Court Declines to Dismiss Claims that Ideas for Creation of Huffington Post Website Were Misappropriated

A state court judge in New York City declined to dismiss claims that publisher Arianna Huffington and others misappropriated the idea to create the Huffington Post, a liberal political blogging website. Daou v. Huffington, No. 651997/2010 (N.Y. Sup. Ct. Oct. 25, 2011). Although the court found that the plaintiffs—a pair of bloggers formerly associated with the 2004 presidential campaign of U.S. Senator John Kerry—failed adequately to allege the existence of a joint venture agreement between Huffington and themselves, Supreme Court Judge Charles E. Ramos concluded that the allegations of the complaint were sufficient to state a claim for idea misappropriation under New York law.

Allegations of the Complaint

Reciting the allegations of the complaint, the court explained that plaintiffs Peter Daou and James Boyce met while working on the Kerry presidential campaign. After the campaign ended, Daou and Boyce formulated a blueprint for a joint business venture to develop a website “collective of blogs by notable personalities, non-partisan news aggregation, issue-specific web pages, scoops and exclusives derived from the founders’ personal relationships with Democratic Party and media insiders, and online community-building.” Daou and Boyce included the details of their plan in a memorandum entitled “1460”—to reflect the number of days until the next presidential election—and allegedly presented it to writer Arianna Huffington. Huffington purportedly agreed to become involved in the project as a strategic partner and investor, and she allegedly met with Daou and Boyce on other occasions to discuss details. The plaintiffs claimed that Huffington and her co-defendant, Kenneth Lerer, asked them for a refined blueprint and strategic plan for the proposed website. Believing they were partners in a joint venture, the plaintiffs purportedly complied with this request. Huffington and Lerer allegedly used the plaintiffs’ ideas, plans, and materials to raise funds and to develop the website. The website was launched as the Huffington Post on May 9, 2005.

Daou and Boyce contributed content to the Huffington Post but from an early date, Huffington purportedly excluded them from the management of the website. They eventually sued Huffington, Lerer, and, Inc., alleging that the defendants were liable for breach of contract, breach of fiduciary duty, idea misappropriation, fraud, and negligent misappropriation. In the alternative, the plaintiffs asserted claims for breach of implied contract, unjust enrichment, and quantum meruit. The defendants moved to dismiss the complaint.

Joint Venture, Fiduciary Duty, Negligent Misrepresentation Claims

The court dismissed the plaintiffs’ claim that the defendants breached an agreement to establish and operate a joint venture. Such an agreement, the court wrote, must manifest the “intent of the parties to be associated as joint venturers” by combining “property, financial resources, effort, skill or knowledge, [and] a measure of joint proprietorship and control over the enterprise,” and by providing “for the sharing of profits and losses.” The alleged oral agreement between the plaintiffs and the defendants did not “rise to the level of an agreement to join property, skills and risk, and is otherwise too indefinite to be enforceable.” Moreover, the court found the plaintiffs’ actions to be inconsistent with those of joint venturers. The court observed that Daou and Boyce were not involved in the management or financing of the Huffington Post and, prior to filing their lawsuit, they did not attempt to assert their purported ownership rights. Similarly, the court found that the complaint did not adequately allege a breach of fiduciary duty or negligent misrepresentation, because both of those claims were premised on an assumption that the court had already rejected — that the plaintiffs and the defendants were joint venturers.

Idea Misappropriation Claim

New York law recognizes the tort of misappropriation of ideas when the plaintiff establishes that the misappropriated ideas were both “novel and concrete.” For this purpose, novelty refers to true innovation, rather than merely that the idea has not previously been used. Even if the idea combines existing elements, it may still be novel if the idea itself is not in the public domain. Whether an idea is novel is generally a question of fact that is inappropriate for resolution in connection with a motion to dismiss.

The court concluded that Daou and Boyce’s complaint sufficiently alleged a novel and concrete idea which the defendants misappropriated. The court noted that the plaintiffs claimed that at the time of the misappropriation, no website had yet combined the elements of a “collective of blogs by notable personalities, non-partisan news aggregation, issue-specific web pages, scoops and exclusives derived from the founders’ personal relationships with Democratic Party and media insiders, and online community-building.” In addition, they alleged that Huffington herself acknowledged the novelty of the idea in a March 2010 interview in Wired magazine, in which Huffington purportedly stated that the specific combination of elements that went into the Huffington Post “had never been done.” Huffington also allegedly told Playboy magazine that, “We were the first hybrid of news and group blog.” Although such allegations did not establish that the idea was in fact novel, the court found them adequate to survive a motion to dismiss.

Remaining Claims

The court dismissed the plaintiffs’ implied contract claims, finding that the complaint did not allege conduct by the defendants reflecting an intent to be bound by an agreement to purchase the plaintiffs’ idea. Likewise, because the fraud allegations of the complaint lacked specific averments that the defendants made promissory statements which they did not intend to honor, the court dismissed the fraud claim. Lastly, the court found inadequate the plaintiffs’ claims of unjust enricnment and quantum meruit. However, the court granted the plaintiffs leave to re-plead the dismissed claims in order to attempt to state actionable claims.

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