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Jonathan Tasini, Molly Secours v. Aol

March 30, 2012

JONATHAN TASINI, MOLLY SECOURS, TARA DUBLIN, RICHARD LAERMER AND BILLY ALTMAN, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
PLAINTIFFS
v.
AOL, INC., THEHUFFINGTONPOST.COM, INC., ARIANNA HUFFINGTON AND KENNETH LERER
DEFENDANTS.



The opinion of the court was delivered by: John G. Koeltl, District Judge:

OPINION AND ORDER

The plaintiffs, Jonathan Tasini ("Tasini"), Molly Secours ("Secours"), Tara Dublin ("Dublin"), Richard Laermer ("Laermer"), and Billy Altman ("Altman"), individually and on behalf of all others similarly situated (collectively "the plaintiffs"), bring this proposed class action under the common law doctrine of unjust enrichment and New York General Business Law ("NYGBL") § 349. The plaintiffs have sued AOL, Inc. ("AOL"), TheHuffingtonPost.com, Inc., Arianna Huffington ("Huffington"), and Kenneth Lerer ("Lerer") (collectively "the defendants"), alleging that the defendants unjustly and deceptively denied the plaintiffs compensation for submitting content to and promoting content on The Huffington Post (www.thehuffingtonpost.com),*fn1 a website owned and operated by the defendants. The defendants move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the First Amended Class Action Complaint ("FAC" or "Complaint") with prejudice.

I.

In deciding a motion to dismiss pursuant to Rule 12(b)(6), the allegations in the Complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiffs' favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). The Court's function on a motion to dismiss is "not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). The Court should not dismiss the Complaint if the plaintiffs have stated "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While the Court should construe the factual allegations in the light most favorable to the plaintiffs, "the tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions." Id.

When presented with a motion to dismiss pursuant to Rule 12(b)(6), the Court may consider documents that are referenced in the Complaint, documents that the plaintiffs relied on in bringing suit and that are either in the plaintiffs' possession or that the plaintiffs knew of when bringing suit, or matters of which judicial notice may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 & n.3 (2d Cir. 2000).

II.

The following facts alleged in the Complaint are accepted as true for the purposes of this motion to dismiss, unless otherwise indicated.

The Huffington Post launched its www.huffingtonpost.com website as a for-profit enterprise on May 9, 2005. (FAC ¶ 119.) The Huffington Post was ostensibly created by defendants Huffington and Lerer, although the proper attribution of The Huffington Post's creation is subject to ongoing litigation. (FAC ¶ 120.) The website has become quite popular, receiving more than 26 million unique visitors per month as of January 2011. (FAC ¶ 124.) The website provides a mix of content that is written by paid staff members, collected from other websites, or submitted by unpaid bloggers*fn2 who have been selected or recruited to blog for the website. (FAC ¶¶ 132, 135, 182.)

The named plaintiffs and prospective class members are members of the last group: the website's unpaid content providers. (FAC ¶ 104.) The majority of these content providers are "professional or quasi-professional writers." (FAC ¶ 142.) The named plaintiffs are all repeat-providers, having submitted significant volumes of content over varying periods of time. For example, plaintiff Tasini, described in the Complaint as a professional author, politician, union leader, and successful United States Supreme Court litigant, submitted content 216 times over the course of more than 5 years and publicized that content through social networking media such as Facebook and Twitter. (FAC ¶¶ 14-17, 23, 25-26.)

Rather than monetary compensation, the unpaid content providers are offered exposure - namely, visibility, promotion, and distribution, for themselves and their work. (FAC ¶¶ 123, 126, 174.) Although the defendants have, at times, considered compensating the unpaid content providers by, for example, allowing content providers to choose charities with which advertising revenue generated by their content would be shared, the defendants otherwise made clear to the plaintiffs from the beginning that they never intended to pay content providers such as the plaintiffs for submissions. (FAC ¶¶ 125-26, 157, 174, 215.) The unpaid submissions are arguably the website's most valuable content, both because of their effect of "optimizing" the website's ranking in search engines such as Google (thus attracting more viewers to the website) and because they allow The Huffington Post to keep production costs low. (FAC ¶¶ 126, 145-47, 183-84, 187-88.) Additionally, The Huffington Post encourages the bloggers to promote their own submissions via their social networks such as by sending emails, sharing their posts on Facebook or MySpace, responding to reader comments, and contacting other blogs. (FAC ¶ 165.) As a result, the Complaint alleges that The Huffington Post gains more both in terms of exposure and monetary value from the unpaid submissions than do the authors. (FAC ¶ 168.)

