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Previewing the “Lessons from the First Internet Ages” Symposium

As I mentioned, I’m part of a team organizing a special virtual event called the “Lessons from the First Internet Ages Symposium.” The event starts tomorrow 10am Pacific, and it’s not too late to sign up!

The event will explore themes that emerged from a package of essays from an all-star group of Internet legends. Their essays are now available online! A roadmap to them:

[Note: the Knight Foundation has adopted lower-case “internet” despite my protestations. Matthew Prince and I even discuss this in our interview.]

Sir Timothy Berners-Lee

Initially, he thought web users would share their content as freely as they read content. Instead, “the web took off as a medium with a few publishers and a lot of readers––and not the collaborative mind meld I had hoped for.” His solution: build an infomediary that allows web users to share their content with third parties using custom-set reader-specific permissions.

Dr. Vint Cerf

He identified several lessons:

the value of “open architectures” and “relatively neutral infrastructure”

the Internet is capable of being used for pro- and anti-social uses

inventors keep finding new applications of the infrastructure

changing the infrastructure is hard, such as to add more security or expand scale

we need “sustainable business models to maintain and expand the reach of the internet”

affordability has been a barrier to Internet adoption

He concludes: “There is still a great deal of room for new developments to improve the safety, security, privacy, reliability and utility of the internet.”

Chris Cox

He says the Internet “has come to be defined by user-created content,” and Section 230 is a big part of that. He identifies two ways Section 230 can be improved: (1) Internet services should be required to honor court orders to remove content [Note: I’ve written 1k words why I don’t agree with that in this post (see point 4); and due process, the First Amendment, and the FRCP pertain this issue in addition to Section 230.] (2) He would have more clearly said that “platforms can be content creators or developers themselves.”

He reiterates a few places where Section 230 says exactly what he wants it to say: (1) the First Amendment protects politically biased content moderation, so Section 230 does not need to address it. (2) “Section 230 does not require political neutrality.”

He concludes:

There are other tweaks I might be tempted to make to my own legislative handiwork if I were to find myself back in 1996, still holding the pen. But then again, I might restrain myself, knowing as I do now the many aspects of the modern internet that we have come to take for granted, and that are dependent upon Section 230’s protections….It’s just as likely that instead of perfecting Section 230, opening the door for more changes would threaten its essential elements that we know now have made it work.

Reid Hoffman

His vision for LinkedIn “was to inspire users to be more intentional about building the professional networks that positively impact both daily work life and long-term career development. This, in turn, would provide them with more economic security and autonomy while simultaneously enabling companies, industries and even entire geographic regions to operate more effectively.”

He learned that “as platforms grow, and negative emotions and behaviors like fear, anger, greed and malice gain a foothold, the lowest common denominator often sets the tone. So, what starts out as digital Eden devolves into a digital hell.”

He gave an example of how LinkedIn users bypassed writing detailed personal profiles and instead maximized their on-site connections. He says: “however hard I had anticipated it might be to convert emotions like pride and greed into more productive behaviors and aspirational identities, it has proven to be even harder in practice. To do so requires a deliberate, judicious, and consistently well-executed commitment to leadership and governance.”

For example, when LinkedIn launched its publishing platform, it gave authoring rights only to 150 top leaders so they could set authoring norms for the entire community. “So, when we opened up the platform to all our users after seventeen months of influencer-only usage, positive and healthy norms had been established.”

He concludes: “internet platform builders have an opportunity and an obligation to convert humanity’s negative passions into more positive outcomes. By continuously innovating and renovating the incentive structures and power structures that define these communities, we can both empower individuals and transform the madness of the masses into the prosperity and well-being of the crowd.”

Brewster Kahle

He addresses three lessons from the battles over openness:

“relatively few dedicated people, with the support of the government, can create an open environment for breathtaking economic and cultural flowering”

it’s hard “to make protocols work as well as walled gardens, and that it requires many dedicated people who are willing to sit out the gold rush of venture capital, acquisitions and patents”

“we will need dedicated government support, philanthropy and institutions in order to protect public access and libraries”

Craig Newmark

“[D]isinformation professionals are really good at taking a good thing and building a profitable lie around it, sometimes in order to manufacture a culture war…I feel I failed my community by not preparing for this from the beginning.”

Ellen Pao

She highlights two lessons:

“Sunlight is not the best disinfectant when it comes to hate. It just reinforces power structures that already exist and favors young, cisgender white men….Allowing all speech reinforces the uneven playing field and makes it unsafe for people who are less powerful, have less of a voice and less of a platform on which to speak up.”

“The fear that platform employees have of their users drives a lot of decision making.”

Her solutions:

“Executives, companies and board members should be held accountable for their actions and inactions in preventing the harm that we see being caused by lax policies or poor implementation and enforcement.”

“We need leaders with empathy for people who are experiencing harassment.”

Matthew Prince

Instead of submitting an essay, I had an hour-long virtual conversation with Matthew Prince. You can watch the video.

Some of the most interesting parts IMO:

“when we have made decisions in the past to shut down particular customers, one of the very first things that we get are very legitimate, responsible, large platforms calling us and saying, ‘Well, how can we be sure that you’re not going to do the same thing to us someday?'”

“I think there are some really significant consequences, where you deny fundamental Internet technologies for all but the most egregious content. It should almost never get to the point there where you say, ‘DNS is cut off for everyone,’ or, ‘Domain registration is cut off for everyone.’ That seems like the foundation on which all of the rest of the Internet is built, and it seems very dangerous if we start tinkering with that on a policy or editorial basis.”

Regarding the Daily Stormer, “It was not an organization we were proud to have using our services. But again, if we thought about it from the perspective of if Cloudflare ran the entire Internet, should they be on the Internet or not, it felt like that was a pretty tough call for us to be making….the Daily Stormer people just did some of the most repugnant things that you can imagine doing as a human being. If you’re going to fire any customer, firing Neo-Nazi customers is really fun.”

More on the Daily Stormer: “one of the things that was the final determination in us making the decision to kick this particular customer off was that one of our large customers said, basically, “It’s them or us.” That was not a comfortable conversation because we’re a business, and we have shareholders, and we responsibilities to them, and at the end of the day, sacrificing someone who’s paying us nothing and is repugnant for someone who’s paying us a lot and is a good organization––we didn’t love being in that situation, it put us in a hard place. What’s interesting is the general counsel of that organization, about six months later, called me back and said, ‘I owe you an apology.’ I said, ‘What are you talking about?’ and this person had just lived through another situation––this was a software company, and they had provided services in a way that a certain group of people found offensive, and it blew up in their face. The general counsel said, ‘I thought that this was really straightforward, but now having lived through it myself, I see that this is incredibly complicated.'”

“One of the things that’s tricky about all this is that the Internet’s still in its absolute infancy, and it took us a really long time to figure out what were the norms around the printed word, what were the norms around radio, what were the norms around television, what were the norms around the telephone system, and then once you figure out what those norms are, what then are the appropriate laws that follow that? I think we’re still so, so, so early on that it’s not clear.”

“it blows my mind that there isn’t a Fox News search engine… if you think of Facebook as the modern newspaper, it really is quite remarkable that there isn’t a conservative Facebook and a liberal Facebook”

“one of the things that has become a priority for us now, which I wish had been a bigger priority earlier, is how do we figure out how to not only reduce, but make our impact on the environment literally negative? The Internet burns a huge amount of resources and energy resources, a lot of which is just wasted, and we have only recently realized how important that is. I think we’re doing a lot of things to make our carbon footprint negative.”

“what’s been amazing about the Internet is it basically took the US approach to freedom of expression and exported it globally, which obviously has been very disruptive to a lot of businesses and a lot of institutions around the world. I think that, unfortunately, the world is not going to continue to accept the US view of Internet regulation going forward, and even the US might not accept the US view of Internet regulation.”

“watching what happens in India and where India goes is something that we’re spending more time thinking about, and I would encourage people who are interested in the future of Internet regulation to spend time watching what happens there.”

India’s Internet policy is “a result of imposing what was a radically libertarian view of freedom of expression on a world that doesn’t necessarily accept it.”

“while there have been some real challenges the Internet has created, none of us can underestimate the amount of good that it’s done, and it’s actually important for us to all continue to remind people that. Can you imagine how much worse this pandemic would’ve been if it had happened just ten years earlier?”

“whenever you write about the Internet, no matter what the AP says, capitalize it, because if I had to point to a moment in a time when it all started to go wrong, it was when AP said––I think in 2016––that you could now lowercase the Internet. I think what’s amazing about the Internet is that it’s a network of networks, and there is only one. So, I think it being a proper noun is important….if you care about the Internet, capitalize it.”

Brad Smith and Mary Snapp

Three major lessons they learned:

1) “WE WOULD HAVE WORKED HARDER TO ADAPT TO NEW REGULATION, RATHER THAN RESISTING IT.”

“We’ve clearly entered an era of rapidly expanding global technology regulation—and that’s not necessarily a bad thing….We believe it is possible to both adapt to new rules and innovate successfully.”

2) “WE WOULD HAVE RECOGNIZED EARLIER THAT HEALTHY JOURNALISM IS CRITICAL TO THE DEMOCRACIES IN WHICH OUR BUSINESSES THRIVE.”

“We’ve seen time and again the value of trustworthy reporting and we appreciate the role journalism holds in a healthy democracy—and the risk that comes when it’s undermined. Knowing what we do now, we are proactively supporting journalism in several ways.”

3) “WE WOULD HAVE PARTNERED MORE BOLDLY TO HARNESS TECHNOLOGY TOWARD EQUITABLE OUTCOMES FOR PEOPLE AND THE PLANET.”

“We must engage boldly not only in corporate and social responsibility, but also in technology and social responsibility.”

Evan Spiegel

He discussed Snapchat’s role in encouraging young people to vote.

Nirav Tolia (did you see him on Shark Tank on Friday night? Highlight 1. Highlight 2.)

Another 80 minute interview with me instead of an essay. Watch the video. Note: Nirav was my boss when I was general counsel at Epinions, and I did some legal work for him at Nextdoor in the early days.

Some of the most interesting parts IMO:

Nirav talked about structure, incentives, and reputation as levers for managing the gathering, organizing, and presentation of user-generated content.

“with structure, you can use forms, you can require certain things like a minimum word count. You can ensure that the formatting of the submissions and the intent of those submissions ends up being high quality and uniform, at least that was the theory. So unlike Amazon at the time, where you could write anything you wanted as a customer review on a product or service, at Epinions you would show up, there would be a subject, there would be a title, there would be a description, there would be the body, there would be a minimum word count, we would have a spellchecker built in, all of these things that, at the end of the day, were about uniformity and quality.”

“The second thing is incentives. We thought a lot about why people do this. And ultimately, I think this is the one that we got the most wrong. We decided to pay people for content….The incentive system then had a kind of witty little approach, which is we would pay you according to how popular your review was. And we would measure that popularity by how many times it was read….this led to all kinds of things like reading circles, where reviewers would read each other’s reviews. There would be bots that would be created so that it would look like people were reading the reviews and they really weren’t, I mean, it ultimately was the wrong set of incentives.”

“we had this idea of reputation where you didn’t have to use your real name, and it’s not just that you didn’t have to use your real name, you didn’t use your real name. However, you would build a reputation based on the number of people that would follow you or be your fans or read your reviews…Because we felt like creating these fan bases would be valuable. And it was, except for when people started to say, “If you scratch my back, I’ll scratch yours.” And that created all kinds of strange dynamics within the marketplace.”

