Defendants' Winning Motion to Strike in 'Global Telemedia Int'l, Inc. v. Does'

Complaint, 16; Exh. 2; see also Reader Decl., 9 and 10, Exh. 3.

Plaintiffs have improperly targeted Reader for these statements. In addition to filing this meritless and vindictive lawsuit, Plaintiffs have exposed Defendants to actual danger. Reader Decl., 12-15. Plaintiffs befriended certain Message Board users and encouraged them to post private emails from GTMI on the Message Board, so that Plaintiffs could inappropriately disclose private information about Defendants without appearing directly responsible. Plaintiffs also instructed their public relations contact, Tim Garlin of PrimeVest, to post emails on the Message Board in this fashion. Several of these impromptu “press releases” expressed inflammatory and vindictive comments about the Defendants, and even threatened them with criminal convictions and class action lawsuits. Through these public releases, Plaintiffs demonized Reader (and the other Defendants), characterizing Reader’s statements as destructive behavior equivalent to that of a thief who “stole into your home and took your savings.” Gray Decl., 13, Exh. J. Plaintiffs stirred the ire and venom of the posters on the Message Board, several of whom have displayed � in the language of their posts – an unsteady judgment and almost unnatural preoccupation with the “soap opera” played out on the GTMI Message Board. Plaintiffs ultimately released an email that was posted on the Message Board (as Plaintiffs expected), exposing Reader’s true name and residential address, thereby destroying his personal privacy and exposing his family to the very real threat of physical danger from the other posters. Gray Decl., 13, Exh. J.

As explained below, the Complaint is not meritorious because the innocuous statements cited in the Complaint are not actionable. Reader’s statements were not assertions of fact and therefore cannot be defamatory. Even if his comments are considered statements of fact, they are substantially true. In addition, Reader believed his statements to be true, thus he did not act with the requisite actual malice. Reader Decl., 9 and 11. Further, his statements did not cause any damage to Plaintiffs’ reputation. Finally, Plaintiffs’ other causes of action, arising out of protected speech, are analyzed like the defamation claim, and also must fail.

II. INTRODUCTION TO THE INTERNET AND RAGING BULL MESSAGE BOARDS

An understanding of the Internet and the Raging Bull Message Boards is essential to resolve this Motion. As the United States Supreme Court has noted, the Internet is a democratic institution in the fullest sense of the word. [FOOTNOTE 5]It serves as the modern equivalent of Speakers’ Corner in England’s Hyde Park, where the common man may voice his opinion, however silly, profane, or brilliant it may be, to all who choose to listen. Knowing that people have personal and economic interests in the corporations that shape our world, and in the stocks that will hopefully provide for a secure future, and knowing, too, that people love to share their opinions with anyone who will listen, Raging Bull organized an outlet for the expression of opinions on these topics. This outlet, called the Message Boards, is an electronic bulletin board system where individuals freely discuss major companies by posting comments for others to read and respond to. These forums act as the electronic equivalent of a hallway cork-board by allowing participants to post messages for others, or simply read what has already been posted. The collection of messages posted by participants is archived and is accessible to users, creating a form of prolonged conversation.

Raging Bull has built a Message Board for nearly every publicly traded company and anyone may post messages to it. The messages are not regulated or endorsed by Raging Bull or the companies discussed. On the Message Board, real or perceived problems with a company’s stock, products, and management are frequently discussed. The subject companies frequently do not like the opinions expressed on the Message Boards. Unlike the traditional media outlets that are dominated by large corporations, the Internet is beyond the control of corporate spin doctors. [FOOTNOTE 6]Given the increasing consolidation of media companies, the alternative soapbox of the Internet is essential in order to maintain a diverse marketplace of ideas and opinions.[FOOTNOTE 7]

The individuals who post on the Message Boards generally do so under a screen name or “handle” — similar to the handles that truck drivers use when communicating via CB radio. These typically colorful nicknames protect the writer’s identity from those who may disagree with him, and encourage the uninhibited exchange of ideas and opinions.

