Cubby v. CompuServe

Citation: Cubby, Inc. v. CompuServe, Inc., 776 F. Supp. 135 (S.D.N.Y. 1991).

Factual Background
CompuServe was sued for libel, defamation and unfair competition based on allegedly libelous statements about plaintiff's database, Skuttlebut, that had been posted on Rumorville USA &mdash; a publication available on the Journalism Forum of CompuServe.

Trial Court Decision
The trial court held that CompuServe was the equivalent of "an electronic, for profit library.” Thus. CompuServe was entitled to the same First Amendment protection as a news vendor, and therefore, would be liable for defamation only if it knew or had reason to know of the allegedly defamatory statements, rather than the lower level of protection accorded to a publisher. The court stated that:


 * CompuServe has no more editorial control over such a publication than does a public library, book store, or newsstand, and it would be no more feasible for CompuServe to examine every publication it carries for potentially defamatory statements than it would be for any other distributor to do so.

The court also declined plaintiff's request to hold CompuServe liable for the acts of Don Fitzpatrick Associates ("DFA"), the publisher of Rumorville, and CCI, an independent company that contracted with CompuServe to "manage, review, create, delete, edit and otherwise control the contents of" the Journalism Forum "in accordance with editorial and technical standards and conventions of style as established by CompuServe." DFA had no employment, contractual or other direct relationship with CompuServe. DFA provided Rumorville to the Journalism Forum under a contract with CCI. The Journalism Forum's contract with DFA obligated DFA to accept total responsibility for the contents of Rumorville. CompuServe, in turn, had no opportunity to review Rumorville USA's contents before it was uploaded, and received no part of any fees charged users for access to Rumorville. In addition, CompuServe subscribers paid flat monthly and time usage fees, regardless of the information services they use.

The court rejected plaintiff's contention that CCI or DFA could be considered agents of CompuServe, since each of the three entities were independent of one another. The court characterized CompuServe's right under its contract with CCI to remove text from its system for noncompliance with its standards as merely a means of maintaining "control over the results of CCI's independent work." Similarly, the court determined that contractual provisions calling for CompuServe to provide CCI with training, necessary support and to indemnify CCI from claims resulting from information appearing in the Journalism Forum did not give CompuServe sufficient control over CCI and its management to render CCI an agent of CompuServe. Finally, the court rejected the notion that CompuServe could be vicariously liable for the actions of DFA, since DFA's contract was with CCI.