levitt v. yelp motion to dismiss
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YELPS MOTION TO DISMISS AND TO STRIKE CV10-01321MHP;CV10-02351MH
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Gibson, Dunn &Crutcher LLP
GIBSON, DUNN & CRUTCHER LLPGAIL LEES, SBN 90363glees@gibsondunn.com333 South Grand AvenueLos Angeles, California 90071-3197Telephone: (213) 229-7000Facsimile: (213) 229-7520
S. ASHLIE BERINGER, SBN 263977SUSANNAH WRIGHT, SBN 264473aberinger@gibsondunn.comswright2@gibsondunn.com1881 Page Mill RoadPalo Alto, California 94304-1211Telephone: (650) 849-5300Facsimile: (650) 849-5333
YELP! INC.AARON SCHUR, SBN 229566aschur@yelp.com706 Mission StreetSan Francisco, California 94103Telephone: (415) 908-3801Facsimile: (415) 908-3833
Attorneys for DefendantYELP! INC.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
BORIS Y. LEVITT D/B/A RENAISSANCERESTORATION, CATS AND DOGS ANIMALHOSPITAL, INC., TRACY CHAN D/B/AMARINA DENTAL CARE andPROFESSIONAL CONSTRUCTION GROUP,INC. D/B/A PAVER PRO; on behalf ofthemselves and all others similarly situated,
Plaintiff,
v.
YELP! INC.; and DOES 1 through 100,inclusive,
Defendants.
Case No. CV 10-01321 MHPConsolidated with CV 10-02351MHP
CLASS ACTION
DEFENDANT YELP! INC.S NOTICE OFMOTION AND MOTION TO DISMISSSECOND AMENDED CLASS ACTIONCOMPLAINT AND TO DISMISS ORSTRIKE CLASS ACTIONALLEGATIONS; MEMORANDUM OF
POINTS AND AUTHORITIES
Date: February 7, 2011Time: 2:00 p.m.Place: Courtroom 15, 18
thFloor
450 Golden Gate AvenueSan Francisco, California
Judge: The Honorable Marilyn H. Patel
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TABLE OF CONTENTS
Page
I. ISSUES TO BE DECIDED ...................................................................................................... 1
II. INTRODUCTION AND SUMMARY OF ARGUMENT ....................................................... 1
III. ALLEGATIONS IN THE COMPLAINT................................................................................. 3
A. Yelps Online Review Service...................................................................................... 3
1. Yelps Automated Review Filter ...................................................................... 4
2. Yelps Advertising Program ............................................................................. 4
B. Named Plaintiffs Allegations....................................................................................... 4
1. Non-Sponsor Plaintiffs:..................................................................................... 4
a. Boris Levitt ........................................................................................... 4
b. Cats & Dogs .......................................................................................... 6
2. Sponsor Plaintiffs.............................................................................................. 7
a. Tracy Chan............................................................................................ 7
b. Paver Pro ............................................................................................... 9
3. Plaintiffs Fail To Allege the Core Elements of Their Claims........................... 9
C. Class Allegations......................................................................................................... 10
D. The Second Amended Complaint ............................................................................... 11
IV. ARGUMENT.......................................................................................................................... 11
A. Applicable Legal Standard.......................................................................................... 11
1. Motion to Dismiss for Lack of Standing Under Rule 12(b)(1)....................... 11
2. Motion to Dismiss Under Rule 12(b)(6) ......................................................... 11
B. Plaintiffs Lack Standing To Pursue Their Claims ...................................................... 12
1. Plaintiffs Lack Article III Standing................................................................. 12
a. Plaintiffs Fail to Sufficiently Allege an Injury In Fact ....................... 12
b. Plaintiffs Have Not Alleged a Non-Speculative Causal
Connection .......................................................................................... 14c. Plaintiffs Fail to Sufficiently Allege a Redressable Injury ................. 16
2. Plaintiffs Also Lack Standing Under the UCL ............................................... 16
C. Plaintiffs Also Fail To State A Claim Under The UCL.............................................. 17
1. Plaintiffs Have Not Alleged Unlawful Conduct.......................................... 18
a. Plaintiffs Fail to Allege That Yelp Engaged in a Threat ofUnlawful Injury or Wrongful Use of Fear .......................................... 18
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b. Non-Sponsors Plaintiffs Also Fail to Allege That TheyProvided Property to Yelp................................................................... 20
c. Plaintiffs Do Not Allege That Fear Was the ControllingCause of Any Decision To Advertise ................................................. 21
d. Plaintiffs Fail to Allege That Any Purported Fear WasReasonable .......................................................................................... 21
2. Plaintiffs Have Not Alleged Unfair Conduct .............................................. 22
D. Because Plaintiffs Do Not Have Standing and Fail to State a SufficientClaim, the Class Allegations Also Must Be Dismissed .............................................. 23
E. The Second Amended Complaint Should Be Dismissed Without Leaveto Amend..................................................................................................................... 23
F. Plaintiffs Cannot Plead Legally Sufficient Class Allegations..................................... 23
V. CONCLUSION....................................................................................................................... 25
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TABLE OF AUTHORITIES
Page(s)
CASES
Arista Records v. Sanchez,No. CV 05-07046, 2006 WL 5908359 (C.D. Cal. Mar. 1, 2006) ............................................ 21
Ashcroft v. Iqbal,129 S. Ct. 1937 (2009) ............................................................................................................. 12
Augustine v. United States,704 F.2d 1074 (9th Cir. 1983)............................................................................................ 11, 19
Baba v. Hewlett-Packard Co.,No. C 09-05946, 2010 WL 2486353 (N.D. Cal. June 16, 2010) ............................................. 23
Barnum Timber Co. v. U.S. Envtl. Prot. Agency,
No. C 08-01988 WHA, 2008 WL 4447690 (N.D. Cal. Sept. 29, 2008) .................................. 14Birdsong v. Apple, Inc.,
590 F.3d 955 (9th Cir. 2009).................................................................................................... 17
Brazil v. Dell Inc.,585 F. Supp. 2d 1158 (N.D. Cal. 2008) ................................................................................... 24
Browne v. Avvo, Inc.,525 F. Supp. 2d 1249 (W.D. Wash. 2007) ............................................................................... 16
Buena Vista, LLC v. New Res. Bank,No. 10-1502 CW, 2010 WL 3448561 (N.D. Cal. Aug. 31, 2010) ........................................... 22
Californians for Disability Rights v. Mervyns, LLC,39 Cal. 4th 223 (2006) ....................................................................................................... 12, 17
Carafano v. Metrosplash,339 F.3d 1119 (9th Cir. 2003).................................................................................................. 15
Carbo v. United States,314 F.2d 718 (9th Cir. 1963).................................................................................................... 22
Cel-Tech Commcns, Inc. v. Los Angeles Cellular Tel. Co.20 Cal. 4th 163 (1999) ............................................................................................................. 23
Chan v. Lund,
188 Cal. App. 4th 1159 (2010) ................................................................................................ 21Clayworth v. Pfizer, Inc.,
49 Cal. 4th 758 (2010) ............................................................................................................. 17
Daugherty v. Am. Honda Motor Co.,144 Cal. App. 4th 824 (2006) .................................................................................................. 18
Dodd-Owens v. Kyphon, Inc.,No. C06-3988, 2008 WL 410241 (N.D. Cal. Feb. 12, 2008)................................................... 25
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Gardner v. Martino,563 F.3d 981 (9th Cir. 2009).................................................................................................... 16
Goddardv. Google,Inc.,640 F. Supp. 2d 1193 (N.D. Cal. 2009) ................................................................................... 16
Hovsepian v. Apple, Inc.,No. 08-5788, 2009 WL 5069144 (N.D. Cal. Dec. 17, 2009) ................................................... 24
In re Actimmune Mktg. Litig.,No. C 08-02376 MHP, 2009 WL 3740648 (N.D. Cal. Nov. 6, 2009) ..................................... 18
In re Stac Elecs. Sec. Litig.,89 F.3d 1399 (9th Cir. 1996).................................................................................................... 12
In re Tobacco II Cases,46 Cal. 4th 298 (2009) ............................................................................................................. 17
In re Wright,65 Cal. 2d 650 (1967) .............................................................................................................. 20
