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

Filing 179

PRETRIAL STATEMENT by Whitney Information Network, Inc., Xcentric Ventures, LLC. (Attachments: # 1 Exhibit, # 2 Exhibit)(Birken, Shawn)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
Case No. 2:04-cv-47-FtM-29 SPC
WHITNEY INFORMATION
NETWORK, INC., a Colorado corporation,
Plaintiffs,
v.
XCENTRIC VENTURES, LLC., an
Arizona limited liability company;
BADBUSINESSBUREAU.ORG, an
Arizona limited liability company; and
ED MAGEDSON, an individual,
Defendants.
____________________________________/
JOINT PRETRIAL STIPULATION
Plaintiff, WHITNEY INFORMATION NETWORK, INC. (“WIN”), and Defendants,
XCENTRIC VENTURES, LLC. (“XCENTRIC”) and ED MAGEDSON (“MAGEDSON”), by
and through their undersigned counsel, pursuant to Local Rule 3.06, M.D.Fla., file this, their Joint
Pretrial Stipulation and state as follows:
I.

BASIS OF JURISDICTION
Jurisdiction is based on diversity of citizenship pursuant to 28 U.S.C. § 1332. The amount

in controversy is greater than $75,000.00 exclusive of interest, attorneys’ fees and costs. Plaintiff’s
position is that this Court has personal jurisdiction over all Defendants as they intentionally
published defamatory material concerning WIN in Florida on their Internet website. Plaintiff’s
position is that Defendants’ use of such defamatory material is for interstate commercial activity
and such use is a substantial aspect of Defendants’ conduct giving rise to WIN’s claims.

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Defendants’ position is that the Court does not have personal jurisdiction over Defendants,
who are residents of Arizona and operate their business in Arizona. The 11th Circuit found
personal jurisdiction only because of Plaintiff’s unfounded allegation in its Amended Complaint
that Defendants committed a defamation tort against Florida residents. Plaintiff now admits it had
no basis in evidence to support the allegation.
II.

CONCISE STATEMENT OF NATURE OF ACTION
This is a claim for defamation brought by WIN against Defendants. Plaintiff claims that

Defendants intentionally and/or recklessly published defamatory information about WIN, a Florida
corporation and Florida citizen, and published same via the Internet resulting in significant injury
and harm to WIN and its reputation.
III.

GENERAL STATEMENT OF EACH PARTY’S CASE
A.

Plaintiff’s Case

WIN provides post-secondary educational and training products and services in the areas of
real estate investing, business development, financial investment and asset protection to students
world-wide. Xcentric operates a website called the “Rip-off Report.” Ed Magedson does not own
Xcentric, but does run the “Rip-off Report” website and directs and controls Xcentric’s and BBB’s
activities.
In order to post a report on the “Rip-off Report” website one needs to follow a number of
procedures including “Categorize your report by selecting from our list of categories.” In order to
do so, a number of choices are provided from which a selection must be made. Xcentric chooses
which categories are included for selection. Among the categories for selection are “con artists”,
“corrupt companies” and “false TV advertisements”, which categories were used on the postings at
issue regarding WIN.

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The “Rip-Off Report” solicits those who believe they are the “Victim of a consumer Ripoff” who “Want justice”. People are encouraged to file reports; they are told that “Filing a Rip-Off
Report™ is important because you are helping us to help you, and others like you, achieve justice.
We are able to accomplish this by working with the proper authorities for prosecution, and
working with lawyers by using your Report to help organize lawsuits” and “The more Reports filed
on a Company or individual, the more likely it is that the authorities and attorneys will want to take
action.” To further entice people to post reports they are told that “Rip-Off Report™ works
regularly with most TV News magazines & Networks and their affiliates, NBC, CBS, ABC, Fox
News and local and National newspapers including The New York Times the Wall Street Journal
to Auto Motive News” such that “Reporting your experiences on Rip-off Report is the next best
thing to getting your story on TV or in a newspaper.” Facilitating a connection between the people
positing reports on the “Rip-off Report” website and the media is an inducement to people to post
reports on the “Rip-off Report” website. People are encouraged to “USE YOUR REPORT TO
GET WHAT IS COMING TO YOU” by extorting things from the reported entity (“Faxing your
Rip-off Report™ to the Company or Individual you have just reported can serve as a very valuable
negotiating tool. Include in your negotiation that you have the ability to UPDATE your Report and
reflect their good business practices by explaining that their eagerness to satisfy the complaint and
make things right will be seen by the entire world. Also, explain that failure to respond/rectify the
situation will also be seen.”). Xcentric encourages such reports even though it knows that people
can post a report with derogatory comments that are totally false for spiteful purposes.
Not only do the defendants solicit reports, they take an active role in shaping the content of
the postings on the “Rip-off Report” website. Under a heading “What makes a good Rip-off
Report?” they provide “guidance on what [consumers] should think about in preparing their RipOff Reports”, including guidance on preparing a title such as “Be creative when using the example
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words. It will make your report more interesting.” The home page of the “Rip-off Report” website
contains a “front page” section which contains a picture and description of the “Top Rip-off
Reports”, “Top Rip-off Links” and “Featured Rip-off Reports.” Not only does Xcentric decide
which submissions are included in the “Top Rip-off Reports”, “Top Rip-off Links” and “Featured
Rip-off Reports”, under a heading “How can my story be featured on the Home page?” they
provide “guidance to a person who wants to place a Rip-Off Report as to how his might be deemed
worthy of being in the top Rip-off Reports or featured Rip-Off Reports….”
Defendants sell a “Revenge Guide” on the “Rip-off Report” website. Mr. Magedson
prepared this “Revenge Guide.” The “Revenge Guide” provides that “YOUR FIRST STEP TO
REVENGE. First go to RIP-OFF Report to file your report and begin your Rip-off Revenge.”
Advertising is also sold on the “Rip-off Report” website. Xcentric acknowledges that the
more hits it receives on its “Rip-off Report” website the greater the likelihood it can sell
advertising and the greater amount it could sell that advertising for. In addition, donations are
solicited on the “Rip-off Report” website and, likewise, the more hits the website receives the
greater the likelihood it will obtain more and larger donations. The “Rip-off Report” website states
that “TOGETHER, WE ARE A CONSUMER-REPORTING NEWS AGENCY, BY
CONSUMERS, FOR CONSUMERS” and that “In response to reports placed on the website, we
research abuses and help individuals defend their rights. Since our inception, we have helped
consumers collect well over a million dollars to date ….”
One can avoid having reports posted about them on the “Rip-off Report” website by paying
defendants a fee through participation in what is called the corporate advocacy program. For this
fee, defendants tell those people who might submit a report that “these guys are pretty good.
They’ll address your thing. Somebody will contact you in X number of days.” Defendants “try to
calm them down.” The corporate advocacy program member then has an opportunity to deal with
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the person submitting the report and if they can satisfy that person the report is never posted on the
“Rip-off Report” website. Even if the person submitting the report is not satisfied, Xcentric might
still decide not to post his report on the “Rip-off Report” website if it determines that the corporate
advocacy program member’s response is acceptable. This ability to prevent the positing of
submitted reports is only available to those who pay the fee to belong to the corporate advocacy
program.
While people are encouraged to say whatever they want in reports posted on the “Rip-off
Report” website, the people about whom a report is posted are constricted in what they are allowed
to do in rebuttal. They are not allowed to make “trivial comments”, whatever that means; Xcentric
decides if a rebuttal contains a “trivial comment” in which event it may not get posted on the “Ripoff Report” website. Mr. Magedson concedes that this standard is inconsistently enforced.
The “Rip-off Report” website contains numerous stories depicting WIN in a negative light
and defaming its business practices. As consumers search for WIN’s products and services on the
Internet they are unwittingly directed to the “Rip-off Report” website where they are exposed to
the false and defamatory statements about WIN.
B.

