by Matthew S. Effland

Page 63

Damaging comments made by disgruntled employees about company business practices is not a new phenomena. Traditionally, of course, the most damaging and fraudulent of claims could be dealt with through a defamation lawsuit. Often, the mere threat of litigation will cause a single disgruntled speaker to back off his or her slanderous comments. The need to make such threats was—and is—often viewed as a necessary (if unfortunate) cost of doing business. Today, however, companies are faced with a disturbing new source of defamation: cyber-slander.
The Internet (or “Net”), heralded as the most significant achievement in human speech since the printing press, has become ground-zero in a legal battle over the First Amendment and the right of individuals to speak (or rather type) anonymously. At its best, the Net is the ultimate conduit for free speech and expression; at its worst, the Net can be a character assassin’s greatest weapon.
If a company finds evidence that its employee is slandering it on the evening news, or out front of its building, it is a fairly simple matter to serve that employee with a defamation lawsuit. What happens, though, when the person telling lies about a company to the millions of Net users has no name, no address, and no way of being served? This is the issue that courts have been forced to take up as more and more episodes of cyber-slander have arisen.

The Problem of Cyber-Slander
Erik Hvide, the former chairman and CEO of Hvide Marine Inc., a company doing business in Florida, was ousted from his position in early 1999. Shortly thereafter, Hvide learned that eight anonymous people in a Yahoo! (an Internet service provider, or “ISP”) financial chatroom were allegedly making false and derogatory comments about him. Hvide believed that the statements, posted in such a way that anyone with access to the Net could see them, defamed not only him, but also damaged the company’s image to the point where it had to file for Chapter 11 bankruptcy protection.
As might be expected, Hvide filed a defamation lawsuit against the eight individuals who had made the allegedly slanderous comments about him in the chatroom.¹ His attorney, however, faced a problem: How do you sue someone who only exists as an electronic name in an ISP’s database? The eight people involved in the allegedly defamatory activity did not identify their “real” identities in the chatroom, preferring instead to use Internet aliases such as “justthefactsjack.” Nor was there any evidence from their statements that would aid in identifying them. With few options remaining, Hvide’s attorney chose to go after the ISP itself for information, and subpoenaed Yahoo! for its Internet records. Based on statements by Yahoo! that one of the eight posters had an America Online, Inc. (AOL) e-mail address, Hvide’s attorney also subpoenaed AOL for information.
The eight anonymous posters, represented by the American Civil Liberties Union (ACLU), challenged the subpoenas. The ACLU argued that the individual posters had a First Amendment right to speak anonymously over the Net, and that allowing the subpoenas to be issued would chill the speech of others who would seek to use the Net to express ideas in the future. The Florida trial court in Miami ruled that the subpoenas could issue, but froze the subpoenas pending appellate review of that decision. On October 16, 2000, the Third District Court of Appeals dissolved the freeze and allowed the subpoenas to issue; Hvide would have access to the information he needed to pursue his defamation claim.
This decision bolstered an earlier decision from the Fourth District Court of Appeal in Florida that recognized a fundamental difference between computerized defamation and the more traditional forms of libel and slander. Traditionally, prior to filing an action for either slander or libel, the victim of the defamation was required to send written notice of the suit, demanding a retraction of the statements.² Following the case of Zelinka v. Americare Healthscan, Inc.,³ however, pre-suit notice is not required when the defamation occurs online.

