Inc. Zeran v. America Online

Appellant
Kenneth M. Zeran
Appellee
America Online, Inc. (AOL)
Appellant's Claim
That AOL's delay in responding to notification of defamatory messages postedon their Internet system constituted libel in violation of the First Amendment.
Chief Lawyer for Appellant
John Saul Edwards
Chief Lawyer for Appellee
Patrick Joseph Carome
Judges
Chief Judge Wilkinson (writing for the court), Circuit Judge Russell, and U.S. District Judge Boyle
Place
North Carolina
Date of Decision
12 November 1997
Decision
Upheld district court decision that AOL was free of liability for anonymous third party postings on their system.
Significance
The decision meant Internet service providers (ISP) were not responsible as publishers or distributors for what their subscribers wrote, even when receiving notice of potential defamatory language from other parties. The ruling sent a clear message that Section 230 of The Communications Decency Act of 1996designed to protect ISPs could withstand legal challenge and protect the newly emerging medium of the Internet from unwarranted government intrusion on freedom of speech. However, the decision raised issues concerning the applicability of traditional libel law to the high speed, high volume world of electronic communications. Victims of malicious defamation were essentially left without legal recourse for remedies.
The Internet, with its instantaneous communications and global reach, createdunique legal pressures on the First Amendment right of free speech. The Internet, a new bastion of instant and uncensored expression, became a convenientvehicle for material of potentially obscene or defamatory nature. Many citizens, including those with children vulnerable to predators using the World Wide Web and members of minority groups who were targets of hate and racist commentary, were justifiably concerned. Questions of censorship and liability arose which heightened concerns over preserving the constitutional rights of free speech within this new technological framework.
The first case addressing Internet Service Provider (ISP) liability for third-party posted defamation statements was Cubby, Inc. v. CompuServe, Inc. in 1991. However, that case involved a known author and the service provider, CompuServe, won its case by claiming lack of editorial control, hence no liability for the particular messages. Then, in Stratton Oakmont v. ProdigyServices, Inc. (1995) the court ruled against the ISP, Prodigy. BecauseProdigy placed some controls over what could be posted on its system, the court considered Prodigy a publisher and, therefore, responsible for the contentof posted statements. The Stratton decision sent shock waves throughthe Internet industry and potentially set the stage for considerable online defamation lawsuits. No clear-cut guidelines existed for ISPs to avoid liability for defamation. Congress quickly responded. On 8 February 1996, Congress passed the Communications Decency Act of 1996 (CDA) to address these issues and others. Section 230 of the act, intending to promote unfettered free speechon the Internet and encourage self-regulation by ISPs, placed liability forobscene and defaming statements solely on the original authors. The intent ofSection 230 was to allow ISPs to exert control without incurring liability so that speech not protected by the First Amendment could be filtered out.
A Nightmare in Seattle
Kenneth M. Zeran operated a home-based business in Seattle, Washington, thatdepended on his telephone for access to the public. On 25 April 1995, six days after the bombing of the federal building in Oklahoma City, an unidentifiedperson posted a message on an AOL bulletin board advertising "Naughty Oklahoma T-Shirts." The shirts featured offensive slogans related to the bombing. The name "Ken" and Zeran's Seattle telephone number were given as the contactfor those interested in purchasing the shirts. Zeran, immediately inundated with calls that included derogatory messages and death threats, called AOL andexplained his problem. AOL responded that the posting would be removed, butas a matter of policy AOL would not post a retraction.
The next day, another posting advertised additional shirts with new slogans,again offering Zeran's number as a contact and encouraging interested partiesto continue to call back due to high demand. The postings continued for fourdays, with new items and slogans being added to the offering. By 30 April, Zeran was receiving abusive phone calls about every two minutes, some containing death threats.
During this time, a copy of the first AOL posting was sent to the Oklahoma City radio station KRXO. On 1 May a KRXO announcer read the message on the air,attributed the authorship to "Ken" at Zeran's phone number, and urged listeners to call the Seattle number. Zeran was inundated with calls from OklahomaCity that contained violent language and death threats.
Zeran notified the local police and the Seattle FBI, and remained in contactwith AOL and KRXO regarding the incidents. AOL assured Zeran that the subscriber's account would soon be closed. Local police began surveillance of Zeran's home to protect him. Finally, an Oklahoma City newspaper exposed the AOL postings as a hoax, and KRXO made an on-air apology. By 14 May 1995 the numberof abusive calls to Zeran subsided to 15 a day. In January of 1996 Zeran filed suit against KRXO in the U.S. District Court for the Western District of Oklahoma and in April, he filed a separate suit in the same court against AOL.He could not bring action against the party who posted the messages because of AOL's failure to maintain adequate records of its subscribers.
Zeran alleged AOL was liable for defamatory speech initiated by a third party. Zeran argued that once notified, AOL had an obligation to remove the messages, notify other subscribers that they were false, and to screen against future postings. AOL used Section 230 of CDA as its defense. The case was transferred to the Eastern District of Virginia which ruled in favor of AOL. Zeran appealed to the U.S. Court of Appeals.
Distributors as Publishers
In the court of appeals decision, Chief Judge Wilkinson elaborated on the lower court's decision by noting that Section 230 of CDA, "precludes courts fromentertaining claims that would place a computer service provider in a publisher's role. Thus, lawsuits seeking to hold a service provider liable for itsexercise of a publisher's traditional editorial functions--such as deciding whether to publish, withdraw, postpone or alter content--are barred."
However, Zeran argued the law of torts distinguishes distributors from publishers and holds them liable for defamatory material when they have knowledge of their existence. Thus, AOL acted as a distributor as well as a publisher. AOL had been notified, yet the messages were still posted, and the subscriber's access was not closed down in a timely manner. AOL was like a book seller or news vendor who continued to offer offending material for sale after they were notified of the nature of the publications on their shelves. Zeran contended that because a common law distinction existed between distributors and publishers, two different forms of liability applied. AOL was liable as a distributor which was not protected by Section 230.
Wilkinson disagreed with Zeran's logic. Wilkinson noted that even if Zeran had "satisfied the requirements for imposition of distributor liability, this theory of liability is merely a subset, or a species of publisher liability, and is therefore also foreclosed by 230." In essence, and ironically, Zeran'sargument placed AOL as a publisher, hence protected by Section 230. Wilkinsoncontinued, "Because the publication of the statement is a necessary elementin a defamation action, only one who publishes can be subject to this form oftort liability . . . In this case, AOL is legally considered to be a publisher. Even distributors are considered to be publishers for the purposes of defamation law."
Judge Wilkinson brought two other important points to light in his decision.First, Section 230 sought to address the problems of both censorship and liability given the sheer volume of traffic on the Internet. Wilkinson wrote, "Interactive computer services have millions of users. The amount of informationcommunicated . . . is, therefore, staggering. The spectre of tort liabilityin the area of such prolific speech would have an obvious chilling effect. Itwould be impossible for service providers to screen each of their millions of postings for possible problems."
The second point was that 230 sought to encourage service providers to self-regulate the dissemination of offensive material, both by advertising their philosophy, and by choosing to remove offensive material when notified of its presence.

