New York's High Court Weighs In On Scope of CDA 230 Defamation Immunity

Recently the New York Court of Appeals, New York's highest court, held in a 4-3 opinion, Christakis Shiamili, &c., v. The Real Estate Group of New York, Inc. et al., that CDA Section 230 immunity from defamation extends broadly to web sites that perform significant editorial functions on third-party provided allegedly defamatory content.

The decision marks the first time New York's highest court addressed the scope and sweep of Section 230 of the Communications Decency Act, 47 U.S.C. §230, immunity. Not surprising to New Yorkers who’ve dealt with NYC real estate matters or the stereotypical NYC rental agent, the case arose out of the Big Apple's real estate market.

What has surprised some, however, is how broadly NY’s high court apparently ruled CDA Sec. 230 immunity reaches – that websites can’t be held liable for the comments of users even if the host site edits, provides “editorial” heading and sub-headings, or even promotes the defamatory comment supplied by third parties into a stand-alone post for further third-party comment. For those who viewed the Ninth Circuit’s rather controversial decision (Fair Housing Council of San Fernando Valley v., LLC, 521 F3d 1157 (9th Cir 2008)) as signalling a retreat from the previous the high water marks applying Section 230, New York's approach marks an affirmation of previous cases in thought and approach.



In the NY trial court below, plaintiff Christakis Shiamili, founder and CEO of Ardor Realty Corp. (Ardor) filed a complaint claiming defamation and unfair competition by disparagement against the defendants, The Real Estate Group of New York, Inc. (TREGNY) and TREGNY’s COO and his assistant. Both parties are New York city-based apartment rental and sales companies and in direct competition with each in NYC’s highly-regulated rental market.

The driving cause behind the action was the defendant’s website/blog covering the New York City real estate market. Not unexpectedly in such a contentious industry, anonymous commentators frequently pulled out their long knives to slice at various characters, including the plaintiff. One poster, under the name of “Ardor Realty Sucks” alleged using racist and anti-Semetic terms that the plaintiff mistreated employees and other nefarious such dealings.

Where TREGNY managed to get itself on the hook for an online defamation lawsuit that survived the typical trial summary judgment phase of many a CDA 230-cabined case is that TREGNY moved Ardor Realty Sucks’ comment into a stand-alone post, gave it a heading of “Ardor Realty and Those People” with a sub-heading of “and now it’s time for your weekly dose of hate, brought to you unedited, once again, by ‘Ardor Realty Sucks’. [sic] and for the record, we are so. not. afraid” further prefaced by the editorial comment that “the following story came to use as a … comment, and we promoted it to a post.”

Other comments in the related discussion thread stemming from the now promoted Ardor Realty Sucks post added other allegedly defamatory statements: that Ardor was in financial trouble and that the plaintiff cheated on his wife, etc.

In response, the plaintiff posted his own detailed comment and contacted TREGNY’s blog administrator requesting the defamatory statements be removed – TREGNY refused. The underlying lawsuit followed and the defandant’s, not surprisingly, moved under application of NY State’s civil practice rules (CPLR 3211(a)(7)) to dismiss for failure to state a cause of action arguing TREGNY was the administrator and moderator of the website to which anyone could add commentary and not the source of the commentary.

The lower trial court rejected the motion to dismiss, holding Section 230(c)(1) of the CDA did not compel dismissal at that procedural stage of the action as discovery had not commenced and "information as to defendants' role, if any, in authoring or developing the content of the website is exclusively within their possession." Defendant’s appealed as of right to NY’s intermediate appellate court, which reversed the trial court unanimously and dismissed the complaint on the basis that CDA Section 230 immunity insulates online websites in the exercise of traditional publishing functions given TREGNY had not authored the defamatory content at issue. The plaintiff appealed to NY's highest court, which granted leave to appeal.

As the Court of Appeals noted: “Section 230 establishes 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’ (47 USC § 230 [c] [1]), and it preempts any state law -- including imposition of tort liability -- inconsistent with its protections (see 47 USC § 230 [e] [3]).”

After examining the Congressional intent behind Section 230 and various seminal CDA cases granting broad immunity in response (i.e., Zeran v. Am. Online, Inc., 129 F3d 327 (4th Cir. 1997)), the Court noted “Section 230 (c) (1) was meant to undo [] perverse incentives . . . which effectively penalized providers for monitoring content” and stating further “section 230 has ‘two parallel goals. The statute is designed at once 'to promote the free exchange of information and ideas over the Internet and to encourage voluntary monitoring for offensive or obscene material.'"

The Reasoning

With the background established the Court addressed its view of the scope of Section 230’s protections, and as if in response to those who have portrayed the Court’s holding as “sweeping,” stated:

“Today, we follow what may fairly be called the national consensus … and read section 230 as generally immunizing internet service providers from liability for third-party content wherever such liability depends on characterizing the provider as a 'publisher or speaker' of objectionable material. Consistent with this view, we read section 230 to bar "lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions – such as deciding whether to publish, withdraw, postpone or alter content."

The Court did note the issue that “any piece of content can have multiple providers” complicating applying Section 230’s immunity at time since “[i]t may be difficult in certain cases to determine whether a service provider is also a content provider, particularly since the definition of ‘content provider’ is so elastic, and no consensus has emerged concerning what conduct constitutes ‘development’.”

Rejecting the plaintiff’s request that the Court adopt the Ninth Circuit’s’s approach - that a website is a content provider “if it contributes materially to the alleged illegality of the conduct" - the Court concluded it in fact didn’t need to decide whether to apply the Ninth’s Circuit broader view of “development” since while the statement were “unquestionably offensive and obnoxious” Section 230 never-the-less shielded the defendants from liability if the defendants hadn’t provided the content.

Having hacked the applicable law down to size, as it were, the Court then wrapped matters up on the remaining point of whether “the defamatory statements were ‘provided by another information content provider.’” Rejecting the plaintiff’s argument that the defendants should be deemed content providers by the fact that they ran a website that “implicitly encouraged users to post negative comments about the New York City real estate industry” the Court observed “there is no allegation that the defamatory comments were posted in response to any specific invitation for users to bash Shiamili or Ardor.”

As to the various headings, sub-heads, illustration and preface text, the Court concluded, in perhaps the key take away from this case, “[t]he complaint does not allege that the heading or sub-heading are actionable, but only that they ‘preceded’ and ‘prefaced’ the objectionable commentary,” and that there they were not in and of themselves defamatory as a matter of law.

The three judges in the dissent disagreed with the majority's reach, and given that the two parties were direct competitors, opined that while they did “not dispute the adoption of a broad approach to immunity for on-line service providers under the CDA, an interpretation that immunizes a business's complicity in defaming a direct competitor takes us so far afield from the purpose of the CDA as to make it unrecognizable.”

The Takeaway

The primary takeaway is that NY defamation cases against websites where third party comments have allegedly defamed the plaintiff and the CDA is operative are likely to be summarily dismissed, even if the website operators have performed a range of traditional "editorial" functions to the content.  While not an iron clad "guarantee" of course, New York's high court has now positively signaled that the scope of Section 230 CDA immunity is to be applied liberally.