“we’ve now created a world where everyone feels like they have a voice––everyone. That wasn’t the case when Epinions started. The idea of Epinions, this idea that there were amateurs who had expertise, that was something that people were a little puzzled about. No one’s puzzled by that today. In fact, we’re at the other extreme, there are people you’ve never heard of that are the influencers, right? They have no credentials, they have no qualifications, they just have large fan bases.”

“if I were creating the next version of Epinions, now twenty years later, I would say to myself, “Without ignoring the fact that we’re in a mobile world where people have short attention spans, how can I still raise the quality bar?” So maybe there’s a different approach. Maybe something goes into some kind of beta area before it gets pushed out and is read by everyone. But I don’t think it would be very difficult to swim against this tide of short-form content in snippets on a mobile phone. Extremely difficult. The closest I’ve seen that people have done that is the emergence now with user-generated content and online community of newsletters. The most important example I can think of, of longer-form, high-quality content that still creates online community and is, in most cases, created by what we might think of as amateurs or everyday people versus professionals is things like Substack, which are quite interesting to look at today.”

“some of the greatest review writers in Epinions’ history, they were not professionals. They were not looking to quit their jobs and write professionally. Now maybe Epinions made the mistake of paying them so much that they thought they could do that, but that was not their intention in joining the service. Their intention was to share their expertise. But then we messed everything up by deciding to pay people for sharing their expertise. Where, in most cases, and you see this in Wikipedia and you see this all over the web today, people are perfectly happy to share their expertise because it gives them joy. That’s the currency that they’re receiving. That’s the incentive. The incentive is that they are sharing their expertise with the world. They’re helping people. And then, if it gets to be big enough, they find ways to monetize that. But I feel like Epinions taking the central role in that monetization, that was a pretty big mistake.”

“You don’t use your real name on Wikipedia. You don’t really get attribution on Wikipedia. You have to go behind the curtain to understand who wrote these pages. And I would say less than 1 percent of the people who enjoy Wikipedia every single day actually go behind that curtain. They don’t click through, they just read the content. So, Wikipedia said, “Oh, your reputation is not important to us. What’s important is the reputation of Wikipedia. So, if you’re up for contributing and making sure that the reputation of Wikipedia is here, then you can contribute, if not, we’re not interested.” So maybe an interesting topic to consider is if Wikipedia is the model for a high-quality output of online community and user-generated content.”

“‘trust’ is a word that we used at Epinions, and it’s such a loaded word….ultimately it led to what we think of as, again, this kind of circle of trust, not web of trust, where people would say, “Hey, look, I will say that I trust you if you say you trust me.” And then we’ll sort of do this quid pro quo kind of thing. And then, all of a sudden, we can’t tell where the trust really is.”

“what would we do differently? Well, maybe you would get twenty points of trust and you could only give out twenty. And after you gave out twenty, after you trusted twenty people, you can’t trust anyone else. And maybe you can’t trust anyone until we know that you’ve read thirty pieces of their content. Or you have to write why you trust someone.”

“Expressions like “web of trust,” those were very novel at the beginning, and we loved them because they were catchy, and people responded to them. But when we realized they weren’t quite right, it was very difficult, if not impossible to put the genie back in the bottle…we had succeeded beyond our wildest dreams in one way, which is our users felt like Epinions was theirs. But then it was almost impossible to change those things.”

Regarding Nextdoor: “growth is the lifeblood of any consumer internet company, particularly a social media service. And, from the very beginning, think about the friction we created, no discoverability on search engines or across the web, no ability to join and even see the service until you verified your address. And finally, no ability for membership to spread from one neighborhood to another, in a viral way. Doing these things…was just counter to all the best practices. And we weren’t doing these things to be stubborn, or because we felt like it’s just better to think differently or something like that, we were doing these things very specifically because we felt like we needed to build a system that was based on trust. And the way we could do that was to as well as possible understand what goes on in the real world and then create an online environment that proxies those customs. So that was really the beginning of Nextdoor, which was very different than anything that had been created until then.”

“I would say, of all the things that I’m most disturbed by that occur on Nextdoor, racial profiling’s at the top of the list. But the other side of the coin is all the work that we’ve done to build this online system, the work that we’ve done around trying to reduce racial profiling, is some of the work that I’m proudest of.”

Nirav’s conclusion:

We believe that technology is a force for good, and it can be. You just have to be thoughtful about the application and you have to be committed to sticking with it. Because, as we talked about, the stakes are really high and there are people out there who are acting in their own self-interest. And, instead, what we need to try to communicate to them, and what we need to try to build in these systems, is to make it easy to act in everyone’s self-interest, in our collective self-interest. And the reason community is so important to me is because, to me, the definition of community is being part of something that’s larger than ourselves.

Nicole Wong

Some standout parts of her essay:

“Looking back at nearly twenty-five years working in the tech sector, I remember that early period imbued with a sense of freedom and possibility. We believed the broad reach of the internet would empower previously unheard or ignored minorities. It would improve democracy and circumvent authoritarians. New modes for connection and sharing would bring us closer together. In this new landscape, some, like Barlow, believed we would not need nor want governments to regulate the internet. Much of this has been true, and still, it seems terribly naive now. In part, this is because the early internet was not really connecting all the people of the world.”

“We need nuanced legislation that restrains large tech players, punishes exploitative practices and lets nascent competitors thrive. We must figure out how to fund a healthier ecosystem, one that does not rely on exploiting people’s data, attention and worst instincts. We need to adopt and build on technical design principles that support such an ecosystem. Most of all, we must demand more of our public discourse, and work to shift and align our norms of communication in a global community.”

At Google, “we thought the worst thing that could happen—the greatest threat to internet companies and the communities they serve—was to be blocked in a country or prevented from making our platforms and their content available freely. What we’ve discovered in the last few years, however, is that being blocked may not be the worst thing that can happen. Being turned into a weapon against our users and against our own government may be worse.”

“I did not foresee the broad and coordinated weaponization of these open and free spaces that we built and advocated for. For a period, the bad actors could be managed or minimized. But, over time, these spaces have become playgrounds for trolls. They have read our terms of service, and they come right up to the line of acceptable behavior and then dominated these platforms for the lulz. The ecosystem that we hoped would encourage the vulnerable to speak freely and help communities gather around common interests is used by bad actors to bully, harass, threaten and take up so much space on the platform that they push other users off the service.”

“these spaces have been infiltrated by malicious state actors and self-identified insurrectionists. They use the same trolling techniques, not just for entertainment, but to undermine our institutions, our communities and our trust in one another, in known facts and in our democracy.”

“we in the tech community must be honest about the troubling shift in how our platforms and products are used. We should not minimize the dangers created on these platforms that we enable or encourage. We likewise should not overstate what we can solve or make better. We should work urgently and creatively to build a better ecosystem.”

In the mid-2000s, “The pillars shifted to personalization (tailoring content to what we already know about the user), engagement (encouraging and measuring our success and profit based on how long a user stayed on the service) and, once again, speed. As we now know, the combination of these new pillars has been a rocket ship for the most inflammatory, polarizing content. It is a toolset for manipulation. We won’t change the nature of today’s internet and create healthy conversations just by taking down more content, having more rules or being more transparent about how we handle complaints. All of those practices are good, but none of them fundamentally change the product that is operating as designed: encouraging engagement in part by promoting highly viral content, filtering for personalization so users narrow rather than expand their world, and fetishizing the speed at which we deliver information.”

Sen. Ron Wyden

He says: “no law in a generation has done more than Section 230 to build online communities and promote informed, productive and equitable communication online. Section 230 was instrumental in fostering new avenues where regular Americans, particularly those from marginalized communities, could speak and be heard…. I don’t regret that Chris and I succeeded in protecting free speech online, then and now.”

He wishes he/we had been more proactive on broadband availability, competition, and privacy. In particular:

“Meaningful access to the internet also means ensuring that the digital world is accessible to Americans with disabilities and complies with the Americans with Disabilities Act, in the same way that physical infrastructure must.”

“I wish my colleagues and I had secured strong protection for consumers’ personal information at the dawn of the internet era.”

“I will fight tooth and nail to protect strong encryption, to ensure private communications stay secure from hackers, stalkers and other criminals.”

He concludes: “Americans must not accept the perverse bargain that a healthy national discourse requires sacrificing free speech.”

* * *

The essay package is a rich resource filled with countless insights. It’s also a great historical snapshot. I encourage you to read the whole package.

Meanwhile, want more of this? Come to the symposium and hear really smart and provocative commenters discuss their insights from the essay package.

The post Previewing the “Lessons from the First Internet Ages” Symposium appeared first on Technology & Marketing Law Blog.

Previewing the “Lessons from the First Internet Ages” Symposium published first on https://immigrationlawyerfirm.weebly.com/

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Eighth Circuit Says a Browsewrap Might Form a Contract (and It Wasn’t Even a “Browsewrap”)–Foster v. Walmart

This is the latest dubious Internet Law ruling from the Eighth Circuit. (Other dubious rulings in 2021 include Select Comfort v. Baxter and Campbell v. Reisch). In this ruling, the court says Walmart may have imposed a binding arbitration clause on gift card buyers–even though it never used a proper call-to-action or demonstrated that the buyers took any affirmative steps to agree to the terms. The court also created a new definition of browsewrap that further plunges online contract formation law into anarchy.

* * *

This case involves Walmart gift cards. The buyers claim that third-party malefactors could steal the funds and Walmart didn’t provide refunds. Walmart invoked the arbitration clause in its TOU. It argued that the gift cards said, on the back side, “[s]ee Walmart.com for complete terms.” If buyers had gone to Walmart.com,  they would have found a TOU that said “ALL DISPUTES ARISING OUT OF OR RELATED TO THESE TERMS OF USE OR ANY ASPECT OF THE RELATIONSHIP BETWEEN YOU AND WALMART.” The TOU claims it applied to anyone by “[u]sing or accessing the Walmart Sites.”

I trust the tenuousness of Walmart’s position is obvious. A few lowlights:

The cards themselves had no call-to-action explaining that purchasing the cards constituted assent to the terms.

The URL doesn’t even point buyers to the right place.

If the cards at issue look like the photo above (scoured from the Internet, not the litigation filings), then there were already several substantive terms on the card’s back that presumably became part of the purchase contract. Buyers wouldn’t necessarily think they need to go looking for other terms. This is a standard issue about layered notices. It would have been trivially easy to implement a proper if/then statement on the card back, or even reference the arbitration clause.

Buyers don’t have to go to Walmart.com to inspect the terms, and presumably most didn’t.

If the buyers went to Walmart.com after they made the purchase, then the terms seek to amend an existing contract formed at the time of purchase. (I’ve raised this issue before, like in ProCD v. Zeidenberg and the 23andMe litigation. For some reason, this formation pile-up doesn’t seem to bother courts as much as it bothers me).

By saying that “accessing” the site constitutes acceptance of the terms, buyers who do go to the site nominally agree to terms they have yet to see just by trying to inspect the terms, and they have no way of rejecting those terms if they disagree after reviewing them.

The district court concluded that the buyers had no notice of the terms and couldn’t be bound by them. The Eighth Circuit reverses and remands the case for a trial on arbitrability. How did the Eighth Circuit reach that conclusion?

The Eighth Circuit says that the TOU didn’t form on purchase because Walmart’s call-to-action (by “[u]sing or accessing the Walmart Sites”) expressly didn’t reach that circumstance. As usual, the court sidesteps the fact that a contract did form when the buyers completed the purchase, so Walmart is most likely arguing that the TOU amends the existing contract or constitutes a second in-parallel contract to supplement the contract formed at purchase.

