June 01, 2012
PissedConsumer Denied Section 230 Immunity and Can’t Shake Extortion Claim—Vo v. Opinion Corp.
By Eric Goldman
Vo Group v. Opinion Corp., 8758/11 (N.Y. Sup. Ct. May 22, 2012)
PissedConsumer is a consumer review site occupying the same market niche as Ripoff Report. It only wants negative consumer reviews of businesses (as signaled by its name), and its basic business model is to rank the negative consumer reviews highly in Google search results and then charge the businesses money to take the edge off that indexing. Vo Group claims it got snared in PissedConsumer’s scheme and allegedly chose not to pony up the requested cash ($5k) to PissedConsumer. Instead it sued PissedConsumer for a potpourri of claims. PissedConsumer moved to dismiss the lawsuit, and the resulting opinion is a mixed bag. Some highlights:
Defamation. Regarding Vo’s defamation claims, PissedConsumer defended on 47 USC 230. In one of the most important cyberlaw rulings of 2011, PissedConsumer won a 230 defense in the analogous Ascentive case, but the court doesn’t reach the same conclusion here:
at this stage of the litigation before any discovery has been conducted there are certainly allegations whether the initial defamatory content posted on the pissedconsumer website was attributed to the defendants themselves….Therefore the motion seeking to dismiss the initial statements is denied.
This adds to a long-simmering split in Section 230 jurisprudence: can a plaintiff defeat a motion to dismiss simply by alleging that the review website wrote the review in question? Some cases have said or implied yes (see, e.g., Children of America v. Magedson; Whitney v. Xcentric; HyCite v Badbusinessbureau; and I'm sure I'm forgetting others), while others have said no (see, e.g., Levitt v. Yelp). And of course, there was the Roommates.com train wreck on this very issue. If the answer is yes, the Section 230 immunity becomes substantially less effective; at minimum, it means the cases run longer, and plaintiffs can take expensive and disruptive discovery, even if the Section 230 immunity ultimately applies. In fact, given some courts’ wishy-washiness about Section 230 motions to dismiss, several experienced Section 230 litigators have told me that they sometimes skip a 230-based motion to dismiss and just push instead for a quick summary judgment.
Because it’s trivially easy for the plaintiff to allege that the review website wrote the review and therefore defeat an otherwise appropriate early Section 230 dismissal, I think courts need to screen the plaintiff’s allegations much more aggressively than this court did. See, e.g., Nemet Chevrolet v ConsumerAffairs, which didn't rely on 47 USC 230 but still rejected the unsupported assertion that the review site fabricated reviews. First, I think Twombly/Iqbal require the plaintiff to allege more than just the bare assertion that the website wrote the review. The plaintiff should have to provide concrete allegations of facts uncovered in its research supporting the claim, and it should not be enough simply to have a hunch. Compare Frontier Van Lines v. Valley Solutions, which said that the bare assertion of review website authorship didn't clear Iqbal, but the court didn't grant the motion to dismiss either. Second, courts should more aggressively police plaintiffs’ Rule 11 investigation obligation. In my opinion, if plaintiffs are just making up facts and defeating motions to dismiss based on these fictions, they should have to pay for the defendants’ resulting expenses.
We’ll find out if Vo has any juice behind its assertion later in the litigation. Perhaps the Section 230 motion will work better on summary judgment.
Bribery/Extortion. The court rejects the plaintiff’s commercial bribery claim, but it survives a RICO claim predicated on alleged extortion. The court says:
if PissedConsumer had the legal right to engage in the activities it was doing, then to request money in return for desisting from such activities cannot be considered extortion. [Eric’s note: the court doesn’t cite Coase, but this is quintessentially Coasean!] Since it has already been determined that some of PissedConsumer’s posts were possibly defamatory and hence fully unlawful, the $5,000 request cannot be viewed as merely nothing more than “hard bargaining” [Eric’s note: the court’s double negative makes that a hard sentence to parse]
In other words, just like the allegation that PissedConsumer authored the defamatory review defeated the Section 230 dismissal, it also helps the extortion-based RICO claim survive. This only reinforces how important is it/was for the court to gatekeep the plaintiff’s allegation that PissedConsumer wrote the review. Extortion charges are often leveled at Ripoff Report as well. Although I doubt Vo’s extortion claim will succeed in the end, I imagine other plaintiffs suing Ripoff Report and PissedConsumer will start sniffing around this RICO ruling for ways to keep their cases in court a little longer.
Trademark On the plus side, just like the Ascentive case, the court dismisses the trademark claims because the name PissedConsumer makes it clear to consumers what they are going to get. This extends the precedent that a trademark workaround to Section 230’s immunity for review websites may not exist.
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