Court Tosses Prestigious Pets' $1 Million Defamation Suit Against Unhappy Customers

from the no-statute-of-limitations-on-the-Streisand-Effect dept

Prestigious Pets, a Texas pet-sitting company, has done a severe amount of damage to the "prestigious" half of its name over the past several months. After front-loading its inevitable reputational ruin by adding a KlearGearian "non-disparagement clause" to its service contracts, the company doubled-down with a $1 million defamation lawsuit after losing out on its small claims court bid to extract $6,766 from an unhappy customer for "lost work opportunities" and "libelous and slandurous [sic] harm."

The unhappy customers, whose Yelp review only stated the pet sitter Prestigious Pets hired had overfed their fish, were forced to defend themselves against a clearly baseless lawsuit. Fortunately, Chris Dachniwsky of law firm Thompson & Knight stepped up to represent the couple on a contingency basis.

Even better, Public Citizen's Paul Alan Levy is reporting the court has tossed the lawsuit and found [PDF] the non-disparagement clause Prestigious Pets deployed to its own detriment is unenforceable.

A state District Court in Dallas (Judge Jim Jordan of the 160th District) has struck down a lawsuit over a non-disparagement clause in a form consumer agreement, holding that it could not be enforced against a consumer who expressed dissatisfaction about the service provided by a local business. Although we have won default judgments in Utah against Kleargear and in New York against Accessory Outlet, this case represents the first time a company defended its non-disparagement clause with a brief, and thus the first time we have had a judge’s ruling refusing to enforce such a clause.

[...]

What the decision does make clear is that non-disparagement clauses in form consumer contracts are susceptible to attack in court and that businesses in states with anti-SLAPP statutes should act with care before suing to enforce them.

Any company seeking to enforce these stupid clauses is basically pointing a loaded gun at its own reputation when doing so. Taking someone to court over them is pulling the trigger. Suing unhappy customers has almost never worked out in favor of those filing lawsuits. Even if, by some off-chance, the court agrees with them, the public won't.

Unfortunately, the very short opinion doesn't necessarily say the court will never find these clauses enforceable. But this particular case is dismissed with prejudice, meaning Prestigious Pets can't drag the unhappy customers back into court over the same claims.

Here's the decision in full, which is greatly aided by the state's anti-SLAPP law. Legal fees will be paid by Prestigious Pets, which means Thompson & Knight's good deed is the rare kind that may go rewarded, rather than punished.

On July 29, 2016, the court heard Defendants, Robert Duchouquette and Michelle Duchouquette's, Motion to Dismiss Plaintiffs' Claims Under Texas Citizens' Participation Act. Having considered the Motion, Plaintiffs' Response, Defendants' Reply, Plaintiffs' Sur-Reply, the supporting affidavits and exhibits of the parties and the argument of counsel, the court grants Defendants' Motion to Dismiss.

IT IS THEREFORE ORDERED AND ADJUDGED that all causes of action alleged in Plaintiffs' Original Petition are dismissed with prejudice and that Plaintiffs, Kalle McWhorter and Prestigious Pets, LLC, take nothing from Defendants, Robert Duchouquette and Michelle Duchouquette in this action.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that, upon notice and hearing, Defendants are entitled to recover their court costs and reasonable and necessary attorneys' fees incurred in defending this action as justice and equity may require pursuant to § 27.009(a) of the TEXAS CIVIL PRACTICE AND REMEDIES CODE and recover sanctions against the Plaintiffs sufficient to deter them from bringing similar actions described in Chapter 27 of the TEXAS CIVIL PRACTICES AND REMEDIES CODE.

Filed Under: defamation, gag clause, nondisparagement clause
Companies: prestigious pets

Company Sues Customer For $1 Million, Claiming Yelp Review Was 'Defamatory,' Violated Non-Disparagement Clause

from the wrong-on-both-counts dept

A Dallas pet-sitting company had a small problem. HAD. But it approached it badly and now it has a much larger one.

It tried to enforce a "non-disparagement" clause to silence an unhappy customer. Copied nearly word-for-word from what is now known as "KlearGear boilerplate," the clause forbade customers from uttering a discouraging word under pain of whatever Prestigious Pets might come up with (including wholly made-up damages on top of legal fees, etc.), and awarded itself "sole discretion" to determine what words/actions would trigger the clause.

