Klein & Wilson

Appellate court rules for Yelp over reviews placement dispute

In a prior post, we highlighted the possibility that businesses who received bad reviews on Yelp.com could sue customers who posted such reviews. We explored the threshold of proof a company would have to meet in order to be successful given that customers are free to make their feelings known about a company or its products in any way they choose, as long as they are not providing false information.

Yelp is in the news again because of how negative reviews were allegedly posted on some businesses’ profiles. Four different businesses brought suit against Yelp claiming that it extorted (or at least attempted to extort) larger advertising fees out of the companies by threatening to post negative reviews higher on a business’ profile page if it did not purchase a costlier advertising package. 

Naturally, Yelp denied this accusation and filed a motion to dismiss the claim. A federal district court judge agreed and tossed the case. An appeal to the U.S. Court of Appeals for the Ninth Circuit followed.  A three-judge panel recently issued a ruling upholding the district court’s findings. The panel reasoned that the purported engineering of review postings did not fit the court’s definition of extortion as interpreted under federal law.

The court further said that Yelp’s actions amounted to “hard bargaining” which is an acceptable practice. Counsel for the businesses disagreed, explaining that if something looks like extortion and smells like extortion, that it must be extortion.

Nevertheless, Yelp is facing a number of additional lawsuits based on different circumstances. So news on this company will continue. 

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