Brahms v. Carver et al

Filing 24

MEMORANDUM & ORDER: Defendants' 17 motion to dismiss is granted. The Clerk of Court is directed to enter judgment for defendants and to close this case. Forwarded for judgment. Ordered by Judge Eric N. Vitaliano on 7/11/2014. (Chee, Alvin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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MEMORANDUM & ORDER
Plaintiff,
12-CV-5611 (ENV)
-againstRICHARD CARVER and
THOMAS MARCANO,
Defendants.

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VITALIANO, D.J.,
Plaintiff Eric Brahms commenced this diversity action 1 against defendants
Richard Carver and Thomas Marcano, asserting claims of defamation and breach
of contract. Defendants now move to dismiss the complaint pursuant to Federal
Rule of Civil Procedure 12(b)(6). For the reasons that follow, the motion is granted
in its entirety.
Background
The following facts are taken from the amended complaint, as well as other
evidence of which the Court may take notice on a Rule 12(b)(6) motion, and are
assumed to be true for purposes of that motion.
Brahms's claims are based on comments made online on the Vintage Rolex
Forum ("VRF"), an internet forum where users discuss various topics related to
The matter in controversy exceeds $75,000, and is between citizens of different states:
Bralnns is a citizen of Connecticut, Carver is a citizen of Texas, and Marcano is a citizen of
New York. (Comp!. ifif 2-4); 28 U.S.C. § 1332(a)(l).
I

vintage Rolex watches. (Compl.

at~

8.) VRF is owned and operated by Carver and

moderated by Marcano, and it is hosted by Network54.com ("Network54"), an
internet website hosting company that is not a party to this action. (Id.

at~~

9-11).

Brahms is in the business of buying, refurbishing and selling vintage Rolex watches.
(Id.

at~

7.) In April 2011, he registered a free account on VRF under the username

"Beever." (Id.

at~

11.) Linked to Brahms' account were his full name and a

Yahoo.com email address. (Id.

at~

13.) As the moderator and operator ofVRF,

Marcano and Carver had access to this information. 2
The events in dispute occurred in the course of several online conversations
on VRF. Between October 17 and 19, 2011, Brahms (posting under the name
"Beever") participated in a heated discussion on VRF during which he accused
certain eBay sellers of marketing and selling what he deemed to be either fake
Rolexes or fake authentication certificates for Rolexes, and accused other VRF
members of being in cahoots with these fraudsters. (See Affirmation of Matthew G.
Coogan, dated Feb. 15, 2013 ("Coogan Aff."), Aff. Ex. 3, at 7-13.) On October 19,
2011, Marcano joined the conversation under the username "tomvoxl," and
admonished Beever (Brahms) for making baseless allegations against other users,
advising him to "[s]tep away from the keyboard for a few hours/days and get your
facts lined up if you are going to continue to post on this matter." (Id. at 8.) Brahms
and Marcano went on to trade insults over the next several hours, with other VRF
2

Defendants dispute that they had access to Brahms' s personal information, but, for purposes
of this motion, the Court must assume the truth of this fact as alleged.
2

members weighing in as well. (Id. at 14-18.) It is noteworthy that throughout the
course of the conversation, several users referred to "Beever" as "Eric" or "EB."
(See, e.g., id. at 8, 16.) It is unclear how or when those users learned Brahms's real

first and/or last name.
In a separate VRF discussion thread, also proceeding on October 19, 2011, a
user named "Morgan King" posted the following:
"Hey Beever dude:
Honest Question:
Are you the seller on ebay known as ericbee who listed these items on
ebay?"
Is your email address:
[e-mail]
as well as
[e-mail] ????
Is this your listing?
http://www.ebay.com/itm/130578281367
(Coogan Aff. Ex. 4 at 1.) Brahms confirmed that the email addresses and eBay
name were his, adding "Nice work." 3 (Id. at 2.) Other VRF users went on to
intimate that Brahms had sold questionable Rolexes on eBay. (See id. at 2-3.)
Later that evening, in a different discussion thread, Marcano (posting as
tomvoxl) demanded an apology from Brahms for accusations he made against
3

