California Appeals Court Upholds Message Board Speech

By Michael Bartlett, Newsbytes
RIVERSIDE, CALIFORNIA, U.S.A.
27 Nov 2001, 4:34 PM CST

A California court of appeal recently issued what legal experts say is a precedent-setting decision on the right to make comments about a public company on Internet message boards.

In March 2000, ComputerXpress [OTCBB:CPXP], a company that sells computer-related products, filed a complaint against eight defendants after a proposed merger fell through. The company alleged nine causes of action against defendants, including fraud, trade libel and interference with prospective economic advantage.

ComputerXpress claimed defendants made "numerous false and disparaging statements" about the company on the Internet.

Defendants moved to dismiss the suit by seeking protection from a California law written to protect individuals from retaliatory lawsuits by corporations that feel they have been disparaged. These are referred to as "Strategic Litigation Against Public Participation," or SLAPP lawsuits.

The trial court initially ruled three of the nine causes of action were not covered by the anti-SLAPP statute, but the remaining six were. The court subsequently changed its mind, finding that none of the allegations were protected by the statute, and therefore denied the motion to dismiss the case.

The appellate court agreed with the trial court on four causes of action, but reversed on the remaining five. The appellate court found that postings on an Internet message board constituted a "public forum," as defined in the anti-SLAPP statute. The court further ruled the defendants posted opinions as shareholders of ComputerXpress, not competitors, and the matter was therefore "an issue of public interest."

As for the content of the postings, the court said they "certainly could be considered disparaging," but found that, "their tone and content identified them as statements of opinion and not fact."

The court said the postings presented as evidence by ComputerXpress were, "hyperbolic, informal and lacked the characteristics of typical fact-based documents."

The Riverside Court's ruling closely followed - and frequently cited - a May ruling by a U.S. District Court. The federal court ordered Global Telemedia International [OTCBB:GLTIE.OB] to pay over $55,000 in attorney's fees to two defendants. The company had sued several anonymous individuals for posting comments critical of GTMI in an Internet chat room.

In the Global Telemedia case, the court said that, unlike many traditional media, there are no controls on the postings in chat rooms. As a result, such writings are almost always opinions, and therefore are protected under the First Amendment.

The opinion by the Court of Appeal for the Fourth District in the ComputerXpress case is the first published appellate decision on the state level in California, according to Megan Gray, a Los Angeles-based attorney who is an expert on SLAPP lawsuits. She was not involved in the matter, but followed it closely

"It is a great case, and one that is long overdue," said Gray. "The court recognized the dearth of binding case law on this issue, and this ruling takes care of that."

There are many cases pending in courtrooms that stem from Internet message board postings. Gray said she hopes the Court of Appeal decision will encourage some of those cases to, "go away, one way or another, and not clog the court system."

"The ruling does not mean everything you say on a message board is protected," she said. "But, generally, a lot of that talk is along the lines of, 'this stock sucks,' or 'this management sucks.' The Riverside Court said to determine if something is fact or opinion, you must examine the context."

"For example, if Dan Rather says something about ComputerXpress or its management on the nightly news, that is different than someone who can't even spell right posting something on a message board," Gray continued. "This ruling protects John Doe who is just speaking his mind on the Internet to a wide audience."

Paul Levy of the Public Citizen Litigation Group, a non-profit consumer advocacy organization based in Washington, D.C., said the most important part of the ruling is the finding that a discussion of a public company is covered by the anti-SLAPP statute.

"It is wise for people to assume postings on a message board are opinions, not facts," said Levy. "This opinion makes it clear that [the federal court ruling in] Global Telemedia is the state law in California. At least it is for now, unless the California Supreme Court steps in," he added.

The Public Citizen Litigation Group was not directly involved in the ComputerXpress case, but asked the court to publish its opinion - which it had not previously done - to make it binding on state trial courts. Unpublished appellate decisions cannot be cited as precedent.

Yvonne Renfrew, who represented six of the eight defendants (the other two settled out of court with ComputerXpress), said the original, unpublished decision did not include an award of jury fees to her clients.

"We won attorney's fees upon rehearing," said Renfrew. "Not only is this case important in that it clarifies First Amendment protection for Internet postings, it is very important that people have the ability to recover fees. In many cases, people are silenced by the threat of a lawsuit because they cannot afford to spend $200,000 to defend themselves."

Attorneys for ComputerXpress did not return phone calls for this story.

See the opinion at http://www.courtinfo.ca.gov/opinions/documents/E027841.PDF .

Public Citizen Litigation Group is at http://www.citizen.org/ .

Reported by Newsbytes.com, http://www.newsbytes.com/ .

16:34 CST
Reposted 17:15 CST

(20011127/Press Contact: Paul Levy, Public Citizen Litigation Group, 202-588-1000/WIRES LEGAL, ONLINE, BUSINESS/ATWORLD/PHOTO)

© 2001 The Washington Post Company

-- Anonymous, December 15, 2001