Smith v. Substack, Inc.

Background

Oliver Dean Smith’s first amended complaint asserted a California negligence claim against Substack and a defamation claim against an unknown defendant identified as John Doe. Smith alleged that Doe threatened him on social media with a highly embarrassing article unless Smith deleted four articles from another website. Doe then posted an article about Smith on the Cancel Watch blog, which Substack hosted. Smith alleged that the post was edited later and that Substack did not respond to his complaints or remove the blog.

Substack moved to dismiss the negligence claim under Federal Rule of Civil Procedure 12(b)(6), arguing both that the Communications Decency Act provided immunity and that Smith had not stated a negligence claim. Substack also asked the court to take judicial notice of its Content Guidelines and Publisher Agreement.

Communications Decency Act immunity

Section 230(c)(1) of the Communications Decency Act generally prevents treating an interactive computer service as the publisher or speaker of information provided by another content provider. The court explained that immunity applies when the defendant is an interactive computer service, the plaintiff seeks to treat it as a publisher or speaker under state law, and the relevant information was provided by another content provider. The parties agreed, or appeared to agree, on the first and third requirements, so the court focused on whether Smith’s negligence claim treated Substack as a publisher.

The court concluded that Smith’s allegations about Substack’s failure to remove the blog post described publishing activity. Decisions about whether to withdraw third-party content from publication fall within the functions of a publisher. Because Smith did not allege that Substack created the content or received it for a purpose other than publication, Substack was immune to the extent Smith treated it as a publisher or speaker.

The court rejected Smith’s argument that allegations of blackmail and criminal conduct defeated immunity. It also distinguished a case involving a different statutory provision that included a good-faith requirement. The court noted that Smith’s allegations about how Substack responded to his communications were separate from Substack’s publishing decisions and were not necessarily immune. However, the first amended complaint did not adequately state a claim based on that separate conduct. The court allowed Smith an opportunity to amend claims that would be independent of treating Substack as a publisher, while describing that approach as challenging.

Negligence and emotional-distress damages

Under California law, negligence requires a duty of due care, a breach of that duty, and a breach that legally caused an injury. The court found that Smith had not adequately alleged a duty owed by Substack and had relied on a conclusory statement that breach of a duty of care was negligence.

The court also found that Smith had not adequately supported a claim for emotional-distress damages. Smith alleged mental anguish and distress but did not allege physical injury, property damage, or financial harm. He also did not allege circumstances that the court identified as potentially supporting emotional-distress recovery, such as malice, breach of fiduciary duty, physical injury or impact, or another unusually extreme or outrageous circumstance.

Judicial notice

The court granted Substack’s request for judicial notice in part. It took notice of the Content Guidelines under the incorporation-by-reference doctrine because Smith referenced the related website terms in his complaint and did not dispute the document’s authenticity. The court took notice of the existence of the Publisher Agreement because it was publicly available and its authenticity was not disputed, but it did not take notice of facts in that agreement that could reasonably be disputed.

Ruling

Judge Alex G. Tse granted Substack’s motion to dismiss the negligence claim, with leave to amend. The court also granted Substack’s motion as to emotional-distress damages connected to the negligence claim, with leave to amend. Smith’s second amended complaint was due August 26, 2024. The court granted Substack’s request for judicial notice in part.