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Small Justice LLC v. Xcentric Ventures LLC

United States Court of Appeals, First Circuit

October 11, 2017

SMALL JUSTICE LLC; RICHARD A. GOREN; CHRISTIAN DUPONT, d/b/a Arabianights-Boston, Massachusetts Plaintiffs, Appellants,
v.
XCENTRIC VENTURES LLC, Defendant, Appellee.

         APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Denise J. Casper, U.S. District Judge]

          Richard A. Goren, with whom Law Office of Richard Goren was on brief, for appellants.

          Daniel G. Booth and Maria Crimi Speth, with whom Booth Sweet LLP and Jaburg & Wilk, P.C. were on brief, for appellee.

          Paul Alan Levy, Public Citizen Litigation Group, Christopher Bavitz, Berkman Center for Internet and Society, Mitch Stoltz, Kit Walsh, Corynne McSherry, on brief for amici curiae Public Citizen, Inc. and Electronic Frontier Foundation.

          Before Torruella, Kayatta, and Barron, Circuit Judges.

          BARRON, Circuit Judge.

         These consolidated appeals concern a lawsuit that involves a number of claims arising under, respectively, federal copyright law, state tort law, and Massachusetts's catch-all consumer protection statute, Mass. Gen. Laws ch. 93A ("chapter 93A"). The defendant in the suit is Xcentric Ventures, LLC ("Xcentric"), which operates a website, the RipoffReport.com ("Ripoff Report"). The named plaintiffs are Richard Goren ("Goren"), a Massachusetts attorney; Small Justice LLC ("Small Justice"), a corporate entity that Goren created; and Christian DuPont ("DuPont").[1] The plaintiffs' claims all pertain to a dispute arising from two reports that DuPont authored and then posted on the Ripoff Report and that are highly critical of Goren, who had provided legal representation to a plaintiff in an unrelated matter in which DuPont was the defendant.

         In the first of these appeals, we affirm the District Court's decision to dismiss the plaintiffs' claims under Massachusetts law for libel and intentional interference with prospective contractual relations, and to bar portions of the plaintiffs' multi-faceted chapter 93A claim from going forward. We also affirm the District Court's decision to grant summary judgment to Xcentric as to the remaining claims. In the second appeal, we affirm the District Court's decision to award attorney's fees and costs to Xcentric.[2]

         I.

         Despite the meandering path of this case, the facts that give rise to these consolidated appeals are not contested. We thus begin by laying out the facts found by the District Court in its rulings on Xcentric's motion to dismiss and on Xcentric's motion for summary judgment. We then briefly recount the facts relevant to our resolution of the second appeal, which concerns the District Court's award of attorney's fees to Xcentric.

         A.

         Xcentric operates a website called the Ripoff Report. The website's purpose is to permit consumers "to post free complaints, called 'reports, ' about companies and individuals whom [sic] they feel have wronged them in some manner." The website works as follows for one who wishes to post a report on it.

         Before submitting a report to be posted on the website, the would-be poster must click through a series of screens. Those screens ask the user to describe and to categorize the nature of the complaint that the user wishes to post as a report.

         Ultimately, a user attempting to post a report encounters a final screen that is captioned, "Submit your Report." Below that caption is a text box. That text box is separately captioned, "Terms and Conditions, " and contains a vertical scroll bar on the right side. Without employing the vertical scroll bar, a user who encounters this screen can see the very beginning --but only the very beginning -- of what is a longer list of terms and conditions.

         One of the "Terms and Conditions" -- which, according to the District Court, is "not visible unless a user employs the scroll bar" -- provides: "[b]y posting information or content to any public area of [the Ripoff Report], you automatically grant, and you represent and warrant that you have the right to grant, to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute such information and content . . . ." As the District Court noted, in order to post a report, a user is not required to click on a box indicating that the user has read and agreed to the text set forth in the text box captioned, "Terms and Conditions."

         Underneath the text box captioned "Terms and Conditions, " there is additional text that appears without any caption above it. As is relevant here, at the time in question, that text stated:

By posting this report/rebuttal, I attest this report is valid. I am giving Rip-off Report irrevocable rights to post it on the website. I acknowledge that once I post my report, it will not be removed, even at my request. Of course, I can always update my report to reflect new developments by clicking on UPDATE.

         Adjacent to this text is a check box. The parties agree that, to submit a report to be posted on the website, a user of the Ripoff Report must click on this check box. The user must then click on the "continue" button at the bottom of the same screen.

         B.

         Several years ago, Goren was the subject of two negative reports that had been posted on the Ripoff Report. The person who posted the two reports, DuPont, had been the defendant in a lawsuit in which Goren was representing a party suing DuPont. In the two postings, DuPont leveled a number of criticisms regarding Goren's character and conduct.

         In response, Goren filed suit in Massachusetts state court, under Massachusetts state law, for libel and intentional interference with prospective contractual relations. Goren sought both money damages and injunctive relief in the form of an order "enjoining [DuPont] from continuing to publish" the reports that DuPont had posted.

