FILED: NEW YORK COUNTY CLERK 12/19/ :40 PM INDEX NO /2014 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 12/19/2014

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1 FILED: NEW YORK COUNTY CLERK 12/19/ :40 PM INDEX NO /2014 NYSCEF DOC. NO. 8 RECEIVED NYSCEF: 12/19/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK PAYKIN, RICHLAND & FALKOWSKI, P.C., v. Plaintiff, XCENTRIC VENTURES, LLC, RIPOFFREPORT.COM, and DEREK, OUTISE, and ROCCO, being persons unknown, and JOHN DOE No. 1 through JOHN DOE No. 99, being persons unknown, Defendants. Index No /2014 DEFENDANT XCENTRIC VENTURES, LLC S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION TO DISMISS I. INTRODUCTION Preliminarily, the Complaint utterly fails to allege any action wrongful or otherwise by Defendant Xcentric Ventures, LLC ( Xcentric ). The apparent basis of Plaintiff s claims is that some unknown individuals posted allegedly defamatory reviews of its services on an online consumer review forum, the Ripoff Report, which is operated by Xcentric. It is unclear which of the five causes of action relate specifically to Xcentric. The three defamation claims concern actions/speech of three unknown individuals. The fourth cause of action, for deceptive business practices under NY Gen. Bus. Law 349, is predicated on these same reviews, which Plaintiff contends originated from a competitor to gain some sort of litigation or competitive advantage. (Complaint 39). The fifth cause of action, labeled declaratory judgment, actually appears to seek

2 injunctive relief against non-party search engines, including but not limited [to] Google, Yahoo!, and MSN Bing. (Complaint 46). Initially, Xcentric does not have sufficient contacts with New York to justify the exercise of personal jurisdiction over it. And, as it relates to Xcentric, the Complaint is the prototypical lawsuit barred by the Communications Decency Act. Xcentric s only implicit act related to this matter is providing an open Internet forum in which others posted complaints about Plaintiff. Xcentric did not author or create the posts at issue. Rather, Plaintiff alleges that Derek, Outise, and Rocco, all unknown users of Ripoff Report posted the criticism at issue. (See Complaint 4 6, 9, 19 & 29). As practicing attorneys in good standing with the Bar of the State of New York, Plaintiff knows, or should know, that it cannot hold Xcentric (or Ripoff Report) liable for thirdparty posts. (See Complaint 9). Plaintiff appears to have named Xcentric as a defendant for one purpose: To force the silence of its critics by harassing the operator of the message board. But this is an unacceptable abuse of the justice system. Plaintiff should not be allowed to throw its weight around and, thereby, squander both private and public resources. Xcentric is an Arizona limited liability company with its primary place of business in Arizona. (Complaint 2). Xcentric operates Ripoff Report, a website that provides a forum for consumers to post about their experience with a business. (EXHIBIT A Affidavit of Adam S. Kunz dated December 19, 2014 ( Kunz Aff. ) 3). Posting a complaint on Ripoff Report, which is called a report, is completely free. (Id.). It is also free to post a comment or rebuttal. (Id.). Before visitors of the website post any 2

3 comments, they must click a button stating that they consent to jurisdiction over any disputes in Arizona. (Id. 15). There are approximately 1,900,000 posts on Ripoff Report. (Id. 4). Xcentric monitors the content on Ripoff Report for obscenity, vulgarity, threats, and similar prohibited content, but generally makes no attempt to determine the veracity of the statements in the posts because to do so would be cost prohibitive. (Id. 5). Ripoff Report works closely with all levels of federal, state, and local law enforcement, including, but not limited to, various state attorneys general, local and federal prosecutors, Homeland Security, the United States Justice Department, United States Secret Service, FBI, FTC, SEC, U.S. Postal Inspectors, and local police, providing them with information used to locate victims, detect patterns of deceptive business practices, and to prosecute violations of consumer protection laws, among other things. (Id. 6). Plaintiff s Complaint should be dismissed for lack of personal jurisdiction or, alternatively, for failure to state a cause of action because the facts as alleged do not fit within any cognizable legal theory. II. THE COURT LACKS PERSONAL JURISDICTION OVER XCENTRIC. A. General Jurisdiction Is Lacking. A foreign corporation is subject to general jurisdiction in New York if it has engaged in such a continuous and systematic course of doing business here that a finding of its presence in this jurisdiction is warranted. Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 33, 565 N.E.2d 488, 490 (1990); CPLR 301. A defendant is doing business in New York if it has engaged in such 3

