An outcry has lately arisen over consumer contracts that purport to ban disparagement of the company that proffered the contract or its products, especially since a few such companies, seeking to silence customers vocally dissatisfied with products or services, have proceeded to sue them, threaten them with suit, or report them as credit risks. Although it is doubtful that existing law in fact permits practices of this sort, California proceeded to pass a new law protecting consumers from retaliation by companies they criticize — a law that appears to go much farther than just banning the practices that stirred the furor. [Volokh] Contra: Scott Michelman, CL&P.
As we’ve reported earlier in a series of posts, an online supplier named KlearGear inserted into its customer agreement a clause prohibiting “any action that negatively impacts KlearGear.com [or] its reputation.” When a couple nonetheless left a negative review, it billed them $3,500 and reported them for nonpayment to credit raters. The couple filed an action to which KlearGear failed to respond, and a court in Salt Lake City has now granted their request for a total of $306,750 including $250,500 in punitive damages, though the collectibility of that sum is unknown. [CL&P]
A few weeks ago a furor broke out after it was reported that a company called KlearGear had billed customers $3,500 for giving it a negative review, pursuant to a non-disparagement clause prohibiting “any action that negatively impacts KlearGear.com [or] its reputation.” Now it seems a company purveying refrigerated wine cabinets is using a similar clause [Matthew Hunt, Scotch Tape and Duct Whisky via WineBerserkers.com]