Message Board Operator May Be Liable For Moderator’s Content–Enigma v. Bleeping

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It’s been a brutal year for Section 230 jurisprudence, and the hits keep coming. In today’s case, the parties ran into a judge who seemed unshakably determined–for reasons I can’t determine–to deny the motion to dismiss. This produces an outlier opinion, ample grounds for appeal if the case goes that route, and yet another 2,800 word blog post from me that consumed many tearful and head-shaking hours.

Enigma Software makes the anti-malware program SpyHunter. Bleeping Computer runs a computer support message board that included discussions about anti-malware programs. Bleeping Computer has an affiliate program relationship with Malwarebytes, a SpyHunter competitor. Enigma argued that the affiliate relationship motivates Bleeping to denigrate SpyHunter and drive prospective customers instead to Malwarebytes.

Like most message boards, Bleeping designates super-users, which it calls “staff members,” and gives them extra powers:

“Advisors,” whom Bleeping holds out as experts who “can be trusted to give correct and understandable answers to [users’] questions.” Above Advisors are “Global Moderators,” who enjoy “special powers” to enforce rules governing the Forums, e.g., by “closing” discussions, editing the content of users’ posts, and suspending the posting privileges of users who violate the rules….Bleeping touts its staff as experts who can be “trust[ed] to provide correct, unbiased and truthful advice”

Quietman7 is one of three users designated as “Global Moderators” (and he apparently had been an “advisor” previously). The complaint alleges he was the point man on Bleeping’s “smear campaign” against SpyHunter:

the SAC alleges, Quietman7 stated, directly or by implication, that: (1) ESG engages in aggressive and deceptive advertising; (2) SpyHunter is a “dubious” and “ineffective” program that generates false positives; and (3) SpyHunter is a “rogue” product that is properly classified as malware, rather than the anti-malware product it purports to be. In the same posts, the SAC alleges, Quietman7 advised users to remove SpyHunter and replace it with a more “trustworthy” alternative—invariably an Affiliate product, such as Malwarebytes Anti-Malware, for which he supplied an Affiliate Link.

Enigma sued Bleeping for defamation, trade libel and Lanham Act false advertising. Bleeping asserted the appropriate defenses. The court shreds them all.

Section 230. First, the court says that the Lanham Act false advertising claim fits into Section 230’s IP exclusion. This is a basic misunderstanding of the differences between trademark law and false advertising law, but it’s a topic that’s vexed courts. Compare Baldino’s Lock & Key v. Google with General Steel v. Chumley (both uncited by the court).

Next, Quietman7 isn’t a Bleeping employee; he’s a third party volunteer. On this basis, Section 230 should allow Bleeping to avoid all liability for his actions. Engima retorted that Bleeping had an express or implied agency with Quietman7 and that should bypass Section 230’s immunity for third party content because the agency makes it first party content. The court says the complaint plausibly alleges at least an implied agency:

the SAC alleges that Bleeping publicly designated Quietman7 as a “Global Moderator” and “Advisor”—the second and third highest “staff member” positions within the Bleeping member group hierarchy. It alleges that Quietman7 publicly accepted these appointments, and has since signed his posts as “Bleepin’ Janitor” and “The BC Staff.” Further, as alleged in the SAC, Bleeping staff members are “authorized [ ] and expected to post in Bleeping’s forums,” and “direct[ed] . . . to recommend and promote certain products for which [Bleeping] receives commissions . . . and to discourage use of other products from which it does not receive commission.” Bleeping’s Advisors are touted as experts who “can be trusted to give correct and understandable answers to [Bleeping’s] member’s [sic] questions.” And Global Moderators are alleged to enjoy even greater authority: They are authorized “to enforce the rules of the Bleeping Computer Forums,” to “answer questions (or help people with problems),” and to suspend forum posting privileges of members who violate forum rules.

In support of this conclusion, the court cites two *DMCA safe harbor* cases, Capitol Records v. Vimeo (the 2013 district court ruling) and Columbia v. Fung. Relying on DMCA safe harbor cases cuts corners intellectually because Section 512 and Section 230 differ at an architectural level; plus, numerous directly-on-point Section 230 cases hold that websites aren’t liable for super-users’ content. Indeed, in a footnote, the court acknowledges Internet Brands v. Jape; Stevo Design v. SBR Mktg.; Higher Balance v. Quantum Future Group; and Shiamili v. Real Estate Group; plus there are others that aren’t cited (on the defense side, the Furber case comes to mind, and on the plaintiff side, Xcentric v. Smith and Cornelius v. DeLuca). The court distinguishes the Section 230-specific jurisprudence because Quietman7’s “designation as a ‘staff member,’ the special authority he enjoys as an Advisor and Global Moderator, and the representations Bleeping has made regarding staff members who hold those titles….[make this case] afar from those on which Bleeping relies, where the moderators either enjoyed limited powers or did not themselves author the offending posts.” The court adds that Quietman7’s “volunteer” status is irrelevant to the agency inquiry, even if disclosed to other users.

So what did Bleeping do wrong? In retrospect, calling super-users “staff members” is probably not the best titling. At least to this judge, “staff” sounds too much like “employee.” The court also says that site disclosures saying super-users could be “trusted to give correct…answers” meant that Bleeping communicated that these super-users were authorized to post on its behalf. I don’t see that interpretation of the disclosure at all, but it’s also easy to imagine rewording Bleeping’s disclosures to downgrade the risks. For example, Bleeping could make disclosures that super-users had been selected because of their consistently reliable advice, but they remain independent and fallible.

In her post, Rebecca wrote: “Eric Goldman probably won’t like this decision holding that a volunteer moderator may be treated as the ISP’s agent when the ISP gives enough status to him or her; I’m less bothered by the §230 ruling (except for the legal error, which the court may have a chance to correct later).” The Section 230 discussion on agency isn’t clearly wrong applying the standards of a motion to dismiss. All the complaint had to do was marshal evidence supporting an implied agency, and perhaps the complaint did that. Still, I’m irritated by the court’s glossy handling of the Section 230 super-user precedent. I’m also frustrated by the court’s insensitivity to how this ruling undermines Section 230. It green-lights plaintiffs to allege that a user was the site’s implied agent to survive a Section 230 motion to dismiss, even if those allegations fail later in the case. Everyone loses (except the lawyers, of course) when unmeritorious cases get past a Section 230 motion to dismiss. Finally, like Rebecca, I’m irked that the court doesn’t understand the difference between a Lanham Act trademark claim and a Lanham Act false advertising claim for purposes of Section 230’s IP exclusion.

Defamation Statute of Limitations. 13 Quietman7 posts are allegedly defamatory. Defamation has a 1 year statute of limitations, and 8 were made within 1 year of complaint filing. All 8 linked to a 2014 post that Enigma also claims is defamatory. 4 of the 8 allegedly contained more defamatory content than just the link. The court says this provides enough justification to deny the motion to dismiss: “Because at least some of the allegedly defamatory statements fall within the limitations period, ESG’s state-law claims cannot be dismissed as untimely.”

The court should have said is that it could grant the motion to dismiss for the posts from more than 1 year before complaint filing, but the court didn’t actually say that. Instead, the court says it won’t resolve now whether linking to the 2014 post constituted a “republication” that resets its statute of limitations. What??? Numerous cases have held that linking to defamatory content isn’t a republication, but the court says “those cases arise in a context different from that here. There, the hyperlinks were either posted without commentary or accompanied by a reference that did not restate the allegedly defamatory content.” In contrast, 2 of the Quietman7 posts reiterate things from the 2014 post before linking to it. Huh? It’s logical to treat the new material in those posts as initially published when the post was made; but there’s no reason (or logic) to reach back to the 2014 post as well. The court’s discussion about the links to the 2014 post was totally gratuitous, and it feels like the judge went out of his way to stir up doctrinal trouble.

