On the Net, In the Dark Companies want to know who's criticizing them online -- some critics say that's none of their business
By Mark Thompson
California Law Week/Cal Law
November 8, 1999
A company in Fort Worth, Texas, sues a doctor's
secretary who lives in Naples, Fla., for posting
allegedly defamatory comments on a Web site
headquartered in the heart of California's Silicon
Valley.
The secretary, whose access to the Web comes
by way of an Internet provider in Falls Church,
Va., is being challenged over her anonymously
written comments about a lawsuit pending in
federal court in Miami. Oh yes, the Texas
company is pressing its claim for damages
against the secretary in Orange County Superior
Court.
With the World Wide Web providing a relatively
unfettered global bulletin board, some of the
information found online is giving rise to a
mounting number of lawsuits. Much of the
litigation stems from a handful of popular Web
sites that allow investors, employees and others
to post anonymous comments about companies,
their financial prospects and their stock prices --
everything from stinging barbs about CEOs to
diatribes against their boneheaded business
decisions.
In response, lawsuits claiming libel, breach of
contract and theft of trade secrets are often filed
against unnamed defendants -- listed only as
John Does. The suits are then followed by
subpoenas to Internet service providers that
demand information to help the companies
identify their online tormentors.
But in a further twist to the phenomenon of
Internet-related litigation, some of the Does are
resisting the tactics designed to divulge their
identities. Indeed, online privacy advocates insist
that efforts to ferret out the Does can easily lead
to abuses of the civil subpoena process. The
controversy also underscores the pivotal role that
Internet companies -- who themselves are
immune from liability for information posted on
their sites by outside users -- are now playing in
the legal tug-of-war between other companies and
their critics.
Internet services such as Yahoo, America Online,
Silicon Investor and others that operate investor
bulletin boards are reportedly being served with
subpoenas arising out of John Doe suits at the
rate of about one a day. The practice is bound to
expand as word spreads among lawyers about
how easy it is to uncover information on otherwise
anonymous cyber-citizens.
Megan Gray, a lawyer in the Los Angeles office of
Cleveland's Baker & Hostetler, describes investor
bulletin boards as an important new bulwark of
American democracy. While wide-ranging
financial discussions used to be largely confined
to company officials and professional securities
analysts, the Internet now provides a medium
"that embraces the core American principle that
the best solution to 'bad' speech is more
speech," Gray wrote in a motion to quash a
subpoena earlier this year in a John Doe suit filed
in Ventura County by Xircom Inc., a Thousand
Oaks-based computer modem manufacturer.
Gray and others argue that such suits are
heavy-handed attempts to silence those who have
found a voice courtesy of the Web.
Earlier this year, Raytheon Co. filed a John Doe
breach-of-contract suit in Massachusetts,
followed by subpoenas aimed at disclosing the
identity of anonymous posters whom company
officials believed to be employees. After learning
that some of the posters did work for the
company, Raytheon officials dropped the suit and
opted instead to handle the matter internally.
While a company spokesman says some of the
employees "voluntarily quit," privacy advocates
wonder whether the suit was part of a ruse to root
out disgruntled employees.
But George Hampton, a lawyer in the Irvine office
of Chicago's McDermott, Will & Emery, counters
that these kinds of cases -- aided by the
subpoena process -- are a legitimate way for
companies to respond to lies spread across the
Internet. "These posters who go on Yahoo
anonymously think they can say anything," says
Hampton, the plaintiff's counsel in the pending
Orange County case, ProMedCo Management
Co. v. John Does 1-50, 806956. "But they can't.
You can't say 'fire!' in a crowded theater. We're
just trying to apply those same rules to the
Internet." ProMedCo is a publicly traded company
in Fort Worth that manages physician practice
groups, part of an industry that lately has been
coming under critical scrutiny by doctors and
investors alike.
A guiding premise in Internet-related litigation is
that the Yahoos and AOLs of the world are not
liable for the content posted by others on their
online forums. Congress took such Internet
companies off the hook a few years ago through
an amendment to the federal Electronic
Communications Privacy Act. And while Yahoo,
for example, makes some effort to keep profane
and other objectionable postings off its bulletin
boards, the company "does not police its own
boards with respect to truthfulness," says
Hampton. "It's up to individual companies to
protect their own rights. One of the ways to do
that is to file a John Doe lawsuit."
