Re: 1/00 - Cyberlibel and Cybersmears
Cyberlibel and Cybersmears
Mark C. Pomeroy
Bricker & Eckler LLP
January 2000
Controversial, Inc. is a publicly-traded hypothetical company incorporated and located in Tennessee that manufactures automobile parts which are sold all over the country. On a message board provided by an Internet service provider located in New Mexico, a resident of Idaho posts a disparaging message about the motives and products of Controversial, Inc. and signs his name to the message. The Idaho message starts a thread of messages from other participants of the message board, most of which are posted anonymously or by persons using pseudonyms with no geographic identification. The messages intensify from criticism of the company's products to rumors of illegal activities by the company executives including pedophilia and drug smuggling. Some of the messages also claim that the company is under investigation by the FBI and the SEC for various corporate irregularities. Eventually the rumors are picked up and posted on financial message boards and the company's stock value is negatively affected.
This article discusses cybersmear cases such as the above hypothetical that is, cases in which a company believes that it has been made the subject of a smear campaign through information posted on an Internet website. The article also discusses cyberlibel, in which an individual believes that he has been defamed by material contained on an Internet website. The article does not analyze traditional defamation cases, it examines the unique issues that arise when the defamation or smear campaign occurs on the Internet as opposed to more traditional libel occurring in newspapers and other print media. Because there is very little case law on this topic currently, we will keep this article updated periodically as new case law develops.
Suing the Defamer
The obvious target of any defamation lawsuit is the perpetrator of the libelous statement or communication. In the world of the Internet, however, many persons act anonymously or list themselves with pseudonyms. In these cases, lawsuits may be filed against one or several unknown John Does in an attempt to use the court's power to uncover the identities of the message board posters. One such company, Carib Inn, did exactly that after it claimed to be defamed by an unknown subscriber of AOL who posted defamatory and libelous statements on an electronic message board accusing the plaintiff of unsafe and criminal business practices connected with scuba diving. Through a verified petition for discovery, the Carib Inn and its owners requested AOL to produce all subscriber information, applications for membership and payment records in order to locate the individuals responsible for the defamatory messages. Bowker v. America Online Inc., No. 95- L-13509 (Illinois Circuit Court, Cook County). This case apparently settled as nothing further has been officially heard about it since the discovery petition in 1995. In a similar action, Wade Cook Financial Corp. filed suit in December 1999 against 10 unknown John Does who, the plaintiff company claims, made disparaging remarks about the chief executive officer of Wade Cook Financial, including statements that the CEO had been arrested for kickbacks. The company will attempt to subpoena the Internet service provider to identify the anonymous posters. Several other similar cases are pending against unknown John Does for cybersmearing.
When the actual defamer is known, the case is easier. Recently, ZiaSun Technologies, a small Internet company, won a preliminary injunction against a mortgage banker who had been an online critic of the company and its management. The injunction bars the critic from posting false statements alleging criminal activities by the company and its executives. In June of 1999, ZiaSun sued several message-board users in U.S. District Court in Seattle, alleging that they engaged in a "cybersmear" campaign to ruin the company. The case is expected to proceed to trial later this year.
In another case going directly after the alleged defamer, a Columbus Ohio auto dealership filed suit in January 2000 against the creator of two web sites that carry consumer complaints filed against the auto dealership. The web site was created after the creator got into a dispute with the auto dealer over the terms of a warranty. The web site creator filed a consumer complaint with the Ohio Attorney General and then created the web site that lists details of consumer complaints filed against the dealership. The lawsuit alleges trademark infringement, among other things, because the internet address of the site includes the dealer's name followed by "ripoffs.com".
As these litigation attempts to identify and stop the perpetrators of a corporate smear campaign represent a novel approach to liability and discovery, the existing case law is still in the development stage.
Immunity of the internet provider
In many cases, the subject of the defamation or smear campaign attempts to hold the internet service provider liable, frequently because the actual perpetrator of the libel cannot be found or is unidentifiable. Recent Congressional action, however, has largely immunized service providers from responsibility in these cases. In Zeran v. American Online, Inc, 129 F.3d 327 (4th Cir. 1997), the court examined the potential liability of the Internet provider, in this case AOL, for defamatory messages posted by a third party user. According to the facts, an unidentified person posted a message on an AOL bulletin board advertising t-shirts which featured offensive and tasteless slogans related to the 1995 bombing of the federal building in Oklahoma. The phone number listed in the message was that of the plaintiff Kenneth Zeran, who apparently had nothing to do with the advertisement or message. The plaintiff, receiving a high volume of calls, including death threats, contacted AOL and informed a representative of his predicament. The AOL representative assured the plaintiff that the posting would be removed from the bulletin board but AOL would not post a retraction. During the next few days, several similar messages with the same telephone number were reposted on the AOL board and the threatening calls continued. Zeran eventually brought suit against AOL and attempted to hold AOL liable for defamatory speech initiated by a third party. The plaintiff argued that once he notified AOL of the third party posting, AOL had a duty to remove the defamatory postings promptly, to notify its subscribers of the message's false nature, and to effectively screen future defamatory material. AOL defended on the ground that Congress, through the Communications Decency Act of 1996, 47 U.S.C. §230, immunized internet providers from claims based on information posted by a third party.
