{"article":{"id":12537,"heading":"Company Loses Second Bid to Silence Critical Stockholder","author":"Public Citizen","created":"2001-10-31 18:32:28","modified":"2005-08-15 00:42:32","last_modified":"Mon, 15 Aug 2005 07:42:32","article":"

<\/div>Oct. 26, 2001 \r\n             \r\n


Company Loses Second Bid to Silence Stockholder Who Posted Critical \r\nComments on Web

California Judge Dismisses SLAPP Suit Filed by \r\nHollis-Eden Pharmaceuticals

WASHINGTON, D.C. -- A California judge has \r\ndismissed Hollis-Eden Pharaceuticals' second lawsuit against a stockholder who \r\nposted critical messages on an Internet message board. The judge agreed with \r\nPublic Citizen Litigation Group's position that the suit was an improper SLAPP \r\nsuit -- (Strategic Litigation Against Public Participation) -- a lawsuit \r\ndesigned to deter public participation.

In May 2001, Hollis-Eden, a drug \r\nresearch firm, sued Los Angeles area resident Greg Alcus, claiming that a \r\nmessage he had posted to Yahoo!'s \"HEPH\" message board in March defamed the \r\ncompany.  Alcus, represented by Public Citizen, moved to strike the \r\ncomplaint pursuant to California's \"anti-SLAPP\" statute on the ground that the \r\nsuit was an attempt to chill his right to speak freely about the publicly held \r\ncompany.  Recognizing that First Amendment rights are threatened by the \r\nfinancial hardship and chilling effect of defending a frivolous lawsuit, the \r\nanti-SLAPP statute gives SLAPP defendants a mechanism for having meritless suits \r\ndismissed early in the litigation.

The judgment entered this week follows \r\na Sept. 24 ruling by California Superior Court Judge Kevin A. Enright that the \r\nsubject of Alcus' posting concerned a matter of \"public interest\" within the \r\nmeaning of the SLAPP statute and that Hollis-Eden's claims against Alcus were \r\nmeritless. In the March 21, 2001, posting, Alcus asked why the company was \r\nsitting on information about a drug research project. Alcus based his message on \r\nthe company's public filings and answers given by a company official during a \r\nshareholders' meeting.

\"Hollis-Eden's real gripe was not with any \r\nparticular posting, but with the fact that Mr. Alcus was critical of the \r\ncompany,\" said Allison Zieve, an attorney with Public Citizen who represented \r\nAlcus. \"Hollis-Eden's goal was to stifle Mr. Alcus. The judge clearly understood \r\nthat.\"

San Diego-based Hollis-Eden first sued Alcus on Dec. 14, 2000, \r\nclaiming that two comments he posted in November were defamatory.  Enright \r\ndismissed that case on March 28, 2001, saying that the comments were related to \r\na matter of public interest and that the company had no likelihood of prevailing \r\nin the case. The judge ordered the company to pay approximately $72,000 for \r\nAlcus' attorney fees.

In the second suit, Hollis-Eden complained about \r\nthe March 21 posting. The company again claimed that Alcus had defamed the \r\ncompany. In dismissing the suit, the judge again awarded attorney \r\nfees.

In a motion to strike filed on Alcus' behalf, Zieve argued that \r\nAlcus' March posting fell within the scope of a California statute that protects \r\npeople from SLAPP suits and was not defamatory. The company is a publicly traded \r\ncorporation that invites public comment, she argued. When the company's stock \r\nprice falls, when its drug development stalls or when investors have trouble \r\nobtaining information about the company, the ensuing discussion is a matter of \r\npublic interest.

Public Citizen worked on the case with local counsel \r\nCharles A. Bird of Luce, Forward, Hamilton & Scripps LLP, based in San \r\nDiego, Calif.

For background information about this and other Internet \r\nfree speech cases that Public Citizen has handled, please go to http:\/\/www.citizen.org\/litigation\/briefs\/IntFreeSpch\/articles.cfm?ID=5801

###

Public Citizen is a nonprofit consumer advocacy \r\norganization based in Washington, D.C. For more information, please visit \r\nwww.citizen.org.

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