Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 21, 1993 TAG: 9303210121
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: LENGTH: Long
SUIT COULD DEFINE LIMITS ON SPEECH VIA COMPUTER
The trouble started last summer, when Peter DeNigris bought his first computer.For years, the 41-year-old Long Island, N.Y., elections forms processor had invested small sums in small companies. Like many amateur investors, he had lots of opinions about his stocks, but few people who cared to hear them. Then DeNigris discovered Prodigy, an electronic information service that operates a bulletin board system with hundreds of discussion topics, including one called Money Talk.
With a computer, communications modem and Prodigy, DeNigris now could speak his mind to a potential audience of more than 2 million Prodigy subscribers, including many who shared his keen interest in low-priced stocks.
Now, in a case that may test the boundaries of free speech in the emerging computer age, a small New Jersey company called Medphone Corp. is suing DeNigris in federal court in New Jersey. Medphone alleges DeNigris' comments on the Money Talk board helped cause an almost 50 percent decline in the company's stock last summer. The suit also charges him with libel and securities fraud.
In an era when freedom of the press no longer belongs only to those who own one (the $14.95 monthly Prodigy fee will suffice), the case raises questions about responsibility and liability on what has been called the Electronic Frontier. They are questions likely to be posed with greater urgency as the land of high technology grows more populated.
Modern law has failed to keep up with the rapid spread of communications technology. As a result, the high-tech community has been left to wrangle over which conventional mode of communication most resembles the new ones.
"Up to this point we've had two communication modes," says Jack Rickard, editor of Boardwatch Magazine. "One-to-one: you could call someone on the phone, and one-to-many: you could publish something in the L.A. Times. This is many-to-many. We've never had anything like it before."
More than 12 million Americans regularly log on to one of the nation's 60,000 bulletin boards, which have doubled in number in the past 18 months. With a few punches on a computer keyboard, bulletin board users can get baseball scores, stock market reports or the latest version of Duke Nukem. They can swap car repair tips or chat about the latest episode of "The Simpsons."
Hundreds of boards contain information or discussion areas aimed specifically at investors. Yet, what can and can't legally be said on them, and who is ultimately responsible, is far from clear. Part of the problem is that people tend to say things electronically that they wouldn't dare say otherwise. Bulletin boards are often the sites of "flaming," the term used to describe an exceptionally argumentative attack posted on a board.
Among DeNigris' more inflammatory postings, according to Medphone's suit, was this one sent the morning of Sept. 7:
"Is the end near for Medphone????????? Stock is quoted 25 cents to 38 cents. Closed at a new low Friday, at (38 cents). My research indicated company is really having a difficult time. No cash, no sales, no profits, and terrible management. This company appears to be a fraud. Probably will cease operations soon!"
DeNigris says his comments about Medphone were prompted by a debate already taking place on Money Talk the first time he logged on last July. Since he had lost about $9,000 when he sold his Medphone stock in November, he said, he was anxious to contribute to the discussion.
Medphone Chairman S. Eric Wachtel says DeNigris' remarks were out of line. "This guy was logging on three, four times a day to say these things. Why would someone do that?" Wachtel demands. "The things he has done have been very damaging to this company."
The Medphone lawsuit has sparked a storm of controversy among Prodigy subscribers, especially after word got out that the White Plains, N.Y.-based on-line service in January released records of subscriber messages subpoenaed by lawyers for both parties. Some subscribers who were critical of Medphone worry that they could be dragged into the suit. Others contend that Prodigy, not individual users, should be held responsible for whatever gets "published" on its boards.
While the Medphone case is not the first to raise the issue of bulletin board libel, only one such case has gone to court, said Shari Steele, an attorney for the Electronic Frontier Foundation, a Washington, D.C.-based civil liberties group formed in 1990 to defend the constitutional rights of computer hackers. In 1991, the publisher of an on-line newsletter sued the CompuServe Information Service, alleging he had lost customers as a result of defamation by another newsletter the service distributed. In ruling for CompuServe, a New York district judge compared the service to a bookseller, who courts have ruled can not be held responsible for the content of each book they sell.
Prodigy - a joint venture of International Business Machines Corp. and Sears, Roebuck & Co. - is not named as a defendant in the Medphone case. At Medphone's request last month, however, U.S. Magistrate John Pisano gave the company until May 24 to bring in other parties.
Prodigy lawyer William Schneck, who has responded directly on Money Talk to user complaints, concedes he is frustrated with the law's lack of clarity regarding electronic communication. "How can Prodigy deny responsibility for posts appearing on its boards? Because it hasn't been legally established that we are responsible for notes," he wrote in response to a raft of questions from subscribers.