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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1 2 3 4 5 6 7 8 9 10 LAWRENCE D. MURRAY, State Bar No. 77536 NOAH W. KANTER, State Bar No. 224580 MURRAY & ASSOCIATES 1781 Union Street San Francisco, CA 94123 Telephone: (415) 673-0555 Facsimile: (415) 928-4084 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: (415) 433-3900 Facsimile: (415) 433-3950 Attorneys for Plaintiffs BORIS Y. LEVITT et al. UNITED STATES DISTRICT COURT 11 NORTHERN DISTRICT OF CALIFORNIA 12 SAN FRANCISCO DIVISION 13 14 15 BORIS Y. LEVITT, on behalf of himself and all others similarly situated, Plaintiffs, 16 17 18 19 v. YELP! INC.; and DOES 1 through 100, inclusive, Defendants. 5 3 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 20 21 22 Date: October 14, 2011 Time: 1:30 p.m. Place: Courtroom 15 Judge: Hon. Edward M. Chen 23 24 25 26 27 28 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC TABLE OF CONTENTS 1 2 I. INTRODUCTION .............................................................................................................. 1 3 II. STATEMENT OF FACTS................................................................................................. 1 4 A. Yelp Background ....................................................................................................... 1 5 B. Class Allegations ....................................................................................................... 3 6 C. Plaintiffs’ Experiences with Yelp ............................................................................. 3 7 D. The Court’s Order on Yelp’s Prior Motion to Dismiss ............................................. 5 8 E. Plaintiffs’ Attempts to Commence Discovery .......................................................... 7 9 III. ARGUMENT ..................................................................................................................... 7 10 A. Legal Standards ......................................................................................................... 7 11 B. Plaintiffs Have Article III Standing .......................................................................... 8 12 1. Plaintiffs’ Standing Is Not Affected By Yelp’s Evidence............................. 8 13 2. Plaintiffs Should be Permitted to Conduct Limited Discovery ................... 11 14 C. Plaintiffs Have Properly Stated a Claim for Unfair Competition ........................... 12 15 1. The Law of the Case Doctrine..................................................................... 12 16 2. Plaintiffs Adequately Alleged Unfair Competition Claims ........................ 13 17 a. Unlawful Conduct ........................................................................... 13 18 b. Yelp’s Conduct Constitutes an Implied Extortionate Threat .......... 14 19 c. Unfair Conduct ................................................................................ 17 20 D. Plaintiffs Adequately Alleged Claims for Attempted Civil and Civil Extortion .... 20 21 E. Yelp is Not Immune From Plaintiffs’ Claims under the CDA ................................ 20 22 F. Plaintiffs’ Claims Should Not be Dismissed or Stricken ........................................ 23 23 1. It is Improper to Dismiss Plaintiffs’ Claims................................................ 23 24 2. Plaintiffs Have Alleged Sufficient Subclasses ............................................ 23 25 IV. CONCLUSION ................................................................................................................ 25 26 27 28 i PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC TABLE OF AUTHORITIES 1 2 Cases 3 A-1 Technology, Inc. v. Madegson No. 150033/2010 at * 9 (N.Y. Sup. Ct. June 22, 2011) .............................................................. 22 4 5 Anthony v. Yahoo! Inc. 421 F.Supp.2d 1257 (N.D. Cal. 2006) ........................................................................................ 22 6 Asia Economic Institute v. Xcentric Ventures, LLC No. CV 10-01360 SVW (PJWx) 2011 WL 2469822 (C.D. Cal. May 4, 2011) .......................... 22 7 8 Barquis v. Merchants Collection Ass’n. 7 Cal. 3d 94 (1972) ...................................................................................................................... 17 9 Bell Atl. Corp. v. Twombly 550 U.S. 544 (2007) ...................................................................................................................... 7 10 11 Camacho v. Automobile Club of Southern California 142 Cal. App. 4th 1394 (2006) .................................................................................................... 17 12 Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co. 20 Cal. 4th 163 (1999)........................................................................................................... 17, 19 13 14 Chandler v. State Farm Mut. Auto. Ins. Co. 598 F.3d 1115 (9th Cir.2010) ........................................................................................................ 7 15 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 16 17 Dodd-Owens v. Kyphon, Inc. No. C06-3988, 2008 WL 410241 at *3 (N.D. Cal. Feb. 12, 2008) ............................................. 25 18 Durell v. Sharp Healthcare 183 Cal. App. 4th 1350 (2010) .................................................................................................... 