Levitt v. Yelp! Inc.

Filing 85

RESPONSE (re #77 MOTION to Dismiss Third Amended Class Action Complaint and to Dismiss or Strike Class Action Allegations; Memorandum of Points and Authorities ) filed byBoris Y. Levitt. (Attachments: #1 Declaration, #2 Evidentiary Objections)(Ongaro, David) (Filed on 9/2/2011)

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LAWRENCE D. MURRAY, State Bar No. 77536
NOAH W. KANTER, State Bar No. 224580
MURRAY & ASSOCIATES
1781 Union Street
San Francisco, CA 94123
Telephone: [phone]
Facsimile: [phone]
DAVID R. ONGARO, State Bar No. 154698
AMELIA D. WINCHESTER, State Bar No. 257928
ONGARO BURTT & LOUDERBACK LLP
595 Market St., Suite 610
San Francisco, CA 94105
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiffs
BORIS Y. LEVITT et al.
UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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BORIS Y. LEVITT, on behalf of himself and all
others similarly situated,
Plaintiffs,

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v.
YELP! INC.; and DOES 1 through 100, inclusive,
Defendants.

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Case No. CV 10-01321 EMC
Consolidated with CV 10-02351 EMC
PLAINTIFF LEVITT’S
MEMORANDUM OF POINTS AND
AUTHORITIES IN OPPOSITION TO
DEFENDANT YELP! INC.’S MOTION
TO DISMISS THIRD AMENDED
CLASS ACTION COMPLAINT AND
TO DISMISS OR STRIKE CLASS
ACTION ALLEGATIONS

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Date: October 14, 2011
Time: 1:30 p.m.
Place: Courtroom 15
Judge: Hon. Edward M. Chen

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

TABLE OF CONTENTS

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I.

INTRODUCTION .............................................................................................................. 1

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II.

STATEMENT OF FACTS................................................................................................. 1

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A.

Yelp Background ....................................................................................................... 1

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B.

Class Allegations ....................................................................................................... 3

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C.

Plaintiffs’ Experiences with Yelp ............................................................................. 3

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D.

The Court’s Order on Yelp’s Prior Motion to Dismiss ............................................. 5

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E.

Plaintiffs’ Attempts to Commence Discovery .......................................................... 7

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III.

ARGUMENT ..................................................................................................................... 7

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A.

Legal Standards ......................................................................................................... 7

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B.

Plaintiffs Have Article III Standing .......................................................................... 8

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Plaintiffs’ Standing Is Not Affected By Yelp’s Evidence............................. 8

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2.

Plaintiffs Should be Permitted to Conduct Limited Discovery ................... 11

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C.

Plaintiffs Have Properly Stated a Claim for Unfair Competition ........................... 12

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1.

The Law of the Case Doctrine..................................................................... 12

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2.

Plaintiffs Adequately Alleged Unfair Competition Claims ........................ 13

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a.

Unlawful Conduct ........................................................................... 13

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b.

Yelp’s Conduct Constitutes an Implied Extortionate Threat .......... 14

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c.

Unfair Conduct ................................................................................ 17

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D.

Plaintiffs Adequately Alleged Claims for Attempted Civil and Civil Extortion .... 20

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E.

Yelp is Not Immune From Plaintiffs’ Claims under the CDA ................................ 20

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F.

Plaintiffs’ Claims Should Not be Dismissed or Stricken ........................................ 23

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1.

It is Improper to Dismiss Plaintiffs’ Claims................................................ 23

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2.

Plaintiffs Have Alleged Sufficient Subclasses ............................................ 23

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IV.

CONCLUSION ................................................................................................................ 25

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TABLE OF AUTHORITIES

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Cases

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A-1 Technology, Inc. v. Madegson
No. 150033/2010 at * 9 (N.Y. Sup. Ct. June 22, 2011) .............................................................. 22

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5

Anthony v. Yahoo! Inc.
421 F.Supp.2d 1257 (N.D. Cal. 2006) ........................................................................................ 22

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Asia Economic Institute v. Xcentric Ventures, LLC
No. CV 10-01360 SVW (PJWx) 2011 WL 2469822 (C.D. Cal. May 4, 2011) .......................... 22

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8

Barquis v. Merchants Collection Ass’n.
7 Cal. 3d 94 (1972) ...................................................................................................................... 17

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Bell Atl. Corp. v. Twombly
550 U.S. 544 (2007) ...................................................................................................................... 7

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11

Camacho v. Automobile Club of Southern California
142 Cal. App. 4th 1394 (2006) .................................................................................................... 17

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Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co.
20 Cal. 4th 163 (1999)........................................................................................................... 17, 19

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14

Chandler v. State Farm Mut. Auto. Ins. Co.
598 F.3d 1115 (9th Cir.2010) ........................................................................................................ 7

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Colonial Am. Casualty and Surety Co. v. Bay Commercial Construction Co.
No. C 04-1714 PJH, 2004 WL 2434955 (N.D. Cal. Oct. 29, 2004) ........................................... 19

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Dodd-Owens v. Kyphon, Inc.
No. C06-3988, 2008 WL 410241 at *3 (N.D. Cal. Feb. 12, 2008) ............................................. 25

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Durell v. Sharp Healthcare
183 Cal. App. 4th 1350 (2010) .................................................................................................... 13

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Ewert v. eBay, Inc., Nos. C-07-0219 RMW
C-07-04487 RMW, 2010 WL 4269259 at *3 (N.D. Cal. Oct. 25, 2010) .................................... 25

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Farr v. United States
990 F.2d 451 (9th Cir. 1993) ................................................................................................... 9, 11

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Ferrington v. McAfee, Inc.
2010 WL 3910169 at * 13 (N.D. Cal. Oct. 5, 2010) ................................................................... 20

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Friends of the Earth, Inc. v. Laidlaw Envtl. Serv.
528 U.S. 167 (2000) ...................................................................................................................... 8

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George Lussier Enters., Inc. v. Subaru of New England, Inc.
2001 WL 920060 at *17 (D.N.H. Aug. 3, 2001)......................................................................... 24

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GreenPeace, Inc. v. State of France
946 F. Supp. 773 (C.D. Cal. 1996) .............................................................................................. 11

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
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Hal Roach Studios, Inc. v. Richard Feiner & Co.
896 F.2d 1542 (9th Cir. 1989) ..................................................................................................... 13
Hisamatsu v. Niroula
No. C-07-04371-JSW (EDL), 2009 WL 4456392 at *5 (N.D. Cal. Oct. 22, 2009).............. 14, 20
Holomaxx Technologies v. Microsoft Corp.
No. CV-10-4924 JF, 2011 WL 865278 (N.D. Cal. March 11, 2011) ......................................... 23
Hy Cite Corp. v. Badbusinessbureau.com, L.L.C.
418 F.Supp.2d 1142 (D. Ariz. 2005) ........................................................................................... 21
In re Actimmune Mktg. Litigation
No. C 08-02376 MHP, 2009 WL 3740648 at *15 (N.D. Cal. Nov. 6, 2009) ............................. 14
In re Sony Grand Wega KDF-E A10/A20 Series Rear Protection HDTV Television Litigation
758 F.Supp.2d 1077 (S.D. Cal. 2010) ......................................................................................... 13
Kruska v. Perverted Justice Foundation Incorporated.Org
No. CV-08-00054-PHX-SMM, 2010 WL 4791666 at *5 (D. Ariz. Nov. 18, 2010) .................. 21
McKell v. Washington Mutual, Inc.
142 Cal. App. 4th 1457 (2006) .................................................................................................... 13
Miller v. Gammie
335 F.3d 889 (9th Cir. 2003) ....................................................................................................... 17
Monex v. Deposit Co. v. Gilliam
680 F. Supp. 2d 1148 (C.D. Cal. 2010) ....................................................................................... 20
Moreno v. The Geo Group, Inc.
1:07-CV-01630, 2009 WL 841139 at *2 (E.D. Cal. March 26, 2009) ....................................... 12
Myers v. Medquist, Inc.
No. 05-4608, 2006 WL 3751210 (D.N.J. Dec. 20, 2006) ........................................................... 25
Padgett v. City of Monte Sereno
No. C 04-03946 JW, 2007 WL 878575 at *1 (N.D. Cal. March 20, 2007) ................................ 20
Pareto v. F.D.I.C.
139 F.3d 696 (9th Cir. 1998) ......................................................................................................... 7
People v. Casa Blanca Convalescent Homes, Inc.
159 Cal. App. 3d 509 (1984) ....................................................................................................... 17
People v. Oppenheimer
209 Cal.App.2d 413 (1963) ......................................................................................................... 15
Rachford v. Air Line Pilots Assoc.
No. C 03-3618PJH, 2006 WL 1699578 at *3 (N.D. Cal. June 16, 2006) ..................................... 8
Rubin v. Green
4 Cal.4th 1187 (1993).................................................................................................................. 17