Although the Message Boards’ apparent anonymity gives some people cause for concern, this anonymity is fully protected under the First Amendment. [FOOTNOTE 8]The United States Supreme Court has recognized the right to speak anonymously. McIntyre v. Ohio Elections Comm’n, 514 U.S. 334, 115 S. Ct. 1511, 131 L. Ed. 2d 426 (1995); see also, Rancho Publications v. Superior Court, 68 Cal. App. 4th 1538, 1540-41, 81 Cal. Rptr. 2d 274, 275 (1999). In McIntyre, the Supreme Court recited an impressive listing of important anonymous contributors, ranging from Shakespeare to the authors of The Federalist Papers. 514 U.S. at 342-44. After extensive discussion, the Court concluded that anonymity “is not a pernicious, fraudulent practice, but an honorable tradition of advocacy and of dissent. Anonymity is a shield from the tyranny of the majority.” Id. at 357. The right to anonymity on the Internet is given particular deference. See, e.g., ACLU v. Zell Miller, 977 F. Supp. 1228, 1230 (N. Dist. Ga. 1997) (constitutional right to communicate anonymously and pseudonymously on the Internet, and discussion of frequent practice of Internet users to falsely identify themselves); see also, ACLU v. Johnson, 4 F. Supp. 2d 1029, 1033 (Dist. Ct. New Mex. 1998) (upholding right to communicate anonymously over the Internet).

Anonymity on the Message Boards is particularly important. As seen from the various messages and responses posted on the GTMI board, the exchange of opinions can get very heated, and they are often peppered with invective and insults. Indeed, pro-GTMI adherents heatedly took Reader to task on the Message Board for his opinions. Reader Decl., 16, Exh. 8.

Message Board readers view these exchanges with a grain of salt, realizing that they cannot identify the speakers or evaluate their credibility, and understanding the informal, conversational, and generally subjective nature of the posts. Plaintiffs should not be permitted to transparently employ litigation as a procedural vehicle to silence those who do not agree with GTMI’s public-relations machinations, and to punish those who disagree with GTMI’s opinion of itself.

III. SECTION 425.16 MANDATES DISMISSAL OF LAWSUITS DESIGNED TO CHILL FREE SPEECH

California law protects against the use of the judiciary to chill the exercise of free speech. Claims that have this intended effect are known as “SLAPP” suits, or Strategic Litigation Against Public Participation. In order to thwart SLAPP suits, the Legislature enacted California Code of Civil Procedure section 425.16. This statute requires that a lawsuit be dismissed if: (1) the suit is based on a defendant’s exercise of his free-speech rights and, (2) the plaintiff cannot establish a probability of success on the merits.

Examining Section 425.16, one court noted:

SLAPP suits stifle free speech. They undermine the open expression of ideas, opinions and the disclosure of information. “The marketplace of ideas, not the tort system, is the means by which our society evaluates [and validates] those opinions.” The threat of a SLAPP action brings a disquieting stillness to the sound and fury of legitimate . . . debate.

Beilenson v. Superior Court, 44 Cal. App. 4th 944, 956, 52 Cal. Rptr. 2d 357, 365 (1996).

Importantly, in 1997 the Legislature amended Section 425.16 to state that it “shall be construed broadly.” Cal. Civ. Proc. � 425.16(a). Language was also added to underscore that Section 425.16 applies to “. . . any other conduct in furtherance of the exercise of . . . the constitutional right of free speech in connection with a public issue or an issue of public interest.” Cal. Civ. Proc. � 425.16(e)(4); Briggs v. Eden Council For Hope & Opportunity, 19 Cal. 4th 1106, 1119, 81 Cal. Rptr. 2d 471 (1999) (statutory amendment reflects original legislative intent that Section 425.16 be construed broadly).

The courts have given special consideration to SLAPP cases and have noted that “the early termination of [such a] lawsuit is highly desirable . . . . Moreover, �we cannot forget that the public has an interest in receiving information on issues of public importance even if the trustworthiness of the information is not absolutely certain.’” Baker v. Los Angeles Herald Examiner, 42 Cal. 3d 254, 269, 228 Cal. Rptr. 206 (1986).[FOOTNOTE 9]

That the instant lawsuit was filed solely to punish disliked, but constitutionally protected, speech can hardly be doubted. This is precisely the type of litigation that the drafters of Section 425.16 intended to eliminate from our court system.[FOOTNOTE 10] If this frivolous suit is allowed to proceed, not only will it unnecessarily burden judicial resources, but it will impose an even costlier toll on the preservation of democratic debate.

