## Facts

- CompuServe operated the CompuServe Information Service (CIS), providing subscribers access to many information sources and user forums, including the Journalism Forum.
- The Journalism Forum was managed by Cameron Communications, Inc. (CCI), an independent contractor retained to manage and control forum content under CompuServe’s standards.
- Don Fitzpatrick Associates (DFA) published “Rumorville USA” (Rumorville), a daily newsletter carried in the Journalism Forum; DFA contracted with CCI (not CompuServe) and accepted total responsibility for Rumorville’s contents.
- Plaintiffs Cubby, Inc. and Robert G. Blanchard were developing “Skuttlebut,” an electronic publication intended to compete with Rumorville.
- Rumorville published items about plaintiffs and Skuttlebut that plaintiffs alleged were defamatory and disparaging, including accusations of dishonest conduct and improper acquisition of information.
- Rumorville content was uploaded by DFA and made available to subscribers without prepublication review by CompuServe.
- Plaintiffs sued CompuServe (and Fitzpatrick) under New York law for libel, business disparagement, and unfair competition based on the Rumorville statements.

## Issues

1. Whether CompuServe should be treated as a publisher (strictly liable) or a distributor (liable only upon knowledge or reason to know) for allegedly defamatory third-party content carried on its service.
2. Whether CompuServe could be held vicariously liable for Rumorville content based on its contractual arrangement with CCI and CCI’s role in managing the forum.
3. Whether the business disparagement and unfair competition claims could proceed against CompuServe absent proof of knowledge or reason to know of the challenged statements.

## Decision

- The court granted CompuServe summary judgment and dismissed the claims against it.
- CompuServe was treated as a distributor, not a publisher, of Rumorville content.
- As a distributor, CompuServe could be liable only if it knew or had reason to know of the allegedly defamatory matter.
- Plaintiffs produced no evidence that CompuServe had notice of the specific statements (or a basis to anticipate them) before dissemination.
- The lack of knowledge or reason to know defeated the libel, business disparagement, and unfair competition claims against CompuServe.

## Legal Principles

- Under New York defamation law, publishers may face strict liability for defamatory content they publish, while distributors are liable only upon proof they knew or had reason to know of the defamatory content.
- An online service that functions like a library or newsstand for third-party publications, without prepublication review or direct editorial control over specific content, is treated as a distributor for defamation liability.
- Contractual delegation of forum management to an independent contractor does not, without evidence of control over the challenged content, establish vicarious liability for defamation by a separate content provider.
- Claims for business disparagement and unfair competition predicated on the same allegedly defamatory statements fail against a distributor absent the required showing of knowledge or reason to know.

## Conclusion

The court held that an online service carrying third-party publications without prepublication review or direct editorial control is a distributor, and without evidence it knew or had reason to know of the alleged defamation, it cannot be held liable for libel or related tort claims based on that content.


Cubby, Inc. v. CompuServe Inc., 776 F. Supp. 135 (S.D.N.Y. 1991)