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Yelp May Not Use Anti-SLAPP To Dismiss False Advertising Action

Demetriades v. Yelp, Inc. (2014 WL 3661491)

On July 25, 2014, the Court of Appeal, Second District, addressed whether Yelp’s statements related to its “filtering software” were protected by the Anti-SLAPP (Code of Civil Procedure Section 425.16) against claims set forth under Unfair Competition Law (Business & Professions Code, Section 17200, et. seq.) and False Advertising Law (Business & Professions Code, Section 17500, et. seq.)

Overall, the Court of Appeal reasoned Yelp’s statements fell within both prongs of the commercial speech exception from dismissal under Code of Civil Procedure Section 425.17, subdivision (c). Yelp’s statement about its review filter was not mere “puffery” because Yelp made representations about the quality of its product, namely, the reliability of its review filter. Moreover, the statements were made for the purpose of inducing the public to patronize its website, and securing advertisements.

Plaintiff, Demetriades, who operates restaurants in Mammoth Lakes, filed a class action suit seeking injunctive relief under Unfair Competition Law and False Advertising Law to prevent Yelp, Inc., the operator of a popular online website that contains customer reviews of businesses, from making claims about the accuracy and efficiency of its “filter” of unreliable or biased customer reviews. Plaintiff alleged that Yelp engaged in false advertising by claiming that each user review passed through a “filter” that gave consumers “the most trusted reviews.” However, the filter actually suppressed a substantial portion of reviews that were unbiased and trustworthy.

In response, Yelp filed an anti-SLAPP motion, arguing that the complaint targeted Yelp’s protected activity involving matters of public interest. In opposition, Demetriades argued the commercial speech exemption to the anti-SLAPP statute applied to Yelp’s statements. However, the trial court rejected Demetriades’ argument, and granted Yelp’s motion. The Court of Appeal reserved and remanded.

The anti-SLAPP statute allows the court to strike a cause of action that arises in connection with a public issue. However, the anti-SLAPP statute may not be used to dismiss causes of action based on statements against a person who is primarily engaged in the business of selling or leasing goods or services. To fall within this exemption, the statement must consist of representations of fact, not mere “puffery,” about that person’s business goods or services, which are made for the purpose of promoting commercial transactions. Also, the intended audience must be an actual or potential buyer or customer.

Although Yelp’s website was a public forum and contained matters of public concern, Yelp fell within both prongs of the commercial speech exemption. Yelp’s statements about its review filter were not mere “puffery” because Yelp made representations about the quality of its product, namely, the reliability of its review filter. Moreover, the statements were made for the purpose of inducing the public to patronize its website, and securing advertisements. Thus, the trial court erroneously granted Yelp’s anti-SLAPP motion.

ABOUT THE AUTHOR: David Ramirez is a Senior Counsel at TYSON & MENDES, LLP, and primarily represents clients in complex litigation, including construction defect, insurance law, property disputes, and product liability. Mr. Ramirez was recently named as a “Top Lawyer” in California for “Litigation” in the June 2014 issue of American Lawyer Media.

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