Re: 4/23/01 - [TMRT] Seattle Times: Court ruling big win for Net privacy
Monday, April 23, 2001 - 04:54 p.m. Pacific
Court ruling big win for Net privacy
By Steve Miletich
Seattle Times business reporter
In a major ruling protecting Internet privacy, a federal judge in Seattle yesterday blocked the efforts of a bankrupt Internet company to learn the names of people who anonymously derided it in an investor chat room.
The company, 2TheMart.com., said it needed the names to defend itself in a shareholder lawsuit alleging the company misled investors.
U.S. District Judge Thomas Zilly found the company had not provided sufficient evidence to set aside First Amendment rights of people who spoke in the chat room under nicknames such as "NoGuano" and "The Truthseeker."
Zilly's ruling was the first by a federal judge to address the issue of whether the identities of people not named in a lawsuit could be disclosed because of their Internet discussions about the matter.
The American Civil Liberties Union of Washington and the Electronic Frontier Foundation, a group that advocates privacy and free-speech rights on the Internet, intervened on behalf of one of 23 people whose names were sought by 2TheMart, an Irvine, Calif., company that once tried to compete with Web auction site eBay.
A subpoena seeking the names was issued by 2TheMart attorneys to InfoSpace, the Bellevue Internet company that controls the chat room.
ACLU attorney Aaron Caplan called the ruling a significant victory for the First Amendment rights of Internet users.
Kelsey Joyce Hooke, an attorney for 2TheMart, said the company has not decided if it will appeal.
Hooke appeared in court on behalf of the company, but another attorney, Keith Bardellini of New York, argued the case yesterday in a telephone linkup.
Bardellini told Zilly the company wanted to match the names in the chat room to traders it believes participated in stock manipulation that harmed the firm.
The company, whose stock shot up 2,400 percent to $50 a share in 1999 after it announced it would compete against eBay, subsequently plunged into bankruptcy, leading to an investor lawsuit in California that alleges securities fraud.
The discussions about the company occurred on a Web site called The Silicon Investor, which featured message boards for various publicly traded companies.
In court papers, 2TheMart alleged anonymous users engaged in chat that harmed the company, including discussion intended to promote the interests of short-sellers by driving down the value of the stock. In short-selling, investors can profit by betting a stock will fall.
"The Truthseeker" posted a message in 1999 that accused company officials of "defrauding" past employers and customers, while another poster referred to them as "lying, cheating, thieving, stealing, lowlife, criminals," company attorneys said.
The company also alleged that others who had made no direct comment possibly made stock transactions based on what was communicated on the site. It identified one of those users as "NoGuano."
The ACLU and the Electronic Frontier Foundation, which took the case of "NoGuano," identifying him only as John Doe in court papers, argued the subpoena should be quashed against all 23 people as an infringement of their constitutional rights.
"The Internet is a democratic institution in the fullest sense," their attorneys said in court papers. "It serves as the modern equivalent of Speakers' Corner in England's Hyde Park, where ordinary people may voice their opinions, however silly, profane or brilliant they may be to all who choose to read them."
Both sides agreed that the U.S. Supreme Court has protected anonymous speech, but Bardelleni argued speakers have no absolute constitutional right to remain anonymous.
Zilly agreed, noting "rights to speak anonymously are not unlimited."
But Zilly said 2TheMart's reasons for seeking the names to defend itself in the suit were "remote at best."
If the company had wanted the names so that it could bring a defamation action, Zilly said, it would have had a better case.
But he said the firm was making no direct claim against the anonymous posters, except for "innuendo" they had manipulated the stock.
Zilly also noted that the company could seek out the names of investors it suspects of fraud from brokers, a process 2TheMart had dismissed as laborious.
Brent Snyder, an attorney for InfoSpace, which did not directly intervene on behalf of its customers but still argued their rights should be considered, called the ruling important.
He said it provides guidance to Internet companies, which receive subpoenas without knowing the underlying merits of a legal dispute.
InfoSpace gave its customers a chance to challenge the subpoena before the company responded to the subpoena.
Internet companies have increasingly been besieged with subpoenas for customer names in recent years. This has led to court decisions, often in libel actions, that have established the need to show relevancy before such information is surrendered.
Snyder said some state courts have reached the same decision as Zilly, but that Zilly's ruling is significant, being at the federal level.
Zilly said he will issue written findings later. Although his decision is limited to the case at hand, it could influence other courts.
Steve Miletich can be reached at 206-464-3302 or smiletich@seattletimes.com.
Copyright © 2001 The Seattle Times Company
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