ProMedCo's complaint specified only four
allegedly defamatory messages that were posted
earlier this year on a Yahoo bulletin board by
users calling themselves "Voiceonthewind,"
"Scarabviper" and "Gingnik." The online chatter
was aimed at drawing attention to the dicey state
of the once high-flying physician practice
management industry, which has suffered a
series of legal setbacks in recent years, leading
to nervousness among investors. The latest blow
came in July, when a state appellate court in
Florida -- a key market for physician practice
management companies -- ruled that
management contracts typically employed by
such companies amount to unlawful fee-splitting.
The ruling helped to drive down the price of
ProMedCo's stock, which was already
depressed.
Nervous about the ongoing financial viability of
such companies, doctors across the country
have been abandoning these business
arrangements, including two physicians in
Naples, Fla. The pair are now embroiled with
ProMedCo in a suit over the enforceability of a
non-compete clause they had signed with the
company.
John Parrish, a Naples lawyer who represents the
doctors, suspects that ProMedCo's John Doe
libel suit in California was filed, at least in part, to
intimidate his clients. He says he first heard
about the suit during a mediation session with the
company's lawyers, from McDermott, Will's
Miami office. They produced a copy of the libel
complaint filed by the firm's Orange County office,
"slapped it down in front of me, and said, 'We're
going to get you for this.' They thought the
doctors had been posting the messages on
Yahoo. But we had never seen them before."
The hunt for the John Does began soon after the
Orange County complaint was filed in March.
California was chosen as the venue for the suit
because "that is where the messages reside,"
says Hampton, referring to the postings on
Yahoo, which is headquartered in Santa Clara.
It's less clear, however, why the case ended up in
a courtroom some 300 miles south. Hampton has
declined to discuss his litigation strategy.
Yahoo did nothing to resist ProMedCo's
subpoena. Although Yahoo didn't have the actual
names of the anonymous posters, it knew their
e-mail addresses, which indicated that their
Internet service providers were Microsoft and
America Online. Yahoo also had recorded -- and
divulged to ProMedCo -- the unique Internet
Protocol addresses that could be traced back to
the very computers from which each poster had
submitted comments to the Yahoo finance site.
Privacy advocates have long criticized Yahoo for
being the most loose-lipped among major Internet
companies. "They will comply with any subpoena
without thought or consideration of the technical
or substantive requirements of the subpoena,"
says Gray.
Jon Sobel, an associate general counsel at
Yahoo, says the company in most cases can't
notify users of its free bulletin boards about
subpoenas because, in the absence of a billing
relationship with them, it doesn't know how to
reach them.
"In the past we have resisted what we thought
were overreaching efforts to obtain user data,"
adds Sobel. "We frequently negotiate with
subpoenaing parties to pare down the request.
But it is impossible for us to evaluate the merit
and context of each lawsuit in which we are
subpoenaed." Last fall, Yahoo received a
subpoena for information on more than 300
anonymous posters from lawyers for the CEO of
HealthSouth Corp., who had been assailed online
for everything from being a crook to swapping
wives with other executives. In an apparently rare
instance of resistance, Yahoo's lawyers deemed
the request "overly broad" but did provide
information on about 20 people.
Armed with the information from Yahoo in the
ProMedCo case, the company's lawyers served
Microsoft and AOL with subpoenas seeking,
among other things, the three Does' addresses,
phone numbers, Social Security numbers, credit
card numbers, and copies of every piece of e-mail
they had sent or received since last February.
Microsoft and AOL initially rejected the
subpoenas because they weren't issued in their
home states. The lawyers remedied that by
refiling them through courts in Washington state
and Virginia.
As is typical in most John Doe suits, the three
targets of ProMedCo's legal detective work still
had no inkling as of late June that they had been
the subjects of cross-country litigation for more
than three months. Soon after, however, they
learned the news from Microsoft and AOL.
Unlike Yahoo, both companies, in the wake of
mounting criticism about invasions of online
privacy, have a policy of alerting members when a
civil subpoena arrives seeking information about
them. "Our practice is to notify the member and
give them a period of time, usually 14 days, so
that they can avail themselves of their legal rights
and, if they want, hire a lawyer to quash the
subpoena," says Rich D'Amato, an AOL
spokesman.