On the plus side, the court correctly says that non-substantive editing of the 2014 post doesn’t reset the statute of limitations. The court also rejects the plaintiff’s nonsensical argument that “Quietman7’s act of hyperlinking to the 2014 Post in separate forum topics on the Bleeping website was akin to posting it on an entirely separate website, thereby republishing it to ‘new audience.’”

Lanham Act Statute of Limitations. The Lanham Act doesn’t have an express statute of limitations, but courts often import a statute of limitation from analogous state law claims. Bleeping argued that the defamation statute of limitations (1 year) should apply to the Lanham Act claim. It’s not a bad argument, but the court’s mishandling of the defamation statute of limitation undermines the move even if it had been successful. It wasn’t because the judge says the claims are closer to fraud, which has a six year statute of limitations.

Defamation Prima Facie Case. The court says (cites/footnotes omitted):

the “overall thrust” of Quietman7’s thematically similar and mutually reinforcing statements is that ESG is engaged in a deliberate and fraudulent scam in which it is peddling a product which is the precise opposite of what it purports to be: The challenged statements “reasonably imply” that ESG has intentionally designed SpyHunter, in its “free scanner” mode, to generate false positives so as to induce customers to buy a license for the full version to eliminate ostensible malware. In other words, rather than being a means to enable a user to detect and remove unwanted spyware, SpyHunter is itself a rogue product designed to loot customers. Such allegations…could reasonably be understood as assertions of objectively verifiable facts.

To be sure, viewed in isolation, words used in Quietman7’s posts like “scam,” “rogue,” “dubious,” and “ineffective” would likely be too imprecise to be capable of being proven true or false. But, in the context supplied by Quietman7, these words did not appear in isolation. His surrounding commentary made more concrete and reasonably precise the conduct of which he was accusing ESG….In this context, the words “rogue” and “dubious” accuse ESG of a defined course of conduct, and this claim, through discovery, can be proven or disproven.

The court says this conclusion is reinforced by Bleeping’s and Quietman7’s self-laudatory statements about their credibility and expertise. Thus, the court distinguishes the recent trend of judges presuming that readers don’t take online comments seriously (a trend partially attributable to the NY Sandals case). Also, “[t]he manner of Quietman7’s written presentation—one using footnotes and citations—conveyed further that his advice was based on an ‘investigation’ of verifiable facts.” (Contrast the cases holding that linking to source materials can reduce defamation liability). The court disregards Quietman7’s qualifier statements “[m]y personal recommendation” and “[i]n my opinion.”

The court rejects Bleeping’s argument that Enigma is a limited-purpose public figure (which would require Enigma to allege facts showing Bleeping had actual malice) because Enigma’s complaint “does not allege any facts suggesting that ESG has taken a public position on the integrity of its business practices or the quality of its products.” FFS. While focusing on the complaint’s four corners is technically permissible under the legal standards for a motion to dismiss, the judge is allowed to take judicial notice of public statements where Enigma–LIKE EVERY OTHER BUSINESS IN THE UNIVERSE SINCE THE BEGINNING OF TIME–says it does a great job. (Indeed, the judge elsewhere takes notice of Enigma’s website–see FN27). The fact that the judge wouldn’t take that extra step is a sign that he wasn’t going to do ANY favors for the defense.

On the plus side, the judge dismisses the trade libel claim as duplicative of the defamation claim.

Lanham Act False Advertising. Quietman7 made his editorial posts as a super-user. No way the judge will say that these user posts qualify as ADVERTISING…right? Well, if Quietman7 was the equivalent of an employee and made the posts on his employer’s behalf, modern jurisprudence says pretty much everything a company says is advertising. So, yes, the court says that Lanham Act false advertising could apply to Quietman7’s posts (cites omitted):

the Court holds that Quietman7’s posts are commercial speech. In nearly all of them, Quietman7, after lambasting ESG’s SpyHunter, recommends that the reader “remove [that] program and replace it with a trustworthy alternative,” such as Malwarebytes Anti-Malware and other Affiliate products. By promoting Bleeping’s Affiliate products as superior to SpyHunter, these posts unmistakably constitute advertisements for the Affiliate products. (Indeed, Quietman7 goes one step further, providing links through which users can purchase the products). And, by alleging that Bleeping earns a commission on directed sales of those products, the SAC adequately pleads that Bleeping has an economic incentive to engage in such promotion.

Applying the new Lexmark standard, the court says Enigma has Lanham Act standing because there’s enough competitive proximity between its SpyHunter product and Bleeping’s affiliate revenue-driven promotion of competitors.

A Note about the Judge. The judge’s bio didn’t offer many clues about why he put the thumb so firmly on the scale for the plaintiffs. I blogged a prior ruling of his in the Beastie Boys v. Monster Energy case. I called that opinion a “scholarly yet scathing opinion;” and while there are elements of both in this case, I’d provide an overall less flattering characterization of this ruling.

Implications

I’m tempted to say there are no lessons to learn from this opinion. Let’s call it a weird results-driven ruling that should get critical scrutiny on appeal if the case gets that far; and I hope other judges will recognize its distortions and refuse to cite accordingly. Even so, maybe we can glean a few lessons from this trainwreck:

This case reminded me of the adware and spyware wars from a decade ago. During that heyday, anti-spyware software vendors were routinely threatened and sometimes sued for blocking third party software as adware, spyware or otherwise hazardous to a computer’s health (or warning consumers of these concerns). That litigation largely stopped after the Ninth Circuit’s 2009 Zango v. Kaspersky ruling, which emphatically held that Section 230(c)(2) immunized Kaspersky for filtering out Zango’s adware as spyware. Sadly, this ruling could reignite litigation by software vendors unhappy about being characterized as spyware/adware/malware; and that could have chilling effects on the willingness to publish such characterizations for fear that non-frivolous lawsuits (i.e., a lawsuit that can survive a motion to dismiss) will follow.

The court’s ruling highlights the dilemma. Quietman7 tried to provide details about what made SpyHunter objectionable, but the court says these details may have turned opinion-like statements like “rogue software” into objective and fact-like statements capable of defamation. Consumers benefit more from understanding why software functions as spyware/malware/adware rather than just getting warnings like “rogue software,” but providing consumers with details explaining how the opinion was formed increases the litigation risks. A less plaintiff-friendly judge might have navigated this paradox more sensitively.

The court clearly felt that affiliate programs distort the editorial judgment of publishers; motivating the court to treat a super-user’s editorial content as advertising. This is not the first time that courts and regulators have over-assumed nefarious effects of affiliate programs. So this case reminds publishers that affiliate programs should be subject to a stringent cost-benefit review. Do the revenues compensate for the increased legal risks they cause?

If your site has super-users, this ruling might be a call-to-action to take another really close look at how you’ve titled the roles and described them to the public to reduce the risks that a court will see the possibility of an implied agency.

Finally, the motion to dismiss standard–requiring judges to make all inferences in plaintiffs’ favor–gives a lot of power to plaintiffs to slip past the initial pleading and into costly discovery. This case would look *very* different if it were governed by a California-style anti-SLAPP law. The characterization of software as spyware would almost certainly qualify as a matter of public concern, so anti-SLAPP rules would require the plaintiff to show a probability of prevailing on the merits. Perhaps Enigma could have satisfied the more stringent review, but I’m confident the opinion’s tenor would have changed–especially on the many debatable points of law. Given the free speech risks caused by this opinion, we’d benefit from forcing the plaintiff to have better arguments before it gets to raise the defendant’s costs substantially. Because I think an anti-SLAPP law would have provided a more balanced review of a lawsuit with substantial risks to socially important speech, I’ll add this case to the folder of “reasons we need a federal anti-SLAPP law.”