13 19 20 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 21 Farr v. United States 990 F.2d 451 (9th Cir. 1993) ................................................................................................... 9, 11 22 23 Ferrington v. McAfee, Inc. 2010 WL 3910169 at * 13 (N.D. Cal. Oct. 5, 2010) ................................................................... 20 24 Friends of the Earth, Inc. v. Laidlaw Envtl. Serv. 528 U.S. 167 (2000) ...................................................................................................................... 8 25 26 George Lussier Enters., Inc. v. Subaru of New England, Inc. 2001 WL 920060 at *17 (D.N.H. Aug. 3, 2001)......................................................................... 24 27 GreenPeace, Inc. v. State of France 946 F. Supp. 773 (C.D. Cal. 1996) .............................................................................................. 11 28 ii PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 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 28 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Schlagal v. Learning Tree, Int’l No. 98-6384, 1999 WL 672306 at *3 (C.D. Cal. Feb. 23, 1999) 25 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 21 Statutes 22 18 U.S.C. § 1951(b)(2) .................................................................................................................... 14 23 California Business & Professions Code § 17200 ................................................................ 1, 13, 19 24 California Penal Code § 518 ..................................................................................................... 13, 14 25 California Penal Code § 519 ............................................................................................... 13, 14, 20 26 California Penal Code § 523 ............................................................................................... 13, 14, 20 27 California Penal Code § 524 ..................................................................................................... 13, 14 28 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 Rules 2 Rule 12 .......................................................................................................................................... 7, 8 3 Rule 23 ...................................................................................................................................... 1, 7, 8 4 5 6 7 Other Authorities Communications Decency Act .......................................................................................................... 6 Hobbs Act .................................................................................................................................. 13, 14 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 I. INTRODUCTION Plaintiffs Boris Y. Levitt, d/b/a Renaissance Restoration, a/k/a Renaissance Furniture 2 3 Restoration (“Levitt”), Cats and Dogs Animal Hospital, Inc. (“Cats and Dogs”), Tracy Chan, d/b/a 4 Marina Dental Care, a/k/a Marina Dental Care (“Chan”) and John Mercurio d/b/a Wheel 5 Techniques (“Wheel Techniques”) on behalf of themselves and all others similarly situated, filed 6 a class action Third Amended and Consolidated Complaint (“TAC”) against Defendant Yelp! Inc. 7 (“Yelp” or “Defendant”) for a violation of Business and Professions Code section 17200, civil 8 extortion and attempted civil extortion. Defendant now moves to dismiss this case and to strike or 9 dismiss the class allegations. Plaintiffs were previously found to have standing and have adequately alleged and 10 11 submitted facts sufficient to support Article III standing. Plaintiffs have stated claims under 12 California’s Unfair Competition Law and for civil and attempted civil extortion. They bring their 13 claims on behalf of an ascertainable class and satisfy Rule 23. 14 Defendant’s motion should be denied in its entirety. 15 II. STATEMENT OF FACTS 16 A. Yelp Background 17 Yelp is a review website, which allows users to post reviews and rate businesses. TAC ¶2. 18 Users post reviews and assign a star rating with one star being the lowest and five stars being the 19 highest rating. Id. Yelp then assigns the business an overall star rating based on some of the user 20 reviews. Id. Yelp draws over 25 million people each month, who can search the public ratings of 21 businesses and/or post their own reviews. Id. Yelp claims that its website is “Real People. Real 22 Reviews” and that Yelp will only remove user reviews under certain circumstances, including 1) 23 when Yelp’s automated filter suppresses the review; 2) when the review violates the Yelp Terms 24 of Service or Content Guidelines; or 3) when the user removes the review (“Review Terms”). 1 25 TAC ¶¶3, 6. 26 27 28 1 “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 1 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 Despite these representations, Yelp does not comply with its own Review Terms. TAC ¶7. 2 Instead, Yelp actively manipulates the reviews of users to coerce businesses to purchase 3 advertising. Id. Yelp uses several approaches to effectuate its extortionist conduct and obtain its 4 desired advertising revenues. Each approach is firmly rooted in Yelp’s understanding that a 5 business’s reputation and revenues are often tied to rating-based websites like Yelp. TAC ¶¶8, 24. 