Forgive me but the following is very long. If you are not interested in libel law as applied to Chatty's threats then please skip this post.
I am not a lawyer, but I was once threatened with a libel suit as a result of posting information on thread at SI. I owned a lot of stock in a company and I learned, from two different sources, that the CEO was acting corruptly. I published a great deal of critical information about the CEO and the company got their lawyer to threaten me with libel. There is not a doubt in my mind that I would have won in court, but the company would have used stockholders' money to pay their lawyer and I didn't have $100+ /hour to pay a lawyer to defend myself. So I shut up and didn't discuss the company any more. That's the problem with libel law. It can shut people up if they don't have $100,000 lying around to defend themselves. Libel law has turned into a great suppresser of information.
Generally, a libel suit is anathema to the free market of ideas. A libel suit squelches the free flow of information. A libel suit is a tool of a coward who knows he can't win a debate or defend his honor through logic, evidence and persuasion. A libel suit, or even the threat of a libel suit, is the intellectual equivalent of a mugger who drags his victim into a dark alley and knocks him out to silence him. This is what I philosophically believe about libel law, although I may have to modify my philosophy after reading up on Spider's case. There may be times when libel suits are necessary, but they are exceedingly rare.
I have spent a lot of time researching libel law since I was threatened. The more I learned, them more I realized how difficult it would have been for the company to win a case against me. What follows is a bit of what I learned applied to the situation that has arisen on this thread. Keep in mind that I am not a lawyer and this legal advice is free-- therefore it is probably worth about what you paid for it. <g>
In order for Chatty to win a libel suit against any of the posters here he would have to show that
1) Statements made about him were slanderous, i.e. that it discredited him.
2) The postings in question were statements of fact and not statements of opinion. You can not lose a libel suit for stating a general opinion. Your statement must be a statement of verifiable fact. What is the difference between fact and opinion? If I said "Chatty violated section X of Securities Law Y" that would be a statement of fact. It is verifiable. It is either true or false. Changing the statement slightly to say "In my opinion, Chatty violated section X of Securities Law Y" doesn't change things any. You can't use the "In my opinion. . ." formulation to convert a statement of fact into a statement of opinion. If you could then everyone would use that formulation and no one could ever be guilty of libel. What if you said "Chatty is a hypester"? Or how about "Chatty is sleazy"? Would a court declare these to be verifiable facts or merely opinions? I suspect the answer would vary depending upon which court the case was tried in.
And
3) The statements would have to be factually wrong.
All libel plaintiffs, no matter what their status, must prove that the above 3 conditions apply to their case. Chatty would have a relatively easy time of proving the first condition-- statements were made here that discredited him. I don't know if he could prove the second or third conditions. But let us for argument's sake assume he can prove all of the above.
He must also prove that there was some fault on the part of the person making the statements. Even if the statement in question is false, that in itself is not enough to win a case for libel. The level of fault Chatty must prove will depend on his status and the state in which the case is tried. Public officials and public figures have a much more difficult time winning libel cases than private individuals because they have to show that the defendant made his statement with actual malice. Someone makes a statement with actual malice if he knows he is telling a lie or if he is making a statement with reckless disregard of the truth. Note that the term "malice" does not mean "ill will". It is a legal term and does not carry the same meaning that it does in ordinary conversation. A defendant can harbor great animosity towards a plaintiff, but unless he intentionally lied or recklessly disregarded the truth then his statements were not made with actual malice.
If a plaintiff is a private individual he could win a libel case merely by showing the defendant was negligent in making his defamatory statement. The required level of fault varies from state to state. Many states require only a finding of negligence, some require the defendant to act with actual malice, and some set a standard between the two extremes. Proving the defendant acted negligently is much easier than proving he did so with actual malice. The defendant's negligence can be fairly easily determined by the facts in most cases. Proof of actual malice requires evidence as to the plaintiff's state of mind when he made the defamatory statements. It is usually difficult to prove what is inside someone else's head.
So the big question before us is whether Chatty is a private or a public figure. If he is a public figure he would have to prove that his accusers were intentionally lying or recklessly disregarding the truth.
Rodney Smolla's Law of Defamation (release #11, 11/97) (Hereafter referred to as Smolla) lists 9 factors that are used by courts to determine if a plaintiff should be classified as a private figure or a limited public figure. Different courts in different jurisdictions will use different sets of factors to make their decisions, but this set of factors is typical of what many courts will use. Courts will weigh the factors in each case differently. For example one case might have seven factors pointing in the direction that the plaintiff is a public figure and two weighing in favor of declaring him a private figure. He will probably be declared a public figure, but it is possible that he may be declared a private figure if those two factors are the most salient factors of the case. Here are the factors as stated in Smolla (§2.90[4], p. 2-33).
