Yikes, I’ve Been Yelped! What Recourse Do I Have?

For a real estate professional, minimizing, much less avoiding or resolving, the potential fallout from a negative Yelp review has never been easy. Unlike a restaurant or a service provider (e.g., cleaners) who can communicate with their customer to apologize, explain, and/or offer another meal, gift certificate, or a re-do on any service, the typical one-time nature of a professional service does not lend itself to any of these options with the exception of rebating commission.

The option of asking Yelp to remove and review a negative review is very limited, given the standards that Yelp has established for that to take place. Reaching out to your client and attempting to discuss why they have submitted a negative review has rarely led to a retraction, given their perception of what took place and the fact that the transaction is usually closed by that point.

Another option is to try and eliminate the impact of the negative review by having positive reviews submitted to Yelp. How many positive reviews it takes to outweigh a negative one (if that is possible) has yet to be quantified. Obtaining the positive reviews not only requires time but also may be viewed as an imposition by some clients.

The most frequent question I get asked when I am consulted by a real estate licensee in this situation is whether they can sue for defamation. The answer to that question is that you may be able to, but there are potential factual, legal, and practical issues that must be analyzed in each case and that may make a successful defamation case difficult.

To prove a defamation claim, one must establish the following elements: (1) a publication that is (2) false, (3) defamatory, (4) unprivileged, and (5) has a natural tendency to injure or causes special damage (Issa v. Applegate (2019) 31 Cal.App.5th 689, 702). “A statement is defamatory when it tends ‘directly to injure [a person] in respect to [that person’s] profession, trade, or business, either by imputing to [the person] general disqualification in those respects which the occupation peculiarly requires or by imputing something with reference to [the person’s] profession, trade, or business that has a natural tendency to lessen its profits’” (McGarry v. University of San Diego (2007) 154 Cal.App.4th 97, 112).

“Though mere opinions are generally not actionable,” a “statement that implies a false assertion of fact is actionable” (Issa, p. 702). “It is not the literal truth or falsity of each word or detail used in a statement which determines whether or not it is defamatory; rather, the determinative question is whether the ‘gist or sting’ of the statement is true or false, benign or defamatory, in substance” (Issa, p. 702).

“The ‘pertinent question’ is whether a ‘reasonable factfinder’ [judge, jury or arbitrator] could conclude that the statements ‘as a whole, or any of its parts, directly made or sufficiently implied, a false assertion of defamatory fact that tended to injure’ the person’s reputation” (Issa, p. 703).

A court will apply a “totality of the circumstances” test to determine whether a statement is fact or opinion and whether a statement declares or implies a provably false factual assertion; that is, courts look to the words of the statement itself and the context in which the statement was made (Issa, p. 703).

A recent California court of appeal decision, Paglia & Associates Construction, Inc. v. V.J. Hamilton (filed December 27, 2023), discusses the distinction between an opinion and a fact in the context of a Yelp review. Ms. Hamilton stated in her Yelp review that Paglia, her general contractor, had committed “’hard fraud’ in that he had destroyed undamaged structures” on her property. Paglia responded by submitting evidence that he had committed no fraud and that the building codes required him to do the extensive work on Hamilton’s old house, including the work to these allegedly undamaged structures.

On the issue of whether Ms. Hamilton’s statements were merely opinions, the Court of Appeal concluded that a factfinder could conclude that her statements asserted a fact, noting that whether the destruction of the structures was needless and fraudulent or whether modern building codes compelled the work was a matter that could be proven or disproven. The Court also concluded that her statement that Paglia had committed “’hard fraud’” was libel as a prima facie matter, for the statement would tend to injure his occupation.

Unfortunately, even if you can demonstrate that a statement was not an opinion, there still remain the other elements of the cause of action (including causation and damages). A party claiming defamation will have to meet their burden of proof that the Yelp review caused actual damages. It can be very challenging to demonstrate that business and/or profits were lost as a result of a negative Yelp review, especially when compensation is speculative and not guaranteed, as is true in real estate commissions.

There are also practical problems with defamation actions. One of these is whether there will be a basis to recover the attorneys’ fees that are spent in pursuing the claim. Absent a statutory basis to do so (for instance, elder abuse), attorneys’ fees are not recoverable. There may be other statutes that provide for a recovery of attorneys’ fees, but this can only be determined on a case-by-case basis. The reality is that attorneys’ fees are often the single biggest financial factor in deciding whether to pursue a defamation claim.

There is no doubt that a negative Yelp review stings and is frustrating because of the inability to challenge, correct, and/or eliminate it. The Court of Appeal in the Paglia decision concluded that “using the Internet to speak publicly is every American’s right but, if people wish to defame private figures online, they do so at their own risk.” Unfortunately, the factual, legal, and practical issues associated with a defamation action do not give a victim of a negative review a quick or simple remedy, let alone an adequate remedy, with any automatic upside of recovering attorneys’ fees spent in pursuing that action.

Some negative Yelp reviews come out of the blue. Others are unwelcome but not necessarily unexpected. If you are working with a client and start to sense that they are dissatisfied or that their expectations are unrealistic, don’t ignore these warning signs. One possible way to avoid a negative review is to address these issues with the client directly before the client’s dissatisfaction builds up to the point that you can tell that a bad review is coming your way. If you don’t feel that you can continue to communicate effectively with your client and/or address their perceptions and feelings, ask your manager and/or brokerage counsel to step in and assist you in communicating with the client. Getting that assistance quickly, before the client resorts to Yelp, can be the best approach.

About David Hamerslough

In his 35 years of practice, Dave Hamerslough has litigated and arbitrated residential and commercial real estate disputes on behalf of brokers and agents, buyers and sellers, and landlords and tenants. Dave also acts as a mediator and arbitrator of real estate disputes. He also teaches courses and writes articles on these subjects to brokers, agents, attorneys, and consumers.

HomeGuard California Home Inspections, Roof Inspections, Termite Inspections, & More

HomeGuard is equipped to deliver superior home inspection services. Our Home Inspectors are carefully selected for certification based on technical skills and professionalism. We can arrange for a Home or Roof Inspection at the same time you call to make an appointment for your Termite Inspection, pool/spa inspection, or sewer lateral inspection, another timely and cost effective way of meeting your needs.