From its inception, The Huffington Post has generated revenue by, among other things, selling advertising targeted towards visitors to the website. (FAC ¶ 123.) Advertising revenues increase in proportion to the amount of page views a website receives, which in turn is a function of the quality of the content provided, as well as the website's ability to attract visitors either through its own marketing or via the social networks of others. (FAC ¶¶ 5, 7, 133-34, 168, 179, 186- 87.) The Huffington Post allegedly keeps track of the number of page views of, and thus the revenue generated by, each piece of content (including unpaid submissions) on the website. (FAC ¶¶ 180, 185, 204-05.) This information was never provided to the plaintiffs or other content providers. (FAC ¶ 180.)

The Complaint alleges that, while the "guidelines" distributed by The Huffington Post to the plaintiffs and other content providers suggest that this page-view information is unavailable, the data is in fact generated and retained by The Huffington Post and is readily accessible. (FAC ¶¶ 180, 204-05.) Keeping this data hidden prevents the plaintiffs and others from knowing the exact monetary value The Huffington Post generates from their submissions. (FAC ¶ 206.) Stated in other terms, this prevents the plaintiffs from knowing how much exposure their submissions generate for The Huffington Post as compared to the level of exposure the plaintiffs acquire from being published by The Huffington Post. (FAC ¶ 206.) Nowhere does the Complaint allege that the plaintiffs were promised any monetary compensation. See FAC ¶ 126, 174, 215.

In early 2011, AOL purchased The Huffington Post for around $315 million. (FAC ¶¶ 207-10.) The Complaint asserts that The Huffington Post "was an attractive merger target for AOL because of [The Huffington Post's] ability to obtain high quality content from [the plaintiffs] at no cost." (FAC ¶ 152.) The Complaint alleges that at least $105 million of the purchase price is properly traceable to the plaintiffs, including "the value created by the content provided by [the plaintiffs]," the plaintiffs' "efforts to publicize the content provided," and "the value created by [the plaintiffs] in lowering the cost of content production for AOL . . . ." (FAC ¶ 211.) Following the purchase, AOL has ostensibly hopped on the unpaid-content bandwagon, reducing its volume of paid submissions in favor of unpaid submissions. (FAC ¶¶ 154-57.)

After the merger, the plaintiffs brought this suit claiming that The Huffington Post's practice of soliciting and accepting unpaid submissions amounts to a violation of New York General Business Law § 349 and that The Huffington Post was unjustly enriched as a result of this practice. (FAC ¶¶ 212-29.) Pursuant to their claim of deceptive business practices, the plaintiffs seek the greater of actual or statutory damages for the opportunities the plaintiffs were deceived by the defendants into forgoing. Under the doctrine of unjust enrichment, the plaintiffs seek damages in the form of compensation for the alleged monetary value of their submissions, specifically at least $105 million (the plaintiffs' alleged contribution to The Huffington Post's purchase price), as well as any additional appropriate damages. (FAC at 67-68.)

III.

The plaintiffs claim that they are entitled to a portion (namely, $105 million) of the $315 million that AOL tendered in acquiring The Huffington Post. The plaintiffs assert a claim of unjust enrichment arising from the alleged failure of the defendants to compensate the plaintiffs adequately for adding value to, and thus boosting the purchase price of, The Huffington Post. The plaintiffs allege that they added value by submitting content to the website and promoting that content. The defendants argue that the plaintiffs' claim should be dismissed for failure to demonstrate that equity and good conscience require restitution ...


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