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

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Schlagal v. Learning Tree, Int’l
No. 98-6384, 1999 WL 672306 at *3 (C.D. Cal. Feb. 23, 1999)

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Smith v. State Farm Mutual Auto. Ins. Co
93 Cal.App.4th 700 (2001) ......................................................................................................... 17
South Bay Chevrolet v. General Motors Acceptance Corp.
72 Cal.App.4th 861 (1999) .......................................................................................................... 18
St. Clair v. City of Chico
880 F.2d 199 (9th Cir. 1989) ................................................................................................... 8, 11
Swanson v. Citibank, N.A.
614 F.3d 400 (7th Cir. 2010) ....................................................................................................... 17
Swift v. Zynga Game Network
No. C 09-05443 SBA, 2010 WL 4569889 at *10 (N.D. Cal. Nov. 3, 2010) ................................ 7
Taylor v. Clark
No. 1:07-cv-00032-SW1-SMS PC, 2011 WL 917382 at *21 (C.D. Cal. Feb. 16, 2011) ........... 12
Troyk v. Farmers Group, Inc.
171 Cal. App. 4th 1305 (2009) .................................................................................................... 13
U.S. v. Lummi Indian Tribe
235 F.3d 443 (9th Cir. 2000) ....................................................................................................... 12
United States v. Lisinski
728 F.2d 887 (1984) .................................................................................................................... 14
United States v. Mills
810 F.2d 909 (9th Cir. 1987) ....................................................................................................... 12
United States v. Rivera Rangel
396 F.3d 476 (1st Cir. 2005) ....................................................................................................... 14
Westways World Travel, Inc. v. AMR Corp.
No. EDCV 99-386, 2005 WL 6523266 at *8 (C.D. Cal. Feb. 24, 2005) .................................... 24

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Statutes

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18 U.S.C. § 1951(b)(2) .................................................................................................................... 14

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California Business & Professions Code § 17200 ................................................................ 1, 13, 19

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California Penal Code § 518 ..................................................................................................... 13, 14

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California Penal Code § 519 ............................................................................................... 13, 14, 20

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California Penal Code § 523 ............................................................................................... 13, 14, 20

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California Penal Code § 524 ..................................................................................................... 13, 14

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
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Rules

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Rule 12 .......................................................................................................................................... 7, 8

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Rule 23 ...................................................................................................................................... 1, 7, 8

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Other Authorities
Communications Decency Act .......................................................................................................... 6
Hobbs Act .................................................................................................................................. 13, 14

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

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I.

INTRODUCTION
Plaintiffs Boris Y. Levitt, d/b/a Renaissance Restoration, a/k/a Renaissance Furniture

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Restoration (“Levitt”), Cats and Dogs Animal Hospital, Inc. (“Cats and Dogs”), Tracy Chan, d/b/a

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Marina Dental Care, a/k/a Marina Dental Care (“Chan”) and John Mercurio d/b/a Wheel

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Techniques (“Wheel Techniques”) on behalf of themselves and all others similarly situated, filed

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a class action Third Amended and Consolidated Complaint (“TAC”) against Defendant Yelp! Inc.

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(“Yelp” or “Defendant”) for a violation of Business and Professions Code section 17200, civil

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extortion and attempted civil extortion. Defendant now moves to dismiss this case and to strike or

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dismiss the class allegations.
Plaintiffs were previously found to have standing and have adequately alleged and

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submitted facts sufficient to support Article III standing. Plaintiffs have stated claims under

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California’s Unfair Competition Law and for civil and attempted civil extortion. They bring their

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claims on behalf of an ascertainable class and satisfy Rule 23.

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Defendant’s motion should be denied in its entirety.

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STATEMENT OF FACTS

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A. Yelp Background

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Yelp is a review website, which allows users to post reviews and rate businesses. TAC ¶2.

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Users post reviews and assign a star rating with one star being the lowest and five stars being the

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highest rating. Id. Yelp then assigns the business an overall star rating based on some of the user

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reviews. Id. Yelp draws over 25 million people each month, who can search the public ratings of

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businesses and/or post their own reviews. Id. Yelp claims that its website is “Real People. Real

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Reviews” and that Yelp will only remove user reviews under certain circumstances, including 1)

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when Yelp’s automated filter suppresses the review; 2) when the review violates the Yelp Terms

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of Service or Content Guidelines; or 3) when the user removes the review (“Review Terms”). 1

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TAC ¶¶3, 6.

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“Review Terms” is defined in paragraph 6 of the TAC exactly as it is defined above.
Plaintiffs’ use of the phrase “Review Terms” refers only to the defining language set forth in
paragraph 6. It is not an incorporation or an incorporation by reference of any exhibits or
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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
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Despite these representations, Yelp does not comply with its own Review Terms. TAC ¶7.

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Instead, Yelp actively manipulates the reviews of users to coerce businesses to purchase

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advertising. Id. Yelp uses several approaches to effectuate its extortionist conduct and obtain its

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desired advertising revenues. Each approach is firmly rooted in Yelp’s understanding that a

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business’s reputation and revenues are often tied to rating-based websites like Yelp. TAC ¶¶8, 24.

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To instill fear in a business and coerce it to pay for advertising, Yelp controls a business’s

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overall star rating primarily by manipulating the reviews contrary to Yelp’s own policies and

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representations. TAC ¶¶34-35, 37, 38, 40. This can occur several ways. Yelp may manipulate

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which user reviews are filtered (essentially suppressed from general public view and not

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considered as part of the star rating), which affects and controls the business’s overall star rating.

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Id. at ¶40. Yelp may refuse to remove reviews that violate its own Review Terms, which affects

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and controls the business’s overall star rating. Id. Yelp may represent to a business that it has the

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ability to remove reviews, which would affect and control the business’s overall star rating.

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Finally, Yelp may generate and post false negative reviews for the business which directly

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affects and controls the business’s overall star rating. Id. The owner of plaintiff Wheel

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Techniques was told that a former Yelp employee stated that Yelp terminated a group of sales

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employees around the time that this and similar lawsuits were filed as a result of scamming related

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to advertising. TAC ¶82. Plaintiff also was told that Yelp froze the computers of sales employees

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to prevent those employees from being able to change reviews. Id. Yelp also generated content

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through agents. Yelp’s CEO, Jeremy Stoppelman, admitted that Yelp did generate reviews and

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that it paid users to generate and post those reviews. TAC ¶38. Not only did Yelp pay users to

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create content, but in 16 cities, Yelp also maintains community managers who are “encouraged to

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review.” Id.

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Each of Yelp’s approaches revolves around unfair rating changes, which businesses fear

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because of the corresponding loss of customers and revenue. TAC ¶¶8, 10. Yelp capitalizes on

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this fear by both implicit and explicit threats that if the business does not pay for advertising, its

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portions of Yelp’s website, as suggested by Yelp’s treatment in its motion and the exhibits
submitted by its declarants.

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

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overall star rating and reviews will decline. Id.

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B. Class Allegations

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Plaintiffs seek to represent the following subclasses of Non Sponsors (those whose reviews

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Yelp manipulated, but who did not purchase advertising) and Sponsors (those whose reviews Yelp

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manipulated and who thereafter purchased advertising). See TAC ¶ 109(a)-(b).

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Non Sponsors are defined as:

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[a]ll similarly situated businesses and persons nationwide who were in contact
with Yelp regarding the option to advertise on Yelp, declined to purchase
advertising, and as a result of not purchasing advertising, were subject to the
manipulation of the reviews of their businesses by Yelp – in a manner that did not
comply with Yelp’s representations regarding its Review Terms 2 – during the
four years prior to the commencement of this lawsuit, through the final resolution
of this lawsuit.

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Id.

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Sponsors are defined as:
All similarly situated businesses and persons nationwide who were in contact with
Yelp regarding the option to advertise on Yelp, whose reviews were manipulated
by Yelp in a manner that did not comply with Yelp’s representations regarding its
Review Terms and who thereafter purchased advertising during the four years
prior to the commencement of this lawsuit, through the final resolution of this
lawsuit.

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Id.

