Re: 9/14/00 - [CSFB/BXM] Online Defamation; TMF Interview With Attorney Eric Turkewitz
Online Defamation
TMF Interview With Attorney Eric Turkewitz
With Bill Barker (TMF Max)
September 14, 2000
On July 11, Credit Suisse First Boston filed a lawsuit against a group of 11 discussion board users alleging that they had posted false statements regarding CSFB and one of its analysts, and that as a consequence CSFB had suffered harm to its reputation. The postings occurred on the Elan Corp. (NYSE: ELN) message board on Yahoo! Finance.
Fool Bill Barker (a former attorney) covered the story that week allowing that CSFB might have a winnable case, and attorney Eric Turkewitz (a former Fool) took issue with some of Bill's analysis. In this feature, they follow up on Barker's column with a broader discussion of defamation in the age of Internet discussion boards.
(Note: Principles of law are sometimes discussed or alluded to. These principles may differ from state to state and country to country. Some of the principles are in a developmental stage and may not have been tested yet by an appellate court. Your mileage may vary. Do not try this at home.)
Bill: Eric, you called my article the other week in the Fool on the Hill column about defamation "appalling." Can you expand on that?
Eric: Well, I thought you took the First Amendment just a little bit too lightly. There are now over 100 cyber-libel lawsuits pending in the United States. Many of them against vast numbers of Internet posters -- not targeting just one or two people, but sometimes dozens at a time, and it seems clear to me that many of these lawsuits are brought for the purpose of trying to silence critics and trying to punish them with legal fees.
Bill: Do you think that's the case with the CS First Boston suit?
Eric: Well, I haven't reviewed all of the details of the suit. I have looked at a few of the messages and it's clear that some people are discourteous, but discourtesy alone, of course, it not enough to bring a lawsuit. People are free to make fools of themselves by engaging in the type of sandbox activity you would see on a playground, but that's not defamation and that does not subject you to liability.
Bill: What does constitute defamation?
Eric: It would depend on the context. People who express an opinion are clearly entitled to the opinion, even if the opinion is that someone is a liar. That's not the same thing as a factual assertion. For instance, "Bill Barker is a convicted bank robber," as opposed to my saying, "I think that Bill is crazy or nuts."
Bill: I agree with all of that. There's a line between an opinion and a statement of fact. I reviewed some of the posts [on the Yahoo! message boards in relation to the CS First Boston case] and they included such words as "it is a fact that this analyst is manipulating the stock." Why would that not be defamation?
Eric: I would obviously have to take a look at the full context of the messages. People oftentimes will say, "It's a fact that," but when you look at the entire message, you realize that it's actually an expression of opinion. If somebody says "This company is going into bankruptcy," for example, and the company still has $50 million sitting there in the bank. Even though they made the expression as one of fact, it's clearly one that would be an opinion -- a prediction as to what the person believes will happen. You have to really look at the context of the entire message.
Bill: Sure, you'd have to look at the context of the message. I think the message boards are used oftentimes to express opinions or just bad wishes toward somebody who feels differently about a stock, and it's unlikely that in most of those cases, anybody is going to take notice. But, what would you say regarding somebody getting on a message board and stating, "I know that the officers of this company are criminals"?
Eric: Well, I think at that point you're starting to cross the line. If something is phrased as you say it, then people are starting to cross the line, but things are rarely as clear-cut as that.
Bill: Well, we had the episode I guess, and in fact, you brought this to my attention -- the Biomatrix (NYSE: BXM) case -- I guess where some people were going on the message board and declaring that people had died as a result of taking the company's drugs I think, and the company's officers were Nazis and things like that. Now the result of the case at the trial level was that liability was found against message board posters.
Eric: Absolutely. In that case you have people making specific factual assertions which are quite apparently false and that's a far cry from the usual nonsense that you see on the message boards. This is something that was highly specific and false, and defamatory, and that was very different. And I think that's a good example that you brought up because in that case it targeted one or two [defendants] as opposed to the scatter shot approach that you see in most of the cases where "John Does 1 - 50" are all being sued. In [the latter] case, what you then see is a company that is apparently going on a fishing expedition.
Bill: I'm going to play devil's advocate on your point there regarding one item. If a number of posters are joining in together to agree that a company is engaged in criminal conduct of some sort, and there are, let's say, 10 or 15 or 20 people who over a period of time all join in. If a company interprets that as defamation and wants to pursue it, is it well-advised [from a legal perspective] that the company just pursue one or two of these people, or everyone equally?
Eric: Frankly, I've been participating in message board conversations since 1993 and I've never seen a stock board with 15 or 20 people all making such assertions.
By the way, let me just move off to a related issue and that is that the person who is posting the message actually has to have a knowledge that it's false or at least they have had to have posted it with reckless disregard for whether or not it's false. And I'm presuming now that the message is already out there in the public and is something that is being discussed on message boards. I'm not talking about something that is being freshly created. If somebody's discussing something that is already public, then [the company] is going to face a very high standard in order to succeed. We have protected speech for things that are already public and that's important, and I think that the companies have to go look to see who it is that originated the messages.
Bill: Sure, and I think that you've touched earlier on something that refers to the broad spectrum of cases. The majority of these cases seemed to be brought by small companies, penny-stock companies.
Eric: It's without question that most of the suits come from smaller-cap companies that perhaps are seeing their stocks influenced on bulletin boards. That may be one more reason why people should stay away from these types of penny stocks.
