F.T.C. v. Accusearch Inc., 08-8003.

Citation570 F.3d 1187
Decision Date29 June 2009
Docket NumberNo. 08-8003.,08-8003.
PartiesFEDERAL TRADE COMMISSION, Plaintiff-Appellee, v. ACCUSEARCH INC., d/b/a Abika.com; Jay Patel, Defendants-Appellants, Jennifer Stoddart, Privacy Commissioner of Canada, Amicus Curiae.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Deborah L. Roden (Gay Woodhouse with her on the briefs) of Gay Woodhouse Law Office, P.C., Cheyenne, WY, for Defendants-Appellants.

Lawrence DeMille-Wagman, Attorney, Federal Trade Commission, Washington, D.C., (William Blumenthal, General Counsel, John F. Daly, Deputy General Counsel for Litigation, Federal Trade Commission, Washington, D.C.; and Tracy S. Thorleifson, Kial S. Young, Federal Trade Commission, Seattle, WA, with her on the brief), for Plaintiff-Appellee.

Edward R. McNicholas, Sidley Austin LLP, Washington, DC, filed an amicus curiae brief for Jennifer Stoddart, Privacy Commissioner of Canada, in support of Plaintiff-Appellee.

Before HARTZ, TYMKOVICH, and HOLMES, Circuit Judges.

HARTZ, Circuit Judge.

Abika.com is a website that has sold various personal data, including telephone records. The Federal Trade Commission (FTC) brought suit against the operator of the website, Accusearch Inc., and its president and owner, Jay Patel (collectively, Accusearch), to curtail Accusearch's sale of confidential information and to require it to disgorge its profits from the sale of information in telephone records. The FTC alleged that Accusearch's trade in telephone records (which are protected from disclosure under § 702 of the Telecommunications Act of 1996, 47 U.S.C. § 222 (2006)) constituted an unfair practice in violation of § 5(a) of the Federal Trade Commission Act (FTCA), 15 U.S.C. § 45(a) (2006). The district court granted the FTC summary judgment, see FTC v. Accusearch, Inc., No. 06-CV-105-D, 2007 WL 4356786, at *10 (D.Wyo. Sept.28, 2007), and after further briefing entered an injunction restricting Accusearch's future trade in telephone records and other personal information.

On appeal Accusearch contends that (1) the FTC's unfair-practice claim should have been dismissed because Accusearch broke no law and because the FTC had no authority to enforce the Telecommunications Act; (2) it was immunized from suit by the protections provided websites in the Communications Decency Act (CDA), 47 U.S.C. § 230 (2006); and (3) the injunction is unnecessary to prevent it from resuming trade in telephone records and is unconstitutionally overbroad. Exercising jurisdiction under 28 U.S.C. § 1291, we reject each of Accusearch's contentions and affirm. First, conduct may constitute an unfair practice under § 5(a) of the FTCA even if it is not otherwise unlawful, and the FTC may pursue an unfair practice even if the practice is facilitated by violations of a law not administered by the FTC, such as the Telecommunications Act. Second, Accusearch's claimed defense under the CDA fails because it acted as an "information content provider" (and thus is not entitled to immunity) with respect to the information that subjected it to liability under the FTCA. See 47 U.S.C. § 230(f)(3). Finally, the injunction was proper despite Accusearch's prior halt to its unfair practices and the possibility that the resumption of those practices would be criminally prosecuted; and Accusearch waived in district court its claim on appeal that the injunction is overbroad.

I. BACKGROUND
A. Abika.com

Although the parties characterize the Abika.com website differently, they do not dispute the essential aspects of its operation. Any person interested in Abika.com's services could access the website through a search engine or by typing its address into an Internet browser. A visitor to the website would first see its homepage, which displayed various categories of information that could be searched. The record contains one printout of the website from December 20, 2006, and one from November 27, 2007. The printouts show that some searches advertised on the homepage targeted information generally contained in government records, such as "court dockets," "sex offender records," and "Tax ... Liens." Aplts. App., Vol. 4 at 1313; id. Vol. 5 at 1429. Other search categories related to intimate personal information, such as "Romantic Preferences," "Personality traits," and "Rumors." Id. Vol. 4 at 1313; id. Vol. 5 at 1429.

