‘Yelp Law’ Putative Class Action Against Ulta Rightly Tossed

Monday, September 21, 2026

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Court of Appeal:

‘Yelp Law’ Putative Class Action Against Ulta Rightly Tossed

Opinion Says Demurrer Properly Sustained as to Pleading Which Asserts That Retail Giant’s Trademark, Other Terms Violate Law Prohibiting Consumer Non-Disparagement Clauses

By a MetNews Staff Writer

Div. Five of this district’s Court of Appeal on Friday held that a judge rightly sustained a demurrer, without leave to amend, as to a putative class complaint against Ulta Beauty, which accuses the retail giant of violating California’s so-called “Yelp law” by imposing website terms of use that prohibit users from displaying trademarks in a “disparaging” light and reserve the company’s right to “terminate” online access for conduct it deems “harmful.”

At issue Civil Code §1670.8, which specifies:

“(a)(1) A contract…for the sale or lease of consumer goods or services may not include a provision waiving the consumer’s right to make any statement regarding the seller or lessor…, or concerning the goods or services.

“(2) It shall be unlawful to threaten or to seek to enforce a provision made unlawful under this section, or to otherwise penalize a consumer for making any statement protected under this section.”

The statutory scheme further provides that “[a]ny waiver of the provisions of this section is unenforceable” and creates a civil cause of action to enforce the law, with statutory penalties set at between $2,500 and $5,000 per violation.

Disparage Clause

Friday’s opinion, written by Justice Lamar W. Baker, rejects the plaintiffs’ characterization of Ulta’s terms of use as violative of §1670.8. Highlighting that “[t]he disparage or discredit clause…is used only in context of trademark and trade dress violations,” he opined:

“Because the pertinent context indicates the challenged language is not intended to restrict consumer speech, we have no basis to indulge a snippet-based reading of the provision to manufacture grounds for a lawsuit.”

As to the “termination” clause, Baker added:

“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.”

The question arose after two putative class actions were filed against Ulta Beauty Inc. in 2023, each asserting claims under §1670.8. The matters were consolidated and an amended pleading was filed.

Operative Pleading Filed

After Los Angeles Superior Court Judge William F. Highberger sustained a demurrer to the consolidated complaint with leave to amend, the plaintiffs—Erin Scott, Margaret Cruz, Paige Vasseur, Elizabeth Marie Salcedo, Xochitl Poblano, and Joohyee Kim—filed the operative pleading in September 2024, asserting: “At the time the original complaints in this action were filed, the Terms prohibited Ulta’s Online Retail Store customers from using any of Ulta’s product names and/or brand names ‘in any manner that disparages or discredits Ulta.’…This means, for example, a consumer would violate Ulta’s Terms by making a comment such as: [¶] ‘The Ulta Beauty Collection face serum is so oily that it made me break out.’ ”

They also took issue with a clause providing that the company reserves the right to “terminate access” to the Ulta.com website “for any conduct that Ulta Beauty…believes is…harmful,” saying that the provision “presumes to penalize a consumer for making any statement protected under…1670.8.”

Highberger sustained a demurrer to the amended pleading, this time without leave to amend, in February 2025, saying that “the terms Plaintiffs object to…are nothing more than an assertion of Defendants’ trademark and trade dress rights” and “[a]ny contention that there is a private right of action for the mere inclusion of a violative provision in a contract is belied by the text of the Yelp law.”

Trademarks Clause

Declaring that “[w]e will assume for the sake of argument that plaintiffs adequately alleged the Terms constitute a contract for the sale of consumer goods within the meaning of section 1670.8,” Baker pointed to the language of the so-called “Trademarks Paragraph,” which provides:

“Graphics, logos, page headers, button icons, scripts, and service names included in or made available through the Site are trademarks or trade dress of ULTA or its licensors. ULTA’s trademarks and trade dress may not be used [1] in connection with any product or service that is not ULTA’s, [2] in any manner that is likely to cause confusion among customers or [3] in any manner that disparages or discredits ULTA.”

The jurist remarked:

“[The plaintiffs] believe ‘it is impossible for a consumer to make a negative statement about a business’s goods or services if the consumer is prohibited from using that seller’s name in a way that “disparages” or “discredits” the business.’ But read in context—the proper analytical method—the challenged clause in the Trademarks Paragraph is neither ambiguous nor reasonably construed as a waiver of rights protected by section 1670.8.” Taking that context into account, he opined:

“[T]he disparage or discredit clause is…properly understood in light of the two preceding clauses via the concept of noscitur a sociis (‘it is known by its associates’)….The two clauses that precede the disparage or discredit clause are obviously not focused on bona fide customer speech or reviews; they are focused on actions another market seller might take, in connection with a product or service, to confuse customers or otherwise undermine defendants’ brand.”

Baker continued:

“Giving only the disparage or discredit clause a more expansive construction, one where a sentence first directed at competing products and services suddenly shifts to a sweeping ban on any consumer criticism of defendants’ business, would make the challenged clause ‘markedly dissimilar’ from the items preceding it.”

In a footnote, he added:

“ ‘Disparage…’…is often used as a term of art in the intellectual property field….But our analysis does not hinge on assigning a technical or non-technical meaning to ‘disparage’ or ‘discredit.’ ”

Termination Language

Turning to the termination language, he wrote:

“[O]n 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….Whether or not defendants’ actions under this provision might, in specific cases, run afoul of section 1670.8, subdivision (a)(2)’s proscription of conduct ‘otherwise penaliz[ing] a consumer for making any statement protected under this section,’ plaintiffs did not allege they were blocked from accessing defendants’ website.”

Declining to address the plaintiffs’ assertion that the Arterberry v. Peet’s Coffee Inc. decision, filed in July by this district’s Div. One, had wrongly decided that civil penalties are only available for the attempted enforcement of a violative provision, Baker said:

“Because we hold plaintiffs do not state a claim for violation of section 1670.8, subdivision (a)(1), we need not and do not decide whether Arterberry is wrongly decided and a plaintiff may recover penalties even in the absence of a threat to enforce an offending contract.”

The case is Scott v. Ulta Beauty Inc., B345741.