4 continuous and systematic course of activities in New York such that it can be deemed present in New York. Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533, 536, 281 N.Y.S.2d 41, 227 N.E.2d 851 (1967). The test for doing business is a simple [and] pragmatic one, which varies in its application depending on the particular facts of each case. Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 33-34, 563 N.Y.S.2d 739, 565 N.E.2d 488 (1990). The court must be able to say from the facts that the corporation is present in the State not occasionally or casually, but with a fair measure of permanence and continuity. Id. Although simple and pragmatic, [t]he doing business standard is a stringent one because a corporation which is amenable to the Court s general jurisdiction may be sued in New York on causes of action wholly unrelated to acts done in New York. Jacobs v. Felix Bloch Erben Verlag fur Buhne Film und Funk KG, 160 F.Supp.2d 722, 731 (S.D.N.Y. 2001) (internal quotation marks omitted). Xcentric is an Arizona-based limited liability company. (Complaint 2; Kunz Aff. 7). Xcentric does business in Phoenix, Arizona, and its agents and assets are all located in Arizona. (Kunz Aff. 8). Xcentric is not authorized to do business in New York, and Xcentric does not have an agent for service of process in New York. (Id. 9 10). Xcentric owns no assets in New York and has no offices in New York. (Id. 11). It has no New York bank accounts or employees in New York. (Id. 12). Nor does Xcentric have a mailing address, telephone line, or post office box within the State. (Id. 13). Xcentric does not pay New York income or property taxes. (Id. 14). 4

5 Moreover, Xcentric does not transact business in the State of New York by nature of its website being accessible in the State. The mere existence of a website does not show that a defendant is directing its business activities towards every forum where the website is visible. McBee v. Delica Co., 417 F.3d 107, 124 (1st Cir. 2005)); see also Smith v. Circus-Circus Casinos, Inc., 304 F.Supp.2d 463, 465 (W.D.N.Y. 2003) ( A firm does not do[ ] business in New York simply because New York citizens can contact the firm via the worldwide web. ); Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1281 (Fed. Cir. 2005) ( [T]he ability of District residents to access the defendants websites... does not by itself show any persistent course of conduct by the defendants in the District. ). United States courts are virtually unanimous in holding that the mere operation of a website in location A which is viewable in location B does not confer jurisdiction in location B. See, e.g., Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 418 (9th Cir. 1997) (noting, as far as we are aware, no court has ever held that an Internet advertisement alone is sufficient to subject the advertiser to jurisdiction in the plaintiff s home state. ). Furthermore, Xcentric s contacts with New York through Ripoff Report, if any, are insubstantial. See Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1281 (D.C. Cir. 2005) (stating that interactive features on a website, by themselves, did not constitute substantial contacts); Toys R Us, Inc. v. Step Two, S.A., 318 F.3d 446, 454 (3d Cir. 2003); Revell v. Lidov, 317 F.3d 467, (5th Cir. 2002) (finding that Harvard University s maintenance of a website did not constitute substantial contacts with Texas); Dynetech Corp. v. Leonard Fitness, Inc., 523 F.Supp.2d 1344, 1348 (M.D. 5

6 Fla. 2007) (accessibility of a website from Florida did not amount to purposeful availment in the State). Thus, general jurisdiction within the State of New York is lacking. B. Specific Jurisdiction Is Lacking. Specific personal jurisdiction over Xcentric is clearly lacking. Indeed, other New York courts have found that no jurisdiction exists over Xcentric. See Seldon v. Magedson, 2012 WL (S.D.N.Y. July 10, 2012); A-1 Technology, Inc. v. Magedson, 2011 WL (N.Y.S. June 27, 2011). New York s long-arm statute does not extend as far as is constitutionally permitted. Roth v. El Al Israel Airlines, Ltd., 709 F. Supp. 487, 489 (S.D.N.Y. 1989); Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 62 N.Y.2d 65, 71, 464 N.E.2d 432, 435 (1984). CPLR 302(a) provides: (a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nondomiciliary, or his executor or administrator, who in person or through an agent: 1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or 2. commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or 3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or 6

