924 Bel Air Road, LLC v. Zillow Group Inc.

• Court: District Court, C.D. California
• Decided: February 18, 2020
• Docket: 2:19-cv-01368
• Status: Unknown

Opinion

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8 United States District Court 9 Central District of California

11 924 BEL AIR ROAD, LLC, Case № 2:19-CV-01368-ODW (AFMx)

12 Plaintiffs, ORDER GRANTING

13 v. MOTION TO DISMISS [27]

14 ZILLOW GROUP, INC.; ZILLOW, INC.; and DOES 1 THROUGH 10, 15 INCLUSIVE

16 Defendants. 17 18 I. INTRODUCTION 19 Before the Court is Defendants Zillow Group, Inc. and Zillow, Inc.’s 20 (collectively, “Zillow”) Motion to Dismiss for failure to state a claim (“Motion”). 21 (Mot. to Dismiss (“Mot.”), ECF No. 27.)1 For the following reasons, Zillow’s Motion 22 is GRANTED. 23 II. FACTUAL BACKGROUND 24 924 Bel Air Road, LLC (“Bel Air”) is a California limited liability company 25 with a principal place of business in Los Angeles, California. (First Amended 26 Complaint (“FAC”) ¶ 4, ECF No. 24.) Bel Air owned property located at 924 Bel Air 27

28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 Road, Los Angeles, CA 90077, which it listed and marketed for sale for $150,000,000 2 through two brokers. (FAC ¶ 17.) 3 Zillow operates an online residential real estate database that is publicly 4 available at Zillow.com (the “Website”) and its subpages (“Residence Pages”). (FAC 5 ¶¶ 9–10.) Zillow publishes information for approximately 110 million homes across 6 the United States on the Website. (FAC ¶ 10.) The Residence Pages include 7 information about property taxes, tax history, schools, lot dimensions, and listing 8 prices. (FAC ¶ 10.) 9 To claim ownership of a Residence Page on the Website, a user must answer a 10 series of questions. (FAC ¶¶ 13, 15.) If a user attempts to claim a Residence Page 11 enough times, they can learn the questions asked and what information is required for 12 identity verification. (FAC ¶ 15, Ex. F.) The parties’ dispute centers around three 13 specific postings on the Residence Page for Bel Air’s 38,000 square-foot residential 14 property (“Property”). (FAC ¶ 22; Mot. 2–3.)2 15 On or about February 6, 2019, a third-party user unknown to both parties 16 (“User X”) claimed the Property’s Residence Page and falsely posted that the Property 17 had sold on February 4 for $110,000,000. (Mot. 3; FAC ¶ 22, Ex. A.) Bel Air learned 18 about the posting on February 7 and contacted Zillow’s Help Center. (Mot. 3; FAC 19 Ex. E.) That same day, a Zillow representative informed Bel Air that Zillow was 20 working to resolve the issue. (Mot. 3; FAC Ex. E.) 21 Two days later, on February 9, User X posted that the Property had sold on 22 February 9 for $90,540,000. (FAC ¶ 22, Ex. C.) Bel Air immediately notified 23 Zillow’s Help Center about the second false posting. (Mot. 4; FAC Ex. E.) The next 24 day, User X posted that the property had sold on February 10 for $94,300,000. (FAC 25 ¶ 22, Ex. D.) On February 12, Bel Air began threatening Zillow with legal action. 26

