Internet Library of Law
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Whitney Information Network, Inc. v. Xcentric Ventures LLC, Badbusinessbureau.org and Ed Magedson

In the latest chapter of this long running dispute, the District Court holds that the Communications Decency Act, 47 USC Section 230, immunizes defendants from defamation claims arising out of the posting on their site – The Rip-Off Report - of allegedly defamatory statements about plaintiff that were allegedly authored by third parties.  In reaching this result, the Court rejected plaintiff’s contention that defendants were sufficiently involved in the creation of the posts at issue to be denied CDA immunity because they offered such third party posters the opportunity to categorize their reports in categories such as ‘con artists’, ‘corrupt companies’ and ‘false TV advertisements.’  The Court further held that plaintiff had failed to submit evidence sufficient to establish that defendants were involved in authoring the particular defamatory statements at issue so as to lose the immunity offered by the CDA.

Plaintiff Whitney Information Network provides education products and services ‘in the areas of real estate investing, business development, financial investment and asset protection real estate.’ 

Defendant Xcentric operates a website known as The Rip-Off Report, which can be found at the domains ripoffreport.com and badbusinessbureau.com.  Defendant Magedson is the founder and managing member of Xcentric.

The Rip-Off Report provides a forum where disgruntled consumers can post complaints about companies and business dealings with which they are dissatisfied.  To post a complaint, the consumer must select a topic and category from selections provided by the Rip-Off Report.  Topics include ‘outrageous & popular rip off” and ‘unusual-rip off.’  Categories include ‘con artist,’ ‘corrupt companies,’ and ‘false TV advertisements.’  Many additional topics and categories are provided that are not equally inflammatory.  Before a consumer’s complaint can be posted on the Rip Off Report, it is reviewed by site content monitors, to make sure they do not contain ‘blatantly illegal, inappropriate or offensive materials, which can be deleted by the content monitors.  The monitors are instructed, however, not to add any material to consumer’s posts.  Nor do the monitors make any attempt to verify the accuracy of the post.

The subject of the post can submit a rebuttal, which will only be posted on the site at the Rip-Off Report’s discretion.
The Rip-Off Report offers companies the opportunity, for a fee, to participate in a program it calls the “Corporate Advocacy Business Remediation and Consumer Satisfaction Program.” (“CAP Program”).  When a consumer complains about a company that has paid the required fee, his post is not automatically displayed on the site.  Instead, it is sent to the subject company, which is given an opportunity to address the report with the consumer.  If the consumer is satisfied with the response, his complaint is not posted on the Rip-Off Report website.

Believing that various derogatory posts found on the Rip-Off Report website defamed it, Whitney Information Network commenced this suit.  On defendants’ motion for summary judgment, the Court dismissed the suit, holding defendants’ immunized from this claim by operation of the Communications Decency Act.

Under the Communications Decency Act, “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.”  Defendants Xcentric and Badbusinessbureau.com were providers of an interactive computer service because they operated the website at issue.  The same was true of defendant Magedson, because he was the founder and managing member of Xcentric, and because he used that site.

The Court further found that the content at issue was authored by third parties.  Defendants submitted numerous affidavits from those affiliated with the site attesting to the fact that they had no involvement in drafting the particular derogatory posts at issue.  Plaintiff failed, in the face of this evidence, to come forward with sufficient evidence that defendants had actually been involved in drafting the posts at issue to lead the Court to reach a contrary conclusion.

Because the suit sought, via a defamation claim, to hold defendants liable as a publisher for its role in making such content available to the public, it was barred by application of the Communications Decency Act.

In reaching this result, the Court rejected plaintiff’s argument that by providing inflammatory topics and categories in which a consumer had to categorize his complaint, defendants were sufficiently involved in its creation to lose the immunity afforded by the Communications Decency Act.  Under the CDA, an information content provider is defined 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.”  47 U.S.C. Section 230(f)(3).  Plaintiff argued that by supplying the categories, defendants became involved in whole or in part in the creation of the content at issue, and as such was not entitled to immunity in suit arising out of the publication of such content.  The court rejected this argument, because, while defendants provided consumers with category choices, it was the consumer who actually selected the category – defendants were not involved in that process.  The Court also noted that defendants provided the consumer with numerous category choices, many of which were not inflammatory.  Said the Court:

Xcentric created categories …  A review of the evidence demonstrates that some of the reports about WIN contain the ‘con artists’ ‘corrupt companies’ and ‘false TV advertisements’ categories.  Nevertheless, the Court finds that Defendants cannot be considered to be information content providers of the reports about WIN that include these categories.  WIN has not presented any evidence demonstrating that Defendants participated in any way in the selection of these categories to describe WIN. … the Court finds that the mere fact that Xcentric provides categories from which a poster must make a selection in order to submit a report on the Rip Off Report Website is not sufficient to treat Defendants as information content providers of the reports about WIN that contain the ‘con artists’ ‘corrupt companies’ and ‘false TV advertisements’ categories.  Rather, the authors of the postings made the decision to select these categories to describe WIN.  Moreover, Xcentric did not solely provide posters with a selection of categories that were negative and/or defamatory in nature. … Thus, the posters … could have chosen another category to describe their reports about WIN but decided not to do so.

As a result, the Court, applying the Communications Decency Act, held defendants immune from the defamation claims advanced by plaintiff, and dismissed this action.