Ripoff Report Sues Blogger, Loses on Jurisdictional Grounds–Xcentric Ventures v. Bird

By Eric Goldman

Xcentric Ventures, LLC v. Bird, 2010 WL 447759 (D. Ariz. Feb. 3, 2010). See the initial complaint.

I usually find personal jurisdiction rulings mind-numbingly uninteresting, so I try my best to avoid them. However, some personal jurisdiction cases are exceptional, and this is one of them. It involves one of this blog’s favorite litigants, the Ripoff Report, as a defamation plaintiff against a well-respected lawyer-blogger, Sarah Bird, COO and GC of SEOmoz.

The case involves Sarah’s Jan. 2008 blog post on the SEOmoz blog entitled “The Anatomy of a RipOff Report Lawsuit.” As you may know, many SEOs HATE Ripoff Report because of Ripoff Report’s frustratingly high ranking in Google search results, which might be more attributable to Ripoff Report’s venerability than its content quality. To cater to her audience’s interest/fascination with Ripoff Report, Sarah undertook the Herculean effort of trying to catalog all of the Ripoff Report litigation she could find and narrate some of the litigation dynamics. It’s a project I would not have undertaken because I know how long a project like that takes, but I was grateful she did the work and shared it with the rest of us. The post was a useful public service for researchers like me.

Perhaps not surprisingly given the overwhelming volume of information required to prepare her report, Sarah’s post contained at least one factual error, which she subsequently admitted. The post also prompted a conversation between Sarah and Thomas Duffy, the Ripoff Report’s former general counsel (a position now held by David Gingras). Sarah reported on their conversation in a follow-on post.

In my opinion, that should have been the end of it. Sarah undertook a near-impossible research task, made some errors, hashed out some issues with Ripoff Report and posted a follow-up. Instead, feeling that the article still encourages third party plaintiffs to bring false claims, Ripoff Report sued Sarah for defamation and “aiding and abetting” tortious acts by others.

This is not the first time that the Ripoff Report has gone on the defamation offensive. For example, I wrote about their lawsuit against the Phoenix New Times for an important work of investigative journalism they published. See my April 2008 blog post on that lawsuit and Thomas Duffy’s response. So it isn’t surprising that Ripoff Report sued Bird, but I still think it’s an unfortunate turn of events.

It is also a lawsuit that could backfire. Every defamation lawsuit Ripoff Report brings could establish adverse legal precedent that increases the potential exposure of their own contributors–some of whom probably are not as careful as Sarah. In my opinion, this risk is doubly troublesome because contributors can’t remove their reports from Ripoff Report, even if the contributor believes that taking down the content would reduce their liability.

In today’s case, the court rejected the Ripoff Report’s lawsuit against Bird due to her lack of personal jurisdiction in the Ripoff Report’s home court of Arizona. Ripoff Report tried to establish jurisdiction using the Calder “Effects Test.” The court, trying to read ambiguous 9th Circuit precedent interpreting that test, says:

mere knowledge of an individual’s residence, combined with intentional posting of defamatory statements on the internet (which, taken together, makes it foreseeable an individual will be harmed in a certain forum location) does not amount to “express aiming.” Although what else is required is unclear, the express aiming requirement appears to demand a showing that there is at least some additional connection between the defamatory act and the forum.

Applying this standard, the court concludes “the Plaintiffs in this case have alleged no connection between the allegedly defamatory article and the forum other than that the article was about Plaintiffs and Defendants knew Plaintiffs resided in Arizona.” Therefore, personal jurisdiction didn’t attach.

It’s clear from this opinion that the judge didn’t know what to do with the prevailing Ninth Circuit precedents. Surprise—another area where the Ninth Circuit has horked Internet law. As a result, the court’s assessment of Ninth Circuit law is not completely free from doubt. However, it is also clear that this judge doesn’t want to hear this case. In a footnote, the court notes the policy concerns about an expansive interpretation of the Calder Effects Test:

The ability to hale an internet user into a distant forum based on an allegation of intentional defamation could be used to chill free speech. It is true that a rule to the contrary could effectively deprive individuals who cannot afford to litigate outside their forum of a remedy for internet-based defamation….The harm caused by internet-based defamation can be quite severe and widespread, and conventional wisdom might be that one should have the right to remedy that harm without having to litigate in a distant forum. These concerns are mitigated, however, by the relative ease of modern air travel. It is also important to remember that at the pleading stage a plaintiff need only make a prima facie case of defamation. Requiring plaintiffs to bear the burden of traveling is consistent with requiring plaintiffs to bear the burden of proof at trial, and with the goal served by personal jurisdiction rules of preventing defendants from being unreasonably haled into a distant, and potentially biased, forum.

So true! Yet, judges rarely dismiss cases on jurisdictional grounds, so it’s not clear how many other judges would embrace these sentiments.

I reached out to David Gingras, and he informed me that Ripoff Report is planning to appeal this ruling. There may be some legal ground to reevaluate the district court’s reading of Ninth Circuit law, but going to the Ninth Circuit has some peril for Ripoff Report too (remember Kozinski’s example?). Stay tuned.