Defendants’ Case

Plaintiff can not prove the elements of defamation. Plaintiff must prove that (1) the
Defendants were responsible in whole or in part for creating and publishing a false and defamatory
statement about Plaintiff; (2) the statement was made or published to a third person; (3) the
Defendants knew that the statement or statements were false, or acted in reckless disregard as to
whether the statement was true of false; and (4) the statement or statements caused the Plaintiff to
suffer damage. Plaintiff has the burden of establishing element 3 (Defendants’ intent) by clear and
convincing evidence.

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The Plaintiff has no proof of any of the three elements of defamation. As to the first
element, Plaintiff can not prove that Defendants authored the postings at issue, which it must do in
order to satisfy that element. Under the law, the provider or user of an interactive website cannot
be regarded as the publisher or speaker of any statement posted on the site by another person
unless the evidence shows that the Defendant actually created the statement, in whole or in part.
Defendant did provide the authors of the reports a drop down list of categories to choose
from. There are over 500 categories listed, and the categories were created based upon suggestions
or requests from readers. The categories include benign categories such as home based business,
financial services, and multi-level marketing.

The categories also include more colorful

descriptions such as corrupt companies and false television advertisements. Plaintiff’s position is
that even though the consumer chooses the category in which to place his or her report, the fact
that there is a drop down list of categories makes Defendants an information content provider of
those categories. This argument has been squarely rejected by the Courts. Global Royalties, Ltd.
v. Xcentric Ventures, LLC, 2007 WL 2949002 (D.Ariz. 2007); Carafano v. Metrosplash.com, Inc.,
339 F.3d 1119, 1124 (9th Cir. 2003) (holding dating website entitled to CDA immunity because,
“Matchmaker was not responsible, even in part, for associating certain multiple choice responses
with a set of physical characteristics, a group of essay answers, and a photograph. Matchmaker
cannot be considered an ‘information content provider’ under the statute because no profile has any
content until a user actively creates it.”)
Plaintiff further proposes to offer evidence that Defendants solicit posting on the website,
and, thus are responsible for the creation of the content at issue. There is zero support for this
proposed exception, which, if adopted, would swallow the rule. All website operators that permit
postings also encourage postings. The encouragement of a posting can never equate to the
authoring of the posting.
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Plaintiff similarly proposes to offer evidence that Defendants give advice on how to write
the report. Plaintiff points to a statement that it alleges was on the website that told the poster to be
creative in writing the title of the report in order to make the report more interesting. Here again,
encouraging someone to make a report interesting can not rise to the level of authoring the posting.
Plaintiff also points to website policies about decisions to not post certain reports or
rebuttals. Defendants do engage in editing decisions, such as deleting threats and profanity and not
posting certain submitted content. However, editing of content or making decisions whether to
publish, withdraw, postpone, or alter content, does not make Defendants a publisher or speaker of
any statements about Plaintiff unless the evidence shows that the statements were actually written
by Defendants and not by another person. Green v. America Online, 318 F.3d 465, 470 (3rd Cir.
2003).
Even apart from the Communications Decency Act, Plaintiff can not prove defamation.
Plaintiff is a public figure, and the law requires the Plaintiff to show actual malice to prove
defamation. When the Plaintiff in a defamation case is famous or otherwise well-known, the law
will classify the Plaintiff as a “public figure” either generally or for the limited purpose of the case
at issue. First, there must be a “public controversy” of some kind. A public controversy can be
something newsworthy, but it does not have to be. Public controversies included any matter in
which the public has some level of interest in knowing the outcome. 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 (Fl.App. 2002) (citing Steaks Unlimited, Inc. v.
Deaner, 623 F.2d 264, 280 (3rd Cir. 1980) (recognizing consumer reporting involves inherent
matters of particular interest to the public in that it enables citizens to make better informed
purchasing decisions).

