Re: On the Net, In the Dark
Companies want to know who's criticizing them online -- some critics say that's none of their business
By Mark Thompson
California Law Week/Cal Law
November 8, 1999
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A company in Fort Worth, Texas, sues a doctor's secretary who lives in Naples, Fla., for posting allegedly defamatory comments on a Web site headquartered in the heart of California's Silicon Valley.
The secretary, whose access to the Web comes by way of an Internet provider in Falls Church, Va., is being challenged over her anonymously written comments about a lawsuit pending in federal court in Miami. Oh yes, the Texas company is pressing its claim for damages against the secretary in Orange County Superior Court.
With the World Wide Web providing a relatively unfettered global bulletin board, some of the information found online is giving rise to a mounting number of lawsuits. Much of the litigation stems from a handful of popular Web sites that allow investors, employees and others to post anonymous comments about companies, their financial prospects and their stock prices -- everything from stinging barbs about CEOs to diatribes against their boneheaded business decisions.
In response, lawsuits claiming libel, breach of contract and theft of trade secrets are often filed against unnamed defendants -- listed only as John Does. The suits are then followed by subpoenas to Internet service providers that demand information to help the companies identify their online tormentors.
But in a further twist to the phenomenon of Internet-related litigation, some of the Does are resisting the tactics designed to divulge their identities. Indeed, online privacy advocates insist that efforts to ferret out the Does can easily lead to abuses of the civil subpoena process. The controversy also underscores the pivotal role that Internet companies -- who themselves are immune from liability for information posted on their sites by outside users -- are now playing in the legal tug-of-war between other companies and their critics.
Internet services such as Yahoo, America Online, Silicon Investor and others that operate investor bulletin boards are reportedly being served with subpoenas arising out of John Doe suits at the rate of about one a day. The practice is bound to expand as word spreads among lawyers about how easy it is to uncover information on otherwise anonymous cyber-citizens.
Megan Gray, a lawyer in the Los Angeles office of Cleveland's Baker & Hostetler, describes investor bulletin boards as an important new bulwark of American democracy. While wide-ranging financial discussions used to be largely confined to company officials and professional securities analysts, the Internet now provides a medium "that embraces the core American principle that the best solution to 'bad' speech is more speech," Gray wrote in a motion to quash a subpoena earlier this year in a John Doe suit filed in Ventura County by Xircom Inc., a Thousand Oaks-based computer modem manufacturer. Gray and others argue that such suits are heavy-handed attempts to silence those who have found a voice courtesy of the Web.
Earlier this year, Raytheon Co. filed a John Doe breach-of-contract suit in Massachusetts, followed by subpoenas aimed at disclosing the identity of anonymous posters whom company officials believed to be employees. After learning that some of the posters did work for the company, Raytheon officials dropped the suit and opted instead to handle the matter internally. While a company spokesman says some of the employees "voluntarily quit," privacy advocates wonder whether the suit was part of a ruse to root out disgruntled employees.
But George Hampton, a lawyer in the Irvine office of Chicago's McDermott, Will & Emery, counters that these kinds of cases -- aided by the subpoena process -- are a legitimate way for companies to respond to lies spread across the Internet. "These posters who go on Yahoo anonymously think they can say anything," says Hampton, the plaintiff's counsel in the pending Orange County case, ProMedCo Management Co. v. John Does 1-50, 806956. "But they can't. You can't say 'fire!' in a crowded theater. We're just trying to apply those same rules to the Internet." ProMedCo is a publicly traded company in Fort Worth that manages physician practice groups, part of an industry that lately has been coming under critical scrutiny by doctors and investors alike.
A guiding premise in Internet-related litigation is that the Yahoos and AOLs of the world are not liable for the content posted by others on their online forums. Congress took such Internet companies off the hook a few years ago through an amendment to the federal Electronic Communications Privacy Act. And while Yahoo, for example, makes some effort to keep profane and other objectionable postings off its bulletin boards, the company "does not police its own boards with respect to truthfulness," says Hampton. "It's up to individual companies to protect their own rights. One of the ways to do that is to file a John Doe lawsuit."