IV. THIS LAWSUIT FALLS UNDER THE SCOPE OF SECTION 425.16 BECAUSE GTMI AND ITS MANAGEMENT ARE PUBLIC FIGURES AND MATTERS OF PUBLIC INTEREST

Corporate performance and commercial activities fall into the category of a “matter of public interest.” As such, the public enjoys broad latitude to discuss and present opinions on these topics. In Morningstar, Inc. v. Superior Court, 23 Cal. App. 4th 676, 29 Cal. Rptr. 2d 547 (1994), Pilgrim, Inc., a mutual fund manager and sponsor, sued Morningstar, a financial research company, for defamation because of a published statement that described Pilgrim’s advertisements as misleading. The court held that the allegedly defamatory statement “. . . presents to the public the author’s view on a matter of public concern: the impact on consumers who invest their money in reliance on advertisements such as Pilgrim’s, especially in light of proposed Securities and Exchange Commission regulations concerning mutual fund advertising.” Id. at 695; see also Wilcox v. Superior Court, 27 Cal. App. 4th 809, 822, n.6, 33 Cal. Rptr. 2d 446, 453 (1994) (defamation suit over advocacy of economic boycott by competing court-reporter organization; holding the anti-SLAPP statute applies to “commercial speech”); Church of Scientology v. Wollersheim, 42 Cal. App. 4th 628, 650, 49 Cal. Rptr. 2d 620, 633 (1996) (“. . . matters of public interest include . . . activities that involve private persons and entities, especially when a large, powerful organization may impact the lives of many individuals”).

By their very nature, publicly owned companies seek public attention to promote their stock. They voluntarily inject themselves into public discussion. In the seminal case on public figures, Gertz v. Robert Welch, Inc., 418 U.S. 323, 342, 94 S. Ct. 2997, 3008, 41 L. Ed. 2d 789 (1974), the Supreme Court said that “[t]hose who, by reason of the notoriety of their achievements or the vigor and success with which they seek the public’s attention, are properly classed as public figures . . .”

GTMI and its officers are indisputably matters of public interest. The very number of news articles concerning the company illustrates this: over 400 such articles in the past decade. Gray Decl., 3. GTMI craves the public light and uses public relations personnel to publicize itself. A significant number of people have invested their money in GTMI and are justifiably interested in its performance. Gray Decl., 2. In fact, under securities laws, GTMI, as a publicly owned company, is required to be run in the interest of its stockholders. The GTMI Message Board on Raging Bull has witnessed over 50,500 postings since 1998. [FOOTNOTE 11]GTMI even has a website to promote its own version of reality.[FOOTNOTE 12]

Dismissal is necessary to end the threat to the First Amendment created when voluntary public figures like GTMI, Stevens, and Peralta invite public comment and then try to punish that comment when they do not like what they hear.

V. THIS LAWSUIT HAS NO LIKELIHOOD OF SUCCESS ON THE MERITS

This lawsuit has no likelihood of success on the merits because (1) Reader’s statements were not assertions of fact and therefore cannot be defamatory; (2) even if the comments are considered statements of fact, they are substantially true; (3) Reader did not act with actual malice; and (4) Reader’s statements did not cause any damage to Plaintiff’s reputation. Moreover, Plaintiffs’ other causes of action, arising out of protected speech, are analyzed like defamation and also fail.

A. Reader’s Statements Were Not Assertions Of Fact And Therefore Cannot Be Defamatory

Statements of opinion cannot give rise to a valid claim of defamation. Baker v. Los Angeles Herald Examiner, 42 Cal. 3d at 260-261. “However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas.” Gertz v. Welch, 418 U.S. at 339-340.

The distinction between a statement of fact and a non-actionable opinion is made by the court, and is based upon the totality of the circumstances. Baker v. Los Angeles Herald Examiner, 42 Cal. 3d at 260-261; see also Rudnick v. McMillan, 25 Cal. App. 4th 1183, 1191, 31 Cal. Rptr. 2d 193, 197 (1994). The context in which the statement was made and the facts surrounding its publication must be considered including (1) the statement’s nature and full content, and (2) the audience’s knowledge and understanding. Id. Moreover, the court must place itself in the position of the hearer or reader to determine the sense or meaning of the statement according to its natural and popular construction. Id.

As to the first component (the statement’s nature and content) – if the content is too general, it is considered a non-actionable statement of opinion. In making the distinction between actionable statements of fact and constitutionally protected statements of opinion, the courts have regarded as opinion “any broad, unfocused and wholly subjective comment.” Copp v. Paxton, 45 Cal. App. 4th 829, 837, 52 Cal. Rptr. 2d 831, 838 (1996); see also Melaleuca, Inc. v. Clark, 66 Cal. App. 4th 1344, 1353, 78 Cal. Rptr. 2d 627, 632 (1998) (“The dispositive question for the court is whether a reasonable fact finder could conclude that the published statements imply a provably false factual assertion . . . .”)

