Multiversal Enterprises-Mammoth Properties, LLC v. Yelp, Inc.

CourtCalifornia Court of Appeal
DecidedJanuary 28, 2022
DocketB305193
StatusPublished

This text of Multiversal Enterprises-Mammoth Properties, LLC v. Yelp, Inc. (Multiversal Enterprises-Mammoth Properties, LLC v. Yelp, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Multiversal Enterprises-Mammoth Properties, LLC v. Yelp, Inc., (Cal. Ct. App. 2022).

Opinion

Filed 1/28/22 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

MULTIVERSAL ENTERPRISES- B305193 MAMMOTH PROPERTIES, LLC, (Los Angeles County Plaintiff and Appellant, Super. Ct. No. BC484055)

v.

YELP, INC.,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Los Angeles County, Teresa A. Beaudet, Judge. Affirmed. Ervin Cohen & Jessup, Robert M. Waxman and David N. Tarlow for Plaintiff and Appellant. Davis Wright Tremaine, Thomas R. Burke, Nicolas A. Jampol, Diana Palacios; and Aaron Schur for Defendant and Respondent. ___________________________________ Yelp, Inc. (Yelp) operates a popular online Web site that contains customer reviews of businesses. As part of the operation, Yelp uses software designed to filter out unreliable or biased reviews. (Hereafter “filter” or “recommendation software.”) Multiversal Enterprises-Mammoth Properties (Multiversal), which operates restaurants in Mammoth Lakes, sued Yelp for an injunction under the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) and the false advertising law (FAL; Bus. & Prof. Code, § 17500 et seq.) to prevent Yelp from touting the accuracy and efficacy of its filter. During a bench trial, the court excluded Multiversal’s principal, James Demetriades, from a portion of the trial and denied Multiversal’s motion to compel access to Yelp’s source code. Multiversal contends these rulings were in error. We affirm. BACKGROUND We take the pertinent preliminary facts from our prior opinion in this matter, Demetriades v. Yelp, Inc. (2014) 228 Cal.App.4th 294. A. Yelp’s Web site Yelp operates a free social media Web site and search engine that is available to the public and has no registration requirement. Users who do register may post reviews about local businesses on the site using a five-star rating system. Yelp’s Web site draws tens of millions of people each month who search for and review the public ratings of businesses. Yelp sells advertising on its site to generate revenue. Yelp constantly battles the problem of unreliable reviews, which generally are paid reviews, negative reviews written by business competitors, or biased reviews written by friends, employees or relatives of the business being reviewed. Yelp

2 developed filtering software with the aim of identifying reviews likely to be unreliable. It started using the filter in 2005 and employs a team of engineers to monitor and improve it. The Yelp filter applies uniform rules to all reviews and does not favor advertisers over nonadvertisers. Yelp does not use filtered reviews in calculating a business’s rating, and they do not appear on the main page, but are viewable on a special “filtered review page.” Business owners can freely post responses to reviews they receive and can contact reviewers privately to engage in further dialogue. To promote the filter’s integrity, Yelp businesses cannot delete, change, or reorder ratings or reviews. Yelp admits that its filter is not foolproof, and expressly tells users that “the filter sometimes affects perfectly legitimate reviews and misses some fake ones, too. After all, legitimate reviews sometimes look questionable, and questionable reviews sometimes look legitimate.” According to Yelp, in addition to relying on the filter, a site user can judge how much weight to give to any particular review by reading the reviewer’s profile and reviews, and by assessing statistics regarding those reviews. Yelp invested tens of millions of dollars and hundreds of thousands of hours in developing and maintaining the filter, which runs on hundreds of computers. Yelp’s filter is proprietary software that is not distributed or sold to third parties because disclosure would expose Yelp to the risk of persons using the information to overcome the filter. Yelp does not provide the source code or the algorithms to business owners or the general public.

3 In 2010, Yelp created a cartoon video to educate and contribute to the ongoing public dialog about the integrity of online reviews. On November 13, 2013, Yelp replaced the 2010 video on its Web site with a new video which, among many other changes, used Yelp’s updated terminology by, for example, referring to the filter as “recommendation software.” B. Demetriades and Multiversal As previously noted, Demetriades is the principal of Multiversal Enterprises-Mammoth Properties, LLC, which owns businesses in Mammoth, California, including the restaurant “Rafters.” Multiversal purchased a marketing package on Yelp’s Web site. Multiversal’s restaurants received several critical reviews on Yelp, and the recommendation software removed several positive reviews. On August 24, 2011, Multiversal’s attorney wrote to Yelp and asserted that “Yelp’s review filter has [improperly] filtered forty reviews out of Rafters’ Yelp profile.” Before becoming a restaurant owner, Demetriades was a software developer who, in his words, founded “the largest integration software company in the world with a couple hundred million, about the size of Yelp, couple hundred million in revenue.” He has also owned or participated in other software companies, and has “access to hundreds of developers.” Demetriades took an interest in Yelp’s recommendation software, explaining that, “since I’m a programmer and have the largest software integration company in pretty much the world with thousands of employees, I’m very familiar with the area of software development. And I was very concerned with what I was seeing[.]” During an interview on ABC News in 2018,

4 Demetriades demanded that Yelp override the operation of its recommendation software and display reviews he deemed to be “real and legitimate.” In April 2012, Demetriades’s counsel demanded access to “the source code and algorithm for the so-called filters,” and demanded that Yelp change the results for Demetriades’s restaurant. Yelp rejected these demands. C. Complaint In May 2012, Demetriades filed this action in his personal capacity, asserting causes of action for false advertising and unfair competition. Multiversal substituted in as plaintiff after the prior appeal. Multiversal alleged that Yelp engaged in false advertising by making five statements (the “Challenged Statements”): 1. “Yelp uses the filter to give consumers the most trusted reviews.” 2. “All reviews that live on people’s profile pages 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. This keeps less trustworthy reviews out so that when it comes time to make a decision you can make that using information and insights that are actually helpful.” 3. “Rest assured that our engineers are working to make sure that whatever is up there is the most unbiased and accurate information you will be able to find about local businesses.” 4. “Yelp is always working to do as good a job as possible on a very complicated task—only showing the most trustworthy and useful content out there.”

5 5. “Yelp has an automated filter that suppresses a small portion of reviews—it targets those suspicious ones you see on other sites.” (Original boldface.) Yelp made the first four of the Challenged Statements in the 2010 video, and the fifth on its Web site. Multiversal alleged the statements were untrue: Yelp did not use the filter to give consumers the most trusted reviews, and the filter neither accurately separated the most trustworthy reviews from unreliable reviews nor posted reviews from trusted sources.

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Multiversal Enterprises-Mammoth Properties, LLC v. Yelp, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/multiversal-enterprises-mammoth-properties-llc-v-yelp-inc-calctapp-2022.