7 4. owns, uses or possesses any real property situated within the state. When faced with a challenge to the court s ability to hear a case, the ultimate burden is on the party asserting jurisdiction. Roldan v. Dexter Folder Company, 178 A.D.2d 589, 590, 577 N.Y.S.2d 483 (1991); Spectra Products, Inc. v. Indian River Citrus Specialties, Inc., 144 A.D.2d 832, 833, 534 N.Y.S.2d 570 (1988); Basquiat v. Kemper Snowboards, 1997 WL at *1 (S.D.N.Y.1997). Upon motion, a court is obligated to dismiss an action against a defendant over which it has no personal jurisdiction. See In re Ski Train Fire in Kaprun, Austria on November 11, 2000 (Siemens Austria), 230 F. Supp. 2d 403, 406 (S.D.N.Y. 2002). 1. Xcentric did not transact business within the State out of which these causes of actions arose. Any possible claim against Xcentric arises out of Xcentric s operation of the Ripoff Report website, upon which unknown users posted allegedly defamatory and deceptive statements. These unknown users posted for free and entered into no business transaction with Xcentric. Thus the causes of action in this case do not arise out of any transaction of business within the state or out of any contracts to supply goods or services in the state. To establish jurisdiction pursuant to CPLR 302(a)(1), the Plaintiffs must show by a preponderance of the evidence (Charles Abel, Ltd. v. School Pictures, Inc., 40 A.D.2d 944, 339 N.Y.S.2d 242 [4th Dept 1972]; Preferred Elec. & Wire Corp. v. Duracraft Products, Inc., 114 A.D.2d 407, 494 N.Y.S.2d 131 [2d Dept 1985]; Green Point Sav. Bank v. Taylor, 92 A.D.2d 910, 460 N.Y.S.2d 121 [2d Dept 1983]) that Xcentric was 7

8 engaged in such a continuous and systematic course of doing business here as to warrant a finding of its presence in this jurisdiction (Simonson v. Int l Bank, 14 N.Y.2d 281, 285 [1964]), and that the alleged defamation had a substantial connection to its alleged activities in New York (Montgomery v. Minarcin, 263 A.D.2d 665, 693 N.Y.S.2d 293 [3d Dept 1999]; World Wrestling Federation Entertainment, Inc. v. Bozell, 142 F Supp 2d 514 [SDNY 2001] ). And, since Xcentric did not transact any business in the State of New York as established above, it certainly did not transact any business in New York out of which these claims arose. Again, courts are virtually unanimous in holding that the mere operation of a website in location A which is viewable in location B does not confer jurisdiction in location B. See, e.g., Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 418 (9th Cir. 1997). Therefore, Section N.Y. C.P.L.R. 302(a) does not apply here. Even if the unknown users choice to post on the Ripoff Report website could somehow be construed as transacting business in New York, the users had to agree to terms of service that mandate jurisdiction over any claims in Arizona. Every time a user submits a report to Ripoff Report for publication, the user is required to agree to exclusive jurisdiction in Arizona over any dispute arising from the report. (Kunz Aff. 15). It is well-accepted policy that forum-selection clauses are prima facie valid. Silvestre v. De Loaiza, 12 Misc.3d 492, 498, 820 N.Y.S.2d 440, 444 (N.Y. Sup. 2006). Although this might not bind parties that do not post on the site, it certainly precludes haling Xcentric into court on the basis of its interactions with posters in other states. 8

9 Furthermore, as will be discussed in greater detail in Section III, Xcentric cannot be treated as the speaker or publisher of content created by a third party. 47 U.S.C Therefore, the unilateral activity of the site s unknown users cannot procure jurisdiction over Xcentric in New York. 2. The long-arm statute excepts causes of action for defamation. The parts of New York s long-arm statute that concern commission of tortious acts, both within the State and causing injury in the State, have an express exception to causes of action for defamation. CPLR 302(a)(2)-(3). New York s long-arm statute accords separate treatment to defamation claims to reflect the State s policy of preventing disproportionate restrictions on freedom of expression. SPCA of Upstate New York, Inc. v. Am. Working Collie Ass n, 18 N.Y.3d 400, 403, 963 N.E.2d 1226, 1228 (2012). New York courts narrowly construe doing business in the state as it relates to defamation cases to prevent any potential chilling of free speech. Id. at 405, 963 N.E.2d 1226, 1230 (citing Best Van Lines, Inc. v. Walker, 490 F.3d 239, 248 (2d Cir. 2007)). C. Due Process Precludes Hailing Xcentric into New York. The Due Process Clause of the Fourteenth Amendment limits a state s power to render a valid personal judgment against a nonresident defendant. See generally World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559 (1980). This restriction exists because the Due Process Clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations. Int l Shoe Co. v. Washington, 326 U.S. 310, 9