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Another factor to consider is the Plaintiff’s use of and access to the media. Plaintiff uses
the media to attract attention to itself in ways other than merely defending itself or discussing this
lawsuit. For instance, Plaintiff regularly issues press releases. Such conduct makes Plaintiff a
public figure.
Plaintiff can not show by clear and convincing evidence that Defendants knew when the
statements were made that they were false, or that they had serious doubts then as to their truth.
There are over 300,000 postings on Rip-off Report and Defendants do not and can not investigate
the truth of the postings that are made. It is not unusual for as many as 400 postings to be made in
one day.
Indeed, there is overwhelming evidence that the statements at issue are, indeed true. A
statement is substantially true if its substance or gist conveys essentially the same meaning that the
truth would have conveyed. WIN is currently the subject of an SEC investigation and a class
action lawsuit. Indeed, WIN’s own attorneys, hired as a Special Committee, found that, “among
other things, before the start of the government investigations, the Company's marketing function including advertising for Company products, solicitation of customers, presentation of live
seminars, telemarketing, coaching and mentoring - was characterized by inadequate controls,
inadequate training and a failure to devote adequate resources to compliance. The Special
Committee also criticized a variety of practices, including, among others, use of testimonials
obtained for one brand in support of another, failure to disclose affiliations between endorsers and
the Company, failure to adequately disclose investment risks, and misstatements by certain live
speakers.” Plaintiff has admitted to internal management and control problems during the relevant
time period. Plaintiff has filed many other public documents with agencies such as the SEC that
reveal negative information about the business. Plaintiff cannot recover for defamation when its
“hands are not clean;” i.e., it would be inequitable for it to recover because the alleged false
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statements describe conduct by the Plaintiff that is substantially similar to its actual unscrupulous
conduct.
Plaintiff has not been damaged by any statements published on Defendants’ interactive
computer service. Damages resulting from the dissemination of truthful information that rationally
includes the withdrawal of patronage from the person whom the information concerns must be
partitioned from alleged defamation, and if reputation has already been damaged by truthful
information then Plaintiff has no remedy against subsequent alleged defamation. Truthful negative
information regarding Plaintiff abounds, and any withdrawal of patronage resulted from that.
Negative reports and opinions about Plaintiffs abound on the internet, in the news media.
Plaintiff’s business organization has been in turmoil due to key employees leaving the
company as a result of scandalous allegations, government investigations, and poor management.
Russ Whitney himself was forced to step down from his namesake company by Plaintiff’s Board
of Directors. Nothing posted on Rip-off Report caused damage to Plaintiff. It is more likely that
Plaintiff’s own business practices and tumultuous conditions, including self-inflicted and wellpublicized scandals, certainly could have damaged Plaintiff.
IV.

EXHIBIT LISTS
See schedules attached hereto as Schedules A (Plaintiff’s exhibit list) and B (Defendants’

exhibit list).
V.

WITNESS LISTS

See schedules attached hereto as Schedules C (Plaintiff’s witness list) and D (Defendants’ witness
list).
Defendant objects to the generic designation of witnesses provided by Plaintiff. At this
point in time, Plaintiff should be able to specifically identify its witnesses, including those in the

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provided categories of “WIN Representative with the most knowledge regarding its claim of
Defamation” and “WIN Representative with the most knowledge regarding its claim of Damages”.
VI.

EXPERT WITNESSES
No independent experts

VII.

DAMAGES
In a defamation action, such as this, WIN shall be seeking general damages, which are those

naturally, proximately and necessarily result from the publication of the defamation.

These

damages are allowable whenever the immediate result is to impair the plaintiff’s reputation,
although no actual pecuniary loss is demonstrated. Bovenhausen v. Cassat Avenue Mobile Homes,
Inc., 344 So.2d 279, 281 (Fla. 1st DCA 1977). The amount of the general damages are in the
purview of the jury.
Defendants dispute that Plaintiff incurred any damages, and asserts that Plaintiff’s reputation
was already low and lowered further due to its own mismanagement, wrongdoing, and negative
reports from sources other than Defendants.
VIII. DEPOSITIONS TO BE USED AT TRIAL
A.

Ed Magedson (Plaintiffs did not make specific designations)
Defendants object to wholesale admission of Ed Magedson’s deposition, which
contains testimony that is not relevant to the claims at issue, cumulative, and
prejudicial in certain parts.

B.

Ed Magedson as designated by Defendants below
Offered in support of the Defense
PAGE/LINE
16/23-17/1
24/15-25/7
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27/12 – 29/9
29/16-30/23
31/5-14
32/25 – 33/3
46/17–23
58/7–16
68/21-23
72/4 – 13
81/2–18
83/7 – 84/3
139/4 – 141/21
141/22 – 143/13
145/20 – 146/7
147/16 – 148/4
182/5–19
186/1 – 187/7
187/15 – 188/22
245/22 – 246/11
258/19 – 259-3
259/10 – 260/10
260/21 – 261/1
261/8–20
266/9-21

Offered only in rebuttal if objectionable irrelevant testimony from the Deposition is
admitted during Plaintiff’s case in chief

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PAGE/LINE
68/4-16
155/4 – 156/6
158/21 – 162/21

C.
IX.

Ben Smith, total deposition
CONCISE STATEMENT OF UNDISPUTED FACTS

A.