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C. Plaintiffs’ Experiences with Yelp

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Non Sponsor Plaintiff Levitt 3 was contacted by a Yelp sales representative in July 2009

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asking Levitt to purchase advertising. TAC ¶¶46-47. Subsequently, Levitt declined the offer.
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For purposes of both subclass definitions, Review Terms means, as set forth in the
complaint, Yelp’s public representation that reviews may only be removed from Yelp if: 1) A
user removes the review; 2) Yelp removes the review for violating the Terms of Service or
Content Guidelines; or 3) “The review may have been suppressed by Yelp's automated software
system. This system decides how established a particular reviewer is and whether a review will
be shown based on the reviewer's involvement on Yelp. While this may seem unfair to you, this
system is designed to protect both consumers and businesses alike from fake reviews (i.e., a
malicious review from a competitor or a planted review from an employee). The process is
entirely automated to avoid human bias, and it affects both positive and negative reviews. It's
important to note that these reviews are not deleted (they are always shown on the reviewer's
public profile) and may reappear on your business page in the future.” See id.
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/ For purposes of this motion only, Plaintiffs’ experiences with Yelp are only addressed
summarily, due to page constraints.
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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

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TAC ¶47. Just two days after Levitt declined Yelp’s advertising solicitation, all but one of his top-

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rated 5 star reviews was removed from his public Yelp review page. TAC ¶49. Yelp’s action

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caused Levitt’s overall star rating to plummet to 3.5 stars. TAC ¶¶ 47-49. Yelp’s manipulation

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caused Levitt to have significantly reduced customer interest in his business (his Yelp page was

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reviewed only 158 times as opposed to 261 times the previous month). TAC ¶ 49. And Levitt’s

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monthly business income declined accordingly. TAC ¶49. Yelp continued its unfair conduct by

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restricting Levitt’s searchable business category designations from multiple categories to just one

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category. TAC ¶53.

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In September 2009, a Yelp sales representative began calling Non Sponsor Plaintiff Cats

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and Dogs and promised to manipulate its reviews if Cats and Dogs purchased advertising. TAC ¶¶

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58-61. Not even one week after Cats and Dogs declined to purchase advertising, Yelp posted

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multiple negative reviews. TAC ¶¶66-68. One of these negative reviews had been removed

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before because it violated Yelp’s Review Terms. TAC ¶60-61, 66. Plaintiff alleges that the other

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new negative reviews were manufactured by Yelp or its agents. TAC ¶69. Yelp’s conduct caused

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Cats and Dogs reputational harm, a loss in customers, page views, sales, business revenues and

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assets. TAC ¶71.

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In May or June of 2008, Sponsor Plaintiff Chan was contacted by a Yelp sales

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representative and offered the opportunity to advertise. TAC ¶87. Yelp told Chan that Yelp

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employees had the ability to remove reviews from a business’s review page. TAC ¶¶88, 91. In

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August 2008, Chan declined to purchase advertising from the sales representative. TAC ¶89-90.

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Within just two to three days after Chan declined to purchase advertising, Yelp removed nine top-

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rating 5-star reviews from Chan’s Yelp review page. TAC ¶90. Yelp caused Chan’s overall star

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rating to plunge from the highest 5 star rating to 3 stars. Id. Because Chan feared that Yelp would

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continue to manipulate her public reviews (which Yelp admitted they could and would do), she

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felt compelled to purchase advertising. TAC ¶¶92-93. Just days after Chan purchased advertising,

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the 5 star reviews Yelp had removed were suddenly reinstated and Chan’s overall star rating rose

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again. TAC ¶93. In October 2008, Yelp asked Chan to increase her advertising payments to

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$500.00 per month. TAC ¶94. Instead, Chan cancelled her advertising contract, and Yelp then

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removed positive reviews from her review page and replaced them with negative reviews. TAC

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¶95. Yelp’s conduct caused a decline in her overall star rating, the number of Chan’s new patients

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declined as well as her revenues and business assets, and her reputation was harmed. TAC ¶¶101-

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02.

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In or around late 2008 and early 2009, Wheel Techniques began receiving calls from Yelp

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representatives requesting that Wheel Techniques purchase advertising. TAC ¶¶74-76. Around

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the same time period as it began receiving advertising calls, Wheel Techniques also began

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receiving negative reviews on Yelp. TAC ¶¶74, 76. The negative reviews did not appear to be

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written by actual customers of Wheel Techniques because Wheel Techniques had no records of

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performing the reviewed work or the names of the reviewers who claimed they had visited the

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shop. TAC ¶¶74-76. On March 8, 2010, Wheel Techniques was again contacted by Yelp for

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advertising, which it declined, and within minutes a one-star review was moved to the top of

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Wheel Technique’s Yelp review page replacing a five-star review that had previously been listed

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at the top of the review page. TAC ¶¶79-80. Wheel Techniques alleges that Yelp employees or

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individuals acting on behalf of Yelp manufactured the negative reviews that began appearing

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when it declined to purchase advertising, and moved the one-star review to the top of its review

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page after it declined to purchase advertising. TAC ¶¶77, 81.

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Yelp’s conduct caused each of the named Plaintiffs’ overall Yelp star ratings to decline and

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that resulted in a decrease in Plaintiffs’ customers, a loss of sales, revenues and assets, and

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reputational injuries. TAC ¶¶55, 71, 83, 102. Sponsor Plaintiffs seek injunctive and restitution

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relief for payments they made to Yelp due to its unlawful extortion and unfair conduct. TAC

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¶124-25. Non Sponsor Plaintiffs seek injunctive relief ordering Yelp to cease its UCL violations.

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TAC ¶126-27. Sponsors and Non Sponsors seek damages and punitive damages for attempted

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civil extortion and civil extortion. TAC ¶¶138-39, 145-46.

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D. The Court’s Order on Yelp’s Prior Motion to Dismiss

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On March 22, 2011, the Court issued an order on Yelp’s Motion to Dismiss the Second

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

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Amended Class Action Complaint (“SAC”) and to Dismiss or Strike Class Allegations. See Dkt.

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70 (“Order”). The Court found that Plaintiffs had alleged facts sufficient to establish Article III

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standing and overruled Yelp’s standing and jurisdictional challenges. Order, 9:15-16. The Court

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further found that Communications Decency Act (“CDA”) did “not provide Yelp blanket

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‘immunity’ from suit or in any way limit this court’s jurisdiction over Plaintiff’s claims.” Order,

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11:6-7. In addition, the Court found that Plaintiffs had also alleged facts sufficient to satisfy the

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UCL standing requirements. Order, 12:18-20.

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With regard to Plaintiff’s UCL claim pleaded under the unlawful prong, the Court found

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that under the CDA, the following alleged actions by Yelp were actionable: Yelp removed positive

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reviews, thereby changing the overall star rating, immediately after plaintiffs declined to purchase

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advertising or terminated their advertising contracts”; 2) “Yelp manufactured its own negative

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reviews of plaintiffs’ businesses”; and 3) “Yelp stated that paying for advertising would help

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Plaintiff’s overall star rating because Yelp ‘tweaks’ the ratings, ‘manually adds and removes

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reviews in its own discretion’ and its employees have the ability to remove reviews.” Order,

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14:14-22, 15:25-27; 16:2-4; 16:20-27.

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Although Plaintiffs’ allegations were actionable under the CDA, the Court found that the

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SAC didn’t allege sufficient facts to demonstrate that Yelp’s conduct amounted to an implied

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extortionate threat because 1) it was speculative that Yelp manufactures its own reviews or

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manipulates reviews of businesses who purchase advertising; 2) no distinct communication of a

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threat could be inferred; and 3) the apparent correlations between Plaintiffs’ overall star ratings

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and their advertising decisions only provided select snapshots of Plaintiffs’ overall star ratings.

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Order, 17:6-10; 17:11-12; 17:20-23.

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For Plaintiffs’ unfair prong UCL claim, the Court found that Plaintiffs didn’t allege facts

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sufficient to show that they had 1) met the Cel Tech or South Bay tests; and 2) that the theory of

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extortion as a theory of unfairness failed for the same reasons that the unlawful prong had not been

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met. Order, 19:22-25; 19:25-27. Finally, the Court found it unnecessary to address the class

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action allegations. Order, 20:22-23.

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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
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E. Plaintiffs’ Attempts to Commence Discovery

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After receiving the Order, Plaintiffs sought discovery of the names, addresses, and contact

3

information of Yelp’s former sales employees so that they could discover, among other issues,

4

whether Yelp had a widespread policy of manipulating overall star ratings, drafting negative

5

reviews to extort advertising money out of businesses and their owners, and develop issues

6

relating to Yelp’s conduct. Plaintiffs believed this discovery would be crucial towards

7

establishing their allegations and prosecuting their complaint. Because Plaintiffs are not former

8

Yelp employees and could not possibly have first-hand knowledge of inside information, the

9

requested discovery is the only means to obtain such information. Plaintiffs moved to compel this

10

information, but the discovery request was denied on August 1, 2011. See Dkt. No. 82.

11 III.

ARGUMENT

12

A.

13

Article III standing is challenged by a motion to dismiss under Rule 12(b)(1). Chandler

Legal Standards

14

v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1121-22 (9th Cir.2010). On a Rule 12(b)(6)

15

motion, the court must accept the factual allegations of the complaint as true and must draw all

16

reasonable inferences in favor of the plaintiff. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir.

17

1998). A plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.”

18

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 (2007).