The courts have recognized that general dialogue about corporate performance, such as here, cannot give rise to an action in defamation. These cases recognize that business commentary and financial analysis are inherently speculative and that criticism of corporate management should not be constrained by defamation claims. For example, in Biospherics v. Forbes, 151 F.3d 180 (4th Cir. 1998), plaintiff was the subject of scorn in Forbes Magazine’s “Streetwalker” column, published beneath the headline “Sweet-Talking Guys.” The column stated that Biospherics’ stock price was based on “[h]ype and hope,” and that “[i]nvestors will sour on Biospherics when they realize that Sugaree [its main product] isn’t up to the company’s claims.” Id. at 182. The court found that this language was not actionable, in part, because “the context and tenor of the article . . . suggests that it reflects the writer’s subjective and speculative supposition.” Id. at 184; see also Morningstar, Inc. v. Superior Court, 23 Cal. App. 4th 676 (1994) (loose and figurative language in a financial article where the reader expects subjective value statements and opinion is not actionable). Likewise, allegedly libelous statements about a publicly traded security (i.e., negative bond ratings) have been held to be non-actionable opinion. Jefferson County Sch. Dist. No. R-1 v. Moody’s Investor’s Services, Inc., 988 F. Supp. 1341 (D. Colo. 1997).

As to the second component (the audience’s nature and understanding) � if the statement’s forum is routinely a place for publishing opinions, the courts give this great deference. Allegedly defamatory statements in newspaper columns and radio programs have been held not actionable because they were statements of opinion, expressed through the devices of advocacy, hyperbole, and generality. See, e.g., Baker v. Los Angeles Herald Examiner, 42 Cal. 3d 254 (1986); Rudnick v. McMillan, 25 Cal. App. 4th at 1193 (“[l]etters to the editor are typically laden with literary license for the purpose of expressing one’s opinion”); Hunter v. Hartman, 545 N.W.2d 699, 709 (Minn. Ct. App. 1996); Adams v. Frontier Broadcasting Co., 555 P.2d 556, 566-567 (Wyo. 1976) (“[talk radio programs] are the modern . . . town meeting . . . utilized in a similar way to afford every citizen an opportunity to speak his mind on any given issue . . . . The application of any technique of censorship to such a public forum can only result in the ultimate extinction of that forum”); see also, Gregory v. McDonnell Douglas Corp., 17 Cal. 3d 596, 603, 131 Cal. Rptr. 641 (1976) (“. . . the charges are of the kind typically generated in the `economic give-and-take’ of a spirited labor dispute in which the judgment, loyalties and subjective motives of rivals are reciprocally attacked and defended, frequently with considerable heat”).

Courts have further recognized that, in the context of the heated debates that may occur on Internet discussion groups, readers are less likely to view the published statements as assertions of fact. Nicosia v. DeRooy, 72 F. Supp. 2d 1093, 1101 (N.D. Cal. 1999). In the context of spirited critique, “�the audience may anticipate efforts by the parties to persuade others to their position by use of epithets, fiery rhetoric or hyperbole, [and thus] language which generally might be considered as statements of fact may well assume the character of statements of opinion.” Id.

One expects to find heated rhetoric and expressions of opinion on Raging Bull’s Message Boards. Internet Message Boards are ephemeral boxing-rings — forums for verbal jousting between opinions. The statements at issue here are just two of the more than 50,500 messages posted on the GTMI Message Board by interested participants who share ideas, respond to each other’s opinions, and engage in animated banter and debate. Viewers approach Message Board posts with a high degree of skepticism and a challenging attitude. Gray Decl., 8, Exh. F. Indeed, even Raging Bull prefaces the Message Boards by urging users to “. . . please approach messages with appropriate skepticism.” Gray Decl., 10, Exh. H. The following examples demonstrate this spirited (and occasionally mindless) debate:

� In GTMI Post No. 49990, user “foolsfool9″ expressed his opinion about the dishonesty of Plaintiff Stevens: “this is the screwing of everybody!!! Jbs know that all he needs to hold is three dollars to hit AMex and now he has stoped most everybody from being able to sell out and break even. most will now need 5.00 or more to break even and all he needs is three. after he hits his three hold on for the shaft thats when everything will go bentley tel!!this is all my opinon but jbs has shown me that he’s only a crook in a suit!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!”