Yelp.com describes itself as “the fun and easy way to find and talk about great (and not so great) local businesses.” It proclaims that “[a]s of August 2011, more than 63 million people visited Yelp within the past 30 days.” Its tagline: “Real people. Real reviews.®”

I view Yelp.com as one of the many unnecessary, “Web 2.0” websites I will never use that litters the information superhighway like marine snow in the deep ocean. My wife views it as a source of idle entertainment, where she can enjoy reviews that palaver about Jersey Shore-like drama, before even getting to whether a particular restaurant had good food or not. But some businesses have complained, and even filed lawsuits against Yelp,

 

alleging that Yelp salespeople represent to businesses that Yelp has the power to manipulate Yelp.com business listing pages, and that Yelp will wield that power in favor of the business if it becomes a “Yelp Sponsor” and against the business if it declines to do so.

In other words, some businesses claim that Yelp is the like the internet mafia, asking business owners for protection money to make those bad reviews sleep with the fishes. Is it true?

When I first heard about these allegations, I immediately felt the urge to investigate, particularly given my attitude of “do whatever it takes, ruin as many people’s lives, so long as I can make a name for myself as an investigatory journalist, no matter how many friends I lose or people I leave dead and bloodied along the way, just so long so I can make a name for myself as an investigatory journalist, no matter how many friends I lose or people I leave dead and bloodied and dying along the way.” But then I realized that the East Bay Express already did the whole investigatory journalism thing in a thorough article that Yelp already replied to here. So I decided to stick to what I know best.

The Lawsuits

I may not be an investigatory journalist, but I “have learned to work the Google on the internet machine,” (and Westlaw), and learned that Yelp! Inc., has been sued by businesses from around the country, each alleging similar misconduct. Several class action lawsuits have been filed and several websites have sprung up for attracting potential claimants (e.g.YelpLitigation.com and YelpLawsuit.com).

In one of these class action lawsuits filed in the Northern District of California, Renaissance Furniture Restoration, joined by Cats and Dogs Animal Hospital, Inc., Marina Dental Care, and Wheel Techniques, alleged that they were subject to “extortion and/or attempted extortion” by Yelp to obtain payments for advertising. But on October 26, 2011, a Northern District Court permanently dismissed the lawsuit for failure to state a valid legal claim. Specifically, the court dismissed the lawsuit because (1) the Communications Decency Act immunized Yelp’s alleged acts of manipulating user reviews; (2) it was “entirely speculative that Yelp manufactures its own negative reviews or deliberately manipulates reviews to the detriment of businesses who refuse to purchase advertising”; and (3) plaintiffs had no “factual allegations from which any distinct communication of a threat might be inferred.”

Insight From the Court

Its always bad when a court tells you what you could have argued to win, but didn’t. In the dismissal order, the court observed that the plaintiffs failed to allege that Yelp ever falsely stated that its posting of reviews was based on bona fide neutral criteria. As the court put it:

“it could be argued that the harm to the public (and potentially to businesses), which relies on the purported neutrality of Yelp’s service, stems from an alleged misrepresentation about Yelp’s posting criteria and failure to disclose its alleged practice of manipulating ratings in favor of those who advertise.”

The reason is because such conduct is not immunized by the Communications Decency Act. Unfortunately for these plaintiffs, their lawyers withdrew all false advertising allegations. (Whoops.)

If the plaintiffs had asserted claims of misrepresentation and false advertising, they might have survived in the lawsuit a while longer. Sadly, because the complaint had already been amended three times, and all false advertising allegations had been withdrawn, the court ruled it would be “futile” to give the plaintiffs another opportunity to amend, and permanently dismissed the case.

Is Yelp Evil?

My only real insight is that this recent dismissal does not absolve Yelp of anything. It means that even if Yelp did manipulate reviews (a question the court does not answer), it is not legally liable for doing so, under the specific legal theories before the court. But the ruling does not answer the question of whether Yelp is lying to the public about its reviews being bona fide — a question that may be fast-tracked for an answer now that the Northern District has drawn a virtual legal roadmap for the other plaintiffs’ lawyers still in the fight across the country.

(For those of you seeking more existential questions with imponderable answers: If there is smoke, is there fire? Did O.J. do it? Dude, where’s my car?)

Review of this Blog Post

Please leave a review of this blog post using a rating from 1 to 5 stars, with a dramatic lead-in and/or back-story for my wife to enjoy. Please note, however, that if either your review is less than five stars or your story is not salacious enough, it will be deleted or “manipulated” so that it pleases both me and my wife. I would demand money too, but even lawyers have ethical boundaries.