Palmer v. Kleargear.com
| John Palmer and Jennifer Kulas v. Kleargear.com and Fidelity Information Corp. | |
|---|---|
| United States District Court for the District of Utah | |
| Full case name | John Palmer and Jennifer Kulas v. Kleargear.com and Fidelity Information Corp. |
| Date decided | June 25, 2014 |
| Citations | no. 13-cv-00175 (D. Utah, filed Dec. 18, 2013) |
| Judge sitting | Dee Benson |
| Case holding | |
| Default judgment; $306,750 in compensatory and punitive damages; Reporting customer to debt collection for publishing a negative review violates the Fair Credit Reporting Act | |
| Keywords | |
| Fair Credit Reporting Act | |
Palmer v. Kleargear.com, no. 13-cv-00175 (D. Utah, filed Dec. 18, 2013), is a 2013 federal lawsuit in which an internet retailer was sued by two of its customers after it billed the customers for $3,500 following a negative review. The retailer, Kleargear.com, specializes in nerd apparel, geek toys, gadgets and office toys; it is owned by Paris-based Descoteaux Boutiques. The plaintiffs charged the company with violating the Fair Credit Reporting Act, defamation and intentional infliction of emotional distress. In March 2014, the district court entered a default judgment for the plaintiffs, and in June 2014 awarded damages of $306,750. As of 2015, the Palmers continue to attempt to collect the judgment.
The internet retailer's charge to the consumer was based on an anti-disparagement clause of their site's terms and conditions.
The case led to a California statute prohibiting the enforcement of such clauses, and the introduction of the Consumer Review Freedom Act of 2015, a proposed bill that, since passed, has enacted similar prohibitions at the federal level.
The plaintiffs, John and Jen Palmer, attempted to purchase a desk ornament and keychain from the company at a price under $20. Kleargear.com never delivered. PayPal automatically canceled the order in December 2008. Soon after, Jen left a negative review at Ripoff Report. In May 2012, the company sent a bill to Jen Palmer of Layton, Utah for $3,500 based on an anti-disparagement clause of their site's terms and conditions unless they agreed to take down the review. Ripoff Report has a policy of not removing reviews; statements of fact could only be removed if a $2,000 arbitration fee was paid and the arbitrator determined that those statements were false. When Palmer and her husband John refused to pay, Kleargear reported the fine for collection, which dragged down their credit rating.
One issue in the dispute was whether the disparagement clause had been present when the plaintiffs had made their order in 2008. In 2013, after examining archives of Kleargear's Terms of Service at the Internet Archive, KUTV and TechDirt stated that the clause had not been present and had been added to the site in June 2012. In 2014, Kleargear stated that the clause had been present in 2008.
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