Court rules for Yelp in suit over online ratings

Jessica Guynn, USA Today 6:10 p.m. EDT September 4, 2014

The logo of the online reviews website Yelp is shown in neon on a wall at the company's Manhattan offices in New York.(Photo: Kathy Willens, AP)

SAN FRANCISCO -- Small businesses suing Yelp didn't get the kind of review they were hoping for from a federal appeals court.

The businesses alleged the San Francisco company manipulated their ratings on Yelp to extort them to buy ads.

Yelp denies advertisers get more favorable treatment on its popular review service. It says its software that filters reviews to determine ratings does not distinguish between those who advertise and those who don't.

The 9th U.S. Circuit Court of Appeals in San Francisco ruled this week that it doesn't matter anyway.

The plaintiffs did not prove that Yelp broke any laws, the court ruled. Even if Yelp does manipulate reviews, it does not constitute extortion, it said.

"As Yelp has the right to charge for legitimate advertising services, the (alleged) threat of economic harm that Yelp leveraged is, at most, hard bargaining," Judge Marsha Berzon wrote for the three-judge panel in Tuesday's ruling.

Berzon said the plaintiffs could pursue other claims against Yelp.

"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," Yelp wrote in a blog post.

The appeals court upheld a federal judge's dismissal of the proposed class-action brought by the small business owners. They claimed Yelp sales representatives told them their ratings on the service hinged on buying advertising.

The business owners said positive reviews disappeared from their Yelp page and their overall rating fell or a negative review reappeared on the page after they declined to buy ads from Yelp.

Yelp CEO Jeremy Stoppelman​ told USA Today last month that it does not change business ratings to get more advertising.

"You can have all the conspiracy theories you want, but all our disclosures are right there on our site, and there is no amount of money that would cause us to manipulate reviews," Stoppelman said.

The Associated Press contributed to this report.

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