Brahms asserts, but without plausible factual support, that "the only way in which this user
could have received this information is from a person who is associated with the forum (and
who had access to this information), such as defendant Carver or defendant Marcano."
(Mem. in Opp. at 19.)
3

Marcano in the earlier exchange, particularly Brahms' statement that Marcano was
"duping the innocent." (Coogan Aff. Ex. 5 at 1.) Specifically, Marcano wrote "I
would like an apology for this, Beever/Eric Brahms/edoublel41/ericbee ... ."(Id.,
Comp!.

at~

20.) Carver, weighing in for the first time, agreed that Marcano was

owed an apology. (Coogan Aff. Ex. 5 at 1.) In a lengthy post, Brahms responded
with numerous examples of slights that Marcano had made against him, and
demanded his own apology for these "extremely condescending remarks." (Id. at 34.) Carver then responded that "Mr. Beever is no longer with us," indicating that
Brahms had been banned from the forum. (Id. at 4.)
The following month, on November 18, 2011, Brahms was indicted in
Supreme Court, New York County, along with 27 other individuals, for his role in
an alleged credit card counterfeiting scheme. According to the indictment, the
conspirators stole credit card numbers in restaurants and used them to create
forged credit cards, which they then used to purchase goods. (See Coogan Aff. Ex. 6
(Indictment).) Brahms was charged with participation in a criminal enterprise,
petit larceny, criminal possession of a forged instrument in the second degree, and
grand larceny in the fourth degree. (Id.) On November 18, 2011, the New York
Times published an article about the indictment, accompanied by a photo of Brahms
in Manhattan Supreme Court. (See Coogan Aff. Ex. 7.) On November 20, 2011, the
Daily News published an article that described Brahms's arrest and reported that he
had been charged with fencing high-end goods bought by individuals using
counterfeit credit cards. (See Coogan Aff. Ex. 8.)
4

The news ofBeever's troubles did not escape notice on VRF. On December 5,
2011, a user identified as "Frank" posted on VRF, "Eric Brahms aka Beever Arrested for Fraud, Fencing Jewelry & Rolex," and linked to the two news articles.
(Compl.

~

22-24.) Marcano responded that Brahms was a "pathetic and unhinged

individual and in the end just another 2-bit thief and counterfeiter." 4 (Compl. ~
24.) In the ensuing discussion, someone pointed out that the allegations against
Brahms did not appear to relate in any way to Rolexes. (Coogan Ex. 9 at 2.)
Marcano responded, "Hey, he might not be guilty in the long run. But he's still a
first class a@@hole." (Id.)
Nearly a year later, on September 27, 2012, Brahms sent Carver an email
requesting that the negative posts about him be removed from the forum. (Compl. ~
29.) He received no response. (Id.) On November 12, 2012, Carver wrote a post on
VRF entitled "Whatever happened to the Eric Brahms case?" (Id.

~ 31;

Coogan

Aff. Ex. 10.) Carver sought legal advice from the forum, apparently in response to a
November 1, 2012 letter from Brahms' attorney demanding removal of the
offending postings and threatening suit. Carver's post included a link to the
December 5, 2011 thread.

(Complaint~ 31;

Coogan Aff. Ex. 10, 11.)

Brahms filed the complaint in this case on November 14, 2012. On February
20, 2013, while the parties were in the process of briefing this motion to dismiss,
Brahms pleaded guilty to charges of grand larceny in the fourth degree and
criminal possession of a forged instrument in the second degree. (See Coogan
4

This post has since been deleted from VRF.
5

Affirmation in Further Support of Defendants' Motion to Dismiss ("Coogan Reply
Aff.") Ex. 1 (transcript of Brahms' guilty plea allocution.))
After they were posted, the comments about Brahms-along with the links to
the relevant news articles-became available to anyone conducting an internet
search for his name. (Comp!.

