In Zeran v. America Online, the Fourth Circuit upheld the broad grant of immunity for interactive service providers set out in §230 of the Communications Act, 47 U.S.C. §230. The court found that the new statute established a clear Congressional intent to exempt the emerging online industry from the threat of liability for information posted by others on their networks or transmitted over and through them. Obviously, this decision was very gratifying to the industry, and especially to those of us who had spent many months crafting and negotiating that legislation. It would be fair to say, however, that this hugely favorable result likely would never have come to pass without an earlier court decision involving the Stratton Oakmont brokerage firm, infamously memorialized in the movie “The Wolf of Wall Street.”

The complex legal and political issues that ultimately generated §230 as it was reviewed in Zeran had their genesis in a Senator’s desire to protect kids from pornography and other objectionable materials available on this new technological medium called the Internet, and a New York court that found Prodigy Services Company, one of the preeminent online pioneers, liable for millions of dollars because it tried to do just that. Given the obvious disconnect between those perspectives, the path to a resolution that could protect Prodigy and the rest of the online industry from potentially crippling liabilities was both far from clear and littered with proverbial minefields. How we got from those early existential threats to Zeran is an interesting exercise in legislative craftsmanship and political theater, with a substantial dose of legal irony.

In brief, it all started with the Exon Amendment to §223 of the Communications Act, 47 U.S.C. §223, as amended. [A comprehensive early legislative history of this provision can be found here.] Senator James Exon of Nebraska proposed to update existing prohibitions in the Act related to obscene and other objectionable materials and activities using a telephone to include the new online medium. At virtually the same time, Prodigy Services Company was fighting a lawsuit filed by the Stratton Oakmont financial firm over allegedly defamatory comments posted on a Prodigy bulletin board by some of its users. Stratton Oakmont successfully argued that, since Prodigy screened its postings for profanity, it could not take advantage of the historical distributor/conduit immunity that had saved an online rival from liability in a similar case, Cubby v. Compuserve. As Washington counsel for Prodigy, I was tasked to work with Senator Exon’s staff to address both of these potentially devastating developments.

As originally introduced in 1994, Senator Exon’s amendment proposed simply to change references in §223 from “telephone” to “telecommunications device” and to add “communication” to “conversation” in order to accommodate “changing technologies.” The challenge facing the industry was to convince the Senator and others not to throw out the Internet baby with the “dirty” bath water of Internet porn. It would be impossible for online services to screen and block access to all prohibited material, especially when such activities would expose them to inordinate liabilities for the millions of other postings on their services. Unfortunately, that debate would have to be held against the backdrop of a Congress that had never seen anti-pornography legislation that it didn’t support. The Stratton Oakmont case, which was subsequently settled, provided the leverage to make a skeptical Congress receptive to the industry’s need for protections so that it could act responsibly in the ever evolving Internet environment.

After months of discussions with the online industry and other interest groups, Senator Exon agreed to add language to his Communications Decency Act (CDA) that disclaimed the Stratton Oakmont precedent, which would otherwise deter online actors from implementing his desired restrictions. See Report 104-23, 104th Cong., 1st Session (March 30, 1995). As further revised and adopted in conference as part of the Telecommunications Act of 1996, the expanded statutory language prohibited, in relevant part, the use of an interactive computer service to make indecent content available to minors absent the implementation of good faith restrictions on their access. However, it also ensured that online services would not be held liable for merely providing access (including incidental functionality such as browsers and search engines) to prohibited materials so long as they were not complicit in the creation, knowing distribution or advertising of those materials. 47 U.S.C. §§223(e)(1)-(3). This language was essential to recognize and protect the role of these new technologies in the expanding Internet space.

Moreover, while establishing the good faith provision of blocking and screening of children’s access to restricted content as a defense to liability, 47 U.S.C. §(e)(5), the Conference Committee version likewise expressly rejected Stratton Oakmont by: (1) declaring that no actions could be brought “against any person on account of any [lawful] activity … taken in good faith” to restrict access to prohibited content, 47 U.S.C. §223(f)(1); and (2) preempting States from imposing liability on commercial, nonprofit, and educational entities as well as libraries that is inconsistent with this regime, 47 U.S.C. §223(f)(2). We hoped that, with these and several other important revisions, public and private network providers could receive at least some benefit from passage of the CDA even if the remainder of the statute survived judicial review.

Notwithstanding our success in mitigating the risk posed by Stratton Oakmont and the CDA within the text of the CDA itself, we recognized that the online industry required more in the way of liability protection if it were to realize its full potential. If liability arose from content not addressed by the CDA, would the facially broad exculpatory language prohibiting lawsuits and disclaiming liability still hold? What would happen if key parts of the CDA were struck down by the courts, as we expected and in fact occurred? (See Reno v. ACLU.) How could we possibly anticipate how this technology would evolve and whether new capabilities would give rise to unforeseen liabilities? Would Cubby even remain good law for the Internet? Fortunately, another vehicle had appeared that the industry could work in parallel with the Senate’s CDA initiative.

Admittedly galvanized in opposition to the Stratton Oakmont decision, House members Chris Cox and Ron Wyden introduced bipartisan legislation to remove that decision’s glaring disincentive for online services to act responsibly with respect to the information transiting their networks. I and other representatives of the online industry, as well as additional interest groups, were given the opportunity to work with those Congressmen on their draft of the Internet Freedom and Family Empowerment Act, including what became known as the Good Samaritan Provision, as eventually codified in new §230 of the Communications Act. As the latter name suggests, the initial core of that legislation essentially mimicked the CDA’s protection against liability for good faith blocking and screening of objectionable content. 47 U.S.C. §230(c)(2), (d)(3). But, the sponsors were determined to go a step further here.

Initially, they included findings recognizing the value of the Internet in making available “educational and informational resources to … citizens” and that it has “flourished … with a minimum of government regulation.” 47 U.S.C. §230(a). They then declared that it is U.S. policy “to promote the continued development of the Internet” and specifically “to remove disincentives [such as Stratton Oakmont] for the development and utilization of blocking and filtering technologies” to enable parents and providers to restrict “children’s access to objectionable” materials online. 47 U.S.C. §230(b) (emphasis added). Most importantly, they also inserted the affirmative, broadly exculpatory statement that “No 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.” 47 U.S.C. §230(c)(1) (emphasis added). In effect, this provision both codified Cubby for the online world and extended its reach beyond mere conduit services to cover all third party content. Despite the obvious overlap with sections of the CDA, the Conference Committee between the House and the Senate accepted both provisions in their entirety with only minor revisions, while specifically emphasizing their intent to overturn Stratton Oakmont. Conference Report at 194. The next step would be judicial construction.

In the Good Samaritan Provision’s first major test, the Fourth Circuit in Zeran concluded that subsection (c)(1) of §230, as supported by and interpreted consistent with Congress’ express goals in favor of the development of an unregulated Internet and the empowerment of families to control its use, does provide expansive immunity from liability for online services for content provided by others on their systems. Indeed, Zeran’s broad reading of the Good Samaritan Provision has been upheld and applied repeatedly over the past 20 years, and the Internet has flourished in large part as a result of that enlightened opinion. No other piece of legislation or judicial decision has had a more positive impact on the online industry and its users. But, ironically, neither may have existed absent the litigious actions of an unscrupulous brokerage firm in New York City.

 

Robert J. Butler is a member of the law firm Fletcher, Heald & Hildreth. He represented Prodigy Services Company in the negotiations on the Communications Decency Act and the Good Samaritan Provision.

This essay is part of a larger collection about the impact of Zeran v. AOL curated by Eric Goldman and Jeff Kosseff.