Online defamation is simply the publication of defamatory statements on the Internet, including blogs, forums, websites, and social networking websites. However, unlike traditional media outlets that can be held liable for publishing defamatory statements, because of the Communications Decency

Act of 1996 (“CDA”) and the cases interpreting it, online publishers and distributors cannot be held liable for defamatory posts that are authored by third parties. In other words, if a website allows users to leave comments, the operator of that website cannot be held liable for comments posted there by someone else.

The CDA was enacted by Congress during the early years of the Internet and amid concerns over minors’ access to Internet pornography. One of the overall objectives of the CDA was to promote freedom of expression on the Internet during its infancy as a communications medium. Although the CDA was a good idea at the time, its interpretation by both federal and state courts has created huge problems and as a result, defamation is rampant online and businesses who are severely damaged by false or inaccurate information have very limited legal recourse. While certain sections of the original CDA were declared unconstitutional by the United States Supreme Court in Reno v. ACLU, 521 U.S. 844 (1997), Section 230 of the CDA, 47 U.S.C. §230 (“Section 230”) remained intact.

Section 230 simply provides a “safe harbor” from liability for websites and Internet Service Providers (“ISPs”) who disseminate information provided by third parties. Section 230(c)(1) states:

(c) Protection for “Good Samaritan” blocking and screening of offensive material.

(1) Treatment of publisher or speaker: No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

The term “publisher” is not defined in the CDA, but the terms “interactive computer service” and “information content provider” are defined. Specifically, Section 230 (f)(2) and (3) provide:

(2) Interactive computer service. The term “interactive computer service” means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.

(3) Information content provider. The term “information content provider” means any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service.

Section 230 offers broad protection for providers and users of interactive computer services against liability for defamation and other content based claims when a third party provides the information. Although the interactive computer services provider is permitted to exercise traditional editorial functions and still avoid legal liability, it loses the immunity provided by Section 230 (from being sued) when it develops the content that is the subject of this complaint; i.e., the interactive computer services provider becomes an “information content provider”.

In that context, an interactive computer services provider can also operate as an information content provider. MCW, Inc. v. Badbusinessbureau.com, LLC, 2004 U.S. Dist. LEXIS 6678 at *25 (N.D. Tex. 2004); Batzel v. Smith, 333 F.3d 1018 (9th Cir. 2003); and Carafano v. Metrosplash.com, Inc., 339 F. 3d 1119 (9th Cir. 2003). That can happen in a number of different ways. For example, if the interactive computer services provider altered the original content it received from the third parties, the interactive computer services provider is no longer posting information provided by “another content provider” and therefore its activities are not within the scope of Section 230 immunity. Chicago Lawyers’ Committee for Civil Rights v. Craigslist, 461 F. Supp. 2d 681 (N.D. Ill. 2006) and FTC v. Patel, 570 F. 3d 1187 (10th Cir. 2009). The critical issue is whether the interactive computer services provider acts as an information content provider with respect to the information which is damaging the complaining business.

… gripe sites where users post comments on a website are within the scope of immunity.

While this represents a fertile window for businesses attempting to sidestep Section 230 immunity, it is a very narrow window. Courts have consistently held for example, that neutral algorithms and neutral ratings sites have immunity under the CDA. An algorithm that searches for advertising word match options was found to be within the scope of Section 230 immunity in Goddard v. Google, Inc., 640 F. Supp. 2d 1193 (N.D. Cal. 2009). A neutral rating based solely on unaltered ratings and comments posted by third parties was also covered under Section 230 in Gentry v. eBay, Inc., 99 Cal. App. 4th 816 (Cal. App. 4th Dist. 2002). Publishing an unaltered profile created by a third party and a database gathering system that simply transfers the information it received without change were likewise covered by CDA immunity. Carafano and Prickett v. infoUSA, Inc., 561 F. Supp. 2d 646 E.D. Tex. 2006). Similarly, gripe sites where users post comments on a website are within the scope of immunity. Nemet Chevrolet, Ltd. v. Consumer Affairs.com, Inc., 591 F. 3d 646 (4th Cir. 2009) and Universal Communication Systems, Inc. v. Lycos, Inc., 478 F. 3d 413 (1st Cir. 2007).

