Suing Internet Firms To Police Online Misconduct

SUING INTERNET FIRMS TO POLICE ONLINE MISCONDUCT
Suing Internet Firms to Police Online Misconduct:

An Empirical Study of Intermediary Liability Litigation by Secondary Stakeholders
Jaclyn Selby
Tuck School of Business
Dartmouth College
* Correspondence regarding this paper may be addressed to Jaclyn Selby, care of the
Tuck School of Business at Dartmouth, 100 Tuck Hall, Hanover, NH 03766
selby@dartmouth.edu

Abstract
Internet intermediary platforms are online services that provide a means for information
to be hosted, shared, and transmitted between third parties. As such, they may enable the
distribution of content that is objectionable from a societal point of view. Stakeholder
theory proposes that firms must strategically manage a set of relationships with stakeholders
beyond the shareholders who own their stock. Drawing on the stakeholder identification and
saliency framework developed by Mitchell et al (1997) I situate legal action targeting
Internet intermediary platforms in the context of stakeholder theory and argue that
attributes of stakeholders targeting intermediaries may confer legitimacy and urgency on
stakeholder requests which results in increased salience, or positive responses, from
judges. Here, litigation is motivated not by competitive advantage but as a remedy for the
negative consumption externality produced by wrongdoers who utilize intermediary
services for acts of online misconduct. In order to better explicate the relationship between
attributes of stakeholders, their requests, and the likelihood of a positive outcome I
propose a two stage framework that separates Request Development from Salience (or
litigation outcomes). I find that the criminality associated with the act of misconduct and
the choice of downstream intermediary targets contribute positively to the size of requests.
Furthermore, these two factors in conjunction with stakeholder experience show a strong
positive relationship to the likelihood of a positive response. However, as the size of a
stakeholders request grows, the likelihood declines that the judge responds positively by
choosing to impose it on the intermediary.
Keywords: stakeholder theory, intermediaries, market intermediation, salience, online
misconduct

Introduction
Stakeholder theory proposes that firms must strategically manage a set of relationships
with stakeholders beyond the shareholders who own their stock if they are to be successful
(Freeman, 1984). Per Freeman's landmark definition, these stakeholders are encompassed by
"any group or individual who can affect or is affected by" the firm's conduct in pursuit of its
business objectives (1984, p. 25). While little clarity or consensus exists about how to prioritize
stakeholders within the stakeholder literature (Laplume, Sonpar, & Litz, 2008), management
research has traditionally narrowly emphasized a firm's associations with its shareholders,
suppliers, employees and customers - those parties with whom it has direct and contractual
relationships (Friedman & Miles, 2002). Stakeholder theory invites broader focus on the critical
community outside the firm's supply chain, whose members include NGOs, religious groups,
political parties, and geographically proximate community members and organizations. Although
these 'secondary' stakeholders do not hold sway over the firm via formal or implied contractual
obligations, regulatory power, or market mechanisms, they are nevertheless capable of exercising
sometimes powerful demands upon the firm in the form of actions such as protests, lobbying, or
civil suits (Clarkson, 1995; Eesley & Lenox, 2006).
As a general supposition, secondary stakeholders will appeal to firms in response to
perceived misconduct.1 However, stakeholders, having limited attention and being boundedly
Note that misconduct is from the stakeholders perspective. We follow Greve et als review of organizational
misconduct research, defining it as behavior in or by an organization that a social-control agent judges to transgress
a line separating right from wrong; where such a line can separate legal, ethical, and socially responsible behavior
(Greve, Palmer, & Pozner, 2010, p. 56).

rational in their choices (Cyert & March, 1963; Simon, 1955; Williamson, 1975), are thus
constrained in their ability to notice and punish misconduct (Barnett, 2014; Greve, Palmer, &
Pozner, 2010). Because people tend to perceive loss as more salient than opportunity (Kahneman
& Tverksy, 1979), secondary stakeholders may be particularly motivated to act when they feel
they are direct victims of a negative externality2 that occurs as a result of a firms economic
activities and thus owed a response (Margolis & Walsh, 2003).
One timely example comprises the growing population of individuals and organizations
who have filed civil suits to combat damage to their reputations, privacy, and other civil liberties
as a consequence of online speech, or content, that is objectionable because it is either illegal or
intended by the author to cause pain and/or offense. An auto shop, for instance, might sue in
response to an online customer review that falsely claims they use stolen car parts. Or a mother
might litigate upon finding that indecent photographs of her minor child have been posted to a
social network by the childs classmates. In addition to taking action against the culprits who
have directly wronged them, these parties are increasingly using litigation as a tool to hold
Internet companies responsible for the actions of third-party users on their online platforms. In
this way they try to seek recompense from these intermediary firms whose services they see as
instruments of criminal facilitation.
The decision by secondary stakeholders to sue these Internet firms - who have no
contractual duty to them draws attention to an interesting phenomenon in which civil suits, by
bringing in an arbiter, allow secondary stakeholders to have governance over a firm by appealing
to the court system for enforcement. Accordingly, using civil filings against Internet
2
Negative externalities, or spillovers, occur when the provision of goods and services results in a cost to a third
party that is not accounted for in the price of production (Pigou, 1920).