Johnson v. Weinberger,851 F.2d 233 (9th Cir. 1988).................................................................................................... 12
Lee v. Capital One Bank,No. C 07-4599, 2008 WL 648177 (N.D. Cal. Mar. 5, 2008) ................................................... 13
Leong v. Square Enix of Am. Holdings, Inc. ........................................................................................ 23
Lierboe v. State Farm Mut. Auto. Ins. Co.,350 F.3d 1018 (9th Cir. 2003).................................................................................................. 23
Lujan v. Defenders of Wildlife,504 U.S. 555 (1992)................................................................................................................. 12
Mazur v. eBay Inc.,No. C 07-03967, 2008 WL 618988 (N.D. Cal. Mar. 4, 2008) ................................................. 15
McDonald v. Coldwell Banker,543 F.3d 498 (9th Cir. 2008).................................................................................................... 22
Missing Link, Inc. v. Ebay, Inc.,2008 WL 1994886 (N.D. Cal. May 5, 2008) ........................................................................... 17
Mitchell v. Sharon,59 F. 980 (9th Cir. 1894).......................................................................................................... 19
OShea v. Littleton,414 U.S. 488 (1974)................................................................................................................. 23
People v. Anderson,75Cal. App. 365 (1925)........................................................................................................... 20
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People v. Goodman,159 Cal. App. 2d 54 (1958)...................................................................................................... 21
People v. Sales,116 Cal. App. 4th 741 (2004) .................................................................................................. 19
Petrochem Insulation, Inc. v. N. Cal. & N. Nev. Pipe Trades Counsel,No. C-90-3628 EFL, 1991 WL 158701 (N.D. Cal. Apr. 30, 1991) ......................................... 20
Robertson v. Dean Witter Reynolds, Inc.,749 F.2d 530 (9th Cir. 1984).................................................................................................... 11
Rothman v. Vedder Park Mgmt.,912 F.2d 315 (9th Cir. 1990).................................................................................................... 20
Rubio v. Capital One Bank,613 F.3d 1195 (9th Cir. 2010).................................................................................................. 17
Sanders v. Apple, Inc.,672 F. Supp. 2d 978 (N.D. Cal. 2009) ............................................................................... 11, 13
Sigmond v. Brown,645 F. Supp. 243 (C.D. Cal. 1986)........................................................................................... 20
Sisseton-Wahpeton Sioux Tribe v. United States,90 F.3d 351 (9th Cir. 1996)...................................................................................................... 24
Smith & Hawken, Ltd. v. Gardendance, Inc.,No. C04-1664, 2004 WL 2496163 (N.D. Cal. Nov. 5, 2004).................................................. 23
Sosa v. DIRECTV, Inc.,437 F.3d 923 (9th Cir. 2006).................................................................................................... 20
Stearns v. Select Comfort Retail Corp.,No. 08-cv-02746, 2009 WL 4723366 (N.D. Cal. Dec. 4, 2009) .............................................. 24
Sustainable Delta v. Fed. Emergency Mgmt. Grp.,711 F. Supp. 2d 1152 (E.D. Cal. 2010).................................................................................... 14
Two Jinn, Inc. v. Govt Payment Serv., Inc.,2010 WL 1329077 (S.D. Cal. Apr. 1, 2010) ............................................................................ 13
United States v. Billingsley,
474 F.2d 63 (6th Cir. 1973)...................................................................................................... 22
United States v. Marsh,26 F.3d 1496 (9th Cir. 1994).................................................................................................... 22
United States v. Sequel Contractors, Inc.,402 F. Supp. 2d 1142 (C.D. Cal. 2005) ................................................................................... 17
Vinole v. Countrywide Home Loans, Inc.,246 F.R.D. 637 (S.D. Cal. 2007).............................................................................................. 26
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Wolk v. Green,516 F. Supp. 2d 1121 (N.D. Cal. 2007) ................................................................................... 20
STATUTES
18 U.S.C. 1951 .................................................................................................................................. 18
18 U.S.C. 1951(b)(2)......................................................................................................................... 19
47 U.S.C. 230(c) ........................................................................................................................... 3, 15
Cal. Bus. & Prof. Code 17200 .......................................................................................................... 18
Cal. Penal Code 518.............................................................................................................. 18, 19, 20
Cal. Penal Code 519.................................................................................................................... 18, 19
Cal. Penal Code 519(2) ..................................................................................................................... 19
Cal. Penal Code 519(3) ..................................................................................................................... 19
Cal. Penal Code 519(4) ..................................................................................................................... 19
Cal. Penal Code 523.......................................................................................................................... 18
Cal. Penal Code 524.................................................................................................................... 18, 19
F.R.C.P. 12(b) ................................................................................................................................... 11
F.R.C.P. 12(b)(6)............................................................................................................................... 11
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NOTICE OF MOTION AND MOTION TO DISMISS SECOND AMENDED CLASS ACTIONCOMPLAINT AND TO DISMISS OR STRIKE CLASS ACTION ALLEGATIONS
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that at 2:00 p.m. on February 7, 2010, or as soon thereafter as the
matter may be heard by the above-entitled Court, in the courtroom of the Honorable Marilyn H. Patel
450 Golden Gate Avenue, San Francisco, California 94102, Defendant Yelp! Inc. (Yelp) will and
hereby does move for an order dismissing Plaintiffs Second Amended Class Action Complaint
(SAC or Amended Complaint) for a violation of California Business and Professions Code
Section 17200 et seq. (the Unfair Competition Law or UCL) under Rules 12(b)(1) and 12(b)(6)
of the Federal Rules of Civil Procedure. Yelp also moves to strike and/or dismiss the class action
allegations in the SAC under Rules 12(b)(6), 12(f) and/or 23 of the Federal Rules of Civil Procedure.
This motion is based on this Notice of Motion and Motion, the Memorandum of Points and
Authorities, the Courts files in this action, the arguments of counsel, and any other matter that the
Court may properly consider.
MEMORANDUM OF POINTS AND AUTHORITIES
I. ISSUES TO BE DECIDED
1. Do Plaintiffs lack standing under Article III of the United States Constitution and the
California Unfair Competition Law?
2. Do Plaintiffs state a legally sufficient claim against Yelp for violations of the UCL?
3. Should Plaintiffs class allegations be dismissed or stricken pursuant to Federal Rules
of Civil Procedure 12(b)(6), 12(f) and 23 because they failed to plead an ascertainable or manageable
class or to allege commonality and typicality among the proposed class members?
II. INTRODUCTION AND SUMMARY OF ARGUMENT
Plaintiffs seek to suppress legitimate and protected online consumer commentary about
their businesses. Yelp is a leading Internet review website that allows members of the public to read
and write online reviews about their experiences with local businesses. The integrity of these reviews
has fueled the success of Yelps service, and Yelp goes to great lengths to combat efforts by some
businesses (including some of the Plaintiffs here) to post and solicit fake reviews. As Plaintiffs
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acknowledge, Yelp employs a proprietary automated algorithm to filter less reliable reviews from its
website, regardless of whether those reviews are written about businesses that advertise with Yelp.
Although Yelp strives to provide a fair and neutral service for consumers, Plaintiffs complain
that they were harmed by negative consumer reviews or that positive reviews were removed as
unreliable by Yelps automated filter. But Plaintiffs fail to allege a coherent or actionable theory
that Yelp is responsible for their speculative injuries. Indeed, Plaintiffs contend that they were
injured by reviews whether or not they advertisedon Yelp, defeating the premise that Yelp somehow
manipulates reviews in favor of advertisers. Plaintiffs also cannot link any alleged harm to any
purported extortion by Yelp, and fail to allege that Yelp made a single threat of unlawful injury.