1) The extent to which the "controversy" preexisted the defamatory speech (the "bootstrap" problem);
2) The effect of the "controversy" on the interests of nonparticipants;
3) The level of voluntariness in the plaintiff's involvement in the controversy;
4) The plaintiff's access to channels of communication for counterspeech;
5) The degree of public divisiveness concerning the controversy;
6) The extent of the plaintiff's prominence in the controversy
7) The extent of the plaintiff's efforts to attempt to influence resolution of the controversy
8) The extent to which the plaintiff's public figure status continued to exist at the time of publication
9) The extent to which the allegedly defamatory speech is geographically or institutionally limited to the area in which the plaintiff had achieved public figure status.
As we shall see none of the factors indicate in this case that Chatty should be declared a private figure.
1) The extent to which the "controversy" preexisted the defamatory speech (the "bootstrap" problem);
A plaintiff in a libel case is more likely to be a public figure if there is a controversy surrounding him when the allegedly defamatory speech was made. Showing that there was a pre-existing controversy on this thread before allegedly defamatory statements were made does not seem to be a problem. There was highly questionable hype (especially by Chatty) occurring on this thread before anyone said anything allegedly defamatory about him. His "just having some fun" approach of hyping the stock in capital letters, his pretending to be just another investor, and his failure to identify himself as an employee of FNTT are probable violations of the law. By the time Chatty first complained about slander there was plenty of controversy surrounding him, Greg and Cliff (hereafter referred to as the FNTT-3). Even if there was a problem establishing that a controversy existed before the early postings of allegedly defamatory statements, no such problem existed for latecomers who did not post their statements until after the controversy broke out.
The importance of showing that there is a pre-existing controversy does, to some extent, penalize an investigative reporter who is the first to report a crime. Smolla explains why some courts are flexible about using this as a factor to determine the plaintiff's status as a public figure:
"When the plaintiff is allegedly involved in a blameworthy activity and has engaged in efforts to conceal that involvement, the court in its determination of the public figure issue may legitimately treat the blameworthy activity and the acts of concealment as surrogates for the more traditional form of open public controversy. The public interest in hidden corruption is every bit as strong as in open corruption--it would be illogical to say that the first newspaper story uncovering facts about the Watergate break-in is to be treated as having less first amendment protection than subsequent stories. The controversy can, in a sense, be said to "pre-exist" the story; it merely remained 'latent' until exposed."
Smolla §2.11[2], p. 2-37 Not all courts follow this logic, he discusses two cases that do: Marcone v. Penthouse and Rosanova v. Playboy Enterprises, Inc. ( §2.13[2], pp. 2-40.1 -- 2-42)
In any case, it seems that a controversy had erupted well before Chatty hollered "slander" (As was pointed out by others, he should have hollered "libel".) This factor is likely to weigh in favor of Chatty's being declared a public official, if it is to be weighed at all.
2)The effect of the "controversy" on the interests of nonparticipants
There is a controversy over the worthiness of this stock as an investment (i.e. Is it a scam?). The background, behavior and integrity of the FNTT-3 are factors that most potential investors will want to weigh in their investment decisions. Therefore this controversy affects a community larger than just those who participate on this thread. It effects the interests of any potential investor who reads or might read this thread. Since this controversy could effect the economic interest of anyone in the investment community, the court will weigh this factor in favor of determining that Chatty is a public figure.
3) The level of voluntariness in the plaintiff's involvement in the controversy
The plaintiff is more likely to be declared a limited public figure if he voluntarily "thrust[s] himself into the vortex of this public issue" , that is if he voluntarily puts himself in a prominent public position. The FNTT-3 voluntarily thrust themselves into this thread. In fact, you could say they've been doing more thrusting than a shipload of sailors on shore leave at a whorehouse. (Yo, FNTT lawyers! This wasn't meant as a literal statement of fact. I never counted the number of thrusts that a shipload of sailors made at a whorehouse. I don't know if that number literally exceeds the number of times the FNTT-3 posted here. This was just colorful exaggeration to make a point in a somewhat interesting fashion. Get a sense of humor!)
4) The plaintiff's access to channels of communication for counterspeech
This may be one of the most important factors in determining whether the plaintiff should be classified as a public or private figure. Libel law was largely intended as the state's means of protecting the reputation of relatively weak individuals who have been defamed in the press and who do not have access to means to counter the defamatory speech on their own.
