Past victims of false Ripoff Report postings will be pleased with the recent rulings out of the United Stated District Court for the District of Utah, Central Division.
In a case in which a Utah-based company and individual sued Xcentric Ventures, LLC – the parent company of Ripoff Report – the court denied Xcentric Ventures’ motion to dismiss and more recently its motion for reconsideration under Fed. R. Civ. P. 59(e).
This ruling, which has allowed the plaintiffs in the case to move forward with discovery, is undoubtedly a favorable one for the many opponents of Ripoff Report. The website is known to many as a forum for disgruntled persons – not limited to consumers – submitting defamatory postings and Ripoff Report refusing to remove false content, thanks largely to the protections it has under a federal statute, the Communications Decency Act (CDA).
Accordingly, efforts to litigate against Xcentric Venture have been virtually fruitless. In the website’s “About Us” section, Ripoff Report boasts this very fact, cautioning others from taking a similar course of action against Ripoff Report and its parent company:
Based on the protection extended by the CDA, Ripoff Report has successfully defended more than 20 lawsuits in both state and federal courts. Each time, the courts have consistently found that the CDA shields Ripoff Report from any claims seeking to treat it as the speaker or publisher of information posted by a third party.
The About Us section further states: “You can always sue the author if you want, but you can’t sue Ripoff Report just because we provide a forum for speech.”
But, the federal district court in Utah, at least at this stage in the proceedings, seems to disagree. According to the Order Denying Motion To Alter Judgment, filed on Aug. 27, 2015, the court found that the facts alleged infer that Xcentric Ventures (Ripoff Report) is not a neutral publisher, but rather encourages users to submit negative content.
Vision Security, LLC and Rob Harris v. Xcentric Ventures, LLC
Vision Security is a direct sales company specializing in residential alarm services sales. According to a October 2013 complaint, a business competitor made numerous false statements about the company and its CEO/founder, Rob Harris, on Ripoff Report.
As stated in the complaint, the competitor admitted – through an affidavit – that the statements submitted to Ripoff Report were false; that he had intended to dissuade others for working with Vision Security; and that he had informed Ripoff Report of the falsity of the statements and requested removal of the statements.
As those familiar with Ripoff Report are well aware, the website’s refusal to remove Ripoff Report postings extends to situations in which an author admits his or content is false and personally requests removal.
According to the complaint, Ripoff Report instead recommended that Vision Security join its paid Corporate Advocacy Program. This program is designed to assist businesses in protecting their reputations on Ripoff Report and, in turn, in search results. But the program does not help with actual removal of the content.
The plaintiffs in this matter, Vision Security and Mr. Harris, contended in their complaint that requiring a fee to help refute the competitor’s claims amounted to extortion. As such, the plaintiffs alleged several causes of action against Xcentric Ventures, including false advertising under the federal Lanham Action, violation of Utah’s deceptive trade practices, defamation, and tortious interference.
Order denying motion to alter judgment
After denying Xcentric Ventures’ motion to dismiss for failure to state a claim last September, the Court also recently denied Xcentric Ventures’ motion for reconsideration under the Federal Rules.
Among other arguments, the parent company of Ripoff Report maintained that the court had misapplied the CDA. But the controlling authority in the Tenth Circuit – FTC v. Accusearch Inc., 570 F.3d 1187 (10th Cir. 2009) – stated that a service provider is responsible for developing offensive content “if it in some way specifically encourages development of what is offensive about the content.”
As noted in both the complaint and the order, the taglines on RipoffReport.com can reasonably be interpreted as encouraging the posting of negative content. Moreover, based on Ripoff Report’s refusal to remove the negative content and alternative encouragement to buy into its own reputation program, the court found that the plaintiffs pleaded facts demonstrating that Xcentric Ventures and Ripoff Report “had an interest in, and encouraged, negative content.”
According to USDC Judge Clark Waddoups, it can be reasonably inferred, based on the alleged facts, that Xcentric Ventures and Ripoff Report’s decision not to remove the false and defamatory content was motivated by their commercial interests. As such, he denied Xcentric Ventures’ motion for reconsideration and permitted the plaintiffs to go forward with discovery.
This is clearly a difficult ruling for the major proponents of the CDA, but nonetheless a positive one for those victims of internet defamation and those seeking to similarly protect businesses and individuals from harm on the internet.
This is the second recent ruling in favor of plaintiffs in a CDA matter.
(h/t to law professor and blogger Eric Goldman who first wrote about this case on September 20)