Service Provider's Intent in Removing Positive Reviews Irrelevant in Assessing Availability of CDA Section 230 Protection

by Proskauer - New Media & Technology
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A lawsuit against consumer review site Yelp! has yielded an opinion that demonstrates the breadth of the protection afforded interactive service providers under Section 230 of the Communications Decency Act. In Levitt v. Yelp! Inc., 2011 U.S. Dist. LEXIS 124082 (N.D. Cal. Oct. 26, 2011), a group of putative class action plaintiffs filed an action against the site under Section 17200 of the California Business and Professions Code, claiming that the site manipulated its consumer review functionality to extort advertising revenues from the plaintiff businesses.

A key element of the business owners’ claims against Yelp! was the attempt to construct a theory of liability that would avoid the protection from liability for user content that is afforded interactive service providers under CDA Section 230. The business owners’ complaint based its claims on alleged conduct on the part of Yelp! and its employees. This approach has succeeded in a very small group of cases, e.g., Barnes v. Yahoo!, Inc., No. 05-36189 (9th Cir. May 7, 2009) (as amended June 22, 2009) (see our prior blog post here) and Anthony v. Yahoo! Inc., 2006 WL 708572 (N.D. Cal. March 17, 2006) (see Prof. Eric Goldman’s blog post here).

In an opinion rendered last spring, Judge Marilyn Patel rejected most of the business owners’ claims of “implied extortion” that were based upon allegations that Yelp! manipulated reviews in order to coerce businesses into purchasing advertising on the site, but granted leave to amend the complaint. Levitt v. Yelp! Inc, 2011 U.S. Dist. LEXIS 99372 (N.D. Cal. Mar. 22, 2011). A Third Amended Complaint was filed and Yelp! renewed its motion to dismiss. Judge Edward Chen, now assigned to the case, concluded that the Third Amended Complaint failed to cure the pleading and substantive defects identified by Judge Patel and finally dismissed the complaint without leave to amend.

The plaintiffs’ Third Amended Complaint allege!d several different categories of conduct by Yelp!: that the service removed positive reviews, resulting in a lowered overall “star” rating for a business; that the service retained negative reviews, even if those reviews violated the service’s terms of use; that the service’s own employees wrote negative reviews; and that the service said it would manipulate reviews in a positive direction for businesses that paid for advertising on the service.

Judge Chen found that the allegations that Yelp!’s own employees wrote negative reviews or paid users to do so were speculative. They relied, he said, on factually unsupported allegations that one of the plaintiffs was told by an unnamed source that Yelp! employees had been discharged for unspecified “scamming relating to advertising.”

Judge Chen then concluded that allegations that Yelp! either removed user reviews, or changed their order on the site in order to extort businesses, fall within CDA Section 230(c)(1), which prohibits treatment of a provider as the publisher or speaker of information provided by a third party.  Decisions to remove or reorder user content fall within the publisher’s “traditional editorial functions,” he concluded, citing, e.g., Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157 (9th Cir. 2008) (en banc).

The court also rejected the theory that Yelp! created the overall “star” reviews of businesses, which were derived from aggregating the ratings of individual reviews, finding that the aggregation of user content to generate the reviews did not make Yelp! a content provider. On this point, the court cited Gentry v. eBay, Inc., 99 Cal. App. 4th 816, 834, 121 Cal. Rptr. 2d 703 (2002), which absolved eBay of liability for its star ratings of users based upon user-generated data.

The court recognized that there was a distinction in Yelp! based on the business owners’ allegations that the provider included and excluded certain user reviews upon which Yelp! star ratings are based. But Judge Chen noted that the plaintiffs’ did not argue that the inclusion and exclusion of certain reviews per se fell outside of CDA Section 230(c)(1). Rather, they argued that the inclusion and exclusion of certain reviews was done in bad faith. The court framed the issue as whether the exercise of a traditional editorial function, otherwise protected by CDA Section 230, falls outside of that protection when the provider has a bad faith motive.

Judge Chen concluded that, despite the “ethical underpinnings” of the business owners’ position, a provider’s motive in exercising its editorial function is irrelevant under the language of Section 230 as well as prior court interpretations, which have not recognized an intent test for the application of Section 230(c)(1). The court pointed out that while Section 230(c)(2), which protects a provider’s actions taken to restrict obscene and otherwise objectionable material, includes a good faith requirement, Section 230(c)(1) contains no good faith language. As to the policy of protecting possible bad-faith exercises of editorial functions, Judge Chen referred to the strong policy of Section 230 to protect providers from lawsuits over third-party content:

Furthermore, it should be noted that traditional editorial functions often include subjective judgments informed by political and financial considerations. *** Determining what motives are permissible and what are not could prove problematic. Indeed, from a policy perspective, permitting litigation and scrutiny motive could result in the "death by ten thousand duck-bites" against which the Ninth Circuit cautioned in interpreting § 230(c)(1) [citing Fair Housing Council v. Roommates]. *** As illustrated by the case at bar, finding a bad faith exception to immunity under § 230(c)(1) could force Yelp to defend its editorial decisions in the future on a case by case basis and reveal how it decides what to publish and what not to publish. Such exposure could lead Yelp to resist filtering out false/unreliable reviews (as someone could claim an improper motive for its decision), or to immediately remove all negative reviews about which businesses complained (as failure to do so could expose Yelp to a business's claim that Yelp was strong-arming the business for advertising money). The Ninth Circuit has made it clear that the need to defend against a proliferation of lawsuits, regardless of whether the provider ultimately prevails, undermines the purpose of section 230.

In accordance with this conclusion, the court dismissed the business owners’ claims under California Business and Professions Code § 17200, as well as civil extortion and attempted extortion claims.

Plaintiffs Boris Levitt, et al, filed a notice of appeal to the Ninth Circuit on November 7, 2011.

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