• by Wendy Davis  @wendyndavis, May 11, 2009

When Oregon resident Cecilia Barnes broke up with her boyfriend, he responded by posting a fake profile of her on Yahoo -- and a particularly nasty one at that. He included nude photos of Barnes as well as her name, address and phone number.

Barnes complained to Yahoo and a company executive promised to take down the profile. Yahoo allegedly reneged on that promise, spurring Barnes to file suit against the company.

Now, in a ruling that could have significant ramifications for Web publishers, a federal appellate court has held that Yahoo could face liability for breach of contract for failing to delete the post.

Yahoo will still have the opportunity to contest Barnes' claims in court, and it's not yet clear that she will be able to prove her case. The company said in a statement that it was evaluating the court's opinion and anticipates a "swift resolution" in the trial court.

Still, the decision potentially leaves Web publishers more vulnerable to new lawsuits stemming from the posts of users. That's because the ruling appears to carve out a new exception to the federal Communications Decency Act -- a law that many attorneys had long thought immunized Web sites from liability for libelous or offensive user comments. In fact, U.S. District Court, Judge Ann Aiken in Oregon originally dismissed Barnes' lawsuit for that reason.

But Barnes appealed to the 9th Circuit Court of Appeals, which ruled last week that the Communications Decency Act created only a "baseline" rule that Web companies need not censor posts. Once a Yahoo employee promised Barnes that the post would be deleted, Yahoo was obligated to do so, according to the court.

The decision surprised some observers because other courts had long taken the opposite approach. In one of the earliest Internet law cases, the 4th Circuit of Appeals ruled in 1997 that AOL could not be sued for libelous messages posted by a user. In that case, as in the Yahoo-Barnes situation, an AOL employee said the comments would be deleted.

In another instance, an appellate court in Washington ruled in 2001 that Amazon could not be sued for failing to remove reviews -- even though a site employee told the author that the reviews would come down.

Attorney Jeffrey Neuburger, who focuses on technology and media at the law firm Proskauer Rose, said that Web publishers now need to be especially careful when handling complaints about posts. "You can't say, 'We'll take it down,' because that could potentially form a contractual obligation," he says.

Eric Goldman, director of the High Tech Law Institute at Santa Clara University, adds that the 9th Circuit's decision could potentially leave Web publishers open to lawsuits based on their terms of service.

Many sites' terms of service ban users from making offensive posts, but courts generally have not allowed users to sue Web sites for failing to enforce those terms by removing particular posts. But if Barnes can bring a case against Yahoo for failing to honor an employee's promise, then other consumers who feel aggrieved by comments might try to bring cases against publishers who don't honor their terms of service. "Plaintiffs are going to look through all of the marketing representations on companies' sites and are going to say, 'I'm suing you for those,'" Goldman says.