Federal Court Rules That Yelp’s “Hard Bargaining” Is Not Extortion

Yelp has been plagued by accusations of extortive business practices for years. Consumers and small businesses alike have taken to their websites and blogs to report how businesses that purchase advertising through the Yelp are rewarded with the removal of negative reviews from their business profiles, while businesses that refuse to pay Yelp for advertising are punished – their positive reviews are removed and mysterious negative reviews begin to appear.

yelp lawsuitAt this point, those who frequent the website should know to take Yelp reviews with a grain of salt. However, given Yelp’s status as the juggernaut of online business reviews, if these allegations are true, small businesses that decline to advertise with Yelp stand to take a sizeable hit.

Class Action Lawsuit against Yelp
Last July, a group of California small business owners proposed a class action lawsuit against Yelp, alleging that Yelp’s business practices amounted to extortion. The business owners claimed that Yelp hid positive business reviews and fabricated false negative reviews in order to threaten the businesses and coerce them to purchase advertising through Yelp; and claimed Yelp also used these tactics as a way to penalize business that refused.

When the U.S. District Court dismissed the case for failure to state a claim upon which relief can be granted, the plaintiffs appealed their case to the Ninth Circuit Court of Appeals.

The Ninth Circuit Ruled: Yelp’s Behavior Was Merely “Hard Bargaining”
The Ninth Circuit upheld the District Court’s dismissal of the case, saying that Yelp’s behavior was “at most, hard bargaining.” The court stated that in order to prove extortion, a plaintiff must show either a pre-existing right to be free from the threatened harm or that the defendant had no right to seek payment for the service offered.

The court ruled that businesses have no pre-existing right to have positive reviews appear on Yelp. It explained that because Yelp is not under any legal or contractual duty to publish business reviews, removing them doesn’t violate anything other than Yelp’s own purported practice. Regarding the negative reviews, the court stated that re-posting negative reviews or moving negative reviews to the top of a business’s profile are, similarly, not a wrongful acts because they do not violate any legal or contractual rights of the business to be free from these negative reviews.

The court declined to discuss the legal consequences Yelp would face for fabricating false negative reviews, because the court found that there was no evidence that this had actually occurred.

In terms of Yelp’s right to seek payment for the service offered, the court held that there was no evidence to suggest that Yelp’s advertising services are a worthless sham or a privilege to which the plaintiff business owners were already entitled. The court held that businesses are free to decline to purchase advertising, but Yelp is not act wrongfully in offering it.

What Does This Ruling Mean for the Future of Small Business Owners?
While the Ninth Circuit’s dismissal of this case might seem like tacit approval of Yelp’s business practices, it is important to note that the ruling is limited to the alleged claim of extortion. There are other avenues through which Yelp’s actions might be challenged:

  • Other legal theories. The Ninth Circuit took care to point out that their ruling did not state that no cause of action exists that might cover the alleged conduct. The ruling simply states that Yelp’s actions did not meet the definition of extortion.
  • Contractual claims. One of the small business owners claimed that she gave in and purchased advertising through Yelp after Yelp removed nine five-star reviews from her business profile. However, after an initial improvement in her business rating, Yelp agents began contacting her about increasing her advertising purchase. Declining caused her rating to fall again. The Ninth Circuit noted that if this allegation is true the business owner could have a claim for breach of contract.
  • Consumer protection laws. Finally, just because the court decline to shield small businesses from Yelp’s “hard bargaining” does not mean that consumers will be left unprotected. The Federal Trade Commission has already issued guidance requiring search engines to distinguish search results that are the result of paid advertising from organic results (i.e., search results must be ranked on relevance not on third-party payment). It is easy to see the FTC expanding this policy to online business review sites such as Yelp, which, despite the Ninth Circuit’s ruling, states on its website, “Your trust is our top concern, so businesses can’t pay to alter or remove their reviews.”

Is Air Travel Heralding the Future of Inequality in America?

Flying economy class has never been more miserable. Pillows and blankets no longer come with the ticket. Seats are cramped.  Passengers are using devices called “knee defenders” to keep the seat in front of them from reclining. When fights break out, the flights are forced to divert, delaying the trip. What’s the source of all this?

economy class airlineWell, it’s the same reason flights are cheaper today than a few decades ago. As demand for cheaper transportation has gone up, the airlines have supplied that need. Unfortunately, there is a trade off. Cheaper tickets mean that airlines have to sell more tickets. More people means less room and more fighting over reclining chairs.

Of course, it’s not just that there are more people. As the number of economy passengers has gone up, airlines have shrunk the cabin space of those in economy class. But don’t worry, that extra space is being put to good use by business and first class. Leg room isn’t the only perk at the front of the plane. Many airlines are also offering passengers who pay more full entertainment systems, pajamas, Wi-Fi access, and actual food. Some airlines go so far with the perks that they bar economy passengers from using first class toilets.

