Section 230 Immunity Has Its Limits
INTRODUCTION: There has been quite a bit of noise around a federal statute that immunizes website and mobile application owners and operators from liability for certain conduct. This statute is 47 U.S. Code Section 230 “Protection for Private Blocking and Screening of Offensive Material” or more commonly known as “Section 230” of the Communications Decency Act. What is often lost in the noise is the fact that Section 230, at its core, protects website and mobile app owners and operators from liability for content posted by third parties. In other words, if the website or mobile application is a forum where others post content, and a user posts something defamatory or confidential, the website or mobile app owner / operator is immunized from liability to any party injured by that defamation or unauthorized disclosure. Now, that is a very simplistic explanation and there is a lot more to the statute, but for most purposes that should suffice.
DECISION: On April 21, 2021, the Supreme Judicial Court issued a ruling following its review of a Superior Court (Business Litigation Session, Hon. J. Brian Davis) decision to allow a preliminary injunction that prohibited a website / mobile app owner-operator from engaging in certain online transactions – Massachusetts Port Authority v. Turo Inc., et al, 487 Mass. 235. Turo is a type of car-sharing platform where private car owners (individuals and businesses) can ‘rent’ their vehicle to others. Turo facilitates the transaction between those who have the cars available and those who need to rent the car and, importantly, it also provides 24/7 roadside assistance, screening of renters, and liability insurance. Turo also imposes various policies related to the transaction for car cleaning, pets, smoking, cancellations etc.
Turo styles itself as a peer-to-peer marketing platform where a user who wants to rent a car from a “host” would search Turo’s website or available listings, select and book the car for rental, and then coordinate the pick-up location and time with the host. Turo asserts it does not require its hosts to deliver the car to the user, nor does Turo determine the parties’ particular rendezvous location. However, as addressed below, Turo did promote pickup and dropoff at Logan Airport and allowed users to search for cars available specifically at the airport.
The issue in this case arose because the Massachusetts Port Authority (MassPort) had (years prior) imposed a variety of regulations that prohibit commercial activity at the airport without approval and also require car rental companies to register, have a physical or centralized location and pay fees in order to make car rentals available at the airport. Turo’s users and hosts were increasingly ‘rendezvousing’ at Logan Airport – accounting for about half of all transactions in one year – presumably (and this is speculation, not from the decision) because “hosts” were able to price their rentals lower than other rental car companies given what were likely substantial cost savings from non-compliance with MassPort’s airport regulations. Turo, MassPort alleged, was effectively facilitating or “aiding and abetting” car rentals at the airport in violation of the MassPort regulations. Prior to filing suit against Turo, MassPort sent cease and desist letters to Turo and it appears some attempt had been made to come to a pre-suit agreement to resolve the issues – but these efforts were not successful.
MassPort’s complaint against Turo alleged that Turo was aiding and abetting the hosts’ transactions with users in violation of MassPort’s regulations (740 Code Mass. Regs. §§ 21.04(1)(b) and 23.08(1)(b)); common-law trespass; aiding and abetting trespass; unjust enrichment; and violations of G. L. c. 93A. Turo alleged it was a mere recipient of funds and payment processor, and was protected from liability by Section 230 because the hosts and users determined where to exchange the vehicle and Turo had no involvement in that decision-making process. As a result, Turo asserted, even though these transactions were facilitated by its platform, Turo could not be held responsible if its hosts and users violated MassPort regulations by engaging in an unlawful car rental operation. The Supreme Judicial Court disagreed and concluded that MassPort would likely succeed on the claims it brought against Turo and upheld the preliminary injunction issued by the lower court.
KEY TAKEAWAY: Government authorities are increasingly challenging the immunity granted by Section 230. Website and mobile app operators or owners who believe the Uber business model will work for them should take notice (i.e. regulations-be-damned, operate for as long as you can under-the-radar until the service is ubiquitous and ‘too big to fail’). The Court made a key distinction in this case between the communications between host and user and the communications of Turo itself. Turo specifically advertised Logan Airport as a desirable pick-up or drop-off location, On multiple pages of its site, Turo explicitly referenced the airport for pick-up or drop-off: “Owners deliver to nearby airports”; “Airport pickup [is] available — Skip the rental counter”; and a method to search for cars available at Logan Airport.
The Court reasoned that Section 230 may immunize companies like Turo from liability for the posts or conduct of its hosts and users, but it does not immunize them from liability for their own communications, posts or conduct.
And that is the key takeaway – any website or mobile app owners and operators should be extremely cautious with their marketing and advertising messages. If that messaging advocates, encourages or supports a violation of law or regulations it can – as here – be used to support the ‘aiding and abetting’ claim that MassPort brought against Turo. The Court did note that Turo could be liable for its “role in facilitating the online car rental transactions that resulted in its customers’ continuing trespass”. However, this case MIGHT have gone the other way IF Turo had made no reference to the airport or did not specifically market the airport as a desirable location to rendezvous for car rentals. The SJC noted that what Turo was doing was far more than “just offering a website to serve as a go-between among those seeking to rent their vehicles and those seeking rental vehicles.” If Turo (or other website or mobile app owners / operators) limited its business operations in that way, one has to wonder if the Court would have accepted Turo’s Section 230 defense.
MORE INFO: This is also not the only case where Section 230 has failed to shield a website or mobile app owner / operator from liability – AirBnB suffered a similar fate in Airbnb, Inc. v. Boston, 386 F. Supp. 3d 113, 120 (D. Mass. 2019). In that case, the court considered whether Section 230 shielded AirBnB from liability for monetary fines imposed by the City of Boston for continuing to accept booking fees for transactions posted by AirBnB’s users, where those transactions involved apartment rentals prohibited by city ordinance. The court upheld the monetary fines imposed by the city concluding that they were “aimed at regulating AirBnB’s own conduct, and not at punishing it for content provided by a third party,” and therefore Section 230 immunity did not apply. The court further explained that “[t]he fine is neither expressly tied to the content of the underlying listing, nor explicitly aimed at penalizing the manner in which AirBnB has structured its booking and payment services. It is triggered based on AirBnB’s own conduct as a participant in the rental transaction . . . .”.
If you own and operate a website or mobile application that facilitates transactions between providers and users, you should have competent legal counsel review your operations and the content of your marketing and advertising. The Jacobs Law LLC has offered ‘legal reviews’ of marketing materials for years – see our 2014 post here. Contact the experienced business lawyers at The Jacobs Law LLC for a consultation at 1-800-652-4783 or email us at ContactUs@TheJacobsLaw.com.
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