by Public Citizen
Wednesday, Oct. 31, 2001 at 10:32 AM
"Hollis-Eden's real gripe was not with any particular posting, but with the fact that Mr. Alcus was critical of the company," said Allison Zieve, an attorney with Public Citizen who represented Alcus. "Hollis-Eden's goal was to stifle Mr. Alcus. The judge clearly understood that."
error
Oct. 26, 2001
Company Loses Second Bid to Silence Stockholder Who Posted Critical
Comments on Web
California Judge Dismisses SLAPP Suit Filed by
Hollis-Eden Pharmaceuticals
WASHINGTON, D.C. -- A California judge has
dismissed Hollis-Eden Pharaceuticals' second lawsuit against a stockholder who
posted critical messages on an Internet message board. The judge agreed with
Public Citizen Litigation Group's position that the suit was an improper SLAPP
suit -- (Strategic Litigation Against Public Participation) -- a lawsuit
designed to deter public participation.
In May 2001, Hollis-Eden, a drug
research firm, sued Los Angeles area resident Greg Alcus, claiming that a
message he had posted to Yahoo!'s "HEPH" message board in March defamed the
company. Alcus, represented by Public Citizen, moved to strike the
complaint pursuant to California's "anti-SLAPP" statute on the ground that the
suit was an attempt to chill his right to speak freely about the publicly held
company. Recognizing that First Amendment rights are threatened by the
financial hardship and chilling effect of defending a frivolous lawsuit, the
anti-SLAPP statute gives SLAPP defendants a mechanism for having meritless suits
dismissed early in the litigation.
The judgment entered this week follows
a Sept. 24 ruling by California Superior Court Judge Kevin A. Enright that the
subject of Alcus' posting concerned a matter of "public interest" within the
meaning of the SLAPP statute and that Hollis-Eden's claims against Alcus were
meritless. In the March 21, 2001, posting, Alcus asked why the company was
sitting on information about a drug research project. Alcus based his message on
the company's public filings and answers given by a company official during a
shareholders' meeting.
"Hollis-Eden's real gripe was not with any
particular posting, but with the fact that Mr. Alcus was critical of the
company," said Allison Zieve, an attorney with Public Citizen who represented
Alcus. "Hollis-Eden's goal was to stifle Mr. Alcus. The judge clearly understood
that."
San Diego-based Hollis-Eden first sued Alcus on Dec. 14, 2000,
claiming that two comments he posted in November were defamatory. Enright
dismissed that case on March 28, 2001, saying that the comments were related to
a matter of public interest and that the company had no likelihood of prevailing
in the case. The judge ordered the company to pay approximately $72,000 for
Alcus' attorney fees.
In the second suit, Hollis-Eden complained about
the March 21 posting. The company again claimed that Alcus had defamed the
company. In dismissing the suit, the judge again awarded attorney
fees.
In a motion to strike filed on Alcus' behalf, Zieve argued that
Alcus' March posting fell within the scope of a California statute that protects
people from SLAPP suits and was not defamatory. The company is a publicly traded
corporation that invites public comment, she argued. When the company's stock
price falls, when its drug development stalls or when investors have trouble
obtaining information about the company, the ensuing discussion is a matter of
public interest.
Public Citizen worked on the case with local counsel
Charles A. Bird of Luce, Forward, Hamilton & Scripps LLP, based in San
Diego, Calif.
For background information about this and other Internet
free speech cases that Public Citizen has handled, please go to http://www.citizen.org/litigation/briefs/IntFreeSpch/articles.cfm?ID=5801
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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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