Business Owners Seek To Revive Payola Lawsuit Against Yelp
A group of local business owners are asking an appellate court to revive their "extortion" lawsuit against the review site Yelp.
The business owners alleged in a case dating to 2010 that Yelp tried to extort them by promising to bury bad reviews and promote good ones in exchange for ad buys. Last year, U.S. District Court Judge Edward Chen in the Northern District of California threw out the potential class-action lawsuit, ruling that the federal Communications Decency Act immunizes Yelp from liability for reviews authored by users. Chen also ruled that Yelp isn't liable for decisions about how to display those reviews -- regardless of the company's motives for highlighting particular content.
But the business owners say that they should be able to proceed with their claim that Yelp unfairly summarized the reviews, as well as the allegation that Yelp "manipulated" the reviews by removing some and highlighting others.
The Communications Decency Act "does not give protection to internet service providers who manipulate reviews for their own profit, and based on such manipulation, publish their own misleading star rating and information about a particular business knowing it is not accurate," they argue in papers submitted to the 9th Circuit Court of Appeals.
Yelp -- which denies the extortion allegations -- counters that it doesn't lose its immunity for user-generated content by deciding which reviews to weed out and which to display. "Plaintiffs are a group of disgruntled business owners who seek to suppress this legitimate, protected online commentary and to prevent Yelp from exercising its right to screen reviews which may be false or unreliable," the company says in papers filed with the 9th Circuit late last week.
In 2010, Yelp was hit with a flurry of lawsuits alleging that it pressured businesses to purchase ads. The lawsuits were later consolidated into one potential class-action -- which Chen dismissed last year.
One company that sued, the Cats and Dogs Animal Hospital in Long Beach, Calif., said in court papers that a Yelp salesperson offered to move two bad reviews to the bottom of its results, to ensure they didn't appear in search engine results. It would also allow the hospital to decide in which order reviews would appear on the site, in exchange for a one-year, $300-a-month ad buy.
Yelp CEO Jeremy Stoppelman has denied that the site ever offered to bury bad reviews for advertisers. The company has said that it filters reviews that it believes violate its terms of service, including ones by business owners. After the lawsuits were filed, Yelp began allowing Web users to access reviews that had been filtered, but those reviews aren't counted toward the site's overall ranking.
Yelp also previously allowed business owners to pay to have a favorite review highlighted at the top of their page. The company discontinued that practice in 2010.