Don't Like Pushy Cold-Calls? We'll Sue!

Law

The internet is a spectacular resource for consumers. It lets us rate products and services and review the ratings of others, unfiltered by professional publications. It lets us spread the word about verminous and rude telemarketers. It lets us search the internet quickly and effectively for the names of companies, representatives, products, and even telemarketer phone numbers to find out what others have said about them.

Naturally companies in the business of selling shitty products and services, and doing so through rude and deceitful telemarketing, don't like this. They'd prefer that we'd all just shut up and take it. And they're willing to sue to shut us up so that they can keep on selling shitty products and services through pushy and dishonest marketing practices without a Google search of their company name revealing their nature. But in light of strong emerging legal norms protecting web sites from SLAPP suits, they've had to get a lot more creative in that endeavor.

Unfortunately, for every scummy company, there's a scummy and creative lawyer.

Case in point: scummy company Houlihan Smith & Company Inc., represented by scummy but creative lawyer Richard Darke of Duane Morris LLP. The exceptional Consumer Law & Policy Blog, one of the voices of Public Citizen, has the story. In short, there are several message boards (including 800Notes and WhoCallsMe) that perform a crucial public service: they serve as a forum to describe telemarketing calls from particular phone numbers, and to gather data about the telemarketing companies. These boards had posts discussing telemarketing cold calls from Houlihan Smith & Co., which apparently offers loans or venture capital. The posts were not flattering — they described typical dishonest, pushy, and rude telemarketing behavior that marketers use to try to get past secretaries and assistants to speak with decision-makers. In typical internet form, the posts went further (and quite possibly beyond any factual support) to accuse Houlihan of fraud and to speculate whether some of its employees have been charged with crimes.

Houlihan, through Darke, reacted in the typical SLAPP fashion — they sued and sought a restraining order to prohibit online criticism, and not just the allegedly untrue comments about fraud and criminal charges. Unfortunately for the defendants, they found a remarkably dumb judge, Mary Katharine Rochford, who issued a ludicrously broad TRO embodying an extraordinary prior restraint of speech criticizing Houlihan. Fortunately for the defendants, Public Citizen stepped in, removed the case to federal court, found a judge with a passing familiarity with the rule of law, and got her to reject the preliminary injunction. Details through the link — as always, Public Citizen's legal work is top-notch and well worth reading to inform yourself about your free speech rights as consumers.

It's not just remarkable that Houlihan and Darke had such initial success in suppressing criticism through a ridiculously overbroad and abusive TRO. It's also remarkable that they succeeded with a theory that, if successful, could be used consistently to suppress all internet criticism by consumers. Houlihan and Darke argued that the defendants were not just guilty of defamation, but that, by naming Houlihan and its employees, they were violating Houlihan's trademark rights and the employees' right to publicity, and that this conduct was outside the scope of Section 230 protection. Think that one over for a minute — if naming and shaming a company is a violation of its trademark rights, how can consumers safely criticize companies? And, by the way, if this legal theory sounds familiar, it's because it's remarkably similar to the one asserted by unblanaced child-rapists who try to assert copyright in their names to deter news stories about them. (Please note that this does not necessarily mean that Houlihan or Darke approve specifically of child rape. The fact that someone is a censorious telemarketer does not always mean they are amoral thugs in other ways as well.)

Fortunately, it sounds as if U.S. District Court Judge Virginia Kendall is not buying what Houlihan and Darke are selling, and that their SLAPP suit will hit a brick wall in federal court. But not every web site, or consumer, is fortunate enough to have Public Citizen on its side.

What do we need to do to combat such behavior, and preserve vigorous discussion by consumers on the internet?

1. We need to call out and expose censorious litigation like that by Houlihan and Darke. Consumers contemplating doing business with Houlihan should ask themselves: why would you possibly want to repose any trust in a company that sues consumers who criticize its telemarketing policies? Why would you possibly want to do business with a company that not only seeks damages in the face of criticism, but demands broad prior restraint of criticism?

2. We need to support groups like Public Citizen that litigate such issues on behalf of consumers.

3. We need to spread awareness of legal defenses like Section 230, so that more defendants are familiar with them and employ them successfully.

4. We need to continue the dialogue about anti-SLAPP laws. I've expressed federalism concerns about a one-size-fits-all federal anti-SLAPP law, but think that at the very least we should be agitating for a robust anti-SLAPP law in every jurisdiction. This scenario ought to end, at a minimum, with Houlihan and Darke paying the defendants' attorney fees.

Last 5 posts by Ken White

6 Comments

5 Comments

  1. Mike  •  May 11, 2010 @11:28 am

    Why don't you SEO Ricard Drake's name by posting it in blog title? By linking to his law firm page, you're actually giving him positive SEO.

  2. Charles  •  May 11, 2010 @11:42 am

    Or, in the alternative, you can change the hyperlink from his name to "scummy but creative".

  3. Patrick  •  May 11, 2010 @12:18 pm

    It will be picked up by Google guys. Look at the very top of your browser window.

  4. zarathud  •  May 12, 2010 @4:40 pm

    Judge Mary K Rochford recently won 40% of the Democratic primary vote for a vacancy on the Illinois Court of Appeals First District. The Democrat typically wins a 10 year term in the general election.

  5. M.B.  •  May 12, 2010 @6:35 pm

    Interesting details:

    It happened fast – on Friday afternoon April 16 we received an email from Duane Morris, the Houlihan Smith's law firm, informing us that the investment bank had filed a lawsuit against us in Chicago (800 miles from where we are) and that the hearing was to be held in less than 80 minutes!

    Duane Morris, a big law company with offices across the United States and overseas, put together a complaint for Houlihan Smith that goes around Section 230 and claims that the critical comments weren't just defamatory but were trademark dilution, and "intellectual property” claims are not covered by the section.

    In their complaint, Houlihan Smith said the comments constituted trademark misappropriation, dilution and right of publicity violations because its name and employees’ names were used in the posts. Houlihan Smith’s brief also argued that we embedded the company’s name and unflattering information about the company into our HTML code and entered into some partnership with the Google and Yahoo search engines to elevate the pages in the search results.

    More at http://800notes.com/news/houlihan-smith-sues-800notes-for-criticism-and-looses

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