Case citation: Enigma Software Group USA, LLC v. Bleeping Computer LLC, 2016 WL 3773394 (S.D.N.Y. July 8, 2016)

July 22nd 2016 Marketing

Data is Marketing Gold

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“Half the money I spend on advertising is wasted; the trouble is I don’t know which half,” said marketing pioneer John Wanamaker in the early 1900′s. That is why CRM software was invented and why it is used by every serious marketer. In today’s “Big Data” World, enterprises are making not just marketing decisions, but almost ALL decisions based on data analytics.

“Big Data holds the potential to describe target customers with an accuracy and level of detail unfathomable only a decade ago,” said Jean Spencer on the SalesForce blog, who is a Product Marketing Manager at Microsoft and was previously the content marketing manager at Kapost. “While old-school marketing efforts were limited to things like tracking returns on direct mail campaigns, or number of subscribers to newsletters, modern marketers can have data on people’s exercise habits, digital clicking behavior, time spent on various sites, purchasing history, personal preferences based on social media postings, time awake, time spent in the car, caloric intake, and almost anything else you can imagine.”

SalesForce is at the epicenter of data, marketing and sales. They offer this overview of the concept:

Using Data To Make Better Marketing Decisions

A report by the Aberdeen Group says that 44 percent of executives are dissatisfied with the analytic capabilities available to them and that they often make critical decisions based on inaccurate or inadequate data. That was in 2014 and fortunately CRM has improved dramatically since then and executives are now typically integrating CRM solutions into their marketing platforms.

“No longer do we rely on conclusions based on vague and imprecise relationships such as “we advertised last week and sales increased so it must have worked” or the common one that I’ve heard many times, “the objective was awareness and clearly many people are now aware of us”, said Gerald Chait who is Director/CEO of Marketing By Objectives. “In today’s world, this just does not cut it anymore.”

Chait added in a blog post, “Gone are the days when we would define roughly segmented target audiences and place an ad hoping someone would purchase something. Today’s marketing enables us to identify who to work with to make a sale, right down to the individual level. What’s more, we can personalize and customize our advertising and messaging to each specific person, no matter how many people there are. We can even customise and personalize website pages depending on who’s viewing them.”

It’s often referred to as predictive marketing, gathering data to learn what is working and what isn’t using precise analytical strategies and technologies in order to finely tune your marketing.

“Predictive marketing is the application of predictive technology to the entire marketing process, across the entire buyer’s journey, and across every channel of communication,” says Eli Snyder, Associate Technology Director of Strategy at Intelligent Demand. “It means not only having predictive insight into the future through predictive analytics, but also using that insight to make better decisions about who and how to engage, and then build better content, campaigns and programs.”

“In order to execute your marketing strategy in the most effective way, you’ll need your business management platform (or CRM) and marketing automation tools to work together seamlessly; using one to generate leads, and the other to maintain them, so you can get a complete picture of your business,” said Mark Sokol who is the VP of Product Marketing and Branding at ConnectWise.

The Intersection of Marketing & CRM is Leads

CRM and marketing are now tightly integrated in order to make marketing more efficient and and successful. “In the past, the marketing campaign stops here in the CRM software system and the rest is carried out externally,” said Denise Holland, VP & Senior Analyst of Genesys Advisory in the CRMsearch blog. “In today’s world, the right customer relationship management system can create the message, compile your target list, distribute your messaging pursuant to an automated schedule, capture the replies and inquiries from these marketing placements, route them to the right sales person or department, track the sale opportunity progress, record the successful sale event and calculate the campaign ROI.”

“This CRM system can also advise the best time to call or email your customers, what type of messaging will illicit the best response, if your customer is really serious or just shopping around, how you can improve your products and services, and what new products and services your R&D department should focus on next,” he says.

“CRM has one common component to help you make marketing decisions, Leads, says Joe CRM on the PowerObjects blog. “Lead data allows you to gauge how healthy your marketing is, what works and what doesn’t, and lets you understand lead quality. In today’s post, we’ll provide some lead data sources from CRM you can use to help make marketing decisions.”

Joe at PowerObjects says you need to know where your leads are coming from. “Some examples of lead sources include outbound cold calls, email, chat, website form submission, and events,” he said. “Keeping the lead source simple lets you use a different field, source campaign, to describe the lead source in more detail as needed.”

He says that knowing where leads come from drives marketing decisions such as:

  • Number of employees needed for the inside sales team
  • Budget disbursement for paid advertising
  • Landing page success
  • P&L for events attended

Create a Data-Driven Culture

“To cultivate a data-driven culture within your organization, it’s important to remember that without data, you’re simply another person with an opinion,” commented MeetMe CTO Jonah Harris on the NGDATA blog. “All too often, with valuable data and insights in hand, people remain invested in their own hunches and intuition.”

“Transitioning to a genuine data-driven culture is a challenge for many organizations, but one of the ideal first steps is to start leveraging the data your business has to guide evidence-based decision making,” added Vaclav Shatillo of Business Intelligence at Clutch. “When data reinforces or, better yet, contradicts the gut feeling, the conversation around the importance of a data-driven approach is bound to begin.”

David Waterman, Senior Director of Earned Media/SEO at The Search Agency says getting in front of the data is key:

  1. How to get/collect the data,
  2. Specifically what data to use,
  3. How the data will inform business decisions,
  4. At what frequency the data is needed to make actionable decision, and
  5. How to package the data so it can be easily digested, analyzed and reacted to.

Find other great advice from a variety of experts quoted about how to create a data-driven culture here.

Darren Catalano, the CEO of HelioCampus offers some great tips on building a data-driven culture that can be applied to any business:

Data is Marketing Gold

“Data isn’t an overwhelming set of facts and figures,” said Megan Totka is the Marketing Director for ChamberofCommerce.com. “It’s marketing gold. It shows you what your customers want and how to get your customers to buy from you.”

Joe CRM says that the “data you receive from leads that turn into opportunities and then end up as customers is a goldmine.” He says, “This data alone can give your company direction and help you find your niche. That’s why when you use your closed as won accounts it should be for a macro view of your marketing processes. This is the data executives want to see from marketing because it helps prove ROI or that the money spent was worthwhile.”

Data that can power your successful marketing strategy is sometimes found in places that you don’t expect. “New marketing technology, measurement platforms and other advances have greatly expanded the sources that marketers can sift through for nuggets of information,” said Eva Rohrmann, the director of solutions and customer lifecycle marketing for PR Newswire. “

Rohrmann says that the “most useful data that will turn strategic, positioning and tactical efforts into gold oftentimes is hiding right under your nose: with other teams within your organization.” She believes that ideas and data are “streaming” from many directions, “from sales to product to customer support.”

“Every team within your organization has a treasure trove of actionable marketing intelligence waiting to be discovered,” she says.

The marketing landscape is changing and that should make every CMO’s job easier because they are using justifiable logic instead of just gut intuition. In order for a company to reach their maximum sales potential they must utilize data-driven CRM strategies.

“Marketing is currently undergoing a metamorphosis from a once qualitatively measured art towards a quantitatively driven science,” said Eamonn O’Raghallaigh, the Managing Director of Digital Strategy. on the company’s blog. “This paradigm shift will indeed lead to significant impacts on the competitive landscape; with the bias towards companies who adopt and embrace a data-centric culture within their organization.”

The post Data is Marketing Gold appeared first on WebProNews.

July 21st 2016 Marketing

87 Million Millennials on LinkedIn Seeking to Change the World

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A LinkedIn study recently took a look a Millennials in an attempt to erase the stereotype that they are lazy, entitled and unemployed. “Given the massive amounts of news coverage (44,000 articles and counting), it seems like everyone is desperate to understand my generation,” said Alexandra Rynne who contributed to LinkedIn’s Millennial Playbook (PDF). “Thankfully, we don’t have to rely on stereotypes or sensationalism to find out.”

>>> Comment on the article here...

