Hit With Offline
Lawsuits Companies and their critics clash on message boards
Internet user posted an anonymous message on Yahoo that said Hvide Marine,
a Florida shipping company, ``hornswoggled'' and ``bamboozled'' shareholders
out of their money. Another wrote that the firm's management ``blew it''
and speculated whether they were under investigation by the Securities
and Exchange Commission.
eventually got what they wanted when Erik Hvide, the company's chief executive,
was fired. But that was soon followed by the unwelcome news that Hvide
was suing them and several others for libel, a case that is being closely
watched by companies and the Internet community.
In the past
two years, at least 70 so- called cybersmear cases have been filed against
message-board posters. Among the Bay Area firms that have tried to fight
back against online critics are E-Trade, Ross Stores and Sun Microsystems.
and executives say these lawsuits are the only way to protect their reputations
and stock prices. But free- speech advocates say Internet users are censoring
what they post online for fear of being sued.
trend continues, spirited, healthy and valuable discourse on these thousands
of bulletin boards about thousands of companies will whither,'' said Christopher
Leigh, the lawyer representing the Internet posters in the Hvide case,
which is under way in Florida. ``People will be afraid to speak their
in the debate are questions about online anonymity. Internet users may
believe that Web sites guard their identities when they post messages
under pseudonyms, but the truth is that the firms regularly disclose names
when presented with subpoenas.
that practice is being challenged by one anonymous-message poster who
filed a lawsuit against Yahoo last month. He says the Santa Clara company
violated his rights when it disclosed personal information about him to
a company he was criticizing.
suits center on messages posted on financial Web sites such as Yahoo Finance
and Raging Bull. They provide individual message boards for more than
7,000 publicly traded stocks where users can post their views.
is millions of opinions ranging from the thoughtful to the profane. Message
writers analyze everything from company profits, or lack thereof, to launching
personal attacks against executives.
investors visit these message boards every day and use the information
posted there to make investment decisions. In some cases, people post
disinformation among the messages to illegally manipulate a stock's price
in their favor.
OFFLINE RULES APPLY
a law professor who specializes in the First Amendment and the Internet
at the University of California at Los Angeles, said rules governing what
people can say in print generally apply to the Web. For example, people
can air opinions and use hate speech, but they cannot post trade secrets
or intentional lies that hurt the reputation of others.
of statements are just as punishable online as off,'' Volokh said.
suits begin with a company filing a complaint naming ``John Doe'' as a
defendant. The suit entitles the company to issue subpoenas to uncover
the message poster's identity.
subpoena usually asks the message board to disclose the message poster's
Internet service provider. The ISP is then issued a subpoena asking it
to reveal the poster's name.
an attorney who has filed several cybersmear cases for clients, including
Hvide, said people have to be held responsible for the messages they post
online. He advocates that companies and executives be aggressive in defending
themselves or risk suffering the consequences.
are tired of taking it on the chin,'' Fischman said. ``You have to fight
back or you will find the value and goodwill of your company will dissipate.
I'm not saying that you don't have the right to speak, but it has to be
these lawsuits say many of them are frivolous and are not intended to
go to court. Rather, they say, many are filed to silence and retaliate
against people with whom they do not agree.
examples that free- speech advocates cite as being excessive is Raytheon,
the defense contractor, which sued 21 message- board posters in 1999 for
disclosing company trade secrets online. But many of those ``secrets''
were wrong or already public.
also complain that companies do not take hyperbole, humor and bad taste
into account. For example, PhyCor, a medical management company, says
it was libeled by a Pennsylvania doctor who wrote that the company was
``under review for purchase by the Ku Klux Klan, the Cuban government
and the Bank of Iraq,'' statements that could just as easily be the punch
line of a late-night talk show host's joke.
cases were litigated on the merits, most of the anonymous posters would
win,'' said David Sobel, an attorney with the Electronic Privacy Information
Center, in Washington, D.C. ``The law recognizes the right to express
opinions, even if they are extremely critical opinions.''
part, companies are confronted with a medium that allows critics to disseminate
their views around the world with the click of a mouse. Executives say
many investors cannot differentiate between legitimate information and
lies, making their stocks vulnerable to manipulation.
companies justify revealing information about users by pointing to contracts
that users agree to when registering for service. For example, Yahoo's
states that the company can reveal user identities in ``special cases''
when ``we believe in good faith that the law requires it.''
such as America Online and Microsoft give users two weeks notice before
revealing their information so that they can try to have the subpoena
dismissed. But Yahoo's policy was to tell its users nothing about subpoenas,
leaving them in the dark until they were served with a lawsuit. Yahoo
changed its policy in April after getting complaints.
man has sued Yahoo for revealing his identity without warning in a libel
case. The lawsuit, filed last month by an Ohio man using the pseudonym
Aquacool 2000, claims that Yahoo violated his privacy, broke its contract
and engaged in false advertising.
Yahoo's co-founder, explained in an interview that his company is committed
to protecting user privacy. However, he said knowing what policy to follow
issue is a legal gray ground,'' Yang said. ``When you are dealing with
a moving standard, it's hard to say what is right and wrong.''
have not had much opportunity to set the record straight. Virtually all
message-board cybersmear cases are settled -- often by a poster agreeing
to apologize online -- or dropped before going to trial.
In one of
the few legal decisions involving cybersmear, a Florida judge ruled that
two defendants in the Hvide case could not keep their names secret while
challenging the suit. The defendants appealed that decision last week.
posters, Internet service providers such as America Online and Prodigy
cannot be sued for hosting libelous messages posted by outsiders. They
were given immunity by the Federal Communications Decency Act, passed
under the theory that reviewing thousands of messages every day would
be too cumbersome for the companies.
like a telephone company can't be held liable for people using its lines
for a defamatory conversation,'' said Volokh, the UCLA law professor.
One of the
few people to turn the tables on a cybersmear lawsuit is Les French, a
former executive at Itex, an online bartering company in Portland, Ore.
Itex sued him in 1999 after discovering that he was posting anonymous
messages demanding the resignation of the chief executive and claiming
that the company was misreporting its earnings.
But the suit
dragged on and the company lost its appetite for litigation. The attorney
bills were getting big, the company would have to provide documents for
discovery, and French had threatened to take the case to trial.
Itex settled. It gave $5,000 to French and $40,000 to an organization
he created to help cybersmear defendants, the John Does Anonymous Foundation
(www.johndoes.org), in exchange for a promise that he would not countersue
for malicious prosecution.
that people are smart enough to determine for themselves what information
on a message board is credible,'' French said. ``I don't think we need
a CEO or a judge telling us what we need to read or not read.''
Kopytoff at email@example.com
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