intermediaries by secondary stakeholders I cultivate and test a theory concerning which factors
drive a successful outcome (for the stakeholder) in instances where the outcome is determined by
adjudication. Few studies in the stakeholder literature make a distinction between firm targets
and arbiters. Theoretically, I draw on the stakeholder identification and salience framework
developed by Mitchell, Agle and Wood's (1997) and the stakeholder-request-firm triplet
framework developed by Eesley and Lenox (2006).
Mitchell et al (1997) propose that when stakeholders possess power, legitimacy, and
urgency their requests will be more salient to firms. Eesley and Lenox (2006) propose that
salience should be assessed by 'action' rather than preference and define it as the degree to which
firms respond positively to stakeholder requests. They suggest that power, legitimacy, and
urgency will arise out of stakeholder-request-firm triplets. I suggest that stakeholder-request-firm
triplets can be broken down into two stages comprised of (1) request development and (2)
salience. I advance the model by proposing that request development is driven by stakeholder
attributes and target attributes while salience is driven by stakeholder attributes, request
attributes, and target attributes. I additionally propose that a two-stage framework allows the
request-firm-triplet to be approached from the point of view of stakeholders and targets. The
nature of the request provides target firms with insights about stakeholders while the nature of
the response provides stakeholders with information about arbiters. To examine these
propositions I build a unique dataset of 359 instances of stakeholder requests contained in filings
for civil suits in the United States between1996-2014.
This study makes both theoretical and empirical contributions to the stakeholder theory
literature. First, while much extant work in the stakeholder literature addresses the question of
firm responsiveness from the stakeholder perspective, this study looks both at request
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development and arbiter response approach the stakeholder-target interaction from both sides.
Furthermore, while lawsuits are a common tactic in stakeholder actions (Eesley & Lenox, 2006;
Frooman, 2010; Kassinis & Vafeas, 2002) and the relationship between different types of
stakeholders and tactics has been often studied (Carmin & Balser, 2002; Friedman & Miles,
2002; T. I. Rowley & Moldoveanu, 2003), the relationship between stakeholders and arbiters
with governance over the target firm is an understudied construct. Empirical studies of
stakeholders are somewhat narrow in their focus around method (case studies, surveys) and
context (environmental issues). By examining actions against Internet intermediary platforms I
explore legitimacy, power, and urgency within increasingly prominent context of online
misconduct and Intermediary liability.
Theory
Mitchell et al note that Freeman, in referring to stakeholder theory as "The Principle of
Who or What Really Counts" implicitly challenges researchers to embed studies in both the
normative framework (the 'who' of stakeholders) and the descriptive tradition (the 'what really
counts'). Reviews of the literature(Donaldson & Preston, 1995; Laplume et al., 2008)
additionally highlight an instrumental tradition connecting firm responsiveness to stakeholders to
firm performance (Clarkson, 1995; Godfrey, Merrill, & Hansen, 2009). This study orients itself
within the descriptive tradition, addressing the What Really Counts portion of Freemans
principle.
Studies in the descriptive literature have examined the relationship between stakeholder
attributes and firm responses (Murillo-Luna, Garcs-Ayerbe, & Rivera-Torres, 2008; T. J.
Rowley, 1997). Prior work has also investigated the motivations that drive stakeholders to act

(Barnett, 2014; Margolis & Walsh, 2003; T. I. Rowley & Moldoveanu, 2003) and the tactics they
employ (Carmin & Balser, 2002). A recent stream of research has attempted to determine how
stakeholders define and pursue firm misconduct (Barnett, 2014; Greve et al., 2010).
Additionally, the descriptive tradition has addressed the role of cognition and sense-making in
driving salience (Bundy, Shropshire, & Buchholtz, 2013).
In the context of this study, I focus on the stakeholder identification and salience
framework proposed by Mitchell et al (1997) and the stakeholder-request-firm triplet
propounded by Eesley and Lenox (2006). I theoretically and empirically extend these models by
conceptualizing the stakeholder-request-firm triplet as a two stage framework where the
construction of the request (Request Development) is an intermediate stage before the response
by the arbiter (Saliency). In doing so, I allow that perceptions of the same stakeholder attributes
can be examined from two different points of view. In the context of objectionable content, for
instance, the nature of the misconduct that drives a stakeholder to go to court is what forms the
basis for the urgency the stakeholder feels in wanting to pursue reparations. From the point of
view of the judge, however, the nature of the misconduct creates a foundation for assessing the
issues legitimacy.
Furthermore, I propose that this model makes it possible to investigate how the outcome
of the intermediate stage (expressed by the Size of the Request) influences the outcome of the
final stage (Salience) via a mechanism that is distinct from the elements attributed to the
stakeholder and the target firm. Within Mitchell et als model, the elements of stakeholder
power, legitimacy, and urgency are all drivers of salience. The stronger the presence of these
attributes, the higher the salience of the stakeholder request. The three elements within this
model have proven robust to testing within other empirical studies. A survey of American CEOs,
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for instance, found that power, legitimacy, and urgency influenced the reported saliency of
primary stakeholders such as customers, employees and stakeholders (Agle, Mitchell, &
Sonnenfeld, 1999). While in a Spanish context, a survey of manufacturing firms also found the
three elements to be positively correlated with stakeholder salience to managers (Gago and
Antolin, 2004).
Within the context of civil litigation, I drop the element of power from my analysis,
making the argument that to a neutral third-party arbiter whose duty is to community interests
(the judge) the characteristic of stakeholder power is unlikely to have a bearing on salience in the
same way as legitimacy and urgency. Neither the Weberian definition used by Mitchell et al
(1997), where power is defined as the ability of one actor within a social relationship to get
another actor to do something (Weber, 1947), or the resource dependency based definition used
by Eesley and Lenox, where a targets power is measured by its resources relative to
stakeholders, is appropriate in this context.
Salience
Mitchell et al (1997) define salience in terms of the importance and prioritization of the
request by managers, when assessing the claim against others. As claims in this study are all
assessed individually within the context of the adjudication process in torts litigation, we adopt
the definition of salience used by Eesley and Lenox. Eesley and Lenox (2006) propose that the
interaction between stakeholder and firm can be framed as a stakeholder-request-firm triplet, out
of which develops salience. Arguing that saliency should be measured by action rather than
preference (2006, p. 767) in order to avoid the bias of well-meaning but little acting managers,
their definition holds that saliency is determined by the degree of positive response to a

