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September 21, 2011
Bad SEO Advice May Support Negligence Claim--D'Agostino v. Appliances Buy Phone
By Eric Goldman
This is a confusing dispute, so I'm just going to focus on a few aspects. Based on the court's description, it appears that D'Agostino helped Appliances Buy Phones (a baffling TM, but we'll call them ABP) build an e-commerce site in 2003. In 2009, the parties allegedly agreed to have D'Agostino build a second website ("Appliance4Sale") that was more SEO-optimized, and D'Agostino would get a cut of the revenue from the second site. Allegedly, D'Agostino indexed the second site in Google Products and started generating some sales; but subsequently ABP put the kibosh on sales through the second site, and then Google hit the sites with a duplicate content penalty that dried up traffic to the second site, so ABP shut it down to revitalize the indexing of the first site. ABP allegedly didn't pay D'Agostino for his development work on the second site, even though he claimed to spend 1,000-2,000 hours working on the site. On a pro se basis, D'Agostino sued ABP and its principals as well as Google.
The most interesting ruling relates to the counterclaim by ABP's principal, Sigman. Sigman brought counterclaims against D'Agostino for a violation of New Jersey Consumer Fraud Act, negligence and contract breach. The court refuses motions to dismiss the three counterclaims.
On the NJCFA claim, Sigman claimed "Plaintiff knowingly created the Second Website that threatened the existence of the First Website and profitability of ABP." On the negligence claim, Sigman argued that D'Agostino claimed to be an SEO expert but negligently triggered a duplicate content penalty. Finally, Sigman claimed that D'Agostino breached their contract by "jeopardizing defendant’s website, violating Google policies, and causing the interruption of defendant’s enterprise."
Now, if someone selling SEO services wasn't aware of Google's duplicate content rules, that would be a big problem. At the same time, those rules can be pretty arcane, so I could see how even well-meaning SEOs could run into unexpected duplicate content problems, especially if a site were engaged in aggressive grey-hat activities (which may or may not describe the sites involved in this litigation).
This particular judge appears to be a very cautious judge; so cautious that he might refuse a motion to dismiss even when it's warranted just to give a pro se plaintiff more time and space to develop the case. Thus, it's possible/probable that Sigman's counterclaim won't do as well at later stages in the case. Even so, this ruling has to be disconcerting to the SEO community. Combined with the Roger Cleveland case, where the vendor providing (among other things) SEO services got tagged with a big contributory trademark infringement damages award, it seems like the risks of being in the SEO consulting business keep going up.
I'm not 100% clear on D'Agostino's claims still standing against Google, but Google invoked its forum selection clause in one of its agreements to try to get out of New Jersey. (It's not clear which agreement applied, although the court references Google's Merchant Center Terms). We've had a long string of cases upholding Google's forum selection clauses, but here the court waffles on its application to D'Agostino. The court says that even if D'Agostino registered the second website with Google, he may have done so as ABP's agent, in which case he's not a party to the contract. This sounds wrong on two fronts. First, the second website appears to have been a joint endeavor of D'Agostino and ABP, so he may very well have been a party; and even if he was acting as an agent, then he should be bound equally with the principal. The court rejects Google's motion without prejudice, which means Google may still be able to transfer the case if it can show facts binding D'Agostino to the contract, but for now Google's still stuck in New Jersey.
Just yesterday, regarding the Ground Zero Museum Workshop v. Wilson case, I wrote:
Hey people, when you have vendors help run your website, PLEASE dot your i's and cross your t's. When the shit hits the fan and the contract isn't in place or clear enough, the resulting litigation fusillade can destroy your life.
This is another example where the contracts weren't air-tight enough to cut short a murky litigation. In fact, the basic architecture of this business deal--giving the SEO financial interest in the second website but still running the first website--seemed fraught with conflicts from inception. The structure apparently put the two different websites in competition with each other (because there were different economic payoffs associated with each site), so perhaps a falling-out was inevitable.
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