Ninth Circuit takes up thorny issue of immunity for purveyors of gambling apps

SAN FRANCISCO (CN) — A Ninth Circuit panel will decide whether Apple, Meta and Google enjoy immunity from lawsuits over what the plaintiffs claim are illegal gambling apps being sold or offered on their platforms.

Plaintiffs in three lawsuits challenge a federal judge’s finding the three tech giants enjoy immunity under Section 230 of the Communications Decency Act except when the platforms have processed what the judge called "unlawful transactions for unlawful gambling."

But in the same ruling, U.S. District Judge Edward Davila on his own accord asked the Ninth Circuit to review his findings and stayed the case pending the appellate court's decision. The plaintiffs are appealing that ruling, saying that the companies are not granted immunity under Section 230 — which protects the platforms from liability over the content they disseminate.

At oral arguments Monday in San Francisco, the tech giants backed Davila's decision to seek interlocutory appeal. They urged the panel to reject the plaintiffs' claims that the platforms' publication of content like virtual gaming chips equate to unlawful behavior.

Fred Reilly for Google said the plaintiffs' case runs up against a wall of precedent established not only in the Ninth Circuit, but in courts across the country, which gives platforms broad discretion in regulating content they publish.

The companies maintain they are platforms, not content creators, and they merely publish third-party content from gaming apps as they do for many other content creators. They say the apps hosted on their platforms are not off-platform products, which makes the case different from other litigation dealing with transactions taking place outside of social network platforms in for which the platforms could be held liable. 

"Offering and hosting the apps is just publication," Reilly said. "These claims are all about content. Content isn't incidental — content is the entire point."

Arguing for the plaintiffs, attorney Todd Logan noted the Ninth Circuit has repeatedly said it is not enough to simply cite third-party content to be immune to publishing claims, or claims of allowing unlawful activity to take place on a platform. 

"The question is whether we have pleaded ourselves out of court by setting out a case that necessarily seeks to hold these defendants liable for publishing third-party content," Logan said. "I haven't heard any reason why we can transform what is fundamentally gaming activity, that is brokering transactions for gambling, into something that a publisher does. The question here really is, is gambling publishing? The answer's no."

He also said the plaintiffs disagreed with Judge Davila’s finding that the case required an interlocutory appeal: “Judge Davila, I think correctly, didn’t really leave room for disagreement on the pure questions of law here."

The panel comprised of U.S. Circuit Judges Richard Paez and Jennifer Sung and and U.S. District Judge Sidney Fitzwater, a Ronald Reagan appointee sitting by designation from Northern District of Texas, did not indicate when or how it may rule. But the judges aimed near constant pushback at both sides.

When Paez, a Bill Clinton appointee, asked if the case will be closed if the panel sides with the companies, Logan said the plaintiffs should have one more opportunity to amend their claims unless they are told it's fruitless.

Fitzwater asked what could happen if the panel denies the appeal and remands to Davila, Logan said the panel could answer the Section 230 issue. 

“Whether it is actually a legal question there is substantial disagreement on, I think the district court didn't really identify any basis for that kind of disagreement,” Logan said. 

Mark Perry, representing Apple, said on rebuttal that the plaintiffs agreed to allow the Section 230 immunity question to get decided first, and that Davila's order showed lower courts could use "guidance" on the issue.

He described the process the plaintiffs request, to regulate unlawful gambling activity on the social platforms, as an unreasonably complicated one which would require monitoring all transactions of more than one billion users on all gambling apps as well as where the users are located.

“This court has applied immunity in at least three cases to payment processing regimes,” Perry said. “The plaintiffs never presented a claim by claim analysis. In responding to the motion to dismiss, the plaintiffs abandoned their hosting claims. 

“My friends on the other side are asking this court to do Congress’ job,” he added. “There is no way this could be amended to get past Section 230.”

Paez said the Ninth Circuit is not in favor of approving “disruptive” interlocutory appeals. He asked if they might ask Judge Davila to clarify whether he intended his order to result in all claims being allowed to proceed and noted, "He didn't apply his analysis to any specific claim."

Perry said that was answered in Davila’s September 2022 order, in which the judge wrote that seeking an interlocutory appeal is necessary due to “exceptional circumstances.”

Davila also said he thought it would be a “significant and needless waste” if the Ninth Circuit were to deny the appeal and reverse his order, and the case will be resolved if the panel simply reverses his finding on the plaintiffs’ second theory of liability.

Follow @nhanson_reports

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