Thursday, September 09, 2010

230 bars defamation, not false advertising claim

Reit v. Yelp!, Inc., --- N.Y.S.2d ----, 2010 WL 3490167 (N.Y.Sup.),

Reit, a dentist, sued Yelp! and John Doe (Michael S.) for defamation, and Yelp! for deceptive acts and practices under New York’s General Business Law § 349 and § 350. He wanted an order requiring Yelp to delete all references to him and his dental practice from The court granted a TRO (!), and Yelp moved to dismiss based on §230.

In May 2009, Yelp’s page discussing Reit’s practice included ten positive reviews, and then Michael S. posted a negative and allegedly defamatory review, which Reit alleged caused him to lose at least half of his customers. Yelp refused to remove the post, and allegedly removed all the positive postings instead. Reit alleged that highlighting negative reviews and removing positive ones is part of Yelp’s business model, in order to blackmail businesses into buying ads on Yelp. (The Michael S. post was subsequently removed, though the court for some reason notes that it was cached in Google for a time.)

Reit argued that Yelp’s removal of posts was not the exercise of editorial judgment, but business related, making Yelp an internet content provider. But this does not follow. Content provided by others does not cease to be that merely because the configuration or operation of the website might have some influence on that content. And Yelp’s selection of the posts to keep can be considered the selection of information, a quintessential publishing function. Thus, no defamation liability for Yelp.

However, the CDA doesn’t contemplate protecting Yelp’s use of speech as leverage in its business model. Reit alleged that Yelp provided deceptive terms on its website, encouraging both businesses and individual users to believe that the reviews are not manipulated by Yelp. Also, Reit alleged that Yelp’s sales force used negative reviews on the site as leads for new ad business, and that sales reps told business owners that, if they paid for ads, the reps would assist in deleting negative reviews. But if a business owner refuses, Yelp would delete positive reviews. Yelp’s guide for business owners stated “We remove the guesswork by screening out reviews that are written by less established users. The process is entirely automated to avoid human bias,” and yet the system is not entirely automated. This allegedly deceived the public by representing that reviews are ordered, reviewed and removed by computers, and not manipulated by people. Reit referred to class action suits against Yelp of which he is not a member, and did not allege that he was a victim of this conduct.

The General Business Law bars deceptive acts or practices in the conduct of business and false advertising, giving a private right of action to any person who’s been injured; a plaintiff need not be a consumer, but must allege consumer-oriented conduct that is materially misleading and that resulted in injury. However, the identified statement by Yelp isn’t addressed to individual consumers seeking dentists, but to business owners. “Yelp's statement is not materially misleading to a reasonable consumer seeking dentistry, and is not a deceptive practice.” Likewise, deleting postings for the purpose of selling ads would be business conduct, not consumer oriented conduct. Thus, the claim was dismissed.

The claims against Michael S. were severed and continued.

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