Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-00956/USCOURTS-azd-2_07-cv-00956-1/pdf.json

Nature of Suit Code: 320
Nature of Suit: Assault, Libel, and Slander
Cause of Action: 28:1332 Diversity-Libel,Assault,Slander

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NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Global Royalties, Ltd., et al., 

Plaintiffs, 

vs.

Xcentric Ventures, LLC, et al., 

Defendants. 

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No. CV-07-0956-PHX-FJM

ORDER

In our order of October 10, 2007 (doc. 20), we granted defendants’ motion to

dismiss with leave for plaintiffs to amend the complaint. Plaintiffs filed an amended

complaint (doc. 22) on November 1, 2007. Now the court has before it defendants’ motion

to dismiss the first amended complaint (doc. 23), plaintiffs’ response (doc. 25), and

defendants’ reply (doc. 27 ex. A). The court also has before it plaintiffs’ motion to stay

(doc. 28), defendants’ response (doc. 29), and plaintiffs’ reply (doc. 30). For the following

reasons, defendants’ motion to dismiss the first amended complaint is granted, and plaintiffs’

motion to stay is denied. 

I

This is a defamation action. Plaintiffs (“Global”) broker investments in gemstones.

Defendants operate a website called Ripoff Report (www.ripoffreport.com), where visitors

are invited to post consumer complaints. On March 27, 2006, Ripoff Report visitor Spencer

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Sullivan, who is not a party to this action, posted a message on the site referring to Global’s

operation as a “scam.” Am. Complaint at 3. The amended complaint alleges that consumers

who post on defendants’ site “must answer several questions created and developed by

[defendants].” Id. at 4. The complaint gives only one example: When posting on

defendants’ site, consumers are required to chose a “category” with which to label their

message. For the first statement, Sullivan chose “Con Artists” from a list. Id. Further,

plaintiffs allege that defendants encourage defamatory postings in order to use them as

leverage “to coerce businesses and individuals to pay for [defendants’] Corporate Advocacy

Program, which purports to provide assistance in investigating and resolving the posted

complaints.” Id. at 3. 

Sullivan posted a second entry on June 8, 2006, which he said was in response to a

threat of legal action from plaintiffs’ counsel. Id. at 4. Sullivan wrote that he was not aware

of any bad business practices on the part of Global itself, but that two individuals “involved

with” Global had treated him dishonorably and had engaged in criminal acts. Id. Sullivan

added that anyone looking to invest in gemstones should first call the Royal Canadian

Mounted Police, Commercial Crime Unit.

Sullivan posted a third and final entry about Global on June 16, 2006. He again

claimed that he had been “threatened” by plaintiffs’ counsel, who advised him to discontinue

the postings. Id. at 4–5. His message ends, “I think that any upstanding commercial

operation could bear the scrutiny of a crime unit without any issue.” Id. at 5. At some point,

Sullivan allegedly contacted defendants and asked that his entries be removed from the

website, but defendants refused. Id.

II

In our order of October 10, 2007, dismissing the original complaint, we concluded

that plaintiffs’ defamation action was barred by the Communications Decency Act (“CDA”),

47 U.S.C. §§ 230, 560–61. At common law, publishers are liable along with authors for

defamatory content. The CDA immunizes website operators (“providers of an interactive

computer service”) by exempting them from the publisher role:

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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.

 47 U.S.C. § 230(c)(1). Defendants contend that the allegations of the amended complaint

still do not overcome CDA immunity.

III

Plaintiffs contend that CDA immunity does not protect defendants because they failed

to remove the defamatory content after Sullivan, the author, asked them to do so. They rely

principally on Batzel v. Smith, 333 F.3d 1018 (9th Cir. 2003). In Batzel, an individual sent

a defamatory e-mail to a private organization that added the contents to its website. Id. at

1021–22. The author of the message claimed that he never intended its publication on the

internet. In addressing the impact on the website operator’s liability, the court turned to the

statute. Under 230(c)(1), a website operator is not treated as the publisher or speaker “of any

information provided by another information content provider.” (emphasis added). The court

concluded that “provided” means “provided for publication,” so a website operator cannot

disclaim liability for content that the author never intended to post. Id. at 1034. Here,

plaintiffs acknowledge that Sullivan initially provided his statements for publication. But

they contend that once Sullivan requested their removal, the statements were no longer

“provided for publication,” and defendants’ CDA immunity ceased at that point. 

However, in Batzel, the court did not interpret “provided” as an ongoing process.

The focus was on expectations regarding communications when they are made. The court

was concerned that technology users would be discouraged from sending e-mails if website

operators have no incentive to evaluate whether the content they receive is meant to be

broadcast over the internet or kept private. Id. There are no similar concerns in this action;

Sullivan obviously meant his messages to appear on the website. Whether website operators

have a duty to withdraw content when an author later changes his mind is another

question—one that is not addressed by Batzel. 

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The most analogous cases address whether CDA immunity continues to protect

a website operator who is on notice that a posting is potentially defamatory. It is well

established that it does. Universal Commc’n Sys., Inc. v. Lycos, 478 F.3d 413, 420 (1st Cir.

2007). In light of Congress’ goals to encourage development of the internet and to prevent

the threat of liability from stifling free expression, CDA immunity has been interpreted very

broadly. Carafano v. Metrosplash.com, Inc., 339 F.3d 1119, 1122–23 (9th Cir. 2003).