The Eighth Circuit then turns to whether the buyers agreed to the TOU by accessing/using the Walmart Sites. It says a browsewrap “imputes assent through the user’s performance of some specific act—here, ‘using or accessing’ Walmart’s website.” It cites the 9th Circuit’s Nguyen case for this definition, but the Nguyen case defined “browsewrap” as “where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen.” The Eighth Circuit could not have used that definition because, here, the TOU were indirectly referenced on the back of the gift card, not at the “bottom of the screen.” So the Eighth Circuit is defining “browsewrap” differently than the Ninth and Second Circuits, for no apparent good reason.

As you know, I hate all of the -wrap terminology. I especially hate the term “browsewrap,” which I always enunciate with a sneer in my voice. And I really, REALLY hate that no one can agree on what the term “browsewrap” means. The Eighth Circuit’s definition is both meaningless and pernicious. It restates the general Contracts 101 principle that contract formation requires mutual manifestations of assent–which can be done by any method that reasonably communicates assent, including overt acts. By defining this as a browsewrap, the Eighth Circuit���s definition seems to reach all calls-to-action that say “by doing X, you agree to Y” and implies that the action of “doing X” turns the call-to-action into a “browsewrap.” That’s a recipe for a lot of confused rulings.

The court says the “parties do not dispute that this case involves a browsewrap agreement.” That concession by the plaintiffs seems unnecessary and against their own interests. However, they may have accepted the label because browsewraps usually fail in court.

Nevertheless, the court, like some others before it, says that browsewraps might be enforceable if consumers  had sufficient notice of the terms. The court says the district court too breezily rejected the possibility that buyers had inquiry notice of the terms. The parties debate whether any of the buyers accessed Walmart’s site; and some buyers may have tried to redeem the cards online. The court also wants to know more about “the exact location and prominence of the terms-of-use hyperlink, how many clicks it would have taken for the user to discover the arbitration provision, and whether the website changed during the relevant period.” The court also doesn’t rule out the possibility that the on-card disclosure (“see Walmart.com for complete terms”) constituted inquiry notice for the buyers (“In theory, this directive could have put the plaintiffs on notice to inquire further by telling them where to go for more information”). The district court will get the pleasure of revisiting all of these issues.

To me, it seems obvious that Walmart must lose this arbitration request. At minimum, the plaintiffs could exclude any buyers who actually went to Walmart.com. For those buyers, I just don’t see how the on-card disclosure (“See Walmart.com for complete terms”) can be enough to create inquiry notice given all of the problems I discussed above. So the net result of this Eighth Circuit ruling is that the parties should spend a lot more money to reach the same outcome, and the Eighth Circuit’s unnecessary and garbled recapitulation of the “browsewrap” term should make a further hash of an already messy jurisprudence.

To be clear, I think vendors can incorporate terms by reference into a B2C contract formation process, including offline purchases of chattel. Among other necessary steps, the incorporation should be incredibly obvious, the terms should be easy to inspect on the spot, and the call-to-action should be unambiguous. Walmart didn’t satisfy that approach, but they sure could have.

Case Citation: Foster v. Walmart, Inc., No. 20-1787 (8th Cir. Oct. 8, 2021)

Some Prior Blog Posts on Walmart Litigation

CCPA Data Breach Lawsuit Against Walmart Fails–Gardiner v. Walmart

Griper Selling Anti-Walmart Items Through CafePress Doesn’t Infringe or Dilute–Smith v. Wal-Mart

Walmart Foundation Uses Copyright to Curtail Griper

The post Eighth Circuit Says a Browsewrap Might Form a Contract (and It Wasn’t Even a “Browsewrap”)–Foster v. Walmart appeared first on Technology & Marketing Law Blog.

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Lawsuit Still Goes to Arbitration, Even Though Amazon Has Since Removed Its Arbitration Clause–Nicosia v. Amazon

This is the latest update in Nicosia’s multi-year lawsuit against Amazon. That lawsuit has already resulted in two Second Circuit opinions (and three blog posts).

The district court found Nicosia was bound by the arbitration agreement in Amazon’s terms of service. The Second Circuit affirmed this decision. He now asks the district court to modify and vacate its ruling because Amazon has since eliminated its mandatory arbitration clause.

After the Second Circuit affirmed the district court’s rulings that the claims asserted by Nicosia must be arbitrated, the case went to arbitration. The arbitrator’s decision itself is filed under seal, but the court recaps the arbitrator’s findings:

Although the contracts between Plaintiff and Amazon concerning the purchase of the diet pills at issue were illegal and unenforceable, the CoU that governed the transactions were severable and remained enforceable.

The arbitrator denied Nicosia’s request for declaratory relief that the arbitration clause was void. According to the arbitrator, the plaintiff only sought declaratory relief and did not seek damages.

Following the date of the arbitrator’s decision, Amazon modified its terms to eliminate mandatory arbitration. The court says this does not warrant modification of its judgment. The two questions are whether the court’s judgment has “prospective application” and whether such application would be inequitable. The court finds neither condition satisfied. The court says this is the end of the road for Nicosia:

[t]here must be an end to litigation someday, and free, calculated deliberate choices are not to be relieved from.

__

Amazon was somewhat unique in its decision to get rid of mandatory arbitration. Companies (such as Uber) have dealt with a big volume of arbitration demands, but companies haven’t abandoned arbitration en masse. It would have been interesting to have been a fly on the wall in the room when Amazon made its decision.

I’m curious to know what prompted the court to allow the parties to seal the arbitration order. That seems like it would be interest to the general public. Perhaps some media organization will ask the court to unseal the arbitrator’s ruling.

When I first read the court’s most recent order, I predicted a return trip to the Second Circuit for Mr. Nicosia. Sure enough, a check of the docket confirms he will make his third trip there for this case.

Case citation: Nicosia v. Amazon, 2021 U.S. Dist. LEXIS 188893 (S.D.N.Y. Sept. 28, 2021)

Related posts:

Repeated Amazon Purchases Sufficient to Impute Notice of Arbitration Clause

Judge Declines to Enforce Uber’s Terms of Service–Meyer v. Kalanick

Anarchy Has Ensued In Courts’ Handling of Online Contract Formation (Round Up Post)

Second Circuit Says Arbitration Clause in Terms Emailed After-the-Fact Not Enforceable – Schnabel v. Trilegiant

Evidentiary Failings Undermine Arbitration Clauses in Online Terms

Court Enforces Arbitration Clause in Amazon’s Terms of Service–Fagerstrom v. Amazon

‘Flash Sale’ Website Defeats Class Action Claim With Mandatory Arbitration Clause–Starke v. Gilt

Some Thoughts On General Mills’ Move To Mandate Arbitration And Waive Class Actions

Second Circuit Says Arbitration Clause in Terms Emailed After-the-Fact Not Enforceable – Schnabel v. Trilegiant

Users Can’t Sue Sony for Changing Online Terms to Require Arbitration – Fineman v. Sony Network Entertainment

Qwest Gets Mixed Rulings on Contract Arbitration Issue—Grosvenor v. Qwest & Vernon v. Qwest

Zynga Wins Arbitration Ruling on “Special Offer” Class Claims Based on Concepcion — Swift v. Zynga

“Modified Clickwrap” Upheld In Court–Moule v. UPS

Facebook Gets Bad Ruling In Face-Scanning Privacy Case–In re Facebook Biometric Information Privacy Litigation

Defective Call-to-Action Dooms Online Contract Formation–Sgouros v. TransUnion

Court Rejects “Browsewrap.” Is That Surprising?–Long v. ProFlowers

Telephony Provider Didn’t Properly Form a “Telephone-Wrap” Contract–James v. Global Tel*Link

2H 2015 Quick Links, Part 7 (Marketing, Advertising, E-Commerce)

Second Circuit Enforces Terms Hyperlinked In Confirmation Email–Starkey v. G Adventures

If You’re Going To Incorporate Online T&Cs Into a Printed Contract, Do It Right–Holdbrook v. PCS

Clickthrough Agreement Upheld–Whitt v. Prosper

Online Magazine Gets Section 230 Protection For Third Party Article–AdvanFort v. International Registries

The “Browsewrap”/”Clickwrap” Distinction Is Falling Apart

Safeway Can’t Unilaterally Modify Online Terms Without Notice

Clickthrough Agreement With Acknowledgement Checkbox Enforced–Scherillo v. Dun & Bradstreet

How To Get Your Clickthrough Agreement Enforced In Court–Moretti v. Hertz

Judge Can’t Decide if Facebook’s User Agreement is a Browsewrap, But He Enforces It Anyways–Fteja v. Facebook

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Privacy Lawsuit Based on Website Tracking by Service Provider Trimmed

This is a lawsuit against Nike and its service provider (FullStory), which provides Nike with “session replay” functionality for its website. FullStory’s software allows Nike to capture information regarding website visitors: (1) mouse clicks, (2) keystrokes, (3) payment card information, (4) IP address, (5) location, and (6) browser type and OS.

On behalf of a putative class, the plaintiffs asserted privacy claims—including for wiretapping—under California law. The court dismisses FullStory, a Georgia-based corporation, for lack of personal jurisdiction. It dismisses all but one of the claims against Nike.

As an initial matter, the court says that Nike’s privacy policy does not undermine plaintiff’s claims. The operative policy was not fully authenticated or property presented to the court, and the court declines to consider it.

CIPA Claim: There’s a distinction between the “contents” of a communication (which trigger a claim) and “record information.” Nike argued that the communications at issue were in the latter category. The court disagrees:

Plaintiff argues these communications do not constitute “record information” as a matter of law and dismissal is not warranted. The court agrees. Here, the FAC alleges FullStory captures mouse movements, clicks, typing, scrolling, swiping, tapping, keystrokes, geographic location, IP addresses, and data entry. Plaintiff alleges FullStory records these and other details alongside “a video capturing each of Plaintiff’s keystrokes and mouse clicks on the website.” According to the FAC, FullStory’s software allows for the recording and “pixel-perfect playback” of all in-browser interactions, which includes any “content” information Plaintiff sent to Nike. Although not all of this information may constitute the “contents” of a communication under the federal Wiretap Act, Plaintiff has met his burden to allege facts plausibly showing Defendants recorded Plaintiff’s content communications with Nike by recording, among other things, keystrokes and a video of Plaintiff’s interactions with Nike’s website.

However, the plaintiff’s victory is pyrrhic as to this claim. The court concludes that Nike was a party to the communications and therefore can’t be held liable for direct infringement.

While the court dismisses the claim for direct liability against Nike, it declines to dismiss the claim against Nike for “aiding or enabling” FullStory’s wiretapping. The key question according to the court was whether FullStory is a party to the communication or an outsider. The court says FullStory does not become a participant to the conversation by virtue of having recorded it. While the case would be different if the communication were disclosed to FullStory after-the-fact, the fact that FullStory gained contemporaneous knowledge makes it a third party.

Defendants argued that because the data was only shared with Nike (a participant), plaintiff’s allegations “would criminalize ubiquitous functions of websites,” but the court is not persuaded.

Claim Based on Possession Sale or Manufacture of Eavesdropping Device: Section 635 of the California Penal Code prohibits the sale, possession, manufacture, sale (etc.) of an eavesdropping “device.” The complaint only alleges that Nike “possessed” FullStory’s code and did not sell or further distribute it. Citing TransUnion, the court says that this claim fails for Article III standing. While the result may be different in state court, the court says it’s bound by Article III standing limitations.

Invasion of Privacy Under the California Constitution:  The court rejects this claim:

Courts [are] hesitant to extend the tort of invasion of privacy to the routine collection of personally identifiable information as part of electronic communications.

In order to state a claim, the plaintiff must show that the defendant collected “intimate or sensitive” information or “disregarded consumers’ privacy choices.”

