Quixtar and Team Litigation brings important ruling

by louabbott on July 13, 2010

Related litigation in the ongoing Quixtar vs. Signature Management TEAM disputes brings important First Amendment ruling

Directly at issue in this ruling is whether anonymous speech can be protected under the 1st amendment when it hurts the business of private enterprises.  Inquiring minds will be interested in the article published by the Las Vegas Sun:

A federal appeals court has ruled that the constitutional right of free speech is limited in cases of anonymous comments on the Internet made about the practices of private business.

The U.S. Ninth Circuit Court of Appeals said the constitutional protection “varies depending on the circumstances and the type of speech at issue.”

The court, which held oral arguments in the case in Las Vegas in March, affirmed the decision of Senior U.S. District Judge Edward Reed in the battle between Quixtar and Signature Management TEAM, LLC.

The court, in an opinion written by Judge M. Margaret McKeown, said “Given the importance of political speech in the history of this country, it is not surprising that courts afford political speech the highest level of protection.”

But McKeown, quoting from another court’s decision, wrote, “Commercial speech on the other hand, enjoys a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values…”

Quixtar, successor to Amway Corporation, markets cosmetics, nutritional supplements and other products. It sued Signature, where two former Quixtar employees work. Quixtar claims former employees Orrin Woodward and Chris Brady had non-competition clauses in their contracts and suits are under way on the issue.

In these suits, Quixtar claimed that a smear campaign was carried on by Signature and it sought to find out who was behind it. These anonymous complaints on the Internet included allegations that Quixtar secretly acknowledges its products are overpriced, they don’t meet FTC rules and the company suffers from systemic dishonesty.

In depositions in these non-competition suits, Quixtar sought to force TEAM employee Benjamin Dickie to reveal the identity of five anonymous online commenters who allegedly made the defamatory comments about Quixtar. Dickie refused.

Judge Reed ordered Dickie to reveal the names of three of the speakers but said the other two could be kept confidential. An appeal was filed and the circuit court upheld Reed.

McKeown said there have been a number of these cases and she wrote, “Anonymous online speech is an increasingly important issue in the commercial context, particularly in light of the ubiquity of the Internet.”

Relying on prior court decisions, the court said the party suing to get the names of the anonymous online speakers must submit sufficient evidence that it has been harmed by the comments.

In a footnote, the court said some speech, such as fighting words and obscenity, is not protected by the First Amendment. Fighting words, the court said, are that “by their very utterance inflict injury or tend to incite an immediate breach of peace.”

I am may be opening quite a can of worms for this site, but . . .

What do you think?  Should the 1st Amendment  constitutional protection vary “depending on the circumstances and the type of speech at issue?”

Should anyone be able to bash any company anytime and evade responsibility by hiding behind anonymity and the 1st Amendment?

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{ 3 comments… read them below or add one }

Kirby Smith February 18, 2011 at 11:50 am Thumb up 0 Thumb down 0

Eye on the ball follow up,

How is the noncompete written btw mr Woodward and quixtar is the underlying issue here not slander. is it legal to perform the exit strategy of Team execs from their Amway or Quixtar duties to move toward new opportunity. My personal opinion is certainly, let the market dictate where someone choses to conduct and do business.


Craig Mattice July 20, 2010 at 4:15 am Thumb up 1 Thumb down 0

Very interesting and challenging question to address, especially in this day involving freedom of speech on the internet.

The First Amendment of the U.S. Constitution states: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or “abridging the freedom of speech,” or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

However, considerable case law has been established since this initial amendment which include Slander, Slander per se, Libel, and Libel per se. Slander primarily verbal and Libel written. Applying these elements to this case would support the court’s decision in that parties not be allowed to hide in anonymity on the internet and not be held responsibly for comments and statements causing damage.

Every citizen has the right to speak out and say what they wish however, in this case “bashing” and/or making knowingly unsubstantiated and possibly false statements in any medium against another party, would not fall under the protection of the First Amendment. Thus, protection already varies “depending on the circumstances and the type of speech at issue.” The established provisions should encompass speech on the internet also, not allowing it to be a “safe haven” regarding the above, yet having to meet the same obligations to provide “proof of damages,” by the accuser.


louabbott July 15, 2010 at 9:01 pm Thumb up 0 Thumb down 0

Interestingly, I saw one blogger present the case in the exact opposite light:
See: http://www.lvrj.com/blogs/mitchell/Court_gives_leeway_to_anonymous_online_commercial_speech.html?ref=749


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