~

28). Brahms alleges that these comments contain

untrue statements of fact and have eliminated his ability to buy or sell Rolex
watches or parts to anyone anywhere in the world. He alleges further that these
posts have also caused him to be rejected by landlords, banks, and brokerage
accounts, and banned by PayPal and eBay. (Id. at 33.)
Standard of Review
Under Federal Rule of Civil Procedure 8(a)(2), a complaint need only contain
"a short and plain statement of the claim showing that the pleader is entitled to
relief." Fed. R. Civ. P. 8(a)(2). This rule does not compel a litigant to supply
"detailed factual allegations" in support of his claims, Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007), "but it demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 667
(2009). "A pleading that offers 'labels and conclusions' ... will not do." Id.
(quoting Twombly, 550 U.S. at 555). "Nor does a complaint suffice ifit tenders
'naked assertions' devoid of 'further factual enhancement."' Id. (quoting Twombly,
550 U.S. at 557).
A complaint must be dismissed under Rule 12(b)(6) if it does not "contain
sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible
6

on its face."' Id. (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged." Id.
Determining plausibility is "a context-specific task that requires the reviewing court
to draw on its judicial experience and common sense." Id. at 1950. That said, the
factual allegations are paramount-"a complaint need not pin plaintiff's claim for
relief to a precise legal theory" nor provide "an exposition of his legal argument."

Skinner v. Switzer, 131 S. Ct. 1289, 1296 (2011). In analyzing well-pied facts, a court
must accept as true all allegations in the complaint and draw all reasonable
inferences in favor of the pleader. See Gorman v. Consol. Edison Corp., 488 F.3d
586, 591-92 (2d Cir. 2007).
A court may consider on a Rule 12(b) motion, in addition to the pleading
itself, documents that are annexed to or referenced in the complaint, documents that
the plaintiff relied on in bringing the suit, and matters of which judicial notice may
be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002)
(citations omitted); Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000). In this case,
the Court will look to Network54's "Terms of Use" (the "Network54 TOU" or the
"TOU"), (see Coogan Aff. Ex. 2), the Daily News and New York Times articles that
mentioned Brahms (see Coogan Aff. Exs. 8 and 9), and the relevant VRF discussion
threads, (see Coogan Aff. Exs. 5 and 6), all of which are referenced in the complaint
and provided in full by defendants with their briefing, notwithstanding that Brahms
declined to attach these documents to his complaint. See Holowecki v. Fed. Express
7

Corp., 440 F.3d 558, 565-66 (2d Cir. 2006) ('" [w]hen a plaintiff chooses not to attach
to the complaint ... a [docnment] upon which [he] solely relies and which is integral
to the complaint, the court may nevertheless take the document into consideration
in deciding the defendant's motion to dismiss ...."') (quoting Int'/ Audiotext

Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995), afj'd, 552 U.S. 389
(2008)).
Discussion
I.

Defamation
Brahms claims defamation based on Marcano's December 5, 2011 statement

calling him a "2-bit thief and counterfeiter," and Carver's subsequent republication
of the post containing that statement the following year. The parties agree that New
York law applies to the defamation claim. 5
"Defamation is the injury to one's reputation either by written expression,
which is libel, or by oral expression, which is slander." See Idema v. Wager, 120 F.
Supp. 2d 361, 365 (S.D.N.Y. 2000), aff'd 29 Fed. Appx. 676 (2d Cir. 2002). To state a
claim for defamation under New York law, Brahms must allege "1) a false
statement, 2) that was published without privilege or authorization to a third party,
3) constituted fault as judged by, at a minimum, a negligence standard, and 4) either
caused a special harm or constituted defamation per se." McNamee v. Clemens, 762

5

See Merrill Lynch Interfimding, Inc. v. Argenti, 155 F.3d 113, 121 n. 5 (2d Cir.
1998) ("Jurisdiction in this case is premised on diversity, and the parties both present
arguments based on New York law, the law of the forum state. It is therefore appropriate for
this Court to apply New York law.")
8

F. Supp. 2d 584, 599-600 (E.D.N.Y. 2011); see also Dillon v. City ofNew York, 261
A.D.2d 34, 38, 704 N.Y.S.2d 1 (1st Dep't 1999)).
Crucially, only a provable statement of fact is actionable as defamation. See

