Wolf of Wall Street Still

There’s little doubt that Section 230 is one of the most important laws in terms of its impact on the internet.

Passed in 1996, the law grants immunity to providers of “interactive computer services” for content that is published by its users. In short, it separates the provider from the speaker and ensures that the provider of the service cannot be held accountable for the actions its users (speakers).

The law has been credited with enabling much of the modern internet. Sites such as Facebook and Twitter would never be able to police their platforms adequately to avoid liability without it. Review sites like Yelp or Google business listings would be completely untenable.

To be clear, there are exceptions to it. The most notable include the Digital Millennium Copyright Act, which requires such providers to remove copyright infringing material after notification, and the recent FOSTA-SESTA regulations, which modified the law to with regards to sex trafficking.

However, outside of those exceptions, the law is extremely broad and includes defamation, discriminatory housing and even terrorism. This shield for providers has proved to be remarkably effective at protecting providers.

Though the law has found controversy more recently, especially as it pertains to political bias, it has largely shaped the internet we have today.

However, whether you love it or hate it, one interesting piece of trivia is that we might not have the law at all if it hadn’t been for The Wolf of Wall Street, or rather, the film’s inspiration.

A Brief History of Section 230

Compuserve Logo

In the 1990s, the internet was still very new and legal challenges involving it were exceedingly rare. For the most part, courts just attempted to apply laws passed for the physical world to the digital one though the results were often inelegant.

According to Jeff Kosseff, the author of The Twenty-Six Words That Created the Internet, the judgment that governed liability for third parties prior to Section 230 was Smith v. California.

The case involved a Los Angeles bookstore owner that was convicted of violating a city ordinance regarding the sale and distribution of “obscene” material. However, the Supreme Court ruled that, since he was a distributor and not a publisher, he had no way of knowing what was in that book.

This case was cited in a 1991 case against the online service provider Compuserve. That case, Cubby, Inc. v. CompuServe Inc., dealt with an anonymous user that posted allegedly defamatory information on Compuserve’s forums. However, that case was decided in favor of Compuserve because the company did not do any moderation of its forums (at least not directly). The Smith ruling was specifically cited in it.

Four years later, Compuserve competitor Prodigy was hit with a similar lawsuit. This time the results were the opposite. Prodigy was found liable specifically because it did perform moderation of its forums.

This, in turn, caused an uproar in Congress as many felt that these two decisions were backwards. This resulted in two Congressmen, Ron Wyden (D-OR) and Christopher Cox (R-CA) to add Section 230 to the Communications Decency Act (CDA), which itself was part of the Telecommuncations Act of 1996.

When passing the act, Congress made it clear that it had the express intention of overturning the Prodigy ruling, making it effectively retroactive. Though the bulk of the CDA would go on to be ruled unconstitutional in the case Reno v. American Civil Liberties Union, Section 230 remained in effect.

So, what does any of this have to do with The Wolf on Wall Street? The Prodigy case is Stratton Oakmont, Inc. v. Prodigy Services Co. What that means is that the company that sued Prodigy and won (only to later have it overturned) is Stratton Oakmont, the firm that would be featured in the film 18 years later.

The Wolf of Wall Street’s Real Legacy

To be clear, Stratton Oakmont didn’t set out to help create a law that would protect online service providers. Their goal was very much the opposite, to sue and receive damages from such a provider for items posted by their users.

Even though they were victorious in the court battle, they lost the war. Congress saw their victory not as a sign that the law was working as intended, but as a sign it was doing quite the opposite.

This is often how legal history is written. When litigants step into a courtroom they often aren’t just trying to win their case but trying to set precedent for those that come behind them. It’s one of the reasons that many cases that would have been better resolved out of court often make it to a trial, decision, appeal and so on.

Given what we know about Stratton Oakmont today, it should be no surprise that they would be an aggressive litigant and, as part of that, be a candidate to make a bit of legal history. It’s exactly what so many aggressive litigants do.

Bottom Line

In the end, this is purely trivia and an interesting quirk in the nation’s legal history. While it’s funny to think about how the firm features in The Wolf of Wall Street unintentionally helped create Section 230. It really could have been anyone.

This type of litigation was almost inevitable and, if it hadn’t been Stratton Oakmont, it would have been another company or individual. Stratton Oakmont simply got there first.

Still, it’s always fun to look at the ways that the law overlaps with pop culture. It’s one of the reasons that laypeople find stories about the law so compelling, how the cases recontextualize names they already know.

To that end, Stratton Oakmont may be most famous for the movie, but its broadest impact will always be Section 230.

Special Thanks: I want to give thanks to Patrick O’Keefe for tipping me off to this.

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