Is it that David Portnoys Possible Hiring of posters to destroy Mercedes Waltons Reputation. This is What Mercedes should have done to thwart her potential threat,
Your client is a public company. You receive a phone call about a message posted to an Internet message board hosted by Yahoo!, Raging Bull, Silicon Investor or some other message-board host concerning your client. Your client may have learned of the message through its own monitoring of message boards or through one of a growing number of companies that monitors Web sites and message boards for a fee.
The message contains confidential, false or defamatory information. Your client wants this stopped — and for a good reason. Once these messages are posted on a message board, the number of like messages inevitably multiplies within days, if not hours.
A quick evaluation of your options reveals that message-board hosts and Internet Service Providers (ISPs) are typically not liable for the content of messages posted on a message board. You do not know whom else to sue because the posters on the message boards use aliases to hide their true identities. Although some of the information appears as if it only could have come from a handful of people, such as employees in a certain department, you do not know with certainty who within that group may have posted the message.
You need not throw up your hands in frustration and tell your client that he must stoically suffer while the posters remain protected by their anonymity. Instead, your client does have legal redress — filing a John Doe suit, compelling discovery from the message-board host, identifying the wrongdoers and taking appropriate legal action against the proper parties.
Recently, more and more public companies are resorting to litigation to put an end to these postings. Indeed, companies like Raytheon Co., Stone & Webster, Lilly Industries, Total Renal Care, Callaway Golf Co., ITEX Corp. and Flooring America Inc. have followed this approach to stop this type of tortious conduct. [Grant & Eisenhofer was counsel for Flooring America in its litigation, first against 24 John Doe defendants, and subsequently against certain named competitors, relating to the anonymous posting of disparaging messages on a Yahoo! Finance message board.]
In Callaway Golf, an individual (later discovered to be a competitor), admitted using 27 different aliases to post 163 messages in which he disparaged the company, encouraged shareholders to sell their shares in the company and posed as a store owner to disparage the Callaway Golf Co.’s products. See Ronald Grover, "The perils of teeing off online," Business Week, March 13, 2000.
In Raytheon Co., anonymous posters allegedly disclosed bid proposals, pending contract awards and inside financial information, including projected profits and divestitures. Anonymous posters in Stone & Webster posted many messages criticizing the company and its executives. In one case, a poster described an alleged confidential memorandum regarding problems the company was supposedly experiencing in Asia and hinted that the CEO’s job was on the line.
It is important to understand how Internet transmissions occur. Assigned to each Internet Web site, such as a message board, is an Internet Protocol (IP) address — a numeric address consisting of four sets of numbers separated by periods. All communications between computers on the Internet are through these discrete IP addresses unique to each computer. When a computer user transmits data, the transmission includes the IP address of the computer used in the transmission. These addresses are the individual subscriber’s access address to the Internet.
Individuals get into the Internet in a variety of ways, including through commercial "online services" such as America Online (AOL) and PSINet. These services offer access to their own computer networks and organizational software allowing subscribers to interconnect easily with computer networks other than those proprietary to the "online services." These commercial online services, which typically furnish their customers with e-mail addresses as well, are the ISPs.
The challenge in Internet litigation is to connect the dots from the Internet message board to the IP address to the ISP to the offending message poster. Although IP addresses are unique to each computer, ISPs assign those addresses when a user logs onto the Net. A person who logs on and off five times in one day, for example, will have gained access to the Internet from five different IP addresses, albeit through the same ISP. Although the block of IP addresses assigned to an ISP remains static, the actual address assigned to an individual user changes. The ability to identify an offending poster is essential to obtain relief.
The first step, obviously, is the complaint. Four questions need to be addressed in the filing:
• where to sue;
• when to sue;
• what claims; and
• whom to sue.
Where to sue:
There are several choices. You do not know which jurisdiction the posters live in since you do not know their identities. However, until you identify and locate the posters, possible venues may include your client’s principal place of business, the jurisdiction where the message-board host is located or your client’s state of incorporation.
General jurisdiction may be established over a party, regardless of the connection between the underlying controversy and the forum state if that party’s contacts with the state are sufficiently "significant" or "systematic and continuous." Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984).
Specific jurisdiction allows a court to assert jurisdiction only over claims related to the defendant’s contacts with the forum state. Venues may include the jurisdiction where the poster resides or your client’s principal place of business. Calder v. Jones , 465 U.S. 783, 789 (1984)(establishing "effects test" that allows exercise of jurisdiction in the forum where tortious harm directed); Edias Software Int’l LLC v. Basis Int’l Ltd. , 947 F. Supp. 413 (D. Ariz. 1996)(exercising jurisdiction where the plaintiff’s principal place of business is located on the grounds that the plaintiff felt the economic effects of defendant’s defamatory postings in that forum).
