Judge Upinder S. Kalra, Case Number: 23STCV14893, Date: 2024-02-01 Tentative Ruling

1. If you wish to submit on the tentative ruling, please email the clerk at SMCdept51@lacourt.org (and “cc” all other parties in the same email) and notify all other parties in advance that you will not be appearing at the hearing. Include the word "SUBMISSION" in all caps in the subject line and include your name, contact information, the case number, and the party you represent in the body of the email. If you do not have access to the internet, you may call the clerk at (213) 633-0351.

If you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear and argue the motion, and the Court may decide not to adopt the tentative ruling. Please note that the tentative ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question which are not authorized by statute or Rule of Court.

2. For any motion where no parties submit to the tentative ruling in advance, and no parties appear at the motion hearing, the Court may elect to either adopt the tentative ruling or take the motion off calendar, in its discretion.

3. DO NOT USE THE ABOVE EMAIL FOR ANY PURPOSE OTHER THAN TO SUBMIT TO A TENTATIVE RULING. The Court will not read or respond to emails sent to this address for any other purpose.

1. Demurrer to the entire First Amended Complaint on the grounds it is barred by the federal Communications Decency Act, 47 U.S.C. § 230;

2. Demurrer to the entire First Amended Complaint on the grounds it is barred by the First Amendment of the United Stated Constitution; and

3. Demurrer to the entire First Amended Complaint for failure to state sufficient facts to constitute a cause of action against Reddit.

1. Demurrer to the FAC is SUSTAINED in its entirety with 20 days leave to amend.

On June 26, 2023, Plaintiff Edwin Novel Jewelry Design, Inc. (Plaintiff) filed a Complaint against Defendant Reddit, Inc. (Defendant or Reddit) with two causes of action for: (1) Trade Libel; and (2) False Light.

On August 7, 2023, Plaintiff filed an Amendment to Complaint naming Defendant DOE 2 as Matt Fehring.

On September 25, 2023, Plaintiff filed an Amendment to Complaint naming Defendant DOE 6 as Dan Moran and Defendant DOE 9 as Concierge Diamonda, Inc.

On September 26, 2023, Plaintiff filed a First Amended Complaint (FAC). According to the FAC, a group of Plaintiff’s competitors acting as moderators on Reddit started attacking Plaintiff through online publications causing Plaintiff’s sales to plummet.

On October 17, 2023, Defendant Matt Fehring filed a Motion to Quash Service of Summons and Complaint.

On November 13, 2023, Defendant Reddit, Inc. filed a Demurrer to the FAC. On January 19, 2024, Plaintiff filed an opposition. On January 24, 2024, Reddit filed a reply.

The court grants Reddit’s Request for Judicial Notice as to Exhibits E, F, G, and Plaintiff’s Request for Judicial Notice as to Items 1 and 2.[1] (Cal. Evid. Code § 452(h).) However, the court only takes judicial notice of the foregoing documents only as to “the existence, content and authenticity of public records and other specified documents”; it does not take judicial notice of the truth of the factual matters asserted in those documents. (Dominguez v. Bonta (2022) 87 Cal. App. 5th 389, 400.)

Prior to filing a demurrer, the demurring party is required to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. (CCP) §430.41 and demonstrate that they so satisfied their meet and confer obligation by submitting a declaration pursuant to CCP §430.41(a)(2) & (3). Upon reviewing the Declaration of Julie E. Schwartz, the parties sufficiently met and conferred.

A demurrer for sufficiency tests whether the complaint states a cause of action.¿(Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context.¿In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. …. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”¿(Hahn¿147 Cal.App.4th at 747.)

Reddit contends that Plaintiff’s FAC is barred as to Reddit under the CDA because it provides an interactive computer service, Plaintiff’s claim treats Reddit as a publisher of the offending content, and the content was provided by another information content provider. Plaintiff argues that the moderators are gratuitous agents of Reddit and so Reddit is not immune under the CDA. Reddit replies that Plaintiff has not alleged any facts overcoming CDA immunity and that the moderators are third parties under the CDA because their relationship with Reddit is expressly defined such that they do not speak for Reddit or act on its behalf. Reddit additionally replies that Reddit’s right to terminate moderators does not transform moderators into employees. The parties heavily rely on federal authority to support their arguments.[2]

Section 230(c)(1) of the CDA provides that, “no provider… of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” (See also, Barrett v. Rosenthal (2006) 40 Cal.4th 33, 39.) An “interactive computer service” is “any information service, system . . . that provides or enables computer access by multiple users to a computer server.” (Id., § 230(f)(2).) An “information content provider” is “any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other inter active computer service.” (Id., § 230(f)(3).) Section 230(e)(3) of the CDA provides that, “No cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.”

“Immunity under section 230 requires proof of three elements: (1) [Defendant] is an interactive computer services provider, (2) [Defendant] is not an information content provider with respect to the disputed activity, and (3) [Plaintiffs] seek to hold [Defendant] liable for information originating with a third-party user of its service.” (Doe II v. MySpace Inc. (2009) 175 Cal.App.4th 561, 568 (Doe II).)

At issue here is whether a Reddit volunteer moderator is “another information content provider” who triggers Section 230 protection for Reddit or if Reddit is liable for their volunteer moderator’s posts.[3] The FAC alleges two moderators: defendant Matt Fehring (formerly DOE 2) and DOE 1, username Chooseausername7567. (FAC ¶¶15, 18.) Upon reviewing the FAC, there are no allegations pertaining to Reddit posts other than via these two moderators. Plaintiff alleges that Defendant Fehring and DOE 1 are employed by Reddit as volunteer moderators. (FAC ¶¶ 7, 15, 18.)

