Ripoff Report Defeats Extortion Claim, But Plaintiffs Keep Trying–AEI v. Xcentric

By Eric Goldman

Asia Economic Institute v. Xcentric Ventures LLC, 2:10-cv-01360-SVW-PJW (C.D. Cal. July 19, 2010). First Amended Complaint filed July 27, 2010.

I’ve lost track of the different techniques plaintiffs have tried to bypass 47 USC 230 and hold Ripoff Report liable for its UGC business. In this case, AEI played the “extortion” angle–that the combination of bad user reviews that Ripoff Report will not remove plus Ripoff Report’s Corporate Advocacy Program (which offers to help businesses rehabilitate their reputation for a substantial fee) equals extortion, a predicate for the plaintiffs’ civil RICO claim. This is hardly a new argument against Ripoff Report; but AEI has gotten further than most plaintiffs by getting a scheduled trial date.

But in a familiar denouement, Rip-off Report defeated the extortion charge on summary judgment. The court evaluated the undisputed evidence and held that evidence did not show extortion. This conclusion was aided by the previously unknown (to me) fact that Ripoff Report has been routinely recording its phone calls without telling callers–a troubling fact, but one that proved helpful as the plaintiffs withdrew and modified their declarations after having their memories refreshed by the recordings. Without the he said/she said disputes over the phone conversations, Ripoff Report was able to cut through the other evidence on summary judgment.

I doubt this will deter other plaintiffs from trying the extortion angle, but there is no reason to believe the extortion 230 bypass will work any better than others.

While Ripoff Report won this ruling, the court left open the possibility of a RICO claim based on wire fraud. The plaintiffs have filed a First Amended Complaint pursuing that.

One curiosity: AEI was a content publisher from 2000-2009 (it’s now out of business), and during those 9 years, it had zero revenues. This could make it hard for AEI to garner much judicial sympathy over any harm to its business.

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