A Texas appellate court has reversed a $1.2 million judgment against a marketing professional who wrote a negative Yelp review about a dentist who owed him money.
The premise of Friday’s appellate ruling, issued by Dallas’ Fifth Court of Appeals, is about the protection of broad-form releases that litigating parties enter with one another, but the marketer’s lawyers also say it’s a good day for free speech.
The litigation pits marketer Sean Gharavi against Texas dentist Behrooz Khademazad and his practice, Grand Prairie Family Dental.
Gharavi wrote the negative Yelp review after Khademazad refused to pay Gharavi’s business, Aidris Inc., for marketing services the firm provided to the dentistry, even after Gharavi received an arbitration award and trial court judgment in Tarrant County to enforce the payment.
The appellate opinion notes that Yelp removed the review several months after it was posted and that “there is no evidence that anyone other than Yelp personnel and the parties viewed the post.”
Meanwhile, more months passed without payment by the dentist. Aidiris filed an application for turnover and receivership, which led attorneys on both sides to negotiate a settlement and a broad-form mutual release of claims.
But two months after signing that agreement, Khademazad sued Gharavi in Dallas County for libel, business disparagement and negligence based on the single Yelp post, the opinion says.
Gharavi moved for summary judgment and argued that the release barred Khademazad’s claims, but the motion went undecided and a one-day bench trial followed, the opinion says, leading to Dallas District Judge Staci Williams awarding Khademazad $1.2 million in damages.
Gharavi’s lawyers presented six issues on appeal, but the appeals court sided with Gharavi on the first issue they raised: that Khademazad’s claims were extinguished by the release that resulted from the settlement agreement both parties reached.
In a six-page opinion written by Justice Ken Molberg, the court agreed and did not address the five other grounds for appeal — which, in the view of Gharavi’s lawyers, further solidified the importance of enforceability on broad-form releases.
“When settling any type of dispute, parties need to know that the releases they sign will be honored and enforced as written and will not be subject to hidden claims or ‘gotcha’ arguments in the future,” Haynes and Boone partner Jason Bloom, who led Gharavi’s appeal, told The Texas Lawbook. “Otherwise, parties will be less likely to settle and court will be more burdened with never-ending disputes.”
Khademazad’s attorney, Julia Pendery of Cowles and Thompson, told The Lawbook in an email that her side will file a motion for rehearing.
Bloom was confident that his side’s First Amendment arguments would have prevailed had their broad-form release argument not been successful, but if that judgment had been affirmed, he said it would have had “a lasting chilling effect on free speech.”
“Speech that costs $1.2 million to make is anything but free,” Bloom said. “The damages awarded for a single social media review are 30 times the median income in this country. And $500,000 in punitive damages for doing something that many Americans do every day is excessive and unjustified, especially given the free speech implications.
“If the judgment stood, I think you would see some aggressive lawyers attaching it to demand letters to discourage others from speaking freely against their clients on social media,” he added. “Although the court did not reach the First Amendment defenses, the outcome is nevertheless important for free speech.”
The Haynes and Boone team that prevailed also included counsel Ryan Paulsen and associate Chris Knight.
Khademazad’s team also included Cowles and Thompson’s Bill Siegel.