Volunteer Bloggers Lose Lawsuit Demanding Payment
An unsurprising end to a ridiculous lawsuit.
In the wake of the transaction that resulted in The Huffington Post becoming part of the AOL media empire, or vice versa depending on how you look at it, a group of bloggers who had been writing at HuffPo for years without compensation filed a class action lawsuit seeking to get themselves a piece of the action under the theory that their content, which HuffPo was receiving for free played a role in the $300,000,000 valuation placed on the site by the sale. As I noted at the time, there was very little legal merit to the Plaintiff’s claims. They had begun blogging at the site knowing that they would not be receiving compensation and cannot be said to be surprised that they didn’t get a piece of the action when the site was sold. Moreover, there was considerable evidence that these uncompensated bloggers were not responsible for the vast majority of the site’s traffic.
Yesterday, just under a year after the suit was filed, a Federal District Court Judge dismissed the lawsuit:
A dissatisified group of unpaid contributors to The Huffington Post got what they were promised: exposure and nothing more, a federal judge has ruled.
The unpaid bloggers sued The Huffington Post last year, seeking compensation after the popular blog was acquired by AOL Inc. for $315 million. The bloggers had sought at least $105 milion of the purchase price, claiming the value created by their content made the website a popular acquistion target.
On Friday, U.S. District John Koeltl disagreed, finding the bloggers submitted their content with no expectation of monetary compensation.
“The plaintiffs entered into their transactions with the defendants with full knowledge of the facts and no expectation of compensation other than exposure,” the judge said. “In such circumstances, equity and good conscience counsel against retroactively altering the parties’ clear agreements.”
The judge dismissed the lawsuit with prejudice, meaning it can’t be brought again.
As I noted at the time the lawsuit was filed, the Plaintiff was proceeding under a theory called “unjust enrichment,” which in layman’s terms is the idea that a party should not be permitted to profit from the work of another without providing some compensation. As Judge Koetl points out, though, there was a fatal flaw in the Plaintiff’s case, namely the fact that they knew from the start that they were not going to be compensated monetarily for the content they provided at the site:
No one forced the plaintiffs to give their work to The Huffington Post for publication and the plaintiffs candidly admit that they did not expect compensation. The principles of equity and good conscience do not justify giving the plaintiffs a piece of the purchase price when they never expected to be paid, repeatedly agreed to the same bargain, and went into the arrangement with eyes wide open. See Shanahan, 854 N.Y.S.2d at 118 (“A claim for unjust enrichment does not lie to relieve a party ‘of the consequences of [the party’s] own failure to . . . exercise caution with respect to a business transaction.'” (quoting Charles Hyman, Inc. v. Olsen Indus., 642 N.Y.S.2d 311 (App. Div. 1996)); cf. Miller v. Schloss, 113 N.E. 337, 339 (N.Y. 1916) (implied contract not found where “[e]ach and every act of the plaintiffs was voluntary and with full and exact knowledge on their part”). Quite simply, the plaintiffs offered a service and the defendants offered exposure in return, and the transaction occurred exactly as advertised. The defendants followed through on their end of the agreed-upon bargain. That the defendants ultimately profited more than the plaintiffs might have expected does not give the plaintiffs a right to change retroactively their clear, up-front agreement. That is an effort to change the rules of the game after the game has been played, and equity and good conscience require no such result.
As I noted at the time this lawsuit was filed, Tasini and the other unpaid bloggers had no ground for expecting get any compensation at all, never mind expecting that they would be getting one third of the purchase price that AOL paid for HuffPo. Despite this, they submitted material not once or twice but over an extended period of time. Clearly they, were expecting compensation in some other form whether it was exposure , eyeballs, recognition, or even merely their own enjoyment. Coming back years after the fact and asserting that they are entitled to compensation they knew they were never going to get merely because Arianna Huffington hit the big time with the AOL buyout is. quite simply, absurd.
This was the correct decision.
Here’s the opinion:
Yeah, the suit never made any sense. And yet I’m sure HuffPo had to spend significant resources responding to it. There really needs to be some threshold requirement for these frivolous cases.
Since the case was dismissed at the Motion to Dismiss case that’s basically what happened. I’m not sure how much work actually went into the case on both sides but that’s basically the early stages of the case and the court probably didn’t authorize any discovery, or even set a trial date, while the motion was pending.