LinkedIn Marketing Solutions looked at the data of the 87 million millennials found on LinkedIn to gain some very interesting insights on who Millennials really are and whether they are still living in their parents basement or not. ”</p

July 19th 2016 Marketing, Social Media

Twitter May Be Liable for Sending Texts to Recycled Cellphone Numbers–Nunes v. Twitter

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Screen_Shot_2016-07-18_at_7_50_49_AM-This is a TCPA lawsuit against Twitter. The claims are based on text messages sent to phone numbers where the subscriber was a Twitter user and signed up to receive text updates but later the phone number got recycled to a new subscriber. As a result, the person now receiving Twitter’s SMS updates did not opt-in to receive them.

Twitter raised two possible defenses. First, it did not “make the call,” as that phrase is used in the TCPA. Second, it’s not responsible for the underlying content and thus immune under Section 230. The court rejects both defenses.

Did Twitter make the call within the meaning of the TCPA? The court says that Twitter converts its tweets into text and (as alleged by plaintiff) uses an auto-dialer. The only other possibilities for “who made the call” are the tweet’s author or the person who opted in originally. The court says the tweet author “can’t possibly” be the maker because this user has no control over who receives his or her tweets and does not even know who is signed up to receive text alerts. Thus, he or she has no idea whether they are even making the call. Similarly, the court says that the person who initially opted-in can’t be the maker of the call because all that person did was to sign up to receive tweets via text message:

[The idea that this person is the maker of the call is] contrary to the ordinary meaning of the word “make” – when someone signs up to receive a call from someone else in the future, he is not ‘making that call when it comes in.

[Eric’s comment: it makes me wonder if it’s possible *no one* was a “maker” under the statutory definition? The judge didn’t seem to consider that possibility.]

Because the plain language of the statute does not, in the court’s view, support Twitter, the court looks to a 2015 FCC ruling that addressed the issue of a platform’s liability for text messages initiated by users. The FCC looked at two apps, TextMe and YouMail. With respect to TextMe, the agency said that a user who invites people on his contact list to join the service is the one who initiates the call as he is picking among various contacts to determine who is invited. This is slightly different from both the subscriber of the previous number or the person sending the tweets—neither of them are actively sending the texts. YouMail similarly sends text messages based on the user’s preference. And the FCC relies on the app user’s “involvement in the process of creating and sending the messages in response to received calls,” in finding that the app user and not YouMail was the person who made the call.

The court also says the FCC’s interpretation of the goals and purposes of the TCPA favors the plaintiff. Commenters noted the recycled number problem to the FCC and argued that the previous owner of a recycled number should be considered the “called party”; so to the extent this party consented, callers who had received consent should be off the hook. The FCC rejected this approach, noting that one of the purposes of the TCPA is to protect consumers from unwanted calls, and the approach urged by the commenters would leave consumers unprotected. The court says that Twitter’s suggestion is at odds with the FCC’s interpretation of the TCPA and its purposes.

Twitter also argued that an adverse ruling would cause Twitter to reconsider providing text updates at all, but the court is not persuaded by this:

Finally, a few words in response to Twitter’s arguments about the potential consequences of this ruling. At oral argument, Twitter insisted that if it were deemed the “maker” of the calls by which tweets are sent to recycled cell phone numbers, it would have no choice but to stop sending those tweets. The implication seemed to be that this result would be unbearable. But even if Twitter made good on its promise to stop sending tweets by text message, Twitter users would be able to view tweets in all sorts of other ways: by checking their timelines on Twitter’s website or in Twitter apps, by enabling push notifications from their Twitter apps, or by signing up for email notifications from Twitter. It’s not at all clear, particularly in light of the FCC’s ruling about recycled numbers, why the need to disseminate tweets in this particular way (that is, by text message) should prevail over the need to protect owners of recycled numbers from getting unwanted texts.

Twitter also cited to the possibility of Southwest airlines being exposed to liability when it provides flight information updates via text message, but the court says this is unlikely. While there are multiple ways in which Southwest can update its customers, the update feature requires passenger input at the time of making a reservation.

Is Twitter Entitled to Section 230 Immunity: Twitter also argued it was entitled to protection under Section 230 because it did not author the tweets in question. Seems hard to dispute and an easy enough conclusion, right? Not so fast, says the court. Citing to Barnes, the court says that Twitter is not being treated as a publisher because “publication involves reviewing, editing, and deciding whether to publish or to withdraw from publication third-party content.” The court also says that the precise content of the messages is not the asserted basis of liability (it’s the form of the communication rather than its content).

__

This is not the end of the road for Twitter. As the court notes, it could still successfully argue that it did not use an autodialer and thus escape TCPA liability. Yahoo won summary judgment in a TCPA case involving a re-assigned number on this basis. Unfortunately, the Third Circuit sent the lawsuit back for a second look at the autodialer issue. (See “Third Circuit Revives TCPA Case Against Yahoo”.)

Recycled numbers are a long-standing problem. As the court notes, the FCC grappled with aspects of it and came to an imperfect solution. A dissenting commissioner (cited by the court) made good points regarding how plaintiffs have capitalized on texts to recycled numbers. This case, along with the one from last week, are good data points for lobbyists who are looking to get the attention of a legislator. As for the recycled number problem, one possible middle ground solution would be to give a company one free message, provided it includes an opt-out mechanism. That message, while unwanted, would not be the basis for TCPA liability, but future messages can be presumed to be consented to since the recipient did not take the simple step of opting out?

Finally, the court’s section 230 ruling falls into the “WTF Is Going On With Section 230?” category. (See Eric’s post from last month, collecting cases). The court cites to Barnes for the proposition that publication involves review and editing, but it takes a bizarro-world approach. The whole point of section 230 is that since the intermediary did not create the content, it should not be held liable for it, regardless of whether it made editorial decisions regarding it, or, in the exercise of its editorial discretion, declined to do so.

Eric’s comments: Yuck. So much to dislike in this opinion.

Perhaps what bothers me most is the court’s (and the FCC’s) denigration of people who choose to receive tweets via text. There’s a tinge of hubris when the court presumes that people should not need texts because they have other ways to receive the tweets–especially in light of how many folks, especially millennials, strongly prefer text communications above other options. Judges (and the FCC) aren’t able to easily evaluate what’s the best medium for people to receive content; that’s why we prefer marketplace mechanisms to sort out questions like this. Furthermore, shutting down a communicate-by-text option may circumscribe information flows in ways we can’t anticipate or understand. In light of number portability where the volume of recycled numbers is already pretty small, I’m guessing that the percentage of texts sent to people who receive unwanted Twitter texts because the predecessor phone number subscriber opted-in is trivial–I’d be shocked if it were even 10%, but I’d expect it to be 1% or less. As a result, the net effect of this ruling is that legal protection for a minuscule minority trumps the communication desires of a majority of Twitter users who opt-into text messages. That’s just bad policy.

It also makes me wonder about the text message exceptionalism of regulating text messages as a medium. As I discussed in my Coasean Analysis of Marketing paper from over a decade ago, the TCPA is a weird opt-in outlier compared to other communication media. Rulings like this highlight its flaws. By giving the minority veto power over the media, rulings like this turn the TCPA into a plaintiff’s dream and doom text messaging as a fully-functional communications media.

The Section 230 analysis is indeed bizarre because it gets the analysis precisely backwards. Section 230 is supposed to mean that intermediaries aren’t liable for third party content whether or not they exercise editorial discretion. They can edit, or not, and the legal outcome is supposed to be the same. Indeed, Section 230’s real innovation was providing the immunity even for intermediaries that exercise editorial discretion; the default common law has always been that intermediaries that don’t exercise editorial discretion lack the necessary control to take liability (i.e., they face less liability because they act as “passive conduits”). Section 230 eliminated the distinction between active editors and passive conduits. Yet, here, the court turns all of this on its head and says that Twitter loses Section 230 because it doesn’t exercise editorial control and acts as a passive conduit. The judge says:

Twitter does not “review” the content of tweets. It does not “edit” the content of tweets. It does not make decisions about whether to send out a tweet.

