Structured Ramblings: “Legalized Highway Robbery” and Speaking Your Mind on the Internet
I came upon this interesting case on Internet speech, privacy, and defamation at EFF.org and found the ruling rather interesting. The case centered on a number of critical posts made to two Yahoo! message boards by anonymous posters, including the defendant using the avatar “Stokklerk”, relating to the company USA Technologies, Inc. USAT (the company’s stock market acronym) is involved in “wireless, cashless, micro-transactions and networking services”, and since its IPO in 2000, the value of the company has plummeted from a high of about $400/share to its current selling price of $.66/share. Perhaps not surprisingly, critics of the company and its management have emerged over the years, including the aforementioned commenter Stokklerk, who claimed that USAT was “legalized highway robbery” and that CEO George Jensen was “fleecing humanity”. The anonymous poster also made references to USAT being a “soft” Ponzi scheme, claiming that it made outsized compensation payments to executives while failing to generate profits or otherwise show progress toward sustainability. The tone of the comments clearly portrayed the company in a poor light, and while the actual credibility of the comments certainly is open to debate, the fact remained that the prominence and quantity of said comments on a major message board related to the company was not good for business.
So in a surprise to no one who has followed Internet-based disputes, USAT brought suit against Yahoo! to disclose Stokklerk’s IP address pursuant to Securities Exchange Act of 1934, specifically Section 10(b) and related Pennsylvania common law defamation statutes. USAT claimed that by posting these negative comments about USAT on a publicly-accessible forum, Stokklerk and others were involved in a “scheme” to “enrich themselves through undisclosed manipulative trading tactics.” In effect, USAT was claiming that various anonymous posters on a Yahoo! forum were involved in a remote cabal to undermine the value of the company’s stock. So for those of you scoring at home, Internet bloggers were apparently a major contributor in USAT retaining a mere .17% of its initial IPO value.
Well, the District Court of northern California clearly did not agree, finding that “the Constitutional protection afforded pseudonymous speech over the internet, and the chilling effect that subpoenas would have on lawful commentary and protest.” The Court also shot holes in the notion that Stokklerk and others were involved in some coordinated assault against USAT and its stock, pointing out that “[USAT] does not allege any facts that defendant ever owned or sold any USAT stock or submit competent evidence that Stokklerk’s alleged statements distorted the market price for USAT stock, and that USAT was damaged as a result." The gist of the Court’s ruling was that while USAT might not agree with the posts made by Stokklerk regarding USAT, these comments are clearly framed as the opinions of the poster and, if perhaps a bit hyperbolic, still should be protected as criticism and not defamatory.
Not surprisingly, I am happy with this ruling. Commenting on social networks and public forums is a new frontier of public discourse, and while there certainly should be limits on what is deemed defamatory and not, making negative comments about an underperforming company and its management strikes me as well within the wheelhouse of free speech. Stokklerk was clearly stating his (as the decision noted, the masculine form was accepted for convention in the brief, and does not necessarily identify the gender of the poster) opinions about USAT and its rather dramatic fall in value, and to be fair made comments that are rather tame by Internet standards. True, if Stokklerk actively and knowingly spread lies and misinformation about USAT and (especially) its executives, I would be more accepting of this type of suit. Because while I am a firm believer that anonymity on the Internet is something to be protected, that should not give carte blanche to post anything you want with impunity (we even have a term for those types of people). Especially with respect to executives, there is a fine line between stating one’s negative opinions and openly attacking an individual, and one should be held responsible if that line is crossed. That is why most legislatures have passed defamation laws that include striations of “public figures,” placing a greater burden on the aggrieved party show malice and intent to defame for public figures (either full or limited).
Hopefully this will help to cement a precedent that free speech needs to be protected on the Internet, even at the expense of some nasty words being shared. I’m sure that USAT felt that they had a viable case here, but some would argue that instead of picking a fight with some anonymous posters, USAT should focus its attention more on fixing the problems that the commenters highlighted.