McNamee, 762 F. Supp. 2d at 600; Gross v. New York Times Co., 82 N.Y.2d 146, 153,
603 N.Y.S.2d 813, 623 N.E.2d 1163 (1993) ("Since falsity is a necessary element of a
defamation cause of action and only 'facts' are capable of being proven false, 'it
follows that only statements alleging facts can properly be the subject of a
defamation action."'). It is axiomatic that statements of opinion cannot constitute
actionable defamation. Egiazaryan v. Zalmayev, 880 F. Supp. 2d 494, 503 (S.D.N.Y.
2012) (statements of opinion "receive 'absolute protection' under the New York
Constitution") (quoting Celle v. Filipino Reporter Enters. Inc., 209 F.3d 163, 178 (2d
Cir. 2000)). Nor can "[l]oose, figurative or hyperbolic statements, even if
deprecating the plaintifP' be the subject of a defamation action. Dillon, 261 A.D.2d
at 38 (citation omitted); see also Gross, 82 N.Y.2d at 152 ("rhetorical hyperbole" is
not actionable). The dispositive inquiry is whether a reasonable reader could have
concluded that the statements were conveying facts about the plaintiff. Gross, 82
N.Y.2d at 152-53. Set in this footing, Marcano argues that his statement was not one
of fact, but rather a protected expression of opinion, and that any reasonable reader
would have interpreted it as such.
"Distinguishing between assertions of fact and nonactionable expressions of
opinion has often proved a difficult task." Brian v. Richardson, 87 N.Y.2d 46, 51,
660 N.E.2d 1126, 637 N.Y.S.2d 347 (1995). The New York courts have set out the
9

following factors to consider in making the distinction: "(l) whether the specific
language in issue has a precise meaning which is readily understood; (2) whether the
statements are capable of being proven true or false; and (3) whether either the full
context of the communication in which the statement appears or the broader social
context and surrounding circumstances are such as to 'signal ... readers or listeners
that what is being read or heard is likely to be opinion, not fact.'" Id. (quoting

Gross, 82 N.Y.2d at 153). In weighing these factors, "the court should look to the
over-all context in which the assertions were made and determine on that basis
'whether the reasonable reader would have believed that the challenged statements
were conveying facts about the libel plaintiff.'" Id. (quoting Immuno AG. v Moor-

Jankowski, 77 N.Y.2d 235, 254, 567 N.E.2d 1270 (1991)).
The upshot is that context is key. In Gross, for example, the allegedly
defamatory statements were made in an investigative article in the news section of
the New York Times, a context which the Court of Appeals held to suggest that the
statements were factual in nature. Gross, 82 N.Y.2d at 155-56. By contrast, New
York courts have held the following contexts to be strongly suggestive that any
alleged statements were opinion or allegations, rather than fact: the editorial page of
a newspaper, Brian, 87 N.Y.2d at 53; a letter to the editor of a professional journal,

ImmunoAG, 77 N.Y.2d 235; a public community board hearing, 600 W. 115th St.
Corp. v Von Gutfeld, 80 N.Y.2d 130589, N.Y.S.2d 825 (1992); and communications
between a union official and a "scab" during a heated labor dispute, Steinhilber v

Alphonse, 68 N.Y.2d 283, 508 N.Y.S.2d 901 (1986). Most relevant here, and it is
10