10 319, 66 S.Ct. 154, 159 (1945). For this reason, [f]oreign defendants have a liberty interest, protected by the due process clause, in not being subject to the binding judgments of a forum with which [they have] established no meaningful contacts, ties, or relations. Burger King Corporation v. Rudzewicz, 471 U.S. 462, , 105 S.Ct. 2174, (1985). In essence, the Due Process Clause ensures that persons will have fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign. Id. The U.S. Supreme Court has held that [t]he unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant s activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws. Id. at 475, 105 S. Ct. 2174, This purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or a third person. Id. The Supreme Court has explicitly declared that [t]he foreseeability that is critical to due process analysis is not the mere likelihood that the product will find its way into the foreign State. Rather it is that the defendant s conduct in connection with the foreign State are such that he should reasonably anticipate being haled into court there. World- Wide Volkswagen Corp., supra, 444 U.S. at 297. There must be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the 10

11 foreign state, thus invoking the benefits and protection of its laws. Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct (1958). Plaintiff has not presented, and cannot present, any set of facts that demonstrate any effort by Xcentric to purposefully avail itself of the privilege of conducting activities in New York. Instead, Plaintiff seeks to have this Court exercise jurisdiction over Xcentric based solely on the unilateral activity of these unknown users. Therefore, personal jurisdiction over Xcentric is lacking. Therefore, the Complaint should be dismissed for lack of personal jurisdiction. III. PLAINTIFF S CLAIMS AGAINST XCENTRIC FAIL TO STATE A CAUSE OF ACTION BECAUSE THE COMMUNICATIONS DECENCY ACT, 47 U.S.C. 230, BARS TREATMENT OF XCENTRIC AS THE SPEAKER OR PUBLISHER OF A THIRD-PARTY POST. Assuming, in the alternative, that this Court finds it can reach the merits of this dispute, the Plaintiff s claims against Xcentric should be dismissed because, even assuming the allegations in the Complaint as true, the claims are completely barred by the Communications Decency Act (the CDA ), 47 U.S.C Nowhere in the Complaint does Plaintiff allege that any of the defamatory or deceptive posts were authored or written by Xcentric. Rather, the thrust of the Plaintiff s claims against Xcentric is the implication that Xcentric is liable because it allowed unknown third parties to post defamatory and deceptive comments on its web forum (see Complaint 9, 19, 29, 39), and Xcentric thereby became the speaker or publisher of those defamatory comments. However, Congress has spoken directly to that issue in the CDA, which prohibits treating online web forums, like Ripoff Report, as the speaker or publisher of third-party content. 11

12 A. Review Standard When evaluating a motion to dismiss for failure to state a cause of action under CPLR 3211(a)(7), the Court must accept as true all facts as alleged in the complaint, resolve all inferences in favor of the plaintiff, and determine only whether the facts as alleged fit within any cognizable legal theory. Signature Bank v. Holtz Rubenstein Reminick, 109 A.D.3d 465, 466, 970 N.Y.S.2d 281, 283 (2013). The Court must evaluate whether the Plaintiff can succeed upon any reasonable view of the facts as stated. Farmer v. Green Bus Lines, Inc., 254 A.D.2d 389, 679 N.Y.S.2d 88 (1998). For purposes of this portion of Xcentric s motion, Xcentric must accept as true all well-pleaded factual assertions but is not required to concede assumptions, opinions, speculations, and/or conclusions of law pleaded in the complaint. Spock v. Pocket Books, Inc., 48 Misc. 2d 812, 813, 266 N.Y.S. 2d 77 (Sup. Ct. 1965). B. The Communications Decency Act Immunizes Xcentric from Liability. Recognizing the value in promoting robust free speech on the internet, Congress passed the CDA, which, inter alia, protects interactive computer service[s] from liability for providing these types of forums. See 47 U.S.C Specifically, the CDA provides that [n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider. Id. The statute defines interactive computer service as any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server. Id. The law states that [n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent 12

