In re: Casino-Style Games Litigation

Question Presented

Whether Section 230 of the Communications Decency Act, which prohibits treating internet companies as the speakers of third-party information, prevents lawsuits against internet companies who sell illegal products provided by third parties on their online marketplaces.

Background

Section 230 of the Communications Decency Act (47 U.S.C. § 230) provides protections for internet companies against lawsuits that seek to treat them as the publisher of harmful third-party content. The law explains 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.” Since its passage, litigants and courts have constantly argued over what the exact scope of Section 230’s protection is.

The determination of Section 230 coverage in each case is important. Too broad a reading of Section 230 wrongfully blocks worthy plaintiffs from the courtroom, leaving their injuries unredressed and removing incentives for powerful internet companies to act responsibly. Too narrow a reading of Section 230 could harm the online ecosystem by incentivizing internet companies to either over-censor users, engage in no content moderation whatsoever, or abandon their business altogether to avoid liability. Getting the balance right is crucially important and often hotly contested in any civil cases against tech companies.

The Ninth Circuit has broken down Section 230’s protections into a three-prong test: Section 230 applies to block legal claims against “(1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat . . . as a publisher or speaker (3) of information provided by another information content provider.” Despite sounding clear, litigants often argue about whether specific claims should be blocked under this test.

The Case

In these three cases, which the parties have recently moved to consolidate into one, the Plaintiffs are suing Apple, Google, and Meta, alleging that these companies broke various state gambling laws, causing the Plaintiffs to lose enormous amounts of money. Many states highly regulate gambling. For instance, they prohibit slot machines whose outcomes are not truly random, games in which players are not allowed to “cash out” their winnings but instead must keep spinning until their money is gone, and profiting from gambling games without a license. Despite these clear prohibitions, the Defendants’ app stores have become filled with “social casino” apps that violate many of these laws, and the Defendants have made enormous amounts of money from them. The Defendants take a cut from the game developers’ profits, sell the virtual tokens used to wager in the games, and provide aid to the game developers in the form of user data, advertising analytics, and other services.

The Defendants argue that the Court must dismiss the Plaintiffs’ claims because Section 230 prohibits any liability for content originating from third parties. According to the Defendants, because the games were developed and added by third parties, the Defendants cannot be held liable for selling and profiting from them. Additionally, the Defendants argue that Section 230 prohibits any claims based on “neutral tools,” i.e., technologies and business practices that don’t contribute to what makes the third-party content illegal. For example, Defendants argue that because they provide their in-app payment processing services to all apps, not just illegal casino game apps, Section 230 requires the court to dismiss any claims in which in-app payment processing services are relevant.

The Plaintiffs are arguing that Section 230 does not prohibit their claims because the claims do not “treat” the Defendants “as publishers” of any third-party speech: the claims treat them as businesses who are selling and profiting from illegal products. They point to previous Ninth Circuit caselaw establishing that Section 230 does not give blanket immunity to any claims based on third-party content: It only gives immunity for claims that allege the defendants are liable simply for showing unlawful third-party material. The Defendants did something more than show unlawful material: they processed transactions for illegal games, profited from the sale of virtual gambling chips, and provided services to the games’ developers. The Plaintiffs also argue that the Defendants’ “neutral tool” argument is incorrect. Only a small subsection of Section 230 cases are decided on neutral tool grounds, specifically, cases in which plaintiffs allege that the defendants’ website design effectively forces users to break the law. In these cases, because the defendants’ website is not “neutral,” but instead a contributor to the illegality, Section 230 does not protect the defendants. But the Plaintiffs explain that because they make that argument in this case, it is irrelevant. In other words, because the Plaintiffs argue that their claims do not treat the defendants as publishers, it does not matter whether or not the tools are neutral. For this reason, and others, the Plaintiffs argue that their claims should be heard on the merits instead of being dismissed on Section 230 grounds.

Evaluating these arguments, the district court issued an order that used a confusing procedural move to agree with some arguments from both sides. When evaluating motions to dismiss based on Section 230, the district court is supposed to look at each claim and decide whether permitting that claim would violate Section 230. Instead of doing this, the district court in this case re-imagined the Plaintiffs’ claims as three “theories of liability,” ruled that two theories of liability would violate Section 230 and one would not, and then certified the case to be heard on appeal by the Ninth Circuit.

EPIC’s Brief

EPIC’s brief supports the Plaintiffs’ arguments, arguing that the claims in this case should be permitted to be heard on their merits because they do not treat the Defendants as publishers. The brief explains that over the past two decades, the Ninth Circuit has carefully struck the right balance of Section 230 protections by looking to the statute’s history and purpose. EPIC’s brief traces that history to explain and synthesize the Ninth Circuit’s rule for evaluating whether a claim treats a defendant as a publisher. As the Ninth Circuit has recognized, Section 230 was meant to prevent a very specific thing: online publishers from being treated like offline publishers. It was not meant to allow online businesses to ignore all of the laws that govern their off-line competitors.

EPIC’s brief shows that the Ninth Circuit has developed a test to determine which claims are treating defendants as publishers. Claims are treating defendants as publishers when they allege that, because a company engaged in publishing activity such as hosting, editing, or removing third-party content, then that company has a duty to alter or remove third-party content ensure that no illegal materials are published. This has two important corollaries: (1) claims whose alleged duties could be fulfilled without altering any third-party content are not prohibited, and (2) duties that companies adopt through any behavior that is not publishing are not prohibited.

EPIC’s brief explains why, based on that test, the claims in this case should not be prohibited. None of them would require the Defendants to change any third-party content, and the Defendants adopted these alleged duties by acting as marketplaces selling goods, not by acting as publishers of content.

EPIC’s brief also explains why the district court was wrong to use the neutral tool test to evaluate the Plaintiffs’ claims and why permitting the Plaintiffs’ claims to be heard on their merits will not ruin the internet, as the Defendants and their amici warn.

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