2d Circuit Holds Communications Decency Act Immunizes GoDaddy from Defamation Claims and Preempts Such State Claims

The Second Circuit affirmed dismissal of defamation and other claims against GoDaddy based upon newsletter postings on a labor union's website hosted by GoDaddy, invoking the exemption and preemption provisions in the Communications Decency Act of 1996, 47 U.S.C. 230.  Ricci v. Teamsters Union Local 456, 2d Cir. No. 14-1732 (March 18, 2015).  The slip opinion is currently available on the Court's website here.

Surprisingly, this is an issue of first impression in the Second Circuit, which joined three other circuits and at least one district court which "have applied the statute to a growing list of internet-based service providers ..." (citing cases in D.C., 5th, and 7th Circuits).  Ricci, slip op. 7.

The Ricci plaintiffs were union members who sued their union for allegedly defamatory statements posted on the union's website which was hosted by GoDaddy.  

The Second Circuit held GoDaddy was immune from suit under Section 230(c)(1) of the Decency Act which states:  "[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."  47 U.S.C. 230(c)(1).  Ricci, slip op. 5.

The Court also held that such state law defamation claims were expressly preempted by the Act:  "No cause of action may be brought and no liability may be imposed under any State or local that is inconsistent with this section."  47 U.S.C. 230(e)(3).  Ricci, slip op. 5.  The plaintiffs labor-based claims were held to be time-barred.

Though the result seemed foreordained, the issues under the Decency Act had not been previously decided by the Second Circuit and should provide further comfort to "interactive computer service[s]."  47 U.S.C. 230(c)(1).

Amicus Brief in Support of Shadadpuri Cert. Petition Filed by American Ass'n of Exporters & Importers

On March 16, 2015, the American Association of Exporters and Importers (AAEI) filed an amicus curiae brief in support of the petition for a writ of certiorari filed by Daniel Law on behalf of Harish Shadadpuri.  Shadadpuri v. United States, S.Ct. No. 14-986, filed February 13, 2015.  The petition seeks review of the en banc decision of the Federal Circuit which imposed personal liability for Customs civil penalties on the president and sole shareholder of the corporate importer of record of men's suits under 19 U.S.C. 1592.  The Solicitor General obtained an extension of time to April 16, 2015 in which to file a response to the petition for certiorari.

The AAEI is an American trade association whose members are U.S. based importers of a wide variety of goods, from automobiles to household goods and apparel, as well as customs brokers, freight forwarders, and banks.  AAEI's brief agrees with petitioner Shadadpuri that the important issue presented warrants the Supreme Court's review.  It contends that the Federal Circuit misconstrued 19 U.S.C. 1592 in a way that imposes personal liability on corporate importer personnel far beyond the language and intention of Congress in 19 U.S.C. 1592.  

AAEI's amicus brief was filed by John M. Peterson, Russell A. Semmel, and Richard F. O'Neill, of Neville Peterson LLP in New York City.  The brief may be viewed here.

Second Circuit Fees Argument in Kirtsaeng "First Sale" Copyright Case: Is There Another Petition for Certiorari in Kirtsaeng's/Orrick's Future?

On remand from the Supreme Court, the district court denied Kirtsaeng's application for an award of attorney's fees as prevailing party under 19 U.S.C. 505, despite the fact that the Supreme Court had vindicated Kirtsaeng's "first sale" defense in the copyright infringement suit brought against him by publisher Wiley.  Kirtsaeng v. John Wiley & Sons, Inc., ___ U.S. ___, 133 S.Ct. 1351 (No. 11-697, March 19, 2013).  The Supreme Court held (6-3) that Kirtsaeng did not infringe Wiley's copyright by importing into the U.S. and reselling Wiley books lawfully published abroad, upholding Kirtsaeng's defense under the "first sale" doctrine in 19 U.S.C. 109(a). 

On February 26, 2015, almost two years after Kirtsaeng's victory in the Supreme Court, the Second Circuit heard oral argument on Kirtsaeng's appeal from denial of attorney's fees in the case (Katzmann, Ch.J., Walker, Chin, C.JJ.).  