WIN provides post-secondary educational and training products and services in the

areas of real estate investing, business development, financial investment and asset protection real
estate to students world-wide.
B.

Xcentric operates a website called the “Rip-off Report.” (also “ROR Site”).

C.

Ed Magedson does not own the “Rip-off Report” website. He is the founder and

managing member of Xcentric.
D.

The “Rip-off Report” website contains postings by “consumers” about their

experiences.
E.

The home page of the “Rip-Off Report” website states that its purpose is “to file &

document complaints about Companies or Individuals who ripoff consumers.”
F.

The “Rip-off Report” website solicits those who believe they are the “Victim of a

consumer Rip-off” who “Want justice”.
G.

People are encouraged to file reports; they are told that “Filing a Rip-Off Report™

is important because you are helping us to help you, and others like you, achieve justice. We are
able to accomplish this by working with the proper authorities for prosecution, and working with
lawyers by using your Report to help organize lawsuits” and “The more Reports filed on a

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Company or individual, the more likely it is that the authorities and attorneys will want to take
action.”
H.

Xcentric has on occasions assembled materials filed on its website and submitted

them to a governmental agency who might be interested.
I.

Xcentric has on occasions provided information from reports posted on the “Rip-

off Report” website to reporters.
J.

The “Rip-off Report” website states that “We are anxious and willing to join forces

with victims and attorneys to stand up for the rights of consumers and help them get justice. Email us. Both victims and attorneys should send their e-mails to: [e-mail]”
and “We get requests every week for class action lawsuits; bringing victims together with lawyers
willing to sue the company after reading your filed Rip-off Report™.”
K.

The email address [e-mail] goes to Xcentric’s office.

L.

Xcentric does not investigate the veracity or truthfulness of the person posting a

report on the “Rip-off Report” website or the actual posting itself.
M.

Xcentric permits and encourages businesses to post rebuttals addressing the

content of reports posted about them
N.

When a user wants to post a new report, they must first sign up for an account with

Rip-Off Report. This process is absolutely free, and Xcentric asks the user to provide truthful and
accurate information, but it is possible for individuals to sign up for an account using forged or
fraudulent names, phone numbers, etc. Given the enormous volume of traffic to the website, like
any other popular site with such a high level of traffic, other than a valid email address which is
required to obtain an account, Xcentric cannot and does not verify the authenticity of the personal
information provided by each user.

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O.

Any time a user wishes to write a report or rebuttal, they must sign in with their

username and password and submit their report using an online form.

When they do so,

Xcentric’s server logs the personal account information provided by the user (which is only as
accurate as the information originally provided by the user). The server also logs the internet
protocol or “IP” address of the user which is a unique number comprised of four sets of one to
three digits. When any person logs onto the Internet, their computer is automatically assigned a
unique IP address by their Internet Service Provider (“ISP”) which identifies that computer.
P.

When the user is done writing their report, they click a button to post their story to

the ROR Sites. There is no charge for submitting a report. As part of the process of submitting
their report, the user creates a title or heading for the report.
X.

CONCISE STATEMENT OF UNDISPUTED LEGAL PRINCIPLES
A.

“Under Florida law, the elements of a defamation claim include ‘a false and

defamatory statement concerning another.’” Johnson v. Clark, 484 F.Supp. 2d 1242,
1247 (M.D.Fla. 2007); Thomas v. Jacksonville Tel., Inc., 699 So. 2d 800, 803 (Fla. 1st DCA
1997).
B.

The Communications Decency Act (“CDA”) states, in pertinent part, that “[n]o

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.” 47 U.S.C. § 230(c)(1).
C.

The CDA “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.” Zeran v.
America Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998). The
immunity applies to a defendant who is the ‘provider or user of an interactive computer service’
and is being sued ‘as the publisher or speaker of any information provided by’ someone else. ; 47
U.S.C. § 230(c).
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XI.

CONCISE STATEMENT OF FACTUAL ISSUES THAT REMAIN
A.

Whether Defendants edit the reports listed on “Rip-off Report”.

B.

Whether Ed Magedson runs the “Rip-off Report” website and directs and controls

Xcentric’s activities.
C.

Whether in order to post a report on the “Rip-off Report” website one needs to

follow a number of procedures including “Categorize your report by selecting from our list of
categories.” A number of choices are provided from which a selection must be made. Xcentric
chooses which categories are included for selection. Among the categories for selection are “con
artists”, “corrupt companies” and “false TV advertisements”, which categories were used on the
postings at issue regarding WIN.
D.

Whether the “Rip-off Report” website contains stories depicting WIN in a negative

light and defaming its business practices.
E.

Whether as consumers search for WIN’s products and services on the Internet they

are directed to the “Rip-off Report” website.
F.

Whether to further entice people to post reports they are told that “Rip-Off

Report™ works regularly with most TV News magazines & Networks and their affiliates, NBC,
CBS, ABC, Fox News and local and National newspapers including The New York Times the
Wall Street Journal to Auto Motive News” such that “Reporting your experiences on Rip-off
Report is the next best thing to getting your story on TV or in a newspaper.”
G.

Whether facilitating a connection between the people positing reports on the “Rip-

off Report” website and the media is an inducement to people to post reports on the “Rip-off
Report” website.
H.

