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Retailer that charged $3,500 for bad review to fight Utah couple's lawsuit

Published May 20, 2014 2:04 pm
Courts • Judge's ruling says KlearGear is liable to Layton couple for defamation.
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Although a federal judge has ruled in favor of a Layton couple who sued an online retailer that tried to force them to pay it $3,500 for a negative review posted by the wife, the legal fight is continuing.

The retailer, KlearGear, claims it first learned John and Jen Palmer were suing the company about a week before U.S. District Judge Dee Benson entered a default judgment against the company. Because KlearGear was never properly served with the Palmers' lawsuit, it will get the ruling overturned and fight the matter in court, a company representative says in a Monday email.

The lawsuit, filed in December, says John Palmer never received a desk toy and a key chain he ordered for his wife in 2008 from the gadget retailer. KlearGear canceled the order after an email correspondence, and Jen Palmer shared her dissatisfaction with the company's service in a review on RipoffReport.com.

KlearGear told the couple in May 2012 that they had 72 hours to remove the post or pay it $3,500 for violating a "non-disparagement clause" in its terms of use for customers, according to the suit. The Palmers refused on the grounds, among others, that the clause was not present at the time of purchase and that the terms violate the First Amendment.

KlearGear notified credit bureaus of the alleged debt, the Palmers said, which led to a poor credit rating that delayed a car loan and made it impossible for them to borrow money for a broken furnace last fall.

Benson entered a default judgment April 30 in favor of the couple after KlearGear failed to respond to the suit. His order says the retailer is liable to the Palmers for defamation, intentional infliction of emotional distress, intentional interference with prospective contractual relations and violation of the federal Fair Credit Reporting Act. The amount is to be determined at a court hearing in June.

In the email, Vic Mathieu, of the Paris-based Descoteaux Boutiques (DBS), KlearGear's parent company, says DBS third-party contractors in the United States are not authorized to accept service of any lawsuits. He also claims the Palmers' attorney, Scott Michelman, of Public Citizen, knew DBS had not been properly served and concealed that information.

"Ironically, if Mr. Palmer had simply approach[ed] Kleargear first last fall and requested a stay to finance their new furnace — we would have worked with him," Mathieu wrote. "We are human beings. Instead he has chosen a public forum."

Michelman said Tuesday that the accusation he misled the court "is entirely false." KlearGear was properly served with the lawsuit at the Grandville, Mich., address on its website, he said, and there also was widespread international coverage about the case.

"Most important, Monday's email does not answer the claims at the heart of this case: that KlearGear used one-sided contractual fine print to try to bully unsatisfied consumers into silence, abused the credit reporting system when the Palmers would not pay KlearGear's extortionate demand and then defamed the Palmers in the press," Michelman said. "If KlearGear decides to appear in court at long last, we welcome the opportunity to demonstrate that the Palmers are entitled to relief, either because of the company's default or on the merits."

pmanson@sltrib.com

Twitter: @PamelaMansonSLC

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