Judge rules Paramount terms don't restrict consumer speech on Yelp

A Los Angeles judge has sided with Paramount Global in a dispute over the state's Yelp law, ruling that the entertainment giant's website terms of use do not unlawfully restrict consumers' rights to post reviews.

Judge David S. Cunningham III found that Paramount's terms applied only to users' conduct on its own sites, not external platforms like Yelp, which the law is intended to protect.

"The purpose of the Yelp Law is to protect consumer statements regarding sellers or goods, particularly on third-party websites like Yelp. The challenged language in the [amended complaint] does not prohibit consumer speech on these external platforms," Cunningham wrote in a tentative ruling that he adopted in full on Tuesday.

Paramount Global was represented by Stephanie A. Sheridan, Christopher E. Stretch and Meegan B. Brooks of Benesch, Friedlander, Coplan & Aronoff LLP in San Francisco. They were unable to obtain clearance from their client to comment by press time on Tuesday.

The plaintiffs were represented by attorneys with Singleton Schreiber, including Christopher R. Rodriguez, Andrew D. Bluth and John R. Ternieden in Sacramento and Tyson B. Gamble in San Diego, as well as sole practitioner Thomas A. Leary in San Diego.

Bluth confirmed in a phone call on Tuesday that Cunningham adopted his tentative ruling in full.

"We have a tremendous amount of respect for Judge Cunningham," Bluth said. "He acknowledged during the hearing that this is a close issue, and ultimately one that is likely to be decided by the Court of Appeal. So, we intend to appeal the order and let the Court of Appeal weigh in on that."

Despite Cunningham's ruling, Bluth said the law is still developing in this area, noting that his firm recently achieved a contrary result in a separate case involving the payment app Cash App before Judge Jeffrey S. Ross in San Francisco.

"We had a case under this same statute in front of Judge Ross in San Francisco Superior Court against Cash App, who came out the other way on this exact issue and overruled the demurrer in that case," he said.

The Los Angeles lawsuit concerned the terms of use for Paramount's online websites and services, including the streaming service Paramount+, which allegedly included unlawful clauses that restrict consumers' rights to make any statements, including negative or truthful reviews, about Paramount, its employees, products or services. Sweeney et al. v. Paramount Global, 23STCV31038 (L.A. Super. Ct., filed Dec. 19, 2023).

"Defendants' conduct is unlawful, including among other reasons, because it is aimed to stifle California consumers' right to free speech, and the right of the California public to hear lawful discourse," read the plaintiffs' amended complaint, filed in June. "Defendants' strong-arm tactics to silence dissatisfied California consumers were and continue to be intentionally exercised to protect Defendants' self-promoting public image for commercial and other benefits. Defendants' unlawful business practices are purposefully designed to maintain and increase their consumers and prop up their stock price, all while denying public, consumers, and potential consumers accurate information so that they may make informed decisions as consumers."

The allegedly invasive terms violated California Civil Code Section 1670.8, the complaint argued - a law making it illegal to subject users to terms containing a clause that waives the consumer's right to make any statement, positive or negative, about the seller, its employees or its services.

The statute is known as the Yelp law, in reference to the online platform that allows users to post reviews of businesses.

Paramount successfully moved the case to federal court in January 2024 under the Class Action Fairness Act. However, the court remanded it back to state court in February, finding that the plaintiffs didn't have constitutional standing because they hadn't adequately shown a credible threat of enforcement against them for breaching the terms of use. Sweeney et al. v. Paramount Global, 2:24-cv-00708-JAK-RAOx (C.D. Cal., filed Jan. 25, 2024).

In a subsequent demurrer, Paramount argued that the plaintiffs had failed to state an actionable claim under the Yelp law, which they claimed doesn't apply to the terms at issue in the case.

"Even if the court were to reach the alleged non-disparagement clause ... the challenged clause does not restrict speech in any way. The specific provision at issue explicitly applies only to visitors' 'use of this Site,'" a memorandum in support of the demurrer read, quoting the amended complaint. "It does not govern users' conduct off the website, such as posting reviews on third-party platforms (which is exactly what the Yelp Law was aimed to protect).

"And even on the Paramount.com website, the terms do not restrict consumer speech--much less the 'right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services," the memorandum continued, quoting from the statute.