Whether Xcentric solicited the disclosure of privileged information on the “Rip-off

Report” website (“If you are an employee or ex-employee with privileged information about the
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company or individual reported, and you can provide ‘insider information’, please click on the
REBUTTAL Box at the end of the specific Rip-off Report™ you wish to give information on. This
sort of information is often very helpful to an investigation and always needed.”); which
solicitation it now realizes is inappropriate.
I.

Whether people are encouraged to “USE YOUR REPORT TO GET WHAT IS

COMING TO YOU” by demanding things from the reported entity (“Faxing your Rip-off
Report™ to the Company or Individual you have just reported can serve as a very valuable
negotiating tool. Include in your negotiation that you have the ability to UPDATE your Report and
reflect their good business practices by explaining that their eagerness to satisfy the complaint and
make things right will be seen by the entire world. Also, explain that failure to respond/rectify the
situation will also be seen.”)
J.

Whether Xcentric encourages such reports even though it knows that people can

post a report with derogatory comments that are totally false for spiteful purposes. The solicitation
closes with “Don’t let them get away with it! File your Report Now!”
K.

Whether Xcentric provides “guidance on what [consumers] should think about in

preparing their Rip-Off Reports” including guidance on preparing a title such as “Be creative when
using the example words. It will make your report more interesting.”
L.

Whether the home page of the “Rip-off Report” website contains a “front page”

section which contains a picture and description of the “Top Rip-off Reports”, “Top Rip-off Links”
and “Featured Rip-off Reports” that Xcentric decides which submissions are included in the “Top
Rip-off Reports”, “Top Rip-off Links” and “Featured Rip-off Reports”, under a heading “How can
my story be featured on the Home page?” it provides “guidance to a person who wants to place a
Rip-Off Report as to how his might be deemed worthy of being in the top Rip-off Reports or
featured Rip-Off Reports …..”
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M.

Whether Defendants sell a “Revenge Guide” on the “Rip-off Report” website. Ed

Magedson prepared this “Revenge Guide.” This “Revenge Guide” provides that “YOUR FIRST
STEP TO REVENGE. First go to RIP-OFF Report to file your report and begin your Rip-off
Revenge.”
N.

Whether advertising is also sold on the “Rip-off Report” website. Xcentric

acknowledges that the more hits it receives on its “Rip-off Report” website the greater the
likelihood it can sell advertising and the greater amount it could sell that advertising for.
O.

Whether donations are solicited on the “Rip-off Report” website and, likewise, the

more hits the website receives the greater the likelihood it will obtain more and larger donations.
Donations are solicited to fund investigation of consumer complaints and to assist consumers. The
“Rip-off Report” website states that “TOGETHER, WE ARE A CONSUMER-REPORTING
NEWS AGENCY, BY CONSUMERS, FOR CONSUMERS” and that “In response to reports
placed on the website, we research abuses and help individuals defend their rights. Since our
inception, we have helped consumers collect well over a million dollars to date ….”
P.

Whether one can avoid having reports posted about them on the “Rip-off Report”

website by paying defendants a fee through participation in what is called the corporate advocacy
program. For this fee, defendants tell those people who might submit a report that “these guys are
pretty good. They’ll address your thing. Somebody will contact you in X number of days.” The
corporate advocacy program member then has an opportunity to deal with the person submitting
the report and if they can satisfy that person the report is never posted on the “Rip-off Report”
website. Even if the person submitting the report is not satisfied, Xcentric might still decide not to
post his report on the “Rip-off Report” website if it determines that the corporate advocacy
program member’s response is acceptable. This ability to prevent the positing of submitted reports
is only available to those who pay the fee to belong to the corporate advocacy program.
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Q.

Whether a corporate advocacy program member may retain defendants to

investigate and publish their findings regarding the truthfulness of complaints about that member.
R.

Whether the people about whom a report is posted are constricted in what they are

allowed to do in rebuttal. They are not allowed to make “trivial comments”; Xcentric decides if a
rebuttal contains a “trivial comment” in which event it may not get posted on the “Rip-off Report”
website. Ed Magedson concedes that this standard is inconsistently enforced.
S.

Whether people considering a rebuttal are told there is a fee to submit multiple

rebuttals.
T.

Whether if Xcentric does not like a rebuttal it is not posted on the “Rip-off Report”

website.
U.

Xcentric operates a website called the “Rip-off Report.” (also “ROR Site”). This

website has been in operation since 1998 and currently receives millions of hits every week. Since
its inception, the site has accumulated almost 8.5 billion page views (meaning pages viewed by a
user during a visit to the site). As of February 1, 2008, the ROR Site contains more than 300,000
individual reports. Including rebuttals, the site contains more than one million unique entries, and
receives approximately 500–800 new reports/rebuttals every day.
V.

Once a story is submitted, the story is held until it can be briefly reviewed by

Xcentric’s staff of content monitors before it is posted online for other users to view. When a
report is reviewed, it is only to confirm that the report does not contain blatantly illegal,
inappropriate, or offensive material (i.e., images of pornography, social security numbers, credit
card numbers, or other inappropriate material). Any report that contains such material may be
deleted or redacted at the discretion of Xcentric staff. Otherwise, reports posted by users of the
ROR Sites are not checked for accuracy. As a matter of policy, Xcentric staff does not add to, or
rewrite, any of the reports posted by users.
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W.

Xcentric agents do not choose which stories to post. Xcentric agents are instructed

to never add content to a report.
X.

Xcentric agents did not create, author, or add any content to any of the reports at

issue in this case, nor change or edit the statements made by third party consumers, nor author or
modify any titles to the statements that are the subject of this lawsuit by adding words to the
content of the titles.
Y.