After getting the word, the poster known as
"Voiceonthewind" sought advice from the
Electronic Privacy Information Center, an
advocacy group in Washington, D.C. Officials
there referred the person to Megan Gray.
After she agreed to help, Gray's role in the case
was over in a matter of days. She immediately
noticed a glaring defect in the subpoena that
demanded the goods on Voiceonthewind.
ProMedCo had attached to its complaint the four
allegedly defamatory postings on the Yahoo
finance site. But none of them had been written
by Gray's client. "It was obviously a fishing
expedition," says the lawyer. "As soon as we told
them that they were abusing the judicial system
and that we were going to fight back and that
there would be substantial publicity, they said,
'OK, never mind.'"
Another one of ProMedCo's targets -- the one
known online as "Scarabviper" -- voluntarily
posted his real name, John Hill, on the Yahoo
message board and dared the company to come
after him after learning via AOL about the
subpoena.
Hill, a retired certified public accountant who
owns and operates medical centers, had posted
three messages on Yahoo before ProMedCo
named him in its John Doe suit. The posting
singled out as defamatory contended that
physician practice management companies in
several states were losing suits on the
fee-splitting and non-compete issues. "Is slavery
a business investors should be in especially
when the slave contracts don't hold up in court?"
he wondered in the message.
In July, Hill learned unofficially from
Voiceonthewind that ProMedCo had stopped its
pursuit of both of them. Deborah Johnson, a
senior vice president at ProMedCo, has since
confirmed that the two are off the hook. The news
hardly came as a surprise to other online critics
of physician practice management companies.
Some of them apparently are doctors or, like Hill,
savvy financial investors who would savor the kind
of insider information subject to discovery in
protracted litigation.
By mid-summer, only one John Doe -- who turned
out to be a Jane Doe -- remained in ProMedCo's
sights. The poster writing online as "Gingnik" was
really Suzanne Field, who lives in Naples and
used to work as a receptionist and secretary for
ProMedCo. She left the company to work for one
of the doctors involved in the pending
non-compete suit.
ProMedCo claims Field committed libel by
writing, in two postings, that the company "lost
on the non-compete clause," that it uses creative
accounting methods to boost its management
fees, that it "does not even contribute to the 401K
anymore," and that its "docs are getting
restless."
The non-compete suit against the pair of doctors
was dismissed at one point, but with leave to
amend, and the case is now back in court. "The
suit is still very much alive today so she must
have been wrong," says Johnson, the ProMedCo
vice president, explaining why the company views
Field's statements as libelous. The messages
also misrepresented the company's accounting
practices and retirement plan, according to
Johnson.
Parrish, the Naples lawyer representing the
doctors in the non-compete dispute, is now
defending Fields in the libel case. If the suit
proceeds, he'll begin by contesting the California
court's jurisdiction in the matter. Even lawyers
who have brought other John Doe suits on behalf
of companies dinged on the Internet are skeptical
of ProMedCo's decision to sue here. "Personal
jurisdiction would be a real stretch based on the
fact that a message resides on a server located
in California," says Garrett Waltzer, a lawyer in
the Silicon Valley office of New York's Skadden,
Arps, Slate, Meagher & Flom.
There's yet another reason why the decision to
file such a suit in California might cause some
lawyers to scratch their heads. Baker &
Hostetler's Gray thinks the state's anti-SLAPP
statute -- aimed against litigation designed to
stifle public debate -- often can apply to John Doe
suits. "Before someone's anonymity can be
revealed, that person should have an opportunity
to bring a SLAPP suit to show that the
[underlying] lawsuit is frivolous or does not have a
likelihood of success," says Gray.
Hampton, ProMedCo's libel lawyer at McDermott,
acknowledges that judges have tools to dispose
of abusive litigation. "But I can tell you from my
own involvement in a couple of these cases that
the courts are listening," he says. "They
recognize that the right to free speech is not
unfettered. The courts understand why the suits
are filed as John Doe lawsuits. And they
understand the discovery that needs to be
employed."
lawnewsnetwork.com |
