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Icon Health & Fitness, Inc. v. Consumer Affairs.Com

United States District Court, D. Utah, Northern Division

June 22, 2017

ICON HEALTH & FITNESS, INC., a Delaware corporation, Plaintiff,
v.
CONSUMER AFFAIRS.COM, a Nevada corporation, CONSUMERS UNIFIED, LLC, a Nevada limited liability company; and DAVID ZACHARY CARMAN, and individual, Defendants.

          MEMORANDUM DECISION

          Dustin B. Pead United Stages Magistrate Judge.

         BACKGROUND

         Plaintiff's Complaint alleges Consumer Affairs.com (“ConsumerAffairs”), Consumers Unified, LLC, and David Zachary Carman[1] (collectively “Defendants”) violated the Racketeering Influenced Corrupt Organizations Act (“RICO”), violated Utah statutes, interfered with prospective economic relations, and defamed Plaintiff. (ECF No. 2, Ex. 1.) Defendants, through ConsumerAffairs, maintain an internet database of product reviews, which includes reviews of products Plaintiff produces. Plaintiff alleges Defendants' internet site improperly favors paying member companies while unfairly disparaging nonmember companies. (See id.) The matter is presently before the court on Defendants' Motion to Dismiss. (ECF No. 10.) Defendants argue they are entitled to statutory immunity under the Communications Decency Act and that Plaintiff fails to properly allege any viable claim. For the reasons set forth below the court will grant Defendants motion, in part.

         STANDARD OF REVIEW

         To survive, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The court accepts factual allegations “as true and construe[s] those allegations, and any reasonable inferences that might be drawn from them” in a plaintiff's favor. Gaines v. Stenseng, 292 F.3d 1222, 1224 (10th Cir. 2002). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Nonetheless, conclusory allegations without supporting factual allegations are insufficient to state a claim for relief. See Id. (“Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'”).

         FACTS

         Plaintiff alleges the following facts. ConsumerAffairs hosts a website containing product reviews and complaints for a wide variety of consumer products, including certain exercise equipment Plaintiff manufactures. (ECF No. 2, Ex. 1 at 3-4.) Defendant Carman is the sole manager of Consumers Unified, LLC, and the President, sole Director, Secretary, and Treasurer of ConsumerAffairs. (Id. at 3.) Together, Defendants maintain a database of product reviews on the ConsumerAffairs website. Defendants, through that database, favor product manufacturers who agree to pay a one-time setup fee and an ongoing monthly fee to ConsumerAffairs or Consumers Unified, LLC.[2] (Id. at 4-7, 11.)

         ConsumerAffairs publishes an “Overall Satisfaction Rating” for each product reviewed on its website. (Id. at 4.) The Overall Satisfaction Rating is expressed as a star rating out of five possible stars. ConsumerAffairs calculates the rating based on an unspecified subset of user reviews hosted on ConsumerAffairs' website. (Id. at 4.) ConsumerAffairs' chooses which consumer reviews to include in given company's Overall Satisfaction Rating based solely on whether that company pays a monthly fee to ConsumerAffairs. (Id. at 5.) ConsumerAffairs alters a company's Overall Satisfaction Rating by intentionally omitting or removing legitimate positive consumer-submitted reviews from pages discussing non-paying companies. (Id. at 6.)

         ConsumerAffairs contacted Plaintiff in early 2016 offering to “help” Plaintiff with their business. (Id.) At that time, ConsumerAffairs rated two of Plaintiff's products at approximately one star out of five. (Id. at 7.) ConsumerAffairs initially refused to share pricing information unless Plaintiff signed a non-disclosure agreement. ConsumerAffairs relented when Plaintiff pointed out that pricing should not constitute a trade secret. (Id. at 6-7.) ConsumerAffairs sent Plaintiff a Member Accreditation Agreement (“Agreement”). ConsumerAffairs offered to waive a customary $9, 000 setup fee and charge Plaintiff an ongoing $3, 000 monthly fee in return for certain benefits and services. (Id. at 7.)

         The Agreement provides that ConsumerAffairs will remove all negative feedback Plaintiff disputes if: the underlying facts are uncertain, the problem is “resolved, ” a consumer does not respond within five days, or the customer's response is “insufficient.” (Id.) If Plaintiff refused to pay, Plaintiff could not challenge any negative feedback related to its products. (Id.) Also, ConsumerAffairs allows paying companies to request or compel[3] individual reviewers to change a prior rating, but a nonpaying company cannot do this. (Id. at 5.)

