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CraigsList Finds Friends In Battle Against Newspapers

CraigsList is a favorite of mine, not because of the namesake, but because it's relatively low-tech, easy to use and productive.  It's kind of an online garage sale, without having to get up early to get the good deals.  But as MIPTC has reported before, CraigsList is in trouble. 

The service has been sued by a group of Chicago lawyers* alleging that it violated The US Department of Housing and Urban Development requirements to ensure nondiscriminatory housing ads.  In contrast to newspapers that comply with HUD requirements by screening ads, CraigsList does not.  On the other hand, ads on CraigsList are free and posted by individuals.  Ads in newspapers cost, and they are posted by newspaper staff.  That distinction may save CraigsList in this lawsuit, but Judge Amy St. Eve in Chicago will be the one to decide that point. 

It didn't help that CraigsList has taken a lot of housing ads away from newspapers, which may be the real genesis for the lawsuit.  Especially when the ads are free.  That's a lot of lost revenue, and the HUD claim is a creative attempt to stopgap that lost revenue stream.

But it may not be so easy.  CraigsList's defense has been joined by the likes of Google Inc., Inc., AOL and Yahoo Inc., according to this National Law Journal article written by Lynne Marek (subscription required).  These online companies, along with eBay, Inc. (which owns a 25% stake of Craigslist) filed an amicus curiae brief before Judge St. Eve.  The friends of the court argue that CraigsList is protected from liability for HUD violations in the same way the phone companies and Internet providers are protected from liability for violations of the law occurring over their wires. 

The article also notes there's a similar suit pending against in the Ninth Circuit.  The CraigsList suit is pending within the jurisdiction of the Seventh Circuit, so it's somewhat of a race to the courthouse to find out which circuit first rules which way. 

*After initial publication and in response to research generated by the comment below, I edited this paragraph to correct my statement that newspapers had sued Craig's List.  MIPTC regrets the error.

Posted by J. Craig Williams on Tuesday, June 27, 2006

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