Tasini v. AOL, Inc.
2012 U.S. Dist. LEXIS 46201, 40 Media L. Rep. (BNA) 1641, 851 F. Supp. 2d 734 (2012)
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Rule of Law:
A claim for unjust enrichment fails when a party voluntarily provides services with no expectation of monetary compensation, and a claim for deceptive business practices under NYGBL § 349 fails when the alleged harm is to service providers, not consumers, and the alleged misrepresentations are not material to the parties' agreement.
Facts:
- The Huffington Post launched in 2005 as a for-profit website that published content from paid staff, other websites, and unpaid volunteer bloggers.
- Jonathan Tasini and other plaintiffs, described as professional or quasi-professional writers, voluntarily and repeatedly submitted content to The Huffington Post.
- From the outset, the defendants made it clear to the plaintiffs that they would not be paid money for their submissions but would instead receive non-monetary compensation in the form of exposure, promotion, and distribution.
- The plaintiffs not only provided content but also actively promoted their submissions through their own social networks, such as Facebook and Twitter.
- The Huffington Post generated revenue through advertising, which increased in proportion to the website's page views.
- The company tracked page-view data for each article but did not share this specific data with the plaintiffs, allegedly telling them it was unavailable.
- In early 2011, AOL, Inc. purchased The Huffington Post for approximately $315 million.
Procedural Posture:
- Jonathan Tasini and other writers filed a proposed class action lawsuit against AOL, Inc., TheHuffingtonPost.com, Inc., and its founders in the U.S. District Court for the Southern District of New York, a federal trial court.
- The plaintiffs asserted claims for unjust enrichment and violation of New York General Business Law § 349.
- After an initial motion to dismiss was filed, the plaintiffs filed a First Amended Class Action Complaint.
- The defendants then moved to dismiss the First Amended Complaint with prejudice under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
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Issue:
Do unpaid content providers state a valid claim for unjust enrichment and deceptive business practices under New York law against a for-profit website that accepted their submissions in exchange for exposure, where the providers never expected monetary compensation?
Opinions:
Majority - John G. Koeltl
No. The plaintiffs failed to state a valid claim for either unjust enrichment or deceptive business practices. A claim for unjust enrichment requires that equity and good conscience demand restitution, which is not the case here because the plaintiffs provided their services with no expectation of monetary payment and received the non-monetary compensation they bargained for—exposure. The claim under New York General Business Law § 349 also fails because the statute is a consumer protection law, and the plaintiffs are content producers, not consumers. Furthermore, the alleged deceptive conduct, such as withholding page-view data, was not materially misleading because the plaintiffs knew they would not be paid and the core terms of their agreement (content for exposure) were never misrepresented.
Analysis:
This decision solidifies the legal principle that parties are bound by the terms of their bargain, even if it is a non-monetary one. It serves as a significant precedent for the digital media and gig economy sectors, affirming that platforms can legally operate using volunteer or user-generated content in exchange for non-cash benefits like exposure, without incurring liability for future profits. The ruling also narrowly construes New York's consumer protection statute, confirming it does not apply to disputes between a business and its service providers, thereby preventing its use in what are essentially business or labor disputes.
