California businesses often put broad language in their website Terms and Conditions. The terms may protect trademarks, regulate customer conduct, control access to the website, and address reviews or other user content.
Sometimes that language goes further than anyone intended.
For example, what happens if a company’s terms say that its trademarks cannot be used in a way that “disparages” or “discredits” the company? What if the company also reserves the right to terminate website access for conduct it considers harmful to its interests?
A new published California Court of Appeal decision considered those questions in Scott v. Ulta Beauty, Inc. (2026).
The case is useful for California businesses because the court did not focus on a few potentially troubling words in isolation. It looked at what the provisions actually regulated and where they appeared in the agreement.
California Law Protects a Customer’s Right to Criticize a Business
California Civil Code section 1670.8 is sometimes called the “Yelp Law.”
The statute generally prohibits a consumer contract from requiring a consumer to waive the right to make statements about the seller, its employees or agents, or its goods and services. It also restricts businesses from threatening to enforce a prohibited provision or penalizing consumers for protected statements.
A business therefore should not use its Terms and Conditions to tell customers that they cannot post a negative review or otherwise criticize the business.
But that was not quite what happened in Scott.
The Terms Challenged in the Ulta Case
The plaintiffs brought a proposed class action challenging provisions in Ulta Beauty’s online Terms and Conditions.
One of those provisions concerned Ulta’s trademarks and trade dress. It restricted the use of Ulta’s intellectual property in ways that could cause confusion and stated that the marks could not be used in a manner that “disparages or discredits” Ulta.
The plaintiffs focused on those words. They argued that the provision violated section 1670.8 because it prevented customers from making negative statements about the company.
The Court of Appeal disagreed.
The court read the language in the context of the entire paragraph. That paragraph dealt with Ulta’s intellectual property, including its graphics, logos, page headers, button icons, scripts, service names, trademarks, and trade dress. Ulta’s terms addressed customer reviews and comments elsewhere.
In that context, the court concluded that the challenged language restricted certain uses of Ulta’s trademarks. It did not require customers to give up their right to criticize Ulta.
That distinction was enough to defeat this part of the plaintiffs’ claim.
A Word Like “Disparage” Does Not Decide the Issue by Itself
This part of the decision is particularly useful when reviewing website terms.
The word “disparage” certainly can create a problem. A clause that simply says, “Customers may not disparage the company,” would raise a very different issue under section 1670.8.
Ulta’s provision, however, did not say that.
The restriction appeared within a provision governing how Ulta’s trademarks and trade dress could be used. The court interpreted the language as part of that provision rather than pulling the word “disparage” out and treating it as a standalone restriction on customer speech.
For businesses, this is a good reason to draft each section of online terms around a clearly defined subject. A trademark provision should read like a trademark provision. Rules governing reviews should clearly concern reviews. Account restrictions should explain the conduct that can result in an account restriction.
Ambiguous language creates room for a plaintiff to argue that a provision reaches further than the business intended.
Ulta Also Reserved the Right to Terminate Website Access
The plaintiffs challenged another provision that allowed Ulta to terminate or suspend access to its website for conduct that violated the agreement or that Ulta considered harmful to itself or others.
They argued that this provision could be used against customers who criticized the company.
The Court of Appeal again rejected the claim as pleaded.
The provision governed access to Ulta’s website. It did not expressly require customers to surrender their right to make statements about Ulta.
The court also observed that the case might look different if a business actually blocked a consumer from its website because the consumer had made protected statements. The plaintiffs did not allege that Ulta had done that to them.
This distinction is worth keeping in mind. The wording of a company’s Terms and Conditions is one issue. What the company actually does with those terms can be another.
The Decision Does Not Authorize Businesses to Ban Negative Reviews
Scott should not be read as permission to put a non-disparagement clause into a consumer contract.
Section 1670.8 remains in place. A provision requiring customers to give up their right to criticize a seller, its employees, or its products and services can violate California law.
What Scott shows is that courts read contractual language in context.
If a provision is actually regulating trademark use, the presence of the word “disparage” does not necessarily convert it into a prohibition against negative reviews. Likewise, a provision governing website access is not automatically a waiver of a customer’s right to criticize the business.
The drafting matters.
A Related 2026 Decision Involving Peet’s Coffee
There is another reason businesses should pay attention to this area.
Earlier in 2026, the California Court of Appeal addressed section 1670.8 in Arterberry v. Peet’s Coffee, Inc.
That case involved a different question: when allegedly prohibited language appears in a consumer agreement, can consumers recover statutory penalties even if the business never tries to enforce the provision against them?
The Arterberry court concluded that the statutory penalties at issue required an attempt to enforce the prohibited provision or otherwise penalize the consumer.
The plaintiffs in Scott argued against that interpretation. The Scott court did not resolve the disagreement.
It did not need to.
The court concluded that Ulta’s challenged provisions were not prohibited waivers of consumer speech rights. Once it reached that conclusion, the separate question concerning penalties did not determine the outcome.
Businesses therefore should not treat Scott as resolving every question concerning section 1670.8. It resolves the particular challenge to Ulta’s terms and gives useful guidance about how courts may read similar contractual language.
What California Businesses Should Review
A business that has not looked at its website Terms and Conditions for several years may want to read them again, particularly if the terms were adapted from a template.
Look closely at provisions concerning customer reviews, disparagement, trademarks, user-generated content, account suspension, and termination of website access.
The question is not simply whether certain words appear in the agreement. The more useful question is whether the agreement makes clear what each provision is intended to regulate.
The way those provisions are enforced matters as well. A company may have legitimate reasons to restrict misuse of its intellectual property or suspend website access for particular conduct. Using those provisions to punish a customer for protected criticism presents a different issue.
Scott v. Ulta Beauty is a useful example of careful contractual interpretation. The challenged provisions survived because, read in context, they did not require customers to surrender their right to criticize the company.
For businesses drafting website terms, clarity may make the difference between an ordinary protective provision and one that becomes the subject of consumer litigation.
Legal Authorities
- California Civil Code § 1670.8
- Scott v. Ulta Beauty, Inc. (Cal. Ct. App. 2026)
- Arterberry v. Peet’s Coffee, Inc. (Cal. Ct. App. 2026)
Related practice areas: Contracts and Business Torts · Civil Litigation