Unable to suppress public discussion about their businesses online or to succeed in their
efforts to post fake positive reviews about their businesses on Yelp, Plaintiffs filed this lawsuit,
asserting contrived and deficient claims for violation of Californias Unfair Competition Law and a
host of other claims. Plaintiffs claims have been a moving target, and they have filed no fewer than
five different pleadings in an attempt to state a viable theory against Yelp. While the First Amended
Complaint asserted that Yelp somehow had engaged in deceptive or misleading sales practices,
Plaintiffs abandoned these claims in response to Yelps latest motion to dismiss, and now premise
their case on unsupported allegations of extortion. Plaintiffs latest effort fares no better than their
prior failures, and the Second Amended Complaint should be dismissed with prejudice.
As a threshold matter, Plaintiffs fail to meet the most basic requirements for standing under
Article III of the United States Constitution or the UCL. Plaintiffs do not allege any particularized
injury-in-fact, and instead rely on vague and unsupported claims of lost business and reputational
harm that are insufficient to demonstrate standing here.
Plaintiffs sole UCL claim also fails because they fail to allege any conduct that is unlawful
or unfair. Although Plaintiffs attempt to base this claim on speculative allegations of extortion,
they do not plead a single instance where Yelp threatened to wrongfully injure a business unless it
advertised on Yelp a basic and required element of any claim for actual or attempted extortion.
Instead, Plaintiffs allege merely that Yelp offered them a range of different advertising benefits that
cannot constitute extortion as a matter of law.
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At bottom, Plaintiffs claims are nothing more than vague complaints about the content of
negative reviews posted by consumers and Yelps use of an automated screening filter to ensure that
reviews posted on its website are authentic. It is well-settled that Yelp is immune from such claims
under Section 230 of the Communications Decency Act, 47 U.S.C. 230(c), which protects online
service providers from claims arising from publishing or screening user content online.
Even at the pleading stage, it also is apparent that Plaintiffs cannot possibly pursue their
claims on behalf of a putative class of businesses contacted by Yelp about advertising. The proposed
class definition is hopelessly overbroad and encompasses hundreds of thousands of businesses,
whether or not Yelp made any threats of unlawful injury that reasonably induced fear. Further, any
attempt to assess what occurred in hundreds of thousands of individual discussions with such
businesses or to determine whether millions of consumer reviews were properly removed or
reinstated would be impossible. Because the alleged class definition is fatally deficient, and
because Plaintiffs cannot certify a class on the fact-intensive claim asserted here under any class
definition, this Court also should dismiss or strike the class allegations at the pleading stage.
III. ALLEGATIONS IN THE COMPLAINT1
A. Yelps Online Review ServiceYelp publishes a popular website at www.yelp.com, which allows consumers to read and
write reviews about local businesses online. SAC 2, 21-24. As Plaintiffs admit, the reviews on
Yelps website are written by members of the public, who rate local businesses on a scale of one to
five stars. Id. 2, 22-23. As disclosed on portions of Yelps website referenced in the Second
Amended Complaint, well over 14 million reviews have been posted to Yelps website, and the
overwhelming majority of these reviews are positive approximately 83% of reviews are 3 stars or
1 The following allegations are deemed to be true solely for purposes of this motion. Yelpvigorously denies that it engaged in any misconduct or manipulated reviews, and if this case were toproceed past the pleading stage, Yelp would demonstrate that Plaintiffs allegations are false.
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higher, whether or not the business advertises on Yelp. See Exhibit 1 to Declaration of Ashlie
Beringer (Beringer Decl.) (referenced in 2-3, 5 of the SAC).2
1. Yelps Automated Review FilterAs Plaintiffs concede, Yelp discloses on its website that it has an automated filter that
suppresses a small portion of reviews it targets those suspicious ones you see on other sites. SAC
5. The review filter is critical to ensuring that consumers see the most reliable reviews posted on
Yelp, rather than those that might have been written by a business owner seeking to deceptively
promote its own business or tarnish a competitor. Seeid. 6; Beringer Decl. Ex. 2 (cited in 3, 5 of
the SAC). The filter does not take into account whether or not a business advertises with Yelp, and
instead filters reviews based on an automated analysis of how established a particular reviewer is.
Id. As Yelp discloses on its website (in disclosures referenced in the SAC), because a reviewers
activities and trustworthiness can vary over time, reviews can disappear and reappear over time
based on the reviewers varying involvement with Yelp. Beringer Decl. Ex. 2.
2. Yelps Advertising ProgramYelp also provides businesses with an opportunity to advertise on Yelp.com. See Beringer
Decl. Ex. 3. Advertisers are featured in clearly designated sponsored results at the top of Yelp search
results and on related business pages. Id.3 In addition, advertising businesses are able to enhance
[their] business page with a photo slideshow, and to prevent competitors advertisements from
appearing on their business pages. Id.
B. Named Plaintiffs Allegations1. Non-Sponsor Plaintiffs:
a. Boris LevittBoris Levitt concedes that his business received several positive reviews and only one
2 Because the Second Amended Complaint specifically references and relies upon disclosurescontained on Yelp.com, the Court may consider the complete contents of these statements whenassessing Plaintiffs allegations. See, e.g., United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003)
3 Although Yelp previously offered advertisers the option to select a single Favorite Review(clearly labeled as such) to display prominently on the businesss review page, it has sincediscontinued this program.
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negative review after signing up for a free business account on Yelp in 2008 more than one year
before he ever spoke to anyone at Yelp about advertising. Id. 43, 45. Levitt nevertheless
complains that certain positive reviews were removed from his businesss Yelp page before and after
he received an offer to purchase advertising on Yelp.
Levitt alleges that when he contacted Yelp in May 2009 to inquire about why a positive
review of his business had disappeared, a representative of Yelp informed him (correctly) that she
could not assist him in removing [sic] the [positive] review. SAC 44. In earlier pleadings,
Levitt further conceded that this representative informed him that Yelp uses an automated system
that decides how much trust to instill in a particular reviewer and that may remove or reinstate
reviews, but that Yelp employees dont have the ability to evaluate or reinstate specific reviews
that are filtered.4 First Amended Complaint (Dkt. Entry #48, Sept. 23, 2010) (FAC) 43, 45.
Levitt alleges that he was contacted a few months later by a Yelp sales representative, who
suggested (again, accurately) that Levitt could increase his page views by advertising on Yelp.
SAC 46. [I]n response, Levitt declined to advertise because he already had a high volume of
users reviewing his business page and a rating of 4.5 stars (despite not advertising). Id.
Levitt contends that after he declined to advertise on Yelp, additional 5-star reviews were
removed from his business page conditions that existed months before he declined to advertise on
Yelp. Id. 43-44, 46, 48. Levitt fails to allege any facts suggesting that these reviews were
removed by any means other than the normal operation of Yelps automated review filter. Seeid.
5-6. Instead, in the Second Amended Complaint, Levitt adds the bald assertion, on information and
belief, that Yelp manipulated the reviews of Levitts business because he did not purchase
advertising, despite paradoxically conceding that he received negative reviews, and lost positive
reviews, months before declining to advertise. Id. 43-45, 49.
Levitt vaguely complains that he experienced a loss of sales, revenues and/or assets and that
his businesss reputation was injured, although he fails to identify a single customer he lost due to
4 Levitt removed these admissions from the Second Amended Complaint, apparently to obscure thefact that Yelp truthfully informed him in writing that it could not manipulate reviews on his behalf.