13 with this section. Id. In implementing the CDA, courts have determined that CDA immunity necessarily entails proscribing imputation of liability to websites for the exercise of traditional editorial functions which include decisions to publish, withdraw, postpone or alter content provided by third parties. Shiamili v. Real Estate Group of New York, Inc., 17 N.Y.3d 281, 289, 952 N.E.2d 1011 (2011) (citing Zeran v. America Online, Inc., 129 F3d 327, 330 (4th Cir. 1997) & Barnes v. Yahoo!, 570 F3d 1096, 1102 (9th Cir. 2009)). Without exception, Plaintiff s implicit argument, that a website operator should be held liable for third-party posts, has been flatly rejected by every court that has ever considered it. This is so because pursuant to 47 U.S.C. 230(c)(1), [a] defendant is... immune from state law liability if (1) it is a provider or user of an interactive computer service ; (2) the complaint seeks to hold the defendant liable as a publisher or speaker ; and (3) the action is based on information provided by another information content provider..... Shiamili v. Real Estate Grp. of New York, Inc., 17 N.Y.3d 281, 286, 952 N.E.2d 1011, 1015 (2011); see also Doe v. Myspace, Inc., 528 F.3d 413, 419 (5th Cir. 2008) ( Parties complaining that they were harmed by a Web site s publication of usergenerated content have recourse; they may sue the third-party user who generated the content, but not the interactive computer service that enabled them to publish the content online. ); Fair Hous. Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, (9th Cir. 2008) (discussing the CDA and noting that [t]he claim against the website was, in effect, that it failed to review each user-created [posting] to ensure 13

14 that it wasn t defamatory. That is precisely the kind of activity for which Congress intended to grant absolution with the passage of section 230. ). As explained herein, the undisputed facts show the following: (1) Xcentric provides an interactive computer service; (2) Plaintiff s claims seek to treat Xcentric as a speaker or publisher ; and (3) Plaintiff s claims are based on information created by a third party. Thus, Plaintiff s claims are plainly barred by the CDA to the extent they arise from material posted on Ripoff Report by a third party. C. The CDA Bars Plaintiff s Claims for Defamation and Deceptive Business Practices Because They Are Based on Material Created by Third Party Users of Ripoff Report. Every cause of action alleged by Plaintiff requires the Court to impute publication of third-party posts to Xcentric. As explained above, the CDA plainly bars any claim that seeks to treat Xcentric as the speaker or publisher of material created by a third party. According to the Complaint, all the allegedly defamatory and deceptive material at issue in this case was created by unknown third parties. (Complaint 9, 19, 29, 39). None of the material was created by Xcentric. Therefore, Xcentric s Motion to Dismiss for failure to state a claim should be granted as to each cause of action. 1. Plaintiff s claims for defamation (First, Second, and Third Causes of Action) fail under the CDA. A cause of action for defamation in New York requires (1) a false statement, (2) published to a third party without privilege or authorization, (3) with fault amounting to at least negligence, (4) that caused (5) special harm or defamation per se. Dillon v. City of New York, 261 A.D.2d 34, 38, 704 N.Y.S.2d 1 (App. Div. 1999). On its face, the 14

15 defamation claim fails on the second, third, and fourth elements. To hold Xcentric liable for these claims, the Court must treat Xcentric as the speaker or publisher of the false statements. However, the CDA prohibits the Court from treating Xcentric as the speaker or publisher of third-party-provided content. Therefore, Xcentric cannot be said to have published to a third party without privilege or authorization. The CDA proscribes publisher liability in such instances. CDA immunity may also be viewed as a privilege, thereby removing Xcentric s implied actions from the reaches of the cause of action. Moreover, since the CDA immunizes Xcentric from any wrongdoing for the creations of third parties, there can be no fault ascribed to Xcentric. Therefore, Plaintiff also has a causation problem. The New York Court of Appeals has considered this exact issue and the law is particularly clear. In Shiamili v. Real Estate Group of New York, the plaintiff sued a website operator claiming that it was responsible for defamatory posts appearing on the defendant s website, even though it was undisputed that the posts were written by a third party. 17 N.Y.3d 281, 284, 952 N.E.2d 1011, 1014 (2011). Unlike the current case, the plaintiff in Shiamili alleged that the website host engaged in various conduct sufficient to transform it into the speaker and thereby deprive it of CDA immunity. The complaint alleged, inter alia, that the defendant s website was intended to encourage the posting of negative information and that the website operator itself had actually posted its own comments in attempt to coax additional defamatory content from the original poster. Id. at , 952 N.E.2d 1011, Although there are no allegations that Xcentric 15

