Directory Assistants, Inc. v. SuperMedia, LLC | Citizen Media Law ...

On August 26, 2011, Directory Assistants, Inc., a Connecticut-based advertising consulting agency, filed a complaint in the U.S. District Court for the Eastern District of Virginia against advertising company SuperMedia, LLC, and three of its employees. The claims, which sound in defamation and tortious interference with business expecations, arose out of SuperMedia's alleged compilation and distribution of hyperlinks to material online that was defamatory of Directory Assistants.

The complaint alleges that defendant Caro compiled a list of links to material on various websites about Directory Assistants, including damaging statements on the websites Ripoff Report and Scam Informer, and then forwarded these links by e-mail to defendant Sapaugh. Sapaugh, in turn, was alleged to have forwarded the list internally at SuperMedia by-email along with the following comments:

Teams- we heard about these guys, they've been here before and all they do is hurt the client.
we do anything the client wants and we don't charge for it- we sell on value, not fear!
once the client signs with DA, DA collects for 2 or 3 years on the
savings.
don't let this happen, so review and be aware
Steve

Defendant Duffy was alleged to have received this list from Sapaugh and to have forwarded it to a potential customer of Directory Assistants; Directory Assistants also generally claimed that SuperMedia continued to forward these links to other potential customers.

The defendants moved to dismiss the complaint for lack of jurisdiction and for failure to state a claim. With respect to jurisdiction, SuperMedia argued in its memorandum in support of the motion that Directory Assistants was invoking the diversity jurisdiction of the federal courts, but had failed to plead sufficient facts to establish diversity because SuperMedia was a limited liability company. As such, SuperMedia claimed that Directory Assistants would need to allege the residency of each of its members rather than the location of SuperMedia.

Substantively, the defendants argued that Directory Assistants' claims were barred by 47 U.S.C. ? 230, because as "users of an interactive computer service" (i.e., RipOff Report and Scam Informer) they could not be held liable for publishing links to information posted by other users of those websites.

Alternatively, the defendants argued with respect to the plaintiff's defamation claim that: (1) Caro's alleged e-mail to Sapaugh and Sapaugh's alleged distribution of Caro's list within SuperMedia would not constitute "publication" of defamatory material under Virginia law, because it was a privileged distribution within a corporate entity to those having a duty and interest in the subject matter; (2) the distribution of hyperlinks is neither a defamatory "statement" for defamation purposes nor the "publication" of such a statement; (3) the underlying statements on the linked websites were statements of opinion; and (4) the complaint failed to allege knowledge of falsity or negligence on the part of the defendants.

With respect to the tortious interference claim, the defendants argued that Directory Assistants had failed to plead: (1) that defendants interfered with a business expectancy through improper means, because of the insufficiency of the plaintiff's defamation claim; (2) that plaintiff had a valid business expectancy in its relationship with any particular potential customer; or (3) that defendants knew of such an expectancy, if one did exist.

Directory Assistants opposed the motion to dismiss, arguing first that it would be inappropriate to resolve the defendants' Section 230 defense on a motion to dismiss, because discovery might establish that the websites at issue were not "interactive computer services" or that Caro obtained the information he shared from some other third party. In either case, the plaintiff argued, Caro would not be a "user of an interactive computer service" entitled to the protection of Section 230. Directory Assistants also argued that its claims were not limited to material on the linked websites, and that there was evidence of other communications between SuperMedia and Directory Assistants' potential customers whose content Directory Assistants should be allowed to investigate through discovery.

With respect to the sufficiency of its defamation claim under Virginia law, Directory Assistants argued that another court (the U.S. Bankruptcy Court for the Southern District of Texas) had found publication of a defamatory statement through distribution of an e-mail with links to false material, and that (as discussed above) the defamation claim was not limited to the linked material. The plaintiff further argued that ruling on SuperMedia's assertion of a qualified privilege for intra-corporate distribution of material was premature, because the privilege is an affirmative defense under Virginia law and could be overcome by a showing of malice on the part of the distributor. Directory Assistants responded to the defendants' argument that the statements at issue were opinions by claiming that they gave rise to inferences of defamatory fact, and by asserting that it was likely that there had been other communications by SuperMedia to customers of which the plaintiff was not currently aware. Finally, Directory Assistants argued that the facts which it pleaded were sufficient to support an inference of actual malice or negligence.

On its interference claim, Directory Assistants argued that (1) its allegations of defamation sufficed as an allegation of interference by improper means, (2) it was sufficient to allege a "business expectation" that the individual contacted by defendant Duffy was identified as a "prospective customer," and (3) the knowledge requirement of the claim was satisfied by alleging that SuperMedia was aware that Directory Assistants did business in Virginia.

The defendants filed a reply brief, in which (among other issues) they argued that allowing Directory Assistants the opportunity to take discovery on the Section 230 issue would be inappropriate where the plaintiff's allegations were insufficient, and cited other courts that had granted motions to dismiss where a Section 230 defense was established on the face of the complaint. The defendants also distinguished the case authority cited by Directory Assistants for the principle that forwarding links could be actionable, on the basis that the earlier decision had not considered the effect of Section 230. Other cases citing Section 230, the defendants claimed, reached the opposite result.

The district court granted the defendants' motion to dismiss on May 30, 2012. Finding that Section 230 "protects users equally as it does providers," the court held that "a user of an interactive computer service who finds and forwards via e-mail that content posted online in an interactive computer service by others is immune from liability." The court further held that the websites to which the SuperMedia e-mails provided links were "interactive computer services," and that the defendants "were users in that they put RipOffReport and other websites into action or service, and availed themselves of and utilized these websites by compiling their posts by copying links to commentary posted on them."

As such, the court held that it "unfortunately" was required to dismiss Directory Assistants' claims, while noting that Section 230's protections are "clearly subject to tremendous abuse," and stating its "serious misgivings about [the Fourth] Circuit's broad interpretation of ? 230 immunity." The court did not reach the parties' other arguments, finding that the plaintiff's failure to overcome Section 230 rendered the other issues moot.

Source: http://www.citmedialaw.org/threats/directory-assistants-inc-v-supermedia-llc

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