GW Equity v. Xcentric Ventures

NOTE: The information and commentary contained in this database entry are based on court filings and other informational sources that may contain unproven allegations made by the parties. The truthfulness and accuracy of such information is likely to be in dispute. Information contained in this entry is current as of the last event mentioned in the "Description" section below; additional proceedings might have taken place in this matter since this event.

Summary

Threat Type: 

Lawsuit

Date: 

06/01/2007

Status: 

Pending

Location: 

Texas

Disposition: 

Dismissed (total)

Verdict or Settlement Amount: 

N/A
GW Equity, LLC, a mergers and acquisition firm that acts as a consultant to middle-market business owners who seek to sell or merge their businesses, sued Xcentric Ventures, LLC and Edward Magedson in Texas federal court for defamation and other torts over... read full description
Parties

Party Receiving Legal Threat: 

Xcentric Ventures, LLC; Edward Magedson

Type of Party: 

Organization

Type of Party: 

Individual
Organization

Location of Party: 

  • Texas
  • Delaware

Location of Party: 

  • Arizona

Legal Counsel: 

Jeffrey Scot Seeburger - Kane Russell Coleman & Logan; Maria Crimi Speth - Jaburg & Wilk PC
Description

GW Equity, LLC, a mergers and acquisition firm that acts as a consultant to middle-market business owners who seek to sell or merge their businesses, sued Xcentric Ventures, LLC and Edward Magedson in Texas federal court for defamation and other torts over reports published on the Ripoff Report website, which provides a forum in which consumers may accuse companies and individuals of various "rip-off" and "bad business" practices.

In its complaint, GW Equity alleged that Ripoff Report published false and defamatory reports submitted by users without verifying their accuracy. In an effort to circumvent the immunity for website operators provided by section 230 of the Communications Decency Act (CDA 230), GW Equity further alleged that Xcentric and Magedson created, developed, and published defamatory titles, headings, and metatags for these reports concerning GW Equity. It also claimed that Ripoff Report generated defamatory content by providing users with drop-down boxes containing defamatory tags, such as "corrupt companies," which were applied by users to reports about GW Equity.

After completing discovery, Xcentric and Magedson moved for summary judgment. In October 2008, a federal magistrate judge issued his report on the motion, recommending that the district court grant Xcentric and Magedson's motion for summary judgment. The magistrate judge found that Xcentric and Magedson were entitled to the protection of CDA 230 because GW Equity had failed to raise a genuine issue of fact concerning their development or creation of defamatory content. The court indicated that providing drop-down boxes with "a broad choice of categories from which a user must make a selection in order to submit a report [was] not sufficient" to deprive the defendants of immunity, especially because they "did not solely provide users with a selection of categories that were negative and/or defamatory in nature." Slip op. at 7, 10.

The magistrate judge also found that there was no competent evidence that any Ripoff Report employee ever wrote or significantly edited report titles and headings, or changed the category tag on a user report. See id. at 9-10. The magistrate relied in part on a report produced by Xcentric showing IP addresses and locations connected with the reports and rebuttals about GW Equity. This report showed the IP addresses of Ripoff Report servers and machines used by Ripoff Report staff, and noneof those IP addresses matched up with the IPs of a report or a rebuttal about GW Equity. See id. at 9.

Finally, the magistrate rejected GW Equity's argument that Ripoff Report's "Corporate Advocacy Business Remediation & Satisfaction Program" took the website outside of CDA 230. According to GW Equity, under this program Ripoff Report will, for a fee, investigate "rip-off" reports targeting member companies and post prominent rebuttals to those reports. The court indicated that "it is not a bar to immunity for an Internet provider to refuse to remove defamatory material created by a third party, or to otherwise use it to their advantage, even though the Internet provider’s conduct may be considered reprehensible and offensive." Id. at 12.

GW Equity has filed objections to the magistrate's report and recommendation, and the district court had not ruled on those objections as of November 14, 2008.

Update:

01/09/2009 - The district court affirmed the magistrate's report and recommendation and granted Xcentric and Magedson's motion for summary judgment.

 

Details

Content Type: 

  • Text

Publication Medium: 

Forum

Subject Area: 

  • Defamation
  • Third-Party Content
  • Trade Secrets
  • Section 230
  • Consumer Ratings and Reviews
Court Information & Documents
CMLP Information (Private)

Priority: 

1-High

Threat Source: 

Blog Post

CMLP Notes: 

Updated 2/26/09 - VAF (just added documents)