Do Passengers Have a Right to Space?

I’m not going to argue that first class or business class passengers can’t have these perks or that airlines can’t offer them. A free market system demands that consumers get what they pay for, especially if the public has been demanding cheaper and cheaper flights. However, reducing space for one set of passengers so that another set of passengers can pay extra for more space should be legally dubious at best.

Airlines have a duty to ensure that passengers have a safe trip. This duty includes making sure that passengers don’t throw water at one another or bash each other’s brains open. Now “safe” doesn’t mean “comfortable.” A car could be perfectly safe but be so small that only one person could reasonable fit inside.

However, if the airlines are designing their vehicles so that people feel they have to resort to fists and cuffs for a little space, it is arguable that those airlines have breached their duty to keep passengers safe. Airlines should be held responsible for injuries that passengers suffer, even if the injuries came from other passengers. The design and business model of the airlines are directly contributing to many of these fights. It’s not like the stories of fighting between passengers because there isn’t enough space are new. The New York Times began reporting on this story as early as 2007. There has to be a limit to the number of people that airlines can cram into a small space. Even if you don’t “believe” in class warfare, human safety should always be a concern.

People Magazine Accused of Racial Discrimination in Lawsuit

A recent lawsuit against People Magazine aims to force the publication to take a hard look at its track record regarding racial equality both behind the scenes and within the pages of the magazine.

people magazine racial discriminationTatsha Robertson, a recently dismissed People Magazine Senior Editor and African American woman, has filed suit against the publication; its parent company Time, Inc.; and her former supervisor Betsy Gleick for unlawful discrimination in violation of the Civil Rights Act. Robertson alleges that during her five years at People she was subjected to unequal and racially discriminatory treatment, which culminated in her eventual firing.

Robertson’s complaint alleges that she experienced an ongoing pattern of unequal treatment by Top Editor Betsy Gleick. The complaint provides several examples: Gleick’s cancelling or simply failing to show up for essential one-on-one meetings prevented Robertson from pitching her stories at staff meetings; Gleick left Robertson off of important emails concerning stories Robertson was working on; Gleick failed to invite Robertson to work lunches that Gleick invited her other direct reports to; and Gleick allowed other editors to publish stories within Robertson’s subject area (crime) but rejected Robertson’s pitches if they even remotely treaded into another editor’s subject area.

However, the most interesting and potentially controversial allegations in the complaint are those relating to the actual content of People Magazine. Robertson’s complaint recounts pitches that Gleick rejected seemingly because the stories involved African American victims. In one instance, Gleick rejected a story that Robertson pitched about an African American model that was murdered, allegedly stating that the victim looked like a “slut” and telling Robertson, “You know the rule – white woman in distress.” In another, Gleick approved Robertson to work on a story about the effects of gun violence on school children, but cancelled the story upon discovering that the majority of examples involved minorities in urban settings rather than “white middle-class suburbia.”

Robertson’s complaint goes even further, discussing the disproportionately low number of African Americans selected for the cover of People, named Sexiest Man Alive, and named Most Beautiful. The complaint also states that many of the African Americans who are chosen for the cover are airbrushed to make their skin appear lighter. Here, Robertson provides two more examples of Gleick’s discriminatory attitudes. In one instance, Gleick did not want to place Queen Latifah on the magazine’s cover because Lupita Nyong’o and Robin Roberts had covered the magazine during the two preceding weeks. In another, Robertson alleges that Gleick was “obsessed” with vetting Trayvon Martin for something sordid in his past before placing him on the cover, despite never making similar efforts to vet white crime victims.

Some commenters have questioned the relevance of information regarding People’s content to Robertson’s employment-based claim. In fact, this information could very well be relevant for purposes of showing a pattern of racial bias. It is clear that Robertson was treated differently from her peers, but Robertson must also prove that her unequal treatment was the result of racial bias. People, Time, and Gleick will likely claim that Robertson’s unequal treatment was due to some other factor, such as work performance or personality issues. The comments made by Gleick – even though they were about potential stories and not about Robertson personally – are relevant to show that Gleick held discriminatory views, which bolsters Robertson’s claim that her treatment was in fact the result of racial bias.

Robertson’s complaint also takes a broad look at People’s organizational structure: People has never had an African American Top Editor; Robertson was the first and only African American Senior Editor in People’s history; only eight out of 110 employees at People were African American; and that number dropped to four after the recent round of layoffs. This data, coupled with Robertson’s assertion of her strong qualifications and work record, further supports the argument that Robertson’s dismissal was the result of racial discrimination.

The nature of the facts and statistics included in Robertson’s complaint has led much of the commentary surrounding this case to devolve into a debate over whether publications, such as People, have a legal or ethical duty to provide racially balanced coverage. However, if this lawsuit goes to trial, the question the court will have to debate is whether the evidence provided suggests a racially discriminatory attitude on the part of People Magazine and its supervisory employees that affects not only the content of the magazine but how the publication treats its employees.