16 actually did anything wrongful here, Plaintiff s claims for defamation and deceptive competition are similar to the claims asserted in Shiamili. In following what it called the national consensus, the New York Court of Appeals flatly rejected Mr. Shiamili s arguments, finding that none of the website host s actions materially contributed to the illegality of the third party s statements and therefore the host retained its CDA immunity: As an initial matter, the complaint alleges that the defamatory statements were first posted by anonymous users; there is no allegation that defendants actually authored the statements. A website is generally not a content provider with respect to comments posted by third-party users. We reject Shiamili s contention that defendants should be deemed content providers because they created and ran a website which implicitly encouraged users to post negative comments about the New York City real estate industry. Creating an open forum for third-parties to post content including negative commentary is at the core of what section 230 protects. Id. at , 952 N.E.2d 1011, 1018 (emphasis added) (citing DiMeo v. Max, 248 Fed.Appx. 280, 282 (3d Cir. 2007); FTC v. Accusearch, Inc., 570 F.3d 1187, 1196 (10th Cir. 2009)). The court rejected the argument that a website operator could contribute to the content s illegality when the data is supplied by a third party. Id. at 292, 952 N.E.2d 1011, Ultimately, the court concluded that Shiamili failed to state a viable claim because his defamation and unfair competition claims concerned information provided by another information content provider and were clearly barred by the CDA. Id. at 293, 952 N.E.2d 1011, Therefore, the court held that the plaintiff s complaint was properly dismissed. Id. 16

17 As in Shiamili, Xcentric did not create the allegedly defamatory posts at issue. The content was provided by third-party users. (Complaint 9, 19, 29, 39). And even though Xcentric did nothing to encourage the defamatory posts, Plaintiffs could not prevail against Xcentric as the operator of Ripoff Report even if it had. Since Xcentric cannot be treated as the speaker of material it did not create, it cannot be held liable for defamation (or deceptive business practices) as pled in the Complaint. Indeed, Xcentric has repeatedly and successfully defended similar claims against it based on CDA immunity. See Asia Econ. Inst. v. Xcentric Ventures, LLC, CV SVW PJWX, 2010 WL (C.D. Cal. 2010); GW Equity, LLC v. Xcentric Ventures, LLC, 2009 WL (N.D. Tex. 2009) (holding Xcentric entitled to immunity under the CDA); Intellect Art Multimedia, Inc. v. Milewski, 2009 WL (N.Y. Sup. 2009) (same); Whitney Info. Network Inc. v. Xcentric Ventures, LLC, 2008 WL (M.D. Fla. 2008) (same); Global Royalties, Ltd. v. Xcentric Ventures, LLC, 544 F.Supp.2d 929 (D. Ariz. 2008) (same); see also Herman v. Xcentric Ventures, LLC, Case No. 1:10-cv (N.D. Ga. Feb. 12, 2011) (recognizing, [s]ince the CDA was enacted in 1996, every state and federal court that has considered the merits of a claim against the Ripoff Report has, without exception, agreed that [Xcentric is] entitled to immunity under the CDA for statements posted by third-party users. ). Thus, Plaintiff s claims for defamation cannot be sustained, and the First, Second, and Third Causes of Action should be dismissed for failure to state a claim. 17

18 2. Plaintiff s claim for deceptive business practices, under NY Gen. Bus. Law 349 (Fourth Cause of Action), fails under the CDA. New York General Business Law 349(a) provides that [d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful. To prevail under this statute, a plaintiff must prove three elements: first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act. Stutman v. Chem. Bank, 95 N.Y.2d 24, 29, 731 N.E.2d 608, 611 (2000). A plaintiff must show that the defendant s material deceptive act caused the injury. Id. at 29, 731 N.E.2d 608, 612. Plaintiff s claim for deceptive business practices fails under every element of the cause of action. Plaintiff s claim is premised on the idea that the allegedly defamatory posts were created by persons unknown to damage Plaintiff s reputation in order to obtain a litigation or commercial advantage. (See Complaint 39). Preliminarily, Xcentric is neither a competitor of Plaintiff nor a litigant opposed to Plaintiff (save for the current case). Rather, Plaintiff s claims are aimed at the unknown posters. Thus, the pleadings are directly contrary to directing this Fourth Cause of Action against Xcentric. Assuming that Plaintiff somehow intended to allege the claim against Xcentric, again, the CDA bars treatment of Xcentric as the speaker or publisher of the third-party-created content. Since the implicit act in Plaintiff s claim is creation of the statements at issue, Xcentric has not acted in the sense required by the statute. Since unknown third parties created the posts at issue, Xcentric did nothing that could possibly be construed as 18