ProMedCo's complaint specified only four allegedly defamatory messages that were posted earlier this year on a Yahoo bulletin board by users calling themselves "Voiceonthewind," "Scarabviper" and "Gingnik." The online chatter was aimed at drawing attention to the dicey state of the once high-flying physician practice management industry, which has suffered a series of legal setbacks in recent years, leading to nervousness among investors. The latest blow came in July, when a state appellate court in Florida -- a key market for physician practice management companies -- ruled that management contracts typically employed by such companies amount to unlawful fee-splitting. The ruling helped to drive down the price of ProMedCo's stock, which was already depressed.
Nervous about the ongoing financial viability of such companies, doctors across the country have been abandoning these business arrangements, including two physicians in Naples, Fla. The pair are now embroiled with ProMedCo in a suit over the enforceability of a non-compete clause they had signed with the company.
John Parrish, a Naples lawyer who represents the doctors, suspects that ProMedCo's John Doe libel suit in California was filed, at least in part, to intimidate his clients. He says he first heard about the suit during a mediation session with the company's lawyers, from McDermott, Will's Miami office. They produced a copy of the libel complaint filed by the firm's Orange County office, "slapped it down in front of me, and said, 'We're going to get you for this.' They thought the doctors had been posting the messages on Yahoo. But we had never seen them before."
The hunt for the John Does began soon after the Orange County complaint was filed in March. California was chosen as the venue for the suit because "that is where the messages reside," says Hampton, referring to the postings on Yahoo, which is headquartered in Santa Clara. It's less clear, however, why the case ended up in a courtroom some 300 miles south. Hampton has declined to discuss his litigation strategy.
Yahoo did nothing to resist ProMedCo's subpoena. Although Yahoo didn't have the actual names of the anonymous posters, it knew their e-mail addresses, which indicated that their Internet service providers were Microsoft and America Online. Yahoo also had recorded -- and divulged to ProMedCo -- the unique Internet Protocol addresses that could be traced back to the very computers from which each poster had submitted comments to the Yahoo finance site.
Privacy advocates have long criticized Yahoo for being the most loose-lipped among major Internet companies. "They will comply with any subpoena without thought or consideration of the technical or substantive requirements of the subpoena," says Gray.
Jon Sobel, an associate general counsel at Yahoo, says the company in most cases can't notify users of its free bulletin boards about subpoenas because, in the absence of a billing relationship with them, it doesn't know how to reach them.
"In the past we have resisted what we thought were overreaching efforts to obtain user data," adds Sobel. "We frequently negotiate with subpoenaing parties to pare down the request. But it is impossible for us to evaluate the merit and context of each lawsuit in which we are subpoenaed." Last fall, Yahoo received a subpoena for information on more than 300 anonymous posters from lawyers for the CEO of HealthSouth Corp., who had been assailed online for everything from being a crook to swapping wives with other executives. In an apparently rare instance of resistance, Yahoo's lawyers deemed the request "overly broad" but did provide information on about 20 people.
Armed with the information from Yahoo in the ProMedCo case, the company's lawyers served Microsoft and AOL with subpoenas seeking, among other things, the three Does' addresses, phone numbers, Social Security numbers, credit card numbers, and copies of every piece of e-mail they had sent or received since last February. Microsoft and AOL initially rejected the subpoenas because they weren't issued in their home states. The lawyers remedied that by refiling them through courts in Washington state and Virginia.
As is typical in most John Doe suits, the three targets of ProMedCo's legal detective work still had no inkling as of late June that they had been the subjects of cross-country litigation for more than three months. Soon after, however, they learned the news from Microsoft and AOL.
Unlike Yahoo, both companies, in the wake of mounting criticism about invasions of online privacy, have a policy of alerting members when a civil subpoena arrives seeking information about them. "Our practice is to notify the member and give them a period of time, usually 14 days, so that they can avail themselves of their legal rights and, if they want, hire a lawyer to quash the subpoena," says Rich D'Amato, an AOL spokesman.