6 To instill fear in a business and coerce it to pay for advertising, Yelp controls a business’s 7 overall star rating primarily by manipulating the reviews contrary to Yelp’s own policies and 8 representations. TAC ¶¶34-35, 37, 38, 40. This can occur several ways. Yelp may manipulate 9 which user reviews are filtered (essentially suppressed from general public view and not 10 considered as part of the star rating), which affects and controls the business’s overall star rating. 11 Id. at ¶40. Yelp may refuse to remove reviews that violate its own Review Terms, which affects 12 and controls the business’s overall star rating. Id. Yelp may represent to a business that it has the 13 ability to remove reviews, which would affect and control the business’s overall star rating. 14 Finally, Yelp may generate and post false negative reviews for the business which directly 15 affects and controls the business’s overall star rating. Id. The owner of plaintiff Wheel 16 Techniques was told that a former Yelp employee stated that Yelp terminated a group of sales 17 employees around the time that this and similar lawsuits were filed as a result of scamming related 18 to advertising. TAC ¶82. Plaintiff also was told that Yelp froze the computers of sales employees 19 to prevent those employees from being able to change reviews. Id. Yelp also generated content 20 through agents. Yelp’s CEO, Jeremy Stoppelman, admitted that Yelp did generate reviews and 21 that it paid users to generate and post those reviews. TAC ¶38. Not only did Yelp pay users to 22 create content, but in 16 cities, Yelp also maintains community managers who are “encouraged to 23 review.” Id. 24 Each of Yelp’s approaches revolves around unfair rating changes, which businesses fear 25 because of the corresponding loss of customers and revenue. TAC ¶¶8, 10. Yelp capitalizes on 26 this fear by both implicit and explicit threats that if the business does not pay for advertising, its 27 portions of Yelp’s website, as suggested by Yelp’s treatment in its motion and the exhibits submitted by its declarants. 28 2 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 overall star rating and reviews will decline. Id. 2 B. Class Allegations 3 Plaintiffs seek to represent the following subclasses of Non Sponsors (those whose reviews 4 Yelp manipulated, but who did not purchase advertising) and Sponsors (those whose reviews Yelp 5 manipulated and who thereafter purchased advertising). See TAC ¶ 109(a)-(b). 6 Non Sponsors are defined as: 7 [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. 8 9 10 11 Id. 12 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. 13 14 15 16 17 Id. 18 C. Plaintiffs’ Experiences with Yelp 19 Non Sponsor Plaintiff Levitt 3 was contacted by a Yelp sales representative in July 2009 20 21 22 23 24 25 26 27 28 asking Levitt to purchase advertising. TAC ¶¶46-47. Subsequently, Levitt declined the offer. 2 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. 3 / For purposes of this motion only, Plaintiffs’ experiences with Yelp are only addressed summarily, due to page constraints. 3 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 TAC ¶47. Just two days after Levitt declined Yelp’s advertising solicitation, all but one of his top- 2 rated 5 star reviews was removed from his public Yelp review page. TAC ¶49. Yelp’s action 3 caused Levitt’s overall star rating to plummet to 3.5 stars. TAC ¶¶ 47-49. Yelp’s manipulation 4 caused Levitt to have significantly reduced customer interest in his business (his Yelp page was 5 reviewed only 158 times as opposed to 261 times the previous month). TAC ¶ 49. And Levitt’s 6 monthly business income declined accordingly. TAC ¶49. Yelp continued its unfair conduct by 7 restricting Levitt’s searchable business category designations from multiple categories to just one 8 category. TAC ¶53. 9 In September 2009, a Yelp sales representative began calling Non Sponsor Plaintiff Cats 10 and Dogs and promised to manipulate its reviews if Cats and Dogs purchased advertising. TAC ¶¶ 11 58-61. Not even one week after Cats and Dogs declined to purchase advertising, Yelp posted 12 multiple negative reviews. TAC ¶¶66-68. One of these negative reviews had been removed 13 before because it violated Yelp’s Review Terms. TAC ¶60-61, 66. Plaintiff alleges that the other 14 new negative reviews were manufactured by Yelp or its agents. TAC ¶69. Yelp’s conduct caused 15 Cats and Dogs reputational harm, a loss in customers, page views, sales, business revenues and 16 assets. TAC ¶71. 17 In May or June of 2008, Sponsor Plaintiff Chan was contacted by a Yelp sales 18 representative and offered the opportunity to advertise. TAC ¶87. Yelp told Chan that Yelp 19 employees had the ability to remove reviews from a business’s review page. TAC ¶¶88, 91. In 20 August 2008, Chan declined to purchase advertising from the sales representative. TAC ¶89-90. 21 Within just two to three days after Chan declined to purchase advertising, Yelp removed nine top- 22 rating 5-star reviews from Chan’s Yelp review page. TAC ¶90. Yelp caused Chan’s overall star 23 rating to plunge from the highest 5 star rating to 3 stars. Id. Because Chan feared that Yelp would 24 continue to manipulate her public reviews (which Yelp admitted they could and would do), she 25 felt compelled to purchase advertising. TAC ¶¶92-93. Just days after Chan purchased advertising, 26 the 5 star reviews Yelp had removed were suddenly reinstated and Chan’s overall star rating rose 27 again. TAC ¶93. In October 2008, Yelp asked Chan to increase her advertising payments to 28 4 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 $500.00 per month. TAC ¶94. Instead, Chan cancelled her advertising contract, and Yelp then 2 removed positive reviews from her review page and replaced them with negative reviews. TAC 3 ¶95. Yelp’s conduct caused a decline in her overall star rating, the number of Chan’s new patients 4 declined as well as her revenues and business assets, and her reputation was harmed. TAC ¶¶101- 5 02. 