On May 2, 2016, the New York Supreme Court for the County of Westchester granted defendant Seeking Alpha, Inc.’s motion to dismiss plaintiff Mark Nordlicht’s (“Plaintiff”) defamation complaint in the case styled as Nordlicht v. Seeking Alpha, Inc., et al., Index No. 64319/15.  The court’s ruling was based on the immunity created by section 230 of the Communications Decency Act, which protects providers or users of an interactive computer service from a defamation lawsuit where the provider or user does not materially contribute to the allegedly defamatory content.

Seeking Alpha maintains and operates www.seekingalpha.com, a global website that functions as a virtual bulletin board and open discussion forum where people can publish commentary and articles regarding U.S. financial markets.  Seeking Alpha describes itself on its website as a “crowd-sourced, contributor-driven research platform for U.S.-focused stock market investors. . . [A]ll views . . . are those of our contributors . . . There is no house opinion.”

On August 6, 2015, an individual using a pseudonym posted an article entitled “Cellceutix:  Empty Office, Unviable ‘Science’, Misleading Disclosures, 96% Downside” to Seeking Alpha’s website.  Seeking Alpha allegedly tagged the article as an “Editor’s Choice.”  The article criticized Cellceutix, a publicly traded company, and contained allegedly defamatory statements about Plaintiff, who is the Chair and Chief Investment Officer of a hedge fund which helped finance Cellceutix.  The article implied that the financiers of Cellceutix were engaged in a Ponzi scheme.

In evaluating Seeking Alpha’s motion to dismiss Plaintiff’s complaint, the court cited legal precedent that the immunity afforded under Section 230 is “quite robust” and “should be construed broadly” and “in favor of immunity.”[1]  The court further noted that Seeking Alpha had been found to be an “interactive computer service” entitled to immunity under Section 230 in at least one prior case.

Plaintiff argued that Seeking Alpha was not entitled to the protection afforded by Section 230, because, by tagging the article as an “Editor’s Choice,” Seeking Alpha endorsed or contributed to its content.  The court was unpersuaded by Plaintiff’s argument, however.  As Judge Lubell explained in his written ruling, Seeking Alpha was simply exercising the traditional editorial functions of a publisher, and Section 230 does not distinguish between “neutral” and selective publishers.  Because Seeking Alpha had not materially contributed to the allegedly defamatory nature of the author’s statements, Seeking Alpha was entitled to immunity under Section 230, and Plaintiff’s complaint was subject to dismissal.

[1] Fair Hous. Council of San Fernando Val. v. Roommates.Com, LLC, 521 F.3d 1157, 1174-75, 1179 (9th Cir. 2008).

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