Online Speech Hit With Offline
Lawsuits Companies and their critics clash on message boards

One 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.

The posters 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.

Companies 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.

``If this 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 minds.''

Entwined 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.

However, 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.

Most cybersmear 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.

The result 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.

Many small 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

Eugene Volokh, 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.

``Those kinds of statements are just as punishable online as off,'' Volokh said.

Most cybersmear 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.

The first 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.

Bruce Fischman, 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.

``Companies 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 responsible.''

Critics of 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.

Among the 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.

Some critics 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.

``If these 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.''

For their 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.

Internet 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.''

Many companies 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.

Indeed, one 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.

Jerry Yang, 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 is difficult.

``The privacy 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.''

The courts 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.

Unlike message 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.

``It's just 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.

In April, 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.

``I think 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.''

E-mail Verne Kopytoff at verne@sfgate.com

© 2000 San Francisco Chronicle Page B1 Chronicle