The Messenger Fights Back

A California law firm that allegedly submitted phony reviews to may itself need a lawyer, given that Yelp has filed a civil suit against the firm. Of course, there may be more to the story.

According to the complaint, Yelp owns and operates, a Web site that provides a forum for members of the public, free of charge, to read and write reviews about local businesses. In the last 8 years, Yelp users have written more than 39 million reviews. In order to write a review, a user has to register for a free account and provide a name, zip code and functional e-mail address. Businesses can sign up for accounts, which allow the businesses to post information or respond to reviews.

Apparently a San Diego law firm called the McMillan Group obtained a Yelp page. In 2010, the firm received a negative rating which stated “would never recommend. Didn’t abide by their own agreement. Communication was very poor.” Not long after that posting, according to the complaint, Yelp got flooded with positive reviews of the firm. And as you might imagine, it turns out many of those reviews were written by employees of the McMillan Group. According to Yelp, that kind of behavior threatens the integrity of Yelp’s operation and ultimately its existence.

Yelp’s complaint alleges 4 counts – breach of contract, intentional interference with contractual relations and two counts relating to California’s false advertising statutes. The breach of contract alleges that the McMillan Group violated the terms of service to which it agreed when it created its account. Included in the TOS is a prohibition against submitting fake reviews. The interference claim contends that the folks who submitted the bogus reviews had to first set up a Yelp account, which included the TOS. Yelp says the McMillan Group induced those folks to violate the TOS, and thus interfered with that contractual relationship. I get those claims, although I don’t know how Yelp will calculate (much less prove) damages.

The claims for false advertising are a little more complicated. Typically, the person suing for false advertising is the consumer – e.g. you told me this car got 40 miles to the gallon, but it’s really a gas guzzler. In this case, the more typical false advertising claim would be a client who was misled by the McMillan Group’s claims. But Yelp isn’t a client – it’s the messenger. So I’m not clear that it has standing to bring the false advertising claims at all, or if it would need to establish that a Yelp customer was somehow affected. Again, not sure what the damages are.

Interestingly, Yelp had been sued previously by the McMillan Group, which claimed that had coerced it into entering an advertisement contract in to order to receive favorable reviews. The firm won a small claims award of $2,700, but Yelp successfully argued that the firm’s case was covered by an arbitration clause in the TOS. We don’t know whether that activity spurred Yelp to sue, but there is certainly more to come.