The CS First Boston Case
Eric: But when you wrote your article, you correctly pointed out that CS First Boston is a departure from what we had seen in the past, where it is oftentimes just small companies that have brought these suits. I believe there are now [more] larger companies that are starting to become involved and that you will see more of these types of suits being brought.
Bill: What was interesting to me about the CS First Boston suit was that in just thinking it through, I couldn't arrive at the hypothesis that CS First Boston would believe it would be successful at shutting people up. Now maybe that was what CS First Boston believed, but it seems to me only logical to think that in fact what they would succeed in doing by filing the case was [create] a whole lot more criticism. So I'm not entirely sure what they think they are going to get out of this case.
Eric: Well that's certainly doubtful that they'll ever see any money in it, so I sure hope that they have some other point that they think is important that needs to be addressed.
Bill: Let's just hypothesize for the moment that, for whatever reason, [message board posters are] getting under their skin by saying, "It's a fact that CS First Boston manipulates the markets and it's run by a bunch of criminals." Let's say CS First Boston had an interest in knowing the names of the people who are accusing its employees of being criminals.
Eric: Well, if CS First Boston's only purpose is to get at who the names are, then let's break that down into to separate questions. If the only purpose is to find out the names of the people who are posting the messages, then I believe that these companies have clearly crossed over a barrier.
I'm assuming for the moment that the message was not defamatory but merely critical of the company, and the company brings on a lawsuit in order to find out these names. That contravenes the law of the United States: We do have a right to speak anonymously. In fact, the Federalist Papers were published anonymously under the name Publius. There has been a long history of people who have published anonymously, including Mark Twain and O. Henry.
There's a long history in the United States of people engaging in anonymous speech, whether it's political or otherwise. And there is protection for it. Of course, the protection will fail if something is defamatory.
Bill: Right, and I think that the line people need to look at in assessing whether they are doing something potentially defamatory is to separate out whether they counting their words as opinions or expressions of fact. Also, are they saying something that is not just "I'm mad at this person" but something which is legitimately going to damage the reputation of somebody?
Eric: I'm currently involved in a case in which I am the defense counsel where a matter was brought here in New York regarding an allegation of defamation. What my client did was simply what millions of other Internet posters have done -- he cut and pasted from one forum into another, something that he saw because it was of interest to him and of interest to other members of the forum. Unbeknownst to him, that message contained things which are alleged to be defamatory. He didn't create it, this was stuff that was already in the public domain and he got involved in a lawsuit that involved a blown corporate financing deal.
When it was brought to the attention of the plaintiff's lawyers that this guy had nothing to do with it, they refused to dismiss. We have been litigating -- or, actually, waiting for a decision here in New York -- with respect to not only a dismissal of it, but sanctions against the plaintiffs for having pushed the case beyond where they should have pushed it. (For more on the case, see www.EricTurkewitz.com.)
Bill: Of course, then there are the exceptions, such as the Biomatrix case, which show that notwithstanding what some people may think -- and this an area that hopefully people will educate themselves about -- it is possible to defame somebody on a message board post. Calling somebody a criminal or a Nazi -- that's going to be the outer limits. However, it's not going to be possible for a company to win a case in which a message board poster is simply saying as to the work of an analyst, "I strongly disagree with this analyst's opinions and I think anybody who would come up with opinions like that must be an idiot." But where you call an analyst somebody who obviously is manipulating stock as part of his business, you're going to find yourself in a more serious gray area for defendants, I would think.
Eric: Well, maybe. But you know these allegations specifically come very much into play at that point and CS First Boston is the largest company that to date has chosen to pursue something like this. As I'll admit, I don't understand under what calculus they would arrive at the conclusion that this is worth doing.
Bill: Maybe we can agree on that.
Eric: I simply do not believe that they intend to pursue 11 different Internet posters in their respective states. I come to that conclusion knowing little else other than what I've seen having scanned a few of those posts and seen how many defendants there are. Could [the case] have [a legitimate] basis if it were one or two [defendants]? Sure. But any time you see a large number of defendants, I believe that there is something else in play, and that is most likely intimidation.
Bill: I can't understand the calculus by which CS First Boston would find it worth their while to try to intimidate people. I don't see what would be on the other side of that. It wouldn't be worth their time and mental stress -- which is what litigation is -- particularly for the analyst to get himself tied up in litigation.
Eric: Clearly they did not run this lawsuit past their public relations people, and I find that hard to believe, but I suppose it's possible.
Bill: Well, why don't we come up with some concluding remarks. While I have no interest in defending or representing CS First Boston, I'm trying to understand what is going on here and point out to people that it is possible to commit defamation in cyberspace.
Although it is hard to believe companies would spend their time and scarce resources pursuing somebody for defaming their character on a message board, nevertheless, we see it happening. That's something that people should understand just so they don't have to worry about what words they use when they are posting.
Eric: I do think it's going to be exceptionally interesting going forward on how the law develops with respect to the issues of jurisdiction, and First Amendment, and issues of who is a public person and who is a private person, and I think a lot of this is going to be fascinating. I'm keeping up on it.
Your Turn:
Share your thoughts on this topic on our Fool on the Hill discussion board.
Related Links:
CS First Boston Sues Board Posters, Fool on the Hill, 7/14/00
Superior Court of NJ Awards Biomatrix Summary Judgment
Titan Moves to Save Its Stock
SLAPP Lawsuits Bruise the Face of Free Speech
fool.com |
