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Governor signs "Yelp" bill. California law now precludes non disparagement clauses in consumer contracts

Governor Brown signed a bill known colloquially as the "Yelp! bill" into law.  The final law, and hot legislative pontificating, can be read here and below and is codified as Cal. Civ. Code § 1670.8.  The bill was a reaction to a Utah lawsuit by a couple who sued Kleargear.com after the company demanded $3,500 for an online review.  The classy people at Kleargear.com contended the online review violated a non disparagement clause and they retained a debt collector.   The Utah couple subsequently saw their credit score damaged.   The "Yelp!" bill does not effect Yelp!.  What it does is prohibit a company from inserting boilerplate into a contract precluding negative reviews of its products or services.   Such clauses are now void and unenforceable in California as a matter of law.  If the company threatens to enforce such a provision, it maybe liable up to $2,500 for the first violation and $5,000 for each subsequent violation.  If the acts are willful, intentional or reckless (how could they not be), then the violations can be up to $10,000.   Kristensen Weisberg, LLP represented Matt Brand, who an attorney in New York threatened with a defamation lawsuit for an opinion review on Yelp! that was not defamatory.   Gawker story.  Our office responded on behalf of Mr. Brand (read our correspondence) and the New York attorney refused to file an unmeritous claim against Mr. Brand. Can Yelp! be sued for defamatory reviews by others on its website? The short answer is no.  The Federal Communications Decency Act of 1996("CDA")  Section 230 of the CDA provides that immunity to interactive computer services, which Yelp! is.  However, users of Yelp! who post false defamatory statements are still liable.  The provider of the forum, Yelp!, is not liable pursuant to the CDA. Kristensen Weisberg, LLP will be filing a libel case in California Superior Court in the near future. Here is the Yelp! bill in its Codified Glory Cal. Civ. Code § 1670.8 (a)  (1)  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. (2)  It shall be 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. (b)  Any waiver of the provisions of this section is contrary to public policy, and is void and unenforceable. (c)  Any person who violates this section shall be subject to a civil penalty not to exceed two thousand five hundred dollars ($2,500) for the first violation, and five thousand dollars ($5,000) for the second and for each subsequent violation, to be assessed and collected in a civil action brought by the consumer, by the Attorney General, or by the district attorney or city attorney of the county or city in which the violation occurred. When collected, the civil penalty shall be payable, as appropriate, to the consumer or to the general fund of whichever governmental entity brought the action to assess the civil penalty. (d)  In addition, for a willful, intentional, or reckless violation of this section, a consumer or public prosecutor may recover a civil penalty not to exceed ten thousand dollars ($10,000). (e)  The penalty provided by this section is not an exclusive remedy, and does not affect any other relief or remedy provided by law. This section shall not be construed to prohibit or limit a person or business that hosts online consumer reviews or comments from removing a statement that is otherwise lawful to remove.

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