By Brendan Pierson

Dec 4 (Reuters) - Yelp on Wednesday urged a federal appeals court to block a lawsuit by Republican Texas Attorney General Ken Paxton accusing the company of posting misleading notices on its online review site about crisis pregnancy centers, which provide services to pregnant women with the goal of preventing abortions.

James Sigel, a lawyer for Yelp, told the three-judge panel of the San Francisco-based 9th U.S. Circuit Court of Appeals that the case was an exception to the usual rule that federal courts should not intervene in state court disputes because Paxton had brought the case in bad faith. He called it "a particularly egregious example of an attorney general retaliating against a company."

U.S. District Judge Trina Thompson in Oakland, California, rejected that argument in February, finding that Yelp had not provided enough "concrete evidence" of Paxton's bad faith. Sigel said that Thompson should have allowed discovery on that issue.

Lanora Pettit, a lawyer for Paxton, told the panel it was Yelp's burden to prove bad faith and that it could not do so "by speculating as to the subjective motivations" behind the lawsuit.

Yelp sued Paxton in Oakland federal court in September 2023 after hearing Paxton intended to sue the company, which he did the next day in Texas. Paxton said that notices Yelp posted on the review pages for crisis pregnancy centers violated a Texas law against unfair business practices and sought unspecified money damages.

A Texas state court judge dismissed Paxton's lawsuit not long after Thompson's ruling, but Paxton is appealing.

The 9th Circuit judges, all appointed by Republican President-elect Donald Trump during his first term, appeared skeptical of Yelp's argument on Wednesday.

"If you win on this, we're going to have cases filed every week in federal court saying, I do not like what that state attorney general is doing to me," Circuit Judge Daniel Bress said. He added that Texas' justice system appeared to be working for Yelp, since it was "doing well there so far."

Circuit Judge Mark Bennett asked Pettit whether a federal court could ever intervene to stop a politically motivated action by a state prosecutor. As an example, he asked whether such intervention would be called for if there was strong evidence that a state attorney general sued a company because its CEO opposed gun rights.

Pettit said that it might, but that there was no strong evidence that Paxton was singling out Yelp for political reasons.

Crisis pregnancy centers offer pregnant women counseling, but usually do not clearly advertise their anti-abortion stance.

In August 2022, Yelp began posting a notice on crisis pregnancy centers' pages stating: "This is a Crisis Pregnancy Center. Crisis Pregnancy Centers typically provide limited medical services and may not have licensed medical professionals onsite."

In February 2023, Paxton and other Republican state attorneys general told Yelp the notice was misleading because it was posted on pages of centers that did have licensed medical professionals.

The company, without conceding that the language was misleading, changed the notices to state that crisis pregnancy centers "do not offer abortions or referrals to abortion providers." Paxton said at the time that the new language was accurate.

The case is Yelp v. Paxton, 9th U.S. Circuit Court of Appeals, No. 24-581.

For Yelp: James Sigel of Davis Wright Tremaine

For Paxton: Lanora Pettit of the Office of the Texas Attorney General

Read more:

US judge won't shield Yelp from Texas lawsuit over crisis pregnancy center notices

(Reporting By Brendan Pierson in New York)

((Brendan.Pierson@thomsonreuters.com; 332-219-1345 (desk); 646-306-0235 (cell);))