yelp.jpgAt the moment, there are no negative reviews of San Francisco’s U.S. District Court on Yelp and it’s looking like it might stay that way because, last week Judge Marilyn Hall Patel dismissed a class action lawsuit against the popular business review site. While Patel has just handed Yelp a major victory, she left the door open for the plaintiffs to rewrite and refile their complaint.

The suit, which was the joining together of several similar individual cases against the company, involves ongoing allegations of extortion. The judge summarized the plaintiff’s allegations like this:

1) Yelp removed positive reviews, thereby changing the overall star rating, immediately after plaintiffs declined to purchase advertising or terminated their advertisingcontracts
2) Yelp maintained negative reviews even though the reviews violated Yelp’s Review Terms
3) Yelp manufactured its own negative reviews of plaintiffs’ businesses
4) Yelp stated that paying for advertising would help Plaintiff’s overall star rating because Yelp “tweaks” the ratings, “manually adds and removes reviews in its own discretion” and its employees have the ability to remove reviews””

Patel ruled that there was little physical evidence of Yelp’s “implied extortion,” rendering the plaintiff’s charges entirely speculative. Additionally, she found that the complaint of one of the named plaintiffs in the case, Cats & Dogs Animal Hospital, that “offers of favorable treatment in exchange for ad purchases are not the equivalent of an extortionate threat of harm.”

Yelp recently won a similar case filed by a New York dentist who was peeved at the company because, after he complained about a negative review of his office, Yelp allegedly removed most of his practice’s positive reviews when he refused their subsequent solicitation to advertise on the site.

The Yelp review page of Yelp itself is a perfect encapsulation of the controversy surrounding the increasingly influential website. While, on one hand, there are a lot of positive comments from users thanking the service for helping them find a dentist or a bar with more/fewer hipsters, there’s also a litany of irate comments complaining about deleted reviews and pushy sales people. Not to mention a requisite non-sequitur dig at Yelp employees’ fashion sense–quoth one reviewer, “I’ve seen more stylish people at stripey shirt night at Digby’s Sport’s Bar in Vacaville.”

Grumbling had been slowing brewing over the company’s business practices for years, but the controversy exploded into the mainstream after a 2009 East Bay Express cover story accused the company of a widespread, systematic pattern of threatening small business owners with bad reviews that could hurt them economically if they didn’t buy advertising.

Yelp has vigorously defended themselves against these claims and has gone to some lengths to try write off what many view as extortion as a combination of a highly motivated sales force and a review filtering system that often throws out legitimate reviews in the name of quality control.

Here’s a helpful video explaining Yelp’s review filtering process that seems to be aimed at 5-year olds.

There are really two issues at hand here. First, Yelp appears to be in a position of power over small businesses, who can’t opt out of being reviewed even if they want to–Yelp covers everything one of its legion of reviewers feel is worthy of coverage. Even if they don’t go into ad sales with the explicit intention of acting like nerdy versions of Tony Soprano, an element of extortion could reasonably be perceived by some, because Yelp simultaneously seems to hold a small business’s fate in their hands while hitting up said small businesses for cash.

Second, both many reviewers and their subjects feel that (despite the video mentioned above) there’s a lack of transparency on Yelp’s part as to how their system operates–why certain reviews float to the top of a given business’s page or why certain comments, be they positive or negative, seem to “mysteriously” disappear with disconcerting regularity.

According to a Yelp-released statement on the dismissal of the suit, since the first lawsuit was filed in February 2010, Yelp’s monthly traffic has nearly doubled from 28 million monthly visitors to 50 million.

The plaintiffs in the case still have 30 days to refile their suit. Will they refile, this time with enough evidence of extortion to please a judge? Attorneys for the plaintiffs didn’t respond to our calls by publication, but if we hear back we’ll let you know.

Photo: Yelp

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