among the first of many bows to come on the changing and challenging mores of the
21't Centnry, the First Department has noted that "readers give less credence to
allegedly defamatory remarks published on the Internet than to similar remarks
made in other contexts," particularly "posted remarks on message boards and in chat
rooms." Sandals Resorts Int'/ Ltd. v. Google, Inc., 86 A.D.3d 32, 43-44, 925 N.Y.S.2d
407 (1st Dep't 2011) (emphasis added); see also Versaci v. Richie, 30 A.D.3d 648, 649,
815 N.Y.S.2d 350 (3d Dep't 2006) (statement made on an internet public message
board, "a forum where people air concerns about any matter," was opinion rather
than fact). The Sandals court also opined that the fact that an online
communication was made anonymously "makes it more likely that a reasonable
reader would view its assertions with some skepticism and tend to treat its contents
as opinion rather than as fact." Sandals, 86 A.D.3d at 44.
The allegedly defamatory statement in this case was made on an internet
forum where people typically solicit and express opinions, generally using
pseudonyms. The statement was also clearly "rhetorical hyperbole" or a "vigorous
epithet," Gross, 82 N.Y.2d at 152, particularly when viewed in the context of the
heated argument-replete with name-calling-in which Marcano and Brahms had
engaged only weeks earlier. Indeed, Marcano made explicit that his comment was a
mere allegation, stating later: "Hey, [Brahms] might not be guilty in the long run."
(Berland Aff., Ex. 1, at 6.)
Brahms argues that Marcano's statement was "a statement of opinion that
implies a basis in facts which are not disclosed to the reader or listener," as opposed
11

to one that "is accompanied by a recitation of the facts on which it is based or ...
does not imply the existence of undisclosed underlying facts." Gross, 82 N.Y.2d at
153 (citations omitted). The two kinds of statements, the New York Court of
Appeals has explained, are qualitatively different:
The former are actionable ... because a reasonable listener or reader
would infer that "the speaker [or writer] knows certain facts, unknown
to [the] audience, which support [the] opinion and are detrimental to
the person [toward] whom [the communication is directed]." In
contrast, the latter are not actionable because ... a proffered
hypothesis that is offered after a full recitation of the facts on which it
is based is readily understood by the audience as conjecture.

Id. at 153-54 (citations omitted). See also Sandals, 86 A.D.3d at 42-43 (email was
"pure opinion" in part because "each remark [was] prompted by or responsive to a
hyperlink" directing the reader to the facts upon which it was based); Clark v.

Schuylerville Cent. School Dist., 24 A.D.3d 1162, 1163, 807 N.Y.S.2d 175 (3d Dep't
2005) ("[A] statement of opinion accompanied by a full recitation of the facts on
which it is based will be deemed a pure opinion ... .");Dillon, 261 A.D.2d at 41
(statement based on facts known to both the declarant and the listener conveyed
only nonactionable opinion).
Marcano made the statement at issue, there is no serious dispute, in response
to two news articles, posted by a different user, and it was clear that Marcano based

his view that Brahms was a "2-bit thief and counterfeiter" on those articles.
Marcano even quoted a passage from one article upon which he drew his conclusion.
(Declaration of Jason H. Berland in Opposition to Defendants' Motion to Dismiss
("Berland Aff."), Ex. 1, at 1.) No reasonable reader could have inferred from the
12

posted conversation that Marcano knew additional, undisclosed facts about Brahms
that supported his post. 6 Marcano, to be sure, quoted from the article, and it was
clear from their prior conversation on VRF that he and Brahms were strangers. In
the totality of the ongoing joust, no reasonable reader could believe that Marcano
had or purported to have facts about Brahms's conduct other than that reported in
the articles.
Despite drawing all reasonable inferences in plaintiff's favor, upon the
pleadings and the evidentiary materials properly before the Court, Brahms cannot
state plausible defamation claims. Pointedly, in light of the nature ofMarcano's
internet statement and the context in which it was posted, especially the fact that it
was accompanied by the news articles on which it was so obviously based,
Marcano's posted comments are protected opinion and cannot be the subject of a
defamation action. It follows that no claim can stand against Carver for simply

6

Brahms argues that the charges against him related solely to his use of a forged credit card to
purchase luxury shoes, and had nothing to do with counterfeiting. So, he argues, Marcano' s
statement that Brahms was a "counterfeiter" could not have been based on the news articles
discussing charges that were linked to in the December 5, 2011 discussion, but, rather, was
intended to imply, without basis in the articles, that Brahms was counterfeiting Rolex
watches. Even if the line Brahms attempts to draw between his conduct and the
"counterfeiting" described in the articles were justified, no reasonable reader would have
drawn the conclusion that Marcano knew of any facts supporting such a statement except
those facts disclosed in the articles. Moreover, for the other reasons explained above, the
surrounding context makes it clear that Marcano's statement was opinion. In any event, the
distinction Brahms presses is not justified. The articles report that Brahms and the others
were charged with enterprise corruption, New York's version of federal RICO, N.Y. Penal
Law § 460.20, thereby directly linking Brahms to a scheme that allegedly did involve the
counterfeiting of credit cards.
13

republishing Marcano's post. The defamation claims against both defendants are
thus dismissed. 7
II.