stakeholders request. I adopt Eesley and Lenoxs definition but modify it for my empirical
context so that salience is defined as a positive response to the stakeholders request by the
arbiter.
In the following discussion I define legitimacy and urgency within the context of this
study. I then address the stakeholder-request-firm triplet in two stages (Request Development,
Saliency) in which I consider the role of Mitchell et als three elements, power, legitimacy, and
urgency as they relate to stakeholder, request, and target characteristics. I propose that different
elements play a larger role at different stages, depending on their relevance as attributes of
stakeholder or target, with legitimacy playing a critical role in both stages. I propose a set of
hypotheses for each stage that tests the relationships between Mitchell et als three elements
when applied to my two-stage framework for the stakeholder-request-firm triplet.
Legitimacy
The definition of legitimacy used by Mitchell et al (1997) proposes that it is a
generalized perception or assumption that the actions of an entity are desirable, proper, or
appropriate within some socially constructed system of norms, values, beliefs, and definitions
(Edelman & Suchman, 1997). Legitimacy, as characterized by Mitchell et al, is an attribute of
the stakeholder. Greater legitimacy suggests that the stakeholders threat to the targeted firm is
justified by community standards. We contribute to empirical tests of legitimacy as an attribute
by extending it to targets and issues within this study.
Urgency
Urgency, the third and final element in Mitchell et als framework, is defined as the
degree to which stakeholder claims call for immediate attention. The concept is made up of two
8

dimensions which are time sensitivity (the degree to which delay is unacceptable) and criticality
(the importance of the claim to the stakeholder). Following Mitchell, I address urgency as an
attribute of the stakeholder but not the request, theorizing that it is people not requests that
feel urgency.
Request Development
In this two stage conceptualization of the stakeholder-request-firm triplet, Request
Development is the stage in which the stakeholder, driven by how greatly they are affected by the
issue (Issue Urgency) and how justified they feel in their choice of target (Target Legitimacy),
determines how large a request to make of the target firm. In the situation where a stakeholder
has sued an Internet intermediary firm to hold them responsible for enabling the spread of
objectionable content, the stakeholders overarching goal is to have the intermediary take action
to repair the damage wrought by the wrongdoer. The action associated with the stakeholders
request may be small, such as requiring the intermediary to disclose the identity of the
wrongdoer. Or it may be large, such as asking that the intermediary be forced to shut down its
service. Typically, the stakeholder requests directed at targeted intermediary firms can be
assigned to one of four actions related to rectifying the objectionable content: disclosure of the
wrongdoers identity, removal of the offending content, monitoring for future offending content,
and discontinuation of services entirely.
The issue urgency of the stakeholder is associated with the type of misconduct that is
behind their grievance. The target firms themselves are always targeted via civil suits, as they are
not directly responsible for more than facilitation. However, the suit against the intermediary will
be linked to a civil or criminal trial that prosecutes the misconduct directly, which may be either

a tort or a crime. The difference between a crime and a tort is that a crime is a breach of the law
that is associated with actions held as offensive to community standards while a tort is a breach
of the law that is associated with harm primarily to the plaintiff (Dyson, 2013). In the case of a
crime, the act of misconduct is associated with a violation of widely held morals. Crimes are
punished by the state and simply attempting to accomplish such an act is punishable by law (Carl
Vinson Institute, 2004). A tort, on the other hand, is not necessarily a breach of morality, as well
as law, and to in order to receive compensation the victim must establish that loss has been
suffered for which reparations are necessary (Carl Vinson Institute, 2004). Consequently I argue
that a stakeholder whose grievance is usually held to be a tort, such as defamation of reputation,
will feel less urgency than a stakeholder whose grievance is tied to conduct typically associated
with a crime, such as the posting to a website of pornography that depicts their minor child. It is
arguable that grievances that are tied to issues that are nearer to crimes than torts will feel greater
urgency to seek recompense and, as a result, ask for larger requests for action from the
intermediary.
H1a: The greater the criminality of the objectionable content (Issue Urgency), the greater
the likelihood that the stakeholder asks for higher duties of care (Size of Request).
The Internet intermediary firms targeted by stakeholders are located in different areas of
the Internet architecture. Those that are located farther upstream, meaning that they are closer
to the Internet backbone, are often providers of infrastructure and less visible to Internet users.
Intermediary platforms that are located farther downstream, or father from the Internet
backbone, provide direct connections between users and content, such as discussion boards and
social networks. Because these firms are highly visible and have greater interaction with Internet
users, stakeholders may feel that they are more legitimate targets (Brammer & Millington, 2006;
10

Lenox & Eesley, 2009; Rehbein, Waddock, & Graves, 2004), resulting in larger requests, than
firms that are located upstream.
H1b: The farther 'downstream' the intermediary firm target is located (Target
Legitimacy), the greater the likelihood that the stakeholder requests higher duties of care
(Size of Request).
Salience
Although legitimacy and urgency are both assumed to have positive relationships with
salience, the size of the request may create a negative response, even if it is perceived to be
justified or appropriate. In a marketing study, Mowen and Cialdini (1980) find that people
respond best to very small initial requests and that they are most likely to respond to large
requests when receiving a very small request first. First requests that were perceived as
disproportionately large received what they termed a door in the face response. It is also
possible that such an effect may be increased when an arbiter must choose to commit to a request
that will be fulfilled by the firm. Consequently, the larger the request by the stakeholder, the
more likely that the arbiter will respond poorly, especially if it is disproportionate to the
legitimacy of the issue, stakeholder, or target.
H2a: The higher the duties of care (Size of Request) requested by the stakeholder, the
smaller the likelihood that the arbiter grants the stakeholder's requests (Saliency).
As described previously, the acts of misconduct associated with each stakeholder action
tend to be characterized as either crimes or torts. Arbiters are unlikely to be deeply affected by
the stakeholders urgency, as the stakeholder has few means by which to pressure them and it is
likely that all those they encounter in their position as arbiters will feel that their needs are
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urgent. The relationship of criminality to issue legitimacy, on the other hand, is an area where a
judge might be affected. With respect to the target firms, the Internet intermediaries, the law
holds that the attribution of responsibility for third party acts does not change regardless of
whether wrongdoing is tied to a criminal act (DMLP, 2007). However, studies show that judges
and other regulators may at times be influenced by personal and political preferences to
manipulate their interpretation of the law to effect decisions that they perceive as more fair (de
Figueiredo, 2005; Yates & Coggins, 2008)
H2b: The greater the criminality of the objectionable content (Issue Legitimacy), the
greater the likelihood that the arbitr grants the stakeholder's requests (Saliency).
Like the stakeholder, arbiters will be more familiar with Intermediary platforms that are
located downstream and have higher visibility. However, they may also consider that
Intermediary platforms that are closer to user interfaces can more easily identify and address
misconduct than the upstream platforms (MacCarthy, 2010), such as hosting services and domain
name registrars who may provide the infrastructure used by wrongdoers to disseminate speech
but are more isolated from its actual content.
H2c: The farther 'downstream' the intermediary firm target is located (Target
Legitimacy), the greater the likelihood that the arbiter grants the stakeholder's requests
(Saliency).
Finally, research indicates that the more experience a stakeholder has the more legitimate
they will be perceived, and furthermore, that organizations tend to have more experience than
individuals (Galanter, 1974; Songer, Sheehan, & Haire, 1999; Wanner, 1975). Following this
12