In other words, so long as the interactive computer services provider maintains neutrality with its search engine or rating system, it does not materially contribute to illegal content, and the users’ comments are unaltered, the courts have generally determined that such systems are covered under Section 230 immunity. However, material contributions to illegal content by the interactive computer services provider have been found to be sufficient actions to transform the interactive computer services provider into an information content provider and thereby lose immunity under Section 230.

Several courts have addressed the types of action that are sufficient to transform an interactive computer services provider into an information content provider.

In 2008, the Ninth Circuit Court of Appeals found that a rating system where the a website created discriminatory questions and the choice of answers and mandated the answering of the discriminatory questions as a condition of using the website was not covered by Section 230 immunity. In Fair Housing Council of San Fernando Valley v. Roommate.com LLC, 521 F. 3d 1157 (9th Cir. 2008) the court found that if a website contributes materially to the illegality of the content, the website becomes an information content provider and therefore loses its immunity under the CDA. The Roommate court also clarified its opinion in Carafano and disavowed “any suggestion that Carafano holds an information content provider automatically immune so long as the content originated with another information content provider.”

Several courts have addressed the types of action that are sufficient to transform an interactive computer services provider into an information content provider. FTC v. Accusearch, 570 F. 3d 1187 (10th Cir. 2009) (service provider is responsible for the development of offensive content if it in some way specifically encourages what is offensive about the content); Anthony v. Yahoo!, Inc., 421 F. Supp. 2d 1257 (N.D. Cal. 2006) (service provider that manufactured false profiles and misrepresented the status of individual profiles was an information content provider”); and Chicago Lawyers’ (ISP’s alteration of third party content is information created by the ISP itself and is not entitled to Section 230 immunity.). Earlier this year, a local law firm filed an action against the local Better Business Bureau alleging that the BBB manipulated its rating system to favor members over non-members. According to the complaint, due to this manipulation, the BBB rating system is neither impartial nor accurate as advertised by the BBB and by publishing these inaccurate ratings online, the BBB has defamed the plaintiff. Given the impact a ruling for the plaintiff could have on the BBB rating system, this case bears watching.

Although the purpose and intention of Section 230 is broad enough in its own right to make it difficult on businesses, various courts have expanded the CDA “publisher” immunity going even further than the plain language of the statute. The courts have done this by actually expanding the “publisher” immunity to “distributors” of the information, even though Section 230 doesnot require that interpretation. This difference is illustrated best by looking at two cases that are often cited as the genesis for the wording of Section 230.

In the first case, Cubby, Inc. v CompuServe, Inc., 776 F. Supp. 135 (S.D.N.Y. 1991), a computer database operator, Cubby, Inc., sued CompuServe, a competitor, for defamation and other various torts arising from a defamatory publication CompuServe maintained on its database. The Cubby court held that CompuServe was a “distributor” and was entitled to the same first amendment protection as a more traditional news distributor. Therefore, CompuServe – as a distributor – would be subject to liability only if it knew or had reason to know of the allegedly defamatory statements.

Four years later, Stratton Oakmont, Inc. v. Prodigy Services Co., 1995 N.Y. Misc. LEXIS 229 (N.Y. Sup. Ct. May 24, 1995) was decided. In Stratton Oakmont, a securities firm sued Prodigy, an ISP, for defamatory statements that were posted by an unknown third party to Prodigy’s computer bulletin board. The court held that because Prodigy exercised general editorial control over its services, it was held to the liability standard of a “publisher” of the defamatory statements and was therefore subject to liability regardless of its knowledge of the statements.