19 misleading. And, again here, Plaintiff has a causation problem because the deceptive acts creation of the posts cannot be attributed to Xcentric under the CDA. In Reit v. Yelp!, Inc., a dentist filed a lawsuit against online consumer review site, Yelp!, alleging causes of action for defamation and deceptive business practices under NY Gen. Bus. Law Misc. 3d 713, 715, 907 N.Y.S.2d 411, (Sup. Ct. 2010). The court ultimately dismissed both causes of action for failure to state a claim. Id. at 719, 907 N.Y.S.2d 411, 415. As for the deceptive business practices claim, the dentist alleged that Yelp! (1) states that its screening process for online reviews is entirely automated when it is not, and (2) removes positive posts and highlights negative posts in attempt to coerce businesses into paying for advertising on the site. Id. The court explained its dismissal of the claim because the statements that the website s screening process is automated was addressed to business owners, not consumers seeking dentists. Id. at 718, 907 N.Y.S.2d 411, 415. The statement was not a deceptive practice because it was not materially misleading to a consumer seeking dentistry. Id. Moreover, the court found that the plaintiff s allegations that Yelp! used the speech as leverage in its business model concerned business conduct, not consumer oriented conduct. Id. Therefore, the court concluded that the plaintiff s cause of action for deceptive business practices must be dismissed (and it awarded costs to the website). Id. at 719, 907 N.Y.S.2d 411, 415. Similarly, the current Section 349 claim must be dismissed because, even if Plaintiff had alleged some action by Xcentric as deceptive, the action would invariably be business conduct that does not mislead a consumer seeking legal representation the alleged misrepresentation was by the unknown users. And, if Plaintiff was to claim that 19

20 Xcentric somehow tried to use the posts on the website as leverage for advertising, it would not be actionable because it would concern business conduct as opposed to the consumer oriented conduct required by Section 349. Moreover, although the exception does not specifically refer to the internet, the drafters of Section 349 may even have intended to eliminate publisher liability from the statute itself. Sub(e) of Section 349 states that [n]othing in this section shall apply to any television or radio broadcasting station or to any publisher or printer of a newspaper, magazine or other form of printed advertising, who broadcasts, publishes, or prints the advertisement. A website could certainly be considered a broadcast or a publisher. The allegedly injurious content, here, is a consumer complaint, which of course garners more protection under the First Amendment than advertising, or commercial speech. However, Plaintiff s cause of action alleges that the posts were created by competitors to gain some sort of competitive advantage. Assuming Plaintiff s factual allegations are true and the speech was created by its competitors for a commercial purpose, the posts could properly be considered advertising under the statute. In that event, Xcentric would be protected from liability by both the CDA and Section 349(e). Thus, Plaintiff s Fourth Cause of Action for deceptive business practices should be dismissed for failure to state a claim. 3. Plaintiff s Fifth Cause of Action, for Declaratory Judgment Is Improper and Should Be Dismissed. In its Fifth Cause of Action, Plaintiff seeks an Order directing non-party search engines... to cease indexing search results from the RipOff Report website against 20

21 Plaintiff. (Complaint 46). This cause of action is improper, whether treated as a declaratory judgment as it is labeled or injunctive relief, which more appropriately describes what Plaintiff is seeking. A declaratory judgment is defined as: [a] binding adjudication that establishes the rights and other legal relations of the parties without providing for or ordering enforcement. Black s Law Dictionary 388 (3d pocket ed. 2006). New York courts may render a declaratory judgment... as to the rights and other legal relations of the parties to a justiciable controversy... for the primary purpose of stabilizing an uncertain or disputed jural relationship with respect to present or prospective obligations. Palm v. Tuckahoe Union Free Sch. Dist., 95 A.D.3d 1087, 1089, 944 N.Y.S.2d 291 (App. Div. 2012) (internal citations omitted). The complaint must demonstrate (1) the existence of a bona fide justiciable controversy, (2) a real dispute between adverse parties, and (3) that the dispute involv[es] substantial legal interests for which a declaration of rights will have some practical effect. Id. (internal citations omitted). Plaintiff has not set forth a cause of action for declaratory relief. As demonstrated above, Plaintiff has no relationship with Xcentric that requires clarification of rights. Any legal interests Plaintiff claims to have would be practically unaffected by a declaration of rights. There is no legal uncertainty concerning the parties relationship. A declaratory judgment would settle nothing. Moreover, Plaintiff seeks action, not some clarification of rights. With no enforcement mechanism, declaratory judgments do not provide for action. Contrarily, an injunction is defined as [a] court order commanding or preventing an action. Black s Law Dictionary But, an injunction is an extraordinary 21