One Part of an Ongoing Battle
While the appellate decisions from Florida are certainly a victory for employers in the fight to protect themselves from online character assassins, the decisions themselves do not reflect much in the way of any national trend. In fact, since the Florida decisions came out last year, three other courts have issued rulings in cases dealing with privacy on the Net, resulting in a mix of policy that does not clearly favor one side or the other.
• Washington. In the case of Doe v. 2Themart.com Inc., 140 F. Supp. 2d 1088 (W.D. Wash. 2001), a federal district court in Washington state determined that any use of the judicial subpoena power to compel the production of names by an ISP was an impermissible action under the First Amendment. The defendant corporation in a stockholder derivative suit attempted to defend itself by identifying individuals who had spoken badly about the company in an Internet forum, arguing that it was the statements of these web posters (rather than officer mismanagement) that caused stock prices to go down. Since the speakers were hiding behind their ISP’s cloak of anonymity, the company sought to subpoena the ISP to provide the names.
Likening the statements made in an Internet chatroom to “anonymous handbilling,” the federal court created a four-factor evaluation process to determine if an anonymous speaker on the Internet is subject to being identified via a court’s subpoena power. In deciding whether to force an ISP to disclose the identity of an anonymous poster, a court said, a judge must consider the following: 1) Was the subpoena sought in good faith and for a proper purpose? 2) Is the information sought related to a “core” claim or defense (i.e., does it relate to a matter of public concern)? 3) Is the identifying information directly relevant to the claim or defense in the lawsuit? and 4) Is there any other nonprotected information available from any other source? The court found that the identity of the posters was not of such critical importance to the company’s defense as to justify infringement on the posters’ First Amendment rights, and quashed the subpoena.
• New Jersey. A similar balancing test was used in a pair of decisions by a New Jersey Court of Appeal. In both Dendrite International, Inc. v. Does 1-14, 2001 WL 770406 (N.J. Super. A.D.), and Immunomedics, Inc. v. Does 1-10, 2001 WL 770389 (N.J. Super. A.D.), the issue involved a plaintiff seeking the identities of anonymous Net posters. Writing for the court in both cases, Justice Fall adopted a case-by-case approach to issues of Net anonymity, weighing the right of anonymous free speech against the right of a company to protect its own commercial interests.
The court denied Dendrite International, Inc., access to the posters’ identities, claiming that the company had failed to show it had been damaged by the allegedly defamatory statements posted about it online. However, Immunomedics, Inc., was able to show that the information posted anonymously on the Net about the company could only have come from employees violating their confidentiality agreements. Thus, the court allowed Immunomedics, Inc., to subpoena the identities of the posters from Yahoo!.
• Virginia. Finally, in March of this year the Supreme Court of Virginia overturned the opinion of a lower state court and denied a company the right to subpoena America Online, Inc., to turn over the names of anonymous members of an AOL web forum. In America Online v. Anonymous Publicly Traded Company, 542 S.E.2d 377 (2001), anonymous posters had allegedly defamed the plaintiff, an Indiana corporation. Concern for the posters’ First Amendment right to speak without being identified was of central import for the decision.
Unfortunately for the plaintiff in this case, the very fact that it also wanted to remain anonymous (identifying itself as “Anonymous Publicly Traded Company,” or APTC) in order to limit its exposure to more mainstream media, played a key role in the Virginia Supreme Court’s decision. The court refused to permit an anonymous plaintiff to force an ISP to divulge the identities of anonymous defendants without first making its own identity known. Thus, a company who was hoping to minimize any additional damage to itself ended up losing out on an opportunity to learn the identity of its alleged defamers.

Issue Is Speech, Not Privacy
On a somewhat related note is a year 2000 federal case out of Kansas. In United States v. Kennedy, 81 F. Supp. 2d 1103 (D. Kan. 2000), the court held that an individual web poster had no expectation of privacy under the Fourth Amendment protecting him from a government-issued subpoena. The defendant was accused of engaging in online child pornography, but was hidden behind his anonymous Internet alias. The court allowed the federal prosecutors to force the defendant’s ISP to disclose his personal information. What bearing (if any) this case will have on the issue of civil cyber-slander remains to be seen.

Conclusion
Unfortunately, issues involving cyber-slander over the Internet are just barely beginning to be addressed by a legal system that seems to operate about a century behind the times. The decisions of the Florida court are encouraging, however, and the Washington, New Jersey, and Virginia decisions will provide guidance on how to approach future actions in which the identity of anonymous Internet posters is at issue.

¹ Thanks to attorney Bruce Fischman of Fischman, Harvey & Dutton, P.A., for his cooperation and insight on the issues involved in the case of Erik Hvide, Mr. Fischman’s client.
² Fla. Stat. §770.01 et seq.
³ 763 So. 2d 1173 (2000).


Matthew S. Effland is an attorney with the Tampa office of Constangy, Brooks & Smith, LLC. He graduated from Cornell College and received his J.D. from Texas Tech University School of Law in 1999. His practice involves representing management in all facets of labor and employment law issues.
This column is submitted on behalf of the Labor and Employment Law Section, Stuart Alan Rosenfeldt, chair, and F. Damon Kitchen, editor.