Agreed! Yet, by listing all of these ways Twitter acts as a “passive conduit,” the judge is proving to himself why Twitter shouldn’t be liable. So…WTF?

As part of its reasoning, the court then calls Twitter’s text messages a “nuisance” and tried an offline nuisance analogy that I can’t bring myself to discuss. I directly addressed–and, I’d like to think, provided persuasive arguments against–the attempts to analogize marketing to “nuisances” in my Coasean Analysis of Marketing article. As a result, it’s disappointing to see a judge embrace this tired and analytically lacking analogy in 2016.

Eric’s Note about Judge Grewal:

This opinion also got some attention because of Judge Chhabria’s lengthy shout-out to Judge Grewal, a rare judge who tweeted and who recently departed the bench for a job at Facebook:

Take, for example, erstwhile Magistrate Judge Paul Grewal, who recently left the bench to work for one of Twitter’s competitors. Apparently 964 people are interested in what Judge Grewal has to say [including me!], because that’s how many Twitter followers he has. In early June 2016, during his last two days on the bench, Judge Grewal posted nine tweets. For example, he said: “Anyone looking for a screaming deal on a slightly-worn judicial robe? I’ve got one ready to move.” In another example (one he was regretting until Game 5 but now is very proud of), Judge Grewal said the following about the NBA Finals: “Here comes @KyrieIrving. Count on it.” On his final day, he said: “Last claim construction issued; it’s time to go. Thank you N.D. Cal. from the bottom of my heart.”

The gratitude Judge Grewal feels towards the Northern District pales in comparison to our appreciation of him. In a few short years, due to his expertise in intellectual property law and his overall judgment and wisdom, Judge Grewal became not merely one of the most important members of the Northern District, but one of the most important members of the federal judiciary. He will be sorely missed.

All of this praise is richly deserved, but I wonder: how much will (former) Judge Grewal still tweet now that he’s working for the competition?

Case citation: Nunes v. Twitter, 14-cv-02843-VB (N.D. Cal. July 1, 2016) [pdf]

Related posts:

“Manufactured” TCPA Suit Fails For Lack of Standing

Does Two-Factor Authentication Violate the TCPA?–Duguid v. Facebook

TCPA Claim Against Non-Sender Fails

Third Circuit Revives TCPA Case Against Yahoo

Court Rejects TCPA Claim on the Basis of Implied Consent

Recent FCC Order Helps Shopkick Defeat TCPA Claims

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Ghostwritten Attorney Newsletter is an “Ad” for TCPA Junk Fax Law Purposes–Holtzman v. Turza

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC

Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

Cellphone Spam Violates TCPA–Joffe v. Acacia Mortgage

Will the Spokeo v. Robins Supreme Court Ruling Favor Plaintiffs Or Defendants? Uh…

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

July 19th 2016 Marketing, spam

Yelp Isn’t Liable For User-Submitted Photos Of Businesses–Albert v. Yelp

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The last time I blogged about a lawyer who sued Yelp for defamation, I spilled 3,000 words (and shed many tears). Fortunately for my mental health and your reading queue, I’m pleased to report that today’s case has better–and more succinct–news.

The lawyer-plaintiff is Lenore Albert. Her Yelp page. She claims a former employee orchestrated a social media attack on her business, including posting fake disparaging reviews on her Yelp page plus this image (which she claims isn’t clearly demarcated as user content instead of Yelp-sourced content):

yelp photo albert

Albert also claims that Yelp further screwed up her page when she refused to advertise with it. She sued Yelp for defamation, tortious interference and intentional infliction of emotional distress. The lower court granted Yelp’s anti-SLAPP motion. The appeals court affirmed.

Anti-SLAPP. The first question is whether the user postings are protected public interest material. Citing Wong v. Jing, the court says that user reviews about “a lawyer heavily involved in the foreclosure fallout from the Great Recession” qualify. Further, a “third party’s comments about some other person’s products or services” aren’t commercial speech for anti-SLAPP purposes (which is correct; the statutory exclusion covers advertising).

Substantively, Albert’s defamation claim is preempted by Section 230. The court says: “The case law on this point is conclusive” (amen!!! cites to Zeran, Batzel, Nemet, Hupp, Jones v. Dirty World and Almeida). The court distinguishes Roommates.com because “there is no evidence that Yelp solicits defamatory or misleading reviews. In fact, all evidence is that it tries to keep such reviews off its site, even if (as the present case illustrates) it is not always successful in its quest.” In a footnote, the court says Roommates.com actually helps Yelp because Yelp is like the free-form comment boxes that Roommates.com said qualified for Section 230. The court distinguishes the old Anthony v. Yahoo ruling because, in that case, the plaintiffs alleged Yahoo created fake dating profiles, while Albert didn’t allege Yelp created the fake content. The court boils it down:

section 230 certainly does not immunize third parties who actually write defamatory posts to a website [cite to Bently] but the website itself is unreachable (emphasis added–can I get another amen?!).

The court’s a little vague about how Albert argued that Yelp should drop out of Section 230 because it unfairly downgrades non-advertisers, but the court says that argument doesn’t help per the Levitt case (the court correctly notes the Ninth Circuit opinion only addressed extortion, not defamation, but says it’s persuasive nonetheless). The court also rejects any “encouragement” exception to Section 230, saying “the courts have uniformly rejected website liability based on the idea that a website psychologically encourages defamatory reviews.”

Having boxed in every possible way the plaintiff tried to get around Section 230, the court says she cannot win the defamation claim against Yelp.

Nomenclature note: in a footnote, the judge refers to Section 230 as part of the Telecommunications Act of 1996 rather than the “Communications Decency Act,” because the decency part of the CDA got struck down and most CDA-related litigation now relates to Section 230. It’s a good reminder that 47 USC 230 was actually Section 509 of the Telecommunications Act of 1996, not Section 230 of that act. So it still grates on me when I see otherwise smart people call it “Section 230 of the CDA.”

Intentional Infliction of Emotional Distress. This tort requires outrageous conduct by Yelp, which Albert didn’t allege. The court implies that it might be outrageous if Yelp authored the bogus reviews or intentionally hid positive reviews, but that seems like speculative dicta.

Tortious Interference. Because Yelp didn’t commit any wrongful act, this tort fails.

Opportunity to Amend. Like most plaintiffs about to lose a case, Albert indicates she can make more successful arguments if she just gets a chance to amend the complaint. For example, Albert says she’d like to sue based on Yelp’s own marketing representations, similar to the Demetriades case. The court even says in a footnote that “Yelp’s statements about itself do not receive protection under section 230.” However, California courts don’t allow complaint amendment once the anti-SLAPP process is invoked, so Albert is stuck with her unsuccessful initial complaint.

Indispensible Party. Finally, Albert argued that she needed to keep Yelp in the case so it can effectuate removal of any defamatory content The court rejects this argument because she didn’t make it at the trial court (indeed, her arguments pointed in a contrary direction). The court doesn’t discuss the Hassell v. Bird ruling, which held that Yelp could be forced to remove user content even as a non-party. That would have further reinforced the court’s conclusion, but I’m still hoping the Hassell court’s mistake gets corrected in the courts or the legislature.

While the net result of this opinion–Yelp wins anti-SLAPP dismissal based on Section 230–doesn’t break much new ground doctrinally, it’s still refreshing to see after the Hassell v. Bird trainwreck. Plus, this is a nice opinion both from a substantive and expository standpoint. I like the judge’s writing style, and reading the judge’s bio, I see he’s won awards for humor writing. Plus, he’s been a NHL hockey goal judge*, so he’s not easily intimidated. So for his no-nonsense and lucid opinion plus his eclectic background, I’m awarding the Technology & Marketing Law’s Judge of the Day award to Judge William W. Bedsworth. Kudos!