2 The parties dispute the source of a fourth posting on the Property’s Residence Page regarding an 27 Open House. Bel Air claims this was another false posting, while Zillow identifies Bel Air’s brokers 28 as the posting’s source. (FAC ¶ 22; Mot. 4.) For the limited purposes of this Motion, the Court relies on neither party’s rendition in its analysis. 1 (Mot. 3–4; FAC Ex. E.) That day, Zillow informed Bel Air that the false posting had 2 been removed and Zillow was looking into the source of the false postings. (FAC 3 Exs. E, F.)3 4 Two days later, after an internal investigation, Zillow reported to Bel Air the 5 series of events that had transpired, shared User X’s IP address, and blocked User X 6 from the Website. (FAC Ex. F.) Through this communication with Zillow, Bel Air 7 learned that Zillow’s internal monitoring system does not involve manually verifying 8 the identity of each user who claims a Residence Page. (FAC Ex. F.)4 9 Bel Air commenced this action on February 24, 2019, and subsequently 10 amended its Complaint on June 3, 2019. (ECF Nos. 1, 24.) Bel Air asserts a single 11 negligence cause of action against Zillow. (FAC ¶¶ 35–49.) Bel Air alleges that 12 Zillow’s internal monitoring system allowed User X to publish false information that 13 removed the property from the “elite status of a $100M plus property” and shifted the 14 market perception to a heavily discounted sale price, thus damaging Bel Air. (FAC 15 ¶¶ 24, 49.) Zillow moves to dismiss Bel Air’s complaint for failure to state a claim 16 upon which relief can be granted. (Mot. 5); see Fed. R. Civ. P. 12(b)(6). 17 III. LEGAL STANDARD 18 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 19 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 20 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To 21 survive a dismissal motion, a complaint need only satisfy the minimal notice pleading 22 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. 23 Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to 24 3 For the duration of these events, the Property remained for sale for $150,000,000. (See FAC ¶ 17.) 25 After the Court took the Motion under submission, Bel Air submitted a Request that the Court consider that the property had sold, presumably to adjust the damages requested. (ECF No. 33.) For 26 reasons consistent with the disposition of this Motion, Bel Air’s Request is DENIED as moot. 4 Although Zillow’s system does not manually verify Website users’ identities, when another user 27 attempted to claim the Residence Page on February 15, 2019, Zillow contacted Bel Air to determine 28 if that user was affiliated with Bel Air. (FAC Ex. F.) When Bel Air denied any affiliation, Zillow blocked the user and offered to auto-claim the Residence Page on Bel Air’s behalf. (FAC Ex. F.) 1 raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 2 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient factual matter, 3 accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 4 Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). 5 The determination of whether a complaint satisfies the plausibility standard is a 6 “context-specific task that requires the reviewing court to draw on its judicial 7 experience and common sense.” Id. at 679. A court is generally limited to the 8 pleadings but may also consider material submitted with the complaint. Lee v. City of 9 Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). The court must construe all “factual 10 allegations set forth in the complaint . . . as true and . . . in the light most favorable” to 11 the plaintiff. Id. at 679. However, a court need not blindly accept conclusory 12 allegations, unwarranted deductions of fact, or unreasonable inferences. Sprewell v. 13 Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 14 Where a district court grants a motion to dismiss, it should generally provide 15 leave to amend unless it is clear the complaint could not be saved by any amendment. 16 See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 17 1025, 1031 (9th Cir. 2008). Leave to amend may be denied when “the court 18 determines that the allegation of other facts consistent with the challenged pleading 19 could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture 20 Co., 806 F.2d 1393, 1401 (9th Cir. 1986). Thus, leave to amend “is properly 21 denied . . . if amendment would be futile.” Carrico v. City and Cty. of San Francisco, 22 656 F.3d 1002, 1008 (9th Cir. 2011). 23 IV. DISCUSSION 24 Zillow moves to dismiss Bel Air’s Complaint as barred by the immunity 25 provisions of the Communications Decency Act or, in the alternative, for a failure to 26 state a claim under Federal Rule of Civil Procedure 12(b)(6). (Mot. 1–2.) 27 The Communications Decency Act (“CDA”) protects from liability “(1) a 28 provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, 1 under a state law cause of action, as a publisher or speaker (3) of information provided 2 by another information content provider.” Barnes v. Yahoo! Inc., 570 F.3d 1096, 3 1100–01 (9th Cir. 2009). This immunity applies to the extent that the “interactive 4 computer service” provider does not also function as an “information content 5 provider” for the publication at issue. Fair Hous. Council of San Fernando Valley v. 6 Roommates.Com, LLC, 521 F.3d 1157, 1162–63 (9th Cir. 2008); Carafano v. 7 Metrosplash.com, Inc., 339 F.3d 1119, 1123 (9th Cir. 2003). 8 “[A]ny activity that can be boiled down to deciding whether to [include or] 9 exclude material that third parties seek to post online is perforce immune under [47 10 U.S.C. § 230].” Roomates, 521 F.3d at 1170–71. Thus, “a plaintiff cannot sue 11 someone for publishing third-party content simply by changing the name of the theory 12 from defamation to negligence.” Barnes, 570 F.3d at 1102. “Nor can he or she escape 13 section 230(c) by [re]labeling . . . an action that is quintessentially that of a publisher.” 