___

The dispute is reminiscent of In re: Pharmatrak from 20 years ago, and other website tracking/data leakage cases, such as those against Zynga and Facebook. It’s interesting to note that here, the third party was able to obtain access to payment information, but that doesn’t seem to have caught the court’s attention.

It doesn’t appear that plaintiff asserted a claim under the CCPA, by way of California’s unfair competition statute. That’s telling, and perhaps speaks to the limited effectiveness of this claim, to the extent courts even recognize it as viable.

It’s interesting that FullStory was dismissed on jurisdictional grounds and the claims directly asserted against Nike were also dismissed. It leaves only a derivative claim against Nike for the collection of information by FullStory. I wonder if that changes the operative standards for what plaintiff has to show and what this means for discovery of communications between FullStory and Nike.

Note: Defendants have sought a stay pending resolution of Susan Johnson v. Blue Nile, Inc. (pending in the Ninth Circuit), or alternatively for leave to appeal the ruling.

Case citation: Saleh v. Nike, Inc., et al., 2:20-cv-09581-FLA (RAOx) [pdf]

Related posts:

Judge Koh Puts the Kibosh on LinkedIn Referral ID Class Action — Low v. LinkedIn

The Cookie Crumbles for Amazon Privacy Plaintiffs – Del Vecchio v. Amazon

A Look at the Commercial Privacy Bill of Rights Act of 2011

Flash Cookies Lawsuit Tossed for Lack of Harm–La Court v. Specific Media

Judge Recognizes Loss of Value to PII as Basis of Standing for Data Breach Plaintiff — Claridge v. RockYou

Another Lawsuit over Flash Cookies Fails — Bose v. Interclick

LinkedIn Beats Referrer URL Privacy Class Action on Article III Standing Grounds–Low v. LinkedIn

The Cookie Crumbles for Amazon Privacy Plaintiffs – Del Vecchio v. Amazon

Facebook and Zynga Privacy Litigation Dismissed With Prejudice [Catch up Post]

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Trump’s Must-Carry Lawsuit Against Twitter Moved to Twitter’s Home Court–Trump v. Twitter

As you recall, in July, Trump sued Twitter, Facebook, and YouTube for “deplatforming” him. As expected (see image to the right), YouTube successfully transferred its case to the Northern District of California. Now Twitter has done the same.

(A reminder that Trump’s legal filings routinely make brain-meltingly stupid arguments. This one is no exception).

Twitter’s TOS, which Trump agreed to in 2009 when he created his account, contains a mandatory venue clause. To get around this, Trump claimed he “is exempted from the forum selection clause because he was the sitting President at the time his Twitter account was suspended and was legally unable to accept the forum selection clause.”

The court gently shreds this argument. It says that the “Court does not find, nor do the Plaintiffs cite to, any section of the code that prevents a federal actor from accepting a forum selection clause.” It also says that the Knight Institute v. Trump ruling had no bearing on venue selection (and, as usual, there’s irony in how Trump tries to turn a bad courtroom loss into something that benefits him). “For these reasons, the Court finds that Trump’s status as President of the United States does not exclude him from the requirements of the forum selection clause in Twitter’s Terms of Service.”

The court could have listed other reasons to reject Trump’s argument, like Trump signed up for the account when he wasn’t a sitting president, he filed the case when he wasn’t a sitting president, and other plaintiffs on the complaint have never been president and thus cannot benefit from these arguments. Plus, yes, Trump literally takes the position that the rule of law doesn’t apply to him–even if it applies to “ordinary” Americans. And the odious idea that a government actor can force private publishers to carry their unwanted propaganda is the kind of “rule of law” we see in banana republics.

The court goes on to explain why the venue clause is mandatory, not permissive, and why it covers Trump’s claims. This is not a hard case.

As a last-ditch effort, Trump argues that he should benefit from the “consistent content moderation” requirement of Florida’s new social media censorship bill (another ironic claim, because he literally just argued that his forum selection situation should not be treated consistently with other users due to his presidential status, but whatever). That law can’t be applied retroactively, and it’s currently enjoined as unconstitutional, but the court rejects the argument on more mechanical grounds.

Having established the enforceability of Twitter’s forum selection clause, the burden shifts to Trump to provide a public policy argument in favor of keeping the case in Florida. The court recaps Trump’s arguments:

(1) the FDUTPA claims constitute a localized controversy that will affect how the Defendants engage in business in Florida; (2) several Plaintiffs, including Trump, are residents of Florida; (3) the bargaining positions between Twitter and its users weighs against a transfer, (4) Justice Clarence Thomas’s concerns regarding Section 230 in an opinion on a petition denying a writ of certiorari; and (5) recent case law weighs against a transfer of this action.

Unsurprisingly, the court shuts these arguments down:

“this case does not present a localized controversy that warrants keeping the case in this district. ‘To the contrary, this case involves issues that are national in scope.'” (Cite to Trump v. YouTube)

“almost half of the Plaintiffs reside outside of Florida and Twitter’s inconsistent application of its rules and policies occurs nationwide.” (Trump routinely disregards his co-plaintiffs, unless they help his personal situation).

Twitter is headquartered in California.

The case involves interpretation of constitutional rights, i.e., the First Amendment.

“the Plaintiffs’ remaining arguments related to the parties’ bargaining power, Justice Clarence’s concerns, and the addictive nature of social media do not constitute the types of public interest considerations that weigh against applying a forum selection clause…These arguments do not share a nexus with Florida and instead raise general national issues related to social media platforms.”

Plaintiffs always lose must-carry lawsuits, and Trump’s arguments give no reason believe that he will become the exception to the dozens of failed cases that preceded this case. That prediction grows increasingly likely watching how easily the courts breeze through Trump’s attempts to fight the mandatory venue clauses.

Recently, Trump filed a preliminary injunction motion in this case while the venue transfer motion was pending. I’m not sure about litigation etiquette, but to me, Trump’s move seemed to be premature, ill-advised, or bad form. I didn’t blog the motion in part because I wasn’t sure if the court would ever hear it in its current form. (Of course, Mike Masnick blogged it at Techdirt). After all, with the venue switch, the Ninth Circuit caselaw will become more relevant than the 11th Circuit caselaw. Now, the plaintiffs ought to redo their preliminary injunction motion to reflect the revised precedent.

Case citation: Trump v. Twitter, Inc., 1:21-cv-22441-RNS (S.D. Fla. Oct. 26, 2021)

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Telematics Car Insurance Discount: Is It Worth It?

The telematics car insurance discount will result in modest short-term savings. But giving your insurance company access to information about your driving and driving behaviors, it can also cause your insurance premiums to go up. It can also result in claims being later denied and your auto insurer even refusing to renew your policy. Buyer beware.   For …

Continue reading "Telematics Car Insurance Discount: Is It Worth It?"

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Court Orders Unmasking Subpoena of Alleged Infringers–Baugher v. GoDaddy

In the DMCA, Congress enabled copyright owners to obtain pre-litigation discovery of alleged infringers (17 USC 512(h)). After sending a takedown notice, the copyright owner can apply for an unmasking subpoena, which the clerk of the court must issue without any discretion or review by a judge. This fast lane is a historical anachronism; it does little to balance the privacy interests of the alleged infringer. Knowing what we know now about the dangers of unmasking subpoenas, I would like to think that Congress would draft 512(h) with more privacy sensitivity today.

512(h) subpoenas rarely produce court opinions because the copyright owners get the subpoena automatically and the services usually automatically comply with the subpoena. This case is unusual because the Doe defendants attempted to quash the subpoena. The court rejects the Doe defendants’ efforts, and it gives us a little more insight about 512(h) along the way.

The copyright owner is Julia Allison Baugher, an author. For unspecified reasons, bloggers reposted some of her works, including an 81 page book proposal, which included a 54 page manuscript draft, and 22 photos. The proposal, manuscript, and 2 photos were previously unpublished and not registered; the other 20 photos were covered by a copyright registration. She sent takedown notices to the blog’s “registrar” (this is the court’s word), GoDaddy, which GoDaddy honored. The bloggers did not submit counternotices. Baugher then submitted a request for a 512(h) subpoena, which the court clerk issued. It’s not clear how the bloggers learned of the subpoena, but they moved to quash it.

The bloggers argued that the subpoena would violate their First Amendment right to speak anonymously. The court says that the First Amendment requires a balancing between the competing interests. Thus, the plaintiff has to show a prima facie case of copyright infringement before the subpoena can be upheld.

Baugher easily established the prima facie case of 106 violations. The bloggers countered with fair use. The court doesn’t see it:

Nature of use. The bloggers claimed they posted Baugher’s works for criticism and commentary, but the court says “most of Baugher’s work was posted without substantial comment or criticism by the Does….Posting a work and implicitly inviting comment or criticism is the same as simply copying the work; any work made public will almost always inspire an opinion in the reader, but the reader’s implicit opinion is not the same as comment or criticism formed and made by the blogger who copies the copyright-protected work.”

Nature of work. The reposted materials were both highly creative and unpublished.

Amount taken. The “Does reproduced the materials in their entirety” (tautology alert).

Market effect. The bloggers didn’t show any evidence of non-harm. (It’s true that the defense has the burden on fair use, but it’s also problematic to require defendants to prove the negative).

One of the reasons why unmasking subpoenas are so dangerous is that they can be used to impose extra-judicial consequences without any court oversight, such as terminating the employment or public shaming of the unmasked people. The DMCA says the subpoenaed information may be used only for copyright enforcement purposes, but there’s no practical way to enforce this, and I can’t think of anyone who has tried. Nevertheless, the court says the statutory limitation is good enough to address the bloggers’ fears of misuse, so the subpoena must be honored.

Case citation: Baugher v. GoDaddy.com LLC, 2021 WL 4942658 (D. Ariz. Oct. 22, 2021)

Some prior blog posts on 512(h):

512(h) Doesn’t Preempt Doe Unmasking Lawsuits–Strike 3 v. Doe

eBay Must Disclose User Identities In Response To 512(h) Subpoenas

Did a Court Eliminate 512(h) Subpoenas?–Maximized Living v. Google

An Unmasking Effort Gets Gutted Some More – Art of Living Foundation v. Does

Copyright Doe Defendant Can’t Quash Disclosure Subpoena Anonymously—Hard Drive Productions v. Does (Guest Blog Post)

Spiritual Group’s Attempt to Unmask Online Critics Goes South–Art of Living Foundation v. Does

Co-Blogger Identity Isn’t Disclosed via 512(h), but Takedown Letters Are Copyrightable

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Why Lawyers Should Offer CLE on Porn Hub and Not Legal Providers

When it comes to promoting his math tutoring services, Taiwanese math teacher Changsu knows all the right angles.  Figuring that the probability of reaching more students would increase proportionately to the size of his audience, Changsu posted 200 calculus lessons on Pornhub, reasoning that:  Since very few people teach math on adult video platforms, and… Why Lawyers Should Offer CLE on Porn Hub and Not Legal Providers published first on https://immigrationlawyerfirm.weebly.com/

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Peloton Can’t Bind All Family Members To Its Arbitration Provision–SS v. Peloton

This case involves the Peloton treadmill (“Tread+”). The treadmill has caused numerous personal injuries, and Peloton has recalled it. In this case, a 3 year old boy suffered personal injuries due to a Tread+ his dad bought. The dad, mom, and child sued Peloton for negligence and misrepresentation. Peloton invoked the arbitration clause in its TOS. The court’s resolution likely satisfies no one.

