Full 9th Circuit: Web site can be sued under fair-housing laws

Friday, April 4, 2008

Saying the Communications Decency Act wasn’t “meant to create a lawless no-man’s land” online, a federal appeals court ruled yesterday that Roommates.com can be sued under fair-housing laws.

The full 9th U.S. Circuit Court of Appeals denied immunity under the CDA to Roommates.com, a site that allows individuals to state frank preferences for roommates based on race, sex and other criteria.

One of the most pressing legal questions in the online age concerns the extent of immunity granted by federal law to Internet service providers for online content generated by third parties. Many courts have granted immunity based on Section 230(c) of the CDA, which states: “No provider … of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

While much of the 1996 federal law that dealt with the regulation of indecent and patently offensive online speech was declared unconstitutional by the U.S. Supreme Court in 1997, Section 230(c) remains valid law. Congress passed the provision to ensure robust communications on the Internet by preventing ISPs from being sued for third-party content. Many courts have interpreted Section 230(c) as providing an ISP broad swath of immunity for content posted by a third party. For example, in Zeran v. AOL, the 4th Circuit insulated America Online from liability for false statements connecting Kenneth Zeran to T-shirts applauding the horrific Oklahoma City bombing.

However, Section 230(c) makes clear in another provision that ISPs are not shielded from liability if they are “information content providers” — that is, if they create material instead of merely publishing content from third parties.

In 2006, the Fair Housing Councils of San Fernando Valley and San Diego sued Roommates.com in federal court, alleging the site had violated the Fair Housing Act, which prohibits housing discrimination. The councils pointed out that Roommates.com displays a questionnaire that asks for demographic information, which enables and even encourages some users to indicate discriminatory preferences in violation of federal and state law — on the basis of gender, family status and sexual orientation.

The district court held that the Web site had immunity under Section 230 of the CDA, which allows legal protection for sites with “interactive computer services.”

However, in May 2007 a three-judge panel of the 9th Circuit reversed and found that Roommates.com was not entitled to Section 230 immunity because it was partly an information content provider.

Roommates.com then petitioned for review by the full 9th Circuit.

Yesterday, the full panel voted 8-3 that the site was not entitled to immunity under Section 230.

Writing for the majority in Fair Housing Council v. Roommates.com, Judge Alex Kozinski noted that Section 230 “does not grant immunity for inducing third parties to express illegal preferences.” He wrote that a Web site, such as Roommates.com, can be both an internet service provider that merely serves as a passive conduit for the speech of others and an information content provider.

“By requiring subscribers to provide the information as a condition of accessing its service, and by providing a limited set of pre-populated answers, Roommate becomes much more than a passive transmitter of information provided by others,” Kozinski wrote. “It becomes the developer, at least in part, of that information.”

He reasoned that Roommates.com not only has no immunity for its questionnaires that allow individuals to express discriminatory preferences, but also has no immunity for the operation of its search systems, which — Kozinski said — “directs e-mails to subscribers according to discriminatory criteria.”

The majority did find that Roommates could not be held liable for discriminatory comments displayed in the “Additional Comments” section of profile pages. This section allows paying subscribers to write whatever they want within blank text boxes. “Roommate is not responsible, in whole or in part, for the development of this content, which comes entirely from subscribers and is passively displayed by Roommate,” Kozinski wrote.

He cautioned that this ruling was based largely on specific features of Roomates.com and that many “close cases … must be resolved in favor of immunity, lest we cut the heart out of Section 230.” He explained: “Where it is very clear that the website directly participates in developing the alleged illegality — as it is clear here with respect to Roommate’s questions, answers and the resulting profile pages — immunity will be lost.”

He added: “The message to website operators is clear: If you don’t encourage illegal content, or design your website to require users to input illegal content, you will be immune.”

The court sent the case back to the district court to determine whether “the alleged actions for which Roommate is not immune violate the Fair Housing Act.” In a footnote, Zozinski noted that the 9th Circuit was not addressing “Roommate’s claims that its activities are protected by the First Amendment,” reasoning that it would not rule on a constitutional claim yet to be analyzed by the district court.

Judge M. Margaret McKeown authored a dissent that was joined by two other judges. She argued that the majority’s “unprecedented expansion of liability for Internet service providers threatens to chill the robust development of the Internet that Congress envisioned.” She said the majority opinion’s ruling with respect to the search engine “dramatically alter[s] the landscape of Internet liability.”

“Congress has spoken: third-party content on the Internet should not be burdened with the traditional legal framework,” McKeown wrote.

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