Accusearch stresses on appeal that the search services offered on Abika.com were primarily services provided by third-party researchers, who were required by Accusearch to provide assurances that they would perform their work in accordance with applicable law. The researchers had no direct contact with Abika.com's customers. As Accusearch explains, "all information passed between [customer] and researcher went through Abika.com, as an intermediary." Aplts. Reply Br. at 3. In placing a search order, a customer paid Accusearch an "administrative search fee," Aplts. App., Vol. 4 at 1246, and selected the type of search desired, not a specific researcher or a search identified with a specific researcher. Accusearch would forward the search request to a researcher who could fulfill it. After completing a search, the researcher would send the results to Accusearch and bill Accusearch directly. Accusearch would then email the results to the customer and post them on the customer's Abika.com account. A customer could know that a third-party researcher was involved in a transaction only by reading boilerplate contained on the website and in Accusearch's email correspondence. And even then, the customer was not provided contact information for any researcher.

B. Provision of Telephone Records

From February 2003 to January 2006 the Abika.com website advertised access to personal telephone records. The website stated that its customers could acquire "details of incoming or outgoing calls from any phone number, prepaid calling card or Internet Phone," and that "Phone searchers are available for every country of the world." Id. Vol. 4 at 1246-47 (internal quotation marks omitted). Abika.com's customers could purchase both cellphone and landline records. The website specified that cellphone records would detail the numbers dialed from a particular cellphone and generally include the "date, time and duration of the calls" made. Id. Vol. 2 at 475. Landline records would include the same information, save for the specific time at which calls were made.

Acquisition of this information would almost inevitably require someone to violate the Telecommunications Act or to circumvent it by fraud or theft. The Act forbids telecommunications carriers from disclosing telephone records absent customer consent or the applicability of one of several exceptions. See 47 U.S.C. § 222(c)-(d). The Act provides as follows:

Except as required by law or with the approval of the customer, a telecommunications carrier that receives or obtains customer proprietary network information by virtue of its provision of a telecommunications service shall only use, disclose, or permit access to individually identifiable customer proprietary network information in its provision of (A) the telecommunications service from which such information is derived, or (B) services necessary to, or used in, the provision of such telecommunications service, including the publishing of directories.

Id. § 222(c)(1). (We note the additional exceptions below.1) There is no dispute that the telephone records available on Abika.com constituted "individually identifiable customer proprietary network information" within the meaning of § 222,2 or, more generally, that the Telecommunications Act barred disclosure of those records by telecommunications carriers. Although Accusearch (remarkably, in our view) maintained that it relied in good faith on its researchers' commitment to obey the law in acquiring information, it represented that it ceased offering telephone records in January 2006 after learning that a subsidiary of one of its researchers possibly obtained telephone data fraudulently.

C. Procedural History

The FTC filed suit against Accusearch on May 1, 2006, roughly four months after Accusearch ceased to offer telephone records. The complaint alleged that telephone records are protected against disclosure by the Telecommunications Act and that trade in such records constitutes an unfair practice in violation of § 5(a) of the FTCA, 15 U.S.C. § 45(a). Accusearch responded with a motion to dismiss, contending that the complaint failed to state a claim because the Telecommunications Act applies only to telephone carriers and because selling confidential telephone records was not otherwise unlawful. The district court denied the motion and Accusearch filed an answer. After conducting discovery the parties each moved for summary judgment.

The FTC argued that Accusearch's practices were unfair under the FTCA as a matter of law. Accusearch countered that it was immunized by the CDA, which, broadly speaking, protects Internet services from liability as publishers with respect to content provided by others. See 47 U.S.C. § 230(c). Accusearch contended that it was entitled to this immunity because the FTC's claim treated it as the publisher of telephone records that were provided by others (that is, telephone companies and independent researchers) and traded over Abika.com. The district court granted the FTC's motion and rejected Accusearch's assertion of immunity. The court ruled that the FTC had established each element of its unfair-practice claim. And it concluded that Accusearch was not entitled to statutory immunity because it had "participated in the creation or development" of the information delivered to customers, Accusearch, 2007 WL 4356786, at *6 (brackets and internal quotation marks omitted), and because the FTC's claim did not "treat" Accusearch as a mere publisher of those records, id. at *5 (internal quotation marks omitted). It found that Accusearch's "claim of blissful ignorance ...

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