basic logic I conclude that organizations, having more experience, will be more likely to receive
positive responses from arbiters than individuals.
H2d: The more experience that the stakeholder has (Stakeholder legitimacy), the greater
the likelihood that the arbiter grants the stakeholder's requests (Saliency).
Data and Measures
In order to test my hypotheses, I built a database of instances in which Internet
intermediaries were targeted for contributory liability in civil suits. In order to avoid issues of
comparative law, the database is constrained to state and federal civil filings in the United States
that address conflicts over objectionable online speech (defined in 'variables' under
objectionable speech). The American legal context provides a particularly suitable setting in
which to study these phenomena as the regulatory status quo does not compel stakeholders to
litigate over speech issues or to target intermediary platforms as a matter of routine convention
although the practice is certainly growing . While there are restrictions and exceptions to free
speech in the United States they are relatively few, as compared to other nations (Eule & Varat,
1998) , and the principle has historically enjoyed fierce and consistent protection by the state
(Von Blum, 2010) which extends to the online environment (Worona & Hodges, 1997). Thus,
the judicial climate affecting various types of objectionable content has remained comparatively
stable over the period covered in our data. Furthermore, many of the most visible Internet
Intermediary platforms operate from within United States and there is an explicit body of
statutory law pertaining to intermediary liability.3
The relevant statutes are section 512 of the Digital Millennium Copyright Act (DMCA), section 230 of the
Communications Decency Act (CDA), and the Lanham Act (in reference to trademarks).
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Data Collection and Sample
The data for this study were hand collected from public and private data sources which
included seven legal databases: the Public Access to Court Electronic Records (PACER)
database, the Bloomberg Law legal research database, the Westlaw legal research database, the
LexisNexis CourtLink database of legal dockets and documents, the Bloomberg BNA Internet
Law Resource Center (ILRC) database of cyberlaw-related court opinions and statutes, the Justia
database of court dockets, and the Digital Media Law Project (DMLP) Database of Online Legal
Threats. As in the previous study, the dataset for this study was hand-collected over a three-year
period (2011-2014) by collating information for each case that included public court filings, such
as court dockets, orders, complaints and opinions. Where necessary to fill in information,
relevant documents such as third-party legal analyses and amicus briefs were collected using a
google custom search engine (see Appendix D) I constructed to perform domain-restricted
searches on a carefully selected subset of legal blogs.
Cases were collected if the filing date for the initial complaint fell with within the twodecade period from January 1, 1995 to August 1st, 2014. To identify cases, search results were
limited to civil filings related to torts claims, where possible, and keyword searches were
conducted including: CDA 230, Internet intermediary, contributory liability, intermediary
liability, and internet service provider. The resulting records were carefully screened manually to
exclude cases which lacked electronic records of complaints, cases in which intermediaries were
being sued for direct liability rather than contributory liability, cases where the primary
complaint did not involve objectionable speech (defined in 'variables'), and cases in which no
intermediary was identified.
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The resulting database includes 354 instances of intermediary targeting within 244 civil
suits filed over online speech-related issues. Non-intermediary defendants (direct offenders)
were excluded from the database.
Variables
The dataset was constructed by the researcher and two trained paralegal assistants who
cross-referenced court dockets, complaints and complaints in order to hand code these
documents for descriptive information including the case name, the names of plaintiffs, the filing
dates of the complaint and final decision, the court abbreviation, the jurisdiction of the court
(trial, appellate, or U.S. supreme), and the judge authoring the decision. The variables which
were not directly reported by the court were coded as follows.
Instance of Intermediary Targeting. The unit of observation used in this database was
an instance of intermediary targeting, defined as the naming of an Internet intermediary platform
as a formal defendant, or more informally within the complaint, when combined with a request
for injunctive relief to be enforced by a court order. Instances where stakeholders asked only for
monetary damages without a request for action by the intermediary firm were excluded from
analysis. Note that although multiple intermediary defendants can be enjoined in a single filing,
the stakeholder's grievances and requested duties of care are outlined for each defendant in a
claim.
Type of Intermediary (Upstream/Downstream). In our analysis, the location of the
intermediary in the online ecosystem is used as a measure of its visibility and network centrality.
Using an intermediary taxonomy developed by the researcher in conjunction with the Center for
Democracy and Technology, a codebook was developed listing 27 types of intermediaries with
15

definitions and example service providers. Two paralegal assistants working together first
identified the intermediary type for each intermediary target. Where the research assistants could
not come to agreement, the researcher made a classification decision. For purposes of data
analysis, the intermediary type observations were collapsed down to the intermediary category
level (see Fig. 1). Also based on the intermediary taxonomy, the intermediary categories were
ranked on a 6-point ordinal item measuring the category's distance (in an engineering context)
from the Internet 'backbone,' or how 'downstream' it is, as a proxy for its location in the
ecosystem. The farther downstream a category is, the less central it is to the network and the
more visible it is to the end user. Categories were ordered such that ISP is coded as a one,
Navigational Infrastructure is coded as a two, Commercial Infrastructure is coded as a three,
Search and Navigation is coded as a four, Utility Provider is coded as a five, and Online Content
and Communities is coded as a six (see Fig. 1).
.
Figure 1 about here
............................
16

