Litigation against Apple Inc., Alphabet Inc.’s Google, and Meta Platforms Inc.’s Facebook over social casinos is likely to prompt the Ninth Circuit to revisit Big Tech’s legal immunity for the apps they host on their platforms.

Plaintiffs in the proposed class actions, consolidated in the US District Court for the Northern District of California, claim the platforms are liable for their involvement in offering, promoting, and processing transactions for the allegedly unlawful third-party social casino games.

The platforms have asserted immunity under Section 230 of the Communications Decency Act, which shields platforms from liability for third-party content, with mixed success. The case is giving federal courts another chance to redefine the limits of that legal shield.

The stakes in the case are high, according to Eric Goldman, a professor at Santa Clara University School of Law who specializes in internet regulation.

“Any ruling that undermines the immunity of app stores is a potentially significant one,” Goldman said.

Unlawful Gambling?

District court Judge Edward D. Davila said the tech giants could be liable for their own conduct, on the theory that they processed unlawful transactions as part of allegedly unlawful gambling enterprises.

After dismissing the plaintiffs’ two other theories as immune under Section 230, Davila certified the decision for immediate interlocutory appeal to the Ninth Circuit, explaining that he was uncertain of his application of the law.

Goldman said he sees apps and app stores as a “net good” and is concerned about the impact the decision could have on a platform’s willingness to host apps and the developers’ willingness to make them.

“We should encourage them to clean up sketchy apps, but we can’t expect them to do it perfectly,” Goldman said. “If platforms are liable for failing, they won’t even try. We’ve understood that for more than 30 years.”

But not all agree that broad immunity under Section 230 is a good thing.

Some judges, including Davila, have been critical of its scope, and judges on the Ninth Circuit have called on Congress to revisit the 1996 law.

The White House announced Thursday that it is exploring legislative changes, including removing special protections for large tech platforms with the objective of promoting more accountability.

In the meantime, plaintiffs seeking to hold Big Tech liable in connection with third-party content must contend with the law.

“The CDA was never intended to reach this kind of conduct, and we believe the Court got it exactly right in holding that our suits seek to hold the Platforms liable for their own conduct,” Todd Logan, a partner at Edelson PC who represents plaintiffs in the litigation, said.

Counsel for Apple, Google, and Facebook didn’t immediately respond to requests for comment.

‘Reasonable Minds’

According to Davila, under Ninth Circuit precedent, “reasonable minds could differ” over the proper outcome in the case.

Goldman, who thinks the court should have tossed all of the theories, attributes some of the confusion to the Ninth Circuit’s decision in Gonzalez v. Google LLC.

The Ninth Circuit said that Section 230 didn’t automatically bar claims based on the theory that Google shared revenue with ISIS in violation of the Anti-Terrorism Act.

The “best indication” that the revenue-sharing allegations weren’t directed to the content of the videos was that the alleged violation of the law “could be remedied without changing any of the content posted by the YouTube’s users,” the court said.

Put another way, Google just needed to stop sending ISIS money to comply with the law. It didn’t need monitor or take down user content.

In the social casino case, the surviving theory is based on the platforms’ processing of allegedly unlawful transactions for illegal gambling, which Davila concluded constituted their “own” allegedly bad acts.

The plaintiffs aren’t claiming that the platforms are liable for the content of the social casino apps, but for allegedly unlawful gambling-related transactions gambling, he said.

Although the virtual gambling chips, or “tokens,” purchased through the platforms are necessary to play the game, they can’t be exchanged for money.

Still, the Ninth Circuit has recognized that tokens to play the casino-style games may constitute a thing of value under certain state’s gambling laws.

More Pressing Questions

The principle set forth in Gonzalez—that a platform is liable for its own conduct—is straightforward, even if application to the facts may prove complicated or leave room for platforms to argue, Matt Perault, a professor of law at the University of North Carolina, said.

The more worthy question for appellate review, Perault said, is “are tech platforms now feeding people information in ways that shift them from being an interactive computer service provider to an information content provider?”

That question goes to whether the platforms, by helping to promote the casino apps and to target users, helped to develop the content.

Although Davila decided that Section 230 barred the claim, he said it was “admittedly the trickiest” issue.

Perault said it’s reasonable to ask whether algorithms are more similar to content creation than to editorial decision-making, but platforms shouldn’t be exposed to liability for that kind of activity.

“Algorithms are more akin to deciding what goes on front page than writing the story itself,” Perault said.

Davila certified his entire ruling for immediate appeal, giving both the plaintiffs and the platforms the opportunity to challenge his decision partially dismissing the lawsuit.

The parties must actually take Davila up on his offer for immediate appellate review and have 10 days from the Sept. 2 order to do so, and the Ninth Circuit must still agree to the early review.