Yelp Escapes ‘Extortion’ Class Action Lawsuit

The 9th U.S. Circuit Court of Appeals refused to revive a Yelp extortion class action lawsuit, alleging the small business owners were unable to state a claim supposed efforts by the review aggregator to push them into buying advertising.

In general, they argued that when they were contacted by company sales representatives and refused to pay for an ad campaign that would promote them above other search results, they started to see negative reviews which in turn reduced revenue. The appeals court did not find this persuasive, arguing that extortion requires a defendant to take away an existing legal right.

That is not what Yelp did, according to the decision. Further, they “had no pre-existing right to have positive reviews appear on Yelp’s website [nor a] contractual right pursuant to which Yelp must publish positive reviews, nor does any law require Yelp to publish them. By withholding the benefit of these positive reviews, Yelp is withholding a benefit that Yelp makes possible and maintains. It has no obligation to do so, however.”

The jurists did note that one of the plaintiffs might have had a plausible case based on breach of contract depending on the agreement she signed with Yelp for a period of advertising and then dealt with the alleged behavior from the company, or other legal avenues. However, the decision placed an emphasis on the sites’ terms of service that “Not all user reviews submitted appear on a business’s Yelp page or remain there after initially appearing. Reviews can be removed by the reviewer, removed by Yelp for violating Yelp’s ‘Review Guidelines’ or ‘Terms of Service,’ or removed by an automated filtering software maintained by Yelp.”

Since the company is a privately-operated venue, the class action attorneys cannot take advantage of extortion because it “is an exceedingly narrow concept as applied to fundamentally economic behavior. The business owners have not alleged a legal theory or plausible facts to support the theories they do argue.”

As a result, not only did the class action lawsuit fail in terms of those counts, but when used to support the unlawful prong of California’s Unfair Competition Law, that count was dismissed as well.

The plaintiffs are represented by class action attorneys Lawrence Dale Murray, John Henning II and Robert C. Strickland of Murray & Associates.

The Yelp Extortion Class Action Lawsuit is Boris Y. Levitt, et al. v. Yelp! Inc., Case No. 11-cv-17676, in the U.S. Court of Appeals for the Ninth Circuit.