Whitney Information Network v. Xcentric Ventures [1]

In January 2004, Whitney Information Network, Inc., a company that provides real estate training programs and seminars, and its CEO Russ Whitney sued Xcentric Ventures, LLC and its founder and managing member, Ed Magedson. Xcentric operates the Ripoff Report website, located at www.ripoffreport.com and www.badbusinessbureau.com, which allows visitors to read and post reports about companies that allegedly have "ripped off" consumers. A number of reports saying derogatory things about Whitney Information Network appeared on the Ripoff Report website. In the original complaint, the plaintiffs alleged that Xcentric and Magedson violated federal and state trademark laws and committed defamation of business reputation (often referred to as "trade libel") by publishing these reports.

In July 2005, the district court dismissed the original complaint, but granted the plaintiffs permission to file an amended complaint. Whitney Information Network re-filed an amended complaint, including only the defamation claim. In the amended complaint, Whitney alleged that Xcentric and Magedson not only published critical reader reports, but edited the complaints to include words like "ripoff" and "scam," and also fabricated certain reports altogether. In February 2006, the court dismissed the amended complaint, reasoning that CDA 230 [2] barred the defamation against Xcentric and Magedson. The Eleventh Circuit Court of Appeals reversed the ruling in March of that year, holding that the allegations that the defendants had altered and fabricated reports were sufficient for Whitney Information to survive a motion to dismiss.

Back in the trial court, the defendants moved for summary judgment, arguing that there was no evidence that they altered or fabricated reports and that CDA 230 thus barred Whitney Information's claim. In February 2008, the court granted the motion for summary judgment, dismissing the amended complaint in its entirety. The court held that Whitney Information had not come forward with any competent evidence to show that Magedson or anyone else working for Xcentric edited or fabricated any reports about it.

The court also rejected Whitney Information's argument that Xcentric and Magedson forfeited the protection of CDA 230 by requiring readers to describe their complaints by choosing from a drop-down menu of tags when submitting a report. The available tags included categories like "con artists," "corrupt companies," and "false advertisements" (which were allegedly applied to reports about Whitney), as well as more neutral terms like "seminar programs," "multi level marketing," "financial services," and "business consulting," just to name a few. The court also rejected the argument that the defendants should lose the protection of CDA 230 because they encouraged and actively solicited defamatory statements from their users.