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Emily D. Swoboda

Long-Standing Class-Action Suit against Google, Yahoo Dismissed

2 December 2008

The dismissal of a four-year-old class-action suit against two California Internet search engines may have gone virtually unnoticed, but its potential impact and its merits -- or lack thereof -- have not.

Richard A. Kramer, a judge in the Superior Court of California, San Francisco County, on Nov. 7 dismissed the case brought by Mario Cisneros and Michael Voight, both residents of California, in May 2004.

The plaintiffs sued Google Inc., Yahoo Inc. and 11 other search engines and portal sites for illegally taking revenue from online gambling advertising, claiming the ads violated the California Business and Professions Code and caused substantial financial harm to the State of California and its residents. In the end, Google and Yahoo were the only parties remaining in the suit.

The ads in question are sponsored links that appear at the top or the side of the search-results page -- Google's AdWords program, for example, offers text-based linked ads which receive top billing on the results page.

Initially, the plaintiffs asked for financial damages, based on revenue gained from online gambling advertising. Mr. Voight, in fact, claimed to have lost $100,000 at online gambling sites he found through the search engines. But an earlier ruling denied any form of monetary compensation and said the plaintiffs could ask only for injunctive relief in the event of a favorable outcome.

Google and Yahoo, however, stopped taking I-gaming advertising in April 2004, when a federal grand jury was investigating Internet gambling in the United States -- before the suit was brought in the San Francisco court.

Because Google and Yahoo had demonstrated they had stopped taking online gambling advertising before the complaint was filed, Judge Richard A. Kramer found the plaintiffs had no standing to ask for injunctive relief.

"An injunction has to mean something -- it has to work," Lawrence G. Walters, an Internet gambling attorney and partner at Weston, Garrou, Walters & Mooney, told IGamingNews.

"And the court said, 'Look, there's nothing that's going to stop these plaintiffs from gambling in terms of an injunction,’ “ he continued. “ ‘We can tell Google and Yahoo anything we want, but the non-sponsored links are still going to appear -- you can't control those.’ “

In addition, section 230 of the Federal Communications Decency Act, upon which Judge Kramer based his ruling, provides immunity from liability for providers and users of an "interactive computer service" who publish information provided by outside sources.

Martin D. Owens Jr, a California gaming attorney, explained Section 230 in simpler terms.

"The question boils down to whether or not an advertiser or I.S.P. can be considered the same thing as a publisher," Mr. Owens told IGN. "Publishers are responsible for the naughty things their authors say. But if you are running a bulletin board, or the electronic equivalent thereof, well, you've got no control if somebody posts something. So you can't be hit for that."

But at the same time, a problematic situation arises with the statute. In some legal circles, the very act of installing a filter on a Web site can mean admitting responsibility for the content, thus making an advertiser or I.S.P. liable, Mr. Owens said.

"Meanwhile, if you made no attempts to clean up the content, that proved that you were not a publisher, and therefore not legally responsible, even if that led to more not less obscenity, as a concrete result," he said. "The Supreme Court called this ‘a disincentive to self-regulation’ and therefore held that the Communications Decency Act ‘creates a federal immunity to any cause of action that would make service providers liable for information originating with a third-party user of the service.’ "

Significantly, Judge Kramer’s is the first decision where Section 230 of the decency act has been applied to search engine-sponsored links, which may have some potentially far-reaching consequences for linked sites.

"Section 230 issues usually come up where people are posting profiles online, like on dating sites or blogs or commentaries or communities where people are just writing things," Mr. Walters said.

"But this is clearly commercial activity,” he went on. “Basically, what they're saying is that if you allow submitters of the links to submit the information themselves; if you don't organize and decide what goes on and what doesn't; if you let it be an auto-post situation and you have some automated programs that exclude certain things -- you're not going to be held liable for the links or what's being promoted by those links."

While Yahoo could not be reached for comment, Google said the company is very happy with the judge's ruling.

"In the case of any frivolous litigation claims, we will always aggressively litigate against those," Andrew Pederson, a spokesman for Google, told IGN.

Calls and e-mails to Ira Rothken, attorney for the plaintiffs, were unreturned by press time.

Long-Standing Class-Action Suit against Google, Yahoo Dismissed is republished from
Emily D. Swoboda
Emily D. Swoboda