22 remedy. Leide v. Dowling, 224 A.D.2d 427, 638 N.Y.S.2d 104 (2d Dep t 1996). To justify this extraordinary relief, an injunction requires danger of irreparable injury unless such a judgment is entered, and the inadequacy of other remedies to afford just and equitable relief. Lotto, Stolowitz & Farr v. New York Tel. Co., 75 Misc. 2d 494, 499, 347 N.Y.S.2d 530, 535 (Sup. Ct. 1973). That plaintiffs may sustain financial loss does not entitle them to equitable relief and the mere allegation of serious or irreparable injury, apprehended or threatened, is insufficient. Fisher v. Health Ins. Plan of Greater New York, 67 Misc. 2d 674, 677, 324 N.Y.S.2d 732, 736 (Sup. Ct. 1971). Here, although Plaintiff requests an order directing non-party search engines... to cease indexing search results... during the pendency of this action and permanently after the action, Plaintiff fails to allege any of the factual requirements to justify an injunction. (See Complaint 46). The basis of Plaintiff s request for this extraordinary order is contained in a single sentence. (Id.). That sentence fails to articulate any irreparable injury. And it fails to demonstrate that Plaintiff has no adequate remedy at law indeed, Plaintiff s Prayer for Relief seeks compensatory and punitive damages on its claims for defamation and deceptive business practices. Moreover, Plaintiff seeks action by non-party search engines, not Xcentric and not the unknown users of Ripoff Report. Thus, the relevant parties against whom Plaintiff seeks relief are not even parties to this case. Finally, though perhaps most importantly, an injunction to silence criticism, no matter how it is achieved, is a prior restraint that violates the First Amendment of the U.S. Constitution. See Alexander v. United States, 509 U.S. 544, 550, 113 S. Ct. 2766, 2771 (1993). 22

23 Therefore, Plaintiff s Fifth Cause of Action for declaratory judgment (or injunctive relief) is improper and should be dismissed for failure to state a claim. IV. REQUEST FOR SANCTIONS The Court has discretion to award costs and reasonable attorneys fees resulting from frivolous conduct. N.Y. Ct. R (a). Conduct is considered frivolous if, inter alia, it is completely without merit in law and cannot be supported by a reasonable extension, modification or reversal of existing law; or it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another. N.Y. Ct. R (c)(1)&(2). The law, here, is clear. If Plaintiff was not familiar with the law at issue, just a few minutes of due diligence would have informed them that their claims against Xcentric lacked merit. It appears Plaintiff did not even consider whether Xcentric could be held liable before haphazardly slapping Xcentric s name on the Complaint. Plaintiff appears to make claims against the authors of the posts, and the Complaint seeks injunctive relief against non-parties, not Xcentric. It appears Plaintiff s design was to harass Xcentric into removing critical speech from the website. Plaintiff apparently recognizes its Defendants dilemma that it is less costly to chill speech than to stand behind it and risk liability. Plaintiff should not be allowed use the Court to throw its legal weight around. Its meritless claims and its attempts to harass have no place in a court of law. Other, lessinformed parties might deserve a pass for such oversight. As a law firm, Plaintiff is held to a higher standard and should know better. Plaintiff should be sanctioned for asserting 23

24 its frivolous claims against Xcentric. Xcentric, therefore, requests that the Court award it its attorneys fees and costs incurred in defending this matter. V. CONCLUSION Due to the foregoing, Defendant Xcentric Ventures, LLC respectfully requests that the Court dismiss the Complaint for lack of personal jurisdiction or, alternatively, for failure to state a claim. Defendant Xcentric Ventures, LLC further requests that the Court award it its attorneys fees and costs incurred in defending this frivolous suit. DATED: December 19, 2014 Phoenix, Arizona JABURG & WILK, P.C. /s/maria Crimi Speth Maria Crimi Speth (Admitted in New York) 3200 N. Central Avenue, 20th Floor Phoenix, AZ Attorneys for Defendant Xcentric Ventures, LLC A copy of this Motion was served on December 19, 2014 by First Class Mail upon: Michal Falkowski, Esq. Paykin, Richland & Falkowski, P.C th Avenue New York, NY

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