Stratton Oakmont, Inc. v. Prodigy Services Co.

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Stratton Oakmont, Inc. v. Prodigy Services Co.
CourtNew York Supreme Court
DecidedMay 24, 1995
Citation(s)23 Media L. Rep. 1794; 1995 WL 323710; 1995 N.Y. Misc. LEXIS 229
Case opinions
MajorityStuart L. Ain

Stratton Oakmont, Inc. v. Prodigy Services Co., 23 Media L. Rep. 1794 (N.Y. Sup. Ct. 1995),[1] is a 1995 U.S. New York Supreme Court[nb 1] decision holding that online service providers could be held liable for the speech of their users. The ruling caused controversy among early supporters of the Internet, including some lawmakers, leading to the passage of Section 230 of the Communications Decency Act in 1996.

Facts[edit]

Prodigy, an early online content hosting site, hosted a bulletin board called Money Talk on which anonymous persons could post messages about finance and investing. In October 1994, an unidentified user on Money Talk created a post claiming that Stratton Oakmont, a securities investment banking firm based in Long Island, New York, and its president Danny Porush, had committed criminal and fraudulent acts in connection with a stock IPO. Stratton Oakmont sued Prodigy as well as the unidentified poster for defamation.[2]

Court ruling[edit]

Stratton Oakmont argued that Prodigy should be considered a publisher of the defamatory material, and was therefore liable for the postings under the common law definition of defamation. Prodigy requested a dismissal of the complaint, on the grounds that it could not be held liable for the content of postings created by its third-party users. This argument cited the 1991 precedent Cubby, Inc. v. CompuServe Inc., which had found CompuServe, an online service provider, not liable as a publisher for user-generated content.[3]

The Stratton court held that Prodigy was liable as the publisher of the content created by its users because it exercised editorial control over the messages on its bulletin boards in three ways: 1) by posting Content Guidelines for users; 2) by enforcing those guidelines with "Board Leaders"; and 3) by utilizing screening software designed to remove offensive language.[1] The court's general argument for holding Prodigy liable, distinguishing from the CompuServe case, was that "Prodigy's conscious choice, to gain the benefits of editorial control, has opened it up to a greater liability than CompuServe and other computer networks that make no such choice."[1]

Impact[edit]

This case conflicted with the 1991 federal district court decision in Cubby, Inc. v. CompuServe Inc., which had suggested that courts would not consider online service providers to be publishers. In that case, the court held that CompuServe should be considered to be more like a digital library than a publisher.[3] The important difference between CompuServe and Prodigy for the Stratton court was that Prodigy engaged in content screening and therefore exercised editorial control.[1]

Some federal legislators noticed the contradiction in the two rulings,[4] while Internet enthusiasts found that expecting service providers to accept liability for the speech of third-party users was both untenable and likely to stifle the development of the Internet.[5] Senator Ron Wyden (D. Or.) proposed legislation that would resolve the contradictory precedents on service provider liability while enabling websites and platforms to host speech without needing to worry about legal liability.[6] The proposal became Section 230 of the Communications Decency Act in 1996. While the rest of the Communications Decency Act was overturned by the Supreme Court as an unconstitutional speech restriction,[7] Section 230 was severed from the rest of the statute and is still in effect, because it was intended to enable speech rather than restrict it.[8] Section 230 also served to overturn the New York Supreme Court ruling in the Stratton case,[4] as the legislation clarified that Internet service providers are not to be considered "publishers" of that content and instead merely provide a platform for third-party speakers.[5]

Related cases[edit]

Notes[edit]

  1. ^ In most states and in the U.S. federal court system, "supreme court" is the name of the highest court in the state. However, the New York Supreme Court is primarily a trial court, roughly equivalent to the "district courts", "superior courts," or "circuit courts" of other states. The highest court in New York State is called the "Court of Appeals." See New York Supreme Court.

References[edit]

  1. ^ a b c d Stratton Oakmont, Inc. v. Prodigy Services Co., 23 Media L. Rep. 1794 (N.Y. Sup. Ct. 1995).
  2. ^ Citizen Media Law Project, Stratton Oakmont, Inc. v. Prodigy Services Co. (Retrieved March 26, 2009).
  3. ^ a b Cubby, Inc. v. CompuServe Inc., 776 F. Supp. 135 (S.D.N.Y. 1991).
  4. ^ a b "Stratton Oakmont v. Prodigy Services: The Case that Spawned Section 230". Washington Journal of Law, Technology & Arts. 2022-02-19. Retrieved 2022-09-11.
  5. ^ a b Cramer, Benjamin W. (2020). "From Liability to Accountability: The Ethics of Citing Section 230 to Avoid the Obligations of Running a Social Media Platform". Journal of Information Policy. 10: 124–125. doi:10.5325/jinfopoli.10.2020.0123. S2CID 226726531.
  6. ^ Stewart, Emily (2019-05-16). "Ron Wyden wrote the law that built the internet. He still stands by it — and everything it's brought with it". Vox. Retrieved 2022-09-11.
  7. ^ Reno v. American Civil Liberties Union, 521 U.S. 844 (1997).
  8. ^ Kosseff, Jeff; Schroeder, Jared (2022-06-26). "Happy 25th Anniversary to the Supreme Court Decision That Shaped the Internet We Have Today". Slate Magazine. Retrieved 2022-09-11.

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