Online Innovation attracts Offline Litigation

I am certainly not the first person to observe the current relationship between the launch of an innovative website (be it a VC-funded start-up or a rage-inspired, spare time project) and litigation. For reasons I will perhaps surmise at in a future post, it seems that the former is almost immediately followed by the latter more often now than at any other time in the admittedly youthful Internet age.

With that observation, two old adages come to mind – “all publicity is good publicity” and “no good deed goes unpunished.”

I’m no PR expert, but I do know that more often than not, rules end up having exceptions. So while there may be some PR folks out there appreciative of the media attention various lawsuits have generated, I would guess that the more common reaction is something along the lines of “we didn’t start this business so we could spend ridiculous amounts of time and money defending ourselves in court.”

As for good deeds, while not every new website can necessarily be said to provide a novel and useful service to its prospective users, there are plenty that do – often by disrupting the status quo. Now a number of them are experiencing punishment in the form of a visit from the local process server.

As you could have guessed, these suits typically allege, among other things, defamation, commercial disparagement or some other harm to a personal or business reputation. In some suits plaintiffs allege violations of state or federal statutes.

The purpose of this post is to simply provide a few current examples of these types of websites and subsequent lawsuits. If you are aware of others, I’d be interested in hearing from you.

1. Earlier this summer I remember reading about the launch of Avvo.com, a website intended to provide consumers, small businesses and others with a free and straight-forward way to identify and screen lawyers appropriate for their particular needs. Core components of the site include a proprietary numeric rating system, third-party comments and attorney disciplinary information. Faster than you can say class action, just such a suit was filed against Avvo and its founder by two Seattle attorneys, alleging the site harmed their reputations, etc. The parties are presently briefing the defendants’ motion to dismiss, which mainly relies upon the First Amendment and Section 230, and, mindful of a recent Ninth Circuit decision, attempts to distinguish the website from Roommate.com.

2. Business Week recently reported that a number of disgruntled homebuyers, and, in at least one case, an unhappy real estate broker, have created websites aimed at collecting and showcasing alleged deficient practices by certain homebuilders. One of these sites has been named in several lawsuits filed in South Carolina and Florida by a targeted builder, Lennar Corp. Referring to Lennar, the site’s founder was quoted by Business Week as saying that “[t]hey want me dead, there’s no way around that.”

3. The Wall Street Journal’s Law Blog has previously reported on Mortgage Lender Implode-O-Meter. The site, less than a year old, is an online compilation of mortgage lenders that have allegedly “imploded.” It has already been sued by at least one lender featured on the site, and according to a July 30, 2007 Inman News story (only available to subscribers), the state court has already ruled that Section 230 is inapplicable to plaintiff’s claims, and denied defendant’s anti-SLAPP motion.

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