Small businesses face another defeat in extortion claim against Yelp

A veterinary hospital and several other small-business owners in California who sued Yelp for extortion have had their class-action lawsuit rejected for the second time.

The lawsuit had been thrown out by the court in 2011, but the plaintiffs were fighting to have it revived.

In 2010, Cats and Dogs Animal Hospital and a group of other small businesses filed a class-action lawsuit against Yelp. They alleged that Yelp had committed acts of extortion by offering to toss out negative reviews and promote positive ones in exchange for purchasing advertising, according to Online Media Daily.

The plaintiffs also claimed that Yelp removed positive online reviews if business owners refused to buy advertising, and that the website unfairly summarized some reviews.

In the animal hospital's case, the owner alleged that a Yelp salesperson offered to move two negative reviews to the bottom of Yelp search results, as well as allow the hospital to choose the order in which results appeared on its profile. In exchange, the salesperson reportedly asked for an ad purchase of $300 per month for one year, Online Media Daily reported in 2012

Since the lawsuit was originally launched, Yelp has denied engaging in any activity that could be construed as extortion. The three-judge panel from the 9th Circuit Court of Appeals sided with Yelp, writing, "Cats and Dogs and Mercurio have no claim that it is independently wrongful for Yelp to post and arrange actual user reviews on its Web site as it sees fit. As Yelp has the right to charge for legitimate advertising services, the threat of economic harm that Yelp leveraged is, at most, hard bargaining."

Yelp lauded the ruling on its blog, writing, "We are obviously happy that the Court reached the right result, and saw through these thin attempts by a few businesses and their lawyers to disparage Yelp and draw attention away from their own occasional negative review. We at Yelp are moving on, and focusing on our core mission – connecting people with great local businesses."

Yelp's online reviews are especially important to small businesses, whose reputations can be significantly impacted positively or negatively by reviews. Alexis Nahama, DVM, vice president of marketing for VCA Animal Hospitals, said during a presentation at the 2014 North American Veterinary Community conference that Yelp is currently the only social media site with enough clout to significantly impact businesses. 

Read the complete court document at Courthouse News.