19

A Rule 12(f) motion “is not the proper vehicle for dismissing portions of a complaint

20

when the 12(f) challenge is really an attempt to have portions of the complaint dismissed; such a

21

challenge is better suited for a 12(b)(6) motion to dismiss . . . .” Swift v. Zynga Game Network,

22

No. C 09-05443 SBA, 2010 WL 4569889 at *10 (N.D. Cal. Nov. 3, 2010) (denying motion to

23

strike Rule 23 class allegations). Class action allegations are not the type of “redundant,

24

immaterial, impertinent, or scandalous matters” that Rule 12(f) is designed to address. Fed. R.

25

Civ. P. 12(f).

26
27

Defendant’s motions should be denied because 1) Plaintiffs have standing; 2) Plaintiffs
have sufficiently pled UCL and civil extortion and attempted civil extortion claims; and 3)

28
7
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

Plaintiffs’ class allegations satisfy Rule 23.

2

B. Plaintiffs Have Article III Standing

3

Article III of the Constitution confers standing on a party if the party can demonstrate: “(1)

4

it has suffered ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not

5

conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the

6

defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed

7

by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Serv., 528 U.S. 167, 180-81

8

(2000). Under Rule 12(b)(1), “the defendant may either challenge jurisdiction on the face of the

9

complaint or provide extrinsic evidence demonstrating lack of jurisdiction on the facts of the

10

case.” Rachford v. Air Line Pilots Assoc., No. C 03-3618PJH, 2006 WL 1699578 at *3 (N.D. Cal.

11

June 16, 2006). If a defendant makes a factual challenge, “[i]t then becomes necessary for the

12

party opposing the motion to present affidavits or other evidence necessary to satisfy its burden of

13

establishing that the court, in fact, possesses subject matter jurisdiction.” St. Clair v. City of

14

Chico, 880 F.2d 199, 201 (9th Cir. 1989).

15

The Court held in its March 22, 2011 Order that Plaintiffs had alleged facts sufficient to

16

confer Article III standing. Order, 9:15-16. Despite the previous order and in conjunction with

17

Yelp’s refusal to permit Plaintiff to conduct even limited discovery, Yelp again contests Plaintiffs’

18

standing by raising a 12(b)(1) factual challenge. In light of these facts, Plaintiffs should be

19

entitled to conduct limited discovery. As discussed below, Yelp’s evidence is not conclusive and

20

does not defeat Plaintiffs’ standing.

21
22

1.

Plaintiffs’ Standing Is Not Affected By Yelp’s Evidence

Yelp fails to prove that Plaintiffs’ injuries are not connected to Yelp’s wrongful conduct in

23

generating or modifying the content of reviews and manipulating reviews. Yelp’s reliance on the

24

Ian MacBean Declaration is misplaced because there is no factual basis underlying the majority of

25

its assertions (e.g., it fails to provide the most basic information about declarant such as how long

26

he has worked at Yelp) and instead consists largely of hearsay and speculation. 4

27
28

4

The bulk of the MacBean declaration and exhibits is inadmissible as set forth more fully
in Plaintiffs’ concurrently filed Evidentiary Objections.
8
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

Yelp’s contention that it has “confirmed that none of the consumers who created and

2

posted [the reviews about Plaintiffs] are current or former employees or agents of Yelp” (Yelp

3

MTD, 21:10-13) relies upon cursory, non-exclusive searches that are based only on information

4

provided to Yelp by its users. Specifically, Yelp’s purported “confirmation,” relied on searches 1)

5

to determine whether each reviewer’s Yelp user profile was “flagged in Yelp’s database” as being

6

associated with a current or former employee; 2) running a search of the first and last names that

7

reviewers provided to Yelp in a database of current and former Yelp employees; 3) checking the

8

email addresses provided by the reviewers to Yelp to see if any had an @yelp.com email address;

9

and 4) reviewing the IP address provided by each reviewer in connection with each of the

10

Plaintiffs’ reviews to see if they were associated with any Yelp IP address. See Declaration of Ian

11

MacBean (Dkt. No. 80), ¶¶ 2-5. This does not verify that Yelp employees did not post reviews or

12

alter reviews on Plaintiffs’ business pages and that Yelp’s conduct did not cause Plaintiffs’ harm.

13

See Farr v. United States, 990 F.2d 451, 454 (9th Cir. 1993) (“although [certificates] were proper

14

evidence, they were not necessarily conclusive evidence”).

15

A closer look at these searches demonstrates that they are not conclusive or exclusive.

16

Yelp necessarily has to rely on the information provided by its users – such as first and last name.

17

Nowhere in the MacBean declaration does Yelp set forth any verification requirements for a user’s

18

first and last name, such as requiring a user to provide a government-issued identification

19

document or to require an in-person verification of the information. Common sense mandates that

20

if a user does not provide their true first and last name, then Yelp’s comparison of user names with

21

its list of current and former employees is meaningless. A Yelp employee could have registered as

22

a user under a different first or last name or both. If Yelp uses first and last name information to

23

“flag” user accounts associated with current or former Yelp employees, then that search is also

24

inconclusive. No information, however, is provided about how Yelp would know whether a user

25

account should be flagged, particularly given its representation that a group of “certain [Yelp]

26

employees” are “prohibited” from providing written content to the website. MacBean Decl., ¶2.

27
28
9
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

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Notably, this statement in the MacBean declaration necessarily implies and concedes that some

2

Yelp employees can generate content by posting reviews – the very fact that Yelp seeks to deny.

3

Similarly, Yelp’s reliance on email addresses provided by its users will fail. “The fact that

4

none of the Yelp posters used a Yelp email address in their contact information does not mean that

5

the poster was not a Yelp employee.” Declaration of Richard Gralnik, ¶10. Hundreds of free

6

services on the internet allow persons – including any Yelp employee – to “create one or more

7

entirely anonymous, completely unverified and perfectly valid email accounts.” Id.

8

Finally, Yelp’s search of “IP addresses” again fails because it relies upon information

9

provided by the user to Yelp. “The fact that the posted reviews about the named Plaintiffs did not

10

originate from the IP address of a computer or device at Yelp does not mean that the posts could

11

not have come from a Yelp computer or device.” Gralnik Decl., ¶12. Just as with email services,

12

there are “numerous ‘anonymizer’ sites on the Internet designed to hide a user’s actual IP address

13

from other users such as Yelp.” Id. at ¶13.

14

The MacBean declaration fails to exclude the possibility that – as Plaintiffs alleged – one

15

or more Yelp employees generated negative reviews, modified the content of reviews or otherwise

16

manipulated reviews to the detriment of Plaintiffs. Therefore, since Plaintiffs’ injuries are linked

17

to Yelp’s improper conduct, Plaintiffs have again demonstrated they have standing.

18

Likewise, Yelp’s attempts to prove that reviews removed or filtered from Plaintiffs’ pages:

19

1) were the result of asserted (but unproven and undocumented) violations of the Terms of Service

20

or violations of Content Guidelines (allegedly in force during an unspecified time frame); 2) were

21

removed by the reviewers; or 3) were allegedly generated by Plaintiffs also fail. Yelp MTD, 21-

22

22. The MacBean declaration is almost completely devoid of any facts which would provide a

23

basis and foundation for his statements about reviews being filtered, removed or in violation of

24

various Terms of Service or Content Guidelines. See generally Plaintiffs’ Evidentiary Objections.

25

Yelp submitted no written evidence from its administrative records (referenced throughout the

26

MacBean declaration) that stated the reviews were filtered or removed for alleged violations of the

27
28
10
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

Terms of Service or Content Guidelines. Declarant’s say-so is not admissible evidence, and

2

Yelp’s unsupported assertions cannot be considered.

3

Similarly flawed is Yelp’s contention that certain reviews for Wheel Techniques and

4

Renaissance Restoration were created by Plaintiffs themselves. Yelp MTD, 21-22. Yelp’s only

5

basis for this is its unsupported assertion that selected information provided by third parties on

6

Facebook and external websites is true and verified. See MacBean Decl., ¶¶14-22. Statements by

7

third parties asserted for their truth is the very definition of hearsay, and that precludes Yelp from

8

relying on that inadmissible information. Yelp may not rely on inadmissible hearsay statements to

9

conclude that a particular Facebook page or external website is in fact associated with and

10

maintained by the owner of a Plaintiff business. Fed. R. Evid. 801, 802. And Yelp has no factual

11

basis or personal knowledge to support any such speculation. Accordingly, Yelp has not

12

demonstrated how or why or for what reason reviews of Plaintiffs’ businesses were removed or

13

filtered on Yelp’s website.

14

2.

Plaintiffs Should be Permitted to Conduct Limited Discovery

15

When a factual challenge is made to a complaint’s jurisdictional allegations, “discovery is

16

necessary . . . if it is possible that the plaintiff can demonstrate the requisite jurisdictional facts if

17

afforded that opportunity.” St. Clair, 880 F.2d at 201. Further, discovery should be permitted

18

“where the facts are peculiarly within the knowledge of the opposition party.” GreenPeace, Inc. v.

