The opinion of the court was delivered by: Trager, District Judge.
In October of 1999, plaintiff Island Online ("IOL") brought
this suit, styled as a § 1983 action, against defendants Network
Solutions, Inc. ("NSI") and the National Science Foundation ("the
NSF") for damages, declaratory judgment and injunctive relief
arising out of NSI's refusal to register three Internet domain
names desired by IOL. IOL contends that NSI's policy of filtering
out certain obscene domain names, coupled with NSI's affiliation
with the NSF, a government entity, constitutes a violation of
IOL's First and Fifth Amendment rights under the United States
Constitution and IOL's rights to freedom of speech and due
process of law guaranteed by Article 1, § 8 and Article 1, § 6 of
the New York State Constitution respectively. NSI now moves for
dismissal of IOL's complaint and/or summary judgment, and the NSF
has moved for dismissal, or, in the alternative, for a more
definite statement.*fn1 Both defendants argue that, even
accepting all of IOL's allegations as fact, IOL has no standing
to bring suit, and NSI is not a state actor and, consequently,
cannot be liable for alleged violations of IOL's constitutional
rights. IOL opposes summary judgment and has made a cross-motion
to amend its complaint to assert a cause of action under
Bivens and to add individual employees of NSI and the NSF as
defendants. NSI and the NSF oppose the motion to amend,
maintaining that any amendment would be futile.
The Internet and the Cooperative Agreement
The "Internet" is a worldwide system of computer networks and
individual computers that are interconnected by communications
facilities. See Decl. George Strawn ¶ 4 [hereinafter "Strawn
Decl."]. The antecedents of the Internet were systems for two
relatively small groups of research-oriented governmental,
academic and corporate entities — ARPANET and NSFNET. See id. ¶
5. ARPANET received its principal support from the Department of
Defense and related agencies, while NSFNET's support came from
numerous sources, including the NSF and other federal agencies,
academic institutions and corporate sponsors. See id.
Under a system first implemented on the ARPANET, each entity
connected to the Internet is assigned one or more unique numeric
"addresses" which permit other connected entities to send it
communications. See id. ¶ 11. These addresses, known as "IP
addresses," are similar in function to telephone numbers and are
written as a series of no more than 12 digits separated by
periods (e.g."18.104.22.168"). See id. During the early days of
the Internet, IP addresses were maintained and assigned by one
individual, Dr. Jon Postel at the University of Southern
California's Information Sciences Institute, who performed this
task as part of the ARPANET experiment. See id. ¶ 12. Later,
Dr. Postel's project came to be known as the Internet Assigned
Numbers Authority ("IANA"). See id. The IANA oversaw the
allocation of IP addresses until November 1998, when the Internet
Corporation for Assigned Names and Numbers ("ICANN"), a private,
non-profit corporation, was formed and designated as the
governing body responsible for IP address space allocation, as
well as other Internet-maintenance responsibilities. See id.
Because IP addresses could be difficult to remember, network
users informally assigned alphabetic names to their own
computers, and these names were tracked and associated with their
corresponding IP numbers in a file maintained by Dr. Postel and
downloaded to the host computers at all Internet sites. See id.
¶ 13. In 1987, this practice evolved into what is known as the
Domain Name System ("DNS") for associating names with IP numbers
on the Internet. See id. ¶ 14. The DNS makes it possible for
users to address messages to other users and to Internet-attached
computers by name rather than number. See id. ¶ 15.
The sequences of alphanumeric characters that make up domain
names are segmented by periods (e.g., "ibm.com" or "nsf. gov").
See id. ¶ 16. The segments are hierarchically related to one
another. See id. The far right segment is called the top level
domain ("TLD"), the next is called the second level domain
("SLD"), and so on. See id. In the above examples, ".com" and
".gov" are TLDs; "ibm" and "nsf" are SLDs. See id. Each domain
name must be unique; it is impossible for more than one entity to
register for any given domain name. See id. ¶ 21.
Since the need for DNS name resolution (conversion of domain
names into IP numbers) is constant, it is necessary to maintain
and update the DNS database continuously. See Strawn Decl. ¶
22. The new domain name information is obtained and disseminated
through a process called DNS registration. See id. An Internet
user who wishes to register a domain name first obtains an IP
address to be associated with the desired domain name from an
Internet Service Provider or from an IP address registry. See
id. If the desired domain name has not already been registered
in the TLD of the user's choice, it can generally be registered
on a first-come, first-served basis. See id.
