Whitney Information, et al v. Xcentric Ventures, et al

Filing 175

TRIAL BRIEF by Xcentric Ventures, LLC. (Speth, Maria)

Maria Crimi Speth, #012574 (Admitted Pro Hac Vice)
JABURG & WILK, P.C.
3200 North Central Avenue, Suite 2000
Phoenix, Arizona 85012
[phone]
Attorneys for Defendants

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA

WHITNEY INFORMATION NETWORK,
INC.; a Colorado corporation,
Plaintiffs,

Case No: 2:04-CV-47-ftm-29
DEFENDANTS’ TRIAL BRIEF

v.
XCENTRIC VENTURES, LLC, an
Arizona limited liability company;
BADBUSINESSBUREAU.ORG, an
Arizona limited liability company; and ED
MAGEDSON, an individual,
Defendants.

Defendants respectfully submit their trial brief addressing legal questions to be
determined by the Court.
I.

THE BURDEN OF PROOF IS ON PLAINTIFF TO
OVERCOME THE PROTECTIONS AFFORDED BY THE
COMMUNICATIONS DECENCY ACT

The Communications Decency Act (“CDA”), 47 U.S.C. § 230, which was passed
by Congress with the intent to “promote unfettered speech,” provides in relevant part
that:
No provider or user of an interactive computer service shall
be treated as the publisher or speaker of any information
provided by another information content provider.

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47 U.S.C. § 230(c)(1) (emphasis added). Section 230 further provides that “[n]o cause of
action may be brought and no liability may be imposed under any State or local law that
is inconsistent with this section.” Green v. America Online, 318 F.3d 465, 470 (3rd Cir.
2003) (noting that the CDA, “‘precludes courts from entertaining claims that would place
a computer service provider in a publisher’s role,’ and therefore bars ‘lawsuits seeking to
hold a service provider liable for its exercise of a publisher’s traditional editorial
functions - such as deciding whether to publish, withdraw, postpone, or alter content.’”).
An outstanding explanation of this law and its history is set forth in the California
Supreme Court’s recent opinion in Barrett v. Rosenthal, --- Cal.Rptr.3d ----, 2006 WL
3346218 (Cal. Nov. 20, 2006), cited above. In fact, as the Barrett Court recognized, the
CDA has been universally interpreted as providing immunity to interactive websites for
content created by a third party. See Barrett, 2006 WL 3346218, *18 note 18; (citing
Blumenthal v. Drudge, 992 F.Supp. 44, 51 (D.D.C. 1998); Ben Ezra, Weinstein, and Co.,
Inc. v. America Online, Inc., 206 F.3d 980, 986 (10th Cir. 2000); Morrison v. America
Online, Inc., 153 F.Supp.2d 930, 933–934 (N.D.Ind. 2001); PatentWizard, Inc. v.
Kinko’s, Inc. 163 F.Supp.2d 1069, 1071 (D.S.D. 2001); Green v. America Online, 318
F.3d 465, 470-471 (3rd Cir. 2003); Carafano v. Metrosplash.com, Inc., 339 F.3d 1119,
1123-1124 (9th Cir. 2003); Doe One v. Oliver, 755 A.2d 1000, 1003-1004
(Conn.Super.Ct. 2000); Doe v. America Online, Inc., 783 So.2d 1010, 1013-1017 (Fla.
2001); Schneider v. Amazon.com, Inc., 31 P.3d 37, 40-42 (Wn.App. 2001); Barrett v.
Fonorow 799 N.E.2d 916, 923-925 (Ill.App.Ct. 2003); Donato v. Moldow 865 A.2d 711,
720-727 (N.J. Super.Ct.App.Div. 2005); Austin v. CrystalTech Web Hosting, 125 P.3d
389, 392-394 (Ariz.App. 2005)).
Secondary authority has also explained that:
[The CDA’s] provisions set up a complete shield from a defamation suit for
an online service provider, absent an affirmative showing that the service
was the actual author of the defamatory content. Accordingly, a number of
courts have ruled that the ISP was immune from liability for defamation
where allegedly libelous statements were made available by third parties
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through an ISP or were posted by third parties on the server's billboards, as
the ISP fell within the scope of 47 U.S.C.A. § 230.
Jay M. Zitter, J.D., Annotation—Liability of Internet Service Provider for Internet or E–
mail Defamation § 2, 84 A.L.R.5th 169 (2000) (emphasis added) (citing Pantazis, Note,
Zeran v America Online, Inc.: Insulating Internet Service Providers From Defamation
Liability, 34 Wake Forest L. Rev. 531 (1999)); see also Batzel v. Smith, 333 F.3d 1018,
1027–28 (9th Cir. 2003) (recognizing, “Making interactive computer services and their
users liable for the speech of third parties would severely restrict the information
available on the Internet. Section 230 therefore sought to prevent lawsuits from shutting
down websites and other services on the Internet.”) (quoting Ben Ezra, Weinstein, & Co.
v. America Online Inc., 206 F.3d 980, 983–84 (10th Cir. 2000).
It is clearly the burden of Plaintiff to show that the defendants are the actual
authors of the defamatory content. As is set forth in Florida Standard Jury Instruction MI
4.1, to prove defamation, the first element that a Plaintiff must prove is “whether
(defendant) [made] [published] [broadcast] the statement concerning (claimant) as
(claimant) contends.”