Website-operator liability based on notice has been rejected, because each “notification

would require a careful yet rapid investigation of the circumstances surrounding the posted

information, a legal judgment concerning the information’s defamatory character, and an onthe-spot editorial decision whether to risk liability by allowing continued publication.”

Zeran v. America Online, Inc., 129 F.3d 327, 333 (4th Cir. 1997). The sheer number of

internet postings, perhaps combined with the anonymity of many contributors, makes this

unworkable for website operators, and the incentive would be simply to remove all

questionable content. See id. 

Plaintiffs contend that the same difficulties are not presented when the author of the

defamatory content himself requests that it be taken down. The situation does present fewer

problems. However, as defendants point out, any time anyone purporting to be the author

of particular content requested retraction, website operators would still have an incentive to

simply remove the speech, rather than “conduct an investigation to determine (if possible)

whether or not the person making the request was the [actual] author and then make an

editorial decision on whether to continue publication.” Defendants’ Reply at 4.

We conclude that liability based on an author’s notice, workable or not, is without

statutory support and is contrary to well-settled precedent that the CDA is a complete bar

to suit against a website operator for its “exercise of a publisher’s traditional editorial

functions—such as deciding whether to publish, withdraw, postpone or alter content.” Zeran,

129 F.3d at 330. The United States Court of Appeals for the Ninth Circuit has contrasted the

CDA with the Digital Millennium Copyright Act, which, “unlike the [CDA], provides

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1

 Here we use “defamatory” in the strict sense of tending to harm one’s reputation

regardless of truth or falsity. See Dan B. Dobbs, The Law of Torts §§ 401, 403 (2000). 

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specific notice, take-down, and put-back procedures,” and has suggested that it is up to

Congress to provide similar procedures for the CDA. Batzel, 333 F.3d at 1031 n.19.

IV

The CDA immunizes website operators from liability for content provided “by

another information content provider.” 47 U.S.C. § 230(c)(1) (emphasis added). Plaintiffs’

next contend that defendants themselves constitute an “information content provider” with

respect to the posted content. If that is so, the CDA does not protect them. Batzel, 333 F.3d

at 1031. 

An “information content provider” is defined as “any person or entity that is

responsible, in whole or in part, for the creation or development of [the content].” 47 U.S.C.

§ 230(f)(3). Plaintiffs allege only the most minor participation by defendants in actually

composing the allegedly defamatory postings: Defendants provided a list of categories

from which Sullivan selected the title “Con Artists” for his post. As in our order dismissing

the original complaint, we conclude that this participation is insufficient as a matter of law

to make defendants information content providers with respect to the postings. See Batzel,

333 F.3d at 1035 (“[A] central purpose of the [CDA] was to protect from liability some

service providers and users who take some affirmative steps to edit the material posted.”).

However, plaintiffs have another theory. They allege that defendants use Ripoff

Report messages as leverage to coerce targeted businesses to pay for defendants’ Corporate

Advocacy Program, which purports to help investigate and resolve posted consumer

complaints. Essentially, plaintiffs allege that defendants encourage defamatory postings

from others for their own financial gain and, therefore, are partly responsible for the

“creation or development” of the messages. 

It is obvious that a website entitled Ripoff Report encourages the publication of

defamatory content.1

 However, there is no authority for the proposition that this makes the

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website operator responsible, in whole or in part, for the “creation or development” of every

post on the site. Essentially, that is plaintiffs’ position. After all, plaintiffs have not

alleged that defendants solicited Sullivan’s postings in particular, or that they specifically

solicited any postings targeting Global. Nor have they alleged that defendants altered

Sullivan’s comments, or had any more than the most passive involvement (providing a

list of possible titles) in composing them. 

Unless Congress amends the statute, it is legally (although perhaps not ethically)

beside the point whether defendants refuse to remove the material, or how they might use it

to their advantage. Through the CDA, “Congress granted most Internet services immunity

from liability for publishing false or defamatory material so long as the information was

provided by another party.” Carafano, 339 F.3d at 1122. Here, the material was

unequivocally provided by another party.

In their responsive memorandum, plaintiffs rely on Fair Housing Council of San

Fernando Valley v. Roommates.com, LLC, 489 F.3d 921 (9th Cir. 2007), reh’g granted, 506

F.3d 716 (9th Cir. 2007). As the case is scheduled for an en banc rehearing, that opinion

currently cannot be cited as precedent. Believing that Fair Housing is analogous to this

action, plaintiffs have filed a motion to stay until the Ninth Circuit issues its en banc opinion.

We reject that suggestion. There is no reason for this action to remain on our docket until

another court issues an opinion which may or may not be binding, or even persuasive, on

these issues. Plaintiffs may always appeal from this court’s judgment. 

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V

For the foregoing reasons, IT IS HEREBY ORDERED GRANTING defendants’

motion to dismiss the amended complaint (doc. 23) and FURTHER ORDERED denying

plaintiffs’ motion to stay (doc. 28). The clerk is instructed to enter final judgment for

defendants. 

DATED this 28th day of February, 2008.

Case 2:07-cv-00956-FJM Document 34 Filed 02/28/08 Page 7 of 7