Executive Faces Uphill Battle in His Suits Over Anonymous Web Attacks

Just FYI for anyone thinking about posting any more libelous comments. Pay close attention to the parts in bold. Looks like I can't sue your sorry ass YET! Good thing Mr. Zwebner is paving the way. Cheerios!

Jessica M. Walker, Daily Business Review

Like clockwork each day, someone who calls himself or herself Wolfblitzzer0 logs on to RagingBull.com, a stock-talk Internet message board, and posts slurs about Michael J. Zwebner, the chief executive of Miami Beach-based Universal Communication Systems.

Wolfblitzzer0's allegations have covered business practices, political conspiracies, and personal misdemeanors. In many posts, Wolfblitzzer0 accuses Zwebner of dirty business dealings and nefarious interactions with the Israeli government. One post accused Zwebner of claiming to keep kosher while secretly eating cheeseburgers, which are a Jewish dietary no-no because they combine meat and dairy.

Zwebner, who holds joint British-Israeli citizenship and splits his time between Tel Aviv and Miami Beach, has shown no tolerance for such cybersmearing. Since September 2003, Zwebner has aggressively fought back, filing five lawsuits in U.S. District Court in Miami in retaliation for comments on RagingBull.com, which is operated by Waltham, Mass.-based Internet network provider Lycos.

The five suits include a class action trademark case and a class action defamation case against Lycos, and a fraud suit and a libel suit against a variety of individual posters. He also filed a defamation claim against CNN, Turner Broadcasting and the real Wolf Blitzer, CNN's high-profile newsman, for failing to stop Wolfblitzzer0 from misappropriating Blitzer's name.

His latest suit, filed Jan. 19 in U.S. District Court in Miami, alleges that postings by Wolfblitzzer0 and other posters have damaged his reputation, driven down his company's share price and embarrassed him and his family.

Universal Communications Systems was founded by Zwebner in 2001. It began as a telecommunications company and recently branched out into developing a technology that extracts water vapor from air to make drinking water.

The lawsuit also accuses Lycos of an offense that could be criminally prosecuted -- cyberstalking. No criminal charges have been filed.

Zwebner's latest suit seeks to have messages about him and his company deleted, and to enjoin Lycos from posting any messages about him or Universal Communication Systems in the future.
Federal courts have been struggling to find a balance between a company's right to protect its reputation and the privacy and free speech rights of anonymous Internet posters since cybersmearing first became an issue in the late 1990s. Also at issue has been the liability of the Internet service provider in cases of online defamation. The courts have so far given Internet companies a great deal of protection.

Zwebner might be fighting an uphill battle on both fronts.
Zwebner's attorney, John H. Faro of Faro & Associates in Miami, sharply criticizes Internet network providers for what he considers their failure to police postings.

"My belief is these [providers] have done absolutely nothing," Faro said. "There is no control over these postings. They don't provide any means for enforcement of their registration policies."

Larry Stumpf, attorney for Lycos and a partner at Black Srebnick Kornspan & Stumpf in Miami, did not return calls seeking comment.

Zwebner's new suits are his most recent legal counterattack against Internet posters who besmirch his name online. He has filed a number of suits across the country against posters, who have been making derogatory comments about him since about 2000.

Faro acknowledged that Wolfblitzzer0's comments about Zwebner might go beyond a desire to manipulate the stock market. He said some of the posted hostility toward Zwebner could be related to "some business deals that didn't go forward." He didn't elaborate on those deals.
Unless Lycos is forced by the court to disclose who Wolfblitzzer0 is, confirming the identity of the poster would be virtually impossible.

Faro expects to uncover additional, similar causes of action against Lycos in the suit's discovery phase. He plans to eventually include other companies and chief executives who allegedly have been defamed on Lycos-operated Web sites.

The issue of cybersmearing publicly traded companies first surfaced in the late 1990s. Some posters are small-time traders seeking to manipulate the market by driving the price of a certain stock down so they can buy while it's low. The practice also is known as poop and scoop, or trash and cash.

The reverse of cybersmearing -- pump and dump -- occurs when Internet posters tout a certain stock in order to increase the price, then sell.

The Securities and Exchange Commission recognizes both practices as Internet fraud and warns that the most vulnerable companies are microcap companies, whose stocks are traded in small volume.

RagingBull.com is linked to Quote.com, a Lycos site that gives stock quotes and other objective data about publicly traded companies. RagingBull, however, is far from objective, and Lycos makes note of that in a disclaimer on the site.

To post on RagingBull, a user must register -- giving a name, location and e-mail address. Posters also must agree to a list of terms and conditions, which state that users who harm others or who violate the law can be terminated.

