Internet Message Boards Under Attack Again

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"If you can't say something nice, don't say anything at all."

That old adage, usually drummed into our heads by our mothers, might one day become official policy in the online message board world. Two lawsuits, one just decided and one just filed, have

reopened debate over where in cyberspace free speech and defamation collide.

In a victory for the companies, the suit that was decided this week found an online message board poster liable for more than $8 million in damages.

Tod Pauly, a message-board regular, says he worries about the trend toward more lawsuits against online posters. "If we allow these companies to go after the posters, the information needed to protect investors in some cases won't get out," Pauly says.

But on the other side, companies say they're trying to protect themselves from what at times are false statements, which can depress their stock prices.

Jared Silverman, a private attorney who specializes in Internet-related cases, notes that some of these lawsuits are similar to the so-called SLAPP, or Strategic Lawsuits Against Public Participation, suits sometimes filed by companies to discourage public opposition and negative publicity. "If this is a private action that goes out to silence somebody, then that is troublesome," Silverman says.

Still, that doesn't give online posters free reign. "The standards of defamation still apply on the Internet as far as posting things that are false," Silverman explains, adding that if it is analysis or opinion the company seeks to squelch, that may be more of a problem.

On Monday,

American Eco

(ECGOF)

said it and a former executive were awarded $8.3 million in a lawsuit against a single anonymous online poster. The lion's share of that, a $7.75 million award in punitive and actual damages, went to the company's former chief financial officer, David Norris. The online poster, who went by the alias of PMMK1, posted what the company said were false statements about Norris' executive history that resulted in Norris being suspended, according to the company.

The suit was filed in the 280th Judicial District Court of Harris County, Texas. The suit names Jonathan Grossman, of Huntington Beach, Calif., as its defendant. A phone call to the Huntington Beach number of a Jon Grossman was not returned.

An American Eco spokeswoman says the suit stemmed from a "particularly malicious" series of messages posted on the

Yahoo!

boards about one year ago. The company was able to learn the identity of the poster by issuing a subpoena to the message-board site, she says. Norris and the company jointly agreed that he should step down because of all the fuss the continuous postings were causing, she adds. Attempts to reach Norris were unsuccessful.

"There's a big difference between posting opinions and posting false things as historical fact -- this individual crossed that line," the spokeswoman notes. "People need to become aware that if they shoot off their mouths, there may be consequences -- I think this is a wake-up call to other posters."

But the debate continues on the boards. An online poster called Ripskii, writing in the Yahoo! message board on American Eco's stock, exclaims: "I would point out that these same management people who are so quick to sue over slander should guard their OWN behinds. Go

d knows they've given WE the STOCKHOLDERS, enough cause to bring suit against them for a variety of reasons."

In the other case,

Legacy Software's

(LGCYC)

chairman last week filed a $10 million defamation suit against 11 defendants. All but one of the defendants were listed as John Doe. Legacy's stock jumped 85% yesterday as word of the company's new lawsuit was thrust onto the message boards.

In an odd move, Charles Solomont, a Boston attorney for Michael Zwebner, Legacy's chairman, posted a copy of the defamation lawsuit on

Silicon Investor

last week. The legal documents asked two online message board posters, who go by the aliases Spider Valdez and Rico Staris, to waive their rights to be served with court papers in person. The waivers would require the two anonymous defendants to disclose their real names.

The pair has not formally responded to the lawsuit yet, says Solomont, adding that he is confident that he will eventually learn the real identities of the message posters. "Once we find out their true names, we will pursue our claims against them," Solomont says.

Solomont says he doesn't believe a lawsuit can be decided and damages levied against an alias on a message board -- that's why finding out the names of the posters is so important. In previous cases, like American Eco's, companies learn the identities of message posters by issuing subpoenas to the board operator. Both Yahoo! and Silicon Investor have complied with past subpoenas.

The Legacy suit accuses the pair and a named individual, Dean Dumont of Milford, N.H., of posting false and defamatory statements about Zwebner. Dumont says the matter is being handled by his attorneys and he declines further comment. The suit, filed in U.S. District Court in New Hampshire, seeks $10 million in damages, and notes the amount could be doubled or tripled under current laws.

The allegedly damaging posts were said to have been made on Silicon Investor in several message boards, known as threads. The suit contends that the posters even created a new thread, ironically called "Spider & Rico's 'No-Bash' Thread for LGCY," in which they would ridicule Zwebner. Eugene Rosov, Legacy's president and chief executive, declined to comment on the suit, referring questions to attorneys. Zwebner couldn't be reached for comment.