Type of Plaintiff (Stakeholder legitimacy). This study proposes that whether the
stakeholder is an individual or an organization is a strong proxy for their experience in filing
civil suits (McIntosh, 1985; Songer et al., 1999) and that experience has a bearing on Saliency
(Galanter, 1974; Songer et al., 1999). The researcher and two paralegal assistants used court
dockets and complaints to make independent classifications of plaintiffs and coded them as a
binary variable, where organizations were coded as a one and individuals were coded as a zero.
In each complaint, the organizational status and business of each party is clearly stated. Where
court documents described plaintiffs as firms, government agencies, or other types of nonmarket
institutions (churches, schools, non-profits etc.), they were categorized as organizations.
Individuals were coded as such.
Objectionable Content (Issue Criminality). With respect to objectionable content, we
focus on the legitimacy and urgency of the misconduct (of the content author) underlying the
issue of the stakeholder's claim. The database includes four major categories of objectionable
speech representing the primary reason a case was filed: defamation/reputation concerns, threats
to privacy and dignity, culturally insensitive speech, and obscenity and incitement to
lawlessness. Defamation/Reputation concerns comprised speech regarded as defamatory or
meant to hold the victim in a false light. Threats to privacy and dignity included speech that used
information about the plaintiff or the plaintiff's likeness to disclose private information or
otherwise intrude into the plaintiff's privacy. Culturally insensitive speech was comprised of
"hate speech" that discriminated against the plaintiff, as well as implied threats or incitement to
"hate crimes" on the basis of gender, race, religion, sexual orientation, and national origin.
Speech categorized under obscenity and incitement to lawlessness was defined as speech found
to be offensive and immoral to community standards as outlined in the 'Miller Test' (Reinhart,
17

1999) used in case law, as well as "criminally instructional speech" (Kendrick, 2005) which
incites others to acts prosecuted under criminal law (and thus is also abhorrent to community
standards). Cases in this category were predominantly related to online dissemination of child
pornography but also included incitement to stalking, drug trafficking, murder, and illegal use of
firearms.
Based on the degree to which the underlying misconduct corresponds to actions typically
prosecuted as a tort (under civil law) or a crime (under criminal law) in the United States,
defamation/reputation cases were coded as a one (mostly tort), threats to privacy and dignity
were coded as a two (leans to tort), culturally insensitive speech was coded as a three (leans to
crime), and obscenity and incitement to crime was coded as a four (mostly crime). When
disagreement among the coders occurred the researcher would make the final determination
concerning classification.
It is critical to note that regardless of whether misconduct by the content author is
prosecuted under civil or criminal law, the liability case against the intermediary is a tort and
thus always adjudicated under civil law. Furthermore, the federal judiciary clarified in Doe v.
Bates that liability protections for Internet intermediaries are not lost when the conduct in
question is criminal, rather than tortious (DMLP, 2007). Consequently, the type of misconduct
has no formal bearing on the intermediary's liability although we argue in this study that it may
impact the salience of the stakeholders request to the judge.
Duties of Care (Size of Request). The dependent variable for our analysis in the first
model is the size of the stakeholder's request (in terms of its burden to the intermediary) as
measured by the legal duties of care requested of the target firm. Duties of care is gauged by a 4-
18

point ordinal item developed by the researcher (see Table 1) representing the type of action a
plaintiff requested and the corresponding burden to the intermediary that is associated with its
implementation. Based on this scale, the researcher and two paralegals cross-referenced court
filings to determine what requests plaintiffs had made and coded them from lowest to highest
with respect to relative operational cost, such that one equals user identity and account
information disclosure, two equals content blocking and removal, three equals continuous
monitoring of content, and four equals discontinuation of intermediary service.
.
Table 1 about here
............................
Target Firm Liability Decision (Saliency). The dependent variable for our analysis in
the second model is the Saliency of the stakeholder's request. As described previously, we adopt
the definition of saliency outlined by Eesley and Lenox, where saliency is measured by whether
or not the firm (or in this case, the arbiter with governance over the firm) complies with the
stakeholder's demands (Eeesley and Lenox, 2006). Saliency is coded as a one if the judge issues
either a court order or a formal opinion that includes an injunction requiring the intermediary
firm to grant the stakeholder's request. Note that in some cases, the judge may issue a court order
to the intermediary firm, based on assessment of early evidence, which is fulfilled before the rest
of the case against the direct offender is subsequently dismissed or settled without a formal
opinion. In these cases, we argue that the court order requiring compliance from the
intermediary is a decision to fulfill the stakeholder's request, regardless of independent outcomes
for other defendants formally named in the suit. We code Saliency as a zero in cases where the
19

