June 25, 2008
Consumer Complaint Site Defeats Lawsuit By Unhappy Vendor--Nemet v. ConsumerAffairs.com
By Eric Goldman
[Note: I'm back from my vacation. For a short recap of my experience, see my FAQs about my trip to the Hulahula River in the Arctic National Wildlife Refuge.]
ConsumerAffairs.com is a consumer review site with a twist. It describes itself as:
a private, non-govermental [sic] entity that empowers consumers by providing a forum for their complaints and a means for them to be contacted by lawyers if their complaints have legal merit. Your complaints and comments may be published, shared with the news media and reviewed by attorneys at no cost to you.
A Legal Times article written when this lawsuit was first initiated raises some questions about ConsumerAffairs.com's architecture. First, it suggests that the domain name capitalizes on consumers who might mistakenly assume that the site is affiliated with a governmental consumer affairs office. Second, the article questions the ties between the site and the Horwitz plaintiff's class action law firm, which mines the consumer-submitted complaints looking for potential class action claims and named plaintiffs. But regardless of these attributes, for my purposes ConsumerAffairs.com is a garden-variety consumer review site. Consumers submits their gripes and ConsumerAffairs.com publishes them. As a natural consequence, some vendors will be unhappy with the things consumers are saying about them.
This lawsuit's unhappy vendor is Nemet Chevrolet, a Jamaica, NY auto dealer who has been the target of several consumer-submitted complaints on ConsumerAffairs.com. See, e.g., this page. Nemet sued ConsumerAffairs.com twice but each time voluntarily dismissed the lawsuit for jurisdictional concerns. Finally, satisfied it found jurisdiction over ConsumerAffairs.com, it brought out the big guns--specifically, DC powerhouse law firm Patton Boggs. As the Legal Times article quotes Nemet, "I knew I had to do something, and I got a very, very powerful law firm." Sadly for Nemet, its very, very powerful law firm's complaint still got quickly crunched by a 12b6 motion to dismiss.
Nemet's claims for defamation and tortious interference were preempted by 47 USC 230. This is really a textbook application of 230--the complaint even specifies that the posts were written by third party consumers. Thus, the only issue on the court's mind is whether 230 supports a 12b6 (it correctly determines that it does). Nemet tries to get around 230 by alleging in its briefs and supporting documents that ConsumerAffairs.com created the content at issue and wrote headlines and other supporting materials, but the court refuses to consider these allegations because they weren't in the complaint. Some courts might have entertained a leave to amend the complaint to let these allegations in, but this court clearly wasn't interested.
The court also dismisses the Lanham Act unfair competition and false advertising claims for lack of standing because Nemet and ConsumerAffairs.com aren't competitors. Alternatively, even if there was standing, the court would dismiss both claims:
* the unfair competition claim [this is ambiguous but I think it actually is treating it as a trademark infringement claim, even though the complaint didn't allege infringement] because an auto dealer and a consumer complaint site are so dissimilar that there is no possibility of likelihood of consumer confusion. The court's discussion is rather garbled here, so I'm not exactly sure what the court was doing or saying. However, if the court was thinking of this as a trademark infingement claim, then its ruling is clearly out of sync with other uncited cases (such as the SMJ case), and trademark infringement claims are not really susceptible to dismissal on a 12b6.
* the false advertising claim because consumer complaints aren't advertising as contemplated by the statute.
I have some questions about the rigor of this court's legal analysis, but I also think the court's message is clear and unmistakable: if a vendor has a problem with a consumer review or complaint online, TAKE IT UP WITH THE CONSUMER AND LEAVE THE INTERMEDIARY OUT OF IT.
UPDATE: Rebecca does a better job sorting out the Lanham Act analysis than I did. WRT to the false advertising claim possibly being preempted by 230, this is one of the big blind spots of 230 that will be explored in future cases. See, e.g., the Mazur case.
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