Prodigy Decision Bodes Well for ISPs

One of the gazillion issues clouding the increasingly complex debate over the proposed federal ban on Internet gambling in the United States is ISP liability. Some legislators in favor of prohibition would love to achieve the coveted yet seemingly unreachable goal of legitimate enforceability by allowing authorities to toss the blame lasso over such an easy target, but that notion--for obvious reasons--isn't flying among the many legislators who benefit from having the ISPs on their sides. In terms of legal precedence, there aren't too many decisions out there to sway the liability issue one way or the other, but IGN has uncovered a case that should raise a few eyebrows.

In September 1994, an unknown imposter opened a number of ISP accounts with Prodigy Services Company in the name of Alexander Lunney, a teenage Boy Scout living in Westchester County, New York. The imposter then posted vulgar messages on Prodigy's bulletin board and sent a threatening, profane email (subject line: "HOW I'M GONNA'KILL U") to Lunney's scoutmaster.

Lunney, believed by authorities to have not sent the threat, learned of the email when he and his mother were confronted by the scoutmaster and police officers. Additionally, he was informed by Prodigy that the accounts in his name, which he says he knew nothing about, were being canceled.

By his father, Lunney subsequently sued Prodigy, asserting that Prodigy was responsible for Lunney being stigmatized and defamed. In his original complaint, filed in December 22, 1994, Lunney demanded compensatory and punitive damages from Prodigy based on libel, negligence and harassment. In an amended complaint, he expanded his factual allegations to encompass the two bulletin board messages posted with the help of Prodigy's service.

The Supreme Court denied three motions by Prodigy for summary judgment. On a consolidated appeal from the denial of the second and third motions, the Appellate Division reversed and granted summary judgment to Prodigy, holding that "(i) the messages were not 'of and concerning' Lunney and therefore did not defame him, (ii) although the messages were in extremely poor taste, the stigma associated with them did not amount to defamation and (iii) Prodigy was not the publisher of the messages, but even if it could be so considered, it was entitled to a qualified privilege sheltering it from liability."

Prodigy's motion for summary judgment was thus granted, and the appeal from the order entered July 2, 1997 was dismissed.

In his opinion, Appellate Judge J. Rosenblatt, asserted, "The public would not be well served by compelling an ISP to examine and screen millions of e-mail communications, on pain of liability for defamation."

The Lunney case bodes well for ISPs in terms of liability for defamation, but what about ISP liability in general? Do rulings like this strengthen the case for keeping ISPs out of the picture in defining enforcement mechanisms for proposed Internet gambling prohibition laws?

According to attorney John Crigler of Garvey, Schubert & Barer, they certainly can't hurt. Crigler points out that the Kyl/Goodlatte prohibition bill, in its current form, only calls for ISPs to be accountable if they're directly involved in the online gambling business. "There's no liability if the ISP is a passive conduit," he explained.

Obviously, aligning the Lunney case with the facilitation of online gambling doesn't produce a direct hit in terms of precedence. The liability argument concerning the Communications Decency Act (47 USC § 230) is far more applicable to this case than that of the Kyl/Goodlatte bill, but the principle is the same: It's unrealistic, as Judge Rosenblatt explained, to expect ISPs to closely control everything that happens on their servers.

For the moment, ISPs aren't being shadowed by the Kyl/Goodlatte anvil, but it should be recognized that changes are likely in store for the bill if it's to stand a chance for survival. Decisions like the one made in the Lunney/Prodigy case, however, could help prevent liability language from creeping back in.

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