Yelp Wins Legal Battle Against Business Owners

Yelp, an online review website, has won its legal battle on September 2^nd against California business owners. Boris Levitt, John Mercurio and Dr. Tracy Chan filed a class-action lawsuit against Yelp that stretches back to 2010. They alleged that Yelp did a number of things that negatively impacted their businesses. One business owner alleged that Yelp altered the reviews listed for their businesses when they declined to purchase an advertising product. There were also claims of high-pressure sales calls from Yelp after a business owner decided against their buying Yelp Ads. Another allegation was that Yelp offered to hide negative ads if one of the plaintiffs bought advertising. When they refused, it’s alleged that Yelp used tactics to instill fear as a sales tactic. According to reports from Courthouse News, the plaintiffs levied hefty allegations at Yelp. Their report indicates that, “The business owners charged Yelp with civil extortion, attempted civil extortion, and violations of California’s Unfair Competition Law in San Francisco federal court.”

The 9^th Circuit Appeals Court ruled that the business owners failed to indicate that Yelp was extorting them, even if they manipulated online reviews after they elected to not purchase advertising. In a ruling, Judge Marsha Berzon explained that, “In sum, to state a claim of economic extortion under both federal and California law, a litigant must demonstrate either that he had a pre-existing right to be free from the threatened harm, or that the defendant had no right to seek payment for the service offered. Any less stringent standard would transform a wide variety of legally acceptable business dealings into extortion.”

The appellate court also ruled that Yelp didn’t cause economic fear. They found that the, “manipulation of user reviews, assuming it occurred, was not wrongful use of economic fear, and, second, … business owners pled insufficient facts to make out a plausible claim that Yelp authored negative reviews of their businesses. Yelp is reportedly happy with the ruling in this case. The Corporate Communications Department at Yelp released a statement saying that, “We have always said the claims were without merit and we are pleased the courts continue to agree.” While Yelp is happy with the decision, one has to wonder what type of precedent that this case creates. Yelp may or may not have modified reviews, instilled fear into business owners and possibly even posted fake reviews. The ruling says that even if they did some of those things, there will not be any consequences. What message does this send to other online review companies? What message does this send to Yelp? Does this decision impact Yelp’s reputation moving forward?