An unhappy couple posted a review to Yelp with some mild criticisms of the company -- the worst of it being that the "independent contractor" the company provided had not taken care of the customer's fish particularly well and that Prestigious Pets was difficult to get ahold of.

First, the company's legal rep sent a letter to the customers disputing every claim made in the Yelp review and informing them that their refusal to discuss the issues with Prestigious Pets "violated the spirit" of its bogus non-disparagement clause.

Then it filed a claim for $6,766 against the couple in small claims court, listing everything from "lost work opportunities" to "libelous and slandurous [sic] harm" to violation of the non-disparagement clause. This action produced completely predictable results. The couple aired their grievances even more publicly as the story of Prestigious Pets' clause and retaliatory legal actions began to make its way from local news stations to nationally-read websites.

The couple retained counsel to file an anti-SLAPP motion against the company's claims. But Prestigious Pets, stung by the backlash to its attempted enforcement of its clause, withdrew its small claims court filing (instantly mooting the anti-SLAPP motion) and filed a million dollar lawsuit instead.

Its new lawsuit may contain more detail than its small claims court filing, but it's not any more valid than its earlier effort. And its reasons for filing a "larger" lawsuit are questionable, as Paul Alan Levy of Public Citizen (who is assisting in the legal battle against Prestigious Pets) points out.

The company claims that the relief in its new lawsuit is justified because its business dried up in the face of the publicity about its lawsuit, and it brought new claims against Robert Duchouquette because he had appeared in media interviews where he objected to having been sued in the first place.   But at this point, the Duchouquettes were not only defendants in a lawsuit for a potentially bankrupting amount of damages, but they had to consider the significant up-front expense of having to pay their lawyers for the hourly expense of defending themselves against a SLAPP suit – the small claims suit alone had subjected them to a ten thousand dollar legal bill.

The statement made by the Duchouquettes that seems to most offend the pet sitting company deals with simple facts. The allegations by Prestigious Pets contain phrases never used by the Duchouquettes ("[T]he Duchouquettes have made it an ongoing campaign to tell the world that Prestigious Pets and Kalle almost killed their fish or at least potentially harmed it (without any evidence to support such a claim)...") and indisputable facts: there was excess food on the bottom of the aquarium, the water was cloudy, and overfeeding is almost always bad for fish, no matter what breed.

The couple's motion to dismiss [PDF] attacks Prestigious Pets' use of a non-disparagement clause that gives the company the "right" to severely limit its customers' speech.

Prestigious Pets’ standard contract—which includes a non-disparagement clause—is shockingly one-sided. It strips consumers of their fundamental rights of free speech, arguably going so far as to even bar consumer actions protected by law such as filing a lawsuit in response to egregious wrongdoing by the company. It provides for the recovery of attorneys’ fees—only against the consumer. It sets Prestigious Pets up as the sole judge and jury to determine whether the non-disparagement clause has been violated. Perhaps worst of all, the contract even goes beyond simply barring speech that injures Prestigious Pets, and actually seeks to bar “any action” that in any way—in Prestigious Pets’ sole estimation—harms the company.

What's really bizarre about this entire debacle is that Prestigious Pets tried to distance itself from this non-disparagement clause by claiming it was inserted by "professionals" who assisted with crafting the company's service agreement. This bizarre post-blowup stiffarm attempts to imply the company is somehow blameless, if not entirely powerless to halt the events set in motion by a service agreement the company apparently had no direct input in compiling. Having such a clause in a service agreement is just stupid. Trying to enforce it to shut up critics is suicide. And, as is noted by Levy, Prestigious Pets has already tried to use the clause against another unhappy customer.

There appears to be almost no chance this lawsuit will survive a motion to dismiss. But if anyone's going to learn what needs to be learned from this experience, the anti-SLAPP motion will also need to be granted, along with a fee shift that compensates these customers for enduring a particularly inept defamation suit.

Filed Under: anti-slapp, dallas, non-disparagement, pet sitting, pets, robert duchouquette, slapp, texas
Companies: prestigious pets, yelp