judge issues an opinion that the intermediary is not liable or where there are no court orders
issued against the intermediary.
Controls
Year Filed. We attempt to control for unobserved heterogeneity through the inclusion of
dummy variables representing the year that cases were originally filed. Specifically, we are
trying to institute control for events within the socio-political and regulatory environment that
may result in changes in the litigation practices, the propensity to litigate, and adjudicatory
decisions. For instance, the recent trend of state legislatures to criminalize "revenge"
pornography, where spurned former romantic partners post amateur pornographic images to the
internet, may ultimately result in increasing numbers of cases filed as victims perceived a
legitimate legal avenue. Furthermore, we try to account for external regulatory shock by
bounding the dataset to after 1996 when the CDA was passed to account for differences in
internet intermediary provisions that were in place at the time. For example, Stratton Oakmont
v. Prodigy in 1995 resulted in Prodigy, the internet service provider, being held liable for the
defamatory speech of one of its users on the grounds that it exercised editorial control and, thus,
was a distributor and publisher of the sites content (Stratton Oakmont v Prodigy, 1995). This
ruling would have been precluded by the CDA and was cited by congress as exactly the sort of
case the CDA was intended to preempt.
Jurisdiction of Court (Trial, Appellate, Supreme). We consider the type of court in an
effort to account for differences in the adjudication process. Appellate courts differ from trial
courts in that they do not allow for the introduction of new evidence that was not presented at
trial. Rather their focus is on the application of law instead of the immediate circumstances of a
20

particular case. Additionally, a single judge oversees a case during a trial while some appellate
cases have multiple judges. Given the differences in scope and processes between trial and
appellate we have chosen to control for the jurisdiction of a court.
Future controls
Frequent Judges. Given the large number of unique judges that appear in the dataset it
is infeasible to control for individual judges without running out of degrees of freedom.
However, it is possible to control for judges who have previously overseen cases involving
intermediary firm liability. Future analyses will incorporate a dummy variable for judges
indicating if they have previously considered cases involving internet intermediaries to control
for judges' familiarity with the issues.
Geographical Regions. We control for the geographic location of courts that appear in
the dataset in order to account for variations in state law. States courts will be clustered by
geographical location by based on how they correspond to existing federal circuits. Federal
circuit courts, which have their own established case law, are already grouped geographically
and provide a convenient and logical unit for clustering.
Analysis and Results
Descriptive statistics and pairwise correlations for each of the study's variables can be
found in Table 2. It is notable that intermediary cases based on objectionable content grew
precipitously between 2002 and 2010 (see Figure 2) and that overall, intermediaries were only
made to comply with the stakeholders request 15% of the time despite being frequent targets for
litigation (see Table 3). The most frequent observed domain of objectionable content was
defamatory statements (59%), followed by obscenity/incitement to crime (18%), privacy &
21

dignity violations (15%), and culturally sensitive speech (9%). Content websites and online
communities (63%) represented the most frequently targeted intermediary type followed by
commercial infrastructure (15%), ISPs (10%) and the intermediaries least likely to be targeted
were search and navigation (5%), navigational infrastructure (4%), and utility providers (3.3%).
.
Table 2 about here
............................
.
Figure 2 about here
............................
.
Table 3 about here
............................
Hypothesis Testing
Size of the request. Table 4 presents a set of models predicting our first dependent
variable, duties of care (Size of the request), defined as the operational burden that corresponds
to the legal duties of care that are requested of the intermediary firms. The sample is constructed
such that each intermediary firm targeted within a civil suit represents a unique observation 4. An
We are aware that the inclusion of multiple intermediaries in a single civil suit may cause a potential issue with
heteroskedasticity arising from the fact that observations are independent across cases but not necessarily within
cases. Our dataset contains 354 instances of targeting spread across 244 civil suits, meaning that the modal number
of intermediaries targeted per case was one.
22

ordered logit specification has been adopted for these models to reflect the rank-ordered
operational costs to the target firm as the size of the request is increased. Thus, each model in
this set of hypotheses predicts the likelihood that stakeholders will make larger requests, with
correspondingly larger burdens for the target firm.
Model 1 presents coefficient estimates for the independent variables, objectionable
speech (issue urgency) and intermediary type (target legitimacy), without the inclusion of any of
the potential control variables. Model 2 includes the type of court as a control variable to control
for differences in the adjudication process found in appeals courts. Type of court was found to
be marginally significant but overall measures of fit, such as pseudo R2, were minimally different
from model 1. Finally, model 3 adds dummies representing the year cases were filed to control
socio-political and regulatory shock that could result in differences in the propensity to litigate.
Several of the year dummies are significant and their inclusion improves the pseudo R2 of the
model.
Hypothesis 1a (issue urgency) posited that objectionable speech that tended towards
classification as a crime would result in greater requested duties of care (size of the request) than
objectionable speech that tended to be prosecuted as a tort. Indeed, the positive significant
coefficient shows a strong relationship exists between the degree of criminality attributed to the
objectionable speech and the size of the request made by the stakeholder. The graphed
probabilities for each type of objectionable speech as they relate to various duties of care can be
found in Figure 3. This graph demonstrates that lower duties of care become less probable and
higher duties of care become more probable as objectionable speech becomes more criminal in
nature.
23

Hypothesis 1b (target legitimacy) held that the farther downstream an intermediary is
located in relation to the Internet backbone, the greater the likelihood that large duties of care
will be requested (size of the request). Positive, marginally significant coefficients for
intermediary type provide some support for the hypothesis 1b. Both model 1 and model 3 show
that the further an intermediary was from the internet backbone and the more closely
objectionable speech resembled a crime, the greater likelihood that more expensive or onerous
duties of care would be requested of the intermediary. In short, there is strong and moderate
support for hypotheses 1a and 1b respectively.
.
Table 4 about here
............................
.
Figure 3 about here
............................
Given that multiple models were estimated for the hypotheses it is necessary to assess
model fit to choose between them. The Bayesian information criterion (BIC) is a well
established means for comparing the relative fit of multiple models when working with
categorical and ordinal data (Raftery, 1995). BIC values help select statistical models that are
most likely to generate the observed data and can be applied to both nested and non-nested
models. In general, smaller values are preferred with differences greater than 2, 6, and 10
equating to moderate, strong, and very strong support for model preference respectively. The
BIC for models hypotheses 1a and 1b suggest that the simpler model 1 (BIC=510.32), without
24

