The “Yelp” Bill impacts any entity or person doing business with consumers in California.
Those who are fans of writing product or service reviews for sites such as Yelp will be pleased that California law just made it much easier for them to do so. The state recently passed a new law that makes it unlawful to include nondisparagement clauses in consumer contracts. Nondisparagement clauses generally restrict individuals from making statements or taking any other action that negatively affects an organization, including its reputation, products, services, management, or employees.
The new law, codified at California Civil Code section 1670.8, which took effect January 1, specifically provides that “a contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.” It is also “unlawful to threaten or to seek to enforce a provision made unlawful under this section, or to otherwise penalize a consumer for making any statement protected under this section.”
The law includes a civil penalty not to exceed $2,500 for the first violation and $5,000 for the second and for each subsequent violation. In addition, for a willful, intentional, or reckless violation of the law, a consumer or public prosecutor may recover a civil penalty not to exceed $10,000.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:Silicon Valley