Ben Ezra, Weinstein & Co. v. AOL

Citation: Ezra, Weinstein & Co. v. America Online Inc., 206 F.3d 980 (10th Cir. 2000).

Factual Background
Defendant America Online, Inc. (AOL) operates a large interactive computer service through which subscribers can access various information and information services, including the Internet. Through its Quotes & Portoflios service area, AOL publishes continuously updated stock quotation information concerning more than 40,000 publicly traded stocks and securities. The stock quotation information includes data about market price for specific stocks and the volume of shares traded in the current or previous trading day.

Two independent third parties &mdash; S&P ComStock, Inc., a stock quote provider, and Townsend Analytics, Ltd., a software provider designated by ComStock &mdash; jointly provide this information to AOL. The original sources for this information are major national and international stock exchanges and stock markets, including the New York Stock Exchange, The American Stock Exchange, and the Over-the-Counter market.

Plaintiff, a publicly owned company out of Alburquerque, filed an action in New Mexico state court against AOL, asserting state law claims for both defamation and negligence. In its complaint, Plaintiff sought both damages and injunctive relief. Plaintiff alleged that on three occasions AOL published incorrect information concerning Plaintiff's stock price and share volume. Plaintiff claimed that AOL failed to exercise reasonable care in the manipulation, alteration, and change of the stock information.

Trial Court Proceedings
AOL moved the action to federal court on the basis of diversity of citizenship. After AOL removed the action, both parties cross-moved for summary judgment. The Plaintiff also moved to stay the proceedings and to join additional defendants, and objected to limitation placed on discovery by the magistrate judge. The trial court granted AOL's summary judgment and denied the Plaintiff's motions. Plaintiff appealed.

Appellate Court Proceedings
The appellate court held that: (1) AOL qualified for immunity under Section 230 of the Communications Decency Act; (2) the magistrate judge did not exceed his authority in limiting discovery; (3) the denial of stay was not abuse of discretion; and (4) denial of stay was not abuse of discretion; and (4) the denial of the motion for leave to amend the complaint to add additional defendants was not an abuse of discretion. The appellate court granted AOL summary judgment de novo, applying the same legal standard used by the district court under Fed. R. Civ. P. 56(c). In construing Section 230 of the CDA, the court "'[gave] effect to the will of Congress, and where its will has been expressed in reasonably plain terms, that language must ordinarily be regarded as conclusive.'" Section 230 created a federal immunity for any state law cause of action that would hold computer service providers liable for information originating with a third party.

Congress enacted section 230 to promote freedom of speech in the "new and burgeoning Internet medium" by eliminating the "threat [of] tort-based lawsuits" against interactive services for injury caused by "the communication of others". The Court believed that Plaintiff has not demonstrated Defendant worked closely enough with ComStock and Townsend regarding the allegedly inaccurate stock information the Defendant became an information content provider. The evidence Plaintiff presented indicated that the communications consisted of e-mails from Defendant requesting ComStock correct the allegedly inaccurate information. Plaintiff argued that the Defendant deleted some stock symbols or other information from the data base in an effort to correct errors. Plaintiff further argues that such alteration constitutes "creation or development" of information and transforms Defendant into an "information content provider". However, by deleting the symbols Defendant made the content unavailable and did not develop or create the stock quotation information displayed. Congress clearly enacted section 230 to forbid the imposition of publisher liability on a service provider for the exercise of its editorial and self regulatory functions. By deleting the allegedly inaccurate stock quotation information, Defendant was simply engaging in the editorial functions congress sought to protect. Plaintiff presented no evidence to contradict Defendant's evidence that ComStock and Townsend alone created the stock information at issue. Imposing liability on Defendant for the allegedly inaccurate stock information provided by ComStock would "treat" Defendant as the "publisher or speaker," a result section 230 specifically proscribes.

Accordingly, the court held that the district court correctly concluded that AOL was immune from liability pursuant to Section 230 and properly granted AOL's motion for summary judgment. The district court properly concluded that Plaintiff failed to demonstrate that the previous depositions or written discovery were insufficient to allow Plaintiff to respond to Defendants summary judgment motion. The plaintiff actually served AOL with interrogatories exceeding the maximum of twenty-five authorized by the discovery order. AOL responded to all of them with technical information. Additionally, while discovery allowed for four depositions, Plaintiffs only chose to do three. Plaintiff failed to show discovery was insufficient. Finally, Plaintiff argues that the district court abused its discretion in denying its motion to stay proceedings to conduct further discovery and for leave of amend its complaint to join ComStock and Townsend as additional defendants.

The Court determined that Plaintiff offered no compelling reason requiring a stay to conduct further discovery. Plaintiff had ample opportunity to conduct discovery into the narrow issue of section 230 immunity, the district court did not abuse it discretion in denying Plaintiff's motion for a stay of proceedings. The Court also determined that the district court did not abuse its discretion in denying Plaintiff's motion for leave to amend its complaint to add ComStock and Townsend as additional defendants.