19

State of France, 946 F. Supp. 773, 789 (C.D. Cal. 1996); see also Farr, 990 F.2d at 454 (would

20

have been fair to allow party to obtain some discovery when faced with a 12(b)(1) motion). “It is

21

an abuse of discretion to dismiss for lack of subject matter jurisdiction without giving plaintiff

22

reasonable opportunity, if requested, to conduct discovery for this purpose.” GreenPeace, Inc.,

23

946 F. Supp. at 789.

24

Here, Plaintiffs have not had the opportunity to conduct jurisdictional discovery on

25

disputed, controlling issues of fact – whether Yelp’s conduct in manipulating and contributing to

26

Plaintiff’s reviews caused them harm – that are in dispute. Plaintiffs’ previous attempt to obtain

27

discovery of former Yelp sales employees’ contact information – which was denied – would have

28
11
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

likely assisted them to obtain and submit evidence necessary to oppose Yelp’s standing challenge.

2

This discovery would have likely allowed Plaintiffs to understand exactly how Yelp’s behind-the-

3

scenes conduct impacted reviews of Plaintiffs’ businesses and why their reviews (and thousands of

4

others) would suddenly change after they declined to purchase advertising. Accordingly, in the

5

event the Court is inclined to consider Yelp’s extrinsic evidence, Plaintiffs respectfully renew their

6

request to conduct limited discovery related to the issues raised by the standing challenge and to

7

submit evidence obtained from that discovery before the Court rules on this motion.

8
9

C.

Plaintiffs Have Properly Stated a Claim for Unfair Competition
1.

The Law of the Case Doctrine

10

As a preliminary matter, the law of the case doctrine does not and should not be applied

11

to Plaintiffs’ UCL claims. “For the law of the case doctrine to apply, the issue in question must

12

have been decided explicitly or by necessary implication in [the] previous disposition.” U.S. v.

13

Lummi Indian Tribe, 235 F.3d 443, 452 (9th Cir. 2000). More importantly, application of the

14

law of the case doctrine is in the court’s discretion. Taylor v. Clark, No. 1:07-cv-00032-SW1-

15

SMS PC, 2011 WL 917382 at *21 (C.D. Cal. Feb. 16, 2011) (“application of the law of the case

16

doctrine is discretionary.”) citing United States v. Mills, 810 F.2d 909 (9th Cir. 1987).

17

Yelp asks this Court to apply the law of the case doctrine to preclude the UCL claims of

18

class representatives Levitt, Chan and Cats & Dogs based on Yelp’s contention that Plaintiffs did

19

not add allegations to the TAC in the sections on those class representatives. See MTD, 11:25-

20

12:4. . Yelp ignores the fact that the TAC added new factual allegations that are applicable to all

21

plaintiffs [see infra Section II.A], and has added an additional class representative who has new

22

factual allegations as to Plaintiffs’ UCL claims. See TAC ¶¶ 37, 38, 72-83. The TAC, therefore,

23

presents different issues. Because Plaintiffs have presented a new basis and additional authorities

24

to support their UCL claims, the law of the case doctrine is inapplicable to Plaintiffs’ claims and

25

the TAC and all claims therein should be evaluated on the merits. See Moreno v. The Geo Group,

26

Inc., 1:07-CV-01630, 2009 WL 841139 at *2 (E.D. Cal. March 26, 2009) (declining to apply law

27

of the case on motion to dismiss when new basis and additional authorities on claim were

28
12
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

presented).

2

Further, applying the law of the case doctrine to Plaintiffs UCL claims (or any portion

3

thereof) is inappropriate because Plaintiffs’ TAC superseded the SAC. See In re Sony Grand

4

Wega KDF-E A10/A20 Series Rear Protection HDTV Television Litigation, 758 F.Supp.2d 1077,

5

1098 (S.D. Cal. 2010) (declining to apply law of case doctrine on motion to dismiss to claim that

6

“remain[ed] substantively unchanged” because previous complaint was superseded and law of

7

case doctrine is discretionary) citing Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d

8

1542, 1546 (9th Cir. 1989) (“[A]n amended pleading supersedes the original”).

9

Even if the issues presented by the SAC and the TAC were the same (they are not) the

10

application of the law of the case doctrine is within the Court’s discretion. See id. at 1098 (“[t]he

11

law of the case doctrine is discretionary and ‘is in no way a limit on a court’s power to revisit,

12

revise, or rescind an interlocutory order prior to entry of final judgment in the case.’”).

13

Accordingly, Plaintiffs’ claims should be evaluated on their merits.

14

2.

Plaintiffs Adequately Alleged Unfair Competition Claims

15

The UCL prohibits conduct that is “any unlawful, unfair or fraudulent business act or

16

practice . . . .” Cal. Bus. & Prof. Code § 17200. “The purpose of the UCL is to protect both

17

consumers and competitors by promoting fair competition in commercial markets for goods and

18

services.” Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1359 (2010) (internal citations

19

omitted). Under the UCL, “a business practice need only meet one of the three criteria to be

20

considered unfair competition.” Id. (citing McKell v. Washington Mutual, Inc., 142 Cal. App.

21

4th 1457, 1471 (2006)). “Therefore, an act or practice is ‘unfair competition’ under the UCL if it

22

is forbidden by law or, even if not specifically prohibited by law, is deemed an unfair act or

23

practice.” Id. (citing Troyk v. Farmers Group, Inc., 171 Cal. App. 4th 1305, 1335 (2009)).

24

a.

Unlawful Conduct

25

As predicates for the “unlawful” prong of the UCL, Plaintiffs allege that Defendants

26

“unlawfully attempted to and/or did in fact commit extortion as set forth in California Penal

27

Code sections 518, 519, 523, 524, the Hobbs Act, civil extortion and attempted civil extortion.”

28
13
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

See TAC ¶ 118. Pursuant to California Penal Code section 518, extortion is defined as

2

“obtaining of property from another, with his consent . . . induced by a wrongful use of . . . fear .

3

. . .” “Fear, such as will constitute extortion, may be induced by a threat . . . to do an unlawful

4

injury to the . . . property of the individual threatened or of a third person . . .” Cal. Penal Code

5

§ 519. Attempted extortion is actionable under California law. 5 Both the Hobbs Act definition

6

of extortion and claims for civil extortion and attempted civil extortion are substantially similar

7

to the California Penal Code. See, e.g., 18 U.S.C. § 1951(b)(2); Hisamatsu v. Niroula, No. C-07-

8

04371-JSW (EDL), 2009 WL 4456392 at *5 (N.D. Cal. Oct. 22, 2009).

9

As this Court articulated, in a case cited by Defendant, with regard to pleading “[u]nder the

10

UCL unlawful prong, it is not necessary that plaintiffs allege violation of the predicate laws with

11

particularity; they must at a minimum, however, identify the statutory or regulatory provisions that

12

defendants allegedly violated.” See In re Actimmune Mktg. Litigation, No. C 08-02376 MHP,

13

2009 WL 3740648 at *15 (N.D. Cal. Nov. 6, 2009). As set forth below, Plaintiffs have not only

14

identified the statutory provisions that Yelp allegedly violated (which, per Actimmune should

15

satisfy the minimum pleading requirement), they also pleaded adequate facts giving rise to the

16

violation.

17
18

b.

Yelp’s Conduct Constitutes an Implied Extortionate Threat

It is well-settled that threats – sufficient to constitute extortion or attempted extortion –

19

may be implied. See, e.g., Cal. Penal Code § 523 (threats may be implied); see also United States

20

v. Lisinski, 728 F.2d 887, 891 (1984) (“The implied threat will usually be that, unless the victim

21

cooperates with the extortionist, economic loss will result”); United States v. Rivera Rangel, 396

22

F.3d 476, 484 (1st Cir. 2005) (In context of extortion through fear of economic loss, “we note that

23
24
5

25
26
27
28

See Cal. Penal Code § 523 (“Every person who, with intent to extort any money or other
property from another, sends or delivers to any person any letter or other writing, whether
subscribed or not, expressing or implying, or adapted to imply, any threat such as is specified in
Section 519, is punishable in the same manner as if such money or property were actually
obtained by means of such threat”); Cal. Penal Code § 524 (“Every person who attempts, by
means of any threat, such as is specified in Section 519 of this code, to extort money or other
property from another is punishable by imprisonment . . .”).
14
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

it is immaterial that Rivera never explicitly threatened Ventura”). In fact, as described by one

2

court, vague and implied threats are not only actionable, but sometimes more effective. Indeed,

3

[a]n experienced extortionist does not find it necessary to designate specifically
what he intends to do as a means of terrifying his prey . . . the more vague and
general the terms of the accusation, the better it would serve the purpose of the
accuser in magnifying the fears of his victim, and the better also it would serve to
protect him in the event of the failure to accomplish his extortion, and of a
prosecution for his attempted crime . . . [n]o precise words are necessary to
convey a threat. Conduct takes its legal color and quality more or less from the
circumstances surrounding it.