         Once a company begins paying ConsumerAffairs, the company's product pages on ConsumerAffairs' website change. (Id. at 4-5.) Prior to paying, ConsumerAffairs superimposes on a given company's page a prompt stating “Not Impressed With [non-paying brand]? Find a company you can trust” or other language recommending competitors. (Id. at 5.) Also, ConsumerAffairs subtly switches the order of wording on a company's page from the non-paying version that states “Top [number] Complaints and Reviews” to the paying version, “Top [number] Reviews and Complaints.” (Id. at 4.)

         ANALYSIS

         I. Communications Decency Act immunity

         a. Parties' Arguments

         Defendants argue the court should dismiss the Complaint because the Communications Decency Act (“CDA”) provides immunity to Defendants for all conduct alleged in the Complaint. Plaintiff contends that Defendants are not entitled to CDA immunity because ConsumerAffairs is a content provider as defined by the CDA, not simply a publisher of third-party submissions. Plaintiff also contends that CDA immunity does not extend to RICO claims.

         b. The CDA applies to ConsumerAffairs' publication of third-party reviews

         The CDA provides immunity to ConsumerAffairs for some, but not all, conduct alleged in the Complaint. The CDA provides, in pertinent part: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c)(1). Further, “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.” Id. § 230(e)(3). Thus, the CDA provides immunity for civil causes of action based on information originating with a third party. Ben Ezra, Weinstein, & Co., Inc. v. Am. Online Inc., 206 F.3d 980, 984-85 (10th Cir. 2000). Yet “the CDA provides immunity only from liability, not suit.” Gen. Steel Domestic Sales, L.L.C. v. Chumley, 840 F.3d 1178, 1181 (10th Cir. 2016). Defendants must satisfy three requirements to take advantage of CDA immunity: Defendants (1) were providers or users of “an interactive computer service, ” (2) Defendants undertook the actions alleged in the Complaint as a publisher or speaker and, (3) another “information content provider” provided the information at issue. See F.T.C. v. Accusearch Inc., 570 F.3d 1187, 1196 (10th Cir. 2009).

         1. Interactive computer service

         “The term ‘interactive computer service' means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.” 47 U.S.C.A. § 230(f)(2). Generally, a website constitutes an interactive computer service. See Universal Commc'n Sys., Inc. v. Lycos, Inc., 478 F.3d 413, 419 (1st Cir. 2007), cited with approval in Accusearch. Plaintiff alleges that Defendants operate the ConsumerAffairs website. (E.g., ECF No. 2, Ex. 1 at 4.) Plaintiff offers no authority to suggest ConsumerAffairs is not an interactive computer service.[4] Thus, the court finds Defendants are providers or users of an interactive computer service to the extent they operate the ConsumerAffairs website.

         2. Speaker or publisher

         The Tenth Circuit held that CDA immunity protects an interactive computer service in the “exercise of its editorial and self-regulatory functions.” Ben Ezra, Weinstein, & Co., Inc. v. Am. Online Inc., 206 F.3d 980, 986 (10th Cir. 2000) (finding that an interactive computer service engaged in editorial functions when it deleted allegedly inaccurate information from a website). The editorial role also includes “deciding whether to publish, withdraw, postpone or alter content” Zeran v. Am. Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997), cited with approval in Ben Ezra, Accusearch, and Gen. Steel. The Zeran court noted that an “important purpose of § 230 was to encourage service providers to self-regulate the dissemination of offensive material over their services.” Id. at 331. Accordingly, the court does not question the motives of the editor. See Fair Hous. Council of San Fernando Valley v. Roommates.Com, LLC, 521 F.3d 1157, 1170-71 (9th Cir. 2008) (“any activity that can be boiled down to deciding whether to exclude material that third parties seek to post online is perforce immune under section 230”). Defendants argue Plaintiff's allegations describe only actions of a publisher. The court partially agrees with Defendants. The Complaint refers to a number of activities Defendants undertake as a publisher of third-party information. For example, the Complaint alleges “ConsumerAffairs hosts web-based product or brand reviews.” (ECF No. 2, Ex. 1 at 4.) In doing so, ConsumerAffairs has deliberately not posted, or even removed, positive reviews. (Id. at 6.) ConsumerAffairs also posts certain reviews “out of chronological order.” (Id. at 9.) These activities fall within the traditional publisher's role. Plaintiff suggests these actions are taken with malicious intent. (E.g. Id. at 6.) Yet the provision of the CDA on which Defendants rely contains no good-faith requirement. See 47 U.S.C. § 230(c)(1). This omission appears intentional because the following subsection contains a good-faith requirement. See Id. § 230(c)(2) (prohibiting liability for “any action voluntarily taken in good faith”). Additionally, other courts have rejected similar attempts to find a bad-faith exception to CDA immunity. See Levitt v. Yelp! Inc., No. 10-1321, 2011 WL 5079526, at *7-8 (N.D. Cal. Oct. 26, 2011), aff'd, 765 F.3d 1123 (9th Cir. 2014). The court finds the Levitt court's reasoning persuasive:

