Yelp Defamation Claimed Barred by CDA

An Alexandria U.S. District Court sets aside a lawyer’s default judgment against the consumer review website Yelp and dismisses the lawyer’s claims of defamation by a former client of the firm as time-barred, and barred under the Communications Decency Act of 1996.

Plaintiff Westlake Legal Group, on behalf of Thomas K. Plofchan, filed a defamation suit against Christopher Schumacher and Yelp in Loudoun County Circuit Court. The complaint arose out of an allegedly defamatory review written by Schumacher about Plofchan’s legal services, which was posted on Yelp’s website on July 7, 2009.

National Registered Agents Inc. is Yelp’s registered agent for service of process. On May 17, 2012, Plofchan purported to serve NRAI with the complaint and summons issued by the state court. NRAI shares the location where it receives process on behalf of its clients with two other registered agent services, one of which is CT Corporation Systems. The sheriff delivered the process to CT Systems’ Corporate Operating Manager and she, on behalf of CT Systems, rejected service of process that same day and sent Plofchan a letter returning the summons and complaint.

Plofchan did not inform Yelp, NRAI or the circuit court that CT Systems had rejected and returned service. Despite this, Plofchan filed a motion for default judgment in the state court on June 29, 2012. The court granted the motion and default judgment was entered against defendants on Oct. 2, 2012. Over a year later, on Jan. 31, 2014, Plofchan moved the circuit court to correct the default judgment nunc pro tunc because of an error that prevented it from being recorded as a lien. The circuit court again granted the motion and entered default judgment on Feb. 7, 2014.

In April 2014, NRAI received a summons to answer interrogatories and a subpoena duces tecum concerning collection proceedings. On April 15, 2014, NRAI forwarded this summons to Yelp. This was the first time Yelp received notice of the action. Yelp immediately emailed Westlake Legal Group requesting a copy of the complaint, which it received the next day. Less than two weeks later, Yelp filed a motion to vacate the default judgment in circuit court. On May 15, 2014, Yelp removed the action to this court. This court denied Plofchan’s motion to remand. The court now denies Pflofchan’s request for reconsideration.

Yelp maintains that removal was appropriate and requests the court to dismiss the complaint in its entirety.

Contrary to Plofchan’s claims, Yelp was not properly served. The default judgment is void. The record makes clear that CT Systems refused the service of process since it was not Yelp’s registered agent. The record also indicates that Plofchan received a letter from CT Systems refusing process. Plofchan maintains service was proper because CT Systems is the registered agent for NRAI. This argument is unavailing. Nowhere can Plofchan find support for the legal proposition that a party is properly served if its registered agent’s registered agent is the entity who received process on the party’s behalf. NRAI is the registered agent for Yelp, not CT Systems. By serving CT Systems, and not NRAI, service on Yelp was improper. This is why CT Systems rejected service.

The parties agree defendant had no notice of the action, the defaulting party has meritorious defenses and it appears plaintiff may have known that service was improper when default judgment was requested.

The court agrees with Yelp that the action must be dismissed because it violates the Virginia one-year statute of limitations in Va. Code § 8.01-247.1. Schumacher’s alleged defamatory post was published in July 2009. Plofchan filed this action almost three years later. This case is therefore time-barred and must be dismissed.

Even if the claim were not time-barred, it would still fail under the Communications Decency Act of 1996, which bars state-law plaintiffs from holding interactive computer service providers legally responsible for information created and developed by third parties.

Westlake Legal Group v. Schumacher (O’Grady) No. 1:14cv564, Aug. 19, 2014; USDC at Alexandria, Va. VLW 014-3-557, 8 pp.