Yelp gives gives Judge Jon Tigar five stars!

On Wednesday, the user-generated review website won another court victory when the judge dismissed a lawsuit by a shareholder that claimed they lied about the quality of their reviews in order to inflate stock prices. According to Reuters, the judge says that any reasonable investor should have a "common-sense understanding of what it means for a website to host user-generated content" and know that not every review would be legit.

The lawsuit was filed last summer and accuses the company of posting "fraudulent reviews by reviewers who did not have first-hand experience" with businesses. The suit goes on to say that Yelp touted the quality of its service in order to pump up stock prices before reports came out that the FTC had received over 2,000 complaints their service. Before the stock's value dropped as a result of the reports, Yelp execs were able to make off with $80 million from sell-offs.

Yelp has long denied that they've extorted local businesses to suppress bad reviews, and the judge says the accusations were merely just that. The judge wrote:

The FTC complaints in this case... did not reveal any fraud to the market.

[T]he FTC complaints merely added more voices to the chorus accusing Yelp of manipulating reviews to encourage businesses to advertise. These voices were not sufficiently numerous or corroborative to establish the veracity of the accusations they contained

This is not to say the events alleged in any of the FTC complaints did not occur. But a reasonable investor during the class period was aware that some businesses maintained that Yelp tried to coerce businesses into advertising by manipulating reviews. To this day, Yelp continues to deny manipulating reviews in this manner, just as it did during the class period. The FTC complaints do not make liars out of Defendants, because they do not meaningfully alter the "total mix" of information available to the marketplace on the issue of whether Yelp manipulates reviews of businesses in connection with advertising.

As Eater points out, the FTC closed their investigation into Yelp's practices back in January and found nothing. In September, Yelp won another case that said they had the right to manipulate reviews.

The judge also found no basis to the claim that the sell-off by execs was anything "unusual."

Although the ruling is certainly a victory for Yelp, the plaintiff still has 30 days to amend his complaint.