[* initially I said a referee until a Canadian reader corrected me that there’s a big difference between a referee and a goal judge. Obviously hockey is not my sport.]

Case citation: Lenore Albert v. Yelp, Inc., G051607 (Cal. App. Ct. July 15, 2016)

Other Posts on Yelp:

* Yelp Forced To Remove Defamatory Reviews–Hassell v. Bird

* Stockholders Can’t Sue Yelp Because Of Fake Reviews

* Court Says Yelp Reviewers Aren’t Employees

* Ninth Circuit Says Yelp Doesn’t Extort Businesses–Levitt v. Yelp

* Does Yelp Have The ‘Most Trusted Reviews’? A Court Wants To Know More

* Yelp Wins Another Section 230 Case–Kimzey v. Yelp

* Yelp Gets Another Anti-SLAPP Victory in Lawsuit Over Consumer Review—Bernath v. Tabitha J.

* Blasting Your Landlord Online? Pick Your Words Wisely

* Dentist’s Defamation Lawsuit Against Yelp Preempted by Section 230–Braverman v. Yelp

* You Shouldn’t Need a Copyright Lawyer to Pick a Dentist–Lee v. Makhnevich

* Building Owner Can’t Discover the Identity of Tenant Who Writes Bashing Yelp Review

* Yelp Defeats Legal Challenge to Its User Review Filter

* Yelp Gets Complete Win in Advertiser “Extortion” Case–Levitt v. Yelp

* Dentist Pays Sizable Penalty for Not Knowing 47 USC 230–Wong v. Jing

* Yelp Beats “Implied Extortion”/”Pay-to-Play” Lawsuit in Round #1–Levitt v. Yelp

* CA Anti-SLAPP Cases Involving Consumer Reviews as Matters of Public Concern

* Dentist Review on Yelp Gets Partial Anti-SLAPP Protection–Wong v. Jing

* Yelp Wins 47 USC 230 Dismissal of Dentist’s Lawsuit–Reit v. Yelp

July 17th 2016 Marketing

Ted Cruz’s Presidential Campaign Apparently Committed Copyright Infringement. Oops.

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I know it may be my own idiosyncratic and romanticized view of governance, but I hold politicians to a higher standard when it comes to knowing, and complying with, the law. After all, if the people in charge of making our laws can’t respect them, why should anyone else? As a result, I’m always fascinated when politicians find themselves as litigants; and I find it ironic (not in a good or funny way) when their arguments fail in court.

Apropos to this blog, we’re seeing politicians and their campaigns regularly run into IP issues. Most frequently, musicians object to their songs being associated with a particular candidate–although if the politician has the proper site licenses, the musicians only have moral, not legal, grounds to object.

In contrast, Senator Ted Cruz’s presidential campaign allegedly hit the copyright infringement bullseye. (All of the following facts are allegations from the complaint, but the defendants’ motion to dismiss doesn’t challenge any of them). The Cruz campaign’s ad agency, Madison McQueen, downloaded two songs from Audiosocket, which I would categorize as a stock music agency. The songs are “Lens” by Sarah Schachner and “Fear of Complacency” by Brad Couture. In each case, the ad agency agreed to Audiosocket’s standard Small Business License Agreement, which prohibited any use “for political purposes” and included a $25k liquidated damages clause. Audiosocket attached unique IDs to its downloads that fingers the ad agency as the downloader of these songs.

Despite the license restrictions, the campaign used both songs in promotional material. Lens was used in the “Victoriesvideo (apparently offline), viewed 78,000 times on YouTube. After the campaign was told that its use was unauthorized, the campaign nevertheless broadcast the video 86 times on Fox Business News (if criminal copyright infringement were being prosecuted, which it won’t be because the DOJ would never go after a sitting Senator for such things, would this fact provide the necessary willfulness?). Fear of Complacency was used in the “Best to Come” video, viewed 12,000 times on YouTube.

Oops. Normally, to avoid bad press, a high-profile political candidate would plead mea culpa and write a settlement check to make the issue go away quietly. For some reason, that didn’t happen here. Instead, Audiosocket sued the ad agency for contract breach and the musicians sued the ad agency and campaign for copyright infringement. The defendants moved to dismiss the complaint, but all of the defense arguments are rejected:

* Copyright ownership. The musicians applied for but have not received copyright registrations, but the court says the complaint nevertheless sufficiently alleges their copyright ownership. [Note: courts disagree about whether a registration is required for standing to enforce a copyright, but the Ninth Circuit says a completed and filed application is enough. See Cosmetic Ideas, Inc. v. IAC/Interactivecorp, 606 F.3d 612 (9th Cir. 2010). The defendants didn’t insist otherwise in their papers. FWIW, I still think 17 USC 411(a) says, and should be strictly interpreted to require, a completed copyright registration for standing to enforce it]. [Note 2: it makes no sense to me why any musician would license music through a stock music service like Audiosocket and NOT register the copyright in time to qualify for statutory damages and attorneys’ fees.]
* Liquidated damages. The parties spar about how many $25k “breaches” occur. The court says it doesn’t have to resolve the value of the liquidated damages because the complaint properly alleges that Audiosocket should be entitled to at least two (one for each song).
* Copyright preemption. Breach of license claims often survive copyright preemption, so the court allows Audiosocket to proceed on its contract breach claim in parallel with the musicians’ copyright claims.
* Injunctive relief. The campaign argued that injunctive relief is unnecessary because Cruz threw in the towel on his presidential campaign. The court says the “Defendants are responsible for the continued use of the musical compositions in ads that remain accessible to the public.”

Now that the plaintiffs survived the motion to dismiss, I’d expect the parties to revisit a settlement. The sticking point may be computing damages, especially the liquidated damages where the parties may disagree about how many times the license was breached. If Audiosocket accepts $25k per song, it should take $50k or less to buy them out–easily doable (especially if he still has $9M cash on hand). Audiosocket says it’s not claiming each of the 90k+ streams count as individual breaches (which would lead to over $2B of liquidated damages), but I’m not sure what their compromise position will be, so it’s hard to guess how far apart they really are.

To me, the most interesting unresolved question is how this lawsuit and failed motion to dismiss will change any of Sen. Cruz’s positions about copyright law. I’m not familiar with his IP platform, but he now has a first-hand brush with copyright infringement that ought to make him more empathetic towards other well-meaning and honest Americans who find themselves unwittingly staring down the barrel of a copyright infringement shotgun. Unfortunately, if past politicians’ response to being accused of IP infringement is any guide, the chances of Sen. Cruz becoming a champion of user rights are remote.

Case citation: Leopona, Inc. v. Cruz for President, 2016 WL 3670596 (W.D. Wash. July 11, 2016). The complaint, motion to dismiss, MTD response and MTD reply.

Some Related Posts:

* Fake Political Attack Video Doesn’t Violate Lanham Act–Ron Paul v. Does
* Political Campaigns and Copyright Infringement

Also:

* City Can’t Use Copyright To Censor Critical Videos–Inglewood v. Teixeira
* County Attorney’s Deletion of Constituent’s Facebook Comment May Violate First Amendment
* The First Amendment Protects Facebook “Likes” – Bland v. Roberts
* Is the Florida Attorney General a Spammer?

Political note: I have no views about Sen. Cruz’s failed presidential campaign, and I have not decided which presidential candidate will get my vote in November. I have, however, tweeted occasionally about Donald Trump, including:

July 14th 2016 Marketing

Twitter Offers Event Targeting To Rio Olympics Advertisers

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“We launched event targeting to provide a fast and easy way to reach a target audience on Twitter that’s actively interested in an event,” says Jay Bavishi, the Marketing Manager at Twitter. “Event targeting gives you the ability to target the Olympics as an entire event or an individual sport throughout the entire Olympic Games.”