Does Double Jeopardy Apply to Ray Rice?

Earlier this month, Baltimore Raven’s running back Ray Rice was accused of knocking out his fiancé inside a casino elevator after partial footage of the couple was caught on the casino cameras. The former running back pleaded not guilty to assault charges that was filed against him by New Jersey prosecutors and also applied for New Jersey’s pretrial intervention program, which offered him no jail time since he had no prior criminal record. The pretrial intervention program also offers first time offenders to have the charges that were filed against them be dismissed if they complete the program and meet certain conditions.

ray riceAfter Ray Rice agreed to participate in the pretrial intervention program, New Jersey prosecutors agreed to dismiss the assault charges that were filed against him if he completes the year long, supervised rehabilitation program. However, the prosecutors made this dismissal prior to the new footage that was made public on September 8, 2014.

The new video released by TMZ shows the NFL running back punching his fiancé in the head against a rail, which results in her becoming unconscious. When prosecutors first agreed to dismiss the charges, the only video evidence that they had seen was Ray Rice dragging his fiancé out of the elevator.

The question is whether the prosecutors can reinforce a new case against Ray Rice and retract their earlier dismissal since the new video shows clear cut evidence of domestic violence. Alternatively, would double jeopardy apply? Double jeopardy protects defendants from being charged for the same offense after there already has been a conviction or acquittal.

Since Ray Rice’s charges were dismissed as a part of the first offender program, the state cannot retry him or change his sentence. The NFL however decided to modify his punishment of a two-game suspension to an indefinite suspension after the video of the incident inside the elevator has emerged.

Commentators have argued that since the NFL made their decision on Rice’s punishment, they cannot retract it because it will be a violation of the double jeopardy laws. However, the NFL has its own system and does not have to follow the court system when making decisions. If there is no double jeopardy clause in the NFL’s collective bargaining agreement, the NFL as an employer can modify Ray Rice’s suspension to anything they want.

It is difficult to say what would happen next for Ray Rice, but Ray Rice’s charges for domestic violent and assault has been dismissed and will likely stay dismissed.

Is Fantasy Football Illegal?

As football season gets underway, so do many “fantasy” leagues. Fantasy leagues allow average, everyday fans to undertake the role of owner and general manager as they draft a team, select a roster, and watch the chaos ensue on game day. As millions of virtual managers watch their virtual team hit the field, specifically those who have paid money or bet on their team, chances are very few stop to ask an important question: Is this legal?

fantasy footballIt may be that most assume it is, or that they are not playing for money. However, if money is involved, this question is vital.

The Unlawful Internet Gambling Enforcement Act of 2006 is legislation that greatly diminished the prevalence of online gambling. However, it also carved out an exception for fantasy sports, provided they meet three requirements:

  1. Prize value is not determined by the number of participants or the value of fees
  2. Winning reflects skill of participants and their knowledge of real-world statistics
  3. Winning is not based on the final score of a real-world game, or the single game performance of a single real-world athlete or team.

Based on these criteria, many traditional fantasy leagues are perfectly legal under federal law.

However, as the popularity of these leagues grows, the variety and type of games also grows: where there are daily, by game payouts, or pay-to-enter “survivor pools” are concerned, the exception laid out above slowly disappears, leaving no federal protection from illegal gambling charges. In fact, any game that is not structured to meet these three requirements may in fact be violating several federal laws.

Moreover, even where fantasy football is legal under federal law, it still faces state review.

Curiously, and unnervingly, while the federal government has, subject to the definition above, deemed fantasy sports games of skill, many states define them as games as “chance.” Moreover, in some states, even if the fantasy football is acknowledged as predominantly a game of skill, it may nonetheless still be illegal if it involves any element of chance.

Even more frustrating are states where fantasy sports have not received much attention at all. For instance, in 1991, Florida’s Attorney General issued an advisory opinion (which means it has little legal authority, but is nonetheless indicative of how the state may treat something) questioning the legality of fantasy sports. Under state law, unless the fantasy sport is a game of “chance” (which would ironically make it illegal under federal law), it is a misdemeanor to wager money on the game. Fortunately, to date, Florida has yet to take any legal action against fantasy leagues or their participants. However, that may cold comfort for those who will continue to play under a constant reminder that what they are doing may one day be taken out of the grey area and deemed to be illegal.

Florida does not stand alone in opposing fantasy sports on the books. Recently, the Kansas Gaming & Racing Commission updated their website, indicating that many types of fantasy sports are most likely illegal. This update may add the Sunflower State to a shortlist where participants are forbidden from participating in the larger, “for cash” online fantasy leagues. Other states include Arizona, Louisiana, Iowa, Montana, and Washington.

As the season unfolds, participants would be wise to brush up on the laws of their state. After all, educating oneself in the legality of fantasy sports is the best way to avoid a reality check later.