By Melissa J. Sachs, Esq., Legal Writer, Westlaw Journal

From Westlaw Journal Computer & Internet:  Yelp’s statements to consumers about the accuracy of its review-filter software are protected speech, the website operator has told the California Supreme Court.

In an Aug. 28 petition for review, Yelp urges the high court to overturn a recent appeals court decision allowing restaurateur James Demetriades to proceed with his false-advertising suit against the site.  The company says the state’s anti-SLAPP statute protects Yelp’s statements about the review filter.

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The anti-SLAPP law, Cal. Civ. Pro. Code § 425.16, prohibits “strategic lawsuits against public participation,” or suits meant to intimidate public critics out of engaging in free speech.

“Demetriades’ artfully pled complaint is not really about the accuracy of Yelp’s claims about its [review] filter,” said Dean Hansell, at partner at Hogan Lovells LLP in Los Angeles, who is not involved in the case.

Hansell, a former prosecutor for the Federal Trade Commission, frequently handles anti-SLAPP and other advertising litigation.

Demetriades’ lawsuit against Yelp may be cloaked as a false-advertising and unfair-competition case, Hansell said, but it is actually an attempt to chill a social media company’s willingness to post comments critical of his restaurant.

“This is exactly what California’s anti-SLAPP law is trying to prevent,” Hansell said.

Yelp’s petition to the California Supreme Court similarly says the anti-SLAPP law should prevent Demetriades from moving forward with his case.

Its statements about the website’s automated filtering process — that it attempts to present the most trustworthy reviews to consumers — addressed a topic of public interest, Yelp says.  The statements were not intended to induce business owners like Demetriades to buy advertising from the site, as the 2nd District Court of Appeal decided, Yelp argues, noting the statements appeared on its blog, not the website section dedicated to advertisers.

Yelp asks the high court to reverse the appeals court’s July decision that the company’s statements about the accuracy of its review filter fell under the “commercial speech” exemption to the anti-SLAPP law, Cal. Civ. Pro. Code § 425.17.  Demetriades v. Yelp Inc., No. B247151, 228 Cal. App. 4th 294 (Cal. Ct. App., 2d Dist. July 24, 2014) (see Westlaw Journal Computer & Internet, Vol. 32, Iss. 5).

(Click here for the petition for review on WestlawNext.)

The exemption allows actual or potential customers to sue a business if they relied on or were influenced by the business’ statements about its goods or services when making a purchase.

Filtered reviews?

According to Demetriades’ suit, filed in the Los Angeles County Superior Court in May 2012, Yelp touted the accuracy of its review filter, which induced him to buy ads on the site for three restaurants he owns in Mammoth Lakes, Calif.

The suit targeted five specific statements Yelp made, including that all reviews “go through a remarkable filtering process that takes the reviews that are the most trustworthy and from the most established sources and displays them on the business page.”

Demetriades says Yelp’s statements were misleading or untrue.

The suit included counts against the website for false advertising under Cal. Bus. & Prof. Code § 17500 and unfair competition under Cal. Bus. & Prof. Code § 17200.  Demetriades also asked the Superior Court for an injunction to stop Yelp from making the allegedly misleading statements.

Yelp moved to strike the complaint, saying California’s anti-SLAPP statute barred Demetriades’ claims.  The court granted the motion in early 2013.

Demetriades appealed, and the three-judge appellate panel reversed the trial court’s decision July 24.

(Click here for the July 24 opinion on WestlawNext.)

Casey Low, a partner at Bracewell & Giuliani in Austin, Texas, who handles defamation and business disparagement matters, said the appeals court’s decision is significant.

“While many opinions define the scope of the [anti-SLAPP] statute’s commercial speech exception, this case appears to be the first concerning an online company’s statements concerning its own product or service,” said Low, who is not involved in the case.

The 2nd District focused on “the commercial nature of the speaker (the company), its intended audience (customers), and the purpose of the speech (to induce a commercial transaction),” Low said.

Under this analysis, it reached the conclusion that Yelp’s speech is “squarely” within the anti-SLAPP law’s commercial speech exemption.

“Whether Yelp’s speech was posted on its blog or its website does not appear to alter the court’s analysis,” he added.

Yelp’s petitions

In early August, Yelp petitioned the Court of Appeal to reconsider its July decision, saying the opinion misstates or omits critical facts that, as a matter of law, would mean that the anti-SLAPP statute bars Demetriades’ case.

Additionally, the opinion fails “to make clear that this is not a garden-variety unfair-competition claim,” the petition for rehearing said.

(Click here for the petition for rehearing on WestlawNext.)

Instead, Demetriades “filed a meritless suit to silence the customer-critics of plaintiff’s restaurant,” and the appellate court’s opinion should take note of his improper litigation tactics, Yelp argued.

The 2nd District panel rejected the petition Aug. 20.

Eight days later, Yelp petitioned the California Supreme Court to review the appeals court’s decision.

“The Court of Appeal’s decision treats Yelp’s statements to the public — which had no advertising purpose — as commercial speech directed to a commercial audience, for a commercial purpose,” the petition says.

“The court’s published opinion is a blueprint for how to evade the anti-SLAPP statute in lawsuits against fora that allow the public to share important information,” according to the petition.

Hogan Lovells’ Hansell picks up on this reasoning.

“It is critical to the First Amendment that citizens be able to freely express their opinions and website operators be able to provide a forum for those opinions without fear that the operator might get sued if a citizen expresses a negative view about a product or service,” he said.

Bracewell & Giuliani’s Low was a bit more dubious about Yelp’s petition.

“Yelp’s chance for success largely turns on whether it can convince California’s high court that the appellate court misinterpreted the [commercial speech] exemption itself, which is broadly drafted and appears to capture the speech in question,” he said.

Demetriades v. Yelp Inc., No. S220885, petition for review filed (Cal. Aug. 28, 2014).