I support statutes that restrict businesses from contractually “gagging” their customers’ reviews. This pernicious business practice emerged around 15 years ago. Eventually, both state legislatures and Congress banned the practice. The flagship law in this area is the Consumer Review Fairness Act, enacted by Congress in 2016. My primer on that law. California enacted a similar law, Civil Code 1670.8, informally called the “Yelp Law” (as in, it protected consumers’ rights to post reviews on Yelp).
1670.8 is a good law, but a group of plaintiff lawyers are weaponizing it through overly tendentious readings of the law and various TOSes. (A reminder of the omnipresent risks of creating private rights of action). Their efforts have not been going well. At this point, the plaintiffs are arguing that their claims belong in state court because their allegations are too weak to support Article III standing for federal court. That’s a litigation strategy, I guess.
Given that track record of futility, it’s surprising to see any of these cases gain any traction at all. But the plaintiffs found a judge who gave them enough benefit of the doubt to survive a motion to dismiss.
The plaintiffs are suing Amazon and related entities for this provision in Amazon’s TOS:
Amazon’s trademarks and trade dress may not be used…in any manner that disparages or discredits Amazon.
There are a few problems with this language. First, it’s unnecesary. Amazon could just as easily say that the TOS doesn’t grant any trademark licenses to use the trademarks at all, whether that’s for disparagement or celebration. Second, the term “use” is ambiguous. Is in the trademark sense or a colloquial sense? If it’s in the trademark sense, then it doesn’t restrict consumers’ reviews at all because such reviews don’t “use” the trademark (i.e., the not-as-a-mark doctrine). The court’s overreading is apparent from this example:
consider a disgruntled Amazon shopper who uploads a negative post on Instagram disparaging the speed of Amazon’s delivery or the sufficiency of its return policies. The shopper in this hypothetical scenario would have “used any Service” as that phrase is used in the Amazon Conditions of Use, and thus be potentially covered under the challenged language if their post includes Amazon’s name or logo “in [a] manner that disparages or discredits Amazon.”
The Instagram post doesn’t “use” the “trademark” in the trademark sense. Amazon could have worded this provision better (or deleted it entirely), but to a trademark nerd, Amazon’s intent is clear.
Third, later in the TOS, Amazon says it “permits customers to ‘post reviews, comments, photos, videos and other content’ [“both favorable and unfavorable”] about Amazon or its products and services….” This is an odd provision because consumers don’t need Amazon’s permission at all to write their reviews; indeed, the CRFA and state law equivalents make it clear that Amazon has no permission to give. Amazon’s TOS would have benefited from a critical reread to think of how plaintiffs’ lawyers could minsterpret the contract to claim 1670.8 violations; but I also think it’s clear this lawsuit is going to fail eventually.
The court rejects Amazon’s motion to dismiss, saying that the trademark use restriction “is—at least on its face—arguably a violation of the Yelp Law [because] users are ostensibly required to waive their rights to make certain negative statements regarding Amazon concerning its goods or services.” (As I mentioned, this is an obvious misreading of the provision). The court also says Amazon’s permission to write reviews may conflict with the trademark restriction, another misreading. Thus:
the Court is left with two competing interpretations of the Conditions of Use. Neither interpretation is absurd, and both interpretations have support in the text of the relevant provisions. Therefore, at this point, the Court must conclude that the terms of the Conditions of Use are ambiguous and will require further exegesis by reference to external evidence, custom and usage, and other interpretive techniques not suitable for determination as a matter of law on a Rule 12 motion
Amazon makes two last-ditch arguments. First, it claims the Yelp Law conflicts with Section 230. It’s dangerous for Amazon to play around with Section 230 like this, and it doesn’t work. The court says “the blanket prohibition on statements that ‘disparage or discredit’ is not limited to statements posted on Amazon’s website,” [FN] and the court thinks “there would be no legal basis for Section 230 to immunize Amazon for censoring posts made outside its online ecosystem.” I’m not sure this is a correct recapitulation of Section 230, but Amazon’s twisting of Section 230 is also troubling.
[FN: the court says that the statute permits Amazon to engage in content moderation on its site.]
Finally, Amazon argues that the First Amendment applies here. The court conclusorily responds: “the First Amendment rights of Amazon are not implicated by a law that prohibits a commercial entity from contractually limiting the speech of its customers in third-party sites.” This may be true, but it deserves more than a single sentence of “analysis.”
Case Citation: Ramos v. Amazon.com, Inc., 2024 WL 4882638 (C.D. Cal. Nov. 25, 2024)
BONUS: Klairen v. Amazon.com, Inc., 2024 WL 4881438 (M.D. Pa. Nov. 25, 2024): “The plain text of the CDA does not establish a private right of action.” [Reminder: it’s unclear if there is a private right of action for violations of 230(d)].