Public Citizen press release
INTERNET - EMAIL LIABILITY?
Jan. 9, 2002
Still news! Company's Lawsuits To Deter Critical Comments Backfire;
Company Dismisses Cases, Pays Critics' Attorney Fees
WASHINGTON, D.C. -- Hollis-Eden Pharmaceuticals has paid $107,887 in
attorney fees and agreed to dismiss two cases against stockholders
who posted critical messages about the company on an Internet
message board.
In both cases, the trial court earlier had agreed with the critics,
who were both shareholders represented by the Public Citizen
Litigation Group, that the suits were improper SLAPPs (Strategic
Litigation Against Public Participation) - lawsuits intended to
deter them and others from exercising their First Amendment right to
criticize the company.
In
the first case, filed in December 2000, Hollis-Eden, a drug
development company based in San Diego, sued 10 individuals,
claiming they had posted defamatory messages on a Yahoo! message
board devoted to discussion about the company. Public Citizen
represented two of the posters and asked the court to dismiss the
complaint against them on the ground that the suit was an unlawful
attempt to chill the exercise of their constitutional right to speak
freely about the publicly held company.
California's
anti-SLAPP law is based on the recognition that the lawful exercise
of First Amendment rights is threatened by the financial and
emotional cost of defending against a frivolous lawsuit. The law
offers defendants a mechanism for seeking prompt dismissal of
meritless lawsuits that challenge speech about a public issue or
speech made in connection with an official proceeding.
In March 2000, the trial court agreed with Public Citizen that the
postings of the two shareholders concerned a matter of "public
interest" within the meaning of the anti-SLAPP statute and that the
statements were not defamatory. The court dismissed the case against
the two and awarded the defendants attorney fees and costs of
approximately $72,000. Hollis-Eden appealed. Both parties had filed
briefs and were awaiting a date for oral argument when they agreed
to settle the case.
Soon after the trial court dismissed the first case, Hollis-Eden
again sued one of the two original defendants, this time for a
single message he posted in March 2001. Public Citizen again invoked
the anti-SLAPP statute, and the court again dismissed the case.
Hollis-Eden's appeal and a motion for attorney fees in the trial
court were both pending when the parties agreed to a settlement.
Under the terms of the settlement, the two defendants accepted
$107,887 in attorney fees and costs in the two cases, and
Hollis-Eden agreed to dismiss both appeals. Both defendants retain
their First Amendment rights to speak about the company.
"Hollis-Eden tried for a full year to use the court system to
intimidate its critics into silence," said Allison Zieve, a Public
Citizen Litigation Group lawyer who represented the two individuals.
"Better late than never, the company seems to have realized that
frivolous lawsuits were not going to suppress criticism and, in
fact, were creating more ill-will for the company among its
stockholders."
Public Citizen is a nonprofit consumer advocacy organization based
in Washington, D.C. For more information, please visit
www.citizen.org.
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