Reference no: EM131274700

Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc.
United States Court of Appeals for the Fourth Circuit
The plaintiff, Nemet Chevrolet, Ltd., is in the business of selling and servicing automobiles. The defendant, Consumeraffairs.com, Inc., operates a Web site where consumers can comment on the quality of goods and services, including those at Nemet Chevrolet. Nemet felt that several of the postings on the defendant's Web site were false and harmful to its business reputation, so it filed suit alleging defamation. The defendant filed a motion to dismiss, under Federal Rule 12(b)(6), for failure to state a claim upon which relief could be granted. According to the defendant, the statements on its Web site are protected by the Communications Decency Act of 1996 (CDA), which prevents plaintiffs from holding Internet service providers liable for the publication of information created and developed by others. The district court granted the motion with leave to amend the complaint. The plaintiff amended, but the defendant filed another 12(b)(6) motion to dismiss. The district court again granted the dismissal. The plaintiff appealed.

Circuit Judge Agee
Recognizing that the Internet provided a valuable and increasingly utilized source of information for citizens, Congress carved out a sphere of immunity from state lawsuits for providers of interactive computer services to preserve the "vibrant and competitive free market"of ideas on the Internet. The CDA bars the institution of a "cause of action" or imposition of "liability"under "any State or local law that is inconsistent"with the terms of §230. As relevant here, §230 prohibits a "provider or user of an interactive computer service" from being held responsible "as the publisher or speaker of any information provided by another information content provider." Assuming a person meets the statutory definition of an "interactive computer service provider,"the scope of §230 immunity turns on whether that persons' actions also make it an "information content provider." The CDA defines an "information content provider"as "any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service."

Taken together, these provisions bar state-law plaintiffs from holding interactive computer service providers legally responsible for information created and developed by third parties. Congress thus established a general rule that providers of interactive computer services are liable only for speech that is properly attributable to them. State law plaintiffs may hold liable the person who creates or develops unlawful content, but not the interactive computer service provider who merely enables that content to be posted online.

To further the policies underlying the CDA, courts have generally accorded §230 immunity a broad scope. This Circuit has recognized the "obvious chilling effect" the "specter of tort liability" would otherwise pose to interactive computer service providers given the "prolific"nature of speech on the Internet. Section 230 immunity, like other forms of immunity, is generally accorded effect at the first logical point in the litigation process. As we have often explained in the qualified immunity context, "immunity is an immunity from suit rather than a mere defense to liability"and "it is effectively lost if a case is erroneously permitted to go to trial." We thus aim to resolve the question of §230 immunity at the earliest possible stage of the case because that immunity protects websites not only from "ultimate liability,"but also from "having to fight costly and protracted legal battles."

Nemet does not dispute that Consumeraffairs.com is an interactive computer service provider under the CDA. What Nemet contends is that Consumeraffairs.com is also an information content provider as to the twenty posts and, therefore, cannot qualify for §230 immunity. In other words, Nemet's argument is that its amended complaint pleads sufficient facts to show Consumeraffairs.com is an information content provider for purposes of denying statutory immunity to Consumeraffairs.com at this stage in the proceedings.

. . . We must determine . . . whether the facts pled by Nemet, as to the application of CDA immunity, make its claim that Consumeraffairs.com is an information content provider merely possible or whether Nemet has nudged that claim "across the line from conceivable to plausible."

In the amended complaint, Nemet recited the specific language from each customer about his or her automobile complaint for each of the twenty posts it claimed were defamatory. Then, Nemet pled as to each of the posts as follows:

Upon information and belief, Defendant participated in the preparation of this complaint by soliciting the complaint, steering the complaint into a specific category designed to attract attention by consumer class action lawyers, contacting the consumer to ask questions about the complaint and to help her draft or revise her complaint, and promising the consumer that she could obtain some financial recovery by joining a class action lawsuit. Defendant is therefore responsible, in whole or in part, for developing the substance and content of the false complaint . . . about the Plaintiffs.

. . . In short, Nemet argues [that] the language . . . shows Consumeraffairs.com's culpability as an information content provider either through (1) the "structure and design of its website," or (2) its participation in "the preparation of" consumer complaints: i.e., that Consumeraffairs.com "solicit[ed]" its customers' complaints, "steered" them into "specific categor[ies] designed to attract attention byconsumer class action lawyers, contact[ed]" customers to ask "questions about" their complaints and to "help" them "draft or revise" their complaints, and "promis[ed]" customers would "obtain some financial recovery by joining a class action lawsuit."

We first examine the structure and design of the website argument, which encompasses all the facts pled in the Development Paragraph except for the claim Consumeraffairs.com asked questions and "help[ed] draft or revise her complaint.". . . Even accepting as true all of the facts Nemet pled as to Consumeraffairs.com's liability for the structure and design of its website, the amended complaint "does not show, or even intimate," that Consumeraffairs.com contributed to the allegedly fraudulent nature of the comments at issue. Thus, . . . Nemet's pleading not only fails to show it is plausible that Consumeraffairs.com is an information content provider, but not that it is even a likely possibility.

