Court: Craigslist Not Liable For Discriminatory Ads

In a victory for Web companies that publish user-generated content, a federal appeals court ruled Friday that online classified service Craigslist isn't liable for discriminatory housing ads placed by users.

The 7th Circuit upheld a trial judge's ruling dismissing the case, holding that the federal Communications Decency Act doesn't permit people to "sue the messenger just because the message reveals a third party's plan to engage in unlawful discrimination."

"Nothing in the service Craigslist offers induces anyone to post any particular listing or express a preference for discrimination," the court wrote in its decision upholding a trial judge's dismissal.

The lawsuit stemmed from a complaint by the Chicago Lawyers' Committee for Civil Rights Under Law, which sued Craigslist for housing ads that contained language like "no minorities" or "no children."

Discrimination based on race, gender, religion and other categories is illegal under the federal Fair Housing Act. But Craigslist argued that the federal Decency Communications Act immunized it from suit based on content posted by users.

Had the court allowed the lawsuit to proceed to trial, the case could potentially have put Craigslist out of business, or severely curtailed its ability to function--an outcome the court warned against in its opinion. "An online service could hire a staff to vet the postings, but that would be expensive and may well be futile: If postings had to be reviewed before being put online, long delay could make the service much less useful, and if the vetting came only after the material was online the buyers and sellers might already have made their deals," the court wrote.

The decision dismissing the case is in line with rulings around the country interpreting the Communications Decency Act, said Eric Goldman, director of the High Tech Law Institute at Santa Clara University School of Law. But industry players were still watching the case closely because language in a previous Seventh Circuit decision interpreting the statute led some lawyers to predict the court might reach the opposite result.

"This is a very big win because we feared that the Seventh Circuit was going to do something goofy," he said. "It reinforces what we thought was the existing state of the law. It reminds everyone that online classified services can do what they're doing."

A similar issue is pending in the 9th Circuit in a lawsuit against Roomates.com. The appeals court in that case originally ruled that a lawsuit against the site could proceed to trial, but later granted re-argument. A decision in that lawsuit is expected soon.

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