• by Wendy Davis  @wendyndavis, December 12, 2011

An insurance company has sued Google for allegedly violating a state law regarding deceptive trade practices by returning search results that include links to unflattering posts.

In court papers filed in Alabama, the company American Income Life Insurance, an Indiana-based subsidiary of Torchmark Corporation, alleges that Google returns links to negative posts from scam.com and pissedconsumer.com in the search results.

The results pages allegedly include snippets like “American Income Life is a Scam.” American Income life contends that Google's display of these results violates an Alabama business law regarding “unconscionable, false, misleading or deceptive acts or practices.”

“American Income Life Insurance Company is not a scam, and is, in fact, a reputable and upstanding business corporation,” reads the lawsuit, which was filed in state court in September and transferred to federal court in Alabama last week.

Before filing suit, American Income Life proposed that Google could avoid litigation by agreeing to return the disparaging results in less prominent positions. “Please allow me to suggest this reasonable solution: after convincing yourself of the true nature of these postings, change their listing priority to below page two (or below 25th individual ranking) for your search engine's results when 'American Income Life Insurance Company' is employed as a search term,” attorney William Baxley wrote in a May 12 letter to Google's chief legal officer David Drummond.

Baxley -- a former Attorney General of Alabama -- received a response by “The Google Team” stating that the company declined to make the requested change. “Google has decided not to take action based on our policies concerning content removal,” the letter stated. Baxley's law firm then sent a second letter to Google complaining about the search results.

The Google Team responded to that letter by saying that the company was immune from defamation lawsuits under Section 230 of the Communications Decency Act. Numerous other courts have agreed with Google on that point. Most recently, the 9th Circuit Court of Appeals said that Google was immune from liability for a bad review, which appeared on Places and was authored by an anonymous user.

But Baxley says that he intends to argue that Section 230 doesn't apply in this case because Google is allegedly violating a state law about deceptive practices.

“Section 230 makes them think they're invincible. They're the bullies that can do anything they want to,” Baxley says of Google. “We've found a statute and a theory to get around that.” He adds that a state official from the district attorney's office has entered the case and is investigating the allegations.

“We are ready, willing and able to finance a lawsuit,” he says, adding that the company remains willing to settle the case if the people at Google “ever come to their senses and quit playing bad street bully. ”

But law professor Eric Goldman, who broke news of the lawsuit on Twitter, predicts that Google will prevail -- despite the insurance company's characterization of the dispute as a trade practices issue and not a defamation case. Either way, he says, Google should be protected by the Communications Decency Act, which generally says that Web companies are immune for posting material created by third parties.

“This is an easy case,” says Goldman, director of the High Tech Law Institute at Santa Clara University. “I don't see anything meritorious here.” A Google spokesperson declined to comment on the lawsuit.