Magedson does not personally review all of the postings that are made on Rip-off

Report before they are posted.
Z.

Magedson did not personally review any postings that were made pertaining to

Whitney before they were posted.
AA.

Once a report or rebuttal is submitted to the ROR Site, only persons with

administrative access have the ability to make any changes to that report or rebuttal.
BB.

Since 1993, only the following people, and no one else, have had administrative

access to the reports and rebuttals (meaning the ability to make edits to the reports):

Ed

Magedson, Amy Thompson, G. Young, Heather Norton, Kim Jordan, Jackie Wynne, Kim Smith,
Lynda Craven, Mary Jo Baker, C. Bowen, Paulette Craven, and Ben Smith.
CC.

None of the relevant reports and/or rebuttals were authored or posted by any of

Xcentric’s editorial staff including but not limited to Ed Magedson, Amy Thompson, G. Young,
Heather Norton, Kim Jordan, Jackie Wynne, Kim Smith, Lynda Craven, Mary Jo Baker, C.
Bowen, Paulette Craven, and Ben Smith. It would be a clear violation of Xcentric’s rules for any
agent of Xcentric to author or post a report or rebuttal, or to add any content or words to any
report or any report title, without Magedson’s express permission, which he did not give regarding
any report or rebuttal regarding WIN. All persons who have had administrative access since the

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beginning of 1993 have supplied an affidavit which confirms that they did not author or add any
content to any of these statements.
DD.

All of the reports and rebuttals at issue were written by independent third-party

users of the ROR Sites.
EE.

Although the ROR Site generally encourages people to write complaints when

they have been victimized, Xcentric never encouraged anyone to submit false complaints. In fact,
before a user is allowed to submit any report or rebuttal to the ROR Sites, they are required to first
agree to a statement that includes the representation that “By posting this report/rebuttal, I attest
this report is valid.”
FF.

Because each user verifies and attests that their reports are valid, Defendants have

a reasonable belief that the reports are truthful.
GG.

Plaintiff WIN is a public figure for the purposes of the controversy at issue in this

lawsuit.
HH.

Plaintiff WIN is famous regarding the business that is the subject of this lawsuit.

II.

Plaintiff WIN conducts extensive mass-media advertising of the business lines and

products that are the subject matter of this lawsuit, including numerous television commercials
and public seminars promoting those business lines.
JJ.

WIN has recently been under government investigation including investigations by

the S.E.C. and a Grand Jury investigation conducted by the United States Attorney for the Eastern
District of Virginia (the “Government Investigations.”).
KK.

Before the Government Investigations, WIN’s marketing function - including

advertising for the Company’s products, solicitation of customers, presentation of live seminars,
telemarketing, coaching and mentoring – was characterized by inadequate controls, inadequate
training and a failure to devote adequate resources to compliance. WIN’s Board of Directors
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appointed a Special Committee and hired outside counsel to investigate the same issues that were
subjects of the Government Investigations. WIN’s own Special Committee criticized WIN for a
variety of practices, including, among others, use of testimonials obtained for one brand in support
of another, failure to disclose affiliations between endorsers and the Company, failure to
adequately disclose investment risks, and misstatements by certain live speakers.

This

information was disclosed to the public in a WIN press release that was published to the world
through the internet, and covered in national business media.
LL.

WIN’s Special Committee found no evidence that WIN’s executive management

knew about the particular statements on which the government investigation was focused. The
Special Committee did recommend management changes, including that Mr. Russ Whitney
should step down as CEO, and Co-President Ron Simons should step down from his positions as a
company officer and director. This information was disclosed to the public in a WIN press release
that was published to the world through the internet, and covered in national business media.
MM. WIN has been widely and consistently criticized for practices that offended or put
off consumers, in a number of public forums including internet websites other than the ROR Sites,
for all periods of time relevant to this litigation. In fact, WIN, its affiliate companies, or its
founder Russ Whitney, have sued several parties in several different lawsuits, each alleging that
the defendant’s public criticism damaged WIN.
There is negative information about WIN in many of its own public filings of required public
disclosures, sufficient to reduce WIN’s business reputation.
NN.

The statements at issue in this case alleged to be defamatory are the highlighted

statements in the exhibit designated Defendants’ Exhibit 6.
OO.

While it is possible for a user to provide forged or fake personal information such

as a name, it is very difficult, though not impossible, to forge an IP address.
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PP.

This website has been in operation since 1998 and currently receives millions of

hits every week. Since its inception, the site has accumulated almost 8.5 billion page views
(meaning pages viewed by a user during a visit to the site). As of February 1, 2008, the ROR Site
contains more than 300,000 individual reports. Including rebuttals, the site contains more than
one million unique entries, and receives approximately 500–800 new reports/rebuttals every day.
XII.

CONCISE STATEMENT OF LEGAL ISSUES THAT REMAIN
A.

Whether Xcentric Ventures is afforded immunity under the CDA.

B.

Whether Magedson is afforded immunity under the CDA.

C.

Whether Fair Housing Council of San Fernando Valley v. Roommates.com, LLC,

489 F.3d 921 (9th Cir. 2007) is an un-citable, de-published case and is not precedent or authority.
D.

Whether “Magedson does not qualify for immunity under the CDA because he is

neither a provider nor a user of an interactive computer service.” MCW, Inc. v.
Badbusinessbureau.com, L.L.C., 2004 WL 833595 at *9 (N.D. Tex. 2004); 47 U.S.C. § 230.
E.

