Commercial Litigation and Arbitration

Yelp Admissibility — Reviews Are Hearsay and Not Present Sense Impressions, But They Are Usable to Show Effect on Future Customers

Mathew Enter., Inc. v. Chrysler Grp. LLC, 2016 U.S. Dist. LEXIS 129925 (N.D. Cal. Sept. 21, 2016):

Plaintiff Mathew Enterprise, Inc., a Chrysler, Jeep, Dodge, and Ram ("CJDR") dealer operating at Stevens Creek CJDR ("Stevens Creek") brings this action alleging that Defendant Chrysler Group LLC ("Chrysler") offered incentive payments to other CJDR dealers in Northern California but not to Stevens Creek in violation of § 2(a) of the Robinson-Patman Act ("RPA"). Stevens Creek initially brought four claims, but only the § 2(a) claim for damages remains. The Court held a pretrial conference on September 19, 2016, at which time it addressed a number of trial issues and heard argument on the parties' motions in limine. The Court hereby orders as follows:


ii. Stevens Creek's Motion in Limine No. 2 to Exclude Evidence Relating to Yelp! Postings After 2013, Including Unsubstantiated Claims of Possible Manipulation of Yelp! Ratings in 2015. GRANTED IN PART AND DENIED IN PART.

Plaintiff seeks to exclude "evidence relating to Yelp! postings after 2013, including unsubstantiated claims of possible manipulation of Yelp! ratings in 2015" because it violates Federal Rules of Evidence 401, 402, and 403, and is inadmissible hearsay. Pl.'s Mot. in Lim. No. 2, at 1, 4, ECF 243. Plaintiff argues that the Yelp! evidence "has no demonstrable relation to pricing, negotiations, or consumer behavior during the asserted [relevant time period], [and] . . . is rank hearsay [*6]  based on mere speculation built on inferences from anonymous online activity." Id. Plaintiff also argues that Chrysler has not demonstrated the evidence's "relevance to a disputed matter being tried in this matter or a proper purpose for this supposed evidence." Id. Additionally, Stevens Creek contends that "Chrysler intends to introduce this evidence to the jury for no other purpose than to paint Stevens Creek as generally a bad actor," and is thus inadmissible character evidence. Id. at 3.

Chrysler responds that the post-2013 Yelp! pages are "relevant to whether online reviews, and not price, impacted sales." Def.'s Opp. to Pl.'s Mot. in Lim. No. 2, at 1, ECF 279. Chrysler contends that the post-2013 "ratings are probative of [the] comparative performance of Stevens Creek and Fremont during the relevant period, because each dealership's performance [was] nearly identical during and after the relevant period." Id. Chrysler also contends that Yelp! reviews are either not hearsay or fall under the present sense impression exception to the hearsay rule. Id. at 3. As to the Yelp! Consumer Alert, Chrysler argues that contrary to Plaintiff's claim, it can show that the "artificial positive reviews came [*7]  from Stevens Creek." Id. at 4-5. Moreover, Defendant states that it will only use the alert to demonstrate Yelp's importance and to impeach claims by Mathew Zaheri, the owner and operator of Stevens Creek, regarding the importance of Yelp. Id. at 5.

The Court finds that the Yelp! pages and ratings are out of court statements, which, if being offered for the truth of the matter asserted, are inadmissible under Fed. R. Evid. 801. Cameron v. Werner Enters., Inc., No. 12-cv-243, 2016 WL 3030181, at *3 (S.D. Miss. May 25, 2016). The Court disagrees with Chrysler's contention that the present sense impression exception to the rule against hearsay applies. The present sense impression exception applies to "[a] statement describing or explaining an event or condition, made while or immediately after the declarant perceived it." Fed. R. Evid. 803(1). At the pretrial conference, Defendant conceded that it did not have any evidence that the pages and ratings were made while or immediately after the declarant perceived it. Therefore, the exception cannot apply. Additionally, as discussed at the pretrial conference, anonymous internet reviews lack the requisite "circumstantial guarantees of trustworthiness" to fall under the residual exception to the rule against hearsay. See Fed. R. Evid. 807; Doe v. Kamehameha Schs./Bernice Pauahi Bishop Estate, No. 08-00359, 2008 WL 5423191, at *4 (D. Hawai'i Dec. 31, 2008) ("[U]nder the cloak of anonymity, [*8]  people will make outrageous, offensive, and even nonsensical statements."). Therefore, Defendant may not use the Yelp! pages and ratings as evidence of how Stevens Creek treats its customers. Defendant may, however, use the pages and ratings to show the effect on future customers.

Additionally, the Court finds that the evidence relating the Yelp! Consumer Alert has little probative value and is highly prejudicial to Stevens Creek. Thus, any evidence relating to the Consumer Alert is inadmissible pursuant to Fed. R. Evid. 403. However, the Court will allow the evidence if Plaintiff opens the door by referring to review manipulation.

Accordingly, the Court GRANTS IN PART AND DENIES IN PART Stevens Creek's motion in limine no. 2 as set forth above.

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