Tuesday, June 07, 2011

Free agents: defendants aren't responsible for forum signatures

Cornelius v. Bodybuilding.com, LLC, 2011 WL 2160358 (D. Idaho)

Prior reporting. Cornelius operated Syntrax Innovations, which made sports nutrition and dietary supplements. Syntrax sold its assets to plaintiff SI03, and Cornelius is now an independent technical consultant for the Syntrax line.

Defendant Gaspari Nutrition makes its own line of bodybuilding supplements. Both sides sell their products on Bodybuilding.com’s website, which also has an online forum. The forum has forum moderators with the power to edit and delete posts, move threads, and ban users. Moderators self-select by nominating themselves, and forum members then vote to confirm or deny them moderator status, which if confirmed is granted after Bodybuilding.com approves the application. They aren’t paid, but receive a discount on all products purchased from the site and offered a free trip to the Boise Fit Expo. (I can’t help myself: what’s second prize?)

Daniel Pierce, aka desurusan, posted a comment stating that Syntrax caused liver failure in multiple subjects, as documented in peer-reviewed journals; was notorious for patent infringement; made label claims for 3x-4x higher amounts of key ingredients than actually included; used “shills” on the Bodybuilding.com forums; and did other bad things. Later, he posted another comment stating that Syntrax was selling badly, had put numerous people in the hospital, and had done other bad things. A third comment upped the ante: “Syntrax was indeed responsible for killing a few people.”

A few months after that last post, Gaspari hired Pierce as a customer service representative, at which point Pierce updated his signature on the site to reflect his new status, which meant that all his prior posts also got updated with that status, making it appear that he was a Gaspari rep when he made the statements. (So, anyone reading through the old forum posts would see the affiliation.)

A different forum member, Ingenium, said that SI03’s Syntrax Matrix product wasn’t “a micellar casein product,” which apparently means something; this was apparently a response to a post by an SI03 officer touting the product, who posted under a username accurately representing his status with SI03. Ingenium was not a forum moderator when he made the post, but became one nearly a year later, at which point being a moderator made his signature appear in bold for all posts whenever made. When he stopped being a moderator last year, his signature was no longer bolded.

After various maneuvers, there remained a Lanham Act claim against Bodybuilding.com and Lanham Act and various state tort claims against Gaspari.

Since an agency relationship didn’t exist between Pierce and Gaspari when he made the posts, plaintiffs argued that Gaspari was liable because it failed to take reasonable steps to remove the posts after Pierce changed his signature block, because at that point the posts appeared as if he was a rep. The court found that this theory could survive with proof that Gaspari intentionally and unreasonably failed to remove the allegedly defamatory posts after notice and opportunity to do so. Liability may attach when a reader may infer adoption from the presence of a statement, and the reasonability of such an inference is context dependent: the NY subway doesn’t endorse graffiti on its cars, but graffiti on the interior walls of a manufacturing plant where supervisors exercise greater supervision and control may be attributed to the company.

Here, no reasonable jury could infer that Gaspari intentionally and unreasonably kept the posts in public view. Gaspari didn’t know about the posts when it hired Pierce or that he changed his signature block, nor did it know until the lawsuit was filed that the change in the signature block would affect past posts. Moreover, Gaspari had no power to remove the posts. It could have directed Pierce to delete the posts once aware of them, but he didn’t have the power to edit or delete them more than 48 hours after they were made. (Interesting §230 consequences!) Thus, notice and ability to remove the posts were both lacking.

SI03’s claim against Bodybuilding.com also depended on attributing Ingenium’s post to Bodybuilding.com because Bodybuilding.com failed to remove the post after Ingenium became a moderator. Bodybuilding.com is responsible for acts of its agents within their actual or apparent authority. Actual authority may be express or implied for powers incidental and necessary to carry out express authority. SI03 argued that Bodybuilding.com gives moderators actual and express authority to delete forum posts and ban forum users, and thus are agents. Bodybuilding.com responded that moderators were only agents for the purpose of moderating discussions. The court agreed: there was no evidence of express authorization for Ingenium to speak on Bodybuilding.com’s behalf about products sold on the site, or any evidence from which a reasonable juror could conclude that Ingenium’s statements of opinion was necessary and incidental to his express authority to moderate the forum.

Further, the court found insufficient evidence that Ingenium had apparent authority to speak on behalf of Bodybuilding.com about any particular product’s virtues. Apparent authority requires reasonable belief in a third party that the agent is acting for the principal, or the principal’s awareness that other people believe in the agency without doing anything to correct the misimpression. There was no evidence of public perception. At most, Bodybuilding.com represented to the public that moderators had authority to moderate the forum, which isn’t the same as representing Bodybuilding.com when stating personal opinions. The required close link between the agent’s tortious conduct and his apparent authority was missing.

In the alternative, the Lanham Act claim failed because SI03 couldn’t prove any damages. It didn’t have evidence that anyone saw the post. The post was the last in the thread. And Ingenium didn’t become a moderator until a year and a half after making the post, making it even less likely that any forum member went back and saw the post, now with Ingenium’s name boldfaced to indicate moderator status.

SI03 argued that monetary damages are available in a false advertising case even without showing actual confusion. But that’s when there’s a deliberately false comparative ad, which wasn’t shown here. Here, there was no market analysis, no expert testimony, no consumer testimony, and nothing else showing injury.

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