The argument was lively, with questions from and colloquy with all three judges.  Andrew Silverman, of Orrick, Herrington & Sutcliffe LLP, argued for Kirtsaeng; Paul Smith of Jenner & Block LLP, argued for John Wiley & Sons.  Joshua Rosenkranz of Orrick represented Kirtsaeng in the Supreme Court; Wiley was represented by former Solicitor General Ted Olson.  Both parties were initially represented by small firms in the district court and in the prior Second Circuit appeal on the merits.

It is unwise to predict the outcome of an appeal based on questions from the bench, but odds are that Kirtsaeng will have to ask the Supreme Court to again review his case if he (and his lawyers) are to obtain any attorney's fees.  

The district court below rejected Kirtsaeng's motion for attorney's fees on the ground that Wiley's copyright infringement claim against Kirtsaeng "was not objective unreasonable, and ... no other factor weights against this important consideration ...."  The Second Circuit has previously held that "objective reasonableness" is entitled to "substantial weight," characterizing the Supreme Court's list of other factors as "dicta," Matthew Bender & Co., Inc. v . West Publishing Co., 240 F.3d 116, 121-122 (2d Cir. 2001), but it noted the Supreme Court's emphasis on any award being "faithful to the purposes of the Copyright Act."  Id. at 122.  The court of appeals denied fees to the prevailing party in Matthew Bender, in part because it had won on a technical "violation" of 19 U.S.C. 403, not an act of infringement.  

The panel peppered Kirtsaeng's counsel with questions and comments seemingly indicating that they thought the district court had properly applied the discretionary factors in determining whether to award fees to a prevailing party and that they were not inclined to second-guess the district court because Wiley's position on the merits was "objectively reasonable," invoking the Second Circuit's prior decision in Matthew Bender & Co., Inc. v . West Publishing Co., supra.  Judge Chin asked whether it was relevant that the Orrick firm represented Kirtsaeng on a pro bono basis, but Smith conceded it was not determinative.  However, he argued that this was the kind of close copyright issue that should be litigated and that Wily should not be punished for losing in a 6-3 decision of the Supreme Court.

Attorney's fees may be awarded to the prevailing party in a copyright case in the discretion of the court, but an award is not mandatory.  However, the Supreme Court ruled that the same criteria must be applied whether the prevailing party is the plaintiff or the defendant in Fantasy, Inc. v Fogerty, 510 U.S. 517 (1994), rejecting the contrary rule in some circuits.  

The Supreme Court in Fogerty identified "several nonexclusive factors" to be considered in deciding whether to award fees to a prevailing party, including "'frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterence.'" Fogerty, 510 U.S. at 535 n. 19 (citation omitted).

However, the Supreme Court added the caveat that "such factors" can be used to guide discretion "so long as [they] are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner."  Fogerty, 510 U.S. at 535 n. 19.

The Second Circuit panel on February 26th also seemed to be negatively impressed by Orrick's request for an award of more than $2 million in attorney's fees after representing Kirtsaeng pro bono in the Supreme Court.  But, substantial fee claims will almost always be involved in a case which has been to the Supreme Court on the merits.  A review of the Fogerty case on remand from his Supreme Court victory reveals that the Ninth Circuit affirmed a fee award to Fogerty of $1,347,519.15 in 1996, and remanded for a further fee award for fees incurred in that second appeal on fees.  Fantasy, Inc. v. Fogerty, 94 F.3d 553 (9th Cir. 1996).  Fogerty had litigated for more than eleven years, defending against a claim that he had infringed the copyright in one of his own songs (then owned by the plaintiff) in a subsequent Fogerty composition!

Here, Kirtsaeng, a native of Thailand, had resold Wiley books in the U.S., which had been lawfully published and purchased from Wiley's Asia subsidiary, to support his studies in the U.S.  It appears that Kirtsaeng was one of many defendants sued by Wiley on similar claims in its enforcement "program."

Time will tell whether you can safely predict the outcome of this appeal from the colloquy with the judges at oral argument.  Stay tuned.

