On June 26, 2014 in the matter of Nanoviricides, Inc. v. Seeking Alpha, Inc., the New York Supreme Court for the County of New York held that a negative anonymous online forum post about a company was a statement of pure opinion, not subject to defamation claims.
NNVC sought a court order to identify an anonymous individual posting to the Seeking Alpha financial information bulletin board-style forum under the name “Pump Terminator.” Pump Terminator posted an article entitled “NanoViricides: House of Cards with -80% Downside, ‘Strong Sell’ Recommendation.”
In short, the article critiqued NNVC’s business practices, including calling it “the worst reverse merger we have ever seen,” and hyperlinking to a shareholder complaint filed against its CEO alleging serious misconduct. NNVC’s moving papers identified multiple defamatory statements in the article.
Defendant, Seeking Alpha, opposed the disclosure of Pump Terminator’s identity, saying the statements were privileged opinions.
N.Y. Civ Pro. Law § 3102(c) provides that a party may seek pre-suit disclosures in aid of bringing an action, but only by court order. Relief is available upon a strong showing that a cause of action exists.
The court refused to order the disclosures sought by NNVC. In doing so, it found that NNVC failed to assert a colorable cause of action for defamation because the Pump Terminator posts were pure opinions, not subject to defamation claims. The court rejected NNVC’s position that the posts were mixed statements of fact and opinion.
Pursuant to New York law, a statement of opinion accompanied by the facts upon which it is based is a pure opinion, while a statement of opinion implying it is based on facts that are left unstated is a mixed opinion, actionable based on the implied, detrimental facts. Steinhilber v. Alphonse, 68 N.Y.2d 283, 290 (1986).
The court said that alleged defamatory content must also be adjudged based on the unique context of the Internet, saying “the defamatory import of the communication must be viewed in light of the fact that bulletin boards and chat rooms ‘are often the repository of a wide range of casual, emotive, and imprecise speech,’ and that the online ‘recipients of [offensive] statements do not necessarily attribute the same level of credence to the statements [that] they would accord to statements made in other contexts,” quoting Sandals Resorts Int’l Ltd. v. Google Inc., 86 A.D.3d 32, 43-44 (N.Y. Sup. Ct. 2011).
Taking the Internet context into account, the court found that Pump Terminator’s statements were pure opinions regarding NNVC’s stock value. It noted that the post included a number of qualifiers such as “we believe” or “it seems to us.”
The nature of the Seeking Alpha forum, where most articles were submitted by users and not reporters, suggested to readers that the statements contained within were mere opinions. The court said that readers were likely to read anonymous user posts in particular with skepticism and treat them as opinions.
NNVC argued that the statement, “This is the first report in a series we will release outlining the most egregious shareholder violations we are aware of in any NYSE company,” implied extraneous unstated facts, rendering the article a mixed opinion. The court disagreed, holding that the statement merely implied that more articles were coming and that by linking to the shareholder complaint, Pump Terminator explicitly provided the factual basis for his opinion.
The court denied the petition to reveal Pump Terminator’s identity and granted Seeking Alpha’s motion to dismiss it.
By holding that an anonymous post attacking a company and linking to shareholder suit documents was a non-actionable opinion, frustrating a pre-suit request to learn the poster’s identity, defamation plaintiffs are once again reminded that online forum posts receive wider latitude that traditional defamation lawsuits.