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any alleged conduct by Yelp (or otherwise) or to provide any specifics concerning how, or whether,
his business was harmed due to any unlawful conduct by Yelp. Id. 54.
b. Cats & DogsCats and Dogs (C&D) focuses on two negative consumer reviews it received before
receiving an offer to advertise on Yelp. SAC 57, 61. Specifically, C&D alleges that it first
contacted Yelp in September 2009 to request removal of a review alleged to be negative and
possibl[y] fals[e]. Id. 57-58. Thereafter, the negative review was removed, even though C&D
did not advertise. Id. 59-60. C&D then alleges it received a second negative review. Id. 61.
C&D claims that about four months later it received a sales call from Kevin, who allegedly
offered various advertising benefits, including the ability to hide negative reviews or place them
lower on the listing page (allegations that Yelp vigorously denies). Id. 63. C&D declined the
[alleged] offer, saying that [it] wanted to track referrals from Yelp . . . without ads. Id. 64.
C&D contends that after it declined to advertise with Yelp, highly negative, inflammatory
reviews continued to reappear on its business page, just as they had before, but that Yelp was
unwilling to remove these reviews consistent with its stated policies. Id. 5-6, 65-68. C&D now
asserts (on information and belief) that Yelp somehow published these third-party reviews as a
threat to cause C&D to advertise. Id. 66. Yet, C&D concedes that Yelp in fact advised that it wasunable to remove these customer reviews because it does not have firsthand knowledge of a
reviewers identity or personal experience and was not in a position to verify [C&Ds] claims that
these reviewers . . . are connected to the recent vandalism at your hospital and not because C&D
had not purchased advertising. Id. 69.
C&D concludes by speculating that [a]s a result of Yelps conduct, it received fewer
customers and a decrease in business revenues. SAC 73. C&D further alleges that negative
reviews posted by third-party customers and not any unlawful conduct by Yelp harmed its
business reputation. Id.5
5 In fact, C&D conceded in its earlier complaint that after declining to advertise with Yelp, itnevertheless enjoyed a 4-star rating on Yelp, with more than 60% of reviews giving it a perfect 5-
[Footnote continued on next page]
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2. Sponsor Plaintiffsa. Tracy Chan
Tracy Chan alleges that a Yelp representative supposedly called to offer her lots of benefits
if she advertised on Yelp, such as the opportunity to hid[e] or bury[] bad reviews and to put
pictures on the Yelp page. SAC 77. Chan concedes that she ultimately declined to purchase
Yelp advertising in response to these purported offers (which Yelp denies were made). Id. 79.
Chan complains that, thereafter, various 5-star reviews were removed from her businesss
page although, like the other Plaintiffs, she fails to allege facts indicating that these reviews were
removed due to anything other than the normal operation of Yelps review filter. Id. 80.
In her first complaint, Chan conceded that several months afterspeaking with Yelp about
advertising, she elected to purchase advertising on Yelp due to months of experiencing a decline in
new patients and not due to any alleged threats by Yelp. FAC 74. Chan now asserts for the first
time that before purchasing advertising, she had a further conversation with Yelp conspicuously
absent from her earlier pleading in which a Yelp representative purportedly told her that Yelp
occasionally tweeks ratings and could help her in unspecified ways if she advertised. SAC 81.
Based on these recent allegations, Chan now asserts that she believed Yelp manipulated
reviews about her business and that she purchased advertising on Yelp so that Yelp would reinstate
the positive reviews and prevent the posting of negative reviews by consumers. Id. 82-83. As
in her earlier complaint, however, Chan does not allege that any representative of Yelp ever
threatened (or even suggested) that Yelp would harm Chans business or manipulate reviews if she
did not advertise on Yelp. Instead, Chan asserts merely that Yelp supposedly offered vague
advertising services. Id. 81.
Chan signed a one-year contract with Yelp for advertising in early August 2008. SAC 83.
Nowhere does Chan allege that she failed to receive the benefits specified in her contract with Yelp.
Instead, Chan alleges that her overall star rating initially increased after purchasing advertising, but
[Footnote continued from previous page]star rating admissions C&D conspicuously removed from the Second Amended Complaintbecause they conflict with its trumped up allegations of injury. FAC 63.
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declined shortly thereafter defeating the spurious premise that Yelp somehow manipulates reviews
in favor of advertisers. Id. 83-84.
In the Second Amended Complaint, Chan also claims that after entering into a one-year
advertising contract, a Yelp salesperson requested that she make an increased payment for
advertising with Yelp allegations also conspicuously absent from her earlier pleading. Id. 84.
Chan fails to describe the additional benefits she supposedly was offered by this representative, and
again, fails to allege that Yelp in any way threatened to harm or manipulate reviews for Chans
business unless she increased her advertising commitment with Yelp. Id.
Chan cancelled her one-year advertising contract in October 2008 just two months after
advertising on Yelp, and in the face of consumer reviews that were again declining. SAC 84-85
Chan complains that some time after she stopped advertising, positive reviews were removed from
her business page, while negative consumer reviews continued to appear just as they had during the
brief period that she advertised. Id. 85. Although Chan adds allegations on information and
belief that Yelp somehow removed the positive reviews to cause Chan to fear that it would
remove positive reviews unless she paid for advertising, she alleges no facts that in any way support
this claim, nor does she point to any statement or conduct by Yelp that could reasonably have
contributed to this belief. Id. 85-86.
Ultimately, Chan complains that during the 18 months after she stopped advertising on Yelp,
several positive reviews were removed from her business page (as was the case before and during the
period she advertised on Yelp), and that her overall star rating fell although she again fails to
allege any facts demonstrating that the removal of these reviews by Yelps automated filter, or the
posting of negative consumer reviews, was in any way unlawful. Id. 86-90.
Chan alleges that she lost money in advertising costs she paid to Yelp purportedly to avoid
Yelps manipulation of reviews, although she does not allege that anyone from Yelp stated or
implied that Yelp would manipulate reviews or her star rating unless she purchased advertising. Id
91. Chan also makes vague and speculative allegations that she lost sales, revenue, and/or assets
as a result of Yelps conduct, and that her businesss reputation was injured due to the posting
of negative reviews and/or removal of positive reviews created by third parties. Id. 92.
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b. Paver ProPaver Pro alleges that it received several positive reviews, and some negative reviews, before
it elected to purchase advertising on Yelp. SAC 95-97. It complains that some of these positive
reviews were later removed, while two negative customer reviews remained on its business page
although it provides no facts that suggest that this was due to anything other than the routine
application of Yelps automated review filter. Id. 97.
Although Paver Pro alleges upon information and belief that these reviews were removed
(or maintained) as a threat to cause Paver Pro to fear that its star rating would be low unless it
purchased advertising, it cites no facts in support of this speculative claim. Id. 98. In fact, Paver
Pro concedes that it never spoke to anyone at Yelp about advertising, and instead, purchased
advertising on its own initiative through Yelps website, with the unfounded hope that the positive
reviews it received would be reinstated. Id. 99.
Paver Pro alleges that at some point after it purchased advertising, many of the positive
reviews that had disappeared were reinstated. Id. 100. Despite having an overall Yelp star rating
of 4 stars in January 2010, Paver Pro apparently decided to stop advertising on Yelp in March 2010.
Id. 101-102. Paver Pro asserts that in April 2010, its overall star rating on Yelp dropped to 3 stars,
although it conspicuously fails to disclose its star rating at the time it stopped advertising on Yelp,
one month earlier. Id. 101, 103.
Paver Pro contends that it somehow lost money in advertising costs, even as it alleges that
positive reviews were reinstated and that its star rating was high during the period it advertised on
Yelp. Id. 100-104. In addition, Paver Pro alleges an unspecified decrease in its business
revenues due to fewer customers and fewer Yelp users viewing its business page. Id. 105.
Like the other Plaintiffs, Paver Pro contends that its businesss reputation was injured by negative
reviews posted by third parties and/or removal of positive reviews by Yelps automated filter. Id.
