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Internet Defamation Suit Ends With Defense Verdict
From fork-admin@xent.com  Tue Aug  6 12:01:26 2002

Subject: Internet Defamation Suit Ends With Defense Verdict
In one of the first trials in the country to
address Internet defamation, a Dallas County,
Texas, jury last week rejected a $700 million
suit by an Internet company that claimed it
was harmed by negative electronic messages
posted by an employee of a competing company.
ZixIt, a Dallas Internet company, filed ZixIt
Corp. v. Visa International, et al. in 1999,
alleging it was harmed by Paul Guthrie, then
a vice president with Visa. ZixIt alleged in
its suit that Guthrie posted more than 400
anonymous messages, many of them negative,
about ZixIt on the Yahoo Finance ZixIt Internet
message board, causing ZixIt's stock price to
destroyed the company's ability to market
authorization system, which allows consumers
to make purchases without revealing their
credit card numbers to merchants. Visa has
ZixIt alleged that the postings caused its
been successful, the company believed it
would have been worth more than $1 billion,
according to lawyers involved in the case.
On July 31, a jury in Judge Merrill Hartman's
Neal Manne and Kenneth McNeil, lawyers from
Houston's Susman Godfrey who represented
ZixIt at trial, did not return calls for
"The company hasn't made any decision about
an appeal," says Cindy Lawrence, a ZixIt
spokeswoman. "The outcome of the lawsuit
Visa's lawyers alleged that Guthrie acted on
his own and had a right to free speech, and
effect on ZixIt's stock. Guthrie has since
Guthrie was not a defendant in the case.
represented by Todd Noonan, an attorney in
Sacramento, Calif.'s Stevens & O'Connell.
succeed or fail [is] because of what you
Internet companies didn't succeed for all
sorts of reasons," says Jeff Tillotson, a
partner in Dallas' Lynn, Tillotson & Pinker,
ZixIt's case was a hard sell to the jury,
especially with the reality of the economy,
has fallen and the trouble with Internet
companies. I think the jury took that into
There were lessons to be learned from the
Internet defamation trial, says Mike Lynn,
who also represented Visa at trial. Even
protected form of free speech, that freedom
won't prevent a company from being dragged
into court if its employee blasts another
"A company can be responsible for what an
employee posts on a message board," Lynn
says. "The courts have said you're entitled
to go to a jury to determine whether there
are damages as a result of that. The law is
very odd, not mature, [and] damage theories
interesting twist to the trial, Tillotson
says. Many of those who posted messages on
throughout the three-week trial, he says.
"It was apparent to everyone that many of
the people who posted on these message boards
were watching the trial," Tillotson says.
"It really was wild. The lawyers felt like