America Online, Inc. v. Greatdeals.Net

• Decision Date: 04 May 1999
• Docket Number: No. Civ.A. 99-62-A.,Civ.A. 99-62-A.
• Citation: 49 F.Supp.2d 851
• Court: U.S. District Court — Eastern District of Virginia
• Parties: AMERICA ONLINE, INCORPORATED, Plaintiff, v. GREATDEALS.NET et al., Defendants.

49 F.Supp.2d 851

AMERICA ONLINE, INCORPORATED, Plaintiff, v. GREATDEALS.NET et al., Defendants.

No. Civ.A. 99-62-A.

United States District Court, E.D. Virginia, Alexandria Division.

May 4, 1999.

COPYRIGHT MATERIAL OMITTED

Anthony Tobias Pierce, Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., for plaintiff.

William Francis Krebs, Galland, Skaraseh & Garfinkle, Washington, D.C., for defendant.

MEMORANDUM OPINION AND ORDER

LEE, District Judge.

THIS MATTER is before the Court on Plaintiff's Motion to Dismiss Defendants' Counterclaims.¹ The issues presented are: (1) whether Defendants' claim of discrimination in violation of the Federal Communications Act and the Telecommunications Act states a claim where an information service provider rather than a common carrier is the alleged perpetrator of discrimination; (2) whether Defendants' claim of monopolization and attempted monopolization in violation of antitrust laws constitutes a claim upon which relief can be granted; and (3) whether Defendants state a claim for tortious interference with contract and prospective contractual relations where the contract or prospective contractual relation is Defendants' relationship with Plaintiff's subscribers through unsolicited bulk e-mail transmission. For the reasons stated below, the Court grants Plaintiff's Motion to Dismiss and all Defendants' counterclaims are hereby dismissed.

I. BACKGROUND

Defendant Martindale Empowerment ("Martindale") is a Virginia corporation in the business of providing commercial electronic-mail ("e-mail") service to advertisers. GreatDeals.Net is an Internet domain name belonging to Martindale Empowerment and GreatDeals is a trade name belonging to Martindale Empowerment. Until September 1998, Martindale's business included sending commercial electronic advertising over the Internet in the form of e-mail to e-mail addresses throughout the United States.

Plaintiff America Online, Inc. ("AOL") is the largest commercial online service with more than sixteen million individual subscribers across the United States. From late 1996 to September 1998, Martindale transmitted commercial e-mail messages advertising goods and services to AOL subscribers among others. Martindale marketed computers and computer-related equipment. Martindale claims that it ceased transmitting messages to AOL subscribers because AOL created various mechanisms to block these transmissions and succeeded in blocking virtually all such transmissions. Martindale contends that AOL has established itself as the only entity that can advertise to AOL subscribers.

AOL brought a complaint seeking damages and an injunction to prohibit Defendants from continuing their practice of sending unsolicited bulk e-mail ("UBE") advertisements to AOL subscribers. AOL charged Defendants with trespass to chattels, unjust enrichment, and violations of the Computer Fraud and Abuse Act, the Virginia Computer Crimes Act, and Washington State's Unsolicited Commercial Electronic Mail Act. AOL alleged that Defendants used deceptive practices to mask the source and quantity of their transmissions and thereby avoid AOL's filtering technologies. AOL further alleged that Defendants continued such transmissions after specific notice from AOL that their use of AOL's computer network was unauthorized and that AOL was receiving thousands of complaints from its subscribers who received Defendants' UBE.

Defendants admit that they transmitted UBE containing their advertisements for computer equipment to AOL subscribers. In response to the complaint, Defendants filed counterclaims complaining of AOL's acts and attempts to block the transmission of Defendants' UBE from reaching AOL subscribers. Specifically, Defendants claimed that AOL unlawfully discriminated against them in violation of the Federal Communications Act and the Telecommunications Act of 1996, that AOL violated antitrust laws by engaging in monopolization and attempted monopolization, and that AOL intentionally interfered with Defendants' contracts and prospective contracts with advertiser-clients.

AOL has filed a motion to dismiss all Defendants' counterclaims on various grounds. That is the subject of this memorandum opinion and order.