The Dad

Peloton successfully argued that the dad agreed to the TOS. “Peloton states that when he signed up for the Peloton account, he necessarily (1) was presented with a conspicuous hyperlink to a full copy of the Terms of Services, including the Arbitration Provision, and (2) affirmatively clicked the button indicating that he agreed to the Terms of Service….Peloton also correctly points out that whether he read the terms or not, Mr. Stern was put on constructive notice of the Arbitration Provision…Mr. Stern cannot reasonably dispute agreeing to Peloton’s Terms of Service. The evidence indicates he did, and Mr. Stern failed to rebut that evidence by providing a declaration attesting to the fact that he did not agree or later opted out of the Arbitration Provision.”

The specific evidence Peloton introduced of its TOS formation:

Defendants rely on declarations from Daniel Feinberg, a Senior Product Manager at Peloton, to establish that Mr. Stern registered for a Peloton account and accepted Peloton’s Terms of Service….

In the Supplemental Declaration, Mr. Feinberg (1) states that he is familiar with Peloton’s internal database, which it maintains in the ordinary course of business; (2) describes the process that transpires when a customer registers and agrees to the Terms of Service, including what account information related to that process is maintained by Peloton; (3) indicates he reviewed Mr. Stern’s account information, which shows that Mr. Stern registered for a Peloton account on August 25, 2019, and again on November 29, 2019, and as part of that registration process, was required to affirmatively agree to Peloton’s Terms of Service regardless of whether he registered on the website or mobile application; and (4) when Mr. Stern created his Peloton account in 2019, the registration process still required users to affirmatively click a button acknowledging they agreed to the Terms of Service

The court overrules the plaintiffs’ objections to this evidence. It’s a reminder that you must consider how you will introduce evidence of contract formation in addition to worrying about the contract terms and formation process.

The court discusses another topic I don’t often see discussed. The Federal Arbitration Act applies only to interstate commerce. “To the extent the contract pertains to use of Peloton’s Services (e.g., its app, website, and on-demand fitness classes), because those services require use of the Internet, the Agreement would involve interstate commerce.”

The Mom and Son

Peloton tries to bind the mom and son to the TOS via “equitable estoppel.” The idea is that sometimes nonsignatories get benefits from a contract sufficient to impose the contract terms on them anyways. But not in this case. The son son is 3 years old. He lacks capacity to agree to the TOS, and he could disaffirm it even if he did. He got no benefits from the treadmill. Peloton’s TOS expressly restricted use by minors, and the 3 year old never used it. The story is the same for the wife: “Mrs. Stern never used the Tread+, nor did she benefit from it.” Thus, the nonparties cannot be swept into the contract. The court distinguishes the Nicosia v. Amazon and Tice v. Amazon rulings; but the result is consistent with the uncited BF v. Amazon case.

Consequences

Abstracting from the nuances, the court’s ruling is obvious. Peloton can’t bind parties not in privity to the terms of its contract. That’s Contracts Law 101. Still, the consequences can be pretty significant in the IoT era. Many products can affect the rights of home residents and visitors who aren’t in privity, like voice-command and surreptitious video devices. This ruling reinforces the unlikelihood that the device manufacturer can reach those parties with its TOS–in some cases, raising questions about the devices’ permissibility under existing law.

In terms of this lawsuit, the dad’s case goes to arbitration but the wife and son’s cases remain in court. The dad signaled that he plans to challenge the arbitrability of his claims, so it’s possible the arbitrator will decide that the claims are outside the arbitration scope and bounce the dad’s case back to court as well. Another possibility is that the family decides to drop the dad’s claims altogether because the bulk of the case’s value likely rests in the son’s claims.

Otherwise, the parties are in a Mexican standoff. The family can proceed with the full set of claims only by litigating in two venues, which doubles the litigation costs for both sides and creates a risk of inconsistent judgments. Both sides would benefit from merging the cases back into one, but someone has to concede, and neither party has an incentive to do so. Another possibility would be to stay one case–likely the arbitration–until the resolution of the other cases to see what happens and decide if the second case is worth pursuing. Either way, the court’s “split the baby” decision (see what I did there? or too soon?) on arbitration was potentially a bummer for both parties.

Case citation: S.S. v. Peloton Interactive, Inc., 2021 WL 4711675 (S.D. Cal. Oct. 7, 2021).

Note: my wife is a big Peloton fan, and we own some stock in the company.

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Social Media Is Often a Defamation-Free Zone…But Not Always–Steak N Shake v. White

I’ve blogged some recent cases showing how it’s become really, really hard to win defamation cases over social media content (e.g., Rapaport v. Barstool). Still, online defamation claims can succeed, as this case shows. But even if the plaintiff wins in court, does it truly win?

* * *

The court summarizes the facts:

On the job at Steak N Shake, Melissa White thought she found worms in hamburger meat, and insisted her manager inspect the meat. And when she didn’t find her manager’s inspection up to her own standards, White, perhaps cloaking herself as a modern-day Upton Sinclair, rushed to post her accusations of Steak N Shake’s purported sale of contaminated meat sales on Facebook.

The Facebook post:

If you can’t read the text, it says:

#SHARESHARESHARE JUST GOT FIRED FROM STEAK N SHAKE ON FLORRISANT AND LINBERGH ROAD BECAUSE I FOUND LIVE WORMS WHILE COOKING A STEAKPATTY MOVING INSIDE OF IT AND REFUSED TO SELL THAT MEAT ……WELL RIGHT NOW #RIGHT NOW THEY ARE STILL SELLING SAME MEAT #NOONEEVENCHECKEDIT. I JUST DON’T WANT EVERYONE GETTING SICK. I JUST GOT FIRED FOR NOTHING I HAVE A FAMILY THIS SHIT IS NOT RIGHT I DID NOTHING WRONG #FOX2 #ELLIOT WYA

(This transcription is from the opinion. Notice how the court omitted any reference to the fire emoji.

)

The post went viral; it received over 36,000 shares and thousands of comments. Unsurprisingly, it’s offline now.

Steak N Shake wasn’t pleased with this post, and it sued White for defamation. The case went to a jury. The jury found for Steak N Shake and awarded $70,000 in compensatory damages and $10,000 in punitive damages. Last week, the court denied White’s requests for post-trial relief. The court shows little interest in overriding the jury’s determinations.

I think Steak N Shake’s decision to sue was an interesting one. Unquestionably, White’s post was very damaging to it. According to the court, “Steak N Shake presented evidence of a multitude of Facebook comments from numerous members of the public, many declaring that they will never eat at Steak N Shake again or that they thought Steak N Shake was ‘gross’ and ‘disgusting.'” (Pro-tip: you could logically reach those conclusions about Steak N Shake even if their food is 100% maggot-free). Further, Steak N Shake presented evidence it lost $755k in sales. So surely the jury ruling vindicates Steak N Shake’s position and increases consumer confidence that its meat is actually maggot-free. In particular, the punitive damages signal that the jury thought White’s mistakes weren’t innocent.

Yet, did Steak N Shake actually accomplish any of its goals? The damages award won’t affect its bottom line–and of course Steak N Shake won’t collect much, if any, of it (“Steak N Shake’s counsel even acknowledged in its closing argument that White likely did not have the financial resources to pay a large judgment”). The media coverage of this ruling will not come close to reaching the audience that White’s post did; as the old saying goes, “a lie can travel halfway around the world while the truth is still putting on its shoes.” So did Steak N Shake accomplish its goals?

Whether or not Steak N Shake’s food is in fact infested with bugs, today is another good day to choose to eat less meat and switch to plant-based options. On that front, Steak N Shake isn’t a venue of choice.

Case citation: Steak N Shake, Inc. v. White, 2021 WL 4819592 (E.D. Mo. Oct. 14, 2021)

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Government Jawboning Doesn’t Turn Internet Services into State Actors–Doe v. Google

The plaintiffs are “conservative content creators” (i.e., QAnon enthusiasts) who posted videos to YouTube. YouTube suspended their accounts. The plaintiffs sued for First Amendment violations (presumably a 1983 claim). The court previously denied a TRO. YouTube now gets the case dismissed with prejudice. It’s not a close call.

To show YouTube is a state actor, the plaintiffs tried four different unsuccessful arguments:

Public Function. This argument is foreclosed by Prager U. v. Google.

Compulsion. The court says:

The Court finds that the statements by federal lawmakers Plaintiffs point to are insufficient to plead that the government “commanded a particular result in, or otherwise participated in, [Plaintiffs’] specific case.” [cite to Daniels v. Alphabet] Plaintiffs point to generalized statements from lawmakers pertaining to “coronavirus-related misinformation,” “disinformation proliferating online,” “QAnon-related speech,” and “conspiracy theories.” None of the statements mention Plaintiffs’ names, their YouTube or Google accounts, their channels, or their videos. Plaintiffs argue that state actors “commanded a particular result” in their case because “Plaintiffs have alleged that Congress demanded that the unpopular speech dubbed ‘misinformation,’ and QAnon-related speech be limited and erased, which is precisely what Plaintiffs allege Defendants did.” The Court disagrees that broad lawmaker proclamations regarding “misinformation” or “QAnon-related speech,” for example, are sufficient to show that the government “commanded” the suspension of Plaintiffs’ accounts. Even if Defendants had complied with these lawmaker statements to the letter, they would still have had the ultimate discretion on what videos or accounts fit into buckets like “misinformation” or “QAnon-related speech.”

Plaintiffs claim that Defendants’ conduct is state action because it was in response to the threat of various government penalties—the repeal of CDA Section 230 protections, “show trials” in front of the U.S. Senate, and a DOJ antitrust suit against Google—allegedly linked to whether Defendants appropriately moderated certain types of content. The threats of penalties Plaintiffs point to are insufficient to convert private conduct into state action here. The Ninth Circuit has found that pleading “a private actor’s conduct is subject to penalties…is…insufficient to convert private action into that of the state.” Moreover, Plaintiffs fail to point to any penalties that necessarily or even likely would have followed if Defendants did not suspend their accounts….

Plaintiffs can point to no authority to support a compulsion theory of state action based on penalties, particularly “threats” as speculative as the ones they point to here.

To be clear, it’s offensive when our elected officials treat Section 230 like a political football, threatening to withdraw the immunity if services don’t bend to their censorial whims. When politicians do this, they are really saying they don’t care about good social policy that benefits their constituents. It’s all fun-and-games until an immunity gets broken. But the plaintiffs’ arguments–that the politicians’ jawboning make all subsequent content moderation decisions into state action–are even worse from a policy outcome. As they would say on Reddit, ESH.

Joint Action. The court says:

the Schiff-Wojnicki Twitter exchange Plaintiffs point to in support of their joint action claim clearly pertains to misinformation regarding COVID-19. As the Court discussed above, Plaintiffs have failed to allege any facts indicating that their posts pertained to COVID-19. Accordingly, it is unclear how this Twitter exchange supports a joint action theory pertaining to the suspension of Plaintiffs’ channels….Further, it is simply implausible to read a casual Twitter exchange between one member of Congress and YouTube’s CEO as joint action. Plaintiffs’ theory would effectively cause companies to cease communicating with their elected representatives for fear of liability, as Defendants compellingly argue.

Chilling companies’ abilities to petition the government is another censorial consequence of the plaintiffs’ arguments.

The court continues:

Based on Plaintiffs’ allegations, their content was removed through the following series of events: federal lawmakers publicly flagged general categories of content for Defendants to consider moderating and issued threats to compel Defendants to comply, Defendants independently chose what content fit into the lawmakers’ general categories, and Plaintiffs’ channels happened to be some of the content Defendants decided to remove. Courts have dismissed cases for lack of state action despite significantly more alleged cooperation between public and private actors compared to what Plaintiffs allege here

…far more is necessary to plead joint action than what they have alleged here…At most, Plaintiffs appear to allege that government officials identified categories of information Defendants should consider removing—there is no allegation that government officials were in the room or somehow directly involved in the decision to suspend Plaintiffs….there are no allegations that Defendants invoked state or federal procedure to bring about the suspension of Plaintiffs’ accounts. Defendants merely suspended Plaintiffs from Defendants own private platform.

