Federal Trade Commission v. Accusearch Inc.
48 Communications Reg. (P&F) 208, 570 F.3d 1187, 2009 U.S. App. LEXIS 14480 (2009)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A website operator that specifically solicits, pays for, and makes available illegal or tortious content is "responsible for the development" of that information, thereby becoming an "information content provider" that is not entitled to immunity from liability under § 230 of the Communications Decency Act (CDA).
Facts:
- Accusearch Inc., through its president Jay Patel, operated a website called Abika.com.
- From February 2003 to January 2006, Abika.com advertised and sold customers' personal telephone records, including details of incoming and outgoing calls.
- These telephone records were protected from disclosure without customer consent under the Telecommunications Act of 1996.
- To fulfill customer orders, Accusearch hired third-party researchers to obtain the phone records from telecommunications carriers.
- Accusearch acted as an intermediary, taking payment from the customer, forwarding the search request to a researcher, and delivering the results back to the customer.
- The acquisition of this information required the researchers to use fraudulent or illegal means, such as impersonation, to circumvent the protections of the Telecommunications Act.
- Accusearch was aware that its researchers were using "underhanded means" to obtain the records.
- In January 2006, Accusearch voluntarily ceased offering telephone records on its website.
Procedural Posture:
- The Federal Trade Commission (FTC) filed suit against Accusearch Inc. and its president, Jay Patel, in the U.S. District Court for the District of Wyoming.
- The complaint alleged that Accusearch's sale of telephone records constituted an unfair practice in violation of § 5(a) of the Federal Trade Commission Act (FTCA).
- Accusearch's motion to dismiss the complaint was denied by the district court.
- After discovery, both parties filed cross-motions for summary judgment.
- The district court granted the FTC's motion for summary judgment, finding that Accusearch's practices were unfair and that it was not entitled to immunity under the Communications Decency Act (CDA).
- The district court subsequently entered a permanent injunction against Accusearch and ordered it to disgorge $199,692.71 in profits.
- Accusearch, as the appellant, appealed the judgment to the U.S. Court of Appeals for the Tenth Circuit; the FTC is the appellee.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the Communications Decency Act (CDA) immunize a website operator from liability under the Federal Trade Commission Act (FTCA) when the operator solicits, pays for, and sells confidential information obtained by third parties in violation of other federal laws?
Opinions:
Majority - Hartz, J.
No. A website operator that is responsible for the development of illegal content is an "information content provider" and is therefore not shielded from liability by the Communications Decency Act (CDA). The court reasoned that Accusearch was not a passive publisher entitled to immunity because it was an "information content provider" with respect to the illegally obtained telephone records. The CDA defines an information content provider as one "responsible, in whole or in part, for the creation or development of information." The court interpreted "development" broadly to mean making previously unavailable or confidential information usable or public. It defined "responsible" as requiring more than being a neutral conduit; a provider must specifically encourage the development of what is offensive about the content. Accusearch met this standard because it solicited requests for confidential records, paid researchers to illegally obtain them, and profited from their sale, thereby actively participating in and encouraging the creation of the unlawful content. The court also rejected the argument that the conduct was not an "unfair practice" under the FTCA, stating that a practice can be unfair even if it does not violate a separate law, particularly when it subverts the public policy established by another statute like the Telecommunications Act.
Concurring - Tymkovich, J.
No. The Communications Decency Act (CDA) does not apply because the Federal Trade Commission's (FTC) claim is based on Accusearch's unlawful business conduct, not its role as a publisher of third-party content. The concurrence argued that the majority unnecessarily extended the CDA's definitions of "responsible" and "development." The simpler and correct analysis is that CDA immunity protects against liability for being a "publisher or speaker" of content provided by others. Here, the FTC's claim was based on Accusearch's own conduct: the unfair business practice of soliciting and paying third parties to illegally obtain confidential information and then selling it. This conduct would be illegal regardless of the medium used, be it the internet or a brick-and-mortar operation. Therefore, since the liability derives from Accusearch's own actions in acquiring the information, not from publishing its content, the CDA's immunity provisions are not triggered in the first place.
Analysis:
This decision significantly clarifies and narrows the scope of the broad immunity granted by § 230 of the Communications Decency Act. The court distinguished between passive intermediaries, which are protected, and active participants who solicit and encourage the creation of illegal content, which are not. By defining "development" and "responsibility" in this context, the ruling establishes that a website's business model can strip it of § 230 protection if the model itself is predicated on generating unlawful information. This precedent is crucial for future litigation against online platforms that facilitate illegal activities, forcing courts to scrutinize the platform's role in the creation of the offending content rather than granting blanket immunity.