. . .we have no difficulty in distinguishing among defamation plaintiffs. The first remedy of any victim of defamation is self-help - using available opportunities to contradict the lie or correct the error and thereby to minimize its adverse impact on reputation. Public officials and public figures usually enjoy significantly greater access to the channels of effective communication and hence have a more realistic opportunity to counteract false statements than private individuals normally enjoy. Private individuals are therefore more vulnerable to injury, and the state interest in protecting them is correspondingly greater.
GERTZ v. ROBERT WELCH, INC., 418 U.S. 323 (1974)
caselaw.findlaw.com
Chatty could have come onto this thread to defend his reputation. If he feels that there are false statements then he can come here and refute them. The court will probably rule him to be a public figure because he has access to the media to counteract the allegedly defamatory speech.
5) The degree of public divisiveness concerning the controversy
The greater the public divisiveness that the plaintiff is involved in, the more likely he is to be classified as a public figure. This provides a paradox in this case since there is no public divisiveness over the inappropriateness of possibly illegal stock hyping. Almost everyone agrees that (allegedly) illegal hyping is wrong. The greater the agreement, the less likely this factor will weigh in favor of the court considering the plaintiff a public figure. Smolla provides a way out of this paradox by reframing this test as follows: To what extent is the plaintiff involved in a significant problem or event about which the public is concerned? Smolla writes:
Imagine an issue about which there can be no "debate," the propriety of attempting to assassinate a President, for example. In the language of Wolston, "all responsible United States citizens understandably were and are opposed to" presidential assassination. But can there be any doubt that presidential assassination attempts ought to be treated as matters of public controversy and individuals connected to such events as vortex public figures? Under the Wolston formulation, John Hinckley Jr. might not qualify as a vortex public figure merely for having shot President Ronald Reagan, because the assassination attempt was not a mater of "public controversy," that is, all responsible Americans would be opposed to it. Hinckley would become a public figure after his acquittal on attempted murder charges by reason of insanity, however, because the insanity defense is an issue over which Americans are divided. This distinction is indefensible; it rests on a hypertechnical construction of the term "controversy" that treats only debate as a matter of first amendment concern, eliminating a plethora of issues and events such as crime, violence, and disease which are obviously subjects of profound concern, and for which full first amendment protection for speech is vital, whether or not "all responsible citizens" are opposed to them.
Smolla §2.16[3], p. 2-49
Even if we ignore this reasoning, there is some public divisiveness because Chatty denies that his postings have violated any laws. This factor will either not play any role in deciding whether he is a public figure or it will weigh slightly in favor of declaring him a public figure.
6) The extent of the plaintiff's prominence in the controversy
This thread was started by Greg Writer. The FNTT-3 are THE predominant players in this controversy. This weighs in favor of Chatty being declared a public figure.
7) The extent of the plaintiff's efforts to attempt to influence resolution of the controversy
Chatty tried to influence potential investors to buy stock in the company. He attempted to persuade the readers of the thread that he did nothing wrong. He tried to persuade the readers not to report them to the SEC. And it appears that he tried to intimidate them by threatening them with a libel suit. He has done what he can to influence the outcome of this controversy, so this factor will weigh in favor of the court declaring him a public figure.
8) The extent to which the plaintiff's public figure status continued to exist at the time of publication
This factor might occasionally be considered if many years had elapsed between the time of a controversy and the time of an allegedly defamatory statement. This factor is seldom given much weight. In any case, no time has elapsed between the controversy and the allegedly defamatory statements so the Court will not use this factor to declare Chatty to be a private individual.
9) The extent to which the allegedly defamatory speech is geographically or institutionally limited to the area in which the plaintiff had achieved public figure status.
This factor is not weighed heavily by most courts. To the extent that it is considered at all, it would favor a ruling that Chatty is a public figure. The allegedly defamatory statements were made in a forum established by Greg Writer specifically to convey information about FNTT to potential investors. Only people who might consider investing in FNTT are likely to read the statements.
SUMMARY
Not one of these factors weigh in favor of Chatty being declared a private figure. All weigh either moderately or heavily (if they weigh at all) in favor of him being a public figure.
I have seen statements like "Get your facts straight" made with the implication that a poster would be guilty of libel merely by posting an incorrect fact. As we have seen, it takes a great deal more to be guilty of libel. Chatty is undoubtedly a public figure, so in his case it would take a great deal more. I think a similar analysis would reveal that Greg and Cliff are also public fig
Robin S. Messing |
