Sunday, April 17, 2011

Huffington Post Class Action Lawsuit: Setting the Tone for the Future?

On April 13, 2011, Jonathan Tasini filed a lawsuit against, AOL, Arianna Huffington and Kenneth Lerer (co-founder) seeking at least $105 million in damages on behalf of approximately 9,000 unpaid bloggers that helped to build the site’s value that culminated in its $315 million sale to AOL in February of this year. A pdf of the complaint is here: The plaintiff makes two claims: deceptive business practices and unjust enrichment.

The lawsuit raises issues that may be of interest to multiple other website owners. In the last decade the internet has provided those who are not in the profession of journalism with an ability to be heard through publishing their own writing online; in other words, the internet has provided many with a public outlet for self-expression. Blogs are used for a variety of purposes, ranging from being a tool in business development to being instrumental in establishing a social network. It is actually difficult nowadays to find someone who has never written and posted on the internet, whether as a blog, or a tweet, or a comment, or even a review on So, this lawsuit is about those who monetize this stream of content. Essentially, TheHuffingtonPost has engaged in crowdsourcing content to drive its marketing revenues. Doesn’t Facebook do that too? What about multiple online journals and newspapers (NY Entrepreneur Report blogs, The Crains, etc). There is a quid pro quo: authors get visibility in exchange for contributing free content and channeling internet traffic to the website where they posted. Everybody is happy until the website sells for $315 million. Then, it is hard not to think: what about me? Do I see any of the money for being a loyal and popular contributor?

Apart from the unjust enrichment and deceptive business practices, one cannot help but think about the legal classification of the bloggers: bloggers appear to be unpaid volunteers, volunteering for a for-profit business, TheHuffington I have addressed this very same question before, when I discussed the class action lawsuit against AOL that was settled in December 2009. That class action lawsuit was brought by thousands of former AOL volunteers (community leaders who during the 1990s spent approximately 2-4 hours per week hosting chat rooms, reviewing bulletin board postings, etc). The volunteers later claimed that they were employees and should have been paid at least minimum wages by AOL. Based on the Supreme Court decisions and DOL interpretations, volunteers don’t have to be paid only if they perform services of the kind typically associated with volunteer work (such as help to minister to the comfort of the sick, elderly, indigent, infirm, or handicapped, and retarded or disadvantaged youth). Not the case here.

Perhaps, what should have done was to enter into individual agreements with each of the bloggers, outlining the terms of the services and consideration provided, and obtaining the appropriate licenses to use the bloggers’ content on their website. If bloggers feel that the “compensation” offered by the website was adequate (“visibility, promotion and distribution” of their content), then they are free to enter into such agreements. After all, it is a free economy. However, I would suggest that should provide adequate disclosure as to the use of the content. This would be only fair to the bloggers. In this age of proliferation of the online media and marketing, online traffic, Google analytics, social media networks and everybody writing about everything, basic legal concepts still remain the same, and freedom to contract as well as the requirement of being offered adequate consideration remain unchanged.

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