Section 230 of the Communications Decency Act states in relevant part: "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." Based on this statute, the 4th Circuit Court of Appeals stated:
By its plain language, §230 creates a federal immunity to any cause of action that would make service providers liable for information originating with a third-party user of the service. Specifically, §230 precludes courts from entertaining claims that would place a computer service provider in a publisher's role. Thus, lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial function -- such a deciding whether to publish, withdraw, postpone or alter content -- are barred.
Zeran at 330.
Even before the application of the Communications Decency Act, most courts found the service provider immune from liability under a common law privilege accorded to telephone and telegraph companies absent malice or bad faith. Courts have held that telephone and telegraph companies, similar to an internet service provider, are merely a conduit and not the publisher of a libelous or defamatory statement. See e.g. Lunney v. Prodigy Services Company,1999 N.T. LEXIS 3746, 1999 WL 1082126 (Ct. App. NY December 2, 1999). But see Stratton Oakmont v. Prodigy Services, 1995 N. Y. Misc. LEXIS 229,1995 WL 805178 (NY Sup. December 11, 1995). The negative outcome for the service provider in Stratton was the impetus for the enactment of §230 of the Communications Decency Act.
Some plaintiffs have attempted to hold the internet service provider liable, despite the federal and common law, on the basis that the provider was not a mere conduit but actually had editorial discretion over messages posted on electronic bulletin boards or over paid contributors of content to the provider. This argument arose in a case brought by Sidney Blumenthal against Matt Drudge and American Online, Inc. In this case, AOL contracted with Matt Drudge to provide The Drudge Report to all members of AOL's service for one year. In one of the reports sent to AOL members, Drudge inaccurately reported that Blumenthal had a history of spousal abuse. Blumenthal argued that AOL was not a "mere conduit" of the report, but in fact paid Drudge $3,000 a month to produce the report and promoted the report to its subscribers as a reason to sign on to AOL. In addition, the license agreement between Drudge and AOL reserved to AOL "the right to remove, or direct [Drudge] to remove, any content which, as reasonably determined by AOL . . . violates AOL's then-standard Terms of Service." Blumenthal v. Drudge, 992 F. Supp. 44 (D.C. Dist. Ct. April 1998). Based on these facts, the court concluded that AOL was not a passive conduit like the telephone company and found that "AOL has certain editorial rights with respect to the content provided by Drudge and disseminated by AOL, including the right to require changes in content and to remove it; and it has affirmatively promoted Drudge as a new source of unverified instant gossip on AOL." Blumenthal at 51. Despite this finding, however, the court, somewhat reluctantly, stated as follows:
But Congress has made a different policy choice by providing immunity even where the interactive service provider has an active, even aggressive role in making available content prepared by others. In some sort of tacit quid pro quo arrangement with the service provider community, Congress has conferred immunity from tort liability as an incentive to Internet service providers to self-police the Internet for obscenity and other offensive material, even where such self-policing is unsuccessful or not even attempted . . . While it appears to this Court that AOL in this case has taken advantage of all the benefits conferred by Congress in the Communications Decency Act, and then some, without accepting any of the burdens that Congress intended, the statutory language is clear: AOL is immune from suit . . . .
Blumenthal at 52-53. Thus, unless some unique arguments are presented to a court or unless Congress revises the current law, suits against the service provider for allowing libelous statements to be posted on the provider's bulletin boards or website will fail as to the Internet service provider.
Jurisdiction
One of the threshold issues that arises in cyberlibel cases is whether the plaintiff's forum court has personal jurisdiction over the libeling defendants. Although the plaintiff can, of course, bring the suit in the local jurisdiction where the defendant resides, the plaintiff in one of these cases is frequently looking at several potential defendants, all of whom may reside in different states from one another and from the plaintiff.
