A federal judge won’t let Amazon use an arbitration clause to defeat a First Amendment class action alleging the online retail giant wielded its user agreement terms and conditions to block customers from sharing bad reviews about their experiences.
Judge Hérman Vera rejected Amazon’s motion to dismiss the complaint, as well as a remand effort from the six named plaintiffs.
The plaintiffs accused Amazon of violating California’s “Yelp Law” saying the company’s “Conditions of Use” prohibit federally protected speech and the law forbids any contracts in which a consumer waives their “right to make any statement” regarding a business.
The lawsuit traces its origins to state court in November 2023.
Amazon removed the complaint to federal court in January, leading to a March filing in which plaintiffs convinced the court to consolidate two related actions. The plaintiffs filed a consolidated class action in May. Amazon moved to dismiss in June and in July the plaintiffs asked for the issue to be sent back to state court.
In seeking a remand, Vera explained, the plaintiffs said federal courts lack jurisdiction because there is not a factual injury, as Amazon hasn’t threatened to enforce its use conditions agreement. But their complaint says otherwise, Vera wrote, noting the allegation that “Amazon seeks to silence its customers from criticizing or making any statement about Amazon using any one of hundreds of words, logos or phrases,” and further explaining the allegation of an attempt to chill customer speech could be a First Amendment violation, if proven.
Amazon noted it allows customers to post both positive and negative reviews about products and services sold through its website, but Vera noted such reviews are “not the same as allowing statements that ‘disparage or discredit’ the company in general. If it were, the sections would be contradictory. In any case, the Yelp Law prohibits a waiver of ‘any statement,’ not merely negative reviews of products or services.”
Vera further rejected Amazon’s contention its agreement “merely incorporates standard trademark protections,” writing that “a promise not to engage in conduct already prohibited by law is mere surplusage since it cannot provide any consideration for the parties’ performance.”
Without assessing the potential success of the class action, Vera concluded both customers and Amazon have an interpretation of the company’s Conditions of Use and since neither is absurd and both have textual support, dismissal is inappropriate.
Vera also said Amazon can’t invoke an immunity clause under the Communications Decency Act, under which websites can be protected for content moderation through Section 230 of that law. Even if that clause applied, Vera said, the terms the plaintiffs challenge aren’t limited to reviews posted to Amazon.com.
“Indeed, the prohibition could by its own terms extend to discrediting statements made by Amazon users on third party websites,” Vera wrote. “To give one example arguably covered by the consolidated complaint, consider a disgruntled Amazon shopper who uploads a negative post on Instagram disparaging the speed of Amazon’s delivery or the sufficiency of its return policies. The shopper in this hypothetical scenario would have ‘used any service’ as that phrase is used in the Amazon Conditions of Use, and thus be potentially covered under the challenged language if their post includes Amazon’s name or logo ‘in (a) manner that disparages or discredits Amazon.’ But there would be no legal basis for Section 230 to immunize Amazon for censoring posts made outside its online ecosystem. In summary, notwithstanding any protection from liability Section 230 may give Amazon for making editorial decisions relating to information on its own website, Section 230 does not preclude the entire claim.”
Likewise, Amazon can’t invoke the First Amendment to argue the Yelp Law forces it to carry content it would otherwise exclude, as Vera said the law only bars “a commercial entity from contractually limiting the speech of its customers in third-party sites.”
Amazon did not respond to a request for comment.