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JuicyCampus Lawyer Responds About the New Jersey Attorney General's Investigation:

For background, see here. Here's a response from a friend of mine, an experienced lawyer whose judgment I trust:

As it happens, I'm the lawyer who drafted Juicy Campus's terms and conditions, and who is representing Juicy Campus in connection with the New Jersey subpoena (along with local counsel in New Jersey). I was in trial the last week of March (on an unrelated matter) or I would have weighed in sooner.

Juicy Campus's Terms and Conditions simply do not say that Juicy Campus will delete offensive posts. To the contrary, the Terms and Conditions expressly provide:

6. No Pre-Screening or Regular Screening of Content.

You acknowledge that JuicyCampus does not pre-screen Content, but agree that JuicyCampus shall have the right (but not the obligation) to access, re-arrange, modify and remove or restrict access to any Content on the Site in its sole discretion and without notice or compensation. Without limiting the foregoing, JuicyCampus shall have the right to access and remove or restrict access to any Content that violates this Agreement or that JuicyCampus believes is otherwise objectionable, in its sole discretion.

The Attorney General's office is basing its investigation on the theory that because Juicy Campus requires its users to agree that they will not post anything defamatory, Juicy Campus is therefore obligated to delete posts that are alleged to be defamatory by third parties. In particular, the AG seems focused on paragraph 7 of the Terms and Conditions, which provides:

7. User Conduct.

You agree to not use the Site to:

(a) violate or solicit the violation of any applicable local, state, national or international law;
(b) infringe the rights of any third party, including but not limited to intellectual property rights and privacy or publicity rights;
(c) upload, post, email or otherwise transmit any Content that:
(1) is unlawful, threatening, abusive, tortious, defamatory, obscene, libelous, or invasive of another's privacy;
... If you use the Site to commit any of the above offenses, JuicyCampus may, at its sole discretion ... remove any Content you posted to the Site.

No one could reasonably interpret such language to impose on Juicy Campus any obligation to delete posts.

Even were there some representation that Juicy Campus would delete posts from the Site (which there emphatically is not), the AG's investigation for violation of New Jersey's consumer fraud statute would be baseless. The New Jersey Consumer Fraud Act prohibits, inter alia, "any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation ... in connection with the sale or advertisement of any merchandise ..." (emphasis added). Juicy Campus does not charge users to post on site or read the site, and does not sell any merchandise on the site. Juicy Campus does, however, serve third-party advertising. It seems self-evident that one who clicks on a banner ad does not do so in reliance on any representation in the Terms and Conditions, but according to Assistant Attorney General James Savage, the fact that JuicyCampus.com sells advertising to third parties is enough to support a finding of fraud if users (even those who never clicked on any advertisement) were misled by its Terms and Conditions into thinking that it would delete offensive posts.

If this is the law in New Jersey, I'm moving there tomorrow to hang out my shingle. It seems to allow one who is neither a party to a contract nor an intended beneficiary of that contract to allege that one has been defrauded by the manner of the contracting parties' performance, without having sustained any damage as a result. I would start by suing all the lenders who have the right to foreclose on late-paying borrowers but are refraining from doing so, on the theory that their failure to enforce the borrowers' payment obligation defrauds me. I would then sue every bank in New Jersey that had ever waived an overdraft charge, since I believe their agreements with their customers allow them to collect such charges. The absurdity of the Attorney General's position is underscored by the sheer inanity of some of the interrogatories in the subpoena (my favorite: "What does the Company mean by the term 'beta' as it is currently used on the JuicyCampus.com website").

Paul Mulshine of NJ.com got it right: it's grandstanding. Richard Blumenthal, the Attorney General of Connecticut, has now chimed in with a letter asking for information similar to that sought by the New Jersey subpoena. I'll keep you posted as things develop.

Related Posts (on one page):

  1. JuicyCampus Lawyer Responds About the New Jersey Attorney General's Investigation:
  2. More on New Jersey Attorney General's Investigation of JuicyCampus.com:
  3. Misrepresentation by JuicyCampus?
George Weiss (mail) (www):
if a private party made the arguments being made by the attorney general he would be sanctioned.

so why do governments not only get away with such arguments-but get to intentionally use them for political gain and intimidation?
4.11.2008 12:34am
Barbara Skolaut (mail):
Because they can, George.

Maybe Eugene's friend will (eventually) help change that.
4.11.2008 11:24am
SJE:
Holding JuicyCampus liable for its poster's comments makes about as much sense as holding the power company liable for posters that people staple to the power poles around here.
4.11.2008 11:30am
Aultimer:
I can see how laypeople might "misunderstand" that those two sentences - about the site's right (but not obligation) to delete stuff, and in particular stuff that violates terms - indicate some level of intent to actually delete stuff that violates the terms.

Here's a version of 6 that would've been better - JuicyCampus does not pre-screen Content, but JuicyCampus is free to delete anything or nothing in its sole discretion, whether or not it violates our ToU.
4.11.2008 11:44am
genob:
Grandstanding by a state AG? Shocking.
4.11.2008 12:11pm
Hans Bader (mail) (www):
The user-conduct policy doesn't constitute a waiver of JuicyCampus's First Amendment and statutory defenses to being forced to censor user content. Indeed, it wouldn't constitute a waiver even if Juicy Campus had not also included a disclaimer of any duty to screen or prescreen comments.