Unless your case is based on a federal question, such as securities fraud, you may have to bring your case in state court. Presumably, because the initial complaint will only name John Doe defendants, you would not have a good-faith basis for asserting diversity of citizenship jurisdiction.
When to sue:
The answer is: Quickly. The immediate challenge is the process of identifying the proper names behind the posters’ aliases. This process must be started quickly because the information needed to identify the posters is retained by the ISPs a very short period of time — in some cases, just a few days. Your success in identifying anonymous posters will turn on the age of the messages and the sophistication of the poster. Many of these cases are unsuccessful because the ISPs have destroyed the relevant information, consistent with their record-keeping practices, long before they receive your subpoena.
What claims:
Several potential causes of action are possible. These include:
• Defamation — Defamation is an "intentional false communication, either published or publicly spoken, that injures another’s reputation or good name." Black’s Law Dictionary 417 (6th ed. 1990). Corporations have standing to assert claims for defamation based on false statements of fact that damage the company’s reputation or good name.
• Breach of fiduciary duty — it will typically be a breach of an employee’s fiduciary duty to act in the company’s best interest if the employee discloses confidential information. It may also be a breach if the employee criticizes the company.
• Tortious interference with business and contractual relations — based on the effect the messages have on your client’s relationships with its employees and customers.
• Misappropriation of trade secrets — typically asserted against a current or former employee.
• Misappropriation of identity — arises when a poster uses the proper name of another as an alias. Typically, the misappropriated identity is that of a company executive or senior official.
• Breach of contract — these claims are most commonly found in situations involving current or former employees, franchisees, distributors or dealers. Many companies now require employees to sign and agree to abide by corporate codes of conduct and electronic communications policies, violations of which constitute breach of contract.
• Unfair and Deceptive Trade Practices Act (UDTPA) — disparaging a company in the course of one’s own business is impermissible under most state UPTPA’s. The typical UDTPA statute provides for recovery of attorneys’ fees, costs and treble damages.
• Securities fraud — possibly the most difficult and untested theory to prove. Stock message boards are an easy medium through which shareholders, stock promoters and stock manipulators may disseminate materially false and misleading information or material nonpublic information to induce a rise or decline in the price of a stock.
(The Internet message-board complaint filed in Raytheon Co. v. John Does 1-21, a/k/a "AT_THE_EDGE," et al., Mass. Super. Ct. No. 99-816, is available online at http://www.intelico.com/johndoe1.htm.) In each case, plaintiffs should seek injunctive relief in addition to damages.
Whom to sue:
The first issue here is whom you cannot sue. Under Section 230 of the Communications Decency Act of 1996 (CDA), 47 U.S.C. ?230(c)(1), ISPs are immune from liability for information originating with a third-party user of the service, unless it developed or created the information.
The courts first interpreted the CDA in Zeran v. America Online, 958 F. Supp. 1124 (E.D. Va. 1997), aff’d, 129 F.3d 327 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998). In Zeran, an unidentified person posted a message on an AOL bulletin board advertising T-shirts featuring offensive and vulgar slogans glorifying the 1995 bombing of the Alfred P. Murrah Federal Building in Oklahoma City in which 168 people were killed.
The person who posted this message instructed those interested in purchasing a T-shirt to call the plaintiff, whose phone number appeared in the message, resulting in callers directing a large number of angry messages and several death threats toward the plaintiff. After the plaintiff complained to AOL about the message, AOL agreed to remove the posting, but refused to post a retraction.
Over the next several days, more messages were posted on AOL’s bulletin board, and after the threatening phone calls intensified, the plaintiff repeatedly called AOL to complain and ask for the removal of the posting. The plaintiff sued AOL claiming that it unreasonably delayed the removal of the defamatory messages posted on its bulletin board. The trial court granted AOL’s motion for summary judgment holding that Section 230 of the CDA creates a federal immunity to any cause of action that would make service providers liable for information originating with a third-party user of the service.
The D.C. Circuit again recognized the broad immunity provided by the CDA in Blumenthal v. Drudge , 992 F.Supp. 44 (D.C. 1998). Sidney Blumenthal, a White House lawyer, sued Matt Drudge, a gossip columnist, and AOL after AOL posted an article by Drudge accusing Blumenthal of committing spousal abuse. The plaintiff named AOL as a defendant because it published the article, and had rights under a license agreement between Drudge and AOL to edit Drudge’s articles as it deemed necessary. The plaintiff asserted that AOL’s active role as an editor subjected it to liability.