The TLD zone files are replicated at 13 different locations
(including NSI) known as the "root server system," but the master
root server is maintained by NSI in Herndon, Virginia, pursuant
to the Cooperative Agreement detailed below. See id. ¶¶ 24-25.
The other 12 root servers obtain the daily updated domain name
information by copying from the master root server. See id. ¶
25. These other root server operators have no contractual or
other legal relationship with the master root server. See id.
Rather, they have a purely voluntary association with it because
of their common interests in a universally resolvable DNS. See
On January 1, 1993, NSI and the NSF, an agency of the United
States Government, entered into Cooperative Agreement No.
NCR-9218742 (the "Cooperative Agreement" or "Agreement"). See
id. ¶ 26. Pursuant to the terms of that Agreement, NSI undertook
the task of registering SLD names within the generic TLDs of
".com," ".org," ".net," ".edu" and ".gov." See id. ¶ 27. The
NSF's role was not to regulate the administration of the Internet
but to provide support for domain name registration. See id. ¶
28. The NSF engaged in general oversight of NSI's performance of
its responsibilities under the Agreement but not NSI's day-to-day
managerial activities. See id. Specifically, the Agreement
includes the following provisions:
[NSI] has primary responsibility for ensuring the
quality, timeliness and effective management of the
registration services provided under this
[A]greement. To the extent that NSF does not reserve
specific responsibility for accomplishing the
purposes of this Agreement, by either special
condition or general condition of this Agreement, all
such responsibilities remain with [NSI]. . . .
NSF has responsibility for registration services
support, support planning, oversight, monitoring, and
evaluation. NSF will make approvals required under
the General Conditions and, where necessary and
appropriate, NSF will contact and negotiate with
Federal agencies and other national and International
[sic] members of the Internet community to further
the efforts of this project.
App. Exs. Supp. Mot. Dismiss by Def. Network Solutions, Inc., Ex.
G at 7. In September, 1998, responsibility for the Agreement was
transferred to the National Telecommunications & Information
Administration ("NTIA") of the Department of Commerce. See
Strawn Decl. ¶ 30. NTIA is now the federal agency that oversees
the administration of the Cooperative Agreement, which was due to
expire on September 30, 2000. See id. ¶¶ 29-30.
On April 21, 1999, ICANN introduced this competition by naming
five entities which would compete with NSI in the registration of
domain names. See id. ¶ 33. As of March 16, 2000, NSI was
already only one of approximately 35 competitive SLD name
registrars (soon to be over 100). See Decl. David M. Graves
Supp. Mot. by Network Solutions, Inc. ¶ 17 [hereinafter Graves
NSI's Registration Process and the Obscenity Policy
NSI is a profit-making Delaware corporation with its principal
place of business in Virginia. See id. ¶ 2. NSI's board of
directors and executive officers do not include, nor have they
ever included any members of the NSF or any other governmental
agency. See id. ¶ 3. Nor does the NSF have the right to
appoint, approve or confirm any of the directors or officers of
NSI. See id.
In 1992, NSI responded to a solicitation issued by the NSF for
one or more privately-owned and operated "Network Information
Service Managers." See id. ¶ 4. As a result, the company won a
competitively-awarded Cooperative Agreement to provide, among
other things, SLD name registration services in the Internet TLDs
of .com, .org, .net, .edu and .gov.*fn3 See id. In connection
with these domain name registration services, NSI enters into
private, commercial contracts with registrants of domain names.
See id. ¶ 6.
During the initial period of performance under the Cooperative
Agreement, NSI received funding from the U.S. government.
Beginning September 14, 1995, however, the government funding was
replaced with fees, charged to the customers for the provision of
registration services, and NSI does not now receive any funding
or subsidies for its domain name registration from the federal
government. See id. ¶ 8. NSI presently charges registrants an
initial two-year registration fee of $70 and a subsequent
one-year registration fee of $35. See id. ¶ 7. No portion of
this fee is presently shared with the NSF or any other agent of
the federal government, see id., nor has any federal or state
government ever acted as either a registry or a registrar of
domain names in the .com, .org, .net and .edu TLDs. See id. ¶
As a registrar, NSI accepts applications for new SLD names and
generally registers them on a first-come, first-served basis.
