ZiaSun Technologies, a San Diego-based company, sued four internet posters in mid-1999 for allegedly waging a so-called “cyberexpose campaign” against them in internet chatrooms.
The company and some of its officers alleged that the individuals disseminated false information linking them to criminal behaviour, pornography, improper financial interests, false corporate disclosures and illegal business practices. They sought court injunctions against further posting. They also demanded $500,000 in lost earnings and earning capacity, reimbursement of their legal costs and a public apology.
However, those responsible for the postings contended that everything posted was absolutely true and therefore, as a matter of law, they could not be held liable. One of the defendants, George Joakimidis, counter-sued for fraud.
Two court actions were involved. Both cases made headlines in January 2000 when the federal court in one case issued the first known preliminary injunction in the US against internet defamation, and the state court in the other case issued the nation's first known temporary restraining order against internet market manipulation.
In a settlement agreement announced yesterday by the parties, ZiaSun and its officers dismissed all of their charges against the individuals, dropped all of their demands for monetary compensation, dropped their demands that the posters apologise and retract their postings and agreed to pay George Joakimidis the sum of $60,000. Except for one news release per side, the parties agreed to make no future publications about one another.
One of the posters, Stephen Worthington, said of the settlement:
“This is, in no uncertain terms, a victory for free speech. If you know your facts, you should not be afraid to stand up and fight for the truth. The suit appeared to be an attempt by ZiaSun to silence those who have raised questions concerning the operational and valuation issues associated with the company.
“The securities markets require full and open discussion of information, including all viewpoints. A public company should not be using its power to sue those with opinions different from the company's, since that would chill the exercise of free speech protected by the First Amendment and thwart the goals of the securities laws."