Sunday, July 10, 2016

This Would Make Me Yelp!

Hassell v. Bird, No. A143233 (D1d4 Jun. 7, 2016)

Wow. Back-to-back Yelp defamation cases. It must be a cottage industry or something. And while I might have had a few quibbles with some of the intermediate steps in the analysis on the last one, this one really manages to go off the rails.

Plaintiff is a Lawyer who got a default judgment against a former Client for leaving defamatory reviews on Yelp. The judgment said Client had to take them down. But it also ordered Yelp to remove the reviews, even though Yelp wasn’t a party to the case. And when Lawyer’s efforts to enforce against Client came to naught, she turned to enforce the judgment against Yelp.

Yelp wasn’t so keen on that. After some back and forth with Lawyer, it went to court had moved to have the judgment vacated under Code of Civil Procedure § 663. (Which was a bit of a strange vehicle to get the relief Yelp was seeking.) The trial court denied the relief, finding that even as a non-party, Yelp could be subject to an injunction due to its customer relationship with the Client. In later proceedings, the court when on to find that Yelp was improperly trying to vacate the entire judgment, and worse, that it was aiding and abetting Client’s contempt by failing to take down the review.

The first issue the Court of Appeal needs to deal with is Yelp’s standing. It is pretty clear that Yelp does not have standing to challenge the whole judgment against Client, because it isn’t aggrieved by it.

Nor was Yelp’s motion properly authorized by § 663, which codifies a post-judgment procedure used to correct errors in a court judgment or to make it conform with the facts found by the court or the jury. It is not a procedure used to vacate a judgment that is void without entering a new one. (That is addressed by § 473(d) or the court’s inherent power.) Nor can § 663 be used to contend that the evidence was insufficient or that factual findings were wrong. (That is addressed by either a new trial motion under § 657 or a JNOV under § 629). And even were a § 663 motion the appropriate vehicle, a § 663 motion is subject to a bunch of very specific procedural requirements similar to a motion for new trial, see § 663a—requirements that are viewed as jurisdictional—including tight timelines following the entry of judgment. Yelp didn’t follow those here.

Yelp did have an avenue to seek relief, however, in the form of a non-statutory motion to vacate the part of the order that applied to it. Why a non-statutory motion under the court’s inherent power vs. a motion under § 473(d), which expressly permits a court to set aside any void judgment or order? Not at all clear form the opinion. Of course, the distinction between the two procedures is not particularly clear in the law either. In any event, the Court of Appeal reads Yelp’s notice of motion to encompass the inherent power a remedy. And since Yelp did have a vehicle to seek relief it also had standing to appeal as a party aggrieved by the part of the judgment addressed to it.

The court thus reaches the merits of Yelp‘s arguments. The main one I’m interested in* is whether was denied due process when a judgment in a case to which it wasn’t a party obliged it to affirmatively do stuff. While reading the procedural history of the case, my gut reaction was: Of course it was. No notice, no hearing, no due process. Fuentes v. Shevin. Read it on the very first day of Civ. Pro. in law school. But the Court of Appeal doesn’t agree.

It holds that it was permissible to include an order applicable to Yelp in the judgment, even though it wasn’t a party. According to the court, “injunctions can be applied to nonparties in appropriate circumstances.” Trial courts “have the power to fashion an injunctive decree so that the enjoined party may not nullify it by carrying out the prohibited acts with or through a nonparty to the original proceeding.”

Ok. Both of these statements are true in general. But there’s no real analysis why they apply here. Indeed, the key cases relied upon by the court do not address putting affirmative obligations on non-parties in judgments. They involve the ability to hold someone who was not a party to the judgment in contempt of it. See Planned Parenthood Golden Gate v. Garibaldi, 107 Cal. App. 4th 345, 354 (2003); People v. Conrad, 55 Cal. App. 4th 896, 903 (1997); In re Berry, 68 Cal.2d 137, 155–156 (1968); Berger v. Superior Court, 175 Cal. 719, 722 (1917). Notably, each ultimately comes out in favor of the third party seeking to avoid contempt.

These cases distill a general rule that a non-party can be held in contempt when: (1) she is actually aware of the injunction; and (2) she violates its terms “with or for” those who are restrained. This enforces the rule the court cites above, about preventing an enjoined party from evading an injunction by working through an intermediary. Ok so far. If Client got enjoined, and Yelp knew about the injunction and actively worked with Client to violate it, Yelp could be held in contempt. E.g., folks who, while aware that defendant is under an SEC receivership, nonetheless help it hide assets. See SEC v. Homa, 514 F.3d 661, 673 (7th Cir. 2008)

But what these cases don’t speak to at all is when a judgment can include and bind by name upon entry a non-party who wasn’t present at the trial to object to its inclusion. The test in the cited cases doesn’t make any sense in that context because both elements of the test presume some injunction has already been entered. How can you know about or help someone violate an injunction that does not yet exist?

The opinion doesn’t grapple with this issue. (Perhaps it wasnt well-briefed?)  Other than to basically say “it’s possible,” there’s no real articulation of what the real test should be. But generally, one can’t be enjoined unless one has done or is about to do something unlawful. See Conrad, 55 Cal. App. 4th at 903. And before a finding like that can be made, there needs to be basic due process stuff like notice and an opportunity to be heard. Along similar lines, there’s a line of cases that say Party A and B can’t enter a consent decree (i.e., an agreed injunction) that messes with non-party C’s rights unless the third party gets a hearing. See W.R. Grace & Co. v. Local Union 759, 461 U.S. 757, 771 (1983). Without notice and a hearing, naming and obliging some absent third party under an injunction simply because it would be a convenient way to enforce an injunction between the parties, just can’t be ok. There are some narrow exceptions. But they would be the same kind of exceptions that would permit amending a judgment after the fact to add a non-party. And those all require some kind of privity-like relation between the party to be added and the judgment debtor, i.e., alter ego, agency, assignment, successor-in-interest, etc. The internet review service-anonymous reviewer relationship shouldn’t cut it.

Affirmed, dubitante.

*The court also rejects arguments challenging the validity of the injunction based on prior restraint and federal preemption under the § 230 of the Digital Millennium Copyright Act. Although that discussion is likely interesting to First Amendment and internet lawyers, the merits of those are well outside of my lane.

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