Has US Internet liability law gone too far? The Shiamili decision – Jennifer McDermott

Website operators in the US, who allow others to post defamatory content on their web­sites, can take huge comfort from a very recent decision by the New York State Court of Appeals, Shiamili v. The Real Estate Group of New York, (N.Y. June 14, 2011). Under section 230 of the federal Communications Decency Act (“CDA”), 47 U.S.C. such operators are virtually immune from suit.

Shiamili highlights again that US law is substantially more protective of website operators than English law. But this extraordinary case shows that the US immunity is probably even wider than Congress intended and is being misused by unscrupulous website operators.

In Shiamili, the owner of a realty company sued a competitor and its principals who admin­istered a publicly-accessible blog. An unnamed user pseudonym “Ardor Realty Sucks,” posted a defamatory comment, stating that Mr Shiamili mistreated his employees, was rac­ist, anti-Semitic and employed a token Jew. The defendant’s website administrator moved the comment to a stand-alone post, allowing other users to add commentary. He added a preface, “the following story came to us as a . . . comment, and we promoted it to a post”; a heading, “Ardor Realty and Those People”; and a sub-heading, “and now it’s time for your weekly dose of hate, brought to you unedited, once again, by ‘Ardor Realty Sucks’. And for the record, we are so. not. afraid.” An image of Christ with Mr Shiamili’s face, and the words, “Chris Shiamili: King of the Token Jews”, was also added.

Other users posted further scurrilous statements about Mr Shiamili. One commentator ended by saying, “call me a liar and I’ll come back here and get REALLY specific.” Mr Shiamili alleged that one defendant, under a pseudonym, responded “liar,” to goad the user into saying more, but the user did not rise to the bait. Mr Shiamili drafted his own response, which was added to the thread. However, the defendants refused his request to remove the defamatory statements.

Mr Shiamili sued the website operators for defamation and they applied to dismiss his case. The New York Court of Appeals held that Section 230 of the CDA barred Mr Shia­mili’s claims because he did not allege that the defendants had written the defamatory content, which appeared on their website, but only that they had published and edited it.

This is the first time that New York’s highest court has construed the CDA, which was enacted by Congress in 1996, and which provides,

“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another content provider.” See 47 U.S.C. § 230(c)(1).

Following what it termed the “national consensus,” the Court of Appeals held that website operators are immune from defamation liability for content which others post on their websites. The Court of Appeals quoted a Congressional finding that US policy is, “to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State Regulation.”

The Court held that Section 230 does not differentiate between selective and neutral pub­lishers and, therefore, bars “lawsuits seeking to hold a service provider liable for its exer­cise of a publisher’s traditional editorial functions – such as deciding whether to publish, withdraw, postpone or alter content.” The Court explained that Section 230 was designed to encourage service providers to self-regulate and voluntarily screen potentially offensive or obscene material posted by others, without fear that doing so would subject them to liability for published content. Indeed, the statute was enacted to overrule cases such as Stratton Oakmont, Inc. v Prodigy Services Co.,1995 WL 323710 (Nassau Sup. Ct. 1995), which held that an internet service provider which screened and controlled third-party con­tent could be liable as the “publisher” of that content, although it would have escaped liabil­ity had it not screened or edited. The Shiamili Court held that Section 230 was meant to undo the “perverse incentives created by this reasoning”, which is, of course, the position in this jurisdiction although, as explained below, moves are afoot at the Ministry of Justice to ameliorate the position for website operators.

In the US unless a website operator is also a “developer” or “content provider” of defama­tory content, it cannot be found liable in defamation. The Shiamili Court held that the defendants in question were not “developers” of the complained-of content because it had been written and posted by third-parties. The Court did not determine whether a website operator could become a “developer” when it solicits negative content, because it found no actionable solicitation: “[c]reating an open forum for third-parties to post content – including negative commentary – is at the core of what section 230 protects.” The Court further held that no liability could attach to the act of moving comments to independent posts as that was “well within a publisher’s traditional editorial functions.” The Court did find, however, that the defendants were the “content providers” of the heading, sub-heading and illustra­tion but found this content not to be defamatory.

Shiamili was a majority four-three decision, with a very strong dissenting judgment. The dissenting judgment began:

“It is unfortunate that in this, our first case interpreting the [CDA], we have shielded de­fendants from the allegation that they abused their power as website publishers to pro­vide and amplify defamation targeted at a business competitor” and that the “scurrilous defamatory attacks against Mr Shiamili and Ardor Realty… are outside the scope of CDA immunity.”