14 Id. at 1102–03; see also id. at 1101 (citing cases and noting that other Circuits have 15 recognized CDA immunity in many causes of action premised on publication, 16 including fraud, negligence, false light, and violation of anti-discrimination laws). 17 Accordingly, “courts must ask whether the duty that the plaintiff alleges the defendant 18 violated derives from the defendant’s status or conduct as a ‘publisher or speaker.’ If 19 it does, section 230(c)(1) precludes liability.” Id. at 1102. 20 The parties dispute the applicability of the CDA’s immunity provisions. Zillow 21 contends that Bel Air’s key allegations center around User X’s posting of false 22 information and, because Bel Air’s negligence claim seeks to hold Zillow liable as a 23 publisher of that content, Zillow is entitled to CDA immunity. (Mot. 6–7.) Bel Air 24 argues it’s negligence claim does not treat Zillow as a publisher because the claim is 25 based, not on the published content, but on Zillow’s allegedly “inadequate monitoring 26 system” that allowed User X to post that false content to the Residence Page. (Opp’n 27 to Mot. (“Opp’n”) 2, ECF No. 30; FAC ¶ 29.) 28 1 The Fifth Circuit persuasively addressed this very distinction in Doe v. 2 MySpace, Inc., 528 F.3d 413 (5th Cir. 2008). There, the plaintiff’s underage daughter 3 lied about her age in an online profile and was subsequently sexually assaulted by 4 someone she met online. Id. at 416. Plaintiffs sued the defendant website for 5 negligence, among other things, and attempted to avoid the bar of CDA immunity by 6 arguing the case was not about publication but instead the defendant’s “failure to 7 implement basic safety measures to protect minors.” Id. at 419. The Court concluded 8 that CDA immunity barred the plaintiffs’ claims: “[the plaintiffs’] allegations are 9 merely another way of claiming that [the defendant] was liable for publishing the 10 communications and they speak to [the defendant’s] role as a publisher of online 11 third-party-generated content.” Id. at 420. The Ninth Circuit is in accord. See 12 Barnes, 570 F.3d at 1098–99, 1106 (finding CDA immunity barred negligent 13 undertaking claim where plaintiff sued defendant website for failing to remove an 14 indecent false profile of plaintiff created by a former boyfriend); Carafano, 339 F.3d 15 at 1121–22, 1125 (finding CDA immunity barred claims including negligence where 16 basis of claim was that the defendant website failed to review each user-created 17 profile to ensure it was not defamatory5). 18 So too here. Despite Bel Air’s repeated assertions that it does not seek to treat 19 Zillow as a publisher, the FAC is replete with allegations of Zillow’s “publishing” or 20 the equivalent. Bel Air alleges “[t]his case is about the monitoring of incoming 21 requests to ‘claim’ a Residence Page [which] results in the publication of false 22 third-party information” (FAC ¶ 12); as a result of the “faulty internal system, [Zillow] 23 published . . . false statements” (FAC ¶ 22); and Zillow’s “defective” “internal 24 monitoring system” allowed an imposter to “make changes to the Residence Page,” 25 “resulting in the dissemination of misleading, false, and inaccurate information” (FAC 26 ¶¶ 23, 24; see also FAC ¶¶ 35–49 (referring repeatedly to the posting of false 27 information).) No matter how artfully Bel Air seeks to plead, its allegations make 28 5 The Ninth Circuit discussed Carafano in these terms in Roommates, 521 F.3d at 1171. 1 clear that Bel Air’s claims are merely another way of holding Zillow liable for 2 publishing User X’s content, and are thus directed toward Zillow as a publisher, editor, 3 or screener. See Barnes, 570 F.3d at 1102–03; Doe, 528 F.3d at 420. 4 Ultimately, Bel Air’s allegations boil down to a charge that Zillow must prevent 5 users from falsely claiming a Residence Page or posting false content. Yet, reviewing 6 each user’s activity and postings to ensure their accuracy is precisely the kind of 7 activity for which Congress intended section 230 to provide immunity. Roommates, 8 521 F.3d at 1171–72. Further, “removing content is something publishers do, and to 9 impose liability on the basis of such conduct necessarily involves treating the liable 10 party as a publisher of the content it failed to remove.” Barnes, 570 F.3d at 1103. 11 The Ninth Circuit has noted that “[w]ebsites are complicated enterprises, and 12 there will always be close cases where a clever lawyer could argue that something the 13 website operator did encouraged the illegality. Such close cases, we believe, must be 14 resolved in favor of immunity, lest we cut the heart out of section 230 . . . .” 15 Roommates, 521 F.3d at 1174. The Court does not find this to be a close case. Bel 16 Air’s negligence claim against Zillow falls squarely within the bounds of CDA 17 immunity. The duty that Bel Air alleges Zillow violated, to monitor new users and 18 prevent or remove false claims or postings, derives from Zillow’s status and conduct 19 as a publisher. See Barnes, 570 F.3d at 1102. Bel Air’s protestations of “novelty” and 20 attempts to circumvent CDA immunity by using new labels for what is inherently 21 publisher’s conduct do not change this claim’s fundamental character. 22 Bel Air’s Complaint against Zillow is barred as a matter of law by 23 section 230(c). Accordingly, the Court GRANTS Zillow’s Motion to Dismiss. No 24 amendment could cure this deficiency, so dismissal is without leave to amend. 25 As the Court finds Bel Air’s Complaint barred as a matter of law under the 26 CDA, it does not reach Zillow’s argument that Bel Air failed to state a claim under 27 Rule 12(b)(6). 28 1 V. CONCLUSION 2 For the reasons discussed above, the Court GRANTS Zillow’s Motion to 3 || Dismiss without leave to amend. (ECF No. 27.) 4 5 IT IS SO ORDERED. 6 7 February 18, 2020

10 OTIS D. GHT, II UNITED STATES DISTRICT JUDGE

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