Another Abusive “Yelp Law” Lawsuit Fails–Scott v. Ulta

September 19, 2026 · by · in Uncategorized

If you aren’t familiar with the mass-lawsuit campaign to weaponize California’s “Yelp Law,” Civil Code 1670.8, maybe start here to get up to speed. In short, California banned contract provisions that purport to restrict consumers from reviewing the business. Plaintiffs are now doing drive-by litigation, claiming that TOS provisions improperly restrict consumer reviews even when the TOS clearly does not say that.

Previously, California appellate courts denied a private right of action for parts of the law.  This ruling, also precedential, takes a different approach. It rejects the plaintiffs’ tendentious reading of the defendant’s TOS. By applying common-sense readings to TOS provisions, this case further thwarts the plaintiffs’ bar trying to turn the Yelp Law into a general purpose nuisance-litigation tool.

Ulta’s TOS had the following two provisions:

  • In the trademarks section: “ULTA’s trademarks and trade dress may not be used in connection with any product or service that is not ULTA’s, in any manner that is likely to cause confusion among customers or in any manner that disparages or discredits ULTA.”
  • In the termination provision: “Ulta Beauty may, without incurring any liability to the Customer, terminate access by such Customer, or suspend any Customer’s access to all or part of the Site, without notice, for any conduct that Ulta Beauty, in its sole discretion, believes is in violation of any applicable law or this Agreement, or is harmful to the interests of another user, a third-party, a merchant, a sponsor, a licensor, a service provider, or Ulta Beauty”

These provisions could and should be drafted better. However, anyone who has ever drafted one of these provisions knows that they do not expressly or implicitly restrict consumer reviews–unless the plaintiffs adopt a completely tendentious and indefensible interpretation that no reasonable consumer would ever make. Because the court takes a common-sense approach to reading, this is an easy case.

With respect to the trademark provision, the appellate court says:

The clause prohibiting use of defendants’ trademarks to disparage or discredit defendants must be construed in light of how the Terms describe what defendants’ trademarks are (website appearance and functionality items) and in light of the full context of the Trademarks Paragraph—which, naturally, is focused on trademark violations and not customer comments (which are instead addressed separately in the Terms)….

The disparage or discredit clause in this last sentence (like the clauses that precede it) is used only in context of trademark and trade dress violations, and the paragraph enumerates what trademarks or trade dress are at issue—graphics, logos, page headers, button icons, scripts, and service names. These are website functionality and appearance items unlikely to be used, and certain not to be used in any meaningful way, in customer comments. There is accordingly no reason to understand the disparage or discredit clause as limiting or waiving consumers’ right to speak—and this is all the more true when a separate paragraph in the Terms is dedicated to addressing the topic of customer reviews

While this is obviously correct, Ulta should not include anything in its contract that purports to restrict how consumers “use” their trademarks (because that can become a backdoor naked licensing issue), and the TOS should not attempt to explicitly restrict any consumer efforts to disparage or discredit anything because that’s none of Ulta’s business. Honestly, the TOS would be stronger if the sentence were deleted entirely.

With respect to the termination provision:

Acknowledging defendants’ discretion to terminate or suspend use of their website for “conduct . . . harmful to the interests of . . . [defendants]” does not constitute a general waiver of consumers’ right to criticize defendants….

on its face, there is nothing in this provision that prohibits consumers from making any statement regarding defendants. At most, the provision reserves defendants’ right to respond by blocking a consumer’s access to their website….The bare fact that an agreement potentially gives a company the means to violate subdivision (a)(2) does not demonstrate a violation of subdivision (a)(1). Otherwise, any reservation of the right to block consumer access to a retail website would violate subdivision (a)(1)—even with an express acknowledgment that the company may not do so in retaliation for speech regarding the company.

If in fact Ulta blocked consumers from accessing its services because they wrote critical reviews, then the Yelp Law might have something to say. That’s not the case here (the court says “plaintiffs did not allege they were blocked from accessing defendants’ website”).

If you’re in charge of drafting your TOS, you can reduce the risk of abusive Yelp Law claims by doing a comprehensive review of your TOS, using an extremely tendentious and illiterate filter to remove any language that could be misinterpreted as a restriction on consumer reviews. And it’s always a good idea to do an editing pass on the TOS to find and remove provisions that aren’t really needed. If Ulta had followed this procedures, it might have avoided the hassle of this lawsuit.

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