To establish a claim for vicarious liability, Plaintiff must show the tortfeasor was employed by the defendant, or there is an alleged “actual” or “ostensible” relationship. (See Asplund v. Selected Investment in Fin’l Equities, Inc. (2000) 86 Cal.App.4th 26, 45-49 [employment relationship]; Cal. Civ. Code § 2298 [“An agency is either actual or ostensible.”]; Roman Catholic Archbishop of Los Angeles (2016) 247 Cal.App.4th 953, 969 [actual agency]; Cal. Civ. Code § 2300 [“An agency is ostensible when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him.”])

Reading the FAC in context, Plaintiff has sufficiently alleged the existence of an employment or agency relationship. First, the FAC alleges that moderators “are granted powers and abilities far beyond those of ordinary users” presumably by Reddit, that they “monitor the messages in the subreddit, and remove messages that are off-topic,” “determine why posts are removed,” “able to make public why posts are removed,” and that Reddit can terminate them. (FAC ¶¶ 8, 9, 10, 11, 12.) Plaintiff alleges that the two moderators posted defamatory statements “within the scope and authority” of their moderator roles. (FAC ¶¶ 15, 18.)

Accordingly, Reddit is not protected by Section 230 of the CDA for the alleged misconduct.

Reddit contends it has a constitutionally protected right to decide which speech to allow on its platform and so cannot face liability for its decisions about what speech to allow, or not, on its service and platform. Plaintiff does not directly oppose this argument. The court declines to further develop this argument at this time.

Reddit contends that Plaintiff’s claim fails because the FAC only alleges that Reddit hosted the content created by ten other Reddit users and that the volunteer moderators do not act on Reddit’s behalf as indicated by Reddit’s Terms. Plaintiff states that Reddit did not dispute that Plaintiff sufficiently alleges a claim of libel but does not otherwise develop this argument. Reddit replies that it has not conceded that the speech at issue is defamatory and that Plaintiff has not otherwise alleged facts supporting an agency relationship or other theory of vicarious liability.

“Trade libel is the publication of matter disparaging the quality of another’s property, which the publisher should recognize is likely to cause pecuniary loss to the owner.” (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010.) “The tort encompasses all false statements concerning the quality of services or product of a business which are intended to cause that business financial harm and in fact do so.” (Id. at pp. 1010-1011.) The statement must be false. (Id. at p. 1011.) Opinions will not support a cause of action for trade libel. (Ibid.) Whether the statement is fact or opinion is usually a question of law which the court determines by reading the alleged statement as an average reader and determining the natural and probable effect of the statement considering both language and the context. (Ibid.)

Here, Plaintiff has not sufficiently alleged defamatory statements by Reddit via its moderators. There are three alleged defamatory statements at issue. (1) DOE 1’s statement: “It seems like the posts criticizing this company keep disappearing across Reddit. I would suspect this is due to bogus legal threats and/or mass reporting of the posts causing them to be pulled down.”[4] (FAC ¶ 43.) (2) Defendant Fehring’s statement: “[e]very time someone posts a negative comment about Edwin Novel Jewelry Design, one of these posts asking about them pops up looking like an advertisement for them.” (FAC ¶ 77.) (3) Defendant Fehring’s statement: “I’m having a ball over here in r/diamonds cleaning up these posts. I swear they’re making or using or using alts to pump out good comments.” (FAC ¶ 78.) It is unclear to the court how these statements allege “false statements concerning the quality of services or product of a business which are intended to cause that business financial harm and in fact do so.” These posts are opinion, observational commentary and hyperbole. Moreover, These statements pertain to managing Reddit’s platform.

Accordingly, the court SUSTAINS Reddit’s demurrer to the first cause of action with leave to amend.

There were no new arguments specific to the second cause of action. As such, the analysis for Section 230 and First Amendment protection is unchanged.

“False light is a species of invasion of privacy, based on publicity that places a plaintiff before the public in a false light that would be highly offensive to a reasonable person, and where the defendant knew or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the plaintiff would be placed.” (De Havilland v. FX Networks, LLC (2018) 21 Cal.App.5th 845, 865.) Like libel, it exposes a person to hatred, contempt, ridicule, or obloquy and assumes the audience will recognize it as such. (Ibid.) The elements are: (1) assertions of fact, (2) actually false or create a false impression about the plaintiff, (3) highly offensive to a reasonable person or defamatory, and (4) made with actual malice. (Ibid.)

Here, Plaintiff has not sufficiently alleged facts supporting a claim against Reddit for false light for the same reasons articulated above.

Accordingly, the court SUSTAINS Reddit’s demurrer to the second cause of action with leave to amend.

2. Demurrer to the FAC is SUSTAINED in its entirety with 20 days leave to amend.

[1] The court notes that none of these documents are attached to the FAC or referenced by the FAC.

[2] While federal precedents are not binding on this court, “where the decisions of the federal courts on a federal question are both numerous and consistent, we should hesitate to reject their authority.” (Doe II, infra, at p. 571 [internal quotations and citations omitted.])

[3] “[T]he CDA immunizes an interactive computer service provider that ‘passively displays content that is created entirely by third parties,’ but not an interactive computer service provider that acts as an information content provider by creating or developing the content at issue.” (Sikhs for Justice “SFJ”, Inc. v. Facebook, Inc. (2015) 144 F.Spp.3d 1088, 1094.)

[4] Reading this statement as an average reader, DOE 1’s statement is clearly an opinion because it is qualified with language such as “seems like” and “I would suspect.”