Tue Nov 07, 2017 2:07 am
Hi to all,
Claude posted yesterday that he missed my Sunday rambles. I wasn't planning on writing one, but I came across this judgment of an interesting lawsuit (thanks, Yuki, for finding it). It's a great decision, but as you'll see, it opens as many questions as it answers so far - makes for a good exploration of matters that are VERY relevant here.
Hope it's good for you, Claude! I would have finished it yesterday, but ran out of time. I promised the family that we'd binge-watch Stranger Things after supper. Highly recommended!
Everyone is aware of the fake reviews of SBI! written by affiliates of Wealthy Affiliate. Well, it turns out that another company (MOBE) was pretty sick of fake reviews about their own product.
So they sued them.
Their first lawsuit was actually filed in December 2015 and then (for complicated legal reasons that I'll skip over) it was consolidated with another motion and re-filed in July 2016.
In August, 2016, they had made an "application for document production," but it seems that WA's fulfillment of this order dragged on for a year+, despite 1 or more warnings from the court.
So MOBE filed for an immediate judgment on the basis of, if I understand all this correctly, what amounts to bad faith with the document order. It seems you can get a decision on the actual suit if one party refuses to "play fair."
Near the end of September, the judge ruled in MOBE's favor...
http://www.courts.gov.bc.ca/jdb-txt/sc/ ... SC1873.htm
For the reasons that follow, I grant the order to strike the defendants' pleadings:
1. The defendants have been ordered to produce documents pursuant to three court orders: August 2016, January 2017, and August 2017.
2. Despite being warned that their defense may be struck, not one further document has been produced since the August 2017 order. The defendants are not contrite.
3. Given their attitude, I agree with the plaintiff that a further warning or order will not have any effect. There is no alternate remedy.
4. The trial is scheduled to proceed on October 10, 2017, less than two weeks from now. I accept the lack of document production has severely hampered the prosecution of the plaintiff's case and that no further warnings or adjournments will produce a different result.
5.The defendants have deliberately prolonged and obstructed the discovery process.
This seems to me (a non-lawyer) to be a stunningly strong decision against Wealthy Affiliate (under its business name of Niche Marketing Inc.) and the two owners of Wealthy Affiliate (Kyle James Loudoun and Carson Randall Lim).
The Court found "deliberate and material non-disclosure" and struck out their defense. The language in this judgment seems to be quite strong, as illustrated in the final paragraph (36)...
I find the defendants' conduct in this litigation reprehensible and order special costs for this application as sought by the plaintiff.
Wow! The judge sounds really angry.
The judge basically takes the case straight to judgment as if WA had been found guilty of defamation. So the next step is a trial to determine damages, I'd guess.
Wealthy Affiliate will have to pay legal and special costs, plus damages that have to be figured out, damage of reputation, etc. How much are they looking at?...
This has been going on since the beginning of 2016. Note the $280,000 in legal fees so far. That, plus lost business and reputation (the biggie, I'd guess), is going to add up quickly. Punitive damages are limited in Canada, although are applied in exceptional circumstances.
Does it qualify as exceptional? In an analysis of this decision by Harper Grey...
https://www.harpergrey.com/app/uploads/ ... -31_17.pdf
... this comment stood out for me...
An order to strike an opposing party’s pleadings for failure to comply with the Supreme Court Civil Rules is not easily achieved. In MOBE, the pleadings of the defendants were only struck after the defendants had failed to comply with three previous document production orders.
The chambers judge was clearly of the view the conduct of the defendants was unacceptable and intentional and that their misconduct could not be addressed by any other order. Even in these circumstances, over a year passed from the original document production order to the order to strike the pleadings, which was only made on the eve of a lengthy trial.
So I take it, putting it all together, that this poor behavior is pretty rare. Maybe this is rather exceptional and will generate punitive damages, I don't know.
But I do have a preference.
Anyway, I'm guessing that the decision will be appealed. Given how persistently things have been dragged out, why not keep wasting time, right?
If so, the appeal will be interesting.
-i) If WA loses the appeal, there'll be a hefty amount to pay.
-ii) If they win, though, I assume that there'd be some kind of an order for WA to comply with document production. That, in itself, would be an interesting test of what the judge of this decision said above as his 3rd reason for the decision...
I agree with the plaintiff that a further warning or order will not have any effect.
Will they or won't they? Here's the thing...
WA would be in a weird kind of squeeze between a rock and hard place. If they fail to produce the documents, they'll get the same negative decision. And if they do produce them, that would go against their claimed inability to produce anything more (if I understood it all correctly)
1) Other companies are watching this with us. On the one hand, it's good to see WA lose this suit. On the other, the reasons would not be relevant to other suits (unless WA does the same stalling for the provision of documents).
2) Ironically, MOBE is denied their day in court, their chance to clear their name and deal a clear rebuke by winning on the merits of the case itself. I'd feel cheated, somehow, that the "rebuke" is for failing to submit documents. They can claim that they lost on a technicality.
3) Lawsuits are a real PITA. On the one hand, WA may be sending a warning out to others who would sue them that "it's going to cost you." On the other, there is valuable information that can be gleaned from a clear-cut loss that would tell us and other companies, "Is it worth it?"
So I'd like to see what kind of damages get awarded for something like this in Canada. And more specifically, how would any orders address the actual presence of fake reviews and payment for sales due to them?
This could drag on for years if orders (to stop fake review production and to take down existing ones) leave loopholes open for WA to comply with in some minimal way. Given that affiliates are third parties, it's easy to imagine loopholes for just about any order to get those fake reviews removed.
A substantial financial penalty and the most complete, loophole-proof order (ordering of the cessation of the affiliate program itself) would make a good example of WA.
Also, given the number of companies' products (175) that were on the list to write reviews about in WA's affiliate training bootcamp, the final judgment should bring out more companies if the final penalty is worth the time, aggravation, distraction and money.
And a final word...
Well done, MOBE! It's good to see that this stuff does not go unpunished. It takes one, the first, to open the floodgates (hopefully).
The courts have a chance to get this right with a really strong financial penalty and an order to close the affiliate program. Hopefullly, in the trial for damages, MOBE will get a chance to introduce the fake reviews so that the courts can recognize the nature of all this activity, and comment on it in their final declaration.
What do YOU think?
All the best,
Ken and the whole SiteSell Team
P.S. Beating Wealthy Affiliates with REAL reviews is a far more effective and immediate way for us to win this battle. Please help push them out of the Top 10 rankings with your own real review of SBI!. Please see my sig file URLs.
Thanks very much to all who have done so already!