The CDA provides restrictions on how Plaintiff can satisfy that

element. Plaintiff can not, pursuant to the express language of the CDA, prove the first
element of defamation except to prove that at Defendant is “responsible, in whole or in
part, for the creation of the content.”
II.

CERTAIN STATEMENTS IDENTIFIED BY WHITNEY
INFORMATION NETWORK (“WIN”)ARE OPINIONS AND
NOT FACTS
A. The Preliminary Determination Of Opinion Versus Fact Is A
Question Of Law For The Court

Although the question of whether a statement is a fact or an opinion might appear
to be an issue for a jury to decide, this is not the law. On the contrary, “The vast majority
of courts, and all of the federal circuits, agree that whether a statement is fact or opinion
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is a matter of law for the court to decide.” Robert D. Sack, Sack on Defamation § 4.3.7 at
4–59 (3rd ed. 2006) (emphasis added) (citing extensive authority for premise).

As the

Sack treatise explains, the Court serves as a gatekeeper in defamation cases, excluding
from the jury’s consideration any terms which, as a matter of law, could only be viewed
as opinion, not fact; “it is the responsibility of courts to ‘examine for [themselves] the
statements in issue and the circumstances under which they were made to see … whether
they are of a character which the principles of the First Amendment … protect.” Id. at
4–59–60 (brackets in original) (quoting New York Times Co. v. Sullivan, 376 U.S. 254,
285 (1964)).
In other words, “[I]n effect, the judge is being asked whether a reasonable jury
could find the term defamatory, and that obviously is a judgment that cannot be left to the
jury.” Sack, § 4.3.7 at 4–60 (emphasis added) (quoting Dilworth v. Dudley, 75 F.3d 307,
310 (7th Cir. 1996). Therefore, as part of its duty to safeguard matters of free expression
and limit a jury to considering only statements which are truly assertions of fact, “a court
may on appropriate facts determine as a matter of law that a statement before it is not
provably false and therefore not actionable.” Sack, § 4.3.7 at 4–61 (citing Burns v.
Denver Post, Inc., 5 Media L. Rep. (BNA) 1105 (D.Colo. 1979); Catalano v. Pechous, 69
Ill.App.3d 797, 387 N.E.2d 714, 723 (App. 1978)).
B. Many of WIN’S Identified Statements are Opinion as a Matter of
Law
At the deposition of Ronald Simon, Mr. Simon was asked to identify the
statements that WIN contends are defamatory. Counsel for Defendants provided Mr.

