Re: 6/4/00 - Corporate America takes on John Doe
Published Sunday, June 4, 2000, in the Miami Herald
Corporate America takes on John Doe
BY JAMES McNAIR
jmcnair@herald.com
When it comes to bashing stocks, nowhere is the bashing as downright caustic as the stuff posted on Internet message boards.
``Ryder is a dinosaur. It got large, slow, failed to adapt to its environment and, like the dinosaur, it's simply a matter of time before it dies.'' -- jgore99--2000, critiquing Ryder System on the Yahoo.com board.
``Wayne should spend the next 30 years in a federal penitentiary for the scam he pulled with this stock.'' -- investor360, taking a shot at H. Wayne Huizenga and AutoNation on Yahoo.com.
``I don't care how big Sunbeam is. The higher ups need to pull their head out of their butt and realize that they aren't GOD.'' -- sportfreak, taking on Sunbeam Corp. on a RagingBull.com board.
After tolerating the anonymous sniping and verbal grenades on message boards, more and more publicly traded corporations are fighting back. With the help of lawyers, they are forcing board hosts to identify their incognito critics, then suing the authors for defamation. If companies prevail, the price of name-calling could be penalties in the millions of dollars.
The skirmishes over message board postings have spilled over into a war between freedom of speech and the right not to be defamed. Groups such as the American Civil Liberties Union and the Electronic Privacy Information Center have stepped in on behalf of message authors who, in lawsuits, are known as John Does.
South Florida is making a healthy contribution to case law on the subject. At least half a dozen cases are working their way through the courts, and two in particular have received national attention.
Here are the highlights of a few:
- Quest Net Corp. of Pembroke Park filed suit in March against five people it said were engaging in ``cybersmear'' on a Raging Bull board. Quest Net has obtained injunctions against two of the five, whom it described as short-sellers profiting from the steady drop in the company's stock price.
- After taking it on the chin for five months, Michael J. Zwebner, chairman of Talk Visual Corp. in Miami retaliated against one of his most irreconcilable critics -- the--worm06 -- by filing suit. Armed with a subpoena, Zwebner learned from the Raging Bull Web site that the--worm06 was really a man in Los Angeles.
- Technical Chemical and Products of Pompano Beach found itself on both ends of message board slander suits in 1999. First it filed a defamation suit against 10 John Does. Three months later, a rival, Americare Health Scan of Miami, filed a multimillion-dollar libel and slander suit, alleging that TCPI was partly responsible for ``unsubstantiated allegations of personal and professional wrongdoing, as well as personal name-calling and profanity.''
- A lawsuit filed by Miami's AnswerThink Consulting Group in February not only accused an anonymous message poster of defamation, but also of spreading company secrets on Yahoo! As it turned out, the John Doe was a company executive. AnswerThink accused him of violating his employment agreement and withheld more than $1 million in compensation.
- Erik Hvide, former CEO of Hvide Marine in Fort Lauderdale, sued an anonymous message board sniper last year and, 10 days ago, won a judge's ruling that could force America Online and Yahoo! to reveal his or her identity. One message warned of an SEC investigation, which might not have been true, while another accused Erik Hvide of lining his pockets as the company sank into bankruptcy.
TOLERANCE OF TRASH
Stock message boards are not known for civility. When posters aren't trashing management, they're trashing each other. On the robust AutoNation board on Yahoo!, the dialogue is more of a bellicose brawl than a forum for stock intelligence. One poster dared to pose AutoNation Chairman Wayne Huizenga. Another uses the name Waynes scam.
Most companies put up with the online trash talk. After all, shareholders will be shareholders, and in any camp of shareholders there will be a group of short-sellers, people who profit from stock price declines and who therefore wallow in negativity.
AutoNation spokesman Oscar Suris said the company does its best to be thick-skinned about the vitriol aimed its way.
``It's a free country, and the First Amendment protects your right to express your opinion,'' he said. ``We're certainly not going to try to overturn the First Amendment.''
But for Zwebner of Talk Visual, enough was enough.
``This character, the worm, started going online in January and at first kept it to issues about the company, which was fine,'' Zwebner said. ``But he then got somewhat blasphemous.
``Where he really got under my skin was when he dug into my past, dug up the name of an ex-girlfriend that died and printed information in an irrelevant manner. It was like a personal vendetta,'' he said.
Zwebner's lawyer, Victor Polk of Boston, said people simply need to draw the line on what they post on the Internet. He doesn't expect message board hosts to review every item as it's posted, but should remove questionable material that is brought to their attention.
