Gripe Site Gets Section 230 Immunity for Lawyer Connection, 4th Circuit Rules

Unlike the 9th Circuit’s ruling against Roommates.com for requiring users to disclose characteristics and preferences that violated fair-housing law, ConsumerAffairs’ activity is perfectly legal, the 4th Circuit said. Interestingly, the court said its analysis of pleading standards was guided by a recent Supreme Court decision against a person who claimed to be wrongfully detained after the Sept. 11 terrorist attacks.

Nemet Chevrolet of New York said 20 posts at ConsumerAffairs making allegations about its sales and services were false and damaging to its business. It asked the lower court to waive the gripe site’s presumed immunity under Section 230 because Nemet alleged the site had a role in creating the content in the posts. But the 4th Circuit majority opinion written by Judge Steven Agee said the Supreme Court’s 2009 ruling in Ashcroft v. Iqbal, holding that a detainee couldn’t simply make “conclusory” claims about government discrimination against Arab Muslim men, doomed Nemet’s allegations. A court must be able to consider factual claims that allow it to infer “more than the mere possibility of misconduct,” Agee said.

ConsumerAffairs solicited complaints, put them into specific categories “designed to attract attention by consumer class-action lawyers,” contacted consumers to get more information and help them revise complaints, and promised they could get money by joining a class-action suit, Nemet said. Through the “structure and design” of its site and “preparation of” complaints, it’s liable for the 20 posts, the dealer said.

But the Roommates.com decision cited by Nemet is “fundamentally distinguishable” from the activity at issue, Agee said. Structuring a site to develop information related to class-action suits is a “legal undertaking,” with its own set of rules in federal judicial procedure. Nemet’s complaint “does not show, or even intimate,” that ConsumerAffairs contributed to the alleged “fraudulent nature” of the posts, Agee said. It’s also unclear how contacting a consumer with questions “develops” or “creates” fraudulent content, and Nemet didn’t detail how the gripe site revised complaints -- especially how its alleged behavior went beyond the “traditional editorial function” protected by Section 230, he said.

Nemet separately argued that it couldn’t identify customers based on the date, car model and first name listed in eight of the 20 posts, and accused ConsumerAffairs of making them up to draw other complaints. But its “sole factual basis” for the claim was Nemet’s own customer records, and not any “tangible fact” showing ConsumerAffairs’ involvement, Agee said: “Of course, the post could be anonymous, falsified by the consumer, or simply missed by Nemet.” Nemet’s claims that it has an “excellent professional reputation” and that none of the complaints had been reported to city authorities, as well as ConsumerAffairs’ reliance on Web advertising revenue and date irregularities in the posts, don’t overcome its pleading hurdle, Agee said. In particular, he said the dates could be off if ConsumerAffairs had first reviewed them for “inappropriate content,” an activity explicitly mentioned in Section 230.

Judge James Jones said in a concurrence he agreed with the Section 230 analysis pertaining to the 12 posts that Nemet said it could trace to actual customers. But he said the court must “accept as true, at least at this stage of the case,” Nemet’s claims about the other eight posts. Nemet’s sales records included customers’ full name, address, vehicle description, date of sale and other information -- “careful documentation” that should have let it identify complaining customers, Jones said. He also noted Nemet’s claims that New York authorities recently had pursued “highly publicized” litigation about other local dealers, that ConsumerAffairs had no section for positive reviews and “entices” users with the possibility of a class-action windfall, and that the site made separate negative comments about Nemet.

The Supreme Court’s Twombly plausibility standard “simply calls for enough fact to raise a reasonable expectation that discovery” will support a plaintiff’s claim, and Nemet has met that burden, Jones said. The possibilities that Nemet overlooked actual customers, “mischief makers” posted the reviews, or customers falsified transaction details, are not “any more plausible” than Nemet’s claim, he said: The Iqbal standard requires “more likely explanations” to bar fanciful pleadings. “Under the circumstances [Nemet] ought to have been allowed to attempt to prove its case,” Jones said.