The court rejected Blumenthal’s argument and granted AOL summary judgment because Drudge wrote the offensive story without any substantive or editorial suggestions from AOL. The court conceded that an ISP may be liable under the CDA if the ISP developed or created the published information, or if it were jointly responsible for the information (such as the relationship between a lyricist and a composer).
The court in Blumenthal noted: "In recognition of the speed with which information may be disseminated and the near impossibility of regulating information content, Congress decided not to treat providers of interactive computer services like other information providers such as television and radio stations, all of which may be held liable for publishing or distributing obscene or defamatory material written or prepared by others."
Your claims against the posters must be brought as "John Doe" claims because their identities will not be known. Once you determine the proper names of the posters, you should amend the complaint accordingly. The identity of the poster may reveal other parties who may be named in the amended complaint. For instance, the poster may be a principal or employee of your client’s competitor who makes disparaging comments about your client company in an effort to promote his or her own company. Such conduct may give rise to a claim against that company and the individual poster under a theory of vicarious liability.
Another issue is how you justify suing an unknown John Doe, but still claim that person is an employee of your company. Some may question why you should worry about justifying your actions since the posters, sued only as John Does, will not be moving to dismiss the claim. However, as an officer of the court, you are required to bring and prosecute all claims in good faith. If that is not sufficient motivation to play it straight, remember that you may at some point have to answer these questions from a judge who will not look kindly to your having abused the authority of the court to wrongfully sue someone.
Getting back to the first issue, you must have a good-faith basis that the poster is an employee or an ex-employee disclosing confidential information or possibly a third party disclosing confidential information that the third party could only have obtained from an employee breaching fiduciary duty either because of the message or the information included in the message.
Even if the poster is not an employee, the poster may be aiding and abetting an employee’s breach of fiduciary duty by disclosing the confidential information. Walck v. American Stock Exchange Inc., 687 F.2d 778, 791 (3d Cir. 1982)(citing elements of a claim for common law aiding and abetting as: (1) the existence of an independent wrong; (2) aider or abettor know of that wrong’s existence; and (3) substantial assistance given in effecting that wrong).
Discovery is the heart of the John Doe posting case. The issues that arise at this stage of the litigation are several. First, are there any discovery rules that may impose limitations on your ability to issue subpoenas to the message-board host? Second, is the lawsuit too late — is the information that you need to proceed even available? Third, what objections or resistance will you receive from the ISPs? Finally, how do you protect your client’s interests?
Some states may have discovery rules similar to Fed. R. Civ. P. 26(d) requiring that counsel meet and confer with the opposing party prior to starting any discovery. But how do you confer with counsel for John Doe? Can you issue a subpoena without conferring with unknown opposing counsel? As is always true with discovery, know the rules. If you are in federal court, or in a state with a "meet and confer" requirement, move the court for an exemption from the statutory requirement. As time is of the essence, counsel should seek expedited consideration of the motion.
Once counsel is confident that a subpoena may be issued, counsel should do so expeditiously to the host of the message board. The subpoena should call for production of information sufficient to identify the parties posting as the "John Does," including the ISPs through which each John Doe posted each message, as well as the IP address from which each message posted. In some cases, the message-board host may have the poster’s e-mail address, from which one may determine the poster’s identity. In rarer cases, the host may have the poster’s proper name.
Although lawyers often are reluctant to provide too much information, the opposite is true in "John Doe" message-board discovery. The more information that you provide to the company hosting the message board, the better the chance of obtaining timely and responsive information. Message-board hosts, such as Yahoo!, may require a copy of the complaint before issuing any information. Depending on the complexity of the subpoena, message-board hosts may require up to 20 days to provide a response.
Any information that you obtain, even if it is not detail concerning the poster, may be sufficient to assist with or expedite the identification process (such as date of birth and city of residence may be sufficient for a human resources department to identify a former or current employee). At the least, the message-board host will provide you with enough information to identify which ISP (or in some cases, multiple ISPs) the poster used to access the Internet message board. As you learn their identities, a second round of subpoenas should be issued subsequently to those ISPs.
