Tang v. Guo

Background

Baiqiao Tang and Jing Geng sued Wengui Guo, Golden Spring (New York) Ltd., Saraca Media Group Inc. (SMG), Rule of Law Foundation III Inc., and Rule of Law Society IV Inc. The opinion states that Tang and Geng alleged Guo controlled the defendant entities and used them to promote his media and nonprofit organizations. They claimed that Guo, through SMG and other outlets, made false or defamatory statements about them and made false or misleading statements about how donations to the Rule of Law entities would be used. They alleged that these efforts damaged their reputations and livelihoods and diverted donors from their competing organizations.

The Second Amended Complaint asserted a claim under the federal Lanham Act, a law addressing false or misleading statements about goods, services, or commercial activities, and a New York unfair competition claim. The court’s earlier order had allowed those claims against SMG and the Rule of Law entities to proceed at the pleading stage.

Motions and Legal Standard

SMG and the Rule of Law entities separately moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. At this stage, the court accepted well-pleaded factual allegations as true, drew reasonable inferences for the plaintiffs, and asked whether the allegations plausibly supported relief rather than whether the plaintiffs had already proved their case.

SMG argued that Section 230 of the Communications Decency Act protected it from liability because the challenged material appeared on an interactive computer service and was allegedly created by Guo. The Rule of Law entities argued that the complaint did not plausibly allege a principal-agent relationship with Guo and did not adequately allege that their advertising caused harm to the plaintiffs.

Court’s Analysis

The court rejected SMG’s Section 230 argument at this stage. Section 230 generally protects an online service from being treated as the publisher of information supplied by another content provider. The court explained, however, that this protection generally depends on the challenged information having been provided by a different party. Accepting the complaint’s allegations, the court found that the plaintiffs plausibly alleged that Guo owned and controlled SMG and used it to violate the Lanham Act and compete unfairly. The complaint therefore plausibly alleged that SMG’s role involved more than simply publishing a third party’s statements.

As to the Rule of Law entities, the court found that the complaint plausibly alleged that Guo founded and controlled them and used them to fund purposes that donors allegedly were not told about, including his asylum application and for-profit media organizations. The court also found that the complaint plausibly alleged that the entities themselves participated in false advertising by failing to disclose that some donations would be used for purposes beyond their stated objectives.

The court further held that the plaintiffs plausibly alleged harm. According to the complaint, the plaintiffs and the Rule of Law entities sought the same types of donations and gifts, and Guo’s alleged conduct redirected donors to the Rule of Law entities. The court declined to resolve the defendants’ counterfactual arguments on a motion to dismiss because those arguments depended on factual issues and potential affirmative defenses.

Disposition

The court denied SMG’s motion to dismiss and denied the Rule of Law Foundation III and Rule of Law Society IV motions to dismiss. The court ordered the parties to proceed to discovery under the supervision of Magistrate Judge Parker and to submit a joint proposed case-management order. The ruling did not decide whether the plaintiffs would ultimately prevail on their claims.