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In the past two weeks, I’ve twice blogged about the Ninth Circuit’s opinion in Barnes v. Yahoo. This case split the Ninth Circuit from other circuits as to how the CDA should be applied – should it support a 12(b)(6) motion to dismiss, or should it be treated as an affirmative defense? In deciding that the CDA was an affirmative defense, the Ninth Circuit created for itself a few problems. If the CDA is treated as an affirmative defense, then a court could open discovery prior to ruling on whether a defendant’s actions were immunized or not. By putting discovery into play, the cost of defending a case on CDA grounds could skyrocket. Thus, the CDA-as-an-affirmative-defense theory would create an incentive for defendants to settle cases for which they ought to receive protection, and create an incentive for plaintiffs to bring cases in the Ninth Circuit strictly for this reason. 

On June 22 (roughly six weeks after the release of the initial Barnes opinion), the Ninth Circuit issued an amended opinion in which it deleted the entire discussion of the CDA as an affirmative defense. This marks the second time in two years that the Ninth Circuit has had to go back and correct a decision about the CDA. But by making this correction, the Ninth Circuit resolves the split among the circuits as to whether the CDA can be used to support a 12(b)(6) motion. Thus, in the Ninth Circuit, the CDA can support a 12(b)(6) motion – for the moment, anyway.

If you want to read the full opinion, it can be found here. 

Why This Matters: Notwithstanding a future departure from the norm, the CDA can form the basis for a 12(b)(6) motion in the Ninth Circuit. This means that it is still possible to resolve a case on CDA grounds prior to the opening of discovery.

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On May 28, I wrote about the Ninth Circuit’s decision in Barnes v. Yahoo. In that case, the Ninth Circuit held (among other things) that the Communications Decency Act (47 USC § 230) (“CDA”) could not support a 12(b)(6) motion to dismiss for failure to state a claim, because the CDA is an affirmative defense. As an affirmative defense, CDA protections must be claimed by filing an answer to the complaint, which can allow for the opening of discovery. Given that the opening of discovery can be expensive and time-consuming, it is not surprising that Yahoo has asked the Ninth Circuit for a rehearing en banc, and has received support from various amici briefs.

On the other side of the country, a New York District Court has tackled the same issue, but came to a different outcome. The case – Gibson v. Craigslist, 1:08-cv-07735-RMB (S.D.N.Y. June 15, 2009) – was brought by a shooting victim who claims that the shooter bought the gun via Craigslist. News reports on the case can be found here and here.

The basis of the case was the allegation that Craigslist had a duty to police its system so that "inherently dangerous objects" could not be purchased for use in criminal activities. Gibson sought $10 million in compensatory damages, punitive damages, and the "appointment of a federal monitor" to keep guns from being advertised on the website. 

In its defense, Craigslist submitted a 12(b)(6) motion to dismiss the case on the grounds that the CDA precluded this kind of liability. In granting the 12(b)(6) motion, the court stated that "discovery into defendant’s efforts to prevent the sale of illegal goods on its website would not establish a set of facts that would entitle the Plaintiff to relief." Therefore, raising CDA immunity was more appropriate in a 12(b)(6) than raising it as an affirmative defense.

Why this Matters: As of today, there is a split in interpretation as to how CDA immunity should be claimed. For the Southern District of New York, as well as other courts like the Northern District of Texas [MCW, Inc. v. badbusinessbureau.com, 02-Civ.-2727 (N.D. Tex. April 19, 2004)], the CDA is properly raised in a 12(b)(6) motion to dismiss. If the motion is granted, this would preclude the opening of discovery. However, in the Ninth Circuit, the CDA should be treated as an affirmative defense to be raised in an answer. Thus, a judge may open discovery prior to ruling on the application of the CDA.

This split in application – if not resolved by the Ninth Circuit in an en banc rehearing – is likely to increase "forum shopping" among plaintiffs because, in the Ninth Circuit at least, plaintiffs would stand a better chance at a settlement. After all, a defendant may be more willing to settle a case than to risk the cost incurred in proceeding with discovery.

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In what is likely to be seen as a watershed moment for the application of the Communications Decency Act of 1996 (the "CDA"), the Ninth Circuit Court of Appeals has released an opinion in Barnes v. Yahoo that has the potential to dramatically increase the cost of defending social media and computer service providers.

The Barnes case centered around the posting of defamatory "fake" profiles on Yahoo's social networking pages. The profiles, which appeared to be from Ms. Barnes but were in fact created by her ex-boyfriend, included several pictures of her in the nude. Ms. Barnes asked Yahoo to remove the profiles, but Yahoo took no action until local media did a story on the events, wherein Yahoo promised to remove the fake profiles. Two months after that, the profiles still appeared on the Internet, and Ms. Barnes sued Yahoo.

Yahoo sought a motion to dismiss based on the immunity provided to it by the CDA. The dismissal was granted and Ms. Barnes appealed to the Ninth Circuit. In deciding to remand the case to the District Court, the Ninth Circuit did two things that can be problematic for the future of the CDA.

First, it held that a promissory estoppel-like claim can survive CDA immunity (at least at the motion to dismiss stage). At its core, a promissory estoppel claim requires someone to make a promise, and someone to rely upon that promise to his/her detriment. The court explained that Yahoo could be seen as having made a promise to Ms. Barnes, as part of its privacy policy and terms of service, and reiterated through local media, that it would take down profiles such as the one at issue. The making of a promise would be an activity that would fall outside of the CDA's scope. Thus, a promissory estoppel claim can survive a CDA-based motion to dismiss.

The second, and potentially more problematic, result of this decision is the treatment of the CDA as an affirmative defense, and the basis for lawsuit immunity. Although this may seem like a small detail, the proverbial devil is in the detail. If the CDA is a source of lawsuit immunity, then this supports a motion to dismiss for failure to state a claim (a 12(b)(6) motion). A 12(b)(6) motion must be dispensed with before the filing of answer, and before the opening of discovery. An affirmative defense, on the other hand, is dealt with by a motion for a judgment on the pleadings. For this type of motion, the defendant must file an answer along with the affirmative defense. The filing of an answer is where things go awry. Upon the filing of an answer, the court can open discovery. If the case was presided over by an overly cautious judge, discovery could be mandated prior to the issuance of a ruling on the summary judgment motion. Given that discovery can be expensive and time consuming, it is not difficult to imagine that the potential costs of exercising CDA immunity may have greatly increased.

Why This Matters: This case should be of great interest to purveyors of social media and those who seek to tap into the power of social networks. Not only does this provide a wake-up call as to what the consequences are of the statements in privacy and terms-of-service policies, but it also defines a way to avoid future promissory estoppel-like claims. Promissory estoppel requires a promise and reasonable reliance – if it is unreasonable to rely on the promise, then the estoppel claim may fail. It is possible that an artful drafting of a terms-of-service document can make this kind of reliance unreasonable, and social media and other interactive website purveyors should think about whether their privacy policies need revision of this type.

Notwithstanding revisions to one's policies, the case is also noteworthy because of the shift in interpretation of the CDA. If the CDA is more properly an affirmative defense than the basis for lawsuit immunity, then the potential cost of tapping into the CDA's protections may rise significantly.

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