Another reason why it's better to be online than to be a newspaper: A federal judge in Chicago ruled today that, unlike newspapers, Craigslist is not liable for discriminatory housing ads on the site. If published in a newspaper those ads would violate fair housing laws. Online, they don't.

Background on the case from the Chicago Trib:

The Chicago Lawyers' Committee for Civil Rights Under Law sued San Francisco-based Craigslist in February, claiming that during a six-month period, the site published more than 100 housing ads in Chicago that violated the federal Fair Housing Act.

Those ads included such declarations as "Non-women of Color NEED NOT APPLY" and "African Americans and Arabians tend to clash with me so that won't work out."

Basically, the case put two federal laws in conflict and the court had to decide how it plays out. Under the 1968 Fair Housing Act newspapers and other publishers of ads deemed discriminatory can be held liable for violating the law. The law says it's illegal to:

[M]ake, print, or publish ... any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any ... discrimination based on race, color, religion, sex, handicap, familial status, or national origin.

But the 1996 Communications Decency Act (CDA) shields websites from liability for the contents of user posts:

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

What's a court to do? Bottom line: Craigslist is surely a "provider ... of an interactive computer service" and neither the Fair Housing Act or any other law that punishes publishers for the content of ads will apply (er, not counting intellectual property claims.)

But in finding for Craigslist, the court rejected the site's argument of unlimited immunity for online providers. The Trib reports:

"We are heartened by fact that (the judge) forcefully rejected the unlimited immunity advocated by Craigslist," said Laurie Wardell, fair housing director for the Chicago Lawyers' Committee.

Judge Amy St. Eve ruled that Craigslist is immune only if it is treated as a publisher of third party content.

St. Eve's ruling implies that online forums can be liable for third-party postings for reasons other than being a publisher, though they could not cite a good example of another avenue of legal pursuit.

It's not easy to pursue a claim against a site like Craigslist without acknowledging publication, said Jim Speta, a communications law expert at Northwestern University's Law School. But it's probably possible, he said.

The decision bothers ICANN director and blogger Susan Crawford, who finds the decision unnecessarily "crabbed." She notes that the CDA was famously upheld in a Fourth Circuit decision, Zeran v AOL, that concluded, "Congress considered the weight of the speech interests implicated and chose to immunize service providers to avoid [the] restrictive effect" of holding providers liable for user-posted content.

The craigslist opinion (from a lower court, not an appellate court, but noting dicta in a 7th circuit opinion) in dicta disagrees with the traditional Zeran reading of Section 230 in a couple of crucial respects. First, the court asserts that sites/services are protected by the statute only for claims that would treat them like a "professional" publisher -- like someone who edits and chooses what to post. Claims that have to do with the site's role in simply making available the material are not barred, in this court's view.

That's strange, because the universe of claims that have as one of their elements a fingerpointing assertion that "you are an editor" is small. (Indeed, the fair housing claim in this case is one of the few. Plus defamation.) This reading of Section 230 narrows its immunity function substantially.

Second, the craigslist court opines that if a site actually alters material that is then made available (and the altered material sparks a legal claim), then the site shouldn't be immune under Section 230. This is a big deal, because mere editing and selection so far hasn't been enough to make the site liable as an "information content provider". The court hastens to note that the alterations would have to be part of the challenged material, but this really muddies the waters.

Crawford also notes that none of this matters for Craigslist; Craig's off the hook. And it doesn't really matter for anyone else because it's only dicta (legal asides) in a District Court ruling. But it does open the door to weakening protection for websites. If the Seventh Circuit (where Chicago is located) were to adopt this reasoning, then federal courts would have to choose between two interpretations and the question could make its way to the Supreme Court.

So a victory for Web 2.0 (and other) sites that depend on user-generated content but one tinged with a slightly bitter taste.