[T]raditional editorial functions often include subjective judgments informed by political and financial considerations. Determining what motives are permissible and what are not could prove problematic. Indeed, from a policy perspective, permitting litigation and scrutiny [of] motive could result in the “death by ten thousand duck-bites” against which the Ninth Circuit cautioned in interpreting § 230(c)(1).

Id. (citations omitted).

         On the other hand, Plaintiff also alleges that Defendants engage in conduct beyond editorial and self-regulatory functions related to speech and publication of third-party information. Plaintiff alleges that Defendants began soliciting Plaintiff via email about purchasing advertising from ConsumerAffairs. (Id. at 6.) At least one court determined similar conduct fell outside CDA immunity. The District of Massachusetts held that an online “consumer advocacy forum” called RipoffReport.com did not qualify for CDA immunity for advertising mediation services to the subjects of consumer complaints. See Small Justice LLC v. Xcentric Ventures LLC, 99 F.Supp.3d 190, 200 (D. Mass. 2015), amended, No. 13-CV-11701, 2015 WL 5737135 (D. Mass. Sept. 30, 2015). The court agrees. While a website provider enjoys CDA immunity for certain information posted on its website, it may engage in other related conduct for which the CDA offers no immunity. Thus, while much of Defendants' conducted alleged in the complaint constitutes third-party speech or publication, other conduct does not. Consistent with the CDA, Defendants will not be treated as publisher or speaker of any third-party information on the website. Nonetheless, the court will examine whether Defendants must defend any portion of the Complaint related to conduct not immunized by the CDA.

         3. Information originating with another information content provider

         Plaintiff alleges facts that show Defendants develop at least some of the offensive content at issue in the Complaint. An interactive service provider “is ‘responsible' for the development of offensive content only if it in some way specifically encourages development of what is offensive about the content.” Accusearch at 1187. The Ninth Circuit, sitting en banc, discussed the thin line between content development and exercise of editorial and self-regulatory functions:

A website operator who edits user-created content-such as by correcting spelling, removing obscenity or trimming for length-retains his immunity for any illegality in the user-created content, provided that the edits are unrelated to the illegality. However, a website operator who edits in a manner that contributes to the alleged illegality-such as by removing the word “not” from a user's message reading “[Name] did not steal the artwork” in order to transform an innocent message into a libelous one-is directly involved in the alleged illegality and thus not immune.

Fair Hous. Council of San Fernando Valley v. Roommates.Com, LLC, 521 F.3d 1157, 1169 (9th Cir. 2008) This element overlaps to a great degree with the question of whether ConsumerAffairs exercised its editorial and self-regulatory function, but the focus is on whether ConsumerAffairs created any of the purportedly-harmful content.

         The court easily concludes that ConsumerAffairs developed or created the content that originates with ConsumerAffairs rather than any user. For example, Plaintiff alleges that ConsumerAffairs superimposes on product pages: “Not Impressed With [non-paying brand]? Find a company you can trust.” (ECF No. 2, Ex. 1 at 5.) Similarly, the Complaint alleges ConsumerAffairs modifies review pages and search engine results for paying members by changing the order of certain words depending on whether a company has paid ConsumerAffairs. (Id. at 4.) ...


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