A proposed class action lawsuit accusing a Manhattan dentist of forcing patients to sign an unconscionable contract barring them from writing bad reviews on customer review websites may continue, a federal judge has ruled.
Southern District Judge Paul Crotty (See Profile) on March 27 denied a motion by the dentist, Stacy Makhnevich, to dismiss the lawsuit, Lee v. Makhnevich, 11-cv-8665, on the ground that there was no actual controversy between the parties. The judge ruled that Makhnevich had created a controversy by threatening to sue the patient, Robert Lee, after he posted an unfavorable review on the websites Yelp and DoctorBase.
Makhnevich, whose website describes her as a "talented and imaginative dentist and an opera singer who is driven by an incredible passion for self-expression through art," refuses to treat patients unless they sign an agreement that they will refrain from publishing any commentary about the treatment, and that if they do write any commentary, the copyright will belong to Makhnevich, according to the suit.
Lee alleges he signed the agreement in October 2010 because he had a very painful infected tooth and needed immediate treatment. According to the suit, Makhnevich billed him $4,800 and then refused to submit his paperwork to his insurer for reimbursement, or give it to Lee so he could submit it himself. Instead, she referred him to a third-party billing service that charged $200 to process the bills.
In August 2011, Lee wrote unfavorable reviews of Makhnevich recounting his experience. The day after he wrote the reviews, Makhnevich’s office sent him a letter saying he would be sued for breach of contract, defamation and copyright infringement. The letter included a draft of a complaint seeking $100,000 in damages. Lee received three more letters, two purporting to be invoices charging him $100 per day for copyright infringement and one, from Makhnevich’s lawyer, again threatening a lawsuit.
Lee then sued Makhnevich seeking a declaration that the confidentiality agreement was void for lack of consideration, unconscionable under common law and deceptive under New York’s General Business Law. He also sought a declaration that patient reviews are fair use under the Copyright Act and that his reviews were not defamatory. He sought to represent a class of Makhnevich’s patients.
Lee is also seeking damages from Makhnevich for breach of contract stemming from her refusal to forward or turn over his dental records.
Makhnevich moved to dismiss on the grounds that there was no controversy between the parties. Crotty rejected that argument as "specious."
"Defendants created the controversy with Lee by attempting to enforce the agreement, which they extracted as a condition for getting dental treatment," he wrote. "Further, under the totality of circumstances, the controversy is sufficiently ‘real’ and ‘immediate.’ Defendants cannot pretend now that their notices to Lee were ‘just kidding,’ or that Lee lacked any reasonable apprehension of liability."
The judge continued, "A brief review of Defendants’ conduct in response to Lee’s exercise of basic rights shows how ridiculous their arguments are." Crotty noted that Makhnevich had twice threatened to sue, sent a draft of a complaint ostensibly to be filed in state court and sent two invoices, one of them threatening to send the bill into collection.
"No reasonable person could view Defendants’ constant barrage of threats as anything other than a real controversy," the judge said.
Crotty rejected Makhnevich’s argument that the federal court lacked jurisdiction over the case because Lee was only seeking damages in the amount of his bill, $4,800. Makhnevich’s threat of a $100,000 lawsuit had raised the amount in controversy to $100,000, he said, giving the court jurisdiction.
Makhnevich also argued that Lee’s claim for a declaratory judgment that his reviews were fair use under the Copyright Act must be dismissed because the copyright was never registered.
Crotty rejected that argument as well, writing that Lee was seeking not to void a registered copyright, only a declaration that no such copyright could be used against him.
"Defendants’ argument that the copyright must be registered before relief can be granted to Plaintiff turns the law upside down," Crotty said.
Crotty ordered the parties to submit a case management plan by April 26.
Lee is represented by Paul Levy of the Public Citizen Litigation Group and by Bruce Keller of Debevoise & Plimpton.
Levy said he was pleased with the ruling and would continue to pursue class certification.
"It’s hard to believe they bothered with a motion to dismiss," he said. "The law was so clearly against them on this."
Makhnevich is represented by David Schwartz of Gerstman, Schwartz & Wink.
"Dr. Makhnevich is an excellent dentist giving her patients the highest quality dental care, and it is unfortunate that she has to be put through this litigation over issues that have nothing to do with the quality of care she delivers to each and every patient," Schwartz said.
@|Brendan Pierson can be contacted at email@example.com.