3. Plaintiffs Fail To Allege the Core Elements of Their ClaimsAlthough the named Plaintiffs make wildly disparate and inconsistent claims concerning
Yelps alleged conduct, each fails to plead any of the basic facts necessary to support their sole UCL
claim here. Indeed:
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No Plaintiff alleges that any representative of Yelp threatened, or even implied, that Yelpwould subject it to harm unless it advertised on Yelp. Indeed, one Plaintiff (Paver Pro)
did not even speak to a Yelp representative.
Likewise, no Plaintiff alleges that it was compelled to give property to Yelp based on anythreat or wrongful use of fear by Yelp. To the contrary, the two Non-Sponsor Plaintiffs
concede that they declined to purchase advertising in response to Yelps generalizedoffers, and the one Sponsor Plaintiff who actually spoke to Yelp (Chan) fails to allege any
conduct by Yelp that was remotely threatening or that could reasonably induce fear.
No Plaintiff pleads any facts to support the contention upon information and belief that Yelp manipulated third-party reviews on behalf of advertisers. In fact, Non-
Sponsor Plaintiffs (like C&D) conceded that they received positive reviews and high starratings even without advertising on Yelp, while Sponsor Plaintiffs (like Chan) complained
about declining ratings during the period that they advertised.
All Plaintiffs allege generalized harm to their business in the most speculative terms,and no Plaintiff identifies a single customer relationship that was disrupted or sale that
was lost. Plaintiffs also fail to allege facts demonstrating how these vague injuries werecaused by any unlawful conduct by Yelp, as opposed to the content of customer reviews
authored by third parties and Yelps use of an automated screening tool.
C. Class AllegationsPlaintiffs purport to assert claims individually and on behalf of all businesses and persons . .
who were in contact with Yelp regarding the option to advertise on Yelp, and who were
subsequently subject to the manipulation of the reviews of their businesses by Yelp in a manner
that did not comply with Yelps representations regarding its Review Terms. SAC 108(a) & (b).
The proposed class is divided into two subclasses: Non-Sponsors consist of businesses that
declined to purchase advertising, while Sponsors consist of businesses that advertis[ed]. Id.
Notably, the proposed class definition encompasses all businesses and persons who were
in contact with Yelp about advertising, whether or not Yelp purportedly engaged in any threatening
or other wrongful conduct during those communications, and whether or not those communications
could reasonably have induced fear. Id. Likewise, the proposed class definition necessitates an
inquiry into the representations (if any) by Yelp to each putative class member regarding its Review
Terms, and a review-by-review analysis of whether the removal and/or reinstatement of millions of
third-party reviews was conducted in a manner that did not comply with those representations. Id.
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D. The Second Amended ComplaintThe Second Amended Complaint is the fifth pleading to be filed in these consolidated actions
After the Court appointed lead counsel and ordered Plaintiffs to file a consolidated amended
complaint, Plaintiffs filed the First Amended Complaint alleging claims for violations of the UCL,
Californias False Advertising Law, and intentional interference with prospective business advantage,
alleging that Yelp had engaged in deceptive statements and misrepresentations to business owners
to induce them to advertise on Yelp. See, e.g., FAC 106, 121, 123. After Yelp moved to dismiss
the First Amended Complaint (Docket No. 48), Plaintiffs once again sought to amend their pleading,
and removed all claims of false and deceptive conduct under the UCL and False Advertising
Law, as well as its intentional interference claim. This time, the Second Amended Complaint rests on
a different theory, premised entirely on unsubstantiated claims of extortion or attempted
extortion. SAC 117-130.
IV. ARGUMENT
A. Applicable Legal Standard1. Motion to Dismiss for Lack of Standing Under Rule 12(b)(1)A challenge to standing under Article III pertain[s] to a federal courts subject-matter
jurisdiction and is therefore properly raised in a motion under Federal Rule of Civil Procedure
12(b)(1). Sanders v. Apple, Inc., 672 F. Supp. 2d 978, 983-84 (N.D. Cal. 2009). On a motion to
dismiss for lack of standing, [n]o presumptive truthfulness attaches to plaintiffs allegations, and the
existence of disputed material facts will not preclude the trial court from evaluating for itself the
merits of jurisdictional claims. Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983).
2. Motion to Dismiss Under Rule 12(b)(6)A complaint should be dismissed under Federal Rule of Civil Procedure 12(b)(6) when it
lacks sufficient facts to support a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc.,
749 F.2d 530, 533-34 (9th Cir. 1984). Although this Court must accept a plaintiffs allegations as
true and construe them in a light most favorable to the plaintiff, [c]onclusory allegations of law and
unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim. In
re Stac Elecs. Sec. Litig.,89 F.3d 1399, 1403 (9th Cir. 1996). To avoid dismissal, a complaint must
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do more than plead[] facts that are merely consistent with a defendants liability, and, instead, a
plaintiff must set forth enough factual information to make it plausible, not merely possible, that
the defendant is liable. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
B. Plaintiffs Lack Standing To Pursue Their ClaimsAs a threshold matter, Plaintiffs have failed to plead facts sufficient to establish that they
satisfy the irreducible constitutional minimum of standing under Article III, as required to pursue
their claims in this Court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Plaintiffs also
fail to satisfy the statutory standing requirements applicable to their claims under the UCL. See
Californians for Disability Rights v. Mervyns, LLC,39 Cal. 4th 223, 227-29 (2006). Because
Plaintiffs fail to make plausible, non-speculative allegations that they suffered an injury in fact, or
that they have lost money or property or suffered any non-speculative injury as a direct result of
Yelps allegedly wrongful conduct, Plaintiffs lack standing under either Article III or the UCL.
1. Plaintiffs Lack Article III StandingTo establish Article III standing, Plaintiffs must allege that (1) they have suffered an injury
in fact an invasion of a legally protected interest which is (a) concrete and particularized and (b)
actual and imminent, not conjectural or hypothetical; (2) there is a causal connection between the
injury and the conduct complained of; and (3) it is likely, as opposed to merely speculative, that theinjury will be redressed by a favorable decision. Lujan, 504 U.S. at 560-61. A plaintiff does not
demonstrate standing [w]hen speculative inferences are necessary . . . to establish either injury or the
connection between the alleged injury and the act challenged. Johnson v. Weinberger, 851 F.2d
233, 235 (9th Cir. 1988) (affirming dismissal of plaintiffs complaint for lack of standing because the
alleged injury was hypothetical and at best, speculative).
a. Plaintiffs Fail to Sufficiently Allege an Injury In FactPlaintiffs assert in conclusory terms that they have suffered injury in the form of an
unspecified loss of sales, revenues and/or assets, and non-specific harm to their businesss
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reputation. SAC 54, 73, 92, 105.6 Tellingly, Plaintiffs do not point to a single lost customer, and
they provide no details or factual support for their speculative claims of injury. Instead, Plaintiffs
rely on vague and unsupported claims of lost business and goodwill, alleging, for example, that
fewer customers patronized the business[es], which caused a decrease in business revenues. Seeid.
54, 73, 92,105; see also id. 91 (alleging that Chan experienced a decline in new patients); id.
104 (alleging Paver Pro also experienced a decline in business).
Courts have dismissed claims for lack of Article III standing including UCL claims in
precisely these circumstances. Most recently, in Two Jinn, Inc. v. Govt Payment Serv., Inc., 2010
WL 1329077 (S.D. Cal. Apr. 1, 2010), the court found that such speculative and non-concrete
allegations of lost business do not establish an injury in fact for purposes of Article III standing.
In Two Jinn, the plaintiff asserted UCL claims, alleging that it lost customers, causing it to lose the
financial benefits of sales they would have made but for [defendants] illegal activities. Id. at *2.
The court dismissed the plaintiffs claims for lack of Article III standing, finding that the plaintiff
failed to allege an injury in fact. Id. at *3. Specifically, the court concluded:
This alleged injury is mere conjecture, and is certainly not concrete orparticularized. Plaintiff has not, and likely could not, point to any potentialcustomers who would have purchased bail from sources other than Defendant,much less Plaintiff.
