Section 230 Is Not Exceptional, It Is Not Unique, It Is Not A Gift: It's The Codification Of Common Law Liability Principles

Legal Issues

from the get-it-straight dept

There are so many myths about Section 230 that seem to need debunking. There’s the myth that it requires platforms to be neutral. There’s the myth that if you moderate too much you “lose” your status as a “platform.” There’s the myth that Section 230 of the CDA was “a gift” to big tech. None of those are true, and we’ve gone into great detail over the past few years about how Section 230 is designed to encourage the most “good” content, and discourage the most “bad” content. It’s designed as a pretty straightforward balance, and it actually does a pretty good job of that.

However, along with the claims that 230 is a “gift” to tech companies, is the unfortunate similar myth that 230 is somehow “exceptional” or that it treats internet companies “different than any other company.” This has never been true. Instead, it’s really about properly applying liability to the party actually violating the law, rather than putting the blame on the tools and services they use to violate the law. Brent Skorup and Jennifer Huddleston at the Mercatus Center have now put out an interesting paper, highlighting how — far from being a “unique gift” to internet companies — Section 230 was merely the codification of basic common law principles regarding liability.

The paper carefully traces the history of liability in common law, finding that for decades preceding Section 230, the general common law principles had converged on a concept of “conduit liability,” which is more or less what we see in Section 230: you don’t blame the “conduit” for merely passing along the message.

As shown above, even before the creation of Section 230, many courts had shifted from the strict liability regime toward conduit liability protections and fault-based requirements. In many circumstances, liability would not have attached even if the distributor had known of the tortious material, because the social and judicial norms favoring practicable moderation practices and free speech had eroded the traditional liability standards. Section 230, in effect, codified the conduit liability protection that was being applied to traditional media distributors and was sometimes applied even after 1996.

As one federal district court noted in 1994, conduit liability ?[p]rotection for republication . . . has not been rigorously circumscribed within the wire service context.? In its 1999 Lunney v. Prodigy decision, the highest court in New York expressly classified an internet bulletin board operator as a common-law conduit. An internet service provider and bulletin board operator, the court held, ?like a telephone operator, is merely a conduit.? It made no difference to the court, and the ?conduit designation? was still applied, even when the bulletin board operator ?reserves for itself broad editorial discretion to screen its bulletin board messages? and occasionally exercises that discretion. The court explained that even if Prodigy ?exercised the power to exclude certain vulgarities from the text of certain [bulletin board] messages, this would not alter its passive character in the millions of other messages in whose transmission it did not participate, nor would this, in our opinion, compel it to guarantee the content of those myriad messages.?

This doesn’t mean, however, that Section 230 serves no purpose. Having 230 the way it is provides significant procedural benefits, in the form of having cases kicked out of court quickly, before they become too expensive. Without that, many of these cases, even though they would ultimately be unsuccessful if the court were able to decide, would be prohibitively expensive for internet platforms, creating, in effect, a censorship-by-lawsuit system. While we discussed that (link above) in a previous paper, the authors of this paper actually put dollar amounts on it:

Still, Section 230 had a salutary effect at a critical time. A report by Engine estimated that without Section 230, the costs of litigation might be prohibitive for many startups even if they might win the case.155 According to the in-house and external attorneys consulted for the report, having to respond to a user-generated content liability claim through a motion to dismiss could cost $15,000 to $80,000, and having to take such a case through discovery could cost a firm $100,000 to more than half a million dollars.

On top of that, Section 230 took away the uncertainty that some random judge might buck the trend — as happened in the infamous Stratton Oakmont case:

As Ardia points out, the statutory protection provided a ?breathing space? and legal certainty after Stratton Oakmont when online providers made decisions regarding third-party content. Stratton Oakmont derailed the legal trend represented by Cubby and the conduit liability cases. A period of uncertainty?and massive ?collateral censorship??would have ensued because online providers do not know in advance where their users are located. Any provider with users in New York would have been potentially subject to liability for users? posts under the Stratton Oakmont decision. Section 230 precluded that turn of events.

However, the idea that Section 230 is somehow “exceptional” or provides some rare gift that would not otherwise exist is not supported by the history laid out in this paper. Conduit liability — protecting the conduit for passing on such information — was (as the paper lays out in great detail) very much the consensus view among courts, thereby making it the accepted common law, even prior to 230.

Finally the paper notes (as have we) that killing Section 230 will harm competition against the big internet companies at a time when we clearly need more competition:

In summary, Section 230 provides a blanket liability shield for big and small firms. Change that cuts down the liability protection will thus impose compliance costs on all firms. Such change should be explicit about those social costs and also explicit about the advantage it will grant larger firms that have the resources to become compliant. In other words, going from a blanket to a tailored shield, however well intended, must account for the chilling effect it will have on innovation by startups and small firms, and for the artificial barrier to entry in the market that will grant additional protection to incumbent firms.

Either way, as the paper concludes, Section 230 merely was codifying basic common law principles of liability:

The Section 230 reform movement is growing, and many of the reform arguments complain that online intermediaries receive a special dispensation regarding publisher liability. The truth is more complicated. Starting in 1931 and for six subsequent decades, courts gradually chipped away the regime of strict liability for publishers and content distributors owing to the practical difficulties of screening all tortious content and to the potential for restricting First Amendment rights. Those courts found that mass media distributors warranted extensive liability protections, including an important protection for conduit liability. The anomalous 1995 Stratton Oakmont decision risked reversing that legal precedent. Yet Congress solved the dissonance by enacting a law that affirmed the precedent and its rationales?the impracticality of holding online content distributors liable and the potential violations of freedom of speech that would ensue from strict liability. Section 230 established a regime of liability protection for online content distributors just when it was needed?at the time internet firms had started to reach audiences of tens of millions?and still provides liability protection for large and small distributors alike. For all the foregoing reasons, we have argued that Section 230 is good policy.

I will note that the authors do make a few suggestions on ways they think Section 230 could be amended in a few specific cases, though they note that the situations where that makes sense should be narrow and well-defined. An interesting read all around.

Filed Under: cda 230, common law, conduit liability, intermediary liability, liability, section 230