Re: Business Wire Drops Charges re Webnode Lawsuit
Business Wire, on behalf of itself and any and all present and former officers, directors, general partners, limited partners, shareholders, agents, employees, administrators, representatives, attorneys, insurers, parents, subsidiaries, predecessors, heirs, executors, successors and assigns, and each of them, for good and valuable consideration, does hereby forever and absolutely release, discharge and acquit Mitchell, Ulrich and Shell from any and all claims, demands, liabilities, damages, compensation, and attorneys' fees, of whatever nature, which arise out of, or are in any way connected with or related to matters alleged in the Complaint or the conduct of the Action, up to and including the date of this Agreement.
To make a long story short, prior to this agreement, we had other opportunities to settle but we *refused* to consider any offer in which we had to a) apologize, b) pay Business Wire any money out of our pockets or our Legal Defense Fund, c) remove the Webnode.com website, or d) forego our first amendment right to comment about the case or BW in general. As you will see from reading the full settlement agreement, my insurance company, Safeco Insurance, paid Business Wire $27,500 (substantially less than the amount BW petitioned the court for as reimbursement for attorneys fees spent to oppose *just* the original anti-SLAPP motion, and a fraction of what Safeco estimated it would cost them to defend our case through trial), and we agreed to simply a) remove certain parts of webnode.com we added in mid April in response to BW threatening to sue us, and b) not do something similar to BW in the future.
Janice, Bill and I would like to first thank Attorney William Crockett of Greenbass & Bass of Los Angeles, CA. He was our counsel when BW made their first offer of settlement and he did everything for us pro bono. We spent quite a while fashioning what we thought was a very fair counter-offer -- something, ironically, that was more favorable to BW than the one to which we finally both agreed -- but they refused to consider it so that was that. As it was now obvious we were headed to trial, Attorney Crockett suggested we hire a lawfirm in the San Francisco area who specialized in both first amendment and trademark law. He also filed for an extension to allow us more time to find someone -- which BW appealed and lost.
After much searching, we decided to go with Attorney Bruce Methven of Methven & Associates of Berkeley, CA. He was actually the first attorney we, via Bill, ever consulted, and he was quite helpful in pointing us to the applicable case literature, but when interested parties recommended a few law firms willing to do pro bono work for us we decided to go that route first. We would also like to thank Bruce's business partner, Attorney Eric Ferraro. Both Bruce and Eric crafted the wonderful "Special Motion to Strike Pursuant to California Code of Civil Procedure Section 425.16".
As you all know, California has an anti-SLAPP (Strategic Lawsuit Against Public Participation) provision which is specifically designed to counter lawsuits brought about to chill the valid exercise of the constitutional rights of freedom of speech. The Business Wire charges against us, however, while brought about in California, were filed in a federal court.
It wasn't until March 24 of this year that the state vs. federal court distinction was challenged. In U.S., ex rel., Newsham et al v. Lockheed Missiles & Space Company, Inc., the Ninth Circuit Court of Appeals ruled that the anti-SLAPP provision *did* apply to claims based on *California* law brought in a federal court. However, as no *federal* claims were at issue, no ruling was made on whether the anti-SLAPP provision applied to *federal* claims brought in a federal court. In an effort to exploit this distinction, and thereby avoid an anti-SLAPP hearing solely on the basis of a technical argument, BW asked the court to "bifurcate" (split) the federal and state claims.
In appealing BW's bifurcation request, with no case law on our side, we based our argument on the spirit of the Newsham ruling: "Plainly, if the anti-SLAPP provisions are held not to apply in federal court, a litigant interested in bringing meritless SLAPP claims would have a significant incentive to shop for a federal forum." In other words, we argued that if federal claims were not subject to the anti-SLAPP provision, plaintiffs could file meritless federal claims to avoid it.
When we saw Business Wire's response to our opposition to their bifurcation request, it was obvious they were confident the federal judge would not base his decision on *current* law. After all, it's hard to believe even Business Wire truly believed Webnode was a publicity stunt for Magnetic Diary and that we made up the part about educating the public to avoid legal liability (especially after we did an interview on 4/1 with the Wall Street Journal about precisely that issue!). We also knew that in the event the judge did go out on a judicial limb and rule in our favor that Business Wire would appeal.
