ATTENTION MUST READ!!Interesting post from one of your followers!
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To: emmerofshmoe (473 )
From: DoubleOddBuck Sunday, Mar 28 1999 10:11PM ET
Reply # of 516
EMMER : Please Read Carefully,
(For distribution Monday, March 29.)
Medical Resorts sues chat site and posters
STOCKHOUSE AND ANONYMOUS POSTERS FACE $6-MILLION SUIT
by Stockwatch Business Reporter
Feeling that Medical Resorts International was the target of ongoing false and malicious statements posted to an Internet discussion site operated by StockHouse Media Corporation, president Robert Talbot requested that StockHouse provide the names and addresses of the offending posters. "They told us to get a court order," Mr. Talbot said. That is precisely what Medical Resorts did, launching a $6-million suit against StockHouse and two anonymous posters in the process.
The statement of claim filed by Robert Talbot and Medical Resorts International in the Court of Queen's Bench of Alberta in Edmonton names StockHouse Media Corporation, StockHouse.com, John Doe 1 also known as Peter41, and John Doe 2 also known as Waitnsee, as defendants. The suit claims various damages including damages for defamation, negligent misrepresentation, and exemplary damages. Among other things, Medical Resorts alleges that "the Defendants Peter41 and Waitnsee have wrongfully made the false and malicious statements against the Plaintiffs, which were published by the Defendants Stockhouse Media and Stockhouse.com, with the intention of causing shareholders to sell their shares in the Plaintiff Medical Resorts and to purchase shares in companies that the Defendants are promoting or in which they have a direct interest." StockHouse has not filed a statement of defence.
In a subsequent hearing before Madam Justice D. Sulyma on March 9, Medical Resorts obtained a court order requiring Stockhouse Media Corporation to "produce and surrender to the Plaintiffs all information in their possession pertaining to the identification of the Defendants, JOHN DOE 1 also known as PETER41 and JOHN DOE 2 also known as WAITNSEE including however not limited to proper names, addresses, telephone numbers, other aliases, internet e-mail addresses, application and credit information." It was also ordered that StockHouse cease publishing and remove all posts on the Medical Resorts bulletin board authored by Peter41 and Waitnsee or any other of their aliases. StockHouse has not complied with the order.
On March 19, a notice of motion was filed that an application would be made on Friday, March 26 for an order citing StockHouse in civil contempt for failing to obey the March 9 order to disclose the information regarding the anonymous posters and to remove their posts. StockHouse did not make an appearance at the hearing on Friday.
Mr. Talbot says that he is prepared to take this "all the way" and that the case will likely result in the institution of some standards regarding Internet posting. "A lot of these people are real brave when they're hiding behind anonymity," he says. He notes that the court order compels StockHouse to divulge all of the aliases of the named posters. He is convinced that the same individuals using different aliases are responsible for other negative posts regarding the company. According to Mr. Talbot, StockHouse is "thumbing its nose" at Alberta judges by not obeying the order. He states that Medical Resorts has "asked for certain remedies" the nature of which he would not disclose, adding, "If we get them, StockHouse are not going to be very happy campers."
A call to StockHouse's president Jeff Berwick last Friday was returned by the company's vice-president Mark Crowder who would not comment on specific matters related to the legal action. He did remark that the sensitive issue of anonymity will probably surface more often as the Internet is increasingly used by people looking for investment information. According to Mr. Crowder, StockHouse had just received the notification regarding the order to disclose the identity of the posters and it had been passed on to the company's lawyer, Brian Kaminski. Mr. Crowder said that Mr. Kaminski was quite surprised that Medical Resorts had obtained the court order. A call to Mr. Kaminski of the law firm Bell Spagnuolo on Friday afternoon was not returned.
Anonymity is fiercely defended by posters using Internet stock discussion sites, and attempts or threats to uncover the identities of posters are often met with a deluge of protest from other discussion site participants. The anonymity of posters is also of some concern to many of the companies who host discussion forums. Sites such as StockHouse, which derive a large part of their revenue from advertising, face stiff competition to attract 'hits' or visitors to the site. The more hits, the better able the company is to sell advertising and the more exposure for its fee-based offerings, such as the pay-per-view newsletters carried by StockHouse. According to a Feb. 8 article in The Australian published during Mr. Berwick's promotional tour in Australia, StockHouse is the top financial site in Canada, boasting about 100 million hits per month. Whatever the number of hits, many are made by posters and 'lurkers' who follow some of the more controversial threads where anonymous posters spin out yarns, often with little regard for fact.
Becoming embroiled in a multi-million dollar lawsuit might be of more concern to StockHouse, especially at this time, than protecting the identity of what several of its users, particularly participants in the active Medical Resorts thread, consider to be a couple of nuisance posters. Again according to The Australian, StockHouse is planning multiple exchange listings, including Nasdaq and the Australian Stock Exchange, within the next six to 12 months and such a suit could have unwanted ramifications for that quest. Moreover, a San Francisco investment firm is purportedly conducting a $6-million placement in advance of the Nasdaq listing and a legal action might turn potential investors away. StockHouse apparently turned its attention to Nasdaq after having its listing application declined by the Alberta Stock Exchange in September 1998, largely over concerns about the company's stock discussion forum. Mr. Berwick has acknowledged that the message boards were once under scrutiny by U.S. and Canadian securities regulators who feared that they allowed the possibility for the release of insider information or fraudulent information.
While protecting anonymity, increasing 'hits', and the quest for an exchange listing may be StockHouse's primary objectives, the number of publicly traded companies taking action against anonymous posters and the sites that host discussion forums is growing. In July 1998, troubled Philip Services reacted to a spate of negative and, in some instances, threatening Internet discussion site posts by obtaining a court order obliging a number of ISPs to reveal the identities of several anonymous posters. In September 1998, ASE-listed Hampton Court Resources took the unusual step of responding to Internet hype by issuing a press release cautioning investors about false rumours circulating on chat sites. Many of those rumours were initiated by an anonymous StockHouse poster. In October 1998, Medinah Energy, a small U.S. mining company launched a suit naming the Internet pseudonyms of posters the company contended were making false and defamatory statements on message boards. In December 1998, Nasdaq listed American Eco Corporation, was awarded punitive damages of $500,000 (U.S.) and direct damages of $75,000 in a lawsuit against a poster hiding behind an alias while posting falsehoods about the company. In the same suit, the former chief financial officer of the company, David Norris, was awarded a total of $7.75-million in punitive and direct damages.
Whether in Canada or the United States, litigation can be expensive. Medical Resorts is a small medical services and health tourism company deriving most of its revenue from its resort on the Caribbean island of Anguilla which caters to dialysis patients. For the six months ended December 31, 1998 the company reported a net income of $180,684 from operating revenue of $492,950. Nonetheless, Mr. Talbot is adamant that he is committed to pursuing the matter. He was encouraged by the fact that Medical Resorts was awarded costs in its court appearance on Friday. Mr. Talbot said he did not know what amount had been awarded but the company's lawyer had just returned to the court to have the judgment registered. The company's solicitor is Robert Burgener, a director of Medical Resorts.
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