The CRFA: Don't Start Celebrating Yet.

 Posted on December 17,2016 in Uncategorized

Protip: the government is not in the business of protecting free speech; any apparently pro-speech statute should be viewed most skeptically.

Here's the congress.gov summary of HR 5111, the Consumer Review Fairness Act of 2016:

(Sec. 2) This bill makes a provision of a form contract void from the inception if it: (1) prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews, or other similar performance assessments or analyses of, including by electronic means, the goods, services, or conduct of a person that is also a party to the contract; (2) imposes penalties or fees against individuals who engage in such communications; or (3) transfers or requires the individual to transfer intellectual property rights in review or feedback content (with the exception of a nonexclusive license to use the content) in any otherwise lawful communications about such person or the goods or services provided by such person.A "form contract" is a contract with standardized terms: (1) used by a person in the course of selling or leasing the person's goods or services, and (2) imposed on an individual without a meaningful opportunity to negotiate the standardized terms. The definition excludes an employer-employee or independent contractor contract.The standards under which provisions of a form contract are considered void under this bill shall not be construed to affect:legal duties of confidentiality;civil actions for defamation, libel, or slander; ora party's right to establish terms and conditions for the creation of photographs or video of such party's property when those photographs or video are created by an employee or independent contractor of a commercial entity and are solely intended to be used for commercial purposes by that entity.Such standards also shall not be construed to affect any party's right to remove or refuse to display publicly on an Internet website or webpage owned, operated, or controlled by such party content that: (1) contains the personal information or likeness of another person or is libelous, harassing, abusive, obscene, vulgar, sexually explicit, inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic; (2) is unrelated to the goods or services offered by or available at such party's website; or (3) is clearly false or misleading.A provision shall not be considered void under this bill to the extent that it prohibits disclosure or submission of, or reserves the right of a person or business that hosts online consumer reviews or comments to remove, certain: (1) trade secrets or commercial or financial information; (2) personnel and medical files; (3) law enforcement records; (4) content that is unlawful or that a party has a right to remove or refuse to display; or (5) computer viruses or other potentially damaging computer code, processes, applications, or files.A person is prohibited from offering form contracts containing a provision that is considered void under this bill.Enforcement authority is provided to the Federal Trade Commission (FTC) and states.The FTC must provide businesses with nonbinding best practices for compliance.Nothing in this bill shall be construed to limit, impair, or supersede the Federal Trade Commission Act or any other federal law.

Can Congress restrict contracts governed by state law? Doubtful. The bill itself, which is being heralded on the Twitter Machine as a victory for free speech, doesn't even make a genuflection toward Interstate Commerce:

The term "covered communication" means a written, oral, or pictorial review, performance assessment of, or other similar analysis of, including by electronic means, the goods, services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party.

In fact, "Nothing in this section shall be construed to affect any cause of action brought by a person that exists or may exist under State law."

So Congress isn't pretending that it can make contract provisions void under State law. Not directly. But it's "unlawful for a person to offer a form contract containing a provision described as void," and the FTC can enforce the law, which means that there is a potential $10,000 civil penalty per violation. State attorneys general can also enforce the law in federal court. So Congress will make these contract provisions void under State law by extinguishing them entirely.

There are public-policy reasons for not allowing consumers to contract away their right to publicly criticize companies they do business with.

There are also public-policy reasons for allowing them to do so. Responding to public criticism is a cost that much be priced into the product or service, and a seller and consumer of a non-necessary good might reasonably agree that the right to publicly criticize is not worth the added cost of the product or service. Not everybody is selling widgets, and some products and services are such that even when everything is done perfectly the consumer might complain, and the provider might be barred from responding (see, e.g., "criminal defense"). I've never discouraged clients from leaving reviews

In my view, the reasons for allowing consumers to enter into these contracts outweigh the reasons for preventing it, but reasonable minds might differ. Using the coercive power of the state to save people from getting into contracts that they are not happy with is just not my thing.

Exceptio probat regulam in casibus non exceptis.

But this should bother even Free-Speech Twitter:

Nothing in paragraph (1) shall be construed to affect-...(C) any party's right to remove or refuse to display publicly on an Internet website or webpage owned, operated, or otherwise controlled by such party any content of a covered communication that-(i) contains the personal information or likeness of another person, or is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic;(ii) is unrelated to the goods or services offered by or available at such party's Internet website or webpage; or(iii) is clearly false or misleading;...

The implication is that one must display on his own website whatever criticism of his goods or services consumers want him to publish there, provided that it is (i) not politically incorrect or (iii) clearly false or misleading.

This is the opposite of free speech; it is a content-based restriction on silence, requiring certain content but allowing other content to not be published.

Especially troubling is the way that the permitted deletions are defined: speech that

contains the personal information or likeness of another person, or is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic

Congress is saying that it will "protect" critical speech that is not "inappropriate with respect to... intrinsic characteristic," but not speech that is.

Inappropriate.

If that doesn't give free-speech lawyers pause, I don't know what will.

See protip, supra.