Government Nexus. “Plaintiffs have failed to point to a single case in which governmental nexus was found.”

Implications. Unsurprisingly, this case wasn’t close. #MAGA plaintiffs are routinely overclaiming state action by Internet services as a short-sighted ploy to force the services to carry garbage content that harms the services’ audiences. This opinion is a clean and decisive ruling that standard government jawboning doesn’t automatically turn the entire Internet into a giant state actor. I can’t wait for this litigation fad to die out.

The court declined supplemental jurisdiction over the state law claims, which the plaintiffs could choose to refile in state court if they want to lose again. I think it’s more likely the plaintiffs will choose to appeal the case and give the Ninth Circuit a first-hand opportunity to explain why Prager U v. Google means they lose.

In contrast to many cases in this genre, the plaintiffs were represented by counsel. That counsel is Cris Armenta. In addition to being on the losing side of the Garcia v. Google case, she also lost the Daniels case, which this court repeatedly cited against her arguments in this case.

Case Citation: Doe v. Google LLC, 2021 WL 4864418 (N.D. Cal. Oct. 19, 2021)

Selected Related Posts About State Action Claims

Anti-Zionist Loses Lawsuit Over Social Media Account Suspensions–Martillo v. Facebook

Court Nopes Another Lawsuit Over Facebook Suspensions–Orders v. Facebook

Facebook Defeats Lawsuit By Publishers of Vaccine (Mis?)information–Children’s Health Defense v. Facebook

Court Rejects Lawsuit Alleging YouTube Engaged in Racially Biased Content Moderation–Newman v. Google

Yet Another Court Says Facebook Isn’t a State Actor–Brock v. Zuckerberg

YouTube (Again) Defeats Lawsuit Over Content Removal–Lewis v. Google

When It Came to @RealDonaldTrump, Twitter Couldn’t Please Everyone–Rutenberg v. Twitter

Another Must-Carry Lawsuit Against YouTube Fails–Daniels v Alphabet

Newspaper Isn’t State Actor–Plotkin v. Astorian

An Account Suspension Case Fails Again–Perez v. LinkedIn

Are Social Media Services “State Actors” or “Common Carriers”?

Google and Twitter Defeat Lawsuit Over Account Suspensions/Terminations–DeLima v. Google

More Plaintiffs (and Lawyers) Need To Be Reminded That YouTube Isn’t a State Actor–Divino v. Google

Facebook Isn’t a Constructive Public Trust–Cameron Atkinson v. Facebook

Google and YouTube Aren’t “Censoring” Breitbart Comments–Belknap v. Alphabet

LinkedIn Isn’t a State Actor–Perez v. LinkedIn

Section 230 Preempts Another Facebook Account Termination Case–Zimmerman v. Facebook

Section 230 Ends Demonetized YouTuber’s Lawsuit–Lewis v. Google

Court Rejects Another Lawsuit Alleging that Internet Companies Suppress Conservative Views–Freedom Watch v. Google

Another Suspended Twitter User Loses in Court–Wilson v. Twitter

First Voters Reject Tulsi Gabbard, Then a Judge Does–Gabbard v. Google

YouTube Isn’t a State Actor (DUH)–PragerU v. Google

Facebook Still Isn’t Obligated to Publish Russian Troll Content–FAN v. Facebook

Vimeo Defeats Lawsuit for Terminating Account That Posted Conversion Therapy Videos–Domen v. Vimeo

Russia Fucked With American Democracy, But It Can’t Fuck With Section 230–Federal Agency of News v. Facebook

Private Publishers Aren’t State Actors–Manhattan Community Access v. Halleck

Your Periodic Reminder That Facebook Isn’t a State Actor–Williby v. Zuckerberg

Section 230 Protects Facebook’s Account and Content Restriction Decisions–Ebeid v. Facebook

Court Tosses Antitrust Claims That Internet Giants Are Biased Against Conservatives–Freedom Watch v. Google

Twitter Isn’t a Shopping Mall for First Amendment Purposes (Duh)–Johnson v. Twitter

YouTube Isn’t a Company Town (Duh)–Prager University v. Google

Facebook Defeats Lawsuit By User Suspended Over ‘Bowling Green Massacre’–Shulman v. Facebook

Yelp, Twitter and Facebook Aren’t State Actors–Quigley v. Yelp

Facebook Not Liable for Account Termination–Young v. Facebook

Online Game Network Isn’t Company Town–Estavillo v. Sony

Third Circuit Says Google Isn’t State Actor–Jayne v. Google Founders

Ask.com Not Liable for Search Results or Indexing Decisions–Murawski v. Pataki

Search Engines Defeat “Must-Carry” Lawsuit–Langdon v. Google

KinderStart Lawsuit Dismissed (With Leave to Amend)

ICANN Not a State Actor

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Michigan Comparative Negligence Law: What You Need To Know

Michigan’s comparative negligence law reduces a car crash victim’s pain and suffering compensation and economic damages by the amount that the victim was at fault. If the victim is found 10% at fault for an auto accident and is awarded $1 million in damages, comparative fault reduces this recovery by $100,000 (10% of $1M). However, …

Continue reading "Michigan Comparative Negligence Law: What You Need To Know"

The post Michigan Comparative Negligence Law: What You Need To Know appeared first on Michigan Auto Law.

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Anti-Zionist Loses Lawsuit Over Social Media Account Suspensions–Martillo v. Facebook

Martillo claims that six social media services suspended his accounts because he is an anti-Zionist. He sued for Title II discrimination. The court responds: “the defendants’ social media platforms are not places of ‘public accommodation.’ The statutory definition of a ‘public accommodation’ cannot be interpreted to include a virtual meeting place.” Cites to Lewis v. Google and Noah v. AOL (from nearly 20 years ago! Plus ça change, plus c’est la même chose).

Martillo also sued for violations of Massachusetts’ common carrier law. The court responds simply: “The defendants are not common carriers of ‘merchandise or other property’ for purposes of this 1869 law.”

The court adds that both the Title II and common carrier claims, if otherwise meritorious, would be preempted by Section 230. The court says simply: “The defendants’ alleged blocking of content posted by Martillo and disabling of his account are editorial decisions protected by the CDA.” Cites to Sikhs for Justice v. Facebook and Langdon v. Google. However, as the court made clear, this case would have failed even without relying on Section 230.

Reminder: dozens of online account termination and content removal lawsuits have failed. Add this one (and the bonus below) to the list.

Case citation: Martillo v. Twitter, Inc., 1:21-cv-11119-RGS (D. Mass. Oct. 15, 2021)

BONUS: Bethune v. Facebook Inc., 0:21-cv-02118-NEB-HB (D. Minn. Oct. 15, 2021): Bethune wants $222 billion in damages because Facebook shut down his page. He sued for violations of 18 U.S.C. § 249, 18 U.S.C. § 242, and 18 U.S.C. § 371, none of which have a private right of action. He also brought a 1983 claim. The court says simply: “Neither Facebook nor Zuckerberg is alleged, or can plausibly be alleged, to be a ‘state actor’ within the meaning of § 1983.” Cite to Prager U. v. Google.

Selected Related Posts About State Action Claims

Court Nopes Another Lawsuit Over Facebook Suspensions–Orders v. Facebook

Facebook Defeats Lawsuit By Publishers of Vaccine (Mis?)information–Children’s Health Defense v. Facebook

Court Rejects Lawsuit Alleging YouTube Engaged in Racially Biased Content Moderation–Newman v. Google

Yet Another Court Says Facebook Isn’t a State Actor–Brock v. Zuckerberg

YouTube (Again) Defeats Lawsuit Over Content Removal–Lewis v. Google

When It Came to @RealDonaldTrump, Twitter Couldn’t Please Everyone–Rutenberg v. Twitter

Another Must-Carry Lawsuit Against YouTube Fails–Daniels v Alphabet

Newspaper Isn’t State Actor–Plotkin v. Astorian

An Account Suspension Case Fails Again–Perez v. LinkedIn

Are Social Media Services “State Actors” or “Common Carriers”?

Google and Twitter Defeat Lawsuit Over Account Suspensions/Terminations–DeLima v. Google

More Plaintiffs (and Lawyers) Need To Be Reminded That YouTube Isn’t a State Actor–Divino v. Google

Facebook Isn’t a Constructive Public Trust–Cameron Atkinson v. Facebook

Google and YouTube Aren’t “Censoring” Breitbart Comments–Belknap v. Alphabet

LinkedIn Isn’t a State Actor–Perez v. LinkedIn

Section 230 Preempts Another Facebook Account Termination Case–Zimmerman v. Facebook

Section 230 Ends Demonetized YouTuber’s Lawsuit–Lewis v. Google

Court Rejects Another Lawsuit Alleging that Internet Companies Suppress Conservative Views–Freedom Watch v. Google

Another Suspended Twitter User Loses in Court–Wilson v. Twitter

First Voters Reject Tulsi Gabbard, Then a Judge Does–Gabbard v. Google

YouTube Isn’t a State Actor (DUH)–PragerU v. Google

Facebook Still Isn’t Obligated to Publish Russian Troll Content–FAN v. Facebook

Vimeo Defeats Lawsuit for Terminating Account That Posted Conversion Therapy Videos–Domen v. Vimeo

Russia Fucked With American Democracy, But It Can’t Fuck With Section 230–Federal Agency of News v. Facebook

Private Publishers Aren’t State Actors–Manhattan Community Access v. Halleck

Your Periodic Reminder That Facebook Isn’t a State Actor–Williby v. Zuckerberg

Section 230 Protects Facebook’s Account and Content Restriction Decisions–Ebeid v. Facebook

Court Tosses Antitrust Claims That Internet Giants Are Biased Against Conservatives–Freedom Watch v. Google

Twitter Isn’t a Shopping Mall for First Amendment Purposes (Duh)–Johnson v. Twitter

YouTube Isn’t a Company Town (Duh)–Prager University v. Google

Facebook Defeats Lawsuit By User Suspended Over ‘Bowling Green Massacre’–Shulman v. Facebook

Yelp, Twitter and Facebook Aren’t State Actors–Quigley v. Yelp

Facebook Not Liable for Account Termination–Young v. Facebook

Online Game Network Isn’t Company Town–Estavillo v. Sony

Third Circuit Says Google Isn’t State Actor–Jayne v. Google Founders

Ask.com Not Liable for Search Results or Indexing Decisions–Murawski v. Pataki

Search Engines Defeat “Must-Carry” Lawsuit–Langdon v. Google

KinderStart Lawsuit Dismissed (With Leave to Amend)

ICANN Not a State Actor

    The post Anti-Zionist Loses Lawsuit Over Social Media Account Suspensions–Martillo v. Facebook appeared first on Technology & Marketing Law Blog.

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If “Trespass to Chattels” Isn’t Limited to “Chattels,” Anarchy Ensues–Best Carpet Values v. Google

Trigger warning: this is a terrible opinion. Let’s hope the judge corrects his errors or that the appeals court does it for him.

* * *

This opinion addresses a venerable issue in Internet Law: can a website control how visitors see its web pages? I first remember this issue flaring up in the late 1990s when Third Voice, a browser plug-in, let users write commentary “over” third-party websites. That sparked angst among website operators who couldn’t control what users were saying about them in the Third Voice frame. Third Voice was followed by adware vendors such as AllAdvantage, which framed third-party websites, displayed ads in the frame, and shared some ad revenue with users (its tagline: “Get Paid to Surf the Web”). Gator, WhenU, and other adware vendors followed. By its nature, adware changes the screen display of the sites users are visiting. A series of lawsuits from two decades ago covered some important ground regarding the ability of website owners to block adware. Wells Fargo v. WhenU concluded that copyright was a dead-end. 1-800 Contacts v. WhenU concluded that trademarks was a dead-end. Nevertheless, because adware often provided poor consumer experiences, adware largely fizzled out by 2010. As a result, the legal issues rarely are litigated any more.