any covariates, is to be moderately preferred to model 2 (BIC=514.84) and strongly preferred to
the more complicated model 3 (BIC=520.31).
Salience. The models in Table 5 predict the likelihood that an arbiter would grant a
stakeholders request (Saliency). The binary nature of the success or failure of requests lends
itself to a logit model specification. As a result, the models represented here reflect sets of
hypotheses concerning the likelihood of a successful request.
Model 1 presents coefficient estimates for the independent variables, duties of care (size
of the request), objectionable speech (Issue Legitimacy), intermediary type (Target legitimacy),
and stakeholder legitimacy (Stakeholder legitimacy) without the inclusion of any of the potential
control variables. Model 2 introduces type of court to control for differences in the adjudication
process. This factor was non-significant and did not produce meaningful changes in the
coefficients of the independent variables or from the pseudo R2 from model 1. Model 3 included
the independent variables, type of court, and dummy variables for the year that cases were first
filed. In regards to the independent variables, the inclusion of the dummies for year helped
achieve significance for duties of care.
Two of the independent variables, objectionable speech and stakeholder legitimacy, have
positive, significant coefficients while a third, intermediary type, has a positive, marginally
significant coefficient. Thus, arbiters are most likely to grant plaintiff requests when
objectionable speech (Issue Legitimacy) is more like a crime than a tort (Hypothesis 5b), when
stakeholders have greater experience (Hypothesis 5d) and when intermediary firms are further
downstream (Target Legitimacy; Hypothesis 5c). Furthermore, a marginally significant,
negative coefficient was found for duties of care, or the size of the request, such that as plaintiffs
asked for larger concessions on the part of intermediaries their requests were less likely to be
25

granted (Hypothesis 2a). Both the direction and overall significance of terms persisted
regardless of model tested providing strong support for hypotheses 2b and 2d and moderate
support for hypotheses 2a and 2c.
Next we consider which of the three models exhibits the best fit for replicating the
observed. In general, measures of model fit show model 3 as having a slightly higher pseudo R2
than either model 1 or model 2. However, when the BIC is consulted there is strong evidence
that model 1 (BIC= 181.77) is more likely to replicate the dataset than model 3 (BIC = 204.55)
and moderately more likely than model 2 (BIC =186.73). In sum, for hypothesis 2 a
parsimonious model without covariates is preferred.
.
Table 5 about here
............................
Discussion and Conclusion

Consistent with the results of previous empirical research that draws on Mitchell et als
framework (Agle et al., 1999; Eesley & Lenox, 2006), we find strong support for the positive
relationship between stakeholder legitimacy and salience. We find also that legitimacy as a
construct is robust and also serves as a driver of salience when it is a characteristic of targets and
issues associated with the stakeholders claim, as well as an attribute of the stakeholder
themselves. Although all three of Mitchell et als elements (power, urgency, legitimacy) are
conceptualized to positively increase the likelihood that firms will respond positively to
stakeholders (salience), the inclusion in this study of the size of the request brought by
stakeholders allows us to see that while issue legitimacy, stakeholder legitimacy, and target
26

legitimacy all drive salience up, those positive effects are moderated by the size of the
stakeholders request, which drives salience back down the larger it grows.
In practical terms, we conclude that though an experienced stakeholder who targets a
downstream Internet intermediary to request remedial action for objectionable content that is
obscene in nature improves their likelihood of a positive response (salience) from a judge who
perceives them as highly legitimate, the filing of a large request that imposes a significant
operating burden on the intermediary target will somewhat reduce the chance of a positive
outcome. It is worth noting here that on average, requests were granted in less than one out of
every five cases, suggesting that judges do not lightly decide to burden Internet intermediaries in
their role as third-party arbiters. However, that proportion shifts from a positive outcome in less
than one out of ten defamation-related filings to a positive outcome in one out of every four
requests for obscenity-related filings.
The separation of the stakeholder-request-firm triplet into two separate stages also makes
it possible to see observe that ironically, while the criminality of the issue behind the
stakeholders request and the legitimate choice of target act in concert to drive up the likelihood
of saliency, at the request development stage these same factors also result in an increased
likelihood of the large requests that drag salience down. One may speculate that the public
condemnation of a crime that helps to make the stakeholder legitimate in the judges eyes also
creates a sense of outrage in stakeholders that distorts their assessment of what is appropriate to
ask for.
It is also important to consider that the assessment of legitimacy always implies a point of
view. In this study we use visibility and experience as constructs that help to establish legitimacy
27

as a driver of salience. While organizational visibility confers legitimacy onto the choice of
target, whether it would operate the same way for a stakeholder is hard to say. The use of
different types of proxies for legitimacy in this, and other stakeholder studies, is a contribution to
the stakeholder theory discussion that suggests constructs beyond legitimacy, urgency, and
power may play a critical role in driving positive responses from arbiters.
While other empirical work on stakeholders incorporates civil suits as an action taken to
exert pressure on target firms, the distinction between firm salience and arbiter salience is not
made clear. This study, in looking exclusively at civil suits targeting Internet intermediaries is
subject both to interesting insights and restricting limitations.
While the context of torts litigation against Internet intermediary platforms allows the
relationship between stakeholder , request, and firm to be examined in terms of the interplay
between stakeholder attributes and the choice of firm targets it does not tell us much about the
responses of the firm itself. Salience in this context, due to the arbiters perfect governance over
the firm, tells us more about what characteristics of the stakeholder-request-firm triplet will
allow the stakeholder to achieve a positive outcome than it does about the salience of the
stakeholder to the intermediary itself. To the stakeholder, the intermediary is a critical supplier of
possible remedies. However, from the intermediarys point of view we dont learn much about
whether plaintiffs are framed as stakeholders.
What we do learn from this particular context is that many of the same factors which lead
to salience in requests made directly of firms will also drive salience when an arbiter must make
an enforceable decision on the target firms behalf. The robustness of this result suggests that
comparisons between manager decisions and arbiter decisions may be a critical avenue for future
28

research in empirical contexts where stakeholders use a variety of tactics to achieve their
objectives.
Overall, this study makes an important empirical contribution to both the literatures on
stakeholder theory and the study of Internet intermediary liability. Much of the empirical work in
the stakeholder literature is reliant on case studies and surveys. In contrast, the reliability of data
about court room decisions and other filings allows us to be sure that the identification of
salience in our results is consistent by real action by the target firm. Finally, while this study is
one of the only empirical investigations into Internet intermediary liability, there is much
advantage to the framing of plaintiffs as secondary stakeholders who use litigation tactics as a
way to get firms to make recompense for perceived misconduct. In this way we can compare
intermediary liability litigation not only to the actions by corporations and governments that are
usually associated with the phenomenon but also draw comparisons to the literature on
stakeholders and environmental issues in order to draw parallels about how stakeholders define
responsibility, misconduct, and culpability for target firms.
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32

