In October 1994, an unidentified user of Prodigy'sMoney Talkbulletin board created a post which claimed that Stratton Oakmont, a Long Island securities investment banking firm, and its president Danny Porush, committed criminal and fraudulent acts in connection with the initial public offering of stock of Solomon-Page, Ltd. Stratton Oakmont sued Prodigy and the unidentified poster for defamation.
Court ruling
The plaintiffs argued that Prodigy should be considered a publisher of the defamatory material and were therefore liable for the postings under the common-law definition of defamation. Prodigy asked to be dismissed from the case on the grounds that they could not be held liable for the content of postings created by its users, relying on a 1991 case Cubby, Inc. v. CompuServe Inc., which had found CompuServe, an online service provider, not liable as a publisher for user-generated content. The Stratton court held that Prodigy was liable as the publisher of the content created by its users because it exercised editorial control over the messages on their bulletin boards in three ways: 1) by posting Content Guidelines for users, 2) by enforcing those guidelines with "Board Leaders", and 3) by utilizing screening software designed to remove offensive language. The court's general argument for holding Prodigy liable, in the face of the CompuServe case, was that "Prodigy's conscious choice, to gain the benefits of editorial control, has opened it up to a greater liability to CompuServe and other computer networks that make no such choice."
Impact
This case conflicted with the 1991 federal district court decision in Cubby, Inc. v. CompuServe Inc., which had suggested that the courts would not consider online service providers to be publishers. In that case, the court held that CompuServe should be considered to be more like a digital library than a publisher. The important difference between CompuServe and Prodigy for the Stratton court was that Prodigy engaged in content screening and therefore exercised editorial control. The holding in Stratton was overruled in federal legislation when Congress passed Section 230 of the Communications Decency Act in 1996. As a result, Internet service providers in the United States today are generally protected from liability for user-generated content.