Breach of Contract
Brahms next claims that when he opened up a VRF account, Carver and

Marcano entered into a contract with him, and that defendants breached that
contract in two ways: (1) by publishing Brahms' e-mail address, eBay username,
and other identifying information on VRF, and (2) by failing to remove the
information upon request. (Compl.

~

43-44.) Specifically, Brahms alleges that

defendants breached paragraph 8 of the Network54 TOU, which prohibits users
from posting content on Network54-hosted websites that, among other things,
"infringes upon privacy rights, such as specific addresses, phone numbers, social
security numbers, or credit card numbers." (Id.

at~

8)

This claim fails to get to the starting gate, which requires that he plausibly
allege the existence of a contractual relationship between Brahms and defendants.
Setting the rules of the road for its stretch of the internet highway, all users ofa
Network54-hosted website, such as VRF, must agree to the Network54 TOU in
order to create an account. (See Berland Aff. Ex. 10 (Network54 TOU).) Thus, in
order to become members ofVRF, Brahms and Marcano had to agree to the TOU,

7

As such, it is not necessary to determine whether, in light ofBrahms's guilty plea, Marcano's
statement was also substantially true. See Dillon, 26 l A.D .2d at 39 ("Truth provides a
complete defense to defamation claims.").
14

and, likewise, in order to create VRF, Carver had to agree to the TOU. 8 Agreeing to
the TOU undoubtedly forms a contract between Network54 and each of its users.

(See id.

at~

1 ("By using Network 54's service ... you are entering into a contract

with Network54 per the following terms of use."). It does not, however, purport to
create a contract between individual users ofNetwork54's services. Brahms does
not claim to have any direct contractual relationship with either defendant. Instead,
scurrying for the back door, he claims that he is a third party beneficiary of the
Network54 TOU, and, thus, can enforce it against Marcano and Carver.
As the parties agree, the Network54 TOU are, by their own terms, governed
by California law. (See Coogan Aff. Ex. 2 at~ 21); Motorola Credit Corp. v. Uzan,
388 F.3d 39, 51 (2d Cir. 2004) ("[W]here the parties have chosen the governing body
oflaw, honoring their choice is necessary to ensure uniform interpretation and
enforcement of that agreement and to avoid forum shopping."). Under California
law, Brahms can enforce the contract as a third party beneficiary only ifthe
contract was made expressly for his benefit. Cal. Civ. Code §1559. "If a contract
does not clearly evince the intent to benefit a third party, that party is not a
beneficiary of the contract." Northstar Financial Advisors, Inc. v Schwab

Investments, 781 F. Supp. 2d 926, 943 (N.D. Ca. 2011); E. Aviation Grp, Inc. v.

8

In his opposition brief, Brahms asserts for the first time that defendants breached a contract
between VRF and Network54. Even ifVRF is a legal entity, which is far from clear, it is not
a party to this action, and Brahms has not alleged that it did or could have agreed to the
Network54 TOU. Accordingly, the Court will assume that Brahms alleges breach of the
agreements between Network54 and the individual defendants, as the complaint indicates,
rather than VRF.
15