         DuPont did not defend the lawsuit, and Goren, after first voluntarily dismissing those counts of the state court complaint that sought money damages, successfully obtained a default judgment. The state court granted Goren certain equitable relief in connection with that default judgment. Specifically, the state court enjoined DuPont from "continuing to publish or republish" the two reports that DuPont had posted. The state court also transferred to Goren "all rights in and to ownership of the copyright" for each of the two reports that DuPont had posted. Finally, the state court appointed Goren as DuPont's attorney-in-fact in order to "execute and deliver a conveyance, transfer, and assignment of all rights in and to ownership" of DuPont's copyright in each posting to Goren. Thereafter, Goren assigned to himself the copyright in the reports that DuPont had posted, which Goren then assigned to Small Justice.

         C.

         The plaintiffs next proceeded to file this lawsuit in federal court in Massachusetts against Xcentric, the owner of the Ripoff Report. As amended, the plaintiffs' complaint claimed, with respect to copyright law, a right to a declaration of Small Justice's ownership of the copyright to the two reports that DuPont had posted, and copyright infringement. The amended complaint also made claims under Massachusetts state law for libel, intentional interference with prospective contractual relations, and violations of chapter 93A.

         The amended complaint sought both damages and equitable relief. With respect to equitable relief, the amended complaint sought a declaratory judgment regarding Small Justice's ownership of the copyright to each of the postings at issue. The amended complaint also sought preliminary and permanent injunctions that would bar Xcentric from "continuing to publish, and/or from republishing all or any part" of the two reports about Goren that DuPont had posted on the Ripoff Report, and that would order Xcentric "to take all steps necessary or appropriate to cause Google, Yahoo and Bing to delete all cached copies of or links to" the two negative posts.

         Xcentric moved to dismiss the amended complaint in its entirety. The District Court partially granted that motion. Specifically, the District Court held that the Communications Decency Act ("CDA"), 47 U.S.C. § 230, immunized Xcentric from liability for the plaintiffs' Massachusetts law tort claims, for libel and intentional interference with prospective contractual relations, as well as from certain theories of liability set forth in the plaintiffs' chapter 93A claim.

         Section 230 of the CDA provides in 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) (emphasis added). Section 230 defines an "interactive computer service" ("ICS") as "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server." Id. § 230(f)(2). Subsection 230(f)(3) then defines an "information content provider" ("ICP") as "any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service."

         Xcentric argued in its motion to dismiss that it was entitled to immunity under the CDA as an ICS. Xcentric contended that the claims at issue -- all of which were related to the Ripoff Report continuing to display DuPont's postings -- treated Xcentric as a "publisher or speaker of . . . information provided by another information content provider, " see id. § 230(c)(1), namely, DuPont.

         In responding to Xcentric's motion, the plaintiffs did not dispute that Xcentric was an ICS. The plaintiffs argued instead that Xcentric was also the ICP with respect to DuPont's postings by virtue of Xcentric having held itself out as a copyright holder of DuPont's postings and having "direct[ed]" internet search engines to display copies of those postings. Thus, the plaintiffs contended, Xcentric could not assert the immunity conferred by the CDA as to the claims at issue, because Xcentric, as an ICS, was not being treated by those claims as the publisher of information provided by another ICP. Rather, the plaintiffs argued, Xcentric was being treated, at most, as the publisher of information content for which Xcentric itself was the ICP.

         In addressing these arguments, the District Court explained that, under our decision in Universal Commc'n Sys., Inc. v. Lycos, Inc., 478 F.3d 413, 418 (1st Cir. 2007), in order for Xcentric "[t]o avail itself of [the] immunity" set forth in § 230(c)(1), "(1) Xcentric must be a provider or user of an [ICS]; (2) the Plaintiffs' claim is based on information provided by another [ICP]; and (3) the claim would treat Xcentric as the publisher or speaker of that information." The District Court then ruled that Xcentric had made the requisite showing to trigger CDA immunity as to each of the plaintiffs' claims that Xcentric's motion to dismiss targeted, save for the plaintiffs' chapter 93A claim. The District Court ruled that, due to CDA immunity, the chapter 93A claim could go forward on only one of the three grounds for finding liability that the District Court determined that the plaintiffs had identified in that count of their amended complaint.

         In finding CDA immunity, the District Court explained that Xcentric was not properly considered to be an ICP with respect to DuPont's postings because Xcentric did not "specifically encourage[] the development of the offensive content" at issue. The District Court concluded that the mere acquisition of copyright to content created by another party -- or the holding of oneself out as the copyright holder of such content -- does not suffice to make an entity an ICP under § 230(f)(3). The District Court similarly concluded that "instructing Google [and other search engines] to use, or at least by not precluding Google from using, its automated program to acquire cached copies of the [postings] . . . does not rise to the level of the 'creation or development of information' that would render Xcentric an 'information content provider' under the CDA."

         Following the District Court's ruling on the motion to dismiss, Xcentric filed a one-count breach-of-contract counterclaim against DuPont. The case then proceeded to discovery on that counterclaim and also on the plaintiffs' remaining claims, which consisted of the two copyright-related claims (for, respectively, a declaration of ...


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