First Amendment and Internet Criticism

[James Maule]

FYI. From another list that permits full reproduction (see note at end).

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Date: Mon, 26 Nov 2001 14:20:38 -0500
From: "Paul Levy" <PLEVY at citizen.org>
To: <declan at well.com>
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    In an unpublished decision issued earlier this year, the Court of Appeal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
http://www.courtinfo.ca.gov/opinions/documents/E027841.PDF.

    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
statute.

    "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
http://www.citizen.org/litigation/briefs/IntFreeSpch/index.cfm.

###

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
http://www.citizen.org/litigation/litigation.html

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Jim Maule
Professor of Law, Villanova University School of Law
Villanova PA 19085
maule at law.villanova.edu
http://vls.law.vill.edu/prof/maule
President, TaxJEM Inc (computer assisted tax law instruction) (www.taxjem.com)
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