The dissent further stated that the defendants were not necessarily mere passive conduits of defamatory material, but were, allegedly, active encouragers or endorsers of it, and discovery should have been permitted to ascertain the defendants’ exact role. Moreover, even if the reposting, heading, subheading and offensive illustration were not independ­ently actionable, “a reasonable reader, viewing the heading and illustration, might very well have concluded that the site editor was endorsing the truth of the appended facts.”

Nevertheless, the majority carried the day. The end result is that website operators in the US who avoid actually writing or soliciting defamatory material can insulate themselves from liability.

Internet service providers and website owners face a very different regime here. Section 1 of the Defamation Act 1996 provides a defence if defendant can show that

(1) he was not the “author, editor, or publisher”;

(2) he took reasonable care in relation to the publi­cation; and

(3) he did not know, and had no reason to believe, that what he did caused or contributed to the defamatory publication.

Moreover, under sub-section 1(3)(e), “the operator of or provider of access to a communications system by means of which the statement is transmitted, or made available, by a person over whom he has no effective control,” is not an “author, editor, or publisher.” This, therefore, exempts passive internet service providers. However, in contrast to US law, a website operator will be liable if that person examines and selects information, or becomes aware of allegedly defamatory content and does not remove it. See Godfrey v Demon Internet Ltd. [2001] QB 201. So if Shiamili had taken place here, the defendants would have been found liable as editors and publishers, if not authors, of the highly defamatory material.

Internet service providers and website owners here have expressed concern that, when notified of potential defamation, they have to decide quickly whether to remove the mate­rial or risk losing their Section 1 protection. As they are not normally in a position to verify whether material is defamatory, they will usually remove it, which may in turn unduly dam­age free speech. The Ministry of Justice is currently consulting on how best to remedy this situation. A number of approaches have been suggested including complete immunity for everyone except the original poster(s). This seems unlikely to be enacted. However, what is likely to be enacted is a new framework, as Lord Lester suggested in his proposed Defamation Bill. This would distinguish mere “facilitators” of information from different types of publishers and intermediaries and set out when each would become liable for internet defamation. The Ministry of Justice is fully aware that our current UK system po­tentially chills free speech, but believes that the US model would unduly restrict people’s rights to protect their reputations, as Shiamili amply demonstrates.

The sharp differences between US and UK internet defamation law, when coupled with the world-wide reach of the internet, are bound to cause conflicts. For example, a US website operator may easily establish and operate a site from the US, aimed primarily at English readers, focusing on English events and personalities and permitting English users to post content which defames English people. They would inevitably sue for defamation in Eng­land. The English court would quite properly assume jurisdiction.

Parliament is, however, currently debating Section 7 of the Government’s Defamation Bill, which would make it more difficult to sue non UK or EU based defendants for defamation because the claimant would additionally have to show that England is “clearly the most ap­propriate place in which to bring the action.” The purpose of this proposed provision is to outlaw so-called “libel tourism,” where the parties have little or no connection to England, but the claimant nevertheless sues here, rather than in the home country, because we have more favorable defamation laws. But, even if this provision is enacted, it would prob­ably not apply to claims by English claimants for internet-based defamation occurring here, as the English court would still consider itself to be the most appropriate forum.Nevertheless, the US based website operator or service provider may contest the jurisdic­tion of the English court. In addition, any resulting English judgment may not be enforcea­ble anywhere in the US. On August 10, 2010 the US enacted its own anti-libel tourism law, stating that no US federal or state court may enforce a foreign defamation judgment unless either: (a) the foreign forum’s defamation laws provide as much protection for free speech as the first amendment, or (b) even if foreign law provides less protection, the defend­ant would have been found liable for defamation by that domestic court applying the first amendment and the law of the state where the domestic court is located. See 28 U.S.C. § 4102(a). The statute further states that no US court may enforce a foreign defamation judgment “against the provider of an interactive computer service,” unless that judgment is consistent with Section 230 of the CDA. See 28 U.S.C. § 4102(c).

Although the US enacted 28 U.S.C. § 4102 to combat so-called “libel tourism,” its applica­tion is not confined to “libel tourism” cases. On the contrary, although no reported case has yet decided this issue, it appears that 28 U.S.C. § 4102 prohibits the recognition of any foreign defamation judgment against a website operator which could not have been ob­tained under Section 230 of the CDA, even one obtained by a English citizen in a English court, based on defamatory internet content which, although it appeared on a US-based website, was primarily aimed at, and accessed by, English readers.

In conclusion, parties in cases involving these conflicts are well-advised to consider both the chance of winning and the enforceability of any resulting judgment when deciding whether and where to bring proceedings. The existing laws are evolving rapidly, here and overseas, as legislators and judges alike try to keep pace with rapid technological change.

Jennifer McDermott is a partner heading the defamation, privacy and reputation management team at London based law firm Withers