Airborne Express, Inc., 6 Cal. App. 4th 1448, 1452, 8 Cal. Rptr. 2d 355 (2d Dist.
1992).
Providing further illumination, a third party is not an intended beneficiary of
a contract under California law if he is only incidentally or remotely benefited by it,
notwithstanding that the contract, "if carried out according to its terms, would
inure to [the third party's] benefit." E. Aviation Grp, Inc., 6 Cal. App. 4th at 1452.
"To determine whether a third party is an intended beneficiary or merely an
incidental beneficiary to the contract involves 'construction of the parties' intent,
gleaned from reading the contract as a whole in light of the circumstances under
which it was entered. Jackson v. Am. Plaza Corp., 08-cv-8980, 2009 WL 1158829 at
*3 (S.D.N.Y. 2009) (quoting Hilderman v. Enea TekSci, Inc., 551 F. Supp. 2d 1183,
1195 (S.D. Cal. 2008)). For example, a physician was only an incidental
beneficiary of a contract between a health care service provider and its enrollees,
even though the contract required the provider to make payments to the physician
for the enrollees' care, because the intent of the agreement-and the paymentswas to benefit the enrollees. Ochs v. PacifiCare of California, 115 Cal. App. 4th 782
(2d Dist. 2004) (motion to dismiss); see also E. Aviation Grp., Inc., 6 Cal. App. 4th at
1451-54 (seller's creditor was merely an incidental beneficiary of a contract entered
between a buyer and the seller, even though the contract called for the buyer to
make payment into an account jointly held by the seller and his creditor).
A recent case offers analysis of the website Craigslist's terms of use, also
governed by California law. The court determined that the terms of use were not
16

intended to benefit-or be enforceable by-third party users. Jackson, 08-cv-8980,
2009 WL 1158829. The plaintiff in Jackson, a real estate company that used
Craigslist to advertise rental properties, sued a competitor for "posting the same
advertisements over and over again" in violation of Craigslist's terms of use, which
prohibited users from repeatedly posting the same content. Id. at *2. Examining
the text of the contract and the circumstances under which it was entered into, the

Jackson court found that the contracting parties had not intended to benefit other
Craigslist users when they entered into the terms of use, and, as a result, one user
could not sue another for its breach of those terms. The Jackson court's analysis is
highly instructive. 9
First, the Craigslist terms of use provided that they would "constitute the
entire agreement between [the user] and Craigslist ... ,"which, the court found,
demonstrated an intent to create contractual rights and duties only between the two
contracting parties. Id.
Second, the Craigslist terms of use stated that a user's "only recourse upon
becoming 'dissatisfied with Craigslist in any way' is to cease using Craigslist." Id. at
*4. The court found that this provision demonstrated an intent to "limit the
remedies available to a discontented user and bar that user" from enforcing the
terms of use by litigation. Id. This conclusion was further supported by an
9

The Court notes that the Jackson court was faced with a motion for a preliminary injunction,
where the plaintiff faced the heavy burden of showing that he was likely to succeed on the
merits of his claim to third party beneficiary status. Nonetheless, that court's analysis of the
third party beneficiary claim is certainly relevant here, particularly given that both arise out
of internet terms of use agreements.
17

additional provision that stated "[C]raigslist has the right, but is not obligated, to
strictly enforce the [terms of use] through self-help, community moderation, active
investigation, litigation and prosecution." Id.
Third, the terms of use established an internal grievance procedure,
requesting that users report any violations of the terms of use by "flagging the
posting(s) for review[] or by emailing ... [e-mail]." Id. at *5. The

Jackson court found that this provision "strongly suggest[ ed] that "Craigslist did
not also intend to endow users with the right to pursue grievances against TOU
violators through litigation." Id. (citing Registry.com, Inc. v. Verio, Inc. 365 F.3d
393, 399-400 (2d Cir. 2004)).
Finally, the court determined that the provision the defendant allegedly
violated existed solely for the benefit of Craigslist. The court noted that the
highlighted paragraph prohibited repeatedly posting the same content "or otherwise
impos[ing] an unreasonable or disproportionately large load on [Craiglist's]
infrastructure." Id. This language indicated "that Craigslist's principal concern
with repetitive posting was that it burdens the Craigslist infrastructure,'' not that it
might hurt other users. Id. All in all, the court held, "any benefit received by
plaintiffs [was] incidental." Id.
The Network54 TOU contain provisions analogous to many, but not all, of
those recalled by the court in Jackson. First, and importantly, like the Craigslist's
terms of use, the Network54 TOU state that they "constitute[] the entire agreement
between Network 54 users and Network 54 and supersede[] all prior agreements
18