Whether MCW, Inc. v. Badbusinessbureau.com, L.L.C., 2004 WL 833595 at *9

(N.D. Tex. 2004) was a district court decision on a 12(b)(6) motion and has no precedential value
because it assumed that the allegations of the complaint were true, so it is inappropriate to cite as
precedent for any fact.
F.

Whether the following quotation is not factual precedent: CDA “immunity is not so

broad as to extend to an interactive computer service that goes beyond the traditional publisher’s
role and takes an active role in creating or developing the content at issue.” MCW, 2004 WL
833595 at *8. “In determining whether the defendants qualify as information content providers,
the critical issue is whether they are ‘responsible, in whole or in part, for the creation or
development of [any disputed] information.’” Id. at *9; 47 U.S.C. § 230(f)(3).

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G.

Whether the following quotation is not factual precedent: The creation of categories

from which a user of the “Rip-off Report” website must choose, in and of themselves, constitutes,
as a matter of law, the creation or development of the content at issue and takes defendants outside
the protection of CDA immunity. MCW, 2004 WL 833595 at * 10 & n 10. The MCW court found
that defendants created “report titles and various headings” “such as ‘Con Artist,’ ‘Scam,’ and
“Ripoff,” and organize the reports under headings such as ‘Con Artists’ and ‘Corrupt Companies”,
Id., just like the foregoing reveals. Based upon this the MCW court held that “[t]he titles and
headings are clearly part of the web page content. Accordingly, the defendants are information
content providers with respect to the website postings and thus are not immune from MCW’s
claims.” Id. at *9.
H.

Whether the following quotation is not factual precedent: “The defendants cannot

disclaim responsibility for disparaging material that they actively solicit. Furthermore, actively
encouraging and instructing a consumer to gather specific detailed information is an activity that
goes substantially beyond the traditional publisher’s editorial role… They are participating in the
process of developing information.” MCW, 2004 WL 833595 at * 10.
I.

Whether a statement is generally defamatory where it injures a person in his trade

or in his profession. Scholz v. RDV Sports, Inc., 710 So. 2d 618, 625 (Fla. 5th DCA 1998).
J.

Whether the following is the correct legal standard -- Determining whether a

statement is defamatory requires the finder of fact to decide whether, “from the language of the
comment, it does not seem unreasonable to infer that persons hearing the same and possessed of a
common mind might have taken it to mean that the plaintiff was a person with whom commercial
relations were undesirable.” Id. (quoting Wolfson v. Kirk, 273 So. 2d 774, 778 (Fla. 4th DCA
1973)).

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K.

Whether, in this case, decisions whether to publish, withdraw, postpone, alter

content, or minor editing of content do not make Defendant liable as a publisher or speaker of any
statement about the Plaintiff. See, e.g. Green v. America Online, 318 F.3d 465, 470 (3rd Cir.
2003).
L.

Whether Defendant is immune from liability pursuant to the CDA because

providing titles, editorial content, and categories for third parties to choose from does not make
Defendants information content providers. See, e.g Global Royalties, Ltd. v. Xcentric Ventures,
LLC, 2007 WL 2949002 (D.Ariz. 2007) citing Hy Cite Corp. v. Badbusinessbureau.com, 418
F.Supp.2d 1142 (D.Ariz 2005); Batzel v. Smith, 333 F.3d 1018, (9th Cir. 2003).
M.

Whether Defendant is immune from liability pursuant to the CDA because

soliciting anonymous posting or favoring certain types of postings does not make Defendants
information content providers. See, e.g Donato v. Moldow, 374 N.J.Super. 475, 865 A2d 711
(N.J.Super.A.D. 2005) citing Batzel v. Smith, 333 F.3d 1018, (9th Cir. 2003); Zeran v. America
Online, Inc. 129 F.3d 327, 334 (4th Cir. 1997), cert. Denied, 524 U.S. 937, 118 S.Ct. 2341, 141
L.Ed. 2d 712 (1998).
N.

Whether Plaintiff is a public figure, in which case Defendants cannot be liable for

defamation without clear and convincing proof that, at the time statements were made, Defendants
knew the statements were false or had serious doubts as to their truth. (Florida Standard Jury
Instruction MI 4.1(c))
O.

Whether any false statements posted on Defendants’ website (if any) were

defamatory, whether it tended to so harm the reputation of Plaintiff as to lower him in the
estimation of the community or to deter a third persons from associating or dealing with him.
Restatement (Second) of Torts § 559; Byrd v. Hustler Magazine, 433 So.2d 593, 595 (Fla. 4th
DCA 1983)); Florida Standard Jury Instruction MI 4.3(a)
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P.

Whether the statements claimed to be defamatory were statements of fact, or

opinion not provably untrue, or such expressions as would not be reasonably interpreted as
asserting actual facts rather than imaginative expression, exaggeration, jokes, rhetorical hyperbole,
etc. such as the terms “rip-off, scandal, snake-oil job” etc. Colodny v. Inverson, Yoakum, Papiano
& Hatch, 936 F.Supp. 917 (M.D.Fla. 1996) (reference to a book on Watergate as a “fraud” held
non-actionable opinion); Phantom Touring, Inc. v. Affiliated Publ’ns, 953 F.2d 724 (1st Cir. 1992)
(terms “rip-off, a fraud, a scandal, a snake-oil job” held non-actionable statements of opinion);
McCabe v. Rattiner, 814 F.2d 839, 842 (1st Cir. 1987) (“The lack of precision [in the meaning of
the word ‘scam’] makes the assertion ‘X is a scam’ incapable of being proven true or false.”)
(emphasis added); Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 50, 108 S.Ct. 876, 879, 99
L.Ed.2d 41 (1988); Horsley v. Rivera, 292 F.3d 695 (11th Cir. 2002)
Q.