* * *

The court approaches this case like it’s an adware case, but the court never once uses the term. The issue is that Google incorporated a new feature into its Android software. You can see how it modified a website’s display in these before/after screenshots (the component at issue is the “view 15 related pages” bar on the bottom right):

As you can see, the new bar covers up the “cove base” line. If a user selects the up arrow, a new screen covers up most of the web page and displays links to rival vendors:

Google has since dropped this feature.

The plaintiffs alleged that the prior screenshot contains ads, which turns this case into an adware case. But the screenshot doesn’t label the listings as “ads,” so either Google uncharacteristically cut that corner or these listings are organic search results, and this isn’t an adware case at all. I’m going to characterize Google’s feature as an “adware bar” because the court accepts the plaintiffs’ allegations as true on a motion to dismiss, but I wonder if that characterization will withstand further scrutiny.

Underlying this litigation is an epistemological question: what does a “canonical” version of a web page look like? Every browser software makes its own choices about how to render a page; every browser software “frames” every web page with its software features; and every browser software lets users configure the display in ways that affect website owners’ expectations. As just one example of the latter point, browser software programs let users magnify or shrink the display size, so what appears above/below the fold critically depends on user configuration, not just the website operator’s choices.

For this reason, if courts want to assess the veracity of the plaintiffs’ claim that the “cove base” link gets covered up, judges must assume how a canonical version of a web page appears. For example, in the “before” image above, the court doesn’t explain the source of the screenshot, what technological conditions it reflects, and how often those conditions will hold in the field. Thus, a court’s hypothesis may have no grounding in reality. It also strips users of their own agency to decide what browsing tools best serve their needs and how best to configure those tools.

* * *

In this lawsuit, the plaintiffs aren’t suing Google for violating their copyrights or trademarks. With respect to copyright, the court says: “Plaintiffs do not rely on copyright protection for their websites in pleading their claim…Plaintiffs are not asserting infringement of any right to the reproduction, performance, distribution, or display of their websites. Plaintiffs want and expect Google to copy and display their websites in Chrome browser and Search App, and acknowledge that Google has license to do so.”

Wait, what? We need to know more about this license. If a website “permits” browser software to display them (assuming such permission is even required in the first place, and assuming that permission isn’t automatically granted by connecting the website to the web), then a website can’t control the browser software configurations. It seems like this license could be dispositive to the case, but the court doesn’t explore it more.

Trespass to Chattels

The plaintiffs instead claim that the adware bar constitutes a trespass to chattels. However, Google’s adware bar never interacts with the plaintiffs’ physical servers at all. As the court says, “None of Plaintiffs’ websites, files, or data were physically altered in any way. Nor were Plaintiffs’ servers disrupted.” Instead, the adware bar’s display customization takes place solely on the user’s device, supplementing how the code renders on the device. So the “chattel” at issue here isn’t the website operator’s servers; it’s the HTML code that the website operators send to each user’s device (and gave Google permission to display).

If the “chattel” at issue is only the intangible HTML code, then no “chattels” are being trespassed. It’s not possible to “trespass” an intangible asset; any legal protection for the asset comes from contract law (but the plaintiffs gave a license) or IP law, such as copyright law, which the plaintiffs aren’t invoking. Thus, given that “intangible chattel” is a legal oxymoron, a lawsuit over “trespassing HTML code” should fail hard. It didn’t.

Citing a 2003 Ninth Circuit case, Kremen v. Cohen, the court says “a website can be the subject of a trespass to chattels claim.” This abstract statement requires more clarification. The Kremen case involved the alleged theft of the sex.com domain name by improperly modifying the electronic records evidencing ownership of the domain name. The Ninth Circuit held that the intangible asset (the domain name) could be “converted,” even though normally conversion only applies to chattel (i.e., physical property), not intangibles. We need legal doctrines to redress the improper hijacking of the monetary value of owning a domain name, just like we would redress the improper acquisition of monetary value stored in an online bank or cryptocurrency account. Thus, other cases have applied conversion law to alleged theft of domain name registrations (e.g., CRS v. Laxton).

But the Kremen case didn’t say that all of a website’s intangible assets are like tangible assets. If it had, it would have eliminated the distinctions between IP law and the law of chattels.

So when this court says “Plaintiffs have property rights to their websites for the same reasons a registrant has property rights to a domain name,” I have no idea what it means. A website can sometimes control access to its servers (see the Van Buren case). A website can own the copyrights to the HTML code and the files that users download. Website owners can prevent the unauthorized reassignment of their ownership interests, such as someone trying to modify their copyright registration records. But the broad statement “property rights to their websites” is mostly wrong.

To find the HTML code’s physicality necessary to treat it like a chattel, the court makes this garbled statement:

like a domain name, a website is a form of intangible property that has a connection to an electronic document. “A website is a digital document built with software and housed on a computer called a ‘web server,’ which is owned or controlled in part by the website’s owner.  website occupies physical space on the web server, which can host many other documents as well.” Compl. ¶ 34. Plaintiffs’ website is also connected to the DNS through its domain name, bestcarpetvalue.com, just as Kremen’s domain name was connected to the DNS.

This is very, very confused. My copyrighted works may be printed on physical pages, but that doesn’t mean a third-party’s encroachment into my intangible copyrights becomes trespass to chattels. That’s the purview of copyright–or not restricted at all. And the linkage to the domain name record is nonsensical because the domain name wasn’t “taken,” and indeed the website operator gave a license to display it. The court even acknowledges that its line of logic has been rejected before:

After Kremen, the California Court of Appeal, Sixth Appellate District, noted that conversion traditionally required a taking of tangible property and that “this restriction has been greatly eroded,” but not “destroyed.” Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 239 n.21 (2010). The Silvaco court also cautioned that “the expansion of conversion law to reach intangible property should not be permitted to ‘displace other, more suitable law.’” As discussed above, however, Plaintiffs’ websites have a connection to a tangible object.

Having accepted the core fallacy of the plaintiffs’ claims, the court makes unhelpful statements like “trespass to chattels ought to apply to a website, and several courts have so found.” The first half of the sentence isn’t in contention; everyone agrees that trespass to chattels can protect a website’s servers (not at issue in this case). Some of the cited precedent do not involve applying trespass to chattels only to intangible code. Some courts have in fact done this (not all of which the court cited), but those cases are overwhelmed by precedent rejecting the point. The court disregards Google’s citations those cases, breezily saying “Other cases cited by Google do not discuss the distinction between tangible and intangible property and offer little guidance.” (That critique might apply to this opinion, too).

Having satisfied itself that “a website is a form of intangible property subject to the tort of trespass to chattels,” the court next turns to harm. The court ignores the plainly stated and impossible-to-miss holding of Intel v. Hamidi, which says that common law trespass to chattels is actionable only when electronic signals cause or threaten to cause measurable loss to computer system resources. The plaintiffs can’t possibly prove any harm to any computer system resources.

Instead, the court cites a different part of the Hamidi opinion saying that Intel didn’t show any “physical or functional harm or disruption” to its computer systems. The court proceeds: “although Plaintiffs are not alleging physical harm to their websites, they do allege functional harm or disruption.” HOLD ON. The plaintiffs may claim “functional harm or disruption,” but the complete test is functional harm or disruption…TO THEIR COMPUTER SYSTEMS. By omitting those words, the court dramatically and improperly expands the test. Seriously, it’s impossible to read the Intel v. Hamidi opinion and miss the majority’s point that not all intangible harms count; only harms to COMPUTER SYSTEM RESOURCES count.

The court says the plaintiffs sufficiently alleged “functional disruption” by claiming that Google’s ads “obscured and blocked their websites, which if true, would interfere with and impair their websites’ published output. Although Google’s ad may not have disabled or deactivated the ‘Cove Base’ product link, it nevertheless allegedly impaired the functionality of the website: an Android phone user cannot engage a link that cannot be seen.” But “published output” isn’t a computer system resource, and an “obscured link” assumes what the hypothetical canonical website looks like.

Implied-in-Law Contract/Unjust Enrichment

Given that the plaintiffs granted a license to Google to display its site, I don’t know what this claim could possibly cover. Google responds that whatever it means, it’s preempted by copyright law. Google’s position seems reasonable given that this claim wades squarely into copyright’s realm. The adware cases from 2 decades ago rejected copyright claims in virtually identical facts; and there are the old copyright cases involving things like adding ads to pre-manufactured videos. Not surprisingly, this judge finds a way around that too.

The court summarizes that “Google allegedly covered up or obscured a portion of Plaintiffs’ websites from Android phone users for financial benefit, which makes their claim ‘qualitatively different’ from a copyright claim.” No, that’s exactly what the derivative work right covers, and it’s the exact issue litigated in the old WhenU cases. To get around this, the plaintiffs argued:

Google could not in the brick-and-mortar marketplace lawfully plant its logo on Plaintiffs’ storefront windows without Plaintiffs’ consent, even if Google owned their buildings. Nor could Google place ads in Plaintiffs’ marketing brochures or superimpose ads on top of Plaintiffs’ print advertisements without Plaintiffs’ permission and without paying Plaintiffs’ price. Likewise, Google cannot in the online marketplace unilaterally superimpose ads on Plaintiffs’ website without Plaintiffs’ consent and without compensation just because Google makes the software through which Android users view that website on their mobile screens…

a storefront business owner is injured when its window is obscured, regardless of whether that window is clear or covered with advertisements. By analogy, a website owner is injured when its website is obscured by unwanted ads, regardless of the content displayed in the website.

Are we really doing this again? I agree Google can’t unilaterally stick its logos onto a physical retailer’s windows…because THAT WOULD BE REAL PROPERTY TRESPASS. I’m not sure what law prevents Google from placing ads over marketing brochures or print ads OTHER THAN COPYRIGHT LAW (or possibly trademark law–but at this point, what does any of this have to do with IMPLIED-IN-LAW CONTRACTS?). And there are many other forms of competitive marketing adjacencies that are fully permissible in the offline/physical space world, as I documented over a decade ago in my Brand Spillovers paper.

Plus, let’s not lose sight of the users’ agency–they are the ones responding to the marketing signals. They aren’t passive automatons in this equation. My Deregulating Relevancy article from 15 years ago explains that principle more.

First Amendment

There is some discussion about the First Amendment, but it’s so terrible that I can’t bring myself to blog it. To summarize: the court seems to be saying that the plaintiffs can suppress truthful non-misleading advertising without relying on any intellectual property rights (and without any countervailing public policy doctrines, like fair use). That can’t possibly be right.

Implications

As you can see, the court creates a distorted pastiche of the precedent to reach an obviously wrong and wholly counterintuitive outcome.

In particular, the court’s mangled summaries, like “Plaintiffs have property rights to their websites” and “a website is a form of intangible property subject to the tort of trespass to chattels,” cannot survive critical scrutiny. What is the point of calling it “trespass to CHATTELS” if no actual chattels are harmed? In that circumstance, the trespass to “chattels” doctrine becomes a boundary-less “commercial trespass to intangibles” concept that both lacks any precedent and conflicts with the entire system of IP.

