On Tuesday, April, 22, the California Assembly Judiciary Committee voted 10-0 to approve a so-called “Yelp bill” that would prohibit companies from suppressing negative consumer reviews through the use of “non-disparagement clauses” in contracts with consumers. Such clauses would be unlawful unless the consumer had knowing, voluntary, and intelligently waived his or her right to voice a negative opinion, and consumers would have the right to sue companies to collect civil penalties if the companies violate the law. The Bill Analysis, which also includes amended language of the Bill, states that the Bill aims to make it clear that non-disparagement provisions—by which customers may unknowingly or involuntarily waive Constitutionally-protected free-speech rights—are not appropriate and are unenforceable in contracts of adhesion and in online consumer transactions for goods and services.
Speaker Pérez explained in his written statement, “[m]ost of us assume we have just as many rights after making a purchase as we did before,” therefore, “[i]f a merchant thinks our First Amendment free speech rights need to be curtailed, they should say so, up front, and in plain language.”
As the Bill Analysis explains, under current law and under the proposed Bill, contractual waivers of Constitutionally-protected rights—such as waivers of free-speech rights through non-disparagement clauses—must be ‘knowing, voluntary and intelligent.’ However, the analysis asserts that even if such clauses would be found unenforceable under current law, the Utah case illustrates that consumers may still face intimidation and heavy burdens in trying to resist such clauses.
The Bill is now with the Assembly Appropriations Committee, and is not yet close to being enacted. It must also make its way through the Senate committee process and be voted on and passed by both the Assembly and Senate before making its way to the Governor’s desk for his signature.