The advent of social media has dramatically lowered the cost to consumers of acquiring and disseminating information.  Formerly, only a handful of people might hear about a bad experience with a retailer or service provider.  Now, it’s possible for a consumer to kvetch online before an audience of millions.  Whether consumer criticisms are accurate and justified or false and malicious, a business is likely to be unhappy to have its shortcomings publicized.  As Justice Franklin D. Elia noted in Krinsky v. Doe 6, 159 Cal. App. 4th 1154, 1163 (2008):

It is this informal ability to “sound off,” often in harsh and unbridled invective, that opens the door to libel and other tortious conduct.   In the corporate and financial arena, the targets of such “cybersmear” may suffer damage to their business reputations and a concomitant decline in company value as disinformation and rumors propagate rapidly over the Internet.

Therefore, some businesses have responded by including non-disparagement clauses in their terms and conditions of sale.  In one widely reported case  an online merchant imposed a $3,500 charge on a Utah couple that had posted a derogatory review on RipOffReport.com.  The $3,500 charge was included in the terms of use section of the website.

The travails of this Utah couple did not go unnoticed in California.  Earlier this week, Governor Brown signed AB 2365 (John A. Pérez) into law.  This bill provides that a contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.  Cal. Civ. Code § 1670.8(a) (new).  This seems relatively clear – waivers of a consumer’s right to comment will soon be verboten.

The bill also declares it “unlawful to threaten or to seek to enforce a provision made unlawful under this section [§ 1670.8], or to otherwise penalize a consumer for making any statement protected under this section”.  Cal. Civ. Code § 1670.8(b) (new).  However, I find this provision to be less than pellucid.  What exactly is a statement protected under the statute?  The statute prohibits waivers of a consumer’s right to make any statement.  Does that mean that all statements, including those that are libelous or defamatory, are now protected?  Would a merchant’s lawsuit for libel or defamation be an attempt to “otherwise penalize” a consumer in violation of the statute?  Unless the legislature sooner takes action to tighten up this new law, we may have to wait for answers to these questions from the courts.