Changing Liability for Third Party Content

In response to President Trump’s May 28, 2020 Executive Order on Preventing Online Censorship, the Commerce Department’s National Telecommunications and Information Administration (NTIA) filed a petition for Rulemaking with the Federal Communications Commission (FCC) and with the Federal Trade Commission (FTC) which would radically change the interpretation and application of Section 230 of the Communications Decency Act (CDA, 47 U.S.C. Section 230).

The CDA was enacted in 1996 after Congress wished to reverse a federal district court ruling holding that a major online consumer service, Prodigy, was liable for an allegedly defamatory bulletin board (BB) post by a user claiming “Stratton Oakmont is a bunch of crooks” (yes, THAT Stratton Oakmont, as in the Wolf of Wall Street movie!). The court held Prodigy liable in part because Prodigy, owned by IBM and Sears, used software to screen every submitted BB post for the Supreme Court’s “7 dirty words” (and others) in order to maintain decency online – hence, the law’s name, the Communications Decency Act.

Fast forward about 25 years, and there have been efforts and amendments to change the CDA to strip immunity for third party online content posted by child sex traffickers and for other reasons. But Mr. Trump’s Executive Order and NTIA’s rulemaking request raise a number of major and, in some cases, first time issues, including:

1.Can a federal agency conduct a rulemaking and issue regulations without any specific grant of authority to do so by Congress or in the subject legislation?

There are currently no regulations regarding interpretation of the CDA, nor any mention of the need for such in the CDA;

2. Can an FCC rulemaking not called for or sanctioned by Congress change the meaning of a law as interpreted in various Supreme Court and federal court holdings?

Federal cases consistently give an expansive reading of the CDA’s grant of immunity from certain liability to Internet Service Providers (ISP) for third party content, without any linkage to required public disclosures regarding “moderation policies” in the relevant Terms of Service or elsewhere, or a right of “timely notice and right to respond” to any action regarding third party content;

3. Can a federal regulation base liability or immunity for Internet Service Providers on inaction, rather than taking an action, thereby forcing ISPs to publish material to which they may object or lose their CDA immunity protection?

The requested proposed rulemaking would only provide ISP liability immunity when the ISP fails to take down a third party post; if the ISP takes it down and a user feels wronged, the ISP would have no immunity shield under the CDA. Since ISPs are private companies not currently regulated by the FCC and not dependent upon government assets or licenses to operate, could this amount to an unconstitutional taking of their property and violation of their first amendment rights?

The Executive Order and proposed rulemaking create risks of uncertainty for any company that posts third party content (product descriptions by a supplier, consumer reviews, comments to blogs or other online content, etc.). If the proposed rulemaking proceeds, many companies with websites or a social media presence will need to reconsider their Acceptable Use policies and disclosures, their Terms of Use, and their operations regarding handling third party and user content. There are various legal challenges filed and anticipated against the Executive Order and any resulting rulemaking, so it may take some time to sort it all out, and a new administration in January could change the course of these actions.

This article is a publication of MWH Law Group LLP and is intended to provide general information regarding legal issues and developments to our clients and other friends. It should not be construed as legal advice or a legal opinion on any specific facts or situations. For further information on your own situation, we encourage you to contact the author of the article or any other member of the firm.

CONTACT ATTORNEY PEGGY A. MILLER

Peggy A. Miller
Special Counsel – New York
P: (914) 751-6279 F: (646) 395-1936
E: peggy.miller@mwhlawgroup.com

Changing Liability for Third Party Content under Section 230 of the CDA

CONTACT ATTORNEY PEGGY A. MILLER