Congress enacted 230 to remove disincentives to self-regulation posed by the Statton Oakmont decision. Under that court's holding, computer service providers who regulated the dissemination of offensive material . . . risked subjecting themselves to liability, because [it] cast the service provider in the role of a publisher.

The CDA also stopped third parties from indulging in what Wilkinson called "ano-cost means to create future lawsuits." If an ISP was unprotected, any subscriber could notify them that a message they found was offensive, and legally defamatory. The fact of notice would make the ISP responsible for publishing the message. Wilkinson wrote, "Thus, like strict liability, liability uponnotice has a chilling effect on the freedom of Internet speech."
Impact
Zeran next appealed to the Supreme Court, but the Court in 1998 refused to hear the case leaving the lower courts' decisions stand. To enhance its publicimage following the decision, AOL began conducting background checks of the key individuals involved in its various information forums. The checks were anattempt to increase accountability in a largely anonymous communications medium.
The speed, the volume, and the global access of the Internet has international implications legally as well as socially. The Internet has also become an important player in the globalizing commerce. One cautionary note was offeredby Chris Hansen, senior staff counsel to the American Civil Liberties Union.Hansen believed that although it was good that ISPs were not treated as though they had to review every message on their site and decide on its defamatorynature, it was wrong that ISPs were free to apply whatever censorship they wished.
With the Internet, false statements highly damaging to peoples' reputations or their businesses could be easily transmitted anonymously to thousands of readers. Critics charged the Zeran decision left individuals with almostno legal recourse to correct the injury caused. They claimed the courts wentwell beyond the literal meaning of the CDA and safeguarded speech not commonly protected by the First Amendment. ISPs received greater protection than any other entity in communications, essentially all the immunity of a common carrier without any regulatory accountability carriers normally bear.
The Supreme Court clearly ruled in Reno v. American Civil Liberties Union (1997) that protection of free speech in cyberspace was of paramount importance. Courts began to struggle with protecting individuals from defamatorystatements and right to privacy. Over 130 bills were pending before Congressaddressing the regulation of speech on the Internet by the end of 1997. Manybelieved that libel law in general was ineffective, and its application to the Internet only compounded the shortcomings, neither protecting the authors of statements nor the subjects of those statements.
Identifying customers using pseudonyms to post critical comments on the Internet became a important issue in a 1998 Canadian case. A Canadian court ordered two Canadian Internet service providers to identify names of libel suspectsallegedly posting anonymous critical comments about Philip Services Corporation of Canada, a recycling company suffering major financial losses in 1997.The ruling could force ISPs to notify users that their privacy cannot be guaranteed, or else the providers could be vulnerable to liability.
Related Cases

• Cubby, Inc. v. CompuServe, Inc., 776 F.Supp. 135 S.D.N.Y. (1991).
  
• Statton Oakmont, Inc. v. Prodigy Services, Co., WL 323710 (N.Y. Sup. Ct. 1995).
  
• Reno v. American Civil Liberties Union, 512 U.S. 824 (1997).
  
• Doe v. America Online, Inc., No. CL 97-63 (Fla Cir. Ct. 1997).