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Socially Aware Blog The Law and Business of Social Media

Two Recent Cases Illustrate Limitations of the CDA Section 230 Safe Harbor

Posted in Section 230 Safe Harbor

Although common law generally holds publishers responsible for the content that they publish, the Communications Decency Act (“CDA”) gives website operators broad protection from liability for content posted by users.  Courts have applied the CDA in favor of website owners in nearly 200 cases, including cases involving Google, Facebook, MySpace, and even bloggers for content posted by their co-bloggers.  Commentators hail the CDA as the legal framework that made possible the rise of social media.  CDA immunity, however, is not limitless.  For example, as the Ninth Circuit explained in Fair Housing Council  of San Fernando Valley v. Roommates.com, where “a website helps to develop unlawful content,” it loses CDA immunity “if it contributes materially to the alleged illegality of the conduct.”  Two recent cases illustrate how websites can lose CDA immunity as a result of contributing to offending content.

The district court in Levitt v. Yelp considered business owners’ claims that Yelp manipulated Yelp pages, rankings, and reviews in an extortionate manner that violated California’s unfair business practices law.  Plaintiffs alleged that Yelp threatened to, and did, take down positive reviews if plaintiffs did not buy ads, and that Yelp’s salespeople manipulated rankings on Yelp.  The court first rejected Yelp’s jurisdictional argument that the CDA prevented the court from hearing the claims.  Second, the court held the CDA did not immunize Yelp because some of the claims focused on Yelp’s sales practices, and not merely Yelp’s editing or selective display of user reviews.  The court dismissed the plaintiffs’ claims anyway— finding that they had not pleaded sufficient facts to show extortion by Yelp—but it gave the plaintiffs leave to amend.

In Hill v. StubHub a North Carolina state court considered claims that StubHub violated state anti-scalping statutes.  The court rejected StubHub’s CDA defense because StubHub’s service suggested that users input particular prices for Miley Cyrus concert tickets, and profited when they did.  That StubHub suggested the illegal prices, monitored its inventory for particular events, and only made money if sufficient tickets were sold, and even then made a percentage of the ticket price, all meant StubHub “developed” the unlawful content:  a system where users scalped tickets.  The court explained that StubHub “encouraged, materially contributed to, and made aggressive use” of the pricing content posted by users, so StubHub could not avoid liability for it.

Together, the Yelp and StubHub cases show that CDA immunity, although critical for social media operators’ use of user-generated content, is not boundless.  Sites can lose CDA immunity by directing or contributing to offending content or as a result of the actions of their salespeople.