The CDA was enacted a year after Stratton Oakmont was decided. Both the timing and the specific language used in Section 230 indicates that Congress intended to overrule the Stratton Oakmont “publisher” ruling and leave the Cubby “distributor” ruling intact. Therefore, it would seem reasonable that when courts interpret and apply Section 230, a website or ISP that “publishes” actionable statements made by a third party would not be liable for those statements under Section 230(c)(1), while a website or ISP that “distributes” defamatory statements after it is on notice of the defamatory nature of the statements would lose the safe harbor immunity created by Section 230(c)(1).

However, the first appellate court to review this issue after Section 230 was enacted did not interpret it that way and broadly interpreted “publisher” immunity to include a “distributor.” Just a year after Section 230 was enacted, Zeran v. America Online, Inc., 129 F. 3d 327 (4th Cir. 1997) interpreted the meaning of “publish” as it applies to Section 230 immunity. The Zeran case arose out of a delay by America Online, Inc. (“AOL”) in removing third party defamatory posts, their refusal to post a retraction and their failure to screen for similar postings thereafter. In Zeran, an unidentified person, as a hoax, posted offensive messages and products on an AOL bulletin board, urging interested parties to call the plaintiff, Kenneth Zeran, and provided the plaintiff’s home phone number. Predictably, Zeran received a large number of threatening and angry calls. When Zeran called AOL about the hoax, AOL assured Zeran they would remove the posting but they would not post a retraction.

Zeran sued AOL for negligence based on a state common law theory of “distributor” liability and claimed that once AOL was notified of the hoax, they had a duty to remove the postings promptly, notify subscribers of the hoax, and screen defamatory material in the future. The U.S. District Court dismissed the complaint and the Fourth Circuit upheld the dismissal on the basis that Section 230 provided AOL with immunity from “all state-law defamation claims”, even if, as Zeran asserted, AOL was a “distributor.” The court reasoned that under the common law of defamation, distributor liability is a subset of publisher liability.

Unfortunately, for businesses injured by defamatory comments, a number of courts, including the Florida Supreme Court, have followed the Zeran court’s ruling and have included distributors as a subset of the “publisher” definition provided in Section 230.

Section 230 immunity has expanded to a point that unless a plaintiff can show that the website significantly contributed to the content complained of, the website is immune from state defamation actions.

In Doe v. America Online, Inc., 783 So. 2d 1010 (Fla. 2001), the Florida Supreme Court, in a 4-3 split decision, held that Section 230 preempts Florida law as to a cause of action against an Internet service provider distributor based on negligence. The majority opinion relied heavily on Zeran and adopted its rationale carte blanche. However, Justice Lewis, writing for the three dissenting justices, found the analysis by the majority faulty and the resulting interpretation unacceptable.

The dissent is highly critical of both the majority opinion and the rationale used by the Zeran court. Importantly, the dissent points out that defining distributors as a “subset” of publishers is not supported by the intent of Congress in enacting Section 230, the actual language of Section 230, the common law, or the Restatement (Second) of Torts. The dissent takes exception with Zeran and its progeny that hold that an Internet service provider cannot be held liable for its own patently irresponsible role as a distributor.

To put the CDA and the Zeran ruling in historical perspective, in 1997 Yahoo and Internet Explorer were two years old, Google and online social networking had not been born, and the use of web blogs was unknown to most people. In 1997 approximately 90 million personal computers were in use in the United States; in 2010 there were over 380 million in use.

Nevertheless, due to Zeran and its progeny, including Doe v AOL decided by the Florida Supreme Court, Section 230 immunity has expanded to a point that unless a plaintiff can show that the website significantly contributed to the content complained of, the website is immune from state defamation actions. Although the online world of 2012 is significantly different from the online world of 1997, Section 230 has not been amended and courts are reluctant to overrule the early precedent established by Zeran and its progenies. As a result, bringing an action against a website that publishes false statements is practically impossible as is getting information from the website about the anonymous poster.

So with the law in perspective, let us take a look at the rough and tumble world of the Internet today.