Each ISP likely will respond differently to the subpoena. At opposite ends of the spectrum are those that will be helpful and those that may require you to file a motion to compel the production of responsive documents. Counsel always should anticipate an objection to the subpoena in the form of a motion for a protective order or a motion to quash. Whatever happens, know that the ISPs are receiving many subpoenas daily, and yours likely will just enter the queue, similar to a subpoena to a telephone company. The most important point is, once you have served the subpoena and begun communicating with a representative of the ISP, ask that they preserve evidence in the event of a dispute concerning the subpoena.
Some ISPs may advise their customers about the subpoena and provide them with enough information to oppose the subpoena. In fact, should you receive a motion to quash, it likely will come from the customer, not the ISP. Because courts are vigilant about protecting the rights of an unrepresented party, counsel should always be able to explain how each message complained of is actionable. In some cases, the ISP also may require a similar explanation before it agrees to release any information.
Yahoo!’s practice of disclosing the identify of anonymous posters without giving the poster advance notice is being challenged in a lawsuit, Doe a/k/a Aquacool 2000 v. Yahoo! Inc. , filed in a California federal court in May of this year. In that case, the plaintiff, who was sued for defamation after making derogatory remarks about managers at the company he worked for on a Yahoo! message board, alleges that the disclosure of his name violated his privacy rights under the state and U.S. constitutions.
Defenses likely to be raised by a poster include relevance, privacy, freedom of speech and notice. If counsel can articulate the basis for asserting claims against a poster, courts are usually reluctant to quash a subpoena. Relevance has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matters that could bear on, any issue that is or may be in the case.
Privacy and freedom of speech have become the most heated issues in opposition to a plaintiff’s subpoena of an ISP. Proponents of absolute anonymity on the Internet argue that posters have a right to use aliases when using the Internet and that anonymity promotes free speech.
In McIntyre v. Ohio Elections Commission, 514 U.S. 334, 342 (1995), the Supreme Court called unconstitutional an Ohio ban on anonymous leaflets distributed in political campaigns. Proponents also often cite another Supreme Court opinion touting the potential virtues of the Internet: "From a publisher’s standpoint, it constitutes a vast platform from which to address and hear from a worldwide audience or millions of readers, viewers, researchers and buyers. . . Through the use of chat rooms, any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox." Reno v. A.C.L.U., 521 U.S. 844, 853 (1997).
Even so, courts have recognized that anonymity is not a license to ignore the law. Under the First Amendment, content-based restrictions on speech are generally prohibited. This does not mean, however, that all content-based restrictions are unconstitutional. There is no First Amendment protection for a poster committing tortious acts like fraud, defamation and misappropriation of trade secrets. Colson v. Groham, 174 F.3d 498 (5th Cir. 1999).
However, privacy advocates claim that company lawsuits against posters are retaliatory efforts to quiet critics through intimidation. Some have suggested that there should be a very high threshold before a company is entitled to discovery of poster identities. The ACLU has argued a company should be required to virtually prove its case in order to obtain discovery.
Courts deciding these issues have not been entirely consistent. In February, an Ohio judge reportedly denied an anonymous poster’s motion to quash a subpoena finding the poster had no reasonable expectation of privacy in his agreement with an ISP. A similar ruling was issued in Fort Lauderdale, Fla., where Yahoo! and AOL were ordered to identify eight John Does who accused J. Erik Hvide, then CEO of Hvide Marine, of securities fraud. Recently, however, a Pittsburgh judge reportedly blocked a subpoena filed by a judge in her defamation suit resulting from the posting of allegedly false statements on a Web site that, in essence, accused the judge of violating state ethics codes.
The mere filing of the John Doe action will probably slow the postings. Some companies have hit home runs through these actions and discovered that the disgruntled posters were actually competitors posing as stockholders or employees. Companies may agree to dismiss litigation in exchange for stipulated cease-and-desist agreements, public retractions and apologies (usually on the same message board the poster used to post the actionable message), the payment of damages or the payment of attorneys’ fees and costs. In some cases, the defendant may agree to the entry of a permanent restraining order prohibiting the posting of any message in the future that disparages or discloses confidential information.
Once the posters’ identities have been uncovered, your client can decide on further action. As so often occurs in litigation, the plaintiff must assess the benefit of pursuing the litigation and its inherent costs, against the potential return. How much can a company expect to collect in damages from a disgruntled former employee who has a part-time job? The answer to that question obviously calls for very different action than the situation associated with a business competitor posting disparaging remarks.
Many commentators have asserted that the Internet is equivalent to a business revolution and that it requires the corresponding development of revolutionary new legal theories to govern its use. For now, however, most courts are applying standard common law principles. Using those principles and standard civil-litigation techniques, it is possible to act swiftly to protect a client under Internet attack.
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