4
5
6
7
8

People v. Oppenheimer, 209 Cal.App.2d 413, 422 (1963) (internal citations and quotations

9

omitted).

10

In its March 22, 2011 Order, the Court found that due to the lack of allegations in the SAC,

11

Plaintiffs had not alleged that Yelp had engaged in an implied extortionate threat. Specifically, the

12

Court found that it was speculative that Yelp manufactures its own negative reviews or

13

manipulates reviews to the detriment of businesses who refuse to purchase advertising because the

14

SAC provided no basis from which to infer that Yelp authored or manipulated the content of the

15

negative reviews complained of by Plaintiffs. See Order 17:6-10. The TAC, however, adds new

16

allegations which demonstrate that Yelp does create content on its own site. Specifically, in the

17

TAC Plaintiffs allege: 1) that approximately 200 Yelp employees or individuals acting on behalf

18

of Yelp have written reviews of businesses on Yelp (TAC ¶ 37); 2) that Yelp’s CEO admitted that

19

Yelp has paid users to write reviews and maintains community managers who are encouraged to

20

review in 16 cities (TAC ¶ 38); and 3) that a class representative was told that a group of sales

21

employees at Yelp were terminated for scamming related to advertising around the time that this

22

lawsuit started (TAC ¶ 82). These additions – which provide factual support that Yelp writes its

23

own reviews and that sales employees engaged in scamming related to advertising – certainly

24

make it plausible and provides a basis for the allegations that Yelp representatives not only wrote

25

and manipulated reviews on Plaintiffs’ review pages, but that they did so shortly after Plaintiffs

26

declined to purchase advertising as part of a policy of extortionate “scamming.”

27

These allegations are consistent with and buttressed by Plaintiffs’ own experiences relating

28
15
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

to advertising with Yelp. Although Plaintiffs simply do not have access to the detailed

2

information that Yelp must maintain as to what happened to each review of Plaintiffs’ businesses

3

each time Plaintiffs were contacted for advertising, the accounts of their experiences demonstrate

4

how Yelp made its implied extortionate threats.

5

For example, Plaintiff Chan alleges that just days after she was contacted by Yelp for

6

advertising and declined to purchase it, Yelp removed nine of her top-rated 5 star reviews from her

7

Yelp review page. TAC ¶¶ 89-90. Chan further alleges that Yelp subsequently told Chan that it

8

tweaks the ratings every so often, and that it could help her if she paid for advertising. TAC ¶ 91,

9

99. Similar to Chan, just two days after Boris Levitt was contacted by Yelp for advertising and

10

declined Yelp’s advertising solicitation, all but one of his top-rated 5 star reviews was removed

11

from his public Yelp review page. TAC ¶49.

12

With Wheel Techniques, a different tact was taken. Wheel Techniques alleges that it was

13

contacted by Yelp for advertising, and within minutes after Wheel Techniques declined the offer,

14

a five-star review which had previously been listed at the top of the review page was replaced by a

15

one-star review. TAC ¶¶ 79-80. Not only did negative reviews begin to be listed first, around that

16

same time, Wheel Techniques also alleges that negative reviews appeared on its Yelp review page

17

from reviewers who did not appear to be actual customers. TAC ¶¶ 74-76. Similarly, Cats and

18

Dogs alleges that a Yelp sales representative began calling Non Sponsor Plaintiff Cats and Dogs

19

and promised to manipulate its reviews if Cats and Dogs purchased advertising. TAC ¶¶ 64. Not

20

even one week after Cats and Dogs declined to purchase advertising, Yelp posted multiple

21

negative reviews. TAC ¶¶ 66-68. One of these negative reviews had been removed before

22

because it violated Yelp’s Review Terms. TAC ¶ 61.

23

Taken together, these allegations – along with the additional information Plaintiffs have

24

alleged relating to Yelp’s authoring of reviews and advertising scamming – are sufficient to allege

25

that Plaintiffs’ received implied extortionate threats from Yelp when they declined to purchase

26

advertising. 6

27
28

6

In the event the Court finds that Plaintiffs’ added allegations are not sufficient to state a
cause of action, Plaintiffs respectfully renew their request to conduct limited discovery. See
16
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1
2

c.

Unfair Conduct

California’s unfair competition laws are “sweeping, embracing ‘anything that can

3

properly be called a business practice and that at the same time is forbidden by law.’” Rubin v.

4

Green, 4 Cal.4th 1187, 1200 (1993) (quoting Barquis v. Merchants Collection Ass’n., 7 Cal. 3d

5

94, 113 (1972)). A business practice alleged under the UCL’s “unfair prong” may qualify as an

6

unfair business practice, even if it does not violate another law. See Cel-Tech Commc’ns, Inc. v.

7

Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). The scope of the unfair prong is

8

broad: “Indeed, . . . the section was intentionally framed . . . precisely to enable judicial tribunals

9

to deal with the innumerable ‘new schemes which the fertility of man’s invention could

10
11

contrive.’” Id. at 181 (internal quotations and citations omitted).
As this Court acknowledged, “there is some uncertainty about the appropriate definition

12

of the word ‘unfair’ in the UCL.” Order, 19:2-4 (citing Camacho v. Automobile Club of

13

Southern California, 142 Cal. App. 4th 1394, 1400 (2006)). Unfair competition – at least in non-

14

consumer cases is – “conduct that threatens an incipient violation of an antitrust law, or violates

15

the policy or spirit of one of those laws . . . or otherwise threatens or harms competition.” Cel-

16

Tech Commc’ns, 20 Cal. 4th at 187, n.12 (discussing Smith v. State Farm Mutual Auto. Ins. Co,

17

93 Cal.App.4th 700, 718-19 (2001) (for unfair competition “the court must we weigh the utility

18

of the defendant’s conduct against the gravity of the harm to the alleged victim”) and People v.

19

Casa Blanca Convalescent Homes, Inc., 159 Cal. App. 3d 509, 530 (1984) (unfair business

20

practice is one that “offends an established public policy or when the practice is immoral,

21

unethical, oppressive, unscrupulous, or substantially injurious to consumers”)).

22
23

This Court explained that, “[s]ome courts apply the Cel-Tech test in non-competitor
contexts,” “others adhere to an older balancing test established in South Bay Chevrolet v.

24
25
26
27
28

Swanson v. Citibank, N.A., 614 F.3d 400, 412 (7th Cir. 2010) (Posner, dissenting in part) (noting
that in light of Supreme Court’s new approach, which requires a plaintiff to conduct a more
extensive precomplaint investigation, that if “the plaintiff shows that he can’t conduct an even
minimally adequate investigation without limited discovery, the judge presumably can allow that
discovery, meanwhile deferring on the defendant’s motion to dismiss”) citing Miller v. Gammie,
335 F.3d 889 (9th Cir. 2003) (en banc).
17
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

General Motors Acceptance Corp., 72 Cal.App.4th 861, 886 (1999), which weighs the unfair

2

practice’s ‘impact on its alleged victim . . . against the reasons, justifications and motives of the

3

wrongdoer,” and others apply different tests or have blended the two approaches. Order, 19:9-15.

4

Plaintiffs plead unfair competition by alleging facts showing that Yelp tries to force small

5

businesses to pay for advertising because if they do not, the business’s overall star rating, which is

6

created by Yelp, will decline. TAC ¶¶8-9, 36, 54, 69, 81, 92. This, is turn, impacts a business’s

7

reputation and profits and devastates small businesses. TAC ¶¶10, 123, 55, 71, 83, 102. Plaintiffs

8

further allege that when they complained about Yelp’s conduct, Yelp retaliated against them by

9

removing positive reviews or re-publishing negative reviews to their Yelp review pages. See,

10

e.g., TAC ¶¶ 53, 97. Yelp’s conduct favors businesses who purchase advertising to the detriment

11

of businesses that do not purchase advertising. TAC ¶78.

12

These facts demonstrate 1) Yelp’s conduct “harms competition by favoring businesses that

13

submit to Yelp’s manipulative conduct and purchase advertising to the detriment of competing

14

businesses that decline to purchase advertising and have their reviews negatively manipulated by

15

Yelp” [TAC ¶119]; 2) that the harm caused to class members due to Yelp’s conduct, including

16

damage caused to their sales, revenues, assets, and business reputations, greatly outweighs any

17

benefit to Yelp in advertising sales [TAC ¶120]; and 3) that the harm caused to class members,

18

including threats, retaliation, extortion, and attempted extortion is substantially injurious to

19

consumers and is immoral and unethical [TAC ¶¶121]. Accordingly, Plaintiffs’ allegations are

20

sufficient to meet several of the “unfair” competition tests.

