Friday, November 11, 2011

Yelp! Not Liable for Unfavorable Business Reviews, Ratings on Website

This posting was written by Cheryl Beise, Editor of CCH Guide to Computer Law.

Businesses that received unfavorable reviews and “star ratings” on were barred by the Communications Decency Act from asserting civil extortion and California Unfair Competition Law claims based on Yelp!’s alleged manipulation of reviews, the federal district court in San Francisco has ruled.

The court dismissed with prejudice a third amended consolidated class action complaint alleging that Yelp! unlawfully manipulated reviews in order to induce businesses to pay for advertising in exchange for better ratings and higher ranking of favorable reviews.

Content Creation

Section 230(c) (1) of the Communications Decency Act (CDA) shields an interactive service provider from liability for publishing third-party content. The businesses argued that Yelp! did not qualify for CDA immunity because it participated in creating unlawful content on its site.

They alleged that approximately 200 employees and others acting on behalf of or paid by Yelp! authored negative reviews of businesses that refused to purchase advertising from Yelp!. Such allegations, however, were speculative, failing to “raise more than a mere possibility” that Yelp! had authored or manipulated reviews of the businesses, the court found.

Manipulation of User Reviews

The court also held that the CDA protected Yelp! from liability in connection with its alleged manipulation of user-generated reviews.

Decisions regarding whether to publish, exclude, promote, or rank user reviews were part of the “traditional editorial function” recognized under Sec. 230(c)(1). Therefore, the businesses’ allegations of extortion based on Yelp!’s alleged manipulation of their review pages—by removing certain reviews and publishing others or changing their order of appearance—fell within the conduct immunized by the CDA.

“Star Ratings”

CDA immunity also extended to Yelp!’s aggregate “star ratings” appearing at the top of each business’s review page, the court determined. The ratings did not constitute editorial content created by Yelp!, as the businesses contended. The ratings were based on the aggregation of user-generated data. Decisions regarding which reviews to include in calculating aggregate star ratings were within Yelp!’s editorial discretion, according to the court.

Moreover, Sec. 230(c) (1) of the CDA did not prevent a service provider from making editorial decisions in bad faith or with nefarious motives. This conclusion was supported by Sec. 230(c) (2), the so-called “good Samaritan” provision, in which Congress inserted a “good faith” requirement to qualify for content-blocking immunity.

“Although the Court is sympathetic to Plaintiffs’ complaint, the sweep of Sec. 230(c)(1) as a matter of text and legislative purpose is broad,” the court noted. Therefore, even if Yelp! had made an extortionate threat by manipulating user reviews, it nevertheless would be immune from suit under Sec. 230(c)(1), the court said.

The October 26 decision in Levitt v. Yelp! Inc., appears at CCH Guide to Computer Law ¶50,290 and CCH Advertising Law Guide ¶64,491.

No comments: