Very Interesting......
Daily News
Company must pay attorney fees in chat room speech case
By Michael Bartlett
May 21, 2001
A U.S. District Court ordered Global Telemedia International to pay more than
$55,000 in attorney's fees to two defendants. The company had sued several
anonymous individuals for posting comments critical of GTMI in an Internet chat
room.
According to court papers, Barry King and Ron Reader posted numerous
messages on the Raging Bull message boards from March to October 2000. The
defendants posted anonymously by adopting pseudonyms -- King used the
handle "BDAMAN609" and Reader was known on the boards as "electrick_man."
Raging Bull is described by the court as a financial Web site that organizes
individual bulletin boards or chat rooms, each one dedicated to a single, publicly
traded company. The judge noted that the majority of posters appear to be
investors or prospective investors in a given company, but stock ownership is not
required to post.
GTMI last fall filed a lawsuit against King, Reader and other defendants. The
company alleged that negative comments by several posters about GTMI and its
management constituted trade libel and interfered with contractual relations.
On Feb. 23, U.S. District Judge David O. Carter granted a motion to dismiss the
case by defendants. In his decision, the judge noted that unlike many traditional
media, there are no controls on the postings in chat rooms. As a result, such
writings are almost always opinions, and therefore are protected under the First
Amendment.
"In sum, neither Reader's nor King's postings are statements of fact," the court
wrote. "Given the general context of the postings, the colorful and figurative
language of the individual postings, the inability to prove the statements true or
false, and in one case, the posting of documents to support the poster's
statements, the postings are opinions."
Because defendants King and Reader were speaking as investors, not as
competitors of GTMI, the court found they were protected by a California law
written to protect individuals from retaliatory lawsuits from corporations that feel
they have been disparaged. These are referred to as "Strategic Litigation Against
Public Participation," or SLAPP lawsuits.
The court ruled the anti-SLAPP provisions are applicable to GTMI's lawsuit against
King and Reader. The judge Thursday ordered the company to pay the two
defendants' attorneys fees.
Megan E. Gray, who defended Reader, said, "it is nice to get an award like this."
According to Gray, this is the first time a court has applied the mandatory
attorney fee provision in the anti-SLAPP statute to a defamation lawsuit involving
anonymous Internet message board posters.
"This is especially important, because there are hundreds of these frivolous
lawsuits filed across the nation in an attempt to silence people from posting
critical opinions on Internet message boards," said Gray.
About 15 states have similar anti-SLAPP laws, according to Gray.
Bruce Braun, an attorney who specializes in Internet legislation and free speech
on the Internet said the court's ruling is potentially significant.
"It is likely that this decision will be used as a guidepost in similar cases," he said.
"It is a very important decision."
Braun said he had never heard of another case where attorney's fees were
awarded to message board posters, but added that there might be an
unpublished decision.
Braun, who was not involved in the GTMI lawsuit, praised California's anti-SLAPP
statute. He said defendants can force a corporation to show they have a
"probability of success" on its claims of defamation.
"This is an unusual provision. It offers defendants extra protection," he said. "It
is a defense of free speech. It lets a defendant tee the issue up at the outset of
litigation before the attorneys' fees get too high. The plaintiff must come forward
with facts that show a probability of success on merits. The plaintiff must have its
ducks in a row."
In the GTMI case, the court found that, even if the postings King and Reader
made were statements of fact, the company would have to show damages as a
result of the allegations the defendants made online.
Because the company's stock price fell significantly before either defendant made
a negative post, the judge found no support of GTMI's claim of trade libel or
defamation.
"This case might start a trend," said Braun. "The attorney's fee provision is
critical. It is a necessary deterrent to stopping corporations from overreaching."
According to Braun, a company can attempt to silence criticism at a minimal cost
to itself, while a defendant would have to hire an attorney.
"This ruling sends a shot across the bow of many corporations. Not only do they
generate bad publicity if a lawsuit is found to be frivolous, they have to pay
attorney's fees as well," he said. "This brings us closer to the English system,
where the winning party's attorney's fees are paid. That results in less litigation."
"With this ruling, companies will be forced to do due diligence before trying to
silence people by suing them," Braun added.
Attorneys for GTMI did not return phone calls for this story.
Baker & Hostetler is at bakerlaw.com.
The U.S. District Court for the Central District of California is at
cacd.uscourts.gov.
Reported by Newsbytes.com, newsbytes.com. |