See id. ¶ 19. If a domain name registration agreement should
expire for any reason, such as the registrant's failure to pay
for the registration or failure to re-register under the terms of
the agreement, NSI deletes the domain name and cancels the
contract, at which point the next applicant who creates and
applies for the name becomes the new domain name registrant. See
id. ¶ 19. Currently, new SLD names are registered with NSI at a
rate of over 500,000 a month, a new one every five seconds, and
NSI has registered eight million SLD names to date. See id. ¶
While the registration of domain names is done automatically,
NSI restricts the registration of domain names that contain six
of the seven obscenities similarly prohibited for broadcast by
the FCC and major television networks. See id. ¶ 31. This
practice is implemented through an automaticallytriggered filter
in the domain name registration process. See id. ¶ 34. The
filer blocks the registration of SLD names containing the exact
letter strings contained in the restricted words. See id.
NSI implemented this policy as a corporate business decision in
the summer of 1996. See id. ¶ 32. Although NSI offered no
further explanation of what specific "corporate business"
considerations led them to adopt the policy, NSI's
vice-president, General Counsel for the NSF and the NSF's program
official responsible for oversight of the Cooperative Agreement
with NSI all declare that the NSF had no involvement with the
formulation and implementation of NSI's obscenity policy beyond
knowing of its existence. See id. ¶ 32, Decl. of Lawrence
Rudolph ¶ 3, Decl. of Donald Mitchell ¶¶ 3-4.
Because NSI's policy was not adopted until mid-1996,
approximately 42 domain names had been previously registered
which contained the restricted words. See Graves Decl. ¶ 35.
NSI did not cancel or otherwise breach the registration contracts
with those domain name registrants but rather allowed them to
continue. See id. However, as these registrations expired or
were canceled by the registrants, NSI has declined to register
them to a new registrant. See id. There are approximately 23
such SLD names remaining in the master database which were
registered by NSI. See id. In addition, because NSI's policy
has not always been error-free, at times, prospective registrants
have been able to obtain an otherwise "filtered" domain name
despite the "filter." See id. ¶ 37. When NSI has been made
aware of these violations of its practice within a reasonable
time after the registration, the offending registrations have
been deleted. See id. At the present time, a significant number
of the registrars that appeared in the wake of ICANN's
introduction of competing registrars on April 21, 1999 do permit
registration of the character strings restricted by NSI. See
id. ¶ 36.
NSI's Rejection of IOL's Domain Names
IOL, a New York corporation headquartered in Richmond County in
the Borough of Staten Island, is in the business of providing
adult content to consumers on websites on the Internet. Pl's Opp.
Mem. at 1-2. Like most Internet companies, IOL uses the
development of websites and the registration of domain names to
increase its outreach to the public. See id. at 2.
On or around April 3, 1999, IOL attempted to register the
following domain names: "fuckme.com," "fuckyou.com," and
"cocksuckers.com." See id. at 3. At this time, NSI was still
the sole registrar of SLD names for non-governmental individuals
and businesses such as IOL. See Decl. of Nicole Watts ¶ 5.
Before April, 1999, there had been 15 prior attempts by unrelated
third parties to register the domain name "fuckme.com," 15 prior
attempts by unrelated third parties to register the domain name
"fuckyou.com" and 14 prior attempts by unrelated third parties to
register the domain name "cocksuckers.com." See Graves Decl. ¶¶
40-43. Pursuant to NSI's policy of registering domain names
on a first-come, first-served basis, the domain names would have
been registered to any of these earlier applicants prior to
plaintiff's applications if NSI had not exercised the obscenity
policy that is the subject of this litigation. See id. ¶ 44.
In order to register a domain name, Nicole Watts, the Chief
Operating Officer of IOL, would follow the same procedure each
time: she would log on to the NSI Internet website located at
www.networksolutions.com, type in the domain name she sought to
register as prompted by the instructions and, if that domain name
was not already registered to another entity, execute the on-line
"Network Solutions Domain Name Registration Agreement" and send
this agreement via e-mail to NSI. See id. ¶ 6. On or around
April 5, 1999, Watts sent checks on behalf of IOL to NSI via
Federal Express in payment for each of the domain names she had
sought to register. See id. ¶ 9. On or around April 8, 1999,
each of the checks dated April 5, 1999 was debited from IOL's
checking account. See id. ¶ 12.
On or around April 14, 1999, NSI notified IOL via e-mail
correspondences that NSI had declined to register each of the
three domain names that are the subject of this litigation. See
id. ¶ 13. Each e-mail offered the ...