IP Law Daily Franchisor’s DTSA claims against Glassdoor website barred by Communications Decency Act Section 230
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Friday, October 19, 2018

Franchisor’s DTSA claims against Glassdoor website barred by Communications Decency Act Section 230

By Cheryl Beise, J.D.

Section 230 of the Communications Decency Act barred Defend Trade Secrets Act and Massachusetts state law claims brought by a craft beer store franchisor against employer review website Glassdoor.com because the franchisor sought to hold Glassdoor liable for reviews that were created and posted by third-parties, the federal district court in Boston has ruled. By removing one post that failed to meet the website’s guidelines, and later publishing a revised version of the post, Glassdoor was not acting as a content creator, but was exercising the traditional role of a publisher. Section 230’s exemption for intellectual property law claims did not apply to the franchisor’s DTSA claim because the DTSA expressly states that it "shall not be construed to be a law pertaining to intellectual property for purposes of any other Act of Congress." The franchisor’s Massachusetts trade secret misappropriation claim failed on its merits because the franchisor did not allege a confidential relationship with Glassdoor (Craft Beer Stellar, LLC v. Glassdoor, Inc., October 17, 2018, Saylor, F.).

Craft Beer Stellar LLC ("CBS") is a franchisor of craft beer stores known as Craft Beer Cellars. CBS franchisees agree to keep certain CBS proprietary information confidential. Glassdoor, Inc., operates a website, www.glassdoor.com, where users can anonymously post comments about their employers. In November 2017, a purported employee of CBS posted a negative review of the Belmont, Massachusetts Craft Beer Cellar on glassdoor.com. Over the next few months, one or more unnamed users identifying themselves as current or former employees of CBS continued to post negative reviews of the Belmont store. Each of the negative reviews mentioned the co-founder of CBS, Suzanne Schalow. After being contacted by Schalow, Glassdoor removed one critical review because it failed to meet the website’s community guidelines. The review was revised and reposted. Glassdoor refused to remove the revised review because it no longer violated the guidelines.

CBS filed suit against Glassdoor, asserting claims for: (1) violation of the federal Defend Trade Secrets Act (DTSA); (2) violation of the federal Computer Fraud and Abuse Act (CFAA); (3) violation of the Massachusetts trade secrets statute; (4) violation of the Massachusetts Consumer Protection Act; (5) aiding and abetting John Does 1-20 in various contractual breaches, torts, and other violations; and (6) civil conspiracy. CBS also sued unnamed Doe defendants. CBS stipulated to dismissal of the CFAA claim.

Glassdoor moved to dismiss the remaining claims under Section 230 of the Communications Decency Act of 1996 (CDA). Section 230(c) of the CDA immunizes interactive service providers from liability for claims arising out of their role as publishers of third-party content. Immunity does not apply if the service provider is responsible for creating or contributing to the content.

Content creation. In this case, it was clear that the posts at issue were authored by third-parties, franchise store owners or employees. CBS, however, argued that Glassdoor should be deemed responsible for creating or developing the posts because it "materially revise[d] and change[d] [their] content." In particular, CBS contended that Glassdoor’s decision to remove the noncompliant review from its website, combined with its subsequent decision to allow the updated review, constituted an act of creating or developing the post’s content.

The court disagreed with CBS. As the First Circuit has explained, service providers are not liable for exercising "a publisher’s traditional editorial functions ... such as deciding whether to publish [or] withdraw ... content." Jane Doe No. 1 v. Backpage.com, LLC, 817 F.3d 12, 18 (1st Cir. 2016). Therefore, Glassdoor’s decisions to remove the review, and to permit an updated version to be re-posted, constituted the exercise of a traditional editorial function. Glassdoor could not be deemed responsible for creating or developing the content. Glassdoor qualified as an "interactive computer service" immune from liability under Section 230.

DTSA claim. Subsection (2)(e) of Section 230 provides that "[n]othing" in the statute "shall be construed to limit or expand any law pertaining to intellectual property." As a matter of first impression, the court considered whether a claim under the DTSA qualified as an intellectual property claim. Although trade secrets are generally considered a form of intellectual property, Section 2(g) of the DTSA itself plainly states that it "shall not be construed to be a law pertaining to intellectual property for purposes of any other Act of Congress." "Because Congress has clearly dictated that the DTSA should not be construed to be a law ‘pertaining to intellectual property’ for the purposes of anyother Act of Congress, the DTSA is clearly not such a law for the purposes of § 230(e)(2)," the court said.

Massachusetts trade secrets claim. In order to prevail on a misappropriation of trade secrets claim under Massachusetts law, a plaintiff must prove that (1) the information at issue is a trade secret; (2) the plaintiff took reasonable steps to preserve the secrecy of the information; and (3) the defendant used improper means, in breach of a confidential relationship, to acquire and use the trade secret. To succeed in proving the third element, a plaintiff must show that it shared a confidential relationship with the defendant, the court noted. Although CBS alleges that it shared a confidential relationship with its employees who supposedly wrote the negative reviews on Glassdoor’s website, it did not contend that it ever shared a confidential relationship with Glassdoor. Because the complaint did not satisfy the third element of trade secret misappropriation under Massachusetts law, the claim was dismissed. The court did not need to address whether this claim was barred by Section 230 of the CDA.

Other claims. CBS’s remaining claims—that Glassdoor violated the Massachusetts Consumer Protection Act, aided and abetted John Does 1-20, and civilly conspired with John Does 1-20—were clearly not claims "pertaining to intellectual property" and thus were subject to Section 230 immunity. Accordingly, these claims were also dismissed.

This case is No. 1:18-cv-10510-FDS.

Attorneys: Philip M. Giordano (Reed & Giordano, P.A.) for Craft Beer Stellar, LLC. Jeffrey Jackson Pyle (Prince Lobel Tye LLP) for Glassdoor, Inc.

Companies: Craft Beer Stellar, LLC; Glassdoor, Inc.

MainStory: TopStory TechnologyInternet TradeSecrets MassachusettsNews

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