Whitney Information Network, Inc. v. Xcentric Ventures, LLC

DATE: August 1, 2006

COURT: United States Court of Appeals, Eleventh Circuit (before Carnes, Wilson and Pryor, Circuit Judges. Per Curiam opinion)

PLAINTIFF: Whitney Information Network, Inc.

DEFENDANTS: Xcentric Ventures, LLC, Badbusinessbureau.org, and Ed Magedson

INTERACTIVE COMPUTER SERVICE: Whitney does not dispute on appeal that Defendants Xcentric or badbusinessbureau.org qualified as a “provider or user of an interactive computer service”

MATERIAL ALLEGATIONS: “Defendants operate the websites “www.ripoffreport.com” and “ripoffrevenge.com,” and allegedly “hold themselves out to the public as a ‘worldwide consumer reporting website and publication, by consumers for consumers’ to file and document consumer complaints about ‘companies or individuals who rip off consumers.’ ” According to Whitney, Defendants solicit consumers to submit complaints about any company that has “ripped” the consumers off, and Defendants then choose to publish certain of these complaints on their website “www.ripoffreport.com,” thereby implying that the companies named in the complaints are “ripping off” consumers. Whitney contends that Defendants do not attempt to verify consumer complaints for accuracy, and seek to “extort” money from companies complained about on Defendants’ website by offering to cease publication of the complaints in exchange for a fee.”

Plaintiff claims “that Defendants tailored and rewrote consumer complaints submitted by third parties to make it appear that, regardless of the true nature of the complaint, the company complained of (i.e., Whitney) was “ripping off” customers. . . . This tailoring and rewriting allegedly included the addition of words such as “ripoff,” “dishonest,” and “scam.” . . . Furthermore, Whitney claimed that Defendants knowingly fabricated entire consumer complaints, ‘which were then attributed to people with false names or ‘anonymous’ titles from fictional locations around the United States … and were false and slanderous.’”

CAUSE OF ACTION: Defamation per se of a business reputation

PROCEDURAL HISTORY: The U.S. District Court for the Middle District of Florida, Covington, J., granted combined motion to dismiss for lack of personal jurisdiction with prejudice. Plaintiff appealed.

PROCEDURAL ACTION TAKEN HERE: Vacated and remanded.

OUTCOME: “The district court erred in concluding that Whitney failed to satisfy . . . Florida’s long-arm statute with respect to Defendants, and thus erred in dismissing the amended complaint for lack of personal jurisdiction on that basis. Whether the exercise of personal jurisdiction over Defendants would violate due process, however, is yet to be resolved. Accordingly, we vacate the judgment of the district court and remand the case for further proceedings consistent with this opinion.”

OPINION: “Having reviewed the declarations, we disagree that they were adequate to shift the burden back to Whitney. Thus, it is not clear that Defendants were entitled to CDA immunity.”

“Defendants’ declarations do not adequately rebut the allegations of the amended complaint insofar as it pleads Defendants’ involvement in creating or developing the alleged defamatory content of consumer complaints posted on their website. Thus, whether Defendants were entitled to CDA immunity remained in question, as did the issue of whether their conduct was tortious.”

“As the district court declined to address whether the exercise of personal jurisdiction over Defendants would violate due process (an issue not briefed on appeal), we vacate the district court’s judgment and remand for further proceedings.”

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