``There's a perception that you can say or do anything you want on the Internet,'' Polk said.
``But there's a long history of defamation law in this country,'' he said. ``There are standards for what is defamatory. The only thing new to me is that the Internet makes it easy to have huge access to people without having any understanding of the limits on free speech.''
OUT OF HIDING
Erik Hvide would agree with that. Two of his biggest critics on Yahoo!, The 1 Quiz and justhefactsjack, subjected Hvide to a steady bombardment of messages in 1998 and 1999 as Hvide Marine's stock price plunged and the company wound up in bankruptcy.
``This ain't like the good old swashbuckling days of running the port out of one pocket and family piggy bank out of the other pocket, is it ERIK!'' wrote The 1 Quiz on Dec. 16, 1998.
In his lawsuit, Hvide blames the message board rascals not only for the loss of his reputation, but also for the loss of his job in 1999.
Round one in the lawsuit went to Hvide 10 days ago. Miami-Dade Circuit Judge Eleanor Schockett ordered America Online and Yahoo! to identify Hvide's tormentors.
The names won't be turned over for at least 20 days while the John Does ponder an appeal, which is expected to draw legal support from the ACLU. The defendants have also drawn moral support from John Does in other cases.
In an e-mail to the Herald, a John Doe in Virginia said his defense is costing him a lot of time and money.
``What most of these companies likely realize is that many posters are simply small individuals without the resources to hire a bunch of legal help,'' he wrote. ``Who can afford $125 to $400-an-hour lawyers except companies or a small cadre of very wealthy individuals?''
But justhefactsjack accomplished something that could make it harder for companies to unmask their message board foes -- a court hearing. His lawyer, Christopher Leigh of Fort Lauderdale, was able to argue for justhefactsjack's anonymity. Until then, all it took was a subpoena to get names or email addresses from Web sites like Yahoo! and Raging Bull.
Raging Bull, an Andover, Mass., company that receives up to 60,000 new stock board posts a day, confirmed that policy.
``We won't give out information unless we have a valid subpoena,'' said Raging Bull spokeswoman Tara Burgess. ``Our goal is to protect our members' privacy to the fullest extent of the law.''
FIGHTING BACK
Gregory Hackett of Ohio wishes he had had a chance to defend his anonymity in court.
Hackett was known as aquacool--2000 when he was posting messages on the Yahoo! board for AnswerThink Consulting Group. It was acidic stuff. He called AnswerThink ``poorly managed'' and said it is run by the ``three stooges.'' He said management is made up of ``cronies'' of CEO Ted Fernandez and ``primarily does things that benefit them personally.''
Hackett would know. He was an AnswerThink employee himself.
Hackett sold his consultancy, The Hackett Group, to AnswerThink in 1997 for $6.5 million in cash and a note for $5.1 million. He stayed on the payroll, signed an employment agreement and received stock options.
Now AnswerThink wants to deny him nearly $1 million that was due to be paid March 31. It also wants to cancel the stock options. All because AnswerThink says Hackett violated his employment agreement by leaking privileged information and making disparaging remarks about the company, not to mention the alleged defamation.
``Mr. Hackett, by virtue of his actions, forfeited payment of approximately $1 million and the vesting of 220,000 shares of stock,'' said AnswerThink's lawyer, S. Daniel Ponce of Miami.
``The company was shocked to find out who this person was, that he was a highly compensated individual who sold his company to AnswerThink for millions of dollars,'' he said. ``He crossed way over the line and when he started posting confidential information, the company felt compelled to take action.''
Hackett is fighting back in a big way. Hackett is suing Yahoo! for giving away his identity without first notifying him of AnswerThink's lawsuit. He also denies AnswerThink's claims.
``What you have is a very thin-skinned management,'' said Hackett's lawyer, Ronald Ravikoff of Miami. ``If I were an executive or director of a publicly traded company, I'd have bigger things to worry about than what's said in an Internet chat room.''
The ACLU and the Electronic Privacy Information Center in Washington hailed Hackett's lawsuit against Yahoo!
``A judge should not allow a lawyer to issue subpoenas in these cases without requiring that the Internet service provider notify the potential defendant that someone is seeking information about him and giving him an opportunity to enter court to protect his anonymity,'' said Chris Hansen, an ACLU lawyer who specializes in Internet speech.
``The right to anonymous speech should not be breached so easily,'' he said.
Copyright 2000 Miami Herald
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