The California Court of Appeal recently ruled on a case involving consumer rights and non-disparagement clauses in contracts. The ruling affects how businesses, including Peet's Coffee, can enforce terms that limit consumers' rights to post negative reviews. This decision is significant for consumers and businesses alike, as it clarifies the legal boundaries regarding consumer reviews in California.
The case, Arterberry v. Peet's Coffee, Inc., was filed on July 29, 2026, under docket number B344295. The plaintiffs, led by Crystal Arterberry, filed a class-action lawsuit against Peet's Coffee, claiming that the company's website terms and conditions included illegal provisions that restricted their ability to post negative reviews. The court's decision is important because it interprets California's Civil Code section 1670.8, known as the “Yelp law,” which protects consumers' rights to express their opinions about businesses.
The plaintiffs in this case argued that Peet's Coffee had violated section 1670.8 by including non-disparagement clauses in its terms and conditions. These clauses required consumers not to submit content that could harm Peet's business or disparage its products. The plaintiffs contended that this practice was unlawful under the Yelp law, which prohibits businesses from enforcing such clauses. However, the key issue was whether consumers could seek penalties for a clause that was included in a contract but not actively enforced by the company.
The dispute began when Arterberry and three other plaintiffs filed their complaint against Peet's Coffee in December 2023. They claimed that the company's terms and conditions, which they had to agree to when using the website, included provisions that violated their rights under the Yelp law. Peet's Coffee responded by arguing that the plaintiffs could not claim damages because the company had not threatened or attempted to enforce the non-disparagement clauses against them. The trial court agreed with Peet's Coffee and sustained its demurrer, dismissing the case.
On appeal, the California Court of Appeal upheld the trial court's decision. The court ruled that section 1670.8 indeed prohibits non-disparagement clauses but clarified that consumers can only seek monetary penalties if a business actively tries to enforce such a clause or penalizes a consumer for making a protected statement. The court stated, "Section 1670.8 outlaws non-disparagement clauses in consumer contracts, but it unambiguously allows a consumer to bring a suit for monetary penalties only when a seller attempts to enforce such a provision or otherwise seeks to penalize a consumer." This ruling was delivered by Justice Weingart, with concurrence from Acting Presiding Justice Bendix and Justice M. Kim.
The impact of this ruling is significant for both consumers and businesses. For consumers, it reinforces their right to post honest reviews without fear of retaliation from businesses. However, it also sets a precedent that limits the ability of consumers to seek penalties against companies for merely including non-disparagement clauses in their contracts unless those clauses are actively enforced. This decision may encourage businesses to reconsider how they draft their terms and conditions to avoid potential legal issues while still protecting their brand.
Moving forward, this ruling may influence how other courts interpret similar cases involving consumer rights and non-disparagement clauses. It highlights the importance of clear communication between businesses and consumers regarding the rights and responsibilities outlined in contracts. The court's decision also emphasizes the need for businesses to ensure that their terms and conditions comply with California law, particularly regarding consumer protection.
As for what’s next, it remains to be seen whether the plaintiffs will seek to appeal this decision to a higher court. There are currently no related cases pending that could affect this ruling directly. However, the implications of this case may prompt other consumers to consider their rights under the Yelp law and how businesses enforce their terms and conditions.