Nemet Chevrolet, Ltd. v. Consumeraffairs.Com, Inc.

• Decision Date: 18 June 2008
• Docket Number: No. 1:08cv254 (GBL).,1:08cv254 (GBL).
• Citation: 564 F.Supp.2d 544
• Parties: NEMET CHEVROLET, LTD., et al, Plaintiffs, v. CONSUMERAFFAIRS.COM, INC., Defendant.
• Court: U.S. District Court — Eastern District of Virginia

564 F.Supp.2d 544

NEMET CHEVROLET, LTD., et al, Plaintiffs, v. CONSUMERAFFAIRS.COM, INC., Defendant.

No. 1:08cv254 (GBL).

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

June 18, 2008.

COPYRIGHT MATERIAL OMITTED

Benjamin G. Chew (Andrew M. Friedman, on brief), Patton Boggs LLP, Washington, DC, for Plaintiffs.

Jonathan David Frieden (Sean P. Roche, on brief), Odin Feldman & Pittleman PC, Fairfax, VA, for Defendant.

MEMORANDUM ORDER

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Defendant Consumeraffairs.com Inc.'s Motion to Dismiss or Strike Complaint. This case concerns negative reviews posted by consumers on Defendant's website concerning Plaintiffs, Nemet Chevrolet, Ltd. and Thomas Nemet D/B/A Nemet Motors. Plaintiffs take issue with the veracity of the information posted on Defendant's website, and seek to hold Defendant liable for defamation, tortious interference with a business expectancy and multiple violations of the Lanham Act. There are five issues before the Court. The first issue is whether immunity Under the Communications Decency Act may be considered by the Court on a 12(b)(6) motion, and if so, whether Defendant is immune under the CDA Plaintiffs claims for defamation and tortious interference with contract. The second issue is whether Plaintiffs' request for punitive damages on Counts I and II in excess of the applicable statutory cap bars these claims. The third issue is whether Plaintiffs have standing to bring their claims under the Lanham Act. The fourth issue is whether Plaintiffs have pled that Defendant has used an imitation of Plaintiffs' mark that is likely to cause confusion among consumers, as required to state a claim of unfair competition under § 43(a)(1)(A) of the Lanham Act. The fifth issue is whether Plaintiffs have properly stated a false advertising claim against Defendant under § 43(a)(1)(B) of the Lanham Act. The Court holds that it may consider immunity under the CDA on a 12(b)(6) motion because the facts necessary for such a determination are apparent from the face of the Complaint, and because the CDA prevents Plaintiffs from establishing a set of facts that would entitle them to relief. Furthermore, the Court holds that Defendant is entitled to immunity under the CDA because it is a provide of an interactive computer service, the postings at issue in the Complaint were provided by a separate information content provider, and Plaintiffs' claims seek to treat Defendant as a publisher of the third party content at issue. With respect to the second issue, the Court finds that while it could strike the ad damnum portion of the claims at issue, that ad damnum serves no practical purpose in a contested case such as this, and it is unnecessary to address the issue further because the Court will strike the claims at issue on other grounds. The Court also finds that under any approach used by the various circuits, that Plaintiffs do not have standing to bring their claims under the Lanham Act because Plaintiffs are not competitors of Defendant, and Plaintiffs have not alleged the sort of injury that the Lanham Act sought to protect against. Alternatively, if the Court were to find that Plaintiffs had standing to bring their claims under the Lanham Act, the Court grants the Defendant's Motion to Dismiss the counts brought under sections 43(a)(1)(A) and (B) of the Act because the two parties' goods are unrelated as a matter of law and because the parties are not in commercial competition and it could not possibly be alleged that the statements at issue were made for the purpose of influencing consumers to buy Defendant's goods or services instead of Plaintiffs'.

