Xcentric wins one in Arizona

Earlier this year Global Royalties, Ltd. and its principal, Brandon Hall (“Plaintiffs”), sued Xcentric Ventures, LLC and its Manager, Edward Magedson (“Defendants”), in Arizona federal court for defamation.

As you may know, the defendants operate ripoffreport.com, a website that solicits consumer complaints. The basis of the defamation claim were statements by one Spencer Sullivan, who apparently posted messages on the site (i) referring to Global’s operation as a “scam”; (ii) stating that two individuals “involved with” Global “had written bad checks and otherwise treated him dishonorably”; and (iii) stating that “any upstanding commercial operation could bear the scrutiny of a crime unit without any issue” (posted after plaintiffs had discouraged potential customers from contacting Canadian law enforcement). Defendants allegedly refused Sullivan’s subsequent request to remove his posts from the website.

Noting that the allegedly defamatory statements were written by Sullivan, and not defendants, earlier this week Judge Frederick J. Martone ruled that Section 230 precluded plaintiffs’ defamation claims. In so doing, the court rejected plaintiffs’ argument that by failing to remove the subject posts, defendants had adopted them (which they argued was tantamount to creation or development). The court noted that established law rejected such assertions of notice, and the Defendants’ failure to remove the allegedly defamatory statements was an exercise of a publisher’s traditional editorial functions.

I noticed that the court characterized as “minor and passive participation in the development of content” the fact that defendants allegedly “supplied a list of titles from which Sullivan picked the phrase ‘Con Artists’ to label [his first allegedly defamatory] statement.” I have not reviewed plaintiffs’ complaint, but if the ‘Con Artists’ label is beyond the scope of the substantive defamation allegations, such participation seems entirely irrelevant to the Section 230 analysis.


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