A boundary-less commercial trespass doctrine creates plenty of problematic edge cases:

By design, ad blockers block portions of how websites display. (The websites can’t claim copyrights in third-party ads, but this court wasn’t considering copyright anyways). How would the court’s “commercial trespass” doctrine apply to ad blockers? Indeed, unlike Google’s browser software, many websites expressly contractually ban ad blockers.

What about updates of browser software? By definition, those updates change the previous website renderings to a new website rendering. If any website prefers the old rendering to the new, can it sue the browser software for commercial trespass?

Browser software programs allow users to resize their windows. Commercial trespass?

Phone manufacturers create different screen sizes. If this cuts off “cove base” from being above the fold, liability?

This case brought to mind the Edible Arrangements v. Google lawsuit in Georgia (also not cited by the court). In that case, the trademark owner claimed that Google committed theft/conversion by selling its trademark for keyword advertising purposes. Unlike this court, the Georgia appellate court rejected the theft/conversion analysis. Weirdly, though, the Georgia Supreme Court granted a petition to hear the case, so who knows anything any more?

Case citation: Best Carpet Values Inc. v. Google LLC, 5:20-cv-04700 (N.D. Cal. Sept. 24, 2021)

The post If “Trespass to Chattels” Isn’t Limited to “Chattels,” Anarchy Ensues–Best Carpet Values v. Google appeared first on Technology & Marketing Law Blog.

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There Is No Bottom When It Comes to Section 230 Reform Proposals (Comments on the Justice Against Malicious Algorithms Act)

When I first saw the Justice Against Malicious Algorithms Act. my draft version didn’t identify its sponsors. I assumed it was yet another sloppy and unserious Section 230 reform proposal from representatives like Rep. Gosar or Gohmert. You can imagine my shock when I learned that this bill was the Section 230 reform bill that the Democratic leaders on the House Energy & Commerce Committee chose to back–including my own representative, Rep. Eshoo, who represents the Silicon Valley (including Google) and surely knows better…?

I couldn’t wrap my head around these leaders investing their political capital into such a poorly drafted bill that seemed more about messaging than solving problems. Or do they think it’s actually a serious, if wholly defective, proposal? Either way, it shows us how we, and the Internet, are inevitably screwed. When one of these 230 reform bills finds a coalition, we’re destined for an Internet that none of these politicians’ constituents actually want.

What the Bill Does

The bill eliminates Section 230 for making a personalized recommendation of information that materially contributes to a physical or severe emotional injury. A personalized recommendation is defined as “the material enhancement, using a personalized algorithm, of the prominence of such information with respect to other information.” A personalized algorithm is “an algorithm that relies on information specific to an individual.”

The new Section 230 exclusion doesn’t apply to (a) services with less than 5M unique monthly visitors, (b) recommendations made in response to a user-specified search, or (c) vendors such as web hosts, domain name registrars, CDN, data storage, and cybersecurity.

Why This Bill is Bad

This bill embodies many of the worst ideas about how NOT to reform Section 230. If the drafters want better inspiration for Section 230 reform ideas, they should consult this 2019 statement.

Some of the structural problems with the bill:

the bill misplaces its scienter standards. It removes Section 230 if the service recklessly, knew, or should have known that it was making personalized recommendations, but what’s the point of that? Any Internet service that makes a personalized recommendation will necessarily know that it’s doing so. The scienter qualifications make no sense.

The scienter standards would make slightly more sense if they modified the imposition of harm, but that’s not what the bill says. Moving the words around won’t make the bill better, however. Adding scienter preconditions to Section 230 functionally repeal the immunity by eliminating Section 230’s procedural benefits. (For more, see Cathy Gellis’ post on this point). Plaintiffs can easily claim that services had the requisite scienter and survive a motion to dismiss, boosting defense costs even if the defense ultimately prevails, because the service will now have to go through discovery on its scienter and delay resolution until summary judgment at the earliest. Anyone advocating to impose scienter conditions on Section 230 either doesn’t understand why Section 230 works today or wants to repeal it without admitting that goal.

the harm standard is unmanageable. How can services predict which UGC items will “materially contribute to a physical or severe emotional injury” and which won’t? They can’t make this assessment on an automated basis; and even manual review won’t identify all of the potential problematic items. Thus, this standard will require Internet services to assume that *all* UGC could “materially contribute” to the specified harms and thus clamp down on all UGC.

the “physical or severe emotional injury” standard is problematic in two other ways. First, not all behavior that causes severe emotional injury will lead to a cause of action, so this standard is overinclusive. Second, this harm standard opens up a Section 230 bypass for any cause of action that recognizes physical or emotional injury–which is virtually all causes of action, including defamation. This too destroys Section 230’s procedural benefits because plaintiffs can easily graft an allegation of emotional injury to any complaint and bypass Section 230’s motion to dismiss.

the definition of “personal algorithm” (“an algorithm that relies on information specific to an individual”) is confusing and over-inclusive. One obvious example is geo-location, which is specific to the geo-located individual. Imagine rolling back 230 for all geo-located content; or imagine abandoning geo-location. (Also, how specific does the geo-location need to be–if it’s geo-location of an individual at the national level, is that specific to the individual?).

the exclusion applies equally to personalized content and personalized ad targeting, so this bill would potentially wreak havoc on the entire advertising ecosystem. After all, I get severe emotional distress when I get targeted ads for old or chunky men…and when I see Facebook’s ads urging Congress to reform Section 230…

like all other efforts to impose size-based distinctions in Section 230, the “small service” exception is miscalibrated. Jess Miers and I put together a much-needed guide for properly drafting size-based distinctions for Internet services. For example: the “unique monthly visitors” standard isn’t defined and applies to services without registered users; there’s no phase-in period; and the 5M “unique monthly visitors” standard is too low. I think the supporters would be surprised at how many services they pick up unintentionally!

The bill, like so many in this genre, doesn’t thoughtfully anticipate the possible countermoves that services might make beyond retrenching personalized content. For example, Internet services could make all content presentations into searches, which would annoy consumers greatly (imagine, for example, every service asking readers “would you like to see articles meant for you? Enter your location here to search for them”); they could migrate towards “top content” lists, which reify existing power structures and disadvantage minority voices; they could aggressively downrank content to make the remaining content more prominent (the 230 exclusion only applies to enhancing the prominence of UGC, not to degrading prominence); or they could just randomly publish content in reverse chronological order and let the trolls and spammers take over. Which of these alternative outcomes do the bill supporters want?

To make sure you didn’t miss the point, this bill would functionally eliminate Section 230’s immunity for UGC in multiple independent ways, which would severely undermine or eliminate much of the current UGC ecosystem. That makes the bill impossible to salvage with some tweaks.

For more on the illogic of linking Section 230 to algorithmic amplification, see Daphne Keller, Amplification and its Discontents.

What Would This Bill Do to Facebook/Instagram?

Facebook has been begging Congress for years to amend Section 230, because Facebook naively (or hubristically) assumes that it can steer Congress into good 230 reforms that entrench a competitive moat around Facebook and Instagram and hurt their competition. In reality, Congress is gunning for Facebook and Instagram, so each time Facebook begs Congress to reform Section 230, it’s digging its own grave (and the grave of all UGC generally…).

This bill obviously targets Facebook and Instagram, but unsurprisingly it overshoots its mark. For example, even if Facebook and Instagram eliminated their newsfeed algorithms in response to this bill, it would still lose Section 230 because presenting content only from a user’s friends would constitute an algorithm that relies on information specific to an individual, i.e., the friendship. Instead, to retain Section 230, Facebook and Instagram would have to present information from non-friends and friends equally, which means that most newsfeeds would rarely, if ever, display news from friends. So the bill would blow apart Facebook’s and Instagram’s core value proposition of letting friends talk to each other. At the same time, it would devastate all other social media services that use “friends” or “followers” as part of the content delivery mechanism. This would dial the entire Internet ecosystem back to look a lot more like the 1990s.

Final Thoughts

There’s a deep irony about this bill. Congressional staffers rely heavily on personalized algorithms (like lobbyist recommendations) for their information flows, yet this bill seeks to kibosh the personalized algorithms for the rest of us.  ¯\_(ツ)_/¯

At its core, this bill is really a privacy bill misplaced in Section 230. The supporters should instead invest their time and energy in actually working on a comprehensive federal privacy bill that preempts problematic state laws like the CCPA/CPRA. I’m not convinced that the First Amendment permits the regulation of algorithms under the privacy rubric as opposed to the Section 230 rubric, but at least the conversation will make more sense than this bill does.

Parting thought: The “JAMAA” acronym, combined with the bill’s problems, brings to mind Carl Carlton’s classic song, She’s a Bad Mama Jama (hat tip Alan Kyle).

Prior Blog Posts on the 117th Congress’ Efforts to Kill the Internet

The SHOP SAFE Act Is a Terrible Bill That Will Eliminate Online Marketplaces

Comments on the PROMISE Act

Comments on the “SAFE TECH” Act

Comments on the “Protecting Constitutional Rights from Online Platform Censorship Act”

While Our Country Is Engulfed By Urgent Must-Solve Problems, Congress Is Working Hard to Burn Down Section 230

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Section 230 Protects Securities Exchange–Saveene v. Remo

This case involves an alleged case of corporate hijacking. The plaintiff alleges that it bought a controlling interest in a corporate entity opaquely named American Diversified Holdings Corp. (“ADHC”) from Remo. Remo then allegedly dissolved the Nevada entity and, without permission, created a new entity in Wyoming with the same name and filed reports for “ADHC” with the OTC securities exchange. The buyer claimed that OTC “permitted Remo to disseminate false information” and “failed to properly investigate Remo and his fraudulent actions.” The buyer sued OTC for tortious interference, breach of fiduciary duty, and negligence. OTC successfully defended on Section 230 on a motion to dismiss.

The court applies the standard three-part test for Section 230:

ICS Provider: “OTC disseminates information on listed companies.”

Third-Party Information: The claims are based on information Remo (a third party) submitted about ADHC. The plaintiff claimed the OTC isn’t a “passive platform” (ugh) because it “reviews and investigates information published on its platform.” The court says that’s irrelevant; the plaintiff didn’t allege that OTC “assisted in the development of or contributed to the quarterly reports Remo published on behalf of ADHC.”

Publisher/Speaker Claim.  The claims are based on “OTC’s dissemination of alleged false information and failure to remove and investigate such information”–in other words, publishing content.

This is an interesting ruling for at least three reasons. First, the court applied Section 230 to a claim of fiduciary breach. That’s the kind of claim that some courts could treat as creating first-party liability not subject to 230, even if the facts won’t actually support a fiduciary duty. Here, I infer the plaintiff created the problem by focusing on disseminating information without adequately investigating it. If those are the plaintiff’s best facts to illustrate a fiduciary breach, then I think 230 was appropriate.

Second, this ruling opens up a range of possibilities for how other securities exchanges might benefit from Section 230. In the end, securities exchanges are fundamentally just information disseminators. The availability of Section 230 could lead to some interesting and unexpected outcomes.

Third, this ruling highlights the general lack of understanding about the interplay between Section 230 and the securities world. I have blogged about that intersection relatively rarely. One notable example was my 2008 comments to the SEC on Section 230’s applicability to linked content, an issue that I haven’t heard about since. This case might spur more securities lawyers to care more about Section 230.

Case citation: Saveene Corp. v. Remo, 2021 WL 4806380 (S.D.N.Y. Oct. 14, 2021)

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National Teen Driver Safety Week: What You Need To Know

National teen driver safety week, which runs from October 17th to the 23rd, is the perfect time to emphasize teaching teens about the dangerous behaviors that put young drivers at risk, such as distracted driving, speeding, drunk driving and not wearing seat belts.  National teen driver safety week is something we all need to take …

Continue reading "National Teen Driver Safety Week: What You Need To Know"

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