21

In its Order, the Court found that Plaintiffs had not pleaded facts demonstrating unfair

22

competition under the “unfair prong” because Plaintiffs relied upon theunlawful prong

23

allegations. Order, 19:22-25. Plaintiffs respectfully submit that even if the Court does not find

24

that they alleged facts sufficient to demonstrate that Yelp committed extortion or attempted

25

extortion under the UCL’s “unlawful prong,” (i.e., the threat element) it does not necessarily

26

mean that Plaintiffs have not alleged sufficient facts to give rise to a claim under the “unfair”

27

prong of the UCL. See, e.g., Colonial Am. Casualty and Surety Co. v. Bay Commercial

28
18
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

Construction Co., No. C 04-1714 PJH, 2004 WL 2434955 (N.D. Cal. Oct. 29, 2004) (finding that

2

although motion to dismiss as to breach of contract claim was granted, that “[g]iven the flexible

3

nature of the definition of ‘unfair’ under § 17200, BCC had alleged sufficient facts in its breach

4

of contract claim for there to be a possibility that it could prove that counter-defendants acted

5

unfairly].”)

6

Should the Court find that Yelp’s alleged conduct does not qualify as extortion, Yelp’s

7

manipulative and retaliatory conduct is precisely the type of activity the “unfair” prong of the

8

UCL was intended to encompass. See, e.g., Cel-Tech, 20 Cal. 4th at 181 (“When a scheme is

9

evolved which on its face violates the fundamental rules of honesty and fair dealing, a court of

10

equity is not impotent to frustrate its consummation because the scheme is an original one”)

11

(internal quotations omitted).

12

Although the Court’s Order found that the SAC’s allegations did not “allege beyond a

13

speculative level that Yelp’s actions threaten competition and there are no allegations from

14

which the Court could reasonably infer that Yelp is materially tilting the economic playing field

15

in favor of plaintiffs’ competitors,” (Order, 20:1-4), the TAC contains new facts adequate to

16

show a threat to competition. See TAC ¶78 (when Wheel Techniques asked why a competitor,

17

known for performing “shotty work” had five stars, Yelp told him that it was because his

18

competitor advertised and that “we work with your reviews if you advertise with us.”)

19

The remaining issue in the Order was the Court found that it was impossible to “balance

20

the harms to plaintiffs against the benefits to Yelp” because the Court was not able to attribute

21

the appearance and disappearance of reviews to Yelp’s conduct and plaintiffs weren’t able to

22

quantify the extent to which they were harmed. Order, 20:4-9. Plaintiffs respectfully submit that

23

the balancing inquiry required to determine whether a business practice is unfair is generally a

24

factual inquiry and cannot be made on the pleadings. As a court in this district explained,

25

“California courts, have noted that the determination of whether a business practice is unfair is

26

one of fact which requires a review of the evidence from both parties and often cannot be made

27

solely on the pleadings.” Ferrington v. McAfee, Inc., 2010 WL 3910169 at * 13 (N.D. Cal. Oct.

28
19
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

5, 2010). Accordingly, the fact that Plaintiffs do not quantify the precise extent of their harm in

2

the pleadings does not mean they will not be able to calculate their harm and prove a claim for

3

unfair competition. See id. (denying defendant’s motion to dismiss plaintiff’s claim under unfair

4

prong of UCL because plaintiffs may be able to show that “deception was unscrupulous and

5

causes injury to consumers which outweighs its benefits”).

6

D. Plaintiffs Adequately Alleged Claims for Attempted Civil and Civil Extortion

7

Over recent years, several federal courts have ruled that a claim for civil extortion and

8

attempted civil extortion exists in California. See Monex v. Deposit Co. v. Gilliam, 680 F. Supp.

9

2d 1148, 1155-56 (C.D. Cal. 2010) (“The Court has previously held in this case that a claim for

10

attempted extortion is implied from California Penal Code sections 523 and 519” and explaining

11

elements that must be shown for a civil tort action); Padgett v. City of Monte Sereno, No. C 04-

12

03946 JW, 2007 WL 878575 at *1 (N.D. Cal. March 20, 2007) (plaintiff alleged claim for civil

13

extortion); Hisamatsu v. Niroula, No. C-07-04371-JSW (EDL), 2009 WL 4456392 at *5 (N.D.

14

Cal. Oct. 22, 2009) (construing claim in second amended complaint as civil extortion and stating

15

that it was adequately alleged). In so doing, “[c]ourts have relied on the definition and elements of

16

the criminal code to analyze civil extortion claims.” See Hisamatsu, 2009 WL 4456392 at *5. As

17

noted by a court in this district, “California has long recognized a claim of ‘civil extortion.’” Id.

18

As explained above, Plaintiffs have adequately alleged the required elements for extortion

19

under the California Penal Code, including that there was an implied threat by Yelp. See infra

20

Section III.C.2.a. Accordingly, they have adequately alleged claims for civil extortion and

21

attempted civil extortion. See Hisamatsu, 2009 WL 4456392 at *5.

22
23

E. Yelp is Not Immune From Plaintiffs’ Claims under the CDA
The Court previously ruled that Yelp is not immunized under the CDA as to Plaintiffs’

24

allegations that relate to “Yelp’s own alleged postings, from statements made by its ad

25

salespersons, or from Yelp’s deliberate manipulation of customer reviews.” Order, 15:19-21. The

26

Court also found that Plaintiffs’ allegations that Yelp manufactured negative reviews is

27

“potentially actionable, because Yelp, and not some third-party, is the alleged provider of such

28
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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

content.” Order, 15:25-27. And likewise, the Court found that “plaintiffs’ fourth theory of

2

purported threats – its representations that it could manipulate reviews in favor of advertisers – are

3

also actionable.” Order, 16:2-3. Finally, the Court found that “[u]nder the theory of extortion

4

proffered by plaintiffs, Yelp’s removal of positive user reviews certainly was not in good faith and

5

other courts have denied motions to dismiss on the basis of CDA immunity in these

6

circumstances.” Order, 16:24-27. Crucially, the only category of Plaintiffs’ allegations that the

7

Court found to be immunized under the CDA was “to the extent the extortion claim [was]

8

premised on Yelp’s failure to remove negative reviews.” Order, 14:25-27. Plaintiffs revised the

9

TAC accordingly and do not allege that that Yelp’s wrongdoing stemmed from its failure to

10
11

remove negative third-party reviews.
Despite the Court’s clear ruling that there is no immunity, Yelp tries to again assert it is

12

immune from liability for any alleged extortionate actions because of the CDA. The relevant

13

allegations in the TAC are that 1) Yelp removed positive reviews thereby changing the overall

14

star rating, immediately after plaintiffs declined to purchase advertising or terminated their

15

advertising contracts [TAC ¶¶49, 66, 90]; 2) Yelp manufactured its own negative reviews of

16

Plaintiffs’ businesses [TAC ¶¶ 67, 69, 74-77, 82]; 3) Yelp told Plaintiffs that paying for

17

advertising would impact Plaintiffs’ overall star ratings and represented that its employees have

18

the ability to remove reviews [TAC ¶78, 91, 99]; and 4) Yelp manipulates reviews, including the

19

order of reviews, depending on whether a business advertises [see, e.g., TAC ¶¶80-81].

20

As the Court found before, those allegations do not immunize Yelp under the CDA. See,

21

e.g., Hy Cite Corp. v. Badbusinessbureau.com, L.L.C., 418 F.Supp.2d 1142, 1149 (D. Ariz. 2005)

22

(CDA immunization argument “ignores Plaintiff’s allegations that wrongful content appears on

23

the Rip-off Report website in editorial comments created by Defendants and titles to Rip-off

24

Reports” and allegation that defendants “produce original content contained in the Rip-off

25

Reports.”); Kruska v. Perverted Justice Foundation Incorporated.Org, No. CV-08-00054-PHX-

26

SMM, 2010 WL 4791666 at *5 (D. Ariz. Nov. 18, 2010) (allegations that defendant contributed

27

content to website and that defendant worked in collusion to post and repost materials about

28
21
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

plaintiff sufficient to avoid CDA immunity); Anthony v. Yahoo! Inc., 421 F.Supp.2d 1257, 1263

2

(N.D. Cal. 2006) (allegations that Yahoo created false online dating profiles and sent profiles of

3

former subscribers to current members not protected under CDA).

4

To support its second attempt to avoid liability, Yelp reiterates its prior arguments and

5

relies upon two additional cases, Asia Economic Institute v. Xcentric Ventures, LLC, No. CV 10-

6

01360 SVW (PJWx) 2011 WL 2469822 (C.D. Cal. May 4, 2011) and A-1 Technology, Inc. v.

7

Madegson, No. 150033/2010 at * 9 (N.Y. Sup. Ct. June 22, 2011). Neither of these cases is

8

directly on point and the Court’s prior ruling should stand.

