AdKnowledge Denied 47 USC 230 Immunity (Again)–Chang v. Wozo

By Eric Goldman

Chang v. Wozo LLC, 2012 WL 1067643 (D. Mass. March 28, 2012)

This case is a cross between Swift v. Zynga and Goddard v. Google. Tatto runs a website, Wozo, that sells art posters. It created a “poster of the month” negative-option club that sent 2 posters/month for $30/month until the customer opts-out. Who has enough wall space for 24 posters a year? Tatto ran ads offering a “free” poster for a 99 cent shipping fee. Unlucky customers allegedly were surreptitiously enrolled in the poster club. To sweeten the deal, Tatto bundled its free poster offer with additional incentives to consumers, including AdKnowledge’s virtual currency (“Super Rewards Points”) pursuant to a deal with AdKnowledge. Chang, as class representative, alleges he responded to an ad for the bundled free poster and virtual currency and got duped into the poster club.

AdKnowledge tries a number of tactics to exit the lawsuit early, but I’m going to focus only on its 47 USC 230 defense. Citing Swift v. Zynga in a footnote (in which AdKnowledge was denied a 230 dismissal in a similar circumstance), the court’s rejection of 47 USC 230 is brief:

Adknowledge and Chang dispute whether the content of the internet advertisements at the heart of this case were developed solely by Wozo and Tatto or whether the content was developed at least in part by Adknowledge….This is a dispute of fact that cannot be resolved at this juncture.

Nowadays, every plaintiff asserts that a 230-immunized entity “developed in part” the offending content. Therefore, it was lazy at best for the court to simply take the statement at face value in rejecting the 230 immunity. As Judge Kozinski said in Roommates.com, the Section 230 immunity needs to be robust to avoid death by a thousand duck bites.

On the other hand, the court may be responding to AdKnowledge’s contract with Tatto to advertise a bundled offering, which does raise the question of how the contract allocated responsibilities for the bundle. For example, if AdKnowledge crafted the ad copy and deliberately omitted any reference to the poster club, 47 USC 230 probably doesn’t apply to the ad copy. In contrast, if AdKnowledge crafted fully legally-compliant ad copy based on everything AdKnowledge knew but Tatto independently and surreptitiously crammed the poster club onto users, 47 USC 230 might very well protect AdKnowledge for Tatto’s rogue behavior. See, e.g., Goddard v. Google and Mazur v. eBay. I can see why a court would want to see more facts beyond the complaint before making assumptions on a 12b6 motion to dismiss. At the same time, I hope the court will be willing to revisit Section 230 if AdKnowledge has the facts to throw Tatto under the bus.

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