When we finally had our first day in court, it lasted all of 45 minutes. To our disappointment but not our surprise, the judge ruled that because there was no case law to support our argument, Business Wire's bifurcation request was granted. So, just as Lockheed appealed their initial defeat in the Ninth Circuit Court of Appeals, so would we.
The only thing preventing us from filing an appeal immediately was money. We had exhausted the Webnode Legal Defense Fund and still had a large legal bill. The irony of the situation was that the anti-SLAPP provision was designed specifically to ease the burden of costly litigation on defendants in SLAPP suits.
Enter Safeco Insurance Company and Attorney Jeffrey Steele of Carol L. Ventura's office in Sacramento, CA. Personal liability insurance is a standard "throw in" on most homeowners insurance policies which, as a homeowner, I have. Defamation is one of the causes of action that is covered under personal liability and thus my coverage kicked in. The only problem in my case was timing, as the person with whom I originally filed the claim dragged her feet, eventually quit the company, and it took a while to get her cases reassigned. Nevertheless, once Safeco was on board in September things changed dramatically.
Attorney Steele had previously litigated other lawsuits in California involving the anti-SLAPP provision so he assured us that he was ready, willing, and able to continue the fight if BW was. As deep-pockets Safeco was going to foot the bill, we were naturally gearing up for battle. Then BW offered, again, to settle. Our initial response to BW's request is not fit for print. Suffice to say, as our court system is not based on "loser pays", Safeco's first priority, naturally, was to end the lawsuit with as little cost to Safeco as possible. So, as to not bite the hand that fed us so to speak, we agreed to give peace a chance if and only if a) Safeco reimbursed the Legal Defense Fund in full, b) paid our existing attorneys fees in full, and c) negotiated on behalf of the three of us, not just me, the insured. Safeco agreed. We then made a counter offer to BW.
BW did not accept Safeco's offer, which, being far less than they wanted, we expected, although, frankly, we thought Safeco should have demanded money from BW and not vice versa. What we didn't expect was that they gave Janice, Bill, and me the impression they were trying to construe Safeco's offer as only on my behalf and they wanted more money separately from Janice and Bill. This was not only not acceptable but, in our opinion, reprehensible. At that point none of us wanted to settle and we told our lawyers we were taking any settlement offer off the table.
To the credit of all the attorneys, they convinced us that even were we to fight on and win under the anti-SLAPP provision, the only people who would benefit would be the attorneys as we were only entitled to recoup those fees. If we wanted monetary damages we'd have to then sue BW, pay legal fees out of our own pockets, not Safeco's, and spend another year or more in litigation. Safeco then also agreed to pay 100% of any settlement money on behalf of all of us if we agreed to settle. Our only remaining reservation was that we really really wanted to set precedent that the anti-SLAPP provision applied to federal causes of action in a federal court so that others less fortunate than us wouldn't be financially wiped out by a SLAPP suit, but, there's also an expression that you don't look a gift horse in the mouth. Besides, what this country really needs is a federal version of the anti-SLAPP provision. So, we continued settlement talks and, as they say, the rest is history!
Of course we'd also like to thank everyone who has supported us here on this thread, via e-mail, via phone, via the media, and via the Webnode Legal Defense Fund. Anyone who contributed to the LDF will be contacted privately so that we may make arrangements to reimburse you. We owe you!
Lastly, we'd like to thank Business Wire. Had they not sued us, Webnode would have been a long forgotten thread on SI. Instead, the story Webnode was trying to tell -- never accept what a company tells you in a press release at face value -- was carried nationwide via the nation's best financial publications. The lawsuit also brought national attention to the importance of anti-SLAPP provisions be they state or federal. We hope the Webnode story will be inspirational to others in similar situations.
- Jeff Mitchell
- Janice Shell
- Bill Ulrich |