In Zwebner's defamation lawsuit filed this month, the cyberstalking claim is based on the allegation that Lycos has continually transmitted harassing communications about Zwebner and has allowed the practice to continue despite his repeated requests to stop them.

The trademark lawsuit, filed in July 2004, alleges that Lycos is using Universal Communication Systems Inc.'s trademarked name and stock ticker symbol without authorization, and in a way that is damaging to the company. Universal Communication Systems Inc.'s ticker symbol is UCSY.

Universal Communication System's net loss in its 2004 fiscal year was $3.5 million, compared with $2.3 million in 2003.

The suits allege that the Internet bashing of Zwebner has had an impact on the company's stock price. The share price has ranged from a low of a penny to about 19 cents during the last 52 weeks. At the end of 2004, before Wolfblitzzer0 made his or her appearance on RagingBull, the stock was at about 9 cents. On Thursday, it traded at 5 cents.

Wolfblitzzer0 -- or Wolfy, as he is called by his message board peers -- is the most recent in a string of posters spewing vitriol against Zwebner on RagingBull.

When Wolfblitzzer0 popped up on the Internet message board late last year, Zwebner contacted CNN, informing the Atlanta-based cable network of the similarity to Wolf Blitzer's name.
In the defamation suit against CNN, filed Jan. 7, Zwebner asserts that CNN and Wolf Blitzer should have acted to end the postings, since the name Wolf Blitzer was the proprietary interest of CNN and it therefore had an obligation to police its use. CNN has not yet filed a response to the allegations in the case, which is pending separately from the Lycos litigation.

Faro said the actual Wolf Blitzer is not believed to be the culprit. The posters likely are a handful of people "in the business of smearing people in the Web, posting under a number of different aliases," he said.

In at least four cases in other states, Zwebner has been able to track down the cybersmearers and has reached settlements with the individual posters.

In 2003, Zwebner won a $50,000 default judgment in U.S. District Court in Oregon against the John Does Anonymous Foundation, an Oregon-based nonprofit devoted to protecting online anonymity.

Zwebner had claimed that members of the organization were defaming him online. He filed the suit pro se, and requested $18 million in damages.

But putting a face to an online alias has proven to be difficult for plaintiffs like Zwebner. Both the anonymous posters and the Internet network providers often strenuously resist the disclosure of private information.

In Zwebner's first foray into federal court in Miami, Lycos' refusal to disclose its users' names and Internet service provider addresses led to the case being dismissed. In September 2003, Zwebner filed a pro se slander, libel and defamation suit against John Doe defendants, only identified by their online aliases. He then attempted to subpoena the John Does, filing a motion to compel Lycos to disclose the identities of about 85 of its message board posters.
The John Does were represented by L. Van Stillman, a former Delray Beach attorney who was disbarred after pleading guilty in 2003 to SEC charges that he was involved in a pump-and-dump scheme. Stillman could not be reached for comment.

Attorneys for Lycos and Stillman filed motions to quash the subpoenas, claiming privacy and First Amendment rights trumped any claim Zwebner may have against the defendants.
Lycos cited numerous federal court decisions that came down on the side of the anonymous posters, including Doe v. 2themart.com Inc., a 2001 decision out of Washington state that allowed a pseudonymous message board poster to retain his or her anonymity.
"The Internet is a truly democratic forum for communication," the court wrote in its opinion. "It allows for the free exchange of ideas at an unprecedented speed and scale. For this reason, the constitutional rights of Internet users, including the First Amendment right to speak anonymously, must be carefully safeguarded."

The onus has been on the companies to prove that the harm they have suffered outweighs the posters' right to free speech and privacy.

In McIntyre v. the Ohio Elections Commission, the U.S. Supreme Court gave anonymous free speech special protection, writing: "the right to remain anonymous may be abused when it shields fraudulent conduct. But ... our society accords greater weight to the value of free speech than to the dangers of its misuse."

Zwebner learned that lesson the hard way, after filing a pro se defamation case against the John Does. U.S. District Judge K. Michael Moore in Miami ruled in favor of the defendants, quashing the subpoenas. Zwebner's case then was dismissed due to his inability to identify any of the posters.

After the loss, Zwebner retained Faro and filed the four suits currently pending in federal court in Miami.

Lycos is trying to have the trademark case moved to federal court in Massachusetts. It has not yet filed a response to the latest suit Zwebner filed against it.

While the federal courts have tended to protect the confidential of John Does in cybersmearing cases, Florida's 3rd District Court of Appeal in Miami took a position against anonymous cybersmearing in a 2000 case, Hvide v. Doe.

The 3rd DCA rejected the anonymous posters' claim to protection under the First Amendment.