Levitt v. Yelp Motion to Dismiss

8/7/2019 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 [email protected] South Grand AvenueLos Angeles, California 90071-3197Telephone: (213) 229-7000Facsimile: (213) 229-7520

S. ASHLIE BERINGER, SBN 263977SUSANNAH WRIGHT, SBN [email protected]@gibsondunn.com1881 Page Mill RoadPalo Alto, California 94304-1211Telephone: (650) 849-5300Facsimile: (650) 849-5333

YELP! INC.AARON SCHUR, SBN [email protected] 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

Case3:10-cv-01321-MHP Document59 Filed12/17/10 Page1 of 32


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YELPS MOTION TO DISMISS AND TO STRIKE CV10-01321MHP

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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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TABLE OF CONTENTS[Continued]

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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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TABLE OF AUTHORITIES[Continued]

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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

Documents

Levitt v. Yelp Motion to Dismiss