On Tuesday, a Ninth circuit appeals court ruled that Yelp's ad sales strategies do not extort small businesses and merely amount to “hard bargaining” by the company.

Yelp lets anyone review a business, and businesses can't opt out of being reviewed. So when Yelp's ad sales team began calling around asking companies to buy advertising in exchange for displaying a chosen review more prominently, some storefronts cried foul. In 2010, four small business owners banded together to sue Yelp for extortion after they refused to buy advertising from Yelp and allegedly found that bad reviews were displayed more prominently.

Two of the business owners also alleged that Yelp authored negative reviews to induce them to advertise or in retaliation after the business declined to buy advertising.

The appeals court panel wrote in its Tuesday decision that an extortion ruling was an extremely high bar to clear, and that the four businesses—a furniture restoration business, an animal hospital, an auto body shop, and a dentist—were not threatened with “wrongful harm.” The court went on to specify that the legal definition of extortion “requires more than fear”:

Like the Hobbs Act, California law states that “[e]xtortion is the obtaining of property from another, with his consent... induced by a wrongful use of force or fear.” Cal. Penal Code §518 (emphasis added). California law also provides that “[f]ear, such as will constitute extortion, may be induced by a threat . . . [t]o do an unlawful injury to the person or property of the individual threatened,” id. § 519(1), “thus excluding fear induced by threat to do a lawful injury,” People v. Beggs, 178 Cal. 79, 83 (1918). … In sum, to state a claim of economic extortion under both federal and California law, a litigant must demonstrate either that he had a pre-existing right to be free from the threatened harm, or that the defendant had no right to seek payment for the service offered. Any less stringent standard would transform a wide variety of legally acceptable business dealings into extortion.

The court ruled that the businesses in question had no pre-existing right to positive reviews. It added that although the business owners naturally see the posting of reviews as a potential way for Yelp to cause their business economic harm, “it is not unlawful for Yelp to post and sequence the reviews.”

“As Yelp has the right to charge for legitimate advertising services, the threat of economic harm that Yelp leveraged is, at most, hard bargaining,” the court concluded.

The court also said that the plaintiffs weren't able to establish that Yelp was fabricating harmful reviews.

Back in 2010 when this case was first brought to court, Yelp changed some features on its site in reaction to the claims made by the plaintiffs, saying the changes would "clarify" Yelp's practices. At the time, it removed a feature that let its advertisers highlight a review, which essentially pinned that review to the top of the business' Yelp page. It also allowed Yelp users to click a button to read reviews that had been filtered by its proprietary algorithm.

In a blog post yesterday, Yelp called the plaintiffs' complaints “conspiracy theories.” The company wrote, “For years, fringe commentators have accused Yelp of altering business ratings for money. Yelp has never done this and individuals making such claims are either misinformed, or more typically, have an axe to grind.”

Lawrence Murray, a plaintiffs' attorney for the four businesses, countered in a press release e-mailed to Ars. "It is a sad day for millions of small businesses across the nation who can not afford to pay the extortion, which Yelp calls 'advertising,' to retain positive reviews... The Court recognized the damage done to businesses that would not pay the extortion but claimed this is not the type of extortion that the court will halt... With big money and awesome destructive power behind them, only Congress and the California Legislature can Stop Yelp."

Although the court sided with Yelp this week, the company still faces opposition in other legal theaters. In April, the FTC said it received over 2,000 complaints about the company since 2008. Yelp is also currently involved in a lawsuit with a San Diego lawyer who Yelp says wrote fake reviews on his own Yelp page. While that lawsuit is on hold at present, it's a bizarre twist in the fundamental question over whether companies can have any control over what's written about them online.