Mediation Message No. 100



Demetriades v. Yelp, Inc. (2014) 228 Cal.App.4th 294 is an interesting read because it applies the anti-SLAPP commercial speech exemption to Yelp litigation.

Yelp, a website that has fundamentally changed the way buyers and sellers meet and interact in the marketplace, is a phenomenon: as of September 2012, users had posted approximately 33 million reviews to its website and it had 84 million monthly unique visitors during the third quarter of 2012. Yelp sells advertising on its site and, in the first three quarters of 2012, generated $91 million in revenue from advertising. It constantly battles the problem of paid reviews, negative reviews written by business competitors and unreliable reviews written by friends, employees or relatives of the business being reviewed. Yelp developed filtering software to address this issue.

James Demetriades, who owns three restaurants, purchased advertising on Yelp. In his complaint against the company, which alleged only causes of action for unfair competition and false advertising, Demetriades asserted that Yelp’s claims about the abilities of its filtering system were untrue and misleading, including the allegations that Yelp did not use the filter software to give consumers the most trusted reviews, did not accurately separate the most trustworthy reviews from unreliable reviews and did not post reviews only from trusted sources. Demetriades sought to enjoin Yelp from making claims about the accuracy and efficacy of its filter of unreliable or biased customer reviews.

Yelp moved to strike the complaint, arguing, inter alia, that Demetriades’ complaint targeted protected activity under Code of Civil Procedure section 425.16, subdivisions (e)(3) and (e)(4), in that it interfered with Yelp’s review publishing process and ability to offer opinions about that process, interfered with its free speech rights and targeted speech that appeared in a public forum and was a matter of public interest. The trial court granted the motion, finding, in part, that Yelp had met its initial burden of establishing that its statements regarding the filtering of reviews are matters of public interest; the commercial speech exemption to section 425.16 anti-SLAPP motions in section 425.17, subdivision (c) did not apply because statements regarding the reviews did not relate to the sale of advertising and plaintiff failed to show that the statements regarding the filter were statements of fact and not opinion or puffery.

The appellate court in Demetriades v. Yelp reversed the trial court order, finding that plaintiff’s complaint satisfied both prongs of section 425.17, subd. (c). That statute provides, in substance, that section 425.16 does not apply to any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services in which the subject statement or conduct consists of representations of fact about that entities’ business operations and the intended audience is an actual or potential buyer or customer. The court reasoned, “Yelp’s statements about its review filter—as opposed to the content of the reviews themselves—are commercial speech about the quality of its product (the reliability of its review filter) intended to reach third parties to induce them to engage in a commercial transaction (patronizing Yelp’s website, which patronage induces businesses on Yelp to purchase advertising).” The court also noted that section 425.17, subd. (c)’s legislative history indicates it was aimed squarely at false advertising claims and was designed to proceed without having to undergo scrutiny under section 425.16 because that statute had been “abused.” (Section 425.17, subd. (a) references that “disturbing abuse.”) The court held, as well, that Yelp’s specific representations about the accuracy of its review filter were not “mere expressions of opinion or puffery and hyperbole; rather Yelp speaks with the authority of a website that intends to attract users with the accuracy of its filter.”

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, July 2014

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