Designer Skin LLC v. S & L Vitamins, Inc., et al.
Cubby, Inc. v. CompuServe Inc.
776 F.Supp. 135 (S.D.N.Y. 1991)
In this action, Cubby charged CompuServe and Don Fitzpatrick with libel, business disparagement and unfair competition. These claims arose out of a series of allegedly defamatory statements made in a publication titled Rumorville, a daily newsletter published by Don Fitzpatrick Associates of San Fransico ("DFA") and available to subscribers of CompuServe. Cubby published a competing publication titled Skuttlebut. CompuServe offered CompuServe Information Services ("CIS") to subscribers for membership and online time usage fees. In return for these fees, the user is given access to "an on-line general information service or 'electronic library'" which includes thousands of information sources, and special interest forums, which consist of electronic bulletin boards, interactive online conferences and topical databases. Rumorville appeared on one of these forums, titled the Journalism Forum. This forum was run by an independent contractor hired by CompuServe, Cameron Communications, Inc. ("CCI"). This outfit was hired to "manage, review, create, delete, edit and otherwise control the contents" of the Forum. CCI, in turn, entered into a contract with DFA, pursuant to which DFA agreed to allow its content to be accessed on this forum. Users paid a direct fee to DFA for access to the Rumorville publication. The decision is silent as to whether CCI also paid DFA a fee for publishing Rumorville. When Rumorville was ready to publish a newsletter, it uploaded it directly onto the CompuServe network. The publication received no prior review by CompuServe before it was available to CompuServe subscribers. CompuServe moved for summary judgment. In granting the motion, the District Court held that the appropriate standard to be applied in judging CompuServe's conduct is that of a distributor, such as a public library, newsstand or bookstore, rather than a publisher. In so holding, the court stated: " CompuServe's CIS product is in essence an electronic, for profit library that carries a vast number of publications and collects usage and membership fees from its subscribers in return for access to the publications. ... CompuServe has no more editorial control over [Rumorville] 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. ... A computerized database is the functional equivalent of a more traditional news vendor, and the inconsistent application of a lower standard of liability to an electronic news distributor such as CompuServe than that which is applied to a public library, book store, or newsstand would impose an undue burden on the free flow of information." Under this standard, CompuServe could only be held liable if "it knew or had reason to know of the allegedly defamatory ... statements." Because Cubby presented no evidence that CompuServe knew or had reason to know of the defamatory statements, the court granted CompuServe's motion and dismissed the complaint as to that concern.