Petition for Certiorari Filed in U.S. Supreme Court in Customs Civil Penalty Case

The Firm filed a petition for a writ of certiorari with the Supreme Court of the United States on February 13, 2015, Harish Shadadpuri v. United States, No. 14-986, to review an en banc decision of the Federal Circuit Court of Appeals in a civil penalties case under the Tariff Act.  

Shadadpuri seeks reversal of the judgment of the Federal Circuit Court of Appeals that he is jointly and severally liable for civil penalties and unpaid duties under 19 U.S.C. 1592 of the Tariff Act.

Petitioner Shadadpuri was president and sole shareholder of Trek Leather, Inc., the importer of record for 72 entries of men's suits into the United States.  The US sued Trek and Shadadpuri jointly and severally for civil penalties for fraud, gross negligence, and negligence for failure to include so-called "assists" to the foreign manufacturers, resulting in unpaid duties.  The government sought more than $2.3 million in penalties plus unpaid duties of $45,245.39.

The importer Trek and Petitioner Shadadpuri were found jointly and severally liable for civil penalties of $545,420.32 plus the unpaid duties for gross negligence for violation of the Tariff Act, 19 U.S.C. 1592, in the US Court of International Trade.  

Shadadpuri appealed and a panel of the Federal Circuit Court of Appeals reversed in his favor, holding that he could not be liable because he was not the importer of record and the government had not claimed that he had "aided or abetted" Trek's violation and had not sought to pierce the corporate veil of Trek.

The government requested rehearing en banc and the full Federal Circuit vacated the panel decision in favor of Shadadpuri.  The full court held that he was jointly and severally liable for having "introduce[ed] the suits, even though Trek was the importer and had formally "entered" the goods with Customs.  The government had not sought to impose liability on Shadadpuri for "aiding or abetting" Trek's violations under a different provision of the statute and had not sought to pierce the corporate veil of Trek in order to impose liability on Shadadpuri directly.

Shadadpuri's petition for certiorari asks the Supreme Court to review the Federal Circuit's en banc decision because it construed the Tariff Act incorrectly and its broad interpretation will potentially impose much greater liability on shareholders, officers, and employees of corporate importers than Congress intended in the statute as revised in 1978.

Contact the Firm if you need additional information or are interested in supporting Shadadpuri's petition for a writ of certiorari with an amicus brief in the Supreme Court.

7th Cir. Reverses Premature Dismissal of Sex Discrimination Claims & Orders Reassignment to Different Judge on Remand

In an opinion by Judge Posner, the 7th Circuit Court of Appeals reversed the dismissal of sex discrimination claims and remanded for reassignment to a different district judge "[b]ecause of the abruptness and irregularity of the district judge's handling of this case ... and the unmistakable (and to us incomprehensible) tone of derision that pervades his opinion ...." Stuart v. Local 727, Int'l Brotherhood of Teamsters, No. 14-1710 (7th Cir. Nov. 14, 2014), slip op. 10.

 The district judge had reached out to the plaintiff to force her to respond to Local 727's statute of limitations defense in its answer before discovery and before the union had even filed a motion to dismiss or for summary judgment. 

Plaintiff Stuart is a professional driver of large passenger vehicles in Chicago.  She joined the Teamsters Union and sought to get jobs ferrying equipment and personnel for movie and television productions in Chicago, which paid twice as much as her ordinary bus driving jobs.

Stuart was never referred out for any movie or TV jobs despite the fact that there were many such jobs and she had the same qualifications as the male drivers who were referred for such jobs.  She filed an EEOC claim of discrimination, received a right to sue letter and brought suit.

Defendant union filed an answer which included a defense of statute of limitations, but did not file a motion to dismiss or for summary judgment on the defense and no discovery had been conducted.

Despite that, the district judge had his law clerk obtain plaintiff's EEOC claim (ex parte) and demanded that plaintiff respond to the union's defense of limitations without awaiting a motion by defendant or discovery.  

The 7th Circuit reversed because the district court was wrong in its analysis and application of statute of limitations law and ordered that the case be reassigned to a different judge on remand because the irregular handling of the limitations issue and the derisive tone of the lower court's opinion.