This largely disposed of all the claims. As for trade libel, BHRS failed to plead special damages. And, because BHRS didn’t allege that it relied on the allegedly false statements, it didn’t sufficiently allege reliance for UCL claims. (There is a clear split on this question in district courts.)

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