I. BACKGROUND

Defendant consumeraffairs.com operates a website through which third-party consumers post reviews of retail buying experiences with merchants and exchange information about their experiences buying products or services from particular companies. Nemet Chevrolet is a group of franchised automotive dealers who sell cars in the New York area. Several consumer reviews posted on Defendant's website complain about individual experiences at Nemet Chevrolet. Plaintiffs' Complaint includes the text of six consumer postings, and Plaintiffs identify the poster responsible for the information contained in all but one of the postings. Plaintiffs attempt to rebut the complaints lodged in each posting in the text of their Complaint. The following counts are alleged in the Complaint: I) defamation; II) tortious interference with a business expectancy; III) violation of § 43(a)(1)(A) of the Lanham Act; and IV) violation of § 43(a)(1)(B) of the Lanham Act. Plaintiffs claim that Defendant's publication of the statements on its website "discredited Plaintiffs honesty, credit and business reputation." (Compl. ¶ 39). With respect to the claim for tortious interference, Plaintiff alleges that "Defendant's false and misleading articles caused potential Nemet customers not to contract with Plaintiffs, resulting in monetary damages to Plaintiff." (Compl. ¶ 45). Plaintiffs assert that Defendant has violated § 43(a)(1)(A) of the Lanham Act by operating "in commerce under the guise of `consumer affairs' for the purpose of unlawfully diverting customers and deriving a profit from misdirecting said customers" and consumers are likely to incorrectly believe that Defendant is affiliated with a state, federal or other organization. (Compl. ¶ 47, 48). With respect to the alleged violation of § 43(a)(1)(B) of the Lanham Act, Plaintiffs state that Defendant's use of the name "consumer affairs" misrepresents the nature and/or quality of its services and that this misrepresentation is likely to "influence the purchasing decision and deceive customers." (Compl. ¶ 52, 53).

II. DISCUSSION

A. Standard of Review

In a recent decision, the Supreme Court held that a Federal Rule of Civil Procedure 12(b)(6) motion should be granted unless an adequately stated claim is "supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1969, 167 L.Ed.2d 929 (2007); see Fed.R.Civ.P. 12(b)(6). In considering a Rule 12(b)(6) motion, the Court must construe the complaint in the light most favorable to the plaintiff, read the complaint as a whole, and take the facts asserted therein as true. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). In addition to the complaint, the court may also examine "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice" when ruling on a Rule 12(b)(6) motion to dismiss. Tellabs, Inc. v. Makor Issues & Rights, Ltd., ___ U.S. ___, ___, 127 S.Ct. 2499, 2509, 168 L.Ed.2d 179 (2007). Conclusory allegations regarding the legal effect of the facts alleged need not be accepted. See Labram v. Havel, 43 F.3d 918, 921 (4th Cir.1995). Because the central purpose of the complaint is to provide the defendant "fair notice of what the plaintiffs claim is and the grounds upon which it rests," the plaintiffs legal allegations must be supported by some factual basis sufficient to allow the defendant to prepare a fair response. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99,2 L.Ed.2d 80 (1957).

B. Analysis

The Court grants Defendant's Motion to Dismiss Counts I (defamation) and II (tortious interference with business expectancy) because it is apparent from the facts contained in the Complaint that Defendant is entitled to immunity under the Communications Decency Act.

By its plain language § 230 creates a federal immunity to any cause of action that would make service providers liable for information originating with a third-party user of the service. Specifically, § 230 precludes courts from entertaining claims that would place a computer service provider in a publisher's role. Thus, lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions such as deciding whether to publish, withdraw, postpone or alter content-axe barred.

Zeran v. America Online, Inc. 129 F.3d 327, 330 (4th Cir.1997)(emphasis added). Courts engage in a three part inquiry when determining the attachment of immunity under the CDA. The Court must determine: 1) whether Defendant is a provider of an interactive computer service; 2) if the postings at issue are information provided by another information content provider; and 3) whether Plaintiffs claims seek to treat Defendant as a publisher or speaker of third party content. Schneider v. Amazon.com, 108 Wash.App. 454, 31 P.3d 37, 46 (2001). The CDA defines an interactive computer service 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." 47 U.S.C. § 230(f)(2). By contrast, an information content provider is defined as, "any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service." 47 U.S.C. § 230(f)(3).

The crucial inquiry for determining immunity is the role of the Defendant as it pertains to the statements at issue in the Complaint. The parties do not disagree that Defendant runs a website. Defendants are indisputably an interactive computer service. The question is whether Defendant assisted in the creation and development of the content at issue so as to render it also an information content provider for these purposes. The Complaint consists largely of isolated statements made by various consumers posted on Defendant's website. Plaintiffs are not only able to provide the first and last names of the customers who authored the postings on Defendant's website, but Plaintiffs also...