First Circuit Rules for Lycos, Bolsters CDA Immunity for Web Site Operators
March 22, 2007
Damon M. Seligson- Boston
The U.S. Court of Appeals for the First Circuit has strengthened protections for Web site operators, upholding the decision of a Massachusetts federal court dismissing claims against Lycos for third-party postings on an online investment message board.
Writing for the appeals court, Judge Sandra Lynch, in Universal Comm’n Sys., Inc. v. Lycos, examined the impact of Section 230 of the Communications Decency Act, 47 U.S.C. § 230, and noted that “Congress intended that, within broad limits, message board operators would not be held responsible for the postings made by others on that board.” Allowing bloggers and message board operators to be sued for the statements of commentators on their sites would have an “obvious chilling effect” on speech, the First Circuit reasoned. Accordingly, the First Circuit upheld the dismissal of the complaint against Lycos and its parent, Terra Networks.
In the underlying suit, the plaintiffs, Universal Communications Systems, Inc., a Florida-based telecommunications company, and its CEO, Michael Zwebner, sued Lycos, Terra Networks and various individual posters on the theory that they had allegedly been victimized by defamatory statements posted on a message board operated by Lycos regarding the value of Universal’s stock.
The message board, RagingBull.com, allows users to post investment-related comments about publicly-traded companies. Lycos provides minimal moderation of the postings. No one from Lycos was responsible for the allegedly defamatory statements. Instead, the statements are posted by third parties.
Although the plaintiffs initially brought suit in federal district court in Florida, including asserting claims for fraudulent securities transactions, cyberstalking and dilution of trade name, the action was transferred to the District of Massachusetts based on a forum selection clause included in a user agreement. Following the transfer of the case, the federal district court dismissed the claims against Lycos and Terra Networks on the grounds that they were immune from liability under Section 230. The plaintiffs then appealed to the Court of Appeals for the First Circuit.
On appeal, the First Circuit noted that while the court had never previously been called upon to interpret Section 230, the prevailing judicial tendency was to interpret the statute broadly. Adopting this broad reading of the statute, the First Circuit determined that Lycos’ conduct in operating the online Web site “fits comfortably within the immunity intended by Congress.”
As Judge Lynch wrote, Congress granted broad immunity to entities such as Lycos that facilitate the speech of others on the Internet. Specifically, Section 230 provides that “[n]o 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,” and that “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.”
Lycos qualified as an “Interactive Computer Service” provider under the statute. Although Lycos does not offer Internet access to its users, it facilitates computer access by multiple users to a computer server by providing a network of Web sites devoted to a wide array of content, including RagingBull.com. The court determined further that the offending message board postings were “information provided by another information content provider” as defined by the broad interpretation of Section 230 by other courts. The court held that it would follow these courts in holding that Section 230 immunity applies “even after notice of the potentially unlawful nature of the third-party content.”
The court further ruled that Lycos had not provided “culpable assistance” to subscribers wishing to disseminate misinformation. Instead, it noted that Lycos’ network was arranged in a way that was “standard for message boards and other web sites.” More importantly, the court ruled generally that there is no “culpable assistance” exception at all to Section 230 immunity.
Accordingly, the First Circuit determined that plaintiffs’ claims of cyberstalking and violations of securities laws were barred under Section 230. As Judge Lynch wrote, addressing these claims would necessitate the court looking at Lycos as the “publisher” of the offending content when it was undisputed that the same was posted by third parties. The First Circuit likewise affirmed the dismissal of the dilution of trade name claim, but as a matter of trademark law.
In conclusion, it is clear that the First Circuit’s decision in Universal Comm’n Sys, Inc. v. Lycos provides broad protection to Web site administrators based on content posted by third-party bloggers.
It is worth noting that in a similar case, Holland & Knight successfully defended Cable Network News in a defamation lawsuit that had been filed in a federal district court in southern Florida by Universal and Zwebner, based on third-party postings on Lycos’ Web sites, a company that has no affiliation with CNN. The lawsuit was ultimately dismissed and CNN was able to recover its legal fees and costs associated with defending the claims.
For more information, e-mail Damon M. Seligson at damon.seligson@hklaw.com or call toll free, 1-888-688-8500.