Id.
As in Two Jinn, Plaintiffs cannot point to a single potential customer[] who would have
purchased products or services but for Yelps alleged conduct, and their claims of lost revenues
and reputational harm are based entirely on impermissible conjecture. Id. Such speculative
assertions are wholly insufficient to establish Article III standing. SeeSanders, 672 F. Supp. 2d at
984 (dismissal for lack of Article III standing where speculative inferences are necessary to establish
either injury or the connection between the alleged injury and the act challenged); Lee v. Capital
One Bank, No. C 07-4599, 2008 WL 648177, at *3 (N.D. Cal. Mar. 5, 2008) (Patel, J.) (dismissal for
lack of Article III standing where injury was hypothetical and not actual or imminent).
6 To the extent Sponsor Plaintiffs allege that their injuries consist of advertising payments to Yelp,these allegations fail for lack of causation. See infra, pp. 14-16.
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b. Plaintiffs Have Not Alleged a Non-Speculative Causal ConnectionLikewise, Plaintiffs cannot establish standing because they do not allege any nexus between
their purported injuries and any unlawful conduct by Yelp. Lujan, 504 U.S. at 560-61 (Article III
standing requires alleged injuries to be fairly traceable to the challenged action of the defendant).
Non-Sponsor Plaintiffs
Non-Sponsor Plaintiffs fail to allege any facts creating a plausible inference that any decline
in their business or reputation was caused by any extortion or other unlawful conduct by Yelp. Nor
can they: the Non-Sponsor Plaintiffs concede that they never purchased advertisingfrom Yelp. SAC
46, 64. Instead, Levitt asserts merely that fewer customers patronized his business sometime
afterhe declined to purchase advertising, but he does not allege as he must any facts that could
support a finding that this unspecified decline was due to any threat or wrongful use of fear by
Yelp, as opposed to customer dissatisfaction, economic conditions, or a multitude of other possible
factors. Id. 54. Likewise, C&D fails to allege how (or whether) any purported threats by Yelp
caused it to receive fewer customers or harmed its business reputation. Id. 73.
Plaintiffs also cannot magically create standing by amending their pleading to add conclusory
allegations that their non-specific injuries were the result of Yelps conduct. SAC 54, 73, 92,
105. Such generic allegations fail to establish standing absent specific, supporting facts. SeeCoal.
for a Sustainable Delta v. Fed. Emergency Mgmt. Grp., 711 F. Supp. 2d 1152, 1157-59 (E.D. Cal.
2010)(standing may be based on non-conclusory factual content); see also Barnum Timber Co. v.
U.S. Envtl. Prot. Agency, No. C 08-01988 WHA, 2008 WL 4447690, at *7 (N.D. Cal. Sept. 29, 2008)
(injury and causation requirements would be empty if such conclusory and unsupported allegations
could alone confer standing).
At bottom, Non-Sponsor Plaintiffs allege that they experienced an unspecified decline in
business that they speculate was connected to consumer reviews and Yelps use of an automated tool
to screen such reviews. For example, both Levitt and C&D contend that their reputation was
harmed due to the posting of negative reviews by consumers before they declined to purchase
advertising. SAC 54, 73 (emphasis added). Likewise, Levitt complains that various positive
reviews were removed from Yelps website before and after declining to advertise on Yelp and
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that this somehow contributed to fewer customers and a decrease in revenues. Id.
Yelp is squarely immune from claims like those asserted here that arise from the content of
user reviews posted on its website under the Communications Decency Act (CDA), 47 U.S.C.
230(c), or from any editorial discretion (including the use of an automated review filter) that Yelp
exercises in publishing such reviews. See, e.g., Carafano v. Metrosplash, 339 F.3d 1119, 1123 (9th
Cir. 2003); Mazur v. eBay Inc.,No. C 07-03967, 2008 WL 618988, at *9 (N.D. Cal. Mar. 4, 2008)
(Patel, J.) (Screening a potential auction house . . . is akin to deciding whether to publish and
therefore eBay is immune under section 230 for its screening decisions.).
Because the Non-Sponsor Plaintiffs fail to allege any causal connection between their
purported injuries and any unlawful conduct by Yelp, they cannot demonstrate Article III standing.
SeeSanders,672 F. Supp. 2d at 984 (dismissing complaint for lack of causal nexus between alleged
misconduct and injury); Two Jinn, 2010 WL 1329077, at *3 (complaint dismissed where there is no
direct connection between Defendants activities and Plaintiffs business).
Sponsor Plaintiffs
Sponsor Plaintiffs also fail to allege any plausible nexus between their claims of lost
business or harm to their reputation and any extortion by Yelp. Like the Non-Sponsor
Plaintiffs, Chan and Paver Pro do not (and cannot) allege that any decline in customers or harm to
their reputation was the direct result of any extortion by Yelp. Instead, the Sponsor Plaintiffs rely
on conclusory allegations that they suffered injury as a result of Yelps conduct that are insufficient
to establish standing, see supra p. 14, and complaints about negative reviews or the removal or
positive reviews from which Yelp is immune as a matter of law. SAC 104-105; see supra.
In addition to speculative claims of lost business, Sponsor Plaintiffs make vague claims that
they lost money in advertising costs paid to Yelp to purchase advertising. See, e.g., SAC
91, 104. But again, the Sponsor Plaintiffs fail to connect these payments to any threat or other
unlawful conduct by Yelp. Although Plaintiffs allege that they paid advertising fees to avoid Yelps
manipulation of [their] reviews . . . in a manner that did not comply with the Yelp Review Terms,
they utterly fail to allege that Yelp threatened (or even implied) that it would manipulate the reviews
of Sponsor Plaintiffs businesses in a manner that did not comply with Yelp Review Terms or
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otherwise, unless Plaintiffs purchased advertising. Id. 91, 104. Instead, Chan concedes that she
declinedto purchase advertising after her initial conversations with Yelp, and that she later purchased
advertising after she contacted a Yelp salesperson who purportedly offered to help her in
unspecified ways if she advertised. Id. 81. And, Paver Pro admits that it never spoke with anyone
at Yelp about advertising at all. Id. 99.
Because the Sponsor Plaintiffs utterly fail to allege any plausible, causal nexus between their
payment of advertising fees and any threat of injury from Yelp, their claims must be dismissed for
lack of standing. See supra p. 12.
c. Plaintiffs Fail to Sufficiently Allege a Redressable InjuryFinally, Plaintiffs do not and cannot allege facts establishing that their purported injuries
are capable of being redressed by a favorable decision. At most, Plaintiffs claims of lost business
stem from the content of reviews posted by consumers who are not before this Court. No decision in
this case can (or should) bar public discussion about Plaintiffs services on Yelp or any other public
forum, and such speech is squarely protected by the First Amendment. See Gardner v. Martino, 563
F.3d 981, 992 (9th Cir. 2009) (statement by talk show host that plaintiffs business sucks was
nonactionable opinion protected by the First Amendment); Browne v. Avvo, Inc., 525 F. Supp. 2d
1249, 1251 (W.D. Wash. 2007) (opinions expressed through defendants website, which rankedattorneys by numerical score, were absolutely protected by the First Amendment).
Precisely to ensure such an open forum for discussion on the Internet, Plaintiffs also are
barred under CDA Section 230 from pursuing claims against Yelp arising from its Internet service or
its screening of reviews for publication through the use of an automated filter. See, e.g., Carafano,
339 F.3d at 1122-25 (affirming dismissal of claim for negligently posting third-party content because
claim was barred by CDA Section 230); Goddardv. Google,Inc., 640 F. Supp. 2d 1193, 1201-02
(N.D. Cal. 2009) (dismissing UCL claims because Google was immune under the CDA for
publishing third-party advertising content). Because Plaintiffs cannot allege that their injuries are
likely to be (or even can be) redressed by a favorable decision, they lack standing under Article III.