and understandings between you and Network 54, " demonstrating an intent to
create benefits and duties only between the two parties to the contract. (See Coogan
Aff., Ex. 2 at ~23), Jackson, 08-cv-8980, 2009 WL 1158829, at *4.
Second, much like Craigslist, the Network54 TOU provide that "[u)sers
should report any violations of Network54's terms of use to
[e-mail]." (Coogan Aff., Ex. 2, ~ 24). This provision "strongly
suggests" that the Network54 TOU "did not also intend to endow users with the
right to pursue grievances against TOU violators through litigation." Jackson, 2009
WL 1158829, at *5.
Finally, the text of paragraph 8 of the Network54 TOU-the provision that
Carver and Marcano allegedly violated-indicates that it was created for
Network54's benefit, and that any benefit that Brahms or any other user might
receive from it was incidental. Paragraph 8, under the microscope, provides a list of
content that users are prohibited from posting. In addition to content that is
"libelous or offensive to another individual or organization,'' or 'infring[ing] upon
privacy rights,'' paragraph 8 bars users from publishing content that involves "mail
fraud and pyramid schemes,'' "hatred and racism of any kind,'' or "unauthorized
use or distribution of copyrighted material(s)." (Coogan Aff., Ex. 2, ~ 8). It is true
that in prohibiting its users from posting content that could be injurious or offensive
to others, Network54 benefited all of its users, including Brahms. Indeed, it equally
benefits all people in the world, whether they are Network54 users or not, who
might be targeted by offensive remarks on a Network54-hosted website. This,
19

however, is the epitome of an incidental, but not intended third party, benefit. It
would be unreasonable to infer, consequentially, that in requiring its users to agree
to paragraph 8, the Network54 TOU was intended to benefit, as a matter of
California contract law, all persons who could potentially be injured by content
posted on a Network54-hosted website, and to permit enforcement of the TOU
against a breaching user under a third party beneficiary theory. The only
reasonable understanding of paragraph 8 is that by prohibiting users from posting
offensive or wrongful content, Network54 intended to protect itself from legal
liability, providing an incidental benefit to others. The provision that defendants
allegedly violated exists for the benefit ofNetwork54, not Brahms or any other
Network54 user.
Unlike in Jackson, the Network54 TOU do not expressly limit a discontented
user's remedies to ceasing use of Network54. See Jackson, 08-cv-8980, 2009 WL
1158829, at *4. Notwithstanding, the absence of an explicit limiting provision, alone,
does not evince an intent to vest third party users with the right to enforce the TOU.
See Kalmanovitz v. Bitting, 43 Cal. App. 4th 311, 314 (1st Dist. 1996) ("[T]he
contracting parties must clearly manifest their intent to benefit the third party.")
(emphasis added). Even drawing all reasonable inferences in his favor, Brahms is
not a third-party beneficiary of the Network54 TOU under California law. 10
Accordingly, the breach of contract claim is also dismissed.

10

Even if Brahms did have standing to enforce the TOU, he would not have stated a claim for
breach of contract. The information that Marcano is alleged to have published-Brahms'
20

Conclusion
For the foregoing reasons, defendants' motion to dismiss is granted.
The Clerk of Court is directed to enter judgment for defendants and to close
this case.
SO ORDERED.
Dated:

Brooklyn, New York
July 11, 2014
/s/ ENV

ERIC N. VITALIANO
United States District Judge

first and last name, part of an email address, and his eBay usemame-is not of the sort
prohibited by paragraph 8 of the TOU, which targets "privacy rights, such as specific
addresses, phone numbers, social security numbers, or credit card numbers." Additionally,
the record clearly shows that at least some of this information was already known to
numerous members ofVRF, and that Brahms publicly confirmed the information on VRF
prior to Marcano's statement. In light of these facts, there was, as a matter oflaw, no
violation of the TOU.
21