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Plaintiffs, a group of professional and quasi-professional writers, filed a class action against AOL and TheHuffingtonPost.com alleging unjust enrichment and violations of New York General Business Law (NYGBL) § 349. Specifically, the writers claimed that AOL and TheHuffingtonPost.com unjustly and deceptively denied them compensation for submitting content to and promoting content on The Huffington Post. Defendants filed a motion to dismiss the complaint with prejudice (Tasini v. AOL, Inc., 2012 U.S. Dist. LEXIS 46201 [S.D. N.Y. Mar. 30, 2012]).
In 2011, AOL purchased The Huffington Post for $315 million dollars. The writers' complaint alleged that The Huffington Post was an attractive merger commodity for AOL inasmuch as The Huffington Post was able to obtain high-quality content from the writers at no cost. The writers contended that The Huffington Post was unjustly enriched when it accepted AOL's offer without compensating the writers for their value-enhancing content.
Defendants countered that the Huffington Post generated revenue by selling "advertising targeted" towards its website visitors. Further, defendants claimed that the writers' claim of unjust enrichment was barred by the existence of an implied contract between The Huffington Post and the writers. Finally, defendants contended that the complaint should be dismissed because the writers failed to demonstrate that equity and good conscience require restitution.
The writers have repeatedly submitted "significant volumes of content" to The Huffington Post over the past several years. The writers are not provided with monetary compensation and instead are offered exposure, "visibility, promotion, and distribution, for themselves and their work." Although the writers' unpaid submissions provide valuable content due to their effect in "optimizing" The Huffington Post's rankings in search engines and in allowing the company to keep its production costs low, the company had repeatedly told the writers from the beginning that it never intended to "pay content providers" for their submissions.
In order to prove an unjust enrichment claim under New York Law, the writers were required to establish: "(1) that the defendant benefitted; (2) at the plaintiff's expense; and (3) that equity and good conscience require restitution." The court determined that in applying the law, the writers were required to allege "some expectation of compensation that was denied" in order to prove that restitution was the equitable outcome.
The facts established that the writers entered into their dealings with The Huffington Post with "full knowledge of the facts and no expectation of compensation other than exposure." Therefore, the court held that the writers' complaint failed to allege any expectation of compensation. Further, the court stated that the "principles of equity and good conscience" failed to justify awarding the writers a portion of the purchase price when the writers never "expected to be paid, repeatedly agreed to the same bargain, and went into the arrangement with eyes wide open."
NYGBL § 349 prohibits deceptive acts or practices within any business conduct or the furnishing of any services. To plead a prima facie claim pursuant to § 349, the writers were required to allege that: "(1) the defendants' deceptive acts were directed at consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has been injured as a result."
The court held that the writers were not consumers in any interpretation of the word inasmuch as they took part in producing the content that was delivered to consumers via The Huffington Post's website. The court determined that the writers' complaint failed to establish that the alleged misleading actions of The Huffington Post were consumer-oriented. Therefore, the court found that the writers failed to state a violation under NYGBL § 349.
The court granted the motion to dismiss with prejudice.
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