We now turn to the remaining factual allegations, common to all twenty posts from the Development Paragraph, that Consumeraffairs.com is an information content provider because it contacted "the consumer to ask questions about the complaint and to help her draft or revise her complaint."Nemet fails to make any cognizable argument as to how a website operator who contacts a potential user with questions thus "develops"or "creates"the website content. Assuming it to be true that Consumeraffairs.com contacted the consumers to ask some unknown question, this bare allegation proves nothing as to Nemet's claim [that] Consumeraffairs.com is an information content provider. The remaining claim, of revising or redrafting the consumer complaint, fares no better. Nemet has not pled what Consumeraffairs.com ostensibly revised or redrafted or how such affected the post. . . .

Moreover, in view of our decision in Zeran, Nemet was required to plead facts to show [that] any alleged drafting or revision by Consumeraffairs.com was something more than a website operator performs as part of its traditional editorial function. It has failed to plead any such facts. . . . §230 forbids the imposition of publisher liability on a service provider for the exercise of its "editorial and selfregulatory functions.

We thus conclude that the Development Paragraph failed, as a matter of law, to state facts upon which it could be concluded that it was plausible that Consumeraffairs. com was an information content provider. Accordingly, as to the Development Paragraph, the district court did not err in granting the Rule 12(b)(6) motion to dismiss because Nemet failed to plead facts sufficient to show [that] Consumeraffairs.com was an information content provider and not covered by CDA immunity.

Even if the facts pled in the Development Paragraph are insufficient for Rule 12(b)(6) purposes, Nemet separately argues that as to eight of the twenty posts, the amended complaint pled other facts which show [that] Consumeraffairs.com is an information content provider. Thus, Nemet argues [that] the motion to dismiss should not have been granted as to these eight posts. . . . [A]s to the eight posts, Nemet pled as to each that "[b]ased upon the information provided in the post, [Nemet] could not determine which customer, if any, this post pertained to.

. . . Nemet's sole factual basis for the claim that Consumeraffairs.com is the author, and thus an information content provider not entitled to CDA immunity, is that Nemet cannot find the customer in its records based on the information in the post.
Because Nemet was unable to identify the authors of these comments based on "the date, model of car, and first name" recorded online, Nemet alleges that these comments were "fabricated" by Consumeraffairs.com "for the purpose of attracting other consumer complaints."But this is pure speculation and a conclusory allegation of an element of the immunity claim. . . . Nemet has not pled that Consumeraffairs. com created the allegedly defamatory eight posts based on any tangible fact, but solely because it [Nemet] can't find a similar name or vehicle of the time period in Nemet's business records.

Of course, the post could be anonymous, falsified by the consumer, or simply missed by Nemet. There is nothing but Nemet's speculation which pleads Consumeraffairs .com's role as an actual author in the Fabrication Paragraph. On appeal, Nemet argues that its supporting allegations nonetheless. . . [present] adequate facts that Consumeraffairs .com is the author of the eight posts, but each is meritless.

These allegations include (1) that Nemet has an excellent professional reputation, (2) none of the consumer complaints at issue have been reported to or acted upon by the New York City Department of Consumer Affairs, (3) Consumeraffairs. com's sole source of income is advertising and this advertising is tied to its webpage content, and (4) some of the posts on Consumeraffairs.com's website appeared online after their listed creation date. Nemet's allegations in this regard do not allow us to draw any reasonable inferences that would aid the sufficiency of its amended complaint. That Nemet may have an overall excellent professional reputation, earned in part from a paucity of complaints reported to New York City's Department of Consumer Affairs, does not allow us to reasonably infer that the particular instances of consumer dissatisfaction alleged on Consumeraffairs.com's website are false.

Furthermore, Nemet's allegations in regard to the source of Consumeraffairs.com's revenue stream are irrelevant, as we have already established that Consumeraffairs.com's development of class-action lawsuits does not render it an information content provider with respect to the allegedly defamatory content of the posts at issue. Finally, the fact that some of these comments appeared on Consumeraffairs.com's website after their listed creation date does not reasonably suggest that they were fabricated by Consumeraffairs.com. Any number of reasons could cause such a delay, including Consumeraffairs .com's review for inappropriate content. . . .

Viewed in their best light, Nemet's well-pled allegations allow us to infer no more than "the mere possibility" that Consumeraffairs.com was responsible for the creation or development of the allegedly defamatory content at issue. Nemet has thus failed to nudge its claims that Consumeraffairs .com is an information content provider for any of the twenty posts across the line from the "conceivable to plausible." As a result, Consumeraffairs.com is entitled to §230 immunity and the district court did not err by granting the motion to dismiss.

CRITICAL THINKING ABOUT THE LAW
In every legal case, there are at least two separate conclusions. The plaintiff believes that the court should rule one way, whereas the defendant thinks that the court should rule another. In Case 12-2, plaintiff Nemet provided one conclusion, but the court supported a conclusion more similar to Consumeraffairs.com's conclusion. The court's reasoning provides the answer for why the court reached its particular conclusion. The following questions address the court's reasoning.

1. Identify the court's conclusion in Case 12-2.
Clue: Reread the final paragraph of the court's decision.

2. What are the reasons the court provides to support this conclusion?
Clue: Look at the court's application of the Communications Decency Act

3. To demonstrate the significance of primary ethical norms in court decisions such as this one, identify the ethical norm that would have reversed this decision.
Clue: This norm is related to prioritizing the plaintiff's rights over those of the defendant in cases such as Case 12-2.