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Friday, January 22, 2010

Fourth Circuit applies Iqbal to affirm dismissal of another complaint

By Gary Beaver

On December 29, 2009, in Nemet Chevrolet, Ltd. v., Inc., the Fourth Circuit again applied the heightened standard for adjudicating a Rule 12(b)(6) motion to dismiss set forth by the United States Supreme Court in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). In Nemet, the defendant was a website that allowed consumers to comment on the quality of businesses, goods, and services. Plaintiff Nemet took offense to 20 of the comments posted on the website and sued for defamation and tortious interference with a business expectancy. countered that the complaint was barred by § 230 of the Communications Decency Act of 1996 (“CDA”), which protected interactive computer service providers liable for the publication of information created and developed by others.

Nemet asserted that the defendant was not protected by the CDA immunity because it was also an “information content provider.” The court reviewed the plaintiff’s complaint to decide whether the allegations plausibly showed that the defendant was an “information content provider.” Nemet alleged that was involved in creating or developing the posts in four ways: (1) through the structure and design of the website as found in Fair Housing Council v., LLC, 521 F.3d 1157, 1174 (9th Cir. 2008); (2) by asking the consumer questions about the complaint; (3) by helping the consumer draft or revise the complaint; and (4) by drafting 8 of the 20 posts itself.

The Fourth Circuit distinguished the case by holding that had not encouraged illegal content and not required consumers to input illegal content. In, the court had adopted a definition of “development” that included “materially contributing” to a piece of posted information’s “alleged unlawfulness. 521 F.3d at 1167-68.

Next, the Court noted that asking questions of the consumer did nothing to “develop” or “create” the posts on the website so those allegations were insufficient. As to the third category, the court held that Nemet had “not pled what ostensibly revised or redrafted or how such affected the post,” i.e., the allegations were “threadbare and conclusory.” In addition, under Zeran v. America Online, Inc., 129 F.3d 327, (4th Cir. 1997), Nemet was required to, but did not, plead facts to show that alleged drafting or revision was more than the usual editing that website operator performs.

The Fourth Circuit found the last allegation – that had itself fabricated 8 of the 20 complaints – to be merely Nemet’s speculation because the sole basis for the allegation was that Nemet could not identify the author of those 8 posts. Nemet wanted to take discovery prior to a dismissal but the Fourth Circuit quoted Iqbal in holding that Rule 8 requires “more than conclusions” to “unlock the doors of discovery for a plaintiff.”

This case comes on the heels of the Fourth Circuit’s application, on December 3, 2009, of Iqbal’s heightened pleading standard to affirm dismissal of the complaint in Francis v. Giacomelli. These decisions should make it easier to obtain dismissals of speculative claims – at least in the federal courts of the Fourth Circuit.

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