The fact that it took a year to resolve is likely a reflection of the volume of cases in the Southern District of New York and the fact that criminal cases receive priority over civil cases on the calender because of speedy trial issues. One year isn’t too bad. I once had a civil case in the USDC in the District of Columbia where the Judge had our Motion to Dismiss under advisement for nearly 18 months. During that time, basically nothing else happened in the case. We won, though, so I guess I shouldn’t complain too much
Liberal hacks filing junk lawsuits against wealthy liberal hacks to extort lots of money. How many layers of irony can fit into one sentence?
That aside, # 1 you’re indeed correct that it cost them a lot of money to deal with that nonsensical lawsuit. Figure a minimum of $500 per hour (blended rate) with at least two attorneys spending a couple of hundred of hours of their time, minimum. Perhaps a lot more. Hourly rates in NYC are a lot higher than they are in my neck of the woods. It might have cost an average of $750 per hour. Either way it adds up. You’re also correct that we need fundamental lawsuit reforms, especially in the arena of class actions. Republicans have been trying for years to make some headway there. Whom do suppose has viciously been blocking those efforts?
If you agree to work for free, which the bloggers did, then you can hardly expect to be paid. The suit had no merit, and I’m pleased it was dismissed with prejudice.
Aspiring authors would do well to heed the words of Samuel Johnson: “No man but a blockhead ever wrote but for money.”
The unjust enrichment theory was always a bad basis for this lawsuit. The real question is, if I grant you license to use my property for some limited purpose without compensation, is that grant transferable? That is, if I grant Ariana Huffington the right to distribute some article I wrote on a website, can she sell that right to the AOL corporation without having to renegotiate with me?
There’s several questions I’d like to know the answer to here:
1. What exactly were the terms of the agreement between Huffington Post and the blogger?
2. Did the agreement involve a transfer of rights (i.e. the Huffington Post owns the IP in the articles) or was it merely a grant of license (i.e. the authors still own the IP and the Huffington Post was merely given permission to use it for some purpose)?
3. Did the agreement specifically allow or specifically deny the Huffington Post to transfer the rights or licenses it was granted in #2 to a third party?
4. If the answer to #3 is neither, is such a grant implied to be part of a standard transaction?
Sadly, the plaintiffs didn’t raise any of these issues, so we don’t know the answer to any of these questions.
I’d be interested in hearing whether the bloggers went and found a lawyer, paying him out of their own pockets, or whether a lawyer found the bloggers and offered to receive compensation only if he were successful.
@Stormy Dragon: So basically a poorly done attempt at a lawsuit…
@StormyDragon: As far as I know, under the Huffpo site’s terms and agreements, the unpaid bloggers granted HuffPo the right to re-publish or re-package all their material in any form or for whatever length of time the HuffPo chose.. They surrendered any conceivable right they had, including copyright, in return for exposure.
@CSK:
The only thing we know for sure about the agreement is that it includes a non-disclosure clause. Beyond that, everything you’ve heard about what is or isn’t in the agreement is speculation by people who have never actually seen it.
Which leads me to…
@matt:
My own theory is that the unjust enrichment claim was just a tactic to get to the discovery phase, after which the complaint would have been ammendmended with more sensible claims based on what they found out.
@Stormy Dragon:
If the Plaintiffs had had a contract based or copyright claim, they would have logically proceeded under that theory rather than the factually dubious and legally weak “unjust enrichment” claim. That’s the type of Complaint you throw together when you’ve got no contract to base your claim on.
@Tsar Nicholas II:
“Liberal hacks filing junk lawsuits against wealthy liberal hacks to extort lots of money. How many layers of irony can fit into one sentence?”
Why?
What is it that makes you behave like this, that makes the first thing out of your mouth on any issue a statement like that? I really want to understand the mindset that has to frame everything in that fashion.
Damn there go my smokes and Harry’s stogies:(
I’d love it if huffpo asks for sanctions to be imposed. Tasini is a total douche.
jpe,
I am unsure if they’ve moved for Rule 11 sanctions. Quite honestly, given what appears to be the clear state of the law on unjust enrichment in New York they very well might have grounds to argue that this was a frivolous lawsuit.
I’d also note that it is very rare for a Federal Court to dismiss a case with prejudice on a Motion To Dismiss under Rule 12(b)(6). Typically, Plainiffs are given at least one opportunity to amend their pleadings. Dismissal with prejudice is a strong indication of the Court’s conclusion that there is no merit at all to the claims.
I am reminded of the contractors to Microsoft. The basis of the suit seems similar.
If you signed up to post at the Huffington Post with stars in your eyes and dreams of fame and fortune, you maybe should have edjimicated yourself on the business ethics and antics of Arianna Huffington.