The plaintiff in Lyle v. Warner Brothers Television Productions 38 Cal. 4th 264, 132 P.3d 211 (Cal. 2006) made a similar argument, to no avail.

She argued that her employer's very broad sexual harassment policy, which banned offensive comments, prevented the employer from raising a First Amendment defense to her harassment lawsuit, which was based on sexual jokes told amongst the writers of the sitcom Friends as they wrote episodes of the adult-oriented sitcom.

The California Supreme Court found that the conduct, while offensive, was not sexual harassment. And the concurring opinion by Justice Chin noted that the speech was also constitutionally protected speech that could not be prohibited or give rise to tort liability.

The Seventh Circuit's Tomic decision also holds that an employer's internal policy banning certain conduct does not prevent it from raising a First Amendment defense to liability for such conduct.
4.11.2008 12:34pm
Bob from Ohio (mail):
I would like to know who in the NJ AG's office had a daughter or niece who was offended by the site. James Savage? The AG.

Well, at least the NJ AG scandals are law related.

Here in Ohio, the big scandal is that the married AG had his young, female scheduler often come to his apartment in the evening to bring him paper copies of his schedule since he "prefers paper".

Once she was observed in some sort of "lounge" wear eating pizza on his floor. The observer was a woman allegedly being sexuall harrased by the AG's roomie, an old friend who was "Director of Operations" in the AG office.

Good judgment is seldom found in state AGs.
4.11.2008 2:24pm
VFBVFB (mail):
--- If this is the law in New Jersey, I'm moving there tomorrow to hang out my shingle. It seems to allow one who is neither a party to a contract nor an intended beneficiary of that contract to allege that one has been defrauded by the manner of the contracting parties' performance, without having sustained any damage as a result. ---

You could not do so, because for a private party to have a standing to file suit under the New Jersey Consumer Act, the party would need to have an "ascertainable loss." N.J.S.A. 56:8-19. The attorney general has no such requirement.
4.11.2008 7:31pm
Brian G (mail) (www):
Gotta love New Jersey. You are taxed into the ground, your First Amendment rights are trampled on, and it is all the Republicans' fault, despite that no Republican has been elected to statewide office since 1997, and won't for the foreseeable future. New Jersey is the natural result of unfettered liberalism.

I evacuated from that state in 2001 and haven't looked back.
4.12.2008 7:35pm
Milhouse (www):
Can the AG be sanctioned for this?
4.13.2008 4:01am
Stash:
First let me say that I think the AG's position is wrong. But AG's do in fact usually have the right to sue without standing under the parens patriae doctrine. This is usually invoked with respect to the protection of minors and incompetents, but it also invoked to protect citizens from consumer fraud. That is the State does not need standing. Thus when counsel writes:

It seems to allow one who is neither a party to a contract nor an intended beneficiary of that contract to allege that one has been defrauded by the manner of the contracting parties' performance, without having sustained any damage as a result.


Most state AG's have the right to do just that under consumer fraud statutes. They generally do not have to prove that anyone in particular was defrauded or sustained damages, though of course that helps to prove their case. Usually they need only prove that representation is deceptive in a "consumer transaction" or, as in this state "in connection with the sale advertising of merchandise."

Where counsel has it right is that the doctrine assumes some consumer, or even a potential consumer somewhere would or could have standing. The State should only have standing if it is suing on behalf of somebody who at least could potentially be deceived and at least potentially damaged.

I have not researched the particular state laws, but my bet is that the AG's are relying on broad legal statements in opinions that they need not prove either reliance or damages--though usually they still have to prove materiality, i.e. that an imaginary "reasonable consumer" could be influenced to visit the site by the representations.

So, while I would say the suit is without merit, I think it is not "frivolous" at least in a legal sense. One could make the argument that a completely fraudulent website that lures one with false promises simply to get a page view for ad rate purposes was, in a broad sense a consumer fraud. In reliance on the false promises consumers have been defrauded out of at least the time they've spent visiting the site.(Compare junk fax statute).

That is not the case here. As counsel says, "No one could reasonably interpret such language to impose on Juicy Campus any obligation to delete posts."

That said, the simple fact is that there is no misrepresentation does not mean there is no consumer fraud. In consumer fraud, there is broad language that only requires something be "deceptive" as opposed to an outright misrepresentation. So, again, the fact that there is no outright lie is not a barrier. (E.g., on a "bait and switch" scheme, the fact that there are actually a very few quickly sold units of the low-priced item with the advertised price is still "deceptive").

At the end the day, I say that there is simply no deception either; at most there is confusion and resentment. Further, if it is deceptive, it is not material. That is, given the nature of the internet, no "internet consumer" from experience, could be reasonably influenced by the statements into believing that offending posts would be removed or strictly policed. This would be, as professor Volokh pointed out like "an attorney general going after [VC] for "suggesting" with our comment policy that we'd delete offensive comments, but then not doing a good enough job of deleting them."

This is bad prosecutorial judgment and bad legal judgment that potentially could result in very bad law.
4.13.2008 6:09am
Stash:
The Attorney General can be sanctioned. But as I explain above, the theory is only clearly wrong, not frivolous.
4.13.2008 6:14am