Certain Approval Programs v. Xcentric Ventures [1]

Certain Approval Programs, LLC and its CEO Jack Sternberg sued Xcentric Ventures, LLC and Edward Magedson in Arizona federal court for defamation and other torts over a user report published on the Ripoff Report [2] website.

Ripoff Report is a website that allows users to post reports about individuals and companies that they believe have "ripped them off" or treated them unfairly.  According to Certain Approval's complaint [3], the website solicits and encourages third parties to submit these reports, does not attempt to verify their truth before publishing them, and refuses to remove any report on the basis that it is false and defamatory.  Cmplt. ¶¶ 16-18 [3]. Xcentric and Magedson also allegedly offer a "Corporate Advocacy Program," in which companies or individuals that have been defamed on the website can pay large sums of money to have the website investigate the defamatory posts about them.  According to the complaint, in return for these payments, the website will amend false and misleading reports to include Magedson's findings that the business or individual has excellent customer service and that the reports were false.  Id. ¶ 21.

Certain Approval and Sternberg allege that an anonymous user of the website posted a defamatory report about them in August 2007, in which the user claimed that their "Buyers First" real estate investor education program was illegal and a "scam," and that Mr. Sternberg had been arrested for fraud in the 1990s and owed millions of dollars as a result.  See id. ¶¶ 38, 51. 

In an effort to circumvent the immunity for website operators provided by section 230 of the Communications Decency Act [4], Certain Approval and Sternberg further allege that Xcentric and Magedson added their own defamatory content to the report by doing the following six things: 

1. adding the words "Rip-off Report:" to the title created by the site user and using it to create a "title meta tag" (which generates the url for the webpage and the title for that page that appears in search engine results);
2. using information submitted by the site user to generate a "description meta tag" (which generates the two lines of text displayed below the title in search engine results);
3. creating "keyword meta tags" for the report using the words "rip-off, ripoff, rip off, Jack Sternberg Ken Preuss Buyers First, Company, Con Artists"; 
4. providing the site user with the defamatory category "Con Artists"; 
5. designing and publishing the website's logo that appears on each report and says "for consumers, by consumers," "Ripoff Report," and "Don't let them get away with it . . . let the truth be known!"; and
6. creating and registering the domain name of the website -- www.ripoffreport.com [5].

Certain Approval and Sternberg allege that Ripoff Report's own content falsely suggests that they "rip off" consumers and are trying to "get away with it." Id. ¶ 51.

Xcentric Ventures and Magedson filed an answer [6] in September 2008, and the parties are headed into the discovery phase of the lawsuit.

Update:

4/13/09 - The court dismissed Sternberg's misappropriation of name and likeness claim, holding that it failed to state a claim under Arizona law. 

5/20/09 - Defendants filed a motion for summary judgment [7].

6/1/09 - Plaintiffs filed a notice [8] stating they had reached a settlement with defendants Xcentric Ventures and Edward Magedson. The plaintiffs noted they would continue to pursue their claims against John or Jane Doe.