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Court Rules Craigslist Not Liable For Illegal Ads

Craigslist is not liable for discriminatory housing ads posted on its Web site, a federal appeals court has ruled.

The decision is a victory for the Internet bulletin board where every month more than 30 million people post offers to buy, sell or rent goods and services, including housing, free of charge.

A group of Chicago lawyers sued the Web site in 2006 because some of its housing notices illegally discriminate on the basis of race, gender, religion and ethnicity.

Various ads say "no minorities" or "no children." Declaring such preferences violates the U.S. Fair Housing Act and would be illegal in a newspaper.

But a three-judge panel of the Seventh Circuit of the U.S. Court of Appeals on Friday found that Craigslist is not the publisher of these ads, as a newspaper would be.

Instead, the Web site is more like an intermediary carrying information from one person to another and, therefore, not liable for its content, the panel said in a ruling that upholds the decision by a lower court.

The attorneys "cannot sue the messenger just because the message reveals a third party's plan to engage in unlawful discrimination," Judge Frank Easterbrook concluded.

He suggested the attorneys instead use Craigslist to find landlords with discriminatory ads, then forward their names to the state's attorney general for prosecution.

Craigslist spokeswoman Susan Best said she was pleased with the court's decision on the issue, which is percolating in other courts seeking to determine the responsibility that Internet sites assume for their content.

For example, Viacom (NYSE: VIA) has brought a $1 billion lawsuit against Google (NASDAQ: GOOG) for the copyrighted content that appears on the search engine's YouTube site.

Roommates.com is another housing site facing a legal challenge for discriminatory ads.

As of Saturday, searches for housing listings on Craigslist were posted with this warning: "Stating a discriminatory preference in a housing post is illegal. Please flag discriminatory posts as prohibited."

The San Francisco-based company is run by fewer than 30 people but offers classified ads and forums for more than 300 cities in the United States alone. In 2004, online auction site eBay (NASDAQ: EBAY) bought 25 percent of the firm's equity.