Ripoff Report Gets Another Big 47 USC 230 Win–Asia Economic Institute v. Xcentric

By Eric Goldman

Asia Economic Institute v. Xcentric Ventures LLC, 2:10-cv-01360-SVW -PJW (C.D. Cal. May 4, 2011)

The AEI Ruling

Keeping alive its truly remarkable winning streak, Ripoff Report got yet another decisive 47 USC 230 victory. This challenge came from Asia Economic Institute (AEI), suing over 6 posts to Ripoff Report from former AEI employees complaining about the work environment. The case raised some eyebrows last summer when the judge gave AEI a chance to plead a RICO claim. That ruling got some plaintiffs excited that a conspiracy theory might finally expose Ripoff Report to liability. No matter, as it turns out, because AEI still lost on summary judgment.

General Applicability of Section 230

The court accepted that the 6 posts in question all originated with the users. Ripoff Report gives some “generic and stylistic” writing guidance to users, such as an ALL CAPS instruction not to use ALL CAPS. (Ironic, I know). With respect to these formatting instructions, the court says:

these statements can not amount to encouragement, solicitation, or instruction to say anything in particular that might warrant labeling Defendants as “information content providers.”

Ripoff Report also does some things to enhance the SEO of user posts, and the court treats these visibility-enhancing efforts as irrelevant to a Section 230 analysis:

Plaintiffs fail to cite any authority that increasing the prominence of a page in internet searches amounts to “creation or development of information” that would render Defendants “information content providers” under the CDA. The very purpose of consumer reports such as the Ripoff Report website is to provide accessibility to the public on a grand scale. Increasing the visibility of a statement is not tantamount to altering its message….At best, increasing the visibility of a website in internet searches amounts to “enhancement by implication,” which is insufficient to remove Defendants from the ambit of the CDA.

This is yet another court opinion citing Roommates.com for the defense.

I think the court’s key line comes immediately after this:

Absent a changing of the disputed reports’ substantive content that is visible to consumers, liability cannot be found.

This sentence is so simple and elegant, yet the concept frustrates plaintiffs to no end. Simply put, if content originates with a third party and the defendant doesn’t substantively change its meaning, Section 230 applies–FULL STOP. All of the plaintiffs’ kvetching about endorsing or ratifying third party content is getting plaintiffs nowhere. Once the court accepted that the reports came from third parties and that ROR employees didn’t substantively modify the contents, there was nothing left to discuss. Section 230 applies. Case over.

The plaintiffs also tried the now-tired argument that Ripoff Report creates report titles by combining user content and Ripoff Report content. The court doesn’t want to hear about this “circumvention” of the immunity either:

Users thus know precisely how the titles of their submissions will appear before posting. Defendants need not present users with a completely blank slate from which to create their reports in order to be protected by the CDA

Having determined that Ripoff Report qualifies for Section 230, the immunity wipes out a long list of claims:

(3) unfair business practices under Cal. Bus. & Prof. Code § 17200 et seq.;(4) defamation; (5) defamation per se; (6) false light; (7) intentional interference with prospective economic relations; (8) negligent interference with prospective economic relations; (9) negligent interference with economic relations; and (10) injunction.

The immunity for the 17200 UCL claim is particularly interesting. This is similar to the Levitt v. Yelp ruling, where the plaintiffs weren’t able to bypass Section 230 by arguing that Yelp’s UGC management practices mooted 230. This court also rejects the 17200 claim on standing grounds and the fraud/deceit claims for a variety of reasons.

Request for More Discovery

The court also denies the plaintiffs’ request for further discovery. Among other things, the plaintiffs wanted to look for evidence that the HTML code/metatags aren’t generated automatically. The court says that information wouldn’t matter because it would just show that Ripoff Report wanted better search engine indexing, plus “Plaintiffs conceded that the HTML code and meta tags of the reports devoted to them were created automatically.”

Anti-SLAPP Motion

The court denied Ripoff Report’s anti-SLAPP motion to strike. This is the second time the court did so; the first time was a broader anti-SLAPP motion denied in April 2010. This was a narrower anti-SLAPP attempt, but it still failed.

