Nondisclosure, Non-disparagement, and Contract Law
posted by Dave Hoffman
“Robert Lee visited a dentist, Stacy Makhnevich, because he was suffering from a severe toothache, caused by a painful infected cavity. She refused to treat him until he signed a so-called “privacy” contract, which included a clause preventing him from posting negative reviews of her online. [The clause read: "Patient will not denigrate, defame, disparage, or cast aspersions upon the Physician; and (ii) will use all reasonable efforts to prevent any member of their immediate family or acquaintance from engaging in any such activity."]
More specifically, the contract stated that Lee would not publish adverse comments about Makhnevich’s performance online, and that he would assign the copyright of any online commentary that he did make to her (presumably so that she could have such commentary quickly and directly taken down if she found it objectionable).
Lee signed the contract. But later—after receiving a hefty bill for service that he viewed as problematic—he posted negative reviews of the dentist on Yelp.com and DoctorBase.com, despite the contract’s ban on such postings.
The Yelp.com review said: “Avoid at all cost! Scamming their customers!” The DoctorBase.com review was similar.
Lee claims that Makhnevich then– in an attempt to enforce the contract—tried to get Lee’s negative reviews taken down from the review sites. He alleges that she also started billing him $100, as a fine, for every day the reviews remained on the Internet. Moreover, Lee alleges, she refused to send copies of his billing records to him so that he could seek reimbursement from his insurer. Makhnevich also sent Lee a notice threatening a lawsuit. In response, Lee filed a lawsuit of his own.
Lee’s lawsuit calls the contract he signed invalid under state law as an unconscionable contract. The lawsuit also alleges that posting one’s own commentary on a website such as Yelp.com or DoctorBase.com constitutes “fair use” under the copyright laws.
In the suit, Lee asks that the agreement that he and other patients signed with his dentist be declared void and unenforceable, and that she be barred from requiring assent to these agreements by future patients.”
So many great issues here — the penalty/liquidated clause damage term; the privacy/nondisclosure nexus; the unenforceability argument coupled with a lurking first amendment claim. The story claims there’s even a consideration defense, though I can’t see how that’s really present on these facts.
As I’ve expressed before, I think these kinds of nondisclosure agreements are more difficult to enforce and obtain damages from than most conventional accounts would have it, and that they often function, like liquidated damages in general, to compel parties to engage in behavior that a court would not actually order. This case seems like a good test of my theory. I’m very glad that the Center for Democracy and Technology has taken up the battle.
(H/T: Reader T.G.)