After getting the word, the poster known as "Voiceonthewind" sought advice from the Electronic Privacy Information Center, an advocacy group in Washington, D.C. Officials there referred the person to Megan Gray.
After she agreed to help, Gray's role in the case was over in a matter of days. She immediately noticed a glaring defect in the subpoena that demanded the goods on Voiceonthewind. ProMedCo had attached to its complaint the four allegedly defamatory postings on the Yahoo finance site. But none of them had been written by Gray's client. "It was obviously a fishing expedition," says the lawyer. "As soon as we told them that they were abusing the judicial system and that we were going to fight back and that there would be substantial publicity, they said, 'OK, never mind.'"
Another one of ProMedCo's targets -- the one known online as "Scarabviper" -- voluntarily posted his real name, John Hill, on the Yahoo message board and dared the company to come after him after learning via AOL about the subpoena.
Hill, a retired certified public accountant who owns and operates medical centers, had posted three messages on Yahoo before ProMedCo named him in its John Doe suit. The posting singled out as defamatory contended that physician practice management companies in several states were losing suits on the fee-splitting and non-compete issues. "Is slavery a business investors should be in especially when the slave contracts don't hold up in court?" he wondered in the message.
In July, Hill learned unofficially from Voiceonthewind that ProMedCo had stopped its pursuit of both of them. Deborah Johnson, a senior vice president at ProMedCo, has since confirmed that the two are off the hook. The news hardly came as a surprise to other online critics of physician practice management companies. Some of them apparently are doctors or, like Hill, savvy financial investors who would savor the kind of insider information subject to discovery in protracted litigation.
By mid-summer, only one John Doe -- who turned out to be a Jane Doe -- remained in ProMedCo's sights. The poster writing online as "Gingnik" was really Suzanne Field, who lives in Naples and used to work as a receptionist and secretary for ProMedCo. She left the company to work for one of the doctors involved in the pending non-compete suit.
ProMedCo claims Field committed libel by writing, in two postings, that the company "lost on the non-compete clause," that it uses creative accounting methods to boost its management fees, that it "does not even contribute to the 401K anymore," and that its "docs are getting restless."
The non-compete suit against the pair of doctors was dismissed at one point, but with leave to amend, and the case is now back in court. "The suit is still very much alive today so she must have been wrong," says Johnson, the ProMedCo vice president, explaining why the company views Field's statements as libelous. The messages also misrepresented the company's accounting practices and retirement plan, according to Johnson.
Parrish, the Naples lawyer representing the doctors in the non-compete dispute, is now defending Fields in the libel case. If the suit proceeds, he'll begin by contesting the California court's jurisdiction in the matter. Even lawyers who have brought other John Doe suits on behalf of companies dinged on the Internet are skeptical of ProMedCo's decision to sue here. "Personal jurisdiction would be a real stretch based on the fact that a message resides on a server located in California," says Garrett Waltzer, a lawyer in the Silicon Valley office of New York's Skadden, Arps, Slate, Meagher & Flom.
There's yet another reason why the decision to file such a suit in California might cause some lawyers to scratch their heads. Baker & Hostetler's Gray thinks the state's anti-SLAPP statute -- aimed against litigation designed to stifle public debate -- often can apply to John Doe suits. "Before someone's anonymity can be revealed, that person should have an opportunity to bring a SLAPP suit to show that the [underlying] lawsuit is frivolous or does not have a likelihood of success," says Gray.
Hampton, ProMedCo's libel lawyer at McDermott, acknowledges that judges have tools to dispose of abusive litigation. "But I can tell you from my own involvement in a couple of these cases that the courts are listening," he says. "They recognize that the right to free speech is not unfettered. The courts understand why the suits are filed as John Doe lawsuits. And they understand the discovery that needs to be employed."
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