II. STANDARD OF REVIEW ON A MOTION TO DISMISS

A court should grant a motion to dismiss for failure to state a claim when it appears that no relief could be granted under any set of facts that could be proved consistent with the allegations. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Estate Constr. Co. v. Miller & Smith Holding Co., 14 F.3d 213, 217 (4th Cir.1994). The function of a motion to dismiss is to test the sufficiency of the complaint, not to resolve contested facts, the merits of the claim or the applicability of defenses. Republican Party of North Carolina v. Martin, 980 F.2d 943, 952 (4th Cir.1992); Gasner v. County of Dinwiddie, 162 F.R.D. 280, 281 (E.D.Va. 1995). In considering a rule 12(b)(6) motion to dismiss, the factual allegations in the complaint are presumed to be true, all reasonable inferences are made in favor of the non-moving party, and a count should be dismissed only where it appears beyond a reasonable doubt that recovery would be impossible under any set of facts which could be proven. Martin, 980 F.2d at 952; Gasner, 162 F.R.D. at 281.

III. Violations of Federal Communications Act and Telecommunications

Act (Counts I and 11)²

Counts I and II allege that AOL discriminated against Defendants by blocking their ability to send UBE to hundreds of thousands of AOL's customers over AOL's computer network. Defendants contend that this blocking constitutes discrimination in violation of the Federal Communications Act of 1934³ and its amendment in the Telecommunications Act of 1996. AOL argues that under section 230(c)(2)(A) of the Telecommunications Act, it is immune from civil liability for actions taken in good faith to restrict access to or availability of material that the provider or user considers to be "obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected."⁴ AOL contends that section 230(c)(2) immunity applies here because AOL is an interactive computer service within the meaning of the statute and because UBE is "harassing" and "otherwise objectionable." AOL claims that UBE is objectionable because it typically contains advertisements for pornography or for fraudulent "get rich quick" schemes that AOL members consider offensive and harassing, because it is transmitted indiscriminately to AOL users regardless of age, and because it slows e-mail processing times and requires members to spend time opening and discarding unwanted solicitations.

AOL further argues that it is not subject to the anti-discrimination provisions of the communications laws because AOL is not a common carrier. AOL claims that it is not a common carrier because it does not offer telecommunications services; rather, it offers information services which are distinguishable as found by Congress and the Federal Communications Commission ("FCC").

The Court holds that AOL is not a common carrier and thus is not subject to the anti-discrimination provisions of the Federal Communications Act and the Telecommunications Act.⁵ Under the Telecommunications Act, a common carrier is defined as "any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or in interstate or foreign radio transmission of energy, except where reference is made to common carriers not subject to this chapter; but a person engaged in radio broadcasting shall not, insofar as such person is so engaged, be deemed a common carrier." 47 U.S.C. § 153(10) (Supp.1998). An interactive computer service is defined as "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions." Id. § 230(e)(2). These two definitions clearly differ. Yet, Congress has not provided clarification on whether an information service provider is a common carrier.

Where a statute is silent or ambiguous with respect to a specific issue, the Court must defer to the agency's interpretation of the statute unless it is an impermissible construction or manifestly contrary to the statute. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); City of Dallas v. Federal Communications Comm'n, 165 F.3d 341, 346-47 (5th Cir.1999); Kennedy v. Shalala, 995 F.2d 28, 30 (4th Cir.1993). In a 1998 Report to Congress, the FCC concluded that Congress intended the categories of telecommunications service and information service to be mutually exclusive, similar to the mutual exclusivity of basic and enhanced service. See 13 F.C.C.R. 11501 ¶ 13 (Apr. 10, 1998). The FCC stated that information service providers generally do not provide telecommunications service. Id. The FCC found that Congress intended to maintain a regime in which information service providers are not subject to regulation as common carriers merely because they provide their services "via telecommunications." Id. In particular, the FCC opined:

The Internet and other enhanced services have been able to grow rapidly in part because the Commission concluded that enhanced service providers were not common carriers within the meaning of the Act. This policy of distinguishing competitive technologies from regulated services not yet subject to full competition remains viable.... We believe that Congress, by distinguishing "telecommunications service" from "information service," and by stating a policy goal of preventing the Internet from being fettered by state or federal...