Twitter has previously posted a best practices guide to event targeting on Twitter. “For brands who want to engage with this live audience, Twitter created event targeting,” stated Eric Farkas who is Twitter’s Product Marketing Manager. “It gives advertisers a fast and easy way to reach a target demographic that’s actively interested in an event.”

“Unlike the Super Bowl or the NBA Finals which happen over a day or the course of a week, the Olympics are an “always on” sporting event that runs from August 5-21,” Bavishi said. “Not only are competitions occurring throughout the day, but athletes, fans, and broadcasters are poised to make news away from the field of play at any point. Given this, it would be impossible for a brand or agency to stay attuned to everything that is happening on and off the field in Rio at all times. We’ve got you covered: event targeting gives you the ability to target the Olympics as an entire event or an individual sport throughout the entire Olympic Games.”

Screen Shot 2016-07-11 at 3.42.47 PM

Bavishi recommends that marketers “leave the targeting to Twitter” stating “by relying on keywords and other contextual cues, we’re able to help you zero in on only the conversations that are related to the event you want to target.” Bavishi added, “Layer on demographic and geographic targeting to refine your audience. Don’t use tailored audiences or additional targeting as it may limit your campaign’s reach. If you are planning to use follower targeting based on an athlete or another Olympic-related account, we recommend setting up a separate campaign.”

He also says that advertisers should “start engaging before the event” noting that “typically we start tracking an event audience 30 days before an event begins, giving you plenty of time to plan your campaign.”

“To seed interest,” Bavishi says, “Send Tweets early. Doing this will increase the list of people engaging with the event (and your campaign). As activity levels rise, your connections multiply and you’ll find yourself at the heart of a growing crowd.”

Lastly Bavishi suggests that marketers “build 360-degree engagement by aligning multiple channels.” He wants you to tie your TV, print and other internet marketing to your Twitter event marketing strategy in order to maximize impact noting, “This will help drive home your message to Olympic fans.”

The post Twitter Offers Event Targeting To Rio Olympics Advertisers appeared first on WebProNews.

July 12th 2016 Marketing, Twitter

Q2 2016 Quick Links, Part 4 (Marketing, Privacy, Contracts)

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Advertising/Marketing

* Google will no longer run ads for payday lenders.

* GALA: Brazil Enacts New Ambush Marketing Laws in Advance of Rio 2016 Olympic Games

* Slate: The Do Not Call list was supposed to defeat telemarketers. Now scammy robocalls are out of control. What happened?

* AdWeek: Publishers Are Largely Not Following the FTC’s Native Ad Guidelines

* Jezebel: Scott Disick Accidentally Reveals the Truth Behind His Instagram Product Promotion

* Slate: The Federal Election Commission has no idea how to handle political astroturfing.

* Free Range Content, Inc. v. Google Inc., 2016 WL 2902332 (N.D. Cal. May 13, 2016). This lawsuit involves Google’s withholding of AdSense balances when it terminates AdSense publishers. Some of the plaintiffs’ claims survive a motion to dismiss.

* ‘Spam King’ Sanford Wallace Sentenced to 2½ Years for Facebook Scheme. Yes, this is a 2016 news item.

Privacy/Security

* People v. Delta Airlines (Cal. App. Ct.).

state enforcement of the OPPA’s privacy policy requirements as applied to Delta’s Fly Delta mobile application is expressly preempted by the ADA. To compel Delta to comply with the OPPA would effectively interfere with the airline’s “selection and design” of its mobile application, a marketing mechanism “appropriate to the furnishing of air transportation service,” for which state enforcement has been held to be expressly preempted by the ADA.

This was supposed to be the state AG’s flagship test case for applying the OPPA’s privacy policy requirement to mobile apps. Losing on federal preemption after 4 years of fruitless litigation is extremely embarrassing for Kamala Harris’ office.

* Campbell v. Facebook, Inc., 2016 WL 2897936 (N.D. Cal. May 18, 2016). In a case over Facebook scanning URLs that users sent in private messages, the court certifies a class for injunctive relief only.

* Daphne Keller and Bruce Brown, Europe’s Web Privacy Rules: Bad for Google, Bad for Everyone

* Softpedia: EU Exploring Idea of Using Government ID Cards as Mandatory Online Logins. Back to the 1990s fantasy/dystopia of Internet drivers’ licenses!

* Khan v. Children’s National Health System, 2016 WL 2946165 (D. Md. May 19, 2016): “The Court therefore concludes that in the data breach context, plaintiffs have properly alleged an injury in fact arising from increased risk of identity theft if they put forth facts that provide either (1) actual examples of the use of the fruits of the data breach for identity theft, even if involving other victims; or (2) a clear indication that the data breach was for the purpose of using the plaintiffs’ personal data to engage in identity fraud.”

Online Contracts

* Lutz v. Turner Broadcasting System, Inc., 2016 WL 2643013 (N.D. W.V. May 9, 2016) (footnotes omitted):

West Virginia law upholds the use of “clickwrap” or “click-through” agreements, which require users to consent to any terms and conditions through the use of internet web-pages. State ex rel. U-Haul Co. v. Zakaib, 752 S.E.2d 589, 594 (W. Va. 2013). In Zakaib, the Supreme Court of Appeals of West Virginia found no difference between electronic contracts and tangible paper agreements, concluding that electronic contracts cannot be denied enforcement solely based on their electronic format. Id. Instead, courts are required to interpret and apply the same common law rules to electronic agreements as those that have been applied to oral and written agreement for hundreds of years. Id. at 595.

Lutz, however, claims that the waiver was not presented to her in a “clear and concise manner” because it “was only accessible by scrolling through [a computer maintained by the defendants], at a makeshift table, after only accessing this waiver through [her] Facebook account.” According to Lutz, these circumstances prevented her from having any appreciation for what she was purportedly reading and signing. Finally, she claims that she was only at the waiver table for a very brief time, clearly not long enough to read the waiver, and that no employee of the Funhouse read or explained the agreement to her.

Even taking these claims as true, Lutz’s reasoning lacks any legal basis for finding the waiver invalid. She is college educated and makes no claim that she could not comprehend the language contained in the waiver. Further, she fails entirely to provide any factual support that the circumstances somehow prevented her from reading the waiver before she signed it. Clearly, had she chosen to do so, Lutz could have taken adequate time to scroll through the one-and-a-half page waiver.

The fact that Lutz accessed the waiver through her Facebook account, on the defendants’ computer, and at a makeshift table is wholly irrelevant. Moreover, the fact that she was at the waiver table for only a brief time is a result of her decision not to read the waiver, not the other way around. Indeed, Lutz makes no assertion that she was rushed in any way and admits there was no line when she arrived at the Funhouse. Finally, Lutz’s contention that the employees failed to read the waiver to her lacks merit, as there is no legal requirement that an employee do so.

* Oracle v. Rimini Street, Inc., 2016 WL 3344377 (D. Nev. June 13, 2016). I last blogged this case in 2010! This is primarily a case over scraping customer support manuals from a password-protected customer support website. Rimini Street lost a jury trial in 2015, and the jury awarded Oracle over $14M in damages based on California and Nevada’s state computer crimes laws. The court upholds the jury verdicts. The most interesting part of this opinion relates to Rimini Street’s constitutional challenge to the computer crime laws:

Defendants’ argument effectively asks the court whether they can be found liable under a criminal statute that allows for civil penalties for taking information from a website without authorization when the power to grant, restrict, change, or revoke that authorization is solely within the control of the plaintiff seeking damages under the statute. The short answer is yes. [cite to Craigslist v. 3Taps].

July 10th 2016 Marketing

“Manufactured” TCPA Suit Fails For Lack of Standing

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Screen Shot 2016-07-08 at 12.19.25 PMThis is a TCPA lawsuit over unsolicited calls. Although plaintiff resided in Pennsylvania, she purchased 35 pre-paid phones with Florida area codes. The area codes were selected because they are comparatively economically depressed and thus more likely to get collection calls.

