By Alex Boguniewicz

Sticks and stones may break bones, but a bad review will surely generate a lawsuit. At least that seems to be the case with Yelp, which can breathe a sigh of relief after the latest litigation regarding its reviews. We have previously covered issues revolving around the online business review site, such as fake reviewers and identity disclosure of negative reviewers. In the most recent controversy, Levitt v. Yelp! Inc., the Ninth Circuit addressed the question of whether Yelp could be held liable for extorting or attempting to extort advertising payments from businesses by hiding positive reviews or manipulating negative reviews. The court unanimously held that even if the plaintiffs’ claims were true—which the court was far willing to concede—the plaintiffs had no cause of action because they failed to meet the narrow test for a civil extortion claim. This case presents the issue of whether this is merely an instance of savvy business tactics or an online “wise guy” scheme.

The case arose in 2010 when a car repair shop, a furniture restoration store, an animal hospital, and a dentist, all filed suit against Yelp in the Northern District of California, alleging civil extortion, attempted civil extortion, and violation of California’s Business and Professions Code. The plaintiffs alleged that Yelp offered business-advertising opportunities on its site for a monthly fee, and that any business that did not purchase the service faced retribution. Such alleged retribution included Yelp removing the business’s positive reviews, making the business’s negative reviews more prominent, and falsely authoring negative reviews. These actions were supposedly done as a way for Yelp to strong arm the plaintiffs into purchasing the advertising package. The district court ultimately dismissed the case for failure to state a claim. Continue reading →