This case arose after an Ebay user (who was not a party in this suit) left negative feedback directed at the plaintiff, Robert M. Grace, on the Ebay website. Grace contended that the feedback, which claimed that he was “dishonest all the way!!!!” and “should be banned from ebay!!!!,” was defamatory. After Ebay refused to take down the negative feedback, Grace sued Ebay for defamation, claiming the auction site had published the defamatory feedback either knowing it to be false or with reckless disregard for the truth. Grace also charged Ebay with breach of contact (the Ebay user agreement) and with unfair business practices.Ebay moved for demurrer arguing (1) that it was protected against liability under the safe harbor of the Communications Decency Act, 47 U.S.C. §230, and (2) that the user agreement entered into by Grace barred his claim. The trial court sustained demurrer, and Grace appealed.
Citing Gentry v. Ebay, 99 Cal.App.4th 816 (2002), the appellate court held that Ebay was not subject to secondary defamation liability as a publisher under §230. Section 230(c)(1) reads: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” The court rejected Grace’s argument that §230 applied only to internet service providers (“ISPs”), holding that even if Ebay was not an ISP it qualified for immunity as a user—implying, thereby, that §230 would insulate any party but the original defamatory speaker from liability for internet publication or transmission, even if that party knew the speech to be false or acted with reckless disregard for the truth. The court further held that Grace’s state law claims were precluded by its finding of immunity under §230.
(For a history of § 230 and its interpretation in the courts, see Zeran v. AOL, 129 F.3d 327 (4th Cir. 1997)).