6 In or around late 2008 and early 2009, Wheel Techniques began receiving calls from Yelp 7 representatives requesting that Wheel Techniques purchase advertising. TAC ¶¶74-76. Around 8 the same time period as it began receiving advertising calls, Wheel Techniques also began 9 receiving negative reviews on Yelp. TAC ¶¶74, 76. The negative reviews did not appear to be 10 written by actual customers of Wheel Techniques because Wheel Techniques had no records of 11 performing the reviewed work or the names of the reviewers who claimed they had visited the 12 shop. TAC ¶¶74-76. On March 8, 2010, Wheel Techniques was again contacted by Yelp for 13 advertising, which it declined, and within minutes a one-star review was moved to the top of 14 Wheel Technique’s Yelp review page replacing a five-star review that had previously been listed 15 at the top of the review page. TAC ¶¶79-80. Wheel Techniques alleges that Yelp employees or 16 individuals acting on behalf of Yelp manufactured the negative reviews that began appearing 17 when it declined to purchase advertising, and moved the one-star review to the top of its review 18 page after it declined to purchase advertising. TAC ¶¶77, 81. 19 Yelp’s conduct caused each of the named Plaintiffs’ overall Yelp star ratings to decline and 20 that resulted in a decrease in Plaintiffs’ customers, a loss of sales, revenues and assets, and 21 reputational injuries. TAC ¶¶55, 71, 83, 102. Sponsor Plaintiffs seek injunctive and restitution 22 relief for payments they made to Yelp due to its unlawful extortion and unfair conduct. TAC 23 ¶124-25. Non Sponsor Plaintiffs seek injunctive relief ordering Yelp to cease its UCL violations. 24 TAC ¶126-27. Sponsors and Non Sponsors seek damages and punitive damages for attempted 25 civil extortion and civil extortion. TAC ¶¶138-39, 145-46. 26 D. The Court’s Order on Yelp’s Prior Motion to Dismiss 27 On March 22, 2011, the Court issued an order on Yelp’s Motion to Dismiss the Second 28 5 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 Amended Class Action Complaint (“SAC”) and to Dismiss or Strike Class Allegations. See Dkt. 2 70 (“Order”). The Court found that Plaintiffs had alleged facts sufficient to establish Article III 3 standing and overruled Yelp’s standing and jurisdictional challenges. Order, 9:15-16. The Court 4 further found that Communications Decency Act (“CDA”) did “not provide Yelp blanket 5 ‘immunity’ from suit or in any way limit this court’s jurisdiction over Plaintiff’s claims.” Order, 6 11:6-7. In addition, the Court found that Plaintiffs had also alleged facts sufficient to satisfy the 7 UCL standing requirements. Order, 12:18-20. 8 With regard to Plaintiff’s UCL claim pleaded under the unlawful prong, the Court found 9 that under the CDA, the following alleged actions by Yelp were actionable: Yelp removed positive 10 reviews, thereby changing the overall star rating, immediately after plaintiffs declined to purchase 11 advertising or terminated their advertising contracts”; 2) “Yelp manufactured its own negative 12 reviews of plaintiffs’ businesses”; and 3) “Yelp stated that paying for advertising would help 13 Plaintiff’s overall star rating because Yelp ‘tweaks’ the ratings, ‘manually adds and removes 14 reviews in its own discretion’ and its employees have the ability to remove reviews.” Order, 15 14:14-22, 15:25-27; 16:2-4; 16:20-27. 16 Although Plaintiffs’ allegations were actionable under the CDA, the Court found that the 17 SAC didn’t allege sufficient facts to demonstrate that Yelp’s conduct amounted to an implied 18 extortionate threat because 1) it was speculative that Yelp manufactures its own reviews or 19 manipulates reviews of businesses who purchase advertising; 2) no distinct communication of a 20 threat could be inferred; and 3) the apparent correlations between Plaintiffs’ overall star ratings 21 and their advertising decisions only provided select snapshots of Plaintiffs’ overall star ratings. 22 Order, 17:6-10; 17:11-12; 17:20-23. 23 For Plaintiffs’ unfair prong UCL claim, the Court found that Plaintiffs didn’t allege facts 24 sufficient to show that they had 1) met the Cel Tech or South Bay tests; and 2) that the theory of 25 extortion as a theory of unfairness failed for the same reasons that the unlawful prong had not been 26 met. Order, 19:22-25; 19:25-27. Finally, the Court found it unnecessary to address the class 27 action allegations. Order, 20:22-23. 28 6 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC 1 E. Plaintiffs’ Attempts to Commence Discovery 2 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 1 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 20 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 25 PLAINTIFFS’ OPP’N TO MOTION TO DISMISS AND TO DISMISS OR STRIKE CLASS ALLEGATIONS Case No. CV 10-01321 EMC

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