Although different states have different standards for what constitutes personal jurisdiction, traditional rules require that in order to subject a defendant to the jurisdiction of the particular state, the defendant must engage in more than isolated activity within the forum state and must purposefully direct action in a substantial way to the forum state. Panavision International v. Toeppen, 141 F.3d 1316, 1321 (9th Cir. 1998). A majority of courts have held, in this context, that the creation of a website in State A which is accessible to residents of State B is not sufficient contacts with State B to create personal jurisdiction in State B. Resnick v. Manfredy, 52 F. Supp.2d 462 (E.D. Pa. April 1999); Cybersell v. Cybersell, 130 F.3d 414, 418 (9th Cir. 1997) In the context of the Internet, courts have looked at websites as passive or interactive. Passive sites, those that simply make information available to those who happen to be interested, are generally not sufficient contacts to establish jurisdiction. Interactive sites, on the other hand, are those where the website developer or sponsor conducts business through the site by entering into transactions or contracts with residents of another jurisdiction. In the case of an interactive website, jurisdiction in the forum state may be proper. See e.g., Blumenthal v. Drudge, 992 F. Supp. 44 (D.C. Dist. Ct. April 1998). An interactive website, coupled with non-internet contacts with the forum jurisdiction, provide an even stronger case for jurisdiction.
In one case the court found that use of a Virginia-based Internet service provider was sufficient nexus to find jurisdiction in Virginia over a New Mexico resident who posted libelous messages on an Internet newsgroup. Bochan v. La Fontaine, 68 F. Supp.2d 692 (E.D.Va May 1999). But see Jewish Defense Organization v. Superior Court, 85 Cal. Rptr.2d 611 (Ct. App. June 1999) in which the court found that the location of the Internet service provider did not automatically confer jurisdiction in the forum.
Use of traditional defamation statutes
Courts are currently forced to apply traditional defamation statutes, designed for traditional libel situations in newspapers and magazines, to a completely different medium with a different set of characteristics. One court noted the difficulty of applying state libel laws to these cases when those laws were enacted "years before cyberspace was envisioned:"
The magnitude of computer networks and the consequent communications possibilities were non-existent at the time this statute was enacted. Applying the present libel laws to cyberspace or computer networks entails rewriting statutes that were written to manage physical, printed objects, not computer networks or services. Consequently, it is for the legislature to address the increasingly common phenomenon of libel and defamation on the information superhighway.
It's In The Cards v. Fuschetto, 535 N.W.2d 11, 14 (Ct. App. Wisc. April 11, 1995). In the Fuschetto case, the plaintiff brought a defamation suit against an individual who posted messages to an Internet bulletin board. The state law required that before any civil action for libel could be commenced, the libeled person had to provide the "newspaper, magazine or periodical" an opportunity to correct the libelous material. The court was required to determine whether the suit against the Internet bulletin board user could proceed without the statutory obligation to allow the libel to be corrected or retracted. The court noted that the sole issue is whether the computerized bulletin board was a "periodical", since it clearly was not a newspaper or magazine. After noting that the existing laws did not contemplate computers and the Internet, the court held that posting a message on an electronic bulletin board is not a publication that appears at regular intervals and thus, the plaintiff was not required to provide the libeling individual with an opportunity to retract the statement. See also Zelinka v. Americare Healthspan, 2000 Fla. App. LEXIS 500; 2000 WL 60913 (Fla. App. 4 Dist. January 26, 2000).
Defamation cases have generally involved communications that directly impugn the character of the plaintiff. But what about the scenario where someone on the Internet sends out threatening or harassing messages using the name of the plaintiff. Where these cases have arisen, the courts have generally found that although the plaintiff was not directly attacked, the plaintiff was nevertheless defamed by being portrayed as the author of the inflammatory material. See e.g., Lunney v. Prodigy Services Company, 1999 N.T. LEXIS 3746, 1999 WL 1082126 (Ct. App. NY December 2, 1999).
Finally, some courts have found that discussions that might be libelous in other contexts are not necessarily libelous when engaged in on message boards on the Internet. For instance, in Nicosia v. Rooy, 72 F. Supp.2d 1093 (N.D. Calif. July 1999), the court found that a poster's statements against the plaintiff, which included allegations of murder, perjury, fraud, and others, were nothing more than hyperbolic language and which occur "in the context of a controversial debate on the Internet." Nicosia at 1106. The court explained that "in the context of the heated debate on the Internet, readers are more likely to understand accusations of lying as figurative, hyperbolic expressions." Id. at 1106.
Summary
The cases discussed above provide an overview of the types of issues that plaintiffs in cybersmear and cyberlibel cases must overcome when looking to hold a defendant liable for defamation on the Internet. 2000
Mark Pomeroy is a partner in the corporate department of Bricker & Eckler LLP and chairs the cyberlaw practice area. Mark can be contacted at mpomeroy@bricker.com.
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