Response to the Ruling

Lisa Borodkin, AEI’s counsel, was kind enough to send me a statement, including this assessment:

Ripoff Report also changed several of its practices during the pendency of this litigation. Ripoff Report began informing telephone callers that their calls would be recorded and corrected the description of the Corporate Advocacy Program. Ripoff Report launched an arbitration program which is upfront about disclosing that Ripoff Report will redact names from Ripoff Reports for parties that prevail in arbitration.

The VIP Arbitration Program

This ruling shows that plaintiffs are running out of creative ways to sue Ripoff Report. They have tried just about every legal trick imaginable, and nothing has worked. Eventually, unhappy vendors will abandon frontal litigation assaults on Ripoff Report and aggressively pursue alternative ways to get the outcomes they desire.

One logical alternative is Ripoff Report’s relatively new arbitration process, called the “VIP Arbitration Program.” The process lets unhappy vendors proceed to an arbitration service designated by Ripoff Report. If the complainant wins the arbitration, Ripoff Report will redact the complainant’s name from the report. This may not be a perfect solution to a problematic report, but it’s more useful than a 47 USC 230-preempted lawsuit against Ripoff Report.

Default Judgments and Google Search Results

Meanwhile, a few months ago, a Texas lawyer, Kenton Hutcherson, wrote at Search Engine Land about another way to redress a problematic report. With the seductive title of “How To Remove Ripoff Reports From Google – Not Just Bury Them,” the article tells readers exactly what they desperately want to know–how to flush a bad report out of Google’s index.

The answer isn’t rocket science, and it takes advantage of Google’s apparent pliability when presented with a court order. The article advocates that aggrieved parties sue the person who posted the report. Although the article doesn’t say this explicitly, the article implies that defendants may quickly agree a default or stipulated judgment. The plaintiff can then present the court order to Google and anticipate that Google will honor it.

I found this article problematic for several reasons:

1) The author initially failed to mention that he had previously sued Ripoff Report–and lost. Do you think this past litigation experience is relevant to assessing the author’s perspectives? I do. One way of reading the article is that the author initially planned to drum up some business suing ROR, failed to show the legal merits of that option, and is now cultivating a replacement business line.

You’ll see that the article now contains the following disclosure:

Editors Postscript: For the purposes of full disclosure, Kenton J. Hutcherson has served as lead counsel in three lawsuits against Xcentric Ventures, LLC, the company that manages Ripoff Report.

That postscript was added in response to my inquiries to Search Engine Land over the past month.

2) The author mentions Ripoff Report’s arbitration program but doesn’t indicate that it may be less expensive than the path he recommends–and more effective too (success in arbitration would redact the problematic content everywhere, not just from Google). Omitting that crucial piece of pricing information (while downplaying the cost of litigation) provides further support for a hypothesis that the article is selling a new business line.

3) The article advocates taking advantage of Google’s apparently lax responses to court orders. Perhaps that’s a legitimate use of the court system, although it’s hard for me to be enthusiastic about such efforts. Meanwhile, this article is a good cautionary tale to Google–and all other service providers–that default and stipulated judgments are a potential source of abusive takedowns requests, especially when they don’t result from a proper substantive adjudication by the court. (As we know, for this reason, Ripoff Report sometimes stands up to default judgments; see the Blockowicz case).

I am a longtime regular reader of Search Engine Land, so I raised my concerns about this article directly to Danny Sullivan of Search Engine Land. On the point of Search Engine Land authors making adequate disclosures, Danny responded:

Going forward, we’re drafting up a disclosure statement that will be added to our contributor guidelines, and our contributors will get a reminder of this in the next monthly newsletter that goes out to them. We’ll be asking that they use common sense in disclosing any relevant relationships or background within their articles, as it makes sense within a story (say if they write about a client, they should disclose that) or provide general disclosure as part of their bio (if they are part of a company that might have bearing on what they’ve written, for example).

As you can see, this translated into the editor’s postscript now in the article. At the same time, Danny pointed out:

The disclosure wouldn’t have made you think he was somehow less biased against Ripoff Report (it was pretty obvious he wasn’t a fan). The disclosure wouldn’t have altered the advice he wrote, in terms of making what he was recommending more or less attractive — nor would it have impacted the alternatives he wrote.

Perhaps this is true, but I find that litigation counsel tend to become deeply entrenched in the viewpoints they advocated, and so I find that knowing that background often helps me contextualize subsequent remarks from them.

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