U.S. Supreme Court To Decide Social Media and E-commerce Liability

Potentially seismic liability ramifications face the online juggernauts.

March 2, 2023, Los Angeles, CA – The Supreme Court will soon decide on the protections Big Tech has enjoyed for years—and the internet may never be the same. Section 230 of the 1996 Communications Decency Act, passed by Congress when internet platforms were just beginning, limits the liability online platforms can be sued for wrongful conduct. While brick-and-mortar stores, newspapers, and broadcasters can be sued for defamation, product liability and other wrongful conduct, social media and e-commerce sites have exploited the protections of Section 230.

In just 26 words, Section 230 draws a distinction between interactive computer service providers and other purveyors of information.

The internet per se is a public square where anyone can set up their soapbox, and all the world’s information and opinions are readily available. The major online platforms have built their business around algorithms programmed to maximize revenue from data collected from each user to select which postings and products to share with which users. Advertising revenue and fee-based consumer transactions allow the online juggernauts to reap enormous profits while escaping liability for their actions. How such participation and process affect the liability protections of Section 230 will be a major question before the Court.

For almost 30 years, Section 230 has been the fundamental regulation governing expression on digital platforms. Technology has changed online experiences dramatically, and the U.S. Congress has failed to re-address existing and emerging policy issues considering those changes. It now falls to the Supreme Court to grapple with the statute. The fact that the justices have agreed to hear the cases shows their concerns. Justice Clarence Thomas has been outspoken about his view that the law should be narrowly interpreted, meaning little protection for social media companies. Justice Samuel Alito has indicated he might agree with that.

Section 230's protections against liability are framed broadly, focusing on the conduct for which the provision bars liability. A significant number of lawsuits against websites assert product liability and other common law claims. Section 230 includes a provision excluding specified causes of action. That list does not include product liability, negligence, or other common law claims. View The SCOTUS Writ

In Gonzalez v. Google, the family of Nohemi Gonzalez alleges Google was complicit in the November 2015 ISIS attack in Paris that killed 130 people – among them Ms. Gonzalez. The Gonzalez family and the families of other terrorism victims are suing Google, Twitter, Facebook and other social media companies under the federal Anti-Terrorism Act, which specifically allows civil damage claims for aiding and abetting terrorism. The families allege that the companies did more than simply provide platforms for communication. Rather, they contend that by recommending ISIS videos to those who might be interested, they were seeking to get more viewers and increase their ad revenue.

In Bolger v. Amazon, Angela Bolger was using her laptop computer when a replacement Lithium-ion ("Li-ion") battery purchased on Amazon exploded. Bolger suffered severe third-degree burns to her arms, legs, and feet, and was hospitalized for two weeks. Amazon, operating under an umbrella of legal immunity and on a quest to be the sole source of all items for purchase, is pivotal in bringing products to the consumer, yet consistently disavows responsibility for defective products, injuries and death from products sold on its site by third-party marketplace vendors. In a win for consumers, the CA Supreme Court ruled in favor of Bolger, holding Amazon strictly liable for a product sold on its marketplace.

The retail shield for online sites, including Amazon, eBay, and Walmart, the issue is equally important. As intended, the law insulates e-commerce sites from blame against inaccurate descriptions by third-party sellers or legitimate customer reviews posted to the sites. But Amazon and other e-commerce platforms have quietly used the law to protect themselves when a third-party product proves to be fraudulent, faulty, injurious or deadly. Because of Section 230, they’ve claimed, they can’t be accountable when a product description fails to warn customers or results in injury or death.

While eBay is merely a third-party seller platform, “Amazon does a lot more to broker the arrangements between buyers and sellers than eBay has ever done,” said Eric Goldman, a professor at the Santa Clara University School of Law. “Things like taking possession of the goods puts Amazon in a qualitatively different place than eBay has ever been.” An important break came in August, when a California judge rejected Amazon’s claims of neutrality and opened the door for it to end up responsible for all sorts of faulty items shipped through its FBA program. Modern Retail

The California legislature, for instance, considered a bill this year that would hold e-commerce platforms liable for the products they host, even when those products come from third-party sellers. Groups ranging from the conservative Chamber of Commerce to the libertarian ACLU have filed an astonishing 48 briefs urging the court to leave the status quo in place.

Regardless of what the Court decides, it can be counted on to ignite a firestorm of public debate and a call for congressional rather than judicial decision-making. Therefore, the Court's decision(s) could end up challenging Congress to overcome its fragmentation to deal with the matter.