sfgate.com
Online Speech Hit With Offline
Lawsuits
Companies and their critics clash
on message boards
Verne Kopytoff, Chronicle Staff Writer
Monday, June 26, 2000
One Internet user posted an anonymous message
on Yahoo that said Hvide Marine, a Florida
shipping company, ``hornswoggled'' and
``bamboozled'' shareholders out of their money.
Another wrote that the firm's management ``blew it''
and speculated whether they were under
investigation by the Securities and Exchange
Commission.
The posters eventually got what they wanted when
Erik Hvide, the company's chief executive, was
fired. But that was soon followed by the unwelcome
news that Hvide was suing them and several others
for libel, a case that is being closely watched by
companies and the Internet community.
In the past two years, at least 70 so- called
cybersmear cases have been filed against
message-board posters. Among the Bay Area firms
that have tried to fight back against online critics are
E-Trade, Ross Stores and Sun Microsystems.
Companies and executives say these lawsuits are
the only way to protect their reputations and stock
prices. But free- speech advocates say Internet
users are censoring what they post online for fear of
being sued.
``If this trend continues, spirited, healthy and
valuable discourse on these thousands of bulletin
boards about thousands of companies will whither,''
said Christopher Leigh, the lawyer representing the
Internet posters in the Hvide case, which is under
way in Florida. ``People will be afraid to speak their
minds.''
Entwined in the debate are questions about online
anonymity. Internet users may believe that Web
sites guard their identities when they post messages
under pseudonyms, but the truth is that the firms
regularly disclose names when presented with
subpoenas.
However, that practice is being challenged by one
anonymous-message poster who filed a lawsuit
against Yahoo last month. He says the Santa Clara
company violated his rights when it disclosed
personal information about him to a company he
was criticizing.
Most cybersmear suits center on messages posted
on financial Web sites such as Yahoo Finance and
Raging Bull. They provide individual message
boards for more than 7,000 publicly traded stocks
where users can post their views.
The result is millions of opinions ranging from the
thoughtful to the profane. Message writers analyze
everything from company profits, or lack thereof, to
launching personal attacks against executives.
Many small investors visit these message boards
every day and use the information posted there to
make investment decisions. In some cases, people
post disinformation among the messages to illegally
manipulate a stock's price in their favor.
OFFLINE RULES APPLY
Eugene Volokh, a law professor who specializes in
the First Amendment and the Internet at the
University of California at Los Angeles, said rules
governing what people can say in print generally
apply to the Web. For example, people can air
opinions and use hate speech, but they cannot post
trade secrets or intentional lies that hurt the
reputation of others.
``Those kinds of statements are just as punishable
online as off,'' Volokh said.
Most cybersmear suits begin with a company filing a
complaint naming ``John Doe'' as a defendant. The
suit entitles the company to issue subpoenas to
uncover the message poster's identity.
The first subpoena usually asks the message board
to disclose the message poster's Internet service
provider. The ISP is then issued a subpoena asking
it to reveal the poster's name.
Bruce Fischman, an attorney who has filed several
cybersmear cases for clients, including Hvide, said
people have to be held responsible for the messages
they post online. He advocates that companies and
executives be aggressive in defending themselves or
risk suffering the consequences.
``Companies are tired of taking it on the chin,''
Fischman said. ``You have to fight back or you will
find the value and goodwill of your company will
dissipate. I'm not saying that you don't have the right
to speak, but it has to be responsible.''
Critics of these lawsuits say many of them are
frivolous and are not intended to go to court.
Rather, they say, many are filed to silence and
retaliate against people with whom they do not
agree.
Among the examples that free- speech advocates
cite as being excessive is Raytheon, the defense
contractor, which sued 21 message- board posters
in 1999 for disclosing company trade secrets online.
But many of those ``secrets'' were wrong or already
public.
Some critics also complain that companies do not
take hyperbole, humor and bad taste into account.
For example, PhyCor, a medical management
company, says it was libeled by a Pennsylvania
doctor who wrote that the company was ``under
review for purchase by the Ku Klux Klan, the
Cuban government and the Bank of Iraq,''
statements that could just as easily be the punch line
of a late-night talk show host's joke.
``If these cases were litigated on the merits, most of
the anonymous posters would win,'' said David
Sobel, an attorney with the Electronic Privacy
Information Center, in Washington, D.C. ``The law
recognizes the right to express opinions, even if they
are extremely critical opinions.''
For their part, companies are confronted with a
medium that allows critics to disseminate their views
around the world with the click of a mouse.
Executives say many investors cannot differentiate
between legitimate information and lies, making their
stocks vulnerable to manipulation.
Internet companies justify revealing information
about users by pointing to contracts that users agree
to when registering for service. For example,
Yahoo's states that the company can reveal user
identities in ``special cases'' when ``we believe in
good faith that the law requires it.''
Many companies such as America Online and
Microsoft give users two weeks notice before
revealing their information so that they can try to
have the subpoena dismissed. But Yahoo's policy
was to tell its users nothing about subpoenas,
leaving them in the dark until they were served with
a lawsuit. Yahoo changed its policy in April after
getting complaints.
Indeed, one man has sued Yahoo for revealing his
identity without warning in a libel case. The lawsuit,
filed last month by an Ohio man using the
pseudonym Aquacool 2000, claims that Yahoo
violated his privacy, broke its contract and engaged
in false advertising.
Jerry Yang, Yahoo's co-founder, explained in an
interview that his company is committed to
protecting user privacy. However, he said knowing
what policy to follow is difficult.
``The privacy issue is a legal gray ground,'' Yang
said. ``When you are dealing with a moving
standard, it's hard to say what is right and wrong.''
The courts have not had much opportunity to set the
record straight. Virtually all message-board
cybersmear cases are settled -- often by a poster
agreeing to apologize online -- or dropped before
going to trial.
In one of the few legal decisions involving
cybersmear, a Florida judge ruled that two
defendants in the Hvide case could not keep their
names secret while challenging the suit. The
defendants appealed that decision last week.
Unlike message posters, Internet service providers
such as America Online and Prodigy cannot be
sued for hosting libelous messages posted by
outsiders. They were given immunity by the Federal
Communications Decency Act, passed under the
theory that reviewing thousands of messages every
day would be too cumbersome for the companies.
``It's just like a telephone company can't be held
liable for people using its lines for a defamatory
conversation,'' said Volokh, the UCLA law
professor.
One of the few people to turn the tables on a
cybersmear lawsuit is Les French, a former
executive at Itex, an online bartering company in
Portland, Ore. Itex sued him in 1999 after
discovering that he was posting anonymous
messages demanding the resignation of the chief
executive and claiming that the company was
misreporting its earnings.
But the suit dragged on and the company lost its
appetite for litigation. The attorney bills were getting
big, the company would have to provide documents
for discovery, and French had threatened to take
the case to trial.
In April, Itex settled. It gave $5,000 to French and
$40,000 to an organization he created to help
cybersmear defendants, the John Does Anonymous
Foundation (www.johndoes.org), in exchange for a
promise that he would not countersue for malicious
prosecution.
``I think that people are smart enough to determine
for themselves what information on a message
board is credible,'' French said. ``I don't think we
need a CEO or a judge telling us what we need to
read or not read.''
E-mail Verne Kopytoff at verne@sfgate.com. |
