Yelp (NYSE: YELP) is urging the Ninth U.S. Circuit Court of Appeals to block a lawsuit filed by Texas Attorney General Ken Paxton, accusing the company of publishing misleading notices on its online platform about crisis pregnancy centers. These centers, which aim to discourage abortion, have become the subject of controversy due to Yelp’s review site comments.
Yelp’s legal counsel, James Sigel, presented the company’s case before a three-judge panel on Wednesday, arguing that Paxton’s lawsuit is an improper and retaliatory action. Sigel described the lawsuit as a prime example of an attorney general engaging in bad faith by targeting Yelp for political reasons. He emphasized that federal courts should intervene in such cases, as Paxton’s actions represent an abuse of legal power.
Despite Yelp’s argument, U.S. District Judge Trina Thompson, based in Oakland, California, previously dismissed claims that Paxton was acting in bad faith. Judge Thompson found insufficient “concrete evidence” to support the accusation. Sigel, however, contested this decision, asserting that Yelp should have been allowed to conduct further discovery into Paxton’s motivations.
On the other hand, Lanora Pettit, representing Paxton, argued that it was Yelp’s responsibility to prove bad faith, and that mere speculation about the attorney general’s intentions should not justify federal intervention. Pettit further claimed that Yelp had not provided enough evidence to support its allegations.
The legal conflict began in September 2023, when Yelp preemptively filed a lawsuit in federal court in Oakland after learning that Paxton planned to sue the company. The dispute centers on the notices Yelp posted on its platform, which warn users that crisis pregnancy centers may not offer complete medical services and could be misleading. Paxton asserts that these notices violate Texas’ consumer protection laws, accusing Yelp of misleading the public.
Though Yelp initially faced legal challenges in Texas state court, a judge dismissed Paxton’s lawsuit, allowing Yelp to continue its operations. However, Paxton has filed an appeal in an attempt to revive the case. The appeals court hearing, scheduled for Wednesday, explored whether federal courts should intervene in state matters of this nature.
The case highlights the delicate balance between state consumer protection laws and corporate rights to free speech. Yelp asserts that it is merely providing transparency on its platform, while Paxton’s office believes the company’s actions undermine consumer protection laws intended to prevent misleading advertising practices.
Crisis pregnancy centers, typically offering counseling services to pregnant women, have come under scrutiny for not fully disclosing their anti-abortion stance. In response to Paxton’s objections, Yelp initially revised its notice language in February 2023, clarifying that these centers “do not offer abortions or referrals to abortion providers.” Paxton acknowledged that the updated language was accurate, but the legal battle continues over Yelp’s role in facilitating public reviews of these centers.
The Ninth Circuit judges, all appointed during President Trump’s administration, appeared divided over Yelp’s request. Circuit Judge Daniel Bress expressed concerns that granting Yelp’s appeal could open the floodgates for similar lawsuits against state attorneys general. However, Judge Mark Bennett raised the question of whether federal courts could step in to stop a politically motivated prosecution, with Pettit conceding that such intervention might be warranted in extreme cases, though she argued it was not necessary here.
As the case proceeds, it raises significant questions about the intersection of state legal authority, corporate expression, and the public’s right to informed choice. Yelp remains committed to providing its users with accurate and transparent information, while Paxton continues to defend Texas’ consumer protection laws.
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