Table 1. Duties of Care (Size of Stakeholder Request) as Proxy for Operational Cost to Intermediary
Type of Duty of Care Type of

Action
Definition
Intermediary Service
is Discontinued
Ex Ante
The plaintiff requests for the intermediary

4
service to be shut down. Alternately, the
intermediary platform is asked to
discontinue the "intermediary" portion of its
activities by no longer providing content
access, transmission, or sharing by third
parties.
Platform-Wide
Content Monitoring,
Disclosure, and
Filtering
Ex Ante
The plaintiff requests the intermediary to

prevent infringing activity on its platform and platforms it controls - via content
monitoring, reporting of illicit activity, and
filtering of infringing content.
Per Instance Content

Blocking or Account
Removal
Ex Post

respond to instances of infringement by
specific actors by removing content,
blocking specific accounts or platforms it
controls, or removing user/platform
accounts.
Per Instance Identity

and Account
Information
Disclosure
Ex Post

respond to instances of infringement by
specific actors by disclosing their
identification, account information, or
records of their activities.
33
Operational
Cost Scale

Table 2. Descriptive Statistics and Pairwise Correlations
Variable
Mean
S.D.
Min
Max
1. Duties of Care
(Size of Request)
2.17
.713
1.00
2. Target Liability Decision

(Saliency)
.13
.333
-.08
1.00
3. Objectionable Content
(Issue Criminality)
1.90
1.162
.50**
.17**
1.00
4. Intermediary Category
(Upstream\Downstream)
4.77
1.778
.01
.09
-.12
1.00
5. Jurisdiction of Court
1.23
.421
-.12
-.06
-.13*
.00
1.00
6. Year Filed
2007
4.249
1996
2014
.02
.13*
.19*
.10
-.17**
1.00
.445
.01
.16*
-.04
-.06
-.05
-.04
7. Type of Plaintiff
.27
(Stakeholder Legitimacy)
Spearmans Rho, n= 245, two tailed
* p < .05; **p<.01
34
1.00

Table 3. Liability Decision for Target Firm by Type of Objectionable Speech
Defamation &
Reputation
Privacy & Dignity
Culturally Sensitive
Speech
Obscenity /
Incitement
Total
Not Liable
159
31
19
42
251
Liable
14
12
11
44
43 (30%)
26 (27%)
53 (21 %)
Total
173 (8%)
Percent liable in parentheses
35
295 (15%)
Table 4. Predicting Duties of Care (Size of Request)

Duties of Care
(Size of Request)
Objectionable Speech
(Issue Urgency)
.971***
(.135)
.969
(.135)
.984***
(.143)
Type of Intermediary
(Target Legitimacy)
.10
(.07)
.097
(.067)
.148*
(.077)
Controls
Jurisdiction of Court
Year: 96-98
-.317
(.248)
-
-.23
(.266)
Omitted
Year: 99-01
Year: 02-04
Year: 05-07
Year: 08-10
Year: 11-13
Year: 14-
268
60.75
.13
268
65.88
.13
Observations
Wald Chi-Square
Pseudo R2
Ordered logit specification with robust standard error in both models.

Robust standard errors are in parentheses. * p < .05; **p<.01; ***p<.001.
p < .1.
36
-1.511**
(.609)
-.090
(.225)
-.462*
(.219)
-.423
(.376)
-.664*
(.340)
-.640
(.546)
261
73.12***
0.152

Table 5. Predicting Whether Requests are Granted (Saliency)
Requests Granted
(Saliency)
Objectionable Speech
(Issue Legitimacy)
.556***
(.177)
.553***
(.178)
.529**
(.183)
Type of Plaintiff
(Stakeholder Legitimacy)
1.14**
(.403)
1.13**
(.404)
1.144**
(.431)
Type of Intermediary
(Target Legitimacy)
.167
(.111)
.169
(.111)
.16
(.121)
Duties of Care
(Size of the Requests)
-.647
(.402)
-.648
(.400)
-.667*
(.374)
Controls
Jurisdiction of Court
Year: 96-98
-.078
(.463)
-
-.197
(.557)
Omitted
Year: 99-01
Year: 02-04
-.53
(.183)
_
Year: 05-07
Year: 08-10
Year: 11-13
Year: 14-
-.699
(.825)
-.475
(.771)
.249
(.804)
-
252
19.24
.0931
252
19.34
.093
194
20.94*
0.109
Observations
Wald Chi-Square
Pseudo R2
Logit specification with robust standard error in both models.

Robust standard errors are in parentheses. * p < .05; **p<.01; ***p<.001.
p < .1.
37

Figure 1. Intermediary Taxonomy by Layer, Category and Distance from the Backbone
38
INTERMEDIARY LITIGATION AS A NONMARKET STRATEGY

Figure 2. Intermediaries Targeted in Contributory Liability Lawsuits for Objectionable Speech
(1996-2013)
39
INTERMEDIARY LITIGATION AS A NONMARKET STRATEGY

Figure 3. Duties of Care x Objectionable Speech
40

Suing Internet Firms To Police Online Misconduct

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Suing Internet Firms To Police Online Misconduct

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SUING INTERNET FIRMS TO POLICE ONLINE MISCONDUCT