Cleaning Up A Messy CDA Case

Federal courts have been pretty generous with their interpretation of the Communications Decency Act.  For the most part, judges have applied the law to protect ISPs and other interactive computer service providers from lawsuits arising from third party content.  But a recent case from a federal court in the Southern District of California bucks that trend. For now at least. 

The case involves LivingSocial – an online promotions service that offers online deals and discounts to consumers for its “strategic business partners.”  The plaintiffs are the owners of a janitorial business called “A.T. Your Service Cleaning and Janitorial.”   In the spring of 2012, A.T. Your Service ran a LivingSocial promotion in San Diego. 

Later in the summer a company called “At Your Service Housekeeping Company” ran a LivingSocial promotion.  According to the complaint, At Your Service Housekeeping “failed almost uniformly to fulfill and honor vouchers purchased on . . . LivingSocial’s website.”   And if that wasn’t bad enough, At Your Service Housekeeping didn’t put a phone number on the voucher, so a bunch of angry customers wound up calling A.T. Your Service to complain.  In A.T. Your Services view, that confusion caused it to suffer “a loss of business, revenue and reputation.”   

A.T. Your Service filed suit against LivingSocial and At Your Service Housekeeping alleging a number of claims centered around the alleged misuse of the A.T. Service trademark and the false advertising. 

LivingSocial filed a motion to dismiss based in part on the Communications Decency Act.  The motion argued that LivingSocial is a provider of interactive computer services and the content it displays is generated by third parties – in this case, At Your Service Housekeeping.  As such, LivingSocial argued it could not be liable for any claims seeking to treat it as a publisher of the offensive content. 

A.T. Your Service countered that, based on LivingSocial’s website, it does not merely “passively display content created entirely by third parties.”  Rather, in its own words, LivingSocial is a “strategic business partner” that “partners with vendors to advertise and offer deals to potential customers.” 

In considering a motion to dismiss, a court has to rely solely on the allegations in the plaintiff’s complaint.  The defendant files the motion before it files an answer, so the question really is whether the complaint is so deficient on its face to merit dismissal before the defendant even has to answer.  It’s a tough standard, and in this case, the court determined LivingSocial couldn’t satisfy it.  A.T. Your Service’s allegations about LivingSocial’s role in the process – which were based on LivingSocial’s own words – were enough to avoid the dismissal.

Of course, that doesn’t mean LivingSocial lost the case.  It only means the case may proceed.  And things may look up for LivingSocial once more facts come in.  The CDA protections do not apply only if the service provider develops the content at issue.  In this case, the offensive content isn’t the promotion itself, so much as the confusing name (At Your Service Housekeeping) and the absence of a phone number.  To the extent At Your Service Housekeeping provided those items, LivingSocial may very well prevail on the CDA defense.  It’s just impossible to know the complete picture based solely on the complaint. 

So this decision is kind of an outlier for now.  But that may change before too much longer.  And this case may get “swept” under the CDA coverage yet.