2. Plaintiffs Also Lack Standing Under the UCLPlaintiffs also have failed to allege standing under the UCL. Following the enactment of
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Proposition 64, a private person has standing to sue [under the UCL] only if he or she has suffered
injury in fact and has lost money or property as a result of such unfair competition. Mervyns,39
Cal. 4th at 227; Rubio v. Capital One Bank, 613 F.3d 1195, 1203-4 (9th Cir. 2010) (citing Birdsong
v. Apple, Inc., 590 F.3d 955, 960 (9th Cir. 2009) (to plead a UCL claim, the plaintiffs must show,
consistent with Article III, that they suffered a distinct and palpable injury as a result of the alleged
unlawful or unfair conduct)).
Non-Sponsor Plaintiffs cannot satisfy the lost money or property element because they did
not purchase advertising and fail to allege, as required, an outlay of funds, tied to any business
dealings with Yelp. Clayworth v. Pfizer, Inc., 49 Cal. 4th 758, 788 (2010) (intent of this change was
to confine standing to those actually injured by a defendants business practices and to curtail the
prior practice of filing suits on behalf of clients who have not used the defendants product or service
. . . or had any other business dealing with the defendant)
Plaintiffs vague claims of loss of sales, revenues and/or assets and injury to business
reputation (see supra pp. 12-13) also do not constitute lost money or property for purposes of
UCL standing. See, e.g., Missing Link, Inc. v. Ebay, Inc., 2008 WL 1994886, at *8 (N.D. Cal. May 5,
2008) (more than an expectation of profit is required to constitute an injury in fact for the purpose
of standing under 17200); United States v. Sequel Contractors, Inc.,402 F. Supp. 2d 1142, 1156
(C.D. Cal. 2005) (decline in the value of a business is not recoverable under UCL).
Sponsor Plaintiffs also fail to allege that they did not receive the benefits of advertising that
they contracted to receive from Yelp, and thus, their payment of advertising fees cannot constitute
money or property sufficient for UCL standing. Birdsong, 590 F.3d at 961 (UCL claim denied for
lack of standing when not alleged that [plaintiffs] were deprived of an agreed-upon benefit in
purchasing their iPods).
C. Plaintiffs Also Fail To State A Claim Under The UCLPlaintiffs also fail to state a valid claim under the UCL, which requires a showing that Yelp
engaged in an unlawful, unfair or fraudulent business act or practice. Cal. Bus. & Prof. Code
17200; Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824, 837 (2006). Plaintiffs have
withdrawn their earlier claims that Yelp engaged in deceptive sales practices and now base their
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sole UCL claim on unsupported allegations of extortion and attempted extortion. See, e.g., SAC
112, 121, 125. Because the Second Amended Complaint is devoid of facts that give rise to a
plausible inference that Yelp engaged in conduct that is unlawful or unfair within the meaning of
the UCL, Plaintiffs UCL claim must be dismissed.
1. Plaintiffs Have Not Alleged Unlawful ConductThe unlawful prong of the UCL borrows violations of other laws . . . and makes those
unlawful practices actionable under the UCL. In re Actimmune Mktg. Litig., No. C 08-02376 MHP,
2009 WL 3740648, at *15 (N.D. Cal. Nov. 6, 2009). Thus, a violation of another law is a predicate
for stating a cause of action under the UCLs unlawful prong. Id.
Plaintiffs base their UCL claims on a contention that Yelp attempted to and/or did in fact
commit extortion as defined in Cal. Penal Code 518, 519, 523, 524 and the federal Hobbs Act
(18 U.S.C. 1951). SAC 121. Because Plaintiffs fall well short of the requirements to plead
extortion or attempted extortion, their claim under the UCLs unlawful prong must be dismissed.
See, e.g., Actimmune, 2009 WL 3740648, at *15 (dismissing unlawful claims for failure to
sufficiently allege violations of the predicate regulations under the unlawful prong of the UCL).
a. Plaintiffs Fail to Allege That Yelp Engaged in a Threat of Unlawful Injuryor Wrongful Use of Fear
Most fundamentally, Plaintiffs do not (and cannot) point to a single instance of Yelp engaging
in any threat of unlawful injury or wrongful use of fear, as required to demonstrate extortion or
attempted extortion.
An unlawful threat is an essential element of extortion and attempted extortion. See Mitchell
v. Sharon, 59 F. 980, 982 (9th Cir. 1894); People v. Sales, 116 Cal. App. 4th 741, 751 (2004)
(reversing attempted extortion conviction because extortion requires a threat). Specifically,
extortion under California law consists of obtaining of property from another, with his consent . . .
induced by a wrongful use of force or fear, while attempted extortion requires an attempt to extort
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money or property by means of any threat.7 Cal. Penal Code 518 (extortion) & 524 (attempted
extortion) (emphasis added). Likewise, the Hobbs Act defines extortion as the obtaining of
property from another, with his consent, induced by wrongful use of actual or threatened force,
violence, or fear . . . . 18 U.S.C. 1951(b)(2) (emphasis added).
Because Plaintiffs do not allege the use of any force or violence, they must allege plausible
facts that Yelp engaged in the wrongful use of fear to plead extortion or attempted extortion. In turn,
the California Penal Code narrowly specifies that fear, such as will constitute extortion consists
solely of fear that is induced by a threat: (1) to do an unlawful injury to the person or property of
the individual threatened or of a third person; (2) to accuse the individual threatened . . . of any
crime; (3) to expose . . . any deformity, disgrace or crime; or (4) to expose, any secretaffecting
him or them. Cal. Penal Code 519 (emphasis added); see also Cal. Penal Code 524
(incorporating threats defined in 519 into crime of attempted extortion). Significantly, only threats
that fall within one of these four categories of section 519 will support a charge of extortion. People
v. Umana, 138 Cal. App. 4th 625, 639 (2006).
Plaintiffs do not allege any threat that falls within the scope of California Penal Code Section
519 or otherwise could support an extortion claim. They do not allege that Yelp threatened to accuse
them of any crime, or to expose any secret, deformity or disgrace. Compare Cal. Penal Code
519(2)-(4). And Plaintiffs do not point to a single instance where Yelp threatened, directly or
indirectly, to engage in an unlawful injury to Plaintiffs property or person.
Likewise, Plaintiffs do not allege that Yelp engaged in the wrongful use of fear, as required to
establish actual or attempted extortion under the Hobbs Act. Petrochem Insulation, Inc. v. N. Cal. &
N. Nev. Pipe Trades Counsel, No. C-90-3628 EFL, 1991 WL 158701, at *3 (N.D. Cal. Apr. 30, 1991)
(definition of extortion under the Hobbs Act and under California law are substantially the
same); see also Sosa v. DIRECTV, Inc., 437 F.3d 923, 939 (9th Cir. 2006) (affirming dismissal of
Hobbs Act claims based on threats to sue unless plaintiffs paid money to defendants, because
7 Although Plaintiffs cite Cal. Penal Code 523 as a predicate statute for its UCL claim, thisprovision requires a letter or other writing conveying a threat. Because Plaintiffs fail to allege anysuch letter or writing from Yelp in the SAC, this provision cannot support Plaintiffs UCL claim.
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extortion [under the Hobbs Act] requires more than fear . . . [t]he use of fear must be wrongful);
Rothman v. Vedder Park Mgmt., 912 F.2d 315, 318 (9th Cir. 1990) (affirming dismissal of extortion
claims under Hobbs Act and California law because threats to raise rent and stop paying utilities did
not constitute a wrongful use . . . of fear).
Instead, the Plaintiffs allege only that Yelp offered them various benefits if they advertised
with Yelp offers that, in most cases, Plaintiffs admittedly declined. For example, Sponsor Plaintiff
Chan alleges that a Yelp sales representative offer[ed] her lots of benefits and later offered to help
her if she signed up for advertising services. SAC 77, 81. Likewise, C&D concedes that it
declined the offer of various purported advertising benefits from Yelp. Id. 63-64; see alsoid.
