The Ninth Circuit dismissed a complaint filed by small business owners in California who claimed Yelp! Inc. extorted advertising payments from them by manipulating negative user reviews.
In a class action lawsuit, the business owners claimed unsuccessfully that Yelp! Inc. violated California’s Unfair Competition Law and the California Business and Professions Code.
As social media’s influence on various aspects of our lives grows exponentially, people turn to websites to make choices about which products and services to use. Sites like Yelp! Inc., Yahoo! Local Listings, CitySearch, MerchantCircle and Angie’s List help consumers decide among popular restaurants and even which professionals to trust.
The Ninth Circuit cited the leading civil procedure cases of Iqbal and Twombly in deciding to dismiss the small business owners’ complaint for a total lack of sufficient facts and failure to state a cause of action against Yelp! Inc. The Ninth Circuit Court found absolutely no facts to support any of the business owners' accusations against Yelp! Inc., and determined that the company's business practices were not in violation of California law.
Yelp! Inc. provides an online forum for its users on which they can express reviews on businesses “ranging from dog walkers to taco trucks,” according to the Ninth Circuit. Reviewers rank businesses on a scale of one to five stars, which Yelp! Inc. uses to generate an overall star ranking.
To ensure fairness and appropriateness of reviews, Yelp! Inc. utilizes a filtering system to sort out both positive and negative business reviews. This process is utilized to avoid human bias and fake reviews. While businesses cannot avoid being listed on Yelp! Inc., they can opt to pay for its advertising services, allowing business to enhance their pages by promoting favorite reviews and adding photos.
Yelp! Inc., is currently the number one review site for attorneys on the Internet. More attorneys are becoming interested in Yelp! as a means of generating clients. While business owners cannot control bad reviews against them by deleting them entirely, it is possible for business owners to overcome these negative reviews by reaching out to unsatisfied customers via Yelp!. Business owners who receive bad reviews can turn these negative comments into opportunities to demonstrate their reasonableness in customer service, without needing to address the substance of the comments.
Moving forward, the way both small and large business owners handle unhappy customer comments on Yelp! Inc. may determine which businesses thrive and which businesses merely survive.
The case is Boris Y. Levitt v. Yelp, No. 11-17676, (9th Cir. September 2, 2014).