Whether statements alleged to be defamatory can actually defame a corporation by

relating to the corporations business operations, financial condition, or quality of goods and
services rather than statements insult or even defame individual employees that are not actionable
by the corporation. Cont’l Nut Co. v. Robert L. Berner Co., 354 F.2d 395, 397 (7th Cir. 1965);
Byrd v. Hustler Magazine, 433 So.2d 593, 595 (Fla. 4th DCA 1983)); David A. Elder, Defamation:
A Lawyer’s Guide § 1:1[A][2] at 10–11 (emphasis added) (citing Adirondack Record v. Lawrence,
202 App.Div. 251, 195 N.Y.S. 627, 629–30 (1922); Brayton v. Cleveland Special Police Co., 63
Ohio St. 83, 57 N.E. 1085, 1086 (1900); Hapgoods v. Crawford, 125 App.Div. 856, 110 N.Y.S.
122, 123 (1908); Afftrex, Ltd. v. General Electric Co., 161 App.Div.2d 855, 555 N.Y.S.2d 903,
905 (1990); Restatement (Second) of Torts § 561, comment b (1977))
R.

Whether negative statements about Plaintiff have been published in other places by

persons other than defendants, and Plaintiff suffered no additional harm as a result of the statements
it claims Defendant to be responsible, so Plaintiff should recover nothing from Defendants. Rodney
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A. Smolla, Law of Defamation § 9:61 (2d ed 2007); Masson v. New Yorker Magazine, Inc., 881
F.2d 1452, 16 Media L. Rep. (BNA) 2089, 2093–94 (9th Cir. 1989); Herbert v. Lando, 781 F.2d
298, (2nd Cir. 1986); Austin v. American Ass’n of Neurological Surgeons, 253 F.3d 967 (7th Cir.
2001); Desnick v. American Broadcasting Cos., 44 F.3d 1345, 1350 (7th Cir. 1995); Haynes v.
Alfred A. Knopf, Inc., 8 F.3d 1222, 1228 (7th Cir. 1993)
S.

Whether Plaintiff’s reputation was already so poor that none of the statements at

issue in this case caused additional harm, and this did not defame Plaintiff. 53 C.J.S. Libel and
Slander; Injurious Falsehood § 15; Cardillo v. Doubleday & Co., Inc., 518 F.2d 638 (2d Cir.
1975); Wynberg v. National Enquirer, Inc., 564 F. Supp. 924 (C.D. Cal. 1982); Ray v. Time, Inc.,
452 F. Supp. 618 (W.D. Tenn. 1976), aff'd, 582 F.2d 1280 (6th Cir. 1978); Logan v. District of
Columbia, 447 F. Supp. 1328 (D.D.C. 1978)
T.

Whether Plaintiff’s failure to identify and disclose evidence in Plaintiff’s control

supports an unfavorable inference against Plaintiff.

Fed. R. Civ. P. 37(c); 2 J. Wigmore,

Evidence, § 285 (1979); International Union v. NLRB, 459 F.2d 1329, 1336 (D.C. Cir. 1972) (for
discussion with citation to authority); Baxter v. Palmigiano, 425 U.S. 308, 318-20 (1976)
XIII. ISSUES REGARDING APPLICATION OF LAW OR RULES OF PROCEDURE
None at this time.
XIV. PENDING MATTERS
A.

Defendants’ Motion for Summary Judgment (Docket # 115).

B.

Defendants’ Motion for Leave to File a Reply Brief in Support of Defendant’s

Motion for Summary Judgment and Request for Oral Argument (Docket #144).
C.

Motion to Admit Newly Discovered Evidence in Support of Defendants’ Motion for

Summary Judgment (Docket #168)

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D.

Defendants Motion to Compel Plaintiff’s Responses to Defendants’ Request for

Production of Documents and Defendants’ Non-Uniform Interrogatories and Request for Sanctions
(Docket # 174).
E.
F.

Motion in Limine (Docket # 171)

G.

Motion in Limine (Docket # 172)

H.

(Settle Jury Instructions)

I.
XV.

Motion in Limine (Docket # 170)

(Motions for Leave to Present Witnesses by Telephone or Video Link)

ESTIMATED TRIAL TIME
The parties estimate that this case will require 6 days to try before a jury following voir dire.

Dated: February 5th, 2008.
Respectfully submitted,

Scott W. Rothstein, Esq.
Steven N. Lippman, Esq.
Shawn L. Birken, Esq.
Counsel for Plaintiff
Rothstein Rosenfeldt Adler
Las Olas City Centre, Suite 1650
401 E. Las Olas Blvd.
Fort Lauderdale, Florida 33301
FBN 709638

Maria Crimi Speth, Esq.
Adam S. Kunz, Esq.
Counsel for Defendants
Jaburg & Wilk, P.C.
3200 North Central Avenue, Ste. 2000
Phoenix, Arizona 85012
Tel: [phone]
Fax: [phone]
Email: [e-mail]

By: __/s/ Shawn Birken______________
Shawn L. Birken, Esq.
Florida Bar Number: 418765
Tele:
954/522-3456
Fax:
954/527-8663
Email:
[e-mail]

Brian J. Stack, Esq.
Stack, Fernandez & Anderson
Co-Counsel for Defendants
122 Brickell Avenue, Ste. 950
Miami, Florida 33131-3255
FBN 0476234

By: ___/s/ Adam Kunz________________
H:\swrdocs\03-8471\Pleadings\joint pretrial stipulation2.doc

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