FC: Calif. appeals court upholds right to flame companies online

From: Declan McCullagh (declanat_private)
Date: Mon Nov 26 2001 - 11:33:57 PST

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    Date: Mon, 26 Nov 2001 14:20:38 -0500
    From: "Paul Levy" <PLEVYat_private>
    To: <declanat_private>
    Subject: New case on Internet Free Speech
    We got involved in this one only to ask that the decision be "published" so 
    that it could be cited as precedent.  But it will have a significant impact 
    on libel suits over chat board comments.
    The lawyer who deserves all the credit for this win is Yvonne Renfrew in 
    LA, http://www.renfrewlaw.com/
    	California Appeals Court Upholds Free Speech Right
    	to Criticize Public Companies on the Internet
    Court Agrees  with Public Citizen That Decision
    Should Have Precedential Effect Protecting All Californians
    	WASHINGTON, D.C. -- A California appellate court has decided for the first 
    time that criticism of public companies on Internet message boards are 
    protected from frivolous litigation by California's anti-SLAPP statute. 
    This echoes the position taken by Public Citizen --  that companies should 
    not be permitted to use lawsuits, or the threat of lawsuits, to silence 
    Internet critics.
    	In March 2000, Computer XPress, a California company that sells 
    computer-related products, sued one of its competitors over, among other 
    things, criticisms expressed on Internet bulletin boards and in a complaint 
    to the SEC. The trial judge decided that none of the issues in the case 
    pertained to issues of public interest that were within the protection of 
    the anti-SLAPP statute (Strategic Litigation Against Public Participation). 
    That law recognizes that First Amendment rights are threatened by the 
    financial hardship and chilling effect of defending a frivolous lawsuit.
    	Under the law, cases filed to deter public participation must be dismissed 
    immediately, and the plaintiff (usually a company) must pay the defendant's 
    attorney fees unless the company can show a reasonable probability that it 
    can win the case.  The promise of a quick dismissal, with a payment of 
    attorney fees, was seen by the California legislature as critical to 
    ensuring that people would not refrain from speaking to avoid a lawsuit 
    even if they could win their cases in the end.
    	In an unpublished decision issued earlier this year, the Court of Appeal 
    in Riverside decided, in agreement with a Los Angeles federal trial judge, 
    that statements made on an Internet bulletin board about a company whose 
    stock is publicly traded are a matter of public interest and thus are 
    protected by the anti-SLAPP statute. The court further decided that the 
    mere fact that the speaker may be a competitor of the plaintiff does not 
    mean that it is not expressing its free speech rights.
    	Attorneys for Public Citizen, which had not previously been involved in 
    the case,  intervened to ask the Court of Appeal to publish its decision so 
    all citizens of California could benefit from the holding. Under California 
    law, unpublished appellate decisions cannot be cited as precedent, but 
    published rulings of an appellate court in one part of the state are 
    binding on state court trial judges throughout the state.
    	In a Nov. 15 decision, the court reconsidered its prior ruling and decided 
    to make its position binding precedent.  The new ruling, Computer XPress, 
    Inc. v. Jackson, No. E027841 (Cal. App., 4th Dist. Div. 2), is available at 
    	The ruling represents an important protection of the public's free speech 
    rights, said Public Citizen attorney Paul Alan Levy, who has defended a 
    number of individuals sued over their Internet postings.
    	"Many public companies have used litigation and the threat of litigation 
    to intimidate individual investors and other members of the public who 
    might have the audacity to criticize them," Levy said. "It is too easy for 
    companies to allege that their critics are ill-motivated as a way of 
    avoiding coverage by the anti-SLAPP statute."
    	In that same opinion, the Court of Appeal reconsidered its original 
    decision that, if even one part of a complaint can be upheld as outside the 
    protection of the anti-SLAPP statute, the defendants lose their right to 
    have their fees paid by the plaintiff.  Under the new ruling, fees must be 
    paid for that part of the case that has been stricken under the anti-SLAPP 
    	"This part of the ruling forces companies to choose their claims carefully 
    and sue a critic only when they are sure that they have a good chance of 
    proving that the speaker abused his free speech rights," Levy said.
    	The defendants in the Computer XPress case were represented by Yvonne 
    Renfrew, a lawyer in Los Angeles. Public Citizen asked to have the ruling 
    published because the organization champions free speech rights. Public 
    Citizen recently represented two people who posted criticisms about 
    Hollis-Eden Pharmaceutical Company on a Yahoo! bulletin board.  The rulings 
    in that case, which supported Public Citizen's position, are on appeal.
    	In another Public Citizen case, Dendrite International v. Doe, the New 
    Jersey Appellate Division decided in July that a corporate plaintiff cannot 
    learn the names of its Internet critics unless it can prove that its 
    complaint has a reasonable chance of success that outweighs the critics' 
    First Amendment right to speak anonymously.  Public Citizen's Internet free 
    speech cases can be viewed on its Web site at 
    Public Citizen is a nonprofit consumer advocacy organization based in 
    Washington, D.C. For more information, please visit www.citizen.org.
    Paul Alan Levy
    Public Citizen Litigation Group
    1600 - 20th Street, N.W.
    Washington, D.C. 20009
    (202) 588-1000
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