Discovery revealed that she bought the phones with the goal of receiving unsolicited calls and then filing TCPA lawsuits. Plaintiff was asked about this during her deposition, and her testimony is damning. The court quotes extensively from it, but a sampling is below:

q. Why do you have so many cell phone numbers?
a. I have a business suing offenders of the TCPA business — or laws.
q. And when you say business, what do you mean by business?
a. It’s my business. It’s what I do.
q. So you’re specifically buying these cell phones in order to manufacture a TCPA? In order to bring a TCPA lawsuit?
a. Yeah.

q. So is there another purpose that you use these cell phones for other than –
a. No.
q. — to — no. So the purpose is to bring a TCPA lawsuit?
a. Correct.
q. Does anyone you know ever call you at these phone numbers?
a. No, ma’am.
q. Did you ever use any of these phone numbers to call anyone?
a. No, ma’am

Based on this, the defendant (Wells Fargo) asserted defenses including: consent, that she invited the injury and assumed the risk. The consent defense does not satisfy the technicalities required under the TCPA. The court says, citing to the most recent FCC rules, that the defenses of assumption of risk and invitation of the injury do not apply to the TCPA. During the FCC proceedings, a commenter had specifically requested a bad faith defense in the scenario where a plaintiff manufactured a lawsuit, by waiting to notify the calling party about a number re-assignment, but the Commission rejected this request. While not directly on point, the court says that this means assumption of risk and invitation of injury are inapplicable to the TCPA.

Finally, the court settles on standing and says that plaintiff has not suffered injury in fact. Her testimony reflected that she did not suffer a violation of privacy when receiving the calls. As an alternative to privacy harm she argued that she suffered economic harm, but the court says she cannot allege this either. Citing to the data breach cases and Clapper, the court says that she cannot claim standing based on her loss of phone minutes or the money she expended to purchase the phones. Interestingly, Spokeo only merits a passing reference in the ruling.

Even assuming plaintiff has constitutional standing, the court says she does not have prudential standing. One of the elements of prudential standing is that the litigant’s interests are within the “zone of interests” sought to be protected by the statute, and that’s not the case here. In enacting the TCPA, Congress sought to protect those who suffered the nuisance of receiving unwanted calls, and as someone who purposefully bought phones and sought out calls, she does not qualify.

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Ouch, this is bad. The plaintiff’s deposition testimony could not have been worse. Pro-tip: I don’t think you ever want to admit that your are in the business of filing lawsuits.

The plaintiff’s scheme feels very similar to Gordon v. Virtumundo, where the court slammed the plaintiff for manufacturing the claim in question. Another case that falls into this genre is Beyond Systems, where spam emails were routed through out-of-state servers to take advantage of the other state’s spam laws. The courts in these cases relied on slightly different theories, but reached the same result.

I wonder if cases like this will be the proverbial straw that breaks the TCPA camel’s back. It’s the type of case that could get the attention of a legislator who was interested in revising and reforming the statute.

Legal doctrines aside, courts always find a way to turn away plaintiffs who manufacture claims. I wonder if defendant will seek a fee-shifting ruling.

Case citation: Stoops v. Wells Fargo, No. 3:15-83 (W.D. Pa. June 24, 2016)

Related posts:

Does Two-Factor Authentication Violate the TCPA?–Duguid v. Facebook

TCPA Claim Against Non-Sender Fails

Third Circuit Revives TCPA Case Against Yahoo

Court Rejects TCPA Claim on the Basis of Implied Consent

Recent FCC Order Helps Shopkick Defeat TCPA Claims

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC

Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

Cellphone Spam Violates TCPA–Joffe v. Acacia Mortgage

Will the Spokeo v. Robins Supreme Court Ruling Favor Plaintiffs Or Defendants? Uh…

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

July 9th 2016 Marketing, spam

Preemption Dooms Suit Over LinkedIn Group Spam

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Screen Shot 2016-07-05 at 7.59.10 AMThis is a lawsuit over spam sent to the member of a LinkedIn group. The common sense failings underlying the claims speak for themselves, but the court ends up dismissing on preemption grounds.

Plaintiff was a member of the “C, Linux and Networking Group” on LinkedIn. He alleged that he received 86 emails advertising various domain names such as “linkedininfluence.com,” “paidsurveyauthority.com,” and “takesurveysforcash.com,” among others. The emails were sent by seemingly fictitious persons, or at least people with names that sounded like they were fake (“Whitney Spence,” “Arelia Rosales,” and “Nona Paine”) (no offense to people who really have those names!). The emails were all sent through LinkedIn’s domain name, as they had to be.

Plaintiff asserted violations of California’s spam statute, which prohibits (1) the use of a third party domain name without permission; (2) falsified, misrepresented, or forged header information; and (3) misleading subject lines. Claims for misleading emails under the statute have to allege more than just mere inaccuracy, in order to escape federal preemption. See Gordon v. Virtumundo. The court rules that the allegations here do not suffice.

The court says the arguments raised by plaintiff are a variant of the arguments rejected in Virtumundo. Moreover, cases following Virtumundo have held that neither the “from” line nor the domain name in question are subject to an accuracy requirement. Nor do they have to readily identify the advertiser or sender in question.

As characterized by the court, Plaintiff did not attempt to meaningfully address preemption via Virtumundo, but tried to rely on Balsam v. Trancos, a California appellate court case where the court said that using a domain name that neither identifies the sender nor can be readily looked up via WHOIS can be misleading under California’s spam statute. The court distinguishes Balsam because the plaintiff didn’t allege the email headers were non-traceable and false.

Finally, Plaintiff contended that he had to open an email to determine the identity of the actual sender, but this argument is also foreclosed by relevant case law. Several cases have held that the identity of the sender need not be ascertainable from the from line or header—i.e., senders can force recipients to open commercial emails to figure out who they are from.

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Despite the waning interest level over spam cases, this dispute is worth noting. Most importantly, it is another case that rejects plaintiff’s attempt to nitpick over “from” line attributes. Plaintiffs consistently try these arguments and they have consistently failed, and they were bound to fail here as well.

For plaintiffs, spam litigation based on CAN-SPAM has been a bust following Virtumundo. Plaintiffs turned instead to California law and achieved some success in cases such as Trancos. But application of a robust preemption doctrine, as in this case, limits the viability of state law claims.

The fact that the claims here were over spam sent to a LinkedIn group are worth noting. Any group of this nature is bound to become overrun with spam over time, whether in the nature of off-topic messages or outside commercial emailers. This is a problem that LinkedIn is in a better position to try to address. (And under federal law unlike under California law, only the ISP is given standing to bring anti-spam claims.) But members of the group should not be litigating these claims. They have a ready non-legal solution at their disposal…hello, unsubscribe button!

Case citation: Silverstein v. Keynetics, 16-cv-00684-DMR (N.D. Cal. June 27, 2016)

Related posts:

Two Recent Spam Cases Look at Falsification of Origin and Subject Line Claims

No Spam Lawsuit When Plaintiff Asked For The Emails–Beyond v. Kraft

California Anti-Spam Law Doesn’t Require Sender’s Name In The ‘From’ Line or Domain Name

Shopkick Unable to Shake Text Spam Complaint — Huricks v. Shopkick

Lawyer’s Suit Over “Professional Recognition” Spam Flops

Path May Be Liable for Text-Spamming Users’ Contact Lists

CAN-SPAM Preemption Doesn’t Apply To Fraud…And More

Advertiser May Have Claims Against SEO Firm Using Undisclosed Spammy Practices

Court Accepts Narrow View of CAN-SPAM Preemption but Ultimately Dismisses Claims – Davison Design v. Riley

Spam Arrest’s Sender Agreement Fails Because Email Marketer’s Employees Lacked Authority–Spam Arrest v. Replacements (Forbes Cross-Post)

July 6th 2016 Marketing, spam