OSTK Overstock Trial continues
sltrib.com
Overstock Trial continues
By Karen Gullo
Bloomberg News
Article Last Updated: 09/21/2007 02:33:21 AM MDT
Gradient Analytics Inc., a research firm, and the hedge fund Rocker Partners LLC must face trial after losing a second bid to dismiss a lawsuit accusing them of driving down Overstock.com Inc.'s stock price.
The California Supreme Court in San Francisco denied petitions Thursday to review a lower court's decision allowing the lawsuit to proceed to trial, according to the court's Web site.
"This ruling puts a stake into the heart of the [defendant's] delay tactics," said Brent Baker, Overstock.com's former corporate attorney who helped bring the lawsuit against the research firm.
Baker, who recently joined the Salt Lake City-based law firm of Parsons, Behle and Latimer, said the ruling means that, "This case can now move forward, and it will move forward quickly."
Overstock.com, an Internet seller of discounted brand-name goods, claims Gradient issued false and misleading reports about the company using information from Rocker to help the fund profit on trades. Gradient and Rocker deny the claims, saying research reports critical of Overstock are protected free speech.
''The issue of free speech is central to our work,'' Gradient Chief Executive Officer Brad Forst said in a statement. ''As we proceed to the trial stage, we are amply prepared to address the facts of the case.''
A state appeals court in San Francisco in May said whether
Gradient's reports contain provably false statements made with malice should be decided at trial. That ruling allows the case to proceed with evidence-gathering in Marin County Superior Court in San Rafael, Calif.
Gradient and Rocker say the lawsuit is an attempt by Overstock to silence its critics.
Gradient, based in Scottsdale, Ariz., does quantitative and qualitative research on publicly traded companies, including reports on companies that may have earnings problems, for hedge fund and mutual fund clients.
In its 2005 suit, Salt Lake City-based Overstock accused Gradient of issuing false stock reports and letting Rocker, a Gradient client, influence the contents of the reports to help the hedge fund benefit from short-selling trades that were a bet that Overstock's shares would fall.
Overstock claims that, starting in June 2003, Gradient released false and misleading reports with information supplied by Rocker Partners that helped drive stock down from a high of $77.18 in January 2005, damaged its reputation and made it difficult to raise investment capital. |