45-46 (asserting that Levitt declined to purchase advertising after he was informed that his business
would have an even greater number of Yelp page views if he advertised).
Yelps alleged offers of various advertising benefits cannot support a claim for extortion as a
matter of law because they do not contain any threat of unlawful injury or wrongful use of fear.
Thus, in Sigmond v. Brown,645 F. Supp. 243, 246 (C.D. Cal. 1986), defendants offer to provide a
chiropractor with more favorable reviews by the chiropractor peer review committee in exchange for
client referrals was not an extortionist threat under Penal Code 518, but merely an offer. See also
Wolk v. Green, 516 F. Supp. 2d 1121, 1129-30 (N.D. Cal. 2007) (If extortion encompassed [a threat
to cease representation of a plaintiff unless more funds were provided], then virtually every
business dispute where one party demands more money for continued service would also constitute
extortion); People v. Anderson,75Cal. App. 365, 374-75 (1925), disapproved of on other grounds
by In re Wright,65 Cal. 2d 650 (1967) (no unlawful threat and hence no extortion where
defendant offered to drop criminal charges in exchange for payment).
b. Non-Sponsors Plaintiffs Also Fail to Allege That They Provided Propertyto Yelp
In addition, the Non-Sponsor Plaintiffs cannot demonstrate extortion because, by their
own admission, they refused to purchase advertising or provide any other property to Yelp
an essential element of an extortion claim. See SAC 46, 64; see, e.g., Arista Records v.
Sanchez, No. CV 05-07046, 2006 WL 5908359, at *2 (C.D. Cal. Mar. 1, 2006) (dismissing
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extortion counterclaim for failure to allege that any property was taken). And, as
demonstrated above, the Non-Sponsor Plaintiffs also do not plead the requirements for a
claim of attempted extortion because they fail to allege the existence of a threat of injury or
wrongful use of fear. See, supra, pp. 18-20.
c. Plaintiffs Do Not Allege That Fear Was the Controlling Cause of AnyDecision To Advertise
The Sponsor Plaintiffs also have not alleged, as they must, any plausible facts
demonstrating that fear induced by a threat of unlawful injury was the controlling cause
of their decisions to purchase advertising. Chan v. Lund, 188 Cal. App. 4th 1159, 1171
(2010) (no extortion because no evidence establishing that the wrongful use of force or fear
[was] the operating or controlling cause compelling the victim's consent to surrender the thing
to the extortionist); People v. Goodman, 159 Cal. App. 2d 54, 61 (1958) (same). Although
Chan now contends that she felt compelled to purchase advertising so that Yelp would
reinstate [certain] positive reviews to her business page, this self-serving allegation fails to
demonstrate that the controlling cause of Chans decision to purchase advertising was
fear due to a threat of unlawful injury. SAC 79-80, 82-83. Indeed, Chan has not alleged
that Yelp threatened any harm to her property if she did not purchase advertising. And, Paver
Pro does not allege that fear played any role in its decision to purchase advertising from
Yelp much less that it was the controlling cause of that decision.
d. Plaintiffs Fail to Allege That Any Purported Fear Was ReasonablePlaintiffs also fail to allege facts that create a plausible inference that any alleged fear that
Yelp would injure their business unless they advertised was reasonable, as required. In addition to
requiring the wrongful use of fear, the Hobbs Act requires as an additional element that the victims
fear be reasonable in order to be actionable. See, e.g., United States v. Billingsley, 474 F.2d 63, 66
(6th Cir. 1973) (reasonableness of actual or anticipated fear is a vital element in [extortion] cases)
(citing Carbo v. United States, 314 F.2d 718 (9th Cir. 1963)); see also United States v. Marsh, 26
F.3d 1496, 1500 (9th Cir. 1994) (overturning verdict of economic extortion . . . because the evidence
failed to establish that Doe possessed a reasonable fear of economic harm).
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Here, Plaintiffs do not allege that any fear they supposedly experienced was reasonable,
particularly given the absence of any threat. Although Chan asserts that she feared that if she did
not pay for advertising, the posting of negative reviews would continue, she fails to allege any
reasonable basis for such purported fear including any actions by Yelp that remotely suggested
she would continue to receive negative reviews from consumers unless she advertised. SAC 83.
And, the remaining Plaintiffs fail to allege that they experienced fear at all.
2. Plaintiffs Have Not Alleged Unfair ConductPlaintiffs also fail to allege that Yelp engaged in any unfair conduct within the meaning of
the UCL, and instead, rely on a single, boilerplate claim that Yelps conduct somehow is unfair and
violates public policy. SAC 125-126.
Although courts are divided as to what constitutes an unfair activity under the UCL,
Plaintiffs make no attempt to plead facts that demonstrate unfair conduct under any definition.
Indeed, Plaintiffs have pled no facts that plausibly suggest that Yelps actions offend[ed] an
established public policy [or that they are] immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers. McDonald v. Coldwell Banker, 543 F.3d 498, 506 (9th Cir.
2008); Buena Vista, LLC v. New Res. Bank, 2010 WL 3448561, at *6 (N.D. Cal. Aug. 31, 2010). In
fact, Plaintiffs identify no conduct at all beyond that alleged to be unlawful, which as discussed
above, are insufficient to support their UCL claim. SeealsoBuena Vista, 2010 WL 3448561, at *6
(allegations that defendants worked in concert to take advantage of [plaintiffs] precarious financial
situation, bilk [plaintiffs] of thousands of dollars for Defendants own profit, and foreclose on
[property] . . . do not support a claim that Defendants actions are unfair under the UCL); Leong v.
Square Enix of Am. Holdings, Inc., 2010 WL 1641364, at *7 (C.D. Cal. Apr. 20, 2010) (plaintiffs
allegations did not establish unfair conduct, where Plaintiffs fail to provide any facts that suggest
they were in any way coerced or forced to spend any money at all by Defendants).
Nor are Plaintiffs allegations of unfairness tethered to some legislatively declared policy or
proof of some actual or threatened impact on competition in Yelps industry, as would be required to
establish unfairness under the definition established in Cel-Tech Commcns, Inc. v. Los Angeles
Cellular Tel. Co., 20 Cal. 4th 163, 185-87 (1999). See, e.g., Baba v. Hewlett-Packard Co., No. C 09-
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05946, 2010 WL 2486353, at *7-8 (N.D. Cal. June 16, 2010)(consumer UCL claims asserting
unfair practices must be tethered to some legislatively declared policy).
Because Plaintiffs have provided no details or facts indicating how Yelps conduct is unfair
within the meaning of the UCL, their claim under the UCL unfairness prong should be dismissed.
See, e.g., Smith & Hawken, Ltd. v. Gardendance, Inc., No. C04-1664, 2004 WL 2496163, at *5 (N.D.
Cal. Nov. 5, 2004) (dismissing UCL claim, finding that [a plaintiff] alleging unfair business
practices under the unfair competition statutes must state with reasonable particularity the facts
supporting the statutory elements of the violation).
D. Because Plaintiffs Do Not Have Standing and Fail to State a Sufficient Claim, the ClassAllegations Also Must Be Dismissed
It is well-settled that claims asserted on behalf of a putative class cannot go forward where, as
here, the named plaintiffs lack standing or fail to state a legally sufficient claim for relief. OShea v.
Littleton, 414 U.S. 488, 494-95 (1974). Because Plaintiffs UCL claim fails for the reasons addressed
in detail above, this also requires dismissal of this claim asserted on behalf of the proposed class.
Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022-24 (9th Cir. 2003).
E. The Second Amended Complaint Should Be Dismissed Without Leave to AmendThe SAC is the fifthcomplaint that has been filed in this action (the third by lead plaintiffs
counsel), and this is the third motion Yelp has prepared to address the deficiencies of these pleadings.
Because Plaintiffs have
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