9

Unlike this case, the Asia Economic Institute plaintiffs did not contend that defendants

10

created or altered the content of the reports. Rather, the claim was that defendants created various

11

HTML coding which plaintiffs alleged had the effect of making the reports more visible in Google

12

search results and was tantamount to altering the content. 7 Asia Econ. Inst., 2011 WL 2469822 at

13

*6. The Asia Economic Court disagreed. Id. The A-1 Technology, Inc. decision dealt with

14

defamation claims. In that case, a New York state trial court – relying on recent New York State

15

Court of Appeals authority that the CDA bars actions for defamation when the website provider

16

exercises traditional editorial control – held that the fact that Xcentric took compensation in

17

exchange for removing postings did not constitute an exception to the defamation bar under the

18

CDA. See id. at *10. A-1 Technology is inapposite to the instant case because there are no

19

defamation claims and the allegations aren’t that there was an arms-length buy-sell transaction, but

20

rather that Yelp engaged in extortion. Nor does the A-1 Technology case have any bearing on

21

Plaintiffs’ allegations here that Yelp drafted the content of reviews.

22

Yelp again seeks protection under the editorial function exception to the CDA under

23

Section 230(c)(2) when it argues that Plaintiffs’ “fail to plead that Yelp’s removal of reviews was

24

made in an ‘absence of good faith.’” Yelp’s MTD, 18:24-25. Section 230(c)(2) provides that an

25

interactive service provider will not be held liable for good faith actions which “restrict access to

26
7

27
28

Plaintiffs also contended that defendants modified the reports’ titles, however, the Court
found that because of the information provided on the site, “users thus know precisely how the
titles of their submissions will appear before posting.” Id. at *7.
22
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

or availability of materiality that the provider or user considers to be obscene, lewd, lascivious,

2

filthy, excessively violent, harassing, or otherwise objectionable . . . .” But here, Plaintiffs are not

3

challenging Yelp’s restriction of access to information and any purported pleading requirements

4

under Section 230(c)(2) are inapplicable. See, e.g., Holomaxx Technologies v. Microsoft Corp.,

5

No. CV-10-4924 JF, 2011 WL 865278 (N.D. Cal. March 11, 2011) (challenging whether email

6

spam filtering was done in good faith and protected under CDA); Holomaxx Technologies v.

7

Yahoo! Inc., No. CV-10-4926-JF, 2011 WL 865794 (N.D. Cal. March 11, 2011) (same).

8
9

Regardless, the fact that Plaintiffs have alleged that Yelp intentionally manipulated and
developed its own content to attempt to extort money from Plaintiffs is plainly sufficient to

10

demonstrate an absence of good faith. In fact, the Court’s Order reached this conclusion as well

11

when it stated “[u]nder the theory of extortion offered by plaintiffs, Yelp’s removal of positive

12

user reviews certainly was not in good faith . . . ” Order, 16:24-26 (emphasis added). There can

13

be no question that Plaintiffs have met the pleading standard to demonstrate that Yelp may be held

14

liable under the CDA.

15
16
17

F. Plaintiffs’ Claims Should Not be Dismissed or Stricken
1. It is Improper to Dismiss Plaintiffs’ Claims
There is no basis for dismissing or striking Plaintiffs’ claims because, as set forth above,

18

the named Plaintiffs have standing under Article III and thus their class claims should survive.

19

Moreover, because Plaintiffs have adequately pleaded claims under the UCL and for civil

20

extortion and attempted civil extortion, the TAC should not be dismissed.

21

2.

Plaintiffs Have Alleged Sufficient Subclasses

22

Defendant’s request that the Class allegations be dismissed and/or stricken is premature

23

and without merit. Plaintiff’s subclass definitions are sufficient because the subclass members

24

will be readily identifiable from Defendant’s electronic records. To identify the members of each

25

subclass, one would simply need to determine which class members Yelp communicated with

26

regarding advertising (likely traceable through Yelp), which reviews Yelp manipulated in a

27

manner that did not comply with the Review Terms (traceable through electronic data), and which

28
23
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

Sponsor class members paid Yelp for advertising thereafter (also tracked through Yelp records).

2

Accordingly, Defendant’s contention that Plaintiffs failed to allege an ascertainable class because

3

individual issues predominate lacks merit.

4

Defendant’s argument that the TAC’s allegation that a group of Yelp sales employees were

5

terminated – after this lawsuit was filed – because of scamming related to advertising in no way

6

defeats Plaintiffs’ class allegations. In fact, if there was a policy of “scamming” amongst Yelp

7

employees, as alleged by Plaintiffs, and because of this lawsuit Yelp suddenly attempted to

8

eliminate those employees and end that conduct, Plaintiffs would certainly still be able to certify a

9

class (even if limited in time) once discovery took place. 8

10

Defendant argues that the class allegations are deficient because the class involves

11

businesses and persons who were in contact with Yelp regarding the option to advertise regardless

12

of whether Yelp made an unlawful threat or the class members felt fear or purchased advertising

13

because of Yelp’s threat. See MTD, 25. Defendant’s assessment, however, fails because the

14

subclasses are defined to include class members that were subject to Yelp’s manipulations, which,

15

are sufficient to constitute at a minimum attempted extortion, regardless of whether the class

16

member felt any fear or felt compelled to purchase advertising. Moreover, if Plaintiffs were to

17

define their class by a class member’s feeling of fear (which is unnecessary), it would necessitate

18

the types of individual inquiries that defeat class certification (i.e., each class member would need

19

to be asked if they experienced fear).

20

Finally, Defendant argues that Plaintiffs cannot satisfy the typicality requirement because

21

their claims are factually inconsistent. It is well-settled that class certification may be proper

22

“even though varying fact patterns support the claims or defense of individual class members or

23

there is a disparity in damages by the representative parties and other members of the class.”

24
25
26
27
28

8

See, e.g., Westways World Travel, Inc. v. AMR Corp., No. EDCV 99-386, 2005 WL
6523266 at *8 (C.D. Cal. Feb. 24, 2005) (stating that class certification claim on extortion is
“viable if it is susceptible to class-wide proof”) (citing George Lussier Enters., Inc. v. Subaru of
New England, Inc., 2001 WL 920060 at *17 (D.N.H. Aug. 3, 2001) (offering internal documents
showing plan to extort dealers and testimony of former employees regarding plan susceptible to
class certification)).
24
PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC

1

Schlagal v. Learning Tree, Int’l, No. 98-6384, 1999 WL 672306 at *3 (C.D. Cal. Feb. 23, 1999).

2

“Typicality refers to the nature of the claim or defense of the class representative, and not to the

3

specific facts from which it arose or the relief sought.” Ewert v. eBay, Inc., Nos. C-07-0219

4

RMW, C-07-04487 RMW, 2010 WL 4269259 at *3 (N.D. Cal. Oct. 25, 2010).

5

Plaintiffs allege facts common to each of them (and the class members): that Defendant

6

was in contact with Plaintiffs for advertising, that Defendant manipulated Plaintiffs’ reviews in a

7

way that did not comply with its Review Terms, and that the Sponsor Plaintiffs purchased

8

advertising. Plaintiffs need not show that class members relied on the same communications,

9

received the same reviews and ratings, or that they all did (or did not) purchase advertising. See

10

Ewert, 2010 WL 4269259 at *3 (“Under the rule's permissive standards, representative claims are

11

‘typical’ if they are reasonably co-extensive with those of absent class members; they need not be

12

substantially identical.”).

13

“Where, as here, it is not ‘plain from the pleadings’ that the class should not be certified,

14

discovery and full briefing on class certification is warranted.” Dodd-Owens v. Kyphon, Inc., No.

15

C06-3988, 2008 WL 410241 at *3 (N.D. Cal. Feb. 12, 2008) (citing Myers v. Medquist, Inc., No.

16

05-4608, 2006 WL 3751210 (D.N.J. Dec. 20, 2006) (declining to strike class allegations because

17

discovery had not yet commenced and noting that most courts deny motions to strike if brought

18

prior to discovery). For that reason, Defendant’s Motion to Dismiss and/or Strike Plaintiffs’ class

19

allegations should be denied.

20 IV.

CONCLUSION

21

For the foregoing reasons, Plaintiffs respectfully request that Defendant’s Motion to

22

Dismiss Third Amended Complaint and to Dismiss or Strike Class Action Allegations be denied

23

in its entirety.

24

DATED: September 2, 2011

25
26
27

ONGARO BURTT & LOUDERBACK LLP
By:

/s/ David R. Ongaro
David R. Ongaro

Attorneys for Plaintiffs
BORIS Y. LEVITT et al.

28
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PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS
Case No. CV 10-01321 EMC