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Simon with the exhibit to their Complaint that comprised all of the postings on Rip-off
Report identified in the Complaint as the basis for the defamation claim and requested
that he highlight the statements within those reports that WIN contends are defamatory.
There are ten separate reports that were attached to WIN’s complaint, which were
identified as Plaintiffs’ Composite Exhibit “G” to Plaintiff’s Complaint. Those reports,
with WIN’s designation of the allegedly defamatory statements in yellow highlights are
attached hereto as Exhibits 1-10.
Defendants have added green highlight to designate every statement identified by
WIN as defamatory which Defendants believe the Court should rule are opinions.
An opinion is a statement which is subjective by definition and not capable of
being proved false. Information Systems and Networks, v. City of Atlanta, 281 F.3d 1220
(11th Cir. 2002). In order to be actionable, a defamatory statement must assert or imply a
provably false fact. Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990).
The Court in Olman v. Evans, 750 F.2d 970 (D.C. Cir. 1984) established a four
factor test for determining whether a statement is fact or opinion. The Court stated that
(1) it would analyze the common usage or meaning of the specific language of the
challenged statement itself to determine whether the statement has a precise core of
meaning for which a consensus of understanding exists or, conversely, whether the
statement is indefinite and ambiguous; (2) it would consider the statement's verifiability
— is the statement capable of being objectively characterized as true or false?; (3) it
would consider the full context of the statement; and (4) it would consider the broader
context or setting in which the statement appears, including the social conventions.
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Applying the Olman Court factors, the statements highlighted in green in the
attached exhibits are opinions and not statements of fact. The opinions include such
statements as “the product isn’t worth the cost of air from the outdoors,” (Exhibit 3) “I
never got a straight answer,” (Exhibit 4) and “he always seemed a little too slick for my
taste. (Exhibit 4)

Despite the fact that these statements are classic opinions, WIN

identified them as defamatory statements. The green-highlighted statements also include
adjectives such as ripoff, crooked and corrupt. These descriptions are indefinite and
ambiguous, and can not be objectively characterized as true or false, especially in the
context used in Exhibits 1-10 and on a website where the social convention is for the
authors to passionately express their opinions about business practices that are unfair to
consumers.

For example, where authors of the postings described how they paid “too

much” for a WIN seminar, or paid for a seminar that they believe turned out to be a sales
pitch for future seminars, they often summed up their experience as a “ripoff” or a
“scam.” These are indefinite and ambiguous terms that are not objectively characterized
as true or false. They are opinions.
Defendants request that the Court analyze each of the green-highlighted statements
and make a legal ruling that the statements are opinions.

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III.

WHITNEY IS A PUBLIC FIGURE

As an initial matter, this Court must determine whether Whitney is a public
figure.1 The threshold issue of whether Whitney is a [limited purpose] public figure is a
question law to be resolved by the court. Thompson v. Nat’l Catholic Reporter Pub. Co.,
4 F.Supp.2d 833, 837 (E.D. Wisc. 1998). In Florida, that determination is a two-step
process. First, there must be a “public controversy” of some type. Consumer reporting on
complaints about businesses involves a “public controversy” as a matter of law. Mile
Marker, Inc. v. Petersen Publishing, L.L.C., 811 So.2d 841, 846 (Fla. App. 2002) (citing
Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 280 (3rd Cir. 1980), which recognizes
that consumer reporting involves inherent matters of particular interest to the public in
that it enables citizens to make better informed purchasing decisions). Second, the
plaintiff must have played a sufficiently central role in the controversy. Mile Marker,
Inc., 811 So.2d at 846. Relevant factors when considering this second prong include the
nature and extent of the advertising and publicity campaigns previously undertaken by
the plaintiff, paying particular attention to the pursuit of a marketing strategy that
emphasizes the subject of the controversy; and, the plaintiff’s use and access to the
media, and whether the plaintiff uses that media access to attract attention to itself in
ways other than in relation to a pending lawsuit. Id., Della-Donna v. Gore Newspapers
Co., 489 So.2d 72, 75 (4th App. Dist. 1986).

1

Whether a plaintiff is a public figure or simply a private person is a question of federal constitutional law and
Supreme Court rulings are controlling. However, since the Supreme Court has not defined the contours of who
constitutes a public figure, resort to state law is appropriate in diversity actions. Harris v. Quadracci, 48 F.3d 247,
250 (7th Cir. 1995).

