For tonight's entertainment:
February 7, 2000
Heard on the Net
Silicon Investor Deletes Posts
In ZiaSun Cyber-Libel Case
By AARON ELSTEIN
THE WALL STREET JOURNAL INTERACTIVE EDITION
In the latest twist in a groundbreaking cyber-libel case, Silicon Investor took
the unusual step of removing three postings from an Internet stock message
board at the request of a company that has sued the writer for defamation.
Silicon Investor, a stock-discussion Web site which ordinarily doesn't delete
postings without the writer's consent unless legally ordered to do so, said it
honored the request last week from ZiaSun Technologies to remove the
postings by Floyd Schneider because of an unusual legal circumstance.
ZiaSun had recently won a preliminary injunction against Mr. Schneider --
one of ZiaSun's fiercest Internet critics -- ordering him to stop publishing
"false statements" about the company. The injunction stemmed from a libel
lawsuit the company had filed in U.S. District Court in Seattle against Mr.
Schneider and seven other online critics. A trial is set for later this year.
Before the injunction, ZiaSun had tried to get Silicon Investor to remove
messages by Mr. Schneider that it considered defamatory. But the Web site
had refused, citing its policy.
"To my knowledge, this is the first time we've been presented with an
injunction and removed postings," said Ethan Caldwell, general counsel at
Go2Net of Seattle, which owns Silicon Investor.
Silicon Investor (www.siliconinvestor.com)
notified Mr. Schneider Feb. 2 about its decision
to remove the three messages posted several
months ago about the Solana Beach, Calif.,
Internet holding company. Mr. Caldwell said
ZiaSun originally asked Silicon Investor to
remove the same messages last spring.
Mr. Caldwell said that since a judge decided
there was sufficient evidence that Mr. Schneider
had posted defamatory statements about ZiaSun
to issue the injunction, Silicon Investor decided to remove messages. Mr.
Caldwell added that Silicon Investor will wait until the lawsuit is resolved
before deciding whether to suspend or terminate Mr. Schneider's
membership. The Web site's rules prohibit the posting of libelous material.
Mr. Schneider, a mortgage banker in Saddle River, N.J., who has posted
thousands of messages about ZiaSun and other companies using the aliases
"The Truthseeker" and "Flodyie," said he was surprised the messages had
been removed. "If they took off three, I guess that means the rest are right,"
he said.
Mark Harris, a spokesman for ZiaSun, disagreed. "The statements removed
may be the ones that ZiaSun officers took greatest offense to," he said. "There
may be others that go beyond the judge's determination of what he may
publish." He said the messages that were removed had referred to ZiaSun
executives as "criminals."
Blake Bell, a New York attorney who specializes in Internet securities cases,
said he couldn't recall an instance of a message board ever deleting a posting
at a company's request. He said message-board participants have agreed to
have their messages removed as a part of settlements with companies.
But he added that it's unlikely that Silicon Investor's decision to delete Mr.
Schneider's messages would quell ZiaSun's critics. "After all, messages get
copied all the time and posted other places," Mr. Bell said. "I wouldn't be at
all surprised if they appear somewhere else."
The federal judge's decision to grant ZiaSun's request to restrict what Mr.
Schneider could publish had surprised many legal experts, who said it's
unusual for such restraints to be granted in cases where freedom of speech is
an issue. Judges generally are reluctant to grant preliminary injunctions
because of concerns about violating First Amendment rights.
Mr. Schneider said he wasn't present in court to refute ZiaSun's charges and
doesn't plan to appear at future hearings. His attorney, Bob Weinberger of
North Palm Beach, Fla., didn't immediately return phone calls Monday.
The lawsuit and Jan. 21 injunction aren't the only problems for Mr. Schneider
in his tussle with ZiaSun.
Mr. Schneider also was accused of defamation in a lawsuit filed in a California
state court by Bryant Cragun, a major ZiaSun shareholder and former
president of the company. The lawsuit stemmed from a press release Mr.
Schneider published on his Web site, TheTruthseeker.com
(www.thetruthseeker.com), on Jan. 1., and from messages he posted on
Silicon Investor about Mr. Cragun.
In the press release, Mr. Schneider had alleged
Mr. Cragun was engaged in fraudulent dealings
involving a ZiaSun solicitation to overseas
investors. In the release, Mr. Schneider rated
ZiaSun shares a "strong sell" and called the
company "an old penny stock trick" because he
alleged it illegally marketed a private equity placement to overseas
shareholders as an initial public offering.
On Jan. 31, Judge Janis Sammartino of the California Superior Court in San
Diego ordered Mr. Schneider to retract the press release. Ms. Sammartino
also issued a temporary restraining order barring Mr. Schneider from posting
any statements that "state, suggest, or imply" that Mr. Cragun had engaged in
"criminal behavior."
Mr. Cragun's attorney, Daniel Pascucci, said his client filed his suit because
Mr. Schneider had personally targeted him and his family in his online
messages and distorted facts to tarnish his reputation.
In the retraction ordered by the court, Mr. Schneider said the release "was
not based on objective analysis of ZiaSun's stock and value" and contained
statements that "were false or implied false facts."
Mr. Pascucci said a hearing for preliminary injunction against Mr. Schneider is
scheduled for Feb. 15.
Mr. Schneider did not appear at the court in San Diego to defend himself and
says he does not have a lawyer working on that case.
Write to Aaron Elstein at aaron.elstein@wsj.com. |
