Re: 10/3/00 - San Diego Daily Transcript: Lawsuits Help Lift Cover Off Cloaked Internet Stock Marauders
San Diego Daily Transcript
Tuesday October 03 09:11 PM EDT
Lawsuits Help Lift Cover Off Cloaked Internet Stock Marauders
Internet users are wrong if they think the anonymity of the Web shields them from laws governing slander and defamation -- and that supposed anonymity probably won't last long if they commit a crime in cyberspace, according to attorneys practicing in this emerging area of law.
"People think when they get on the Internet they're in a private area and they can say anything they want," said Michael Reed, an attorney with Duckor Spradling & Metzger. "That's really not true."
San Diego's Medibuy.com last week became the latest to join the ranks of companies that have filed suit against Internet users who have spoken critically of them online -- even though the lawyers don't know exactly who the culprits are. The lawyer who filed suit on behalf of Medibuy.com cited company policy and declined to comment on the suit.
Titan Corp., also based in San Diego, filed suit in late August against several Internet screen names who the company alleges drove its stock prices down with false statements issued online.
The effects of both negative and positive statements about companies on the Internet have been well publicized in recent weeks.
In a situation similar to that of Titan's, the stock price of Costa Mesa's Emulex plummeted in August after an investor allegedly sent out a phony press release saying the company was under investigation and its president was resigning.
And in New Jersey, a 14-year-old raked in more than $272,000 when he bought penny stocks in several companies and watched the prices rocket after posting on the Internet statements such as one that said a stock would be "the next stock to gain 1,000 percent."
But both of these cases have turned disastrous for the accused. The 23-year-old El Segundo man in the Emulex case has been indicted by a federal grand jury and his assets have been frozen. The New Jersey teen was forced to return $285,000 in profits and interest.
Reed said people must understand that making false statements on the Internet carries the same penalties as making false statements.
"Saying something on the Internet is the same as saying things anywhere else," he said. "The same causes of action that can be used in any other situation can be used on the Internet."
While suits are filed without the names of the users, getting that information is easier than most people realize, said Marshall Grossman, an attorney with Century City's Alschuler Grossman Stein & Kahan, who represents Titan in its suit.
The most direct of those ways is to ask, or subpoena, the culprit's Internet service provider for his name. The lawyers said providers, as well as those who run Web sites, have policies to turn over user's real names when it is suspected that a crime has been committed.
"America Online, Yahoo! and others who provide Internet service or portal services provide no special protection to those who use their services," Grossman said.
"If someone claims you are demeaning them or violating their rights, they will release your information to protect the site because they don't want to be sued for their part in this," Reed said.
"You can always subpoena records from the Internet service provider," Reed added. "Typically, they will give it up unless there is some legal reason they don't have to, and there really isn't any in a lawsuit like this."
Grossman noted that the user can file an objection to his real name being released, but "those objections are rarely filed, and when they are filed, they are rarely sustained."
Competitors and company insiders can face even more charges.
"If it turns out these people are actual insiders of a company and doing this, the plaintiff can file a breach of fiduciary duty or unfair business practices (claim) against them," Reed said. "If it's a competitor, there are a whole bunch of different ways you can go after these people."
Grossman thinks suits like this will continue as long as people venture into the realm of the Internet as a forum for public discussion and test what is allowed and not allowed.
"It is perfectly lawful for people to express their opinions and people are protected by the First Amendment in the expression of their views," he said. "If, however, someone engages in libelous or slanderous conduct, then they are responsible for that conduct and it really doesn't matter whether that defamation is published in a newspaper or is in the form of comments made on an Internet message board or in a chat room."
"Either the speech is protected or it isn't," he said.
Grossman said he does not think suits like this will change the existing law.
"Rather, we will see existing principles applied to a new forum for the expression of opinion, whether those are for better or for worse," he said.
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