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Here, Whitney is a public figure. First, the lawsuit seeks damages from Xcentric
for allegedly defamatory consumer complaints about Whitney published at Xcentric’s
website www.ripoffreport.com. (See Plaintiff’s First Amended Complaint (“FAC”), Dkt.
No. 56, at ¶¶ 56 – 66.) As a matter of law, therefore, the First Amended Complaint
establishes the existence of a public controversy, thereby satisfying the first prong of the
public figure test. The second prong is also satisfied.
Here, also, the second prong is satisfied. The subject of the controversy are
allegedly defamatory statements about the effectiveness of Whitney’s educational
seminars and other educational programs. Whitney has engaged in extensive national and
international marketing regarding its educational programs. For example, as Whitney
admits in its First Amended Complaint, “Plaintiff spends millions of dollars each year on
infomercial and other advertising to promote its products and services. (Id. at ¶ 21.)
Whitney further admits that “Plaintiff has achieved wide-spread and substantial sales of
their products and services,” (id. at ¶ 25), and that “said products and services are now,
and long prior to the acts of Defendants complained of herein, generally known among
the trade and public . . . ,” (id. at ¶ 26). Whitney also maintains an Internet website to
promote its products and services, (id. at ¶ 29), and is believed to also advertise them on
Craigslist, a well-known Internet website. Moreover, as a publicly-traded company,
Whitney is required to make annual and quarterly filings with the SEC regarding is
operations and activities. In its most recently filed annual report, Form 10-K, filed on
April 2, 2007, Whitney discloses that its comprehensive marketing strategy includes
television advertising concentrated in cities where their courses are held, newsprint
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advertising, direct mail and email marketing, Internet marketing, cross-promotional
advertising campaigns, and through strategic alliances with promoters. Clearly, Whitney
has followed an extensive program of marketing its educational products and services—
the subjects of the public controversy—to a national and international audience.
Moreover, Whitney has access to the media and has used that access to attract
attention to itself in other ways not related to this lawsuit. For instance, on March 18,
2007, The New York Times printed a length article entitled Russ Whitney Wants You to
Be Rich, which extolled Mr. Whitney, his rags-to-riches story and how his products and
services could help the average Joe achieve like results. Whitney has also garnered media
attention in local and regional publications such as Florida Trend magazine and
Golfshore Life magazine. See www.wincorporate.com/profile.htm. Finally, Whitney’s
own website brags that,
As the industry leader in financial education, Whitney
Information Network, Inc. reached 600,000 people in 2005,
holding almost 5,000 trainings across the United States, the
United Kingdom, and Canada, providing local training in 185 of
the top 210 U.S. markets and 5 of Canada’s 11 provinces.
Whitney conducted 131 training courses in 55 cities throughout
the United Kingdom, Scotland and Ireland, reaching thousands of
students.
Id.

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Considering all the above factors, Whitney is a public figure, if not in general,
then at least for a limited purpose applicable to this litigation.

DATED:

February 5, 2008.
JABURG & WILK, P.C.

s/Maria Crimi Speth
Maria Crimi Speth, Esq.
Attorneys for Defendants
CERTIFICATE OF SERVICE
I hereby certify that on the 5th day of February 2008, I caused the attached
document to be electronically transmitted to the Clerk’s Office using the CM/ECF
System for filing and transmittal of a Notice of Electronic Filing to the following
CM/ECF Registrants:

Steven Neil Lippman
Shawn L. Birken
Scott W. Rothstein
Rothstein Rosenfeld Adler
Suite 1650
401 E Las Olas Blvd
Ft Lauderdale, FL 33301
Attorneys for Plaintiff

Brian J. Stack
Stack, Fernandez, Anderson,
Harris & Wallace, P.A.
1200 Brickell Ave., Suite 950
Miami, FL 33131-3255
Attorneys for Defendant

s/Maria Crimi Speth
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