Global Telemedia Intern., Inc. v. Doe 1
2001 WL 314520, 132 F.Supp.2d 1261 (2001)
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Rule of Law:
Under California's anti-SLAPP statute, pseudonymous, hyperbolic, and critical statements about a publicly traded company posted on an Internet message board are considered an exercise of free speech in connection with a public issue. To defeat a motion to strike such a defamation suit, the plaintiff must show a probability of success on the merits, which requires demonstrating the statements were verifiably false statements of fact, not protected opinion, and that they caused actual damages.
Facts:
- Plaintiff Global Telemedia International, Inc. (GTMI) is a publicly traded telecommunications company.
- In June 1999, Plaintiff Jonathon Bentley-Stevens took control of GTMI.
- GTMI's stock price experienced significant volatility, rising to a high of around $4.70 per share in March 2000 and falling to a low of $0.25 per share by October 2000.
- Defendants Ronald Reader (posting as 'Electrick_Man') and Barry King (posting as 'Bdaman609') were individual investors who posted messages about GTMI.
- Between March and October 2000, Reader and King posted numerous critical and negative messages about GTMI and Stevens on the Raging Bull Message Boards, a public and unregulated internet forum dedicated to discussing publicly traded companies.
- The online forum was characterized by anonymous posters, informal language, hyperbole, and invective.
- King's posts described GTMI as a 'sinking ship' and told other investors they had been 'screwed out of your hard earned money'.
- Reader's posts characterized Stevens as having been 'busted for misrepresentation' and included a hyperlink to a public SEC enforcement document.
Procedural Posture:
- Global Telemedia International, Inc., Jonathon Bentley-Stevens, and Regina S. Peralta filed a complaint in California state court against several anonymous 'Doe' defendants for trade libel, libel per se, and interference with contractual relations.
- The Defendants removed the action to the United States District Court for the Central District of California.
- Defendants Reader and King, identified as two of the 'Does', filed separate Special Motions to Strike the complaint pursuant to California's anti-SLAPP statute, Cal. Civ. Proc. Code § 425.16.
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Issue:
Do negative, pseudonymous postings about a publicly traded company on an internet financial message board constitute an exercise of free speech in connection with a public issue under California's anti-SLAPP statute, thereby requiring the plaintiff to demonstrate a probability of success on its defamation and trade libel claims?
Opinions:
Majority - Carter, J.
Yes. The defendants' postings are a protected exercise of free speech in connection with a public issue under California's anti-SLAPP statute, and the plaintiffs failed to demonstrate a probability of success on their claims. The court employed a two-part analysis. First, it determined that the speech was 'in connection with a public issue' because GTMI is a publicly traded company with thousands of investors, and it voluntarily entered the public arena via press releases, making its performance a matter of public interest. Second, the court found that the plaintiffs could not show a probability of success on their libel claims because the defendants' statements constituted non-actionable opinion, not defamatory fact. Applying a 'totality of the circumstances' test, the court reasoned that the setting (a 'cacophony of an Internet chat-room'), the anonymous and informal nature of the posts, and the use of hyperbolic and figurative language ('sinking ship,' 'fly the coop') would lead a reasonable reader to view the statements as opinion. Furthermore, even if the statements were factual, the plaintiffs failed to show causation for their alleged damages, as the company's stock price was already in steep decline before the defendants' negative posts began.
Analysis:
This is a significant early federal court decision applying a state anti-SLAPP statute to the then-emerging context of anonymous internet message boards. The case establishes that online discussions about publicly traded companies qualify as speech on a 'public issue,' affording strong free speech protections to individual investors and critics. The court's analysis signals that courts will view the context of online forums—their chaotic, hyperbolic, and opinion-driven nature—as crucial in distinguishing protected opinion from actionable defamation. This ruling raises the bar for corporations seeking to sue anonymous online critics, requiring them to not only prove a statement is a false fact but also to provide clear evidence that the specific online post caused tangible financial harm, a difficult evidentiary burden.
