A Philadelphia Court of Common Pleas judge has thrown out a lawsuit filed earlier this year by Ashton Technology Group, Inc. and its CEO, Freddie Rittereiser, against a frequent online message board critic of the company and its CEO. The lawsuit was filed by Rittereiser and Ashton after the internet poster uploaded documents and other information connecting Ashton and Rittereiser to individuals who work for the Mafia, and who have been arrested by the FBI and indicted by the U.S. Attorney on charges of securities fraud, money laundering, and other Mafia-related activity. In the lawsuit, Rittereiser and Ashton sought court intervention to prevent the defendant, a self-employed Southern California business woman, from posting her research findings and opinions about the plaintiffs to investors on a Yahoo! stock message board.
The allegations were published in the midst of FBI and SEC investigations of Ashton’s financial partners. Earlier this year, Ashton (symbol: ASTN) received notice that its stock would be delisted by Nasdaq by the end of the year. Following the investigations, several former Ashton consultants were indicted and jailed on the fraud charges. Ashton has never derived a profit from its operations since its launch in 1994, but instead relies on revenue from the sale of stock to feed its cash-hungry operations and management. Recently the company announced that it would be relying on death-spiral financing to meet its financial needs for 2001, thus sealing for good any hope that ASTN investors may have of ever recovering their losses. Death-spiral financing usually involves severe dilution of the outstanding shares, causing share value to plummet amidst short perks of market manipulations. Since Ashton filed the lawsuit against the Yahoo! board posters, its stock price has fallen approximately 90% from about $3 to 30 cents, the price at the time of this writing.
The Pennsylvania court ruled that the Commonwealth of Pennsylvania held no personal jurisdiction over the defendant, because she had no minimal contacts within the state which would permit jurisdiction under Pennsylvania’s “long-arm” statute. The defendant, who represented herself pro se, relied on the well-publicized case Barrett v. Catacombs Press in which a Philadelphia federal court had previously ruled that Pennsylvania held no jurisdiction in a similar internet case. That ruling by Judge Antwerpen has been cited by state and federal courts in many different states as a model for determining jurisdiction in states which have “long-arm” statutes similar to Pennsylvania.
Frequently companies such as Ashton file so-called SLAPP lawsuits (Strategic Litigation Against Public Participation) claiming “defamation” when the real intent is to somehow prevent the person from exercising his/her constitutionally protected right of free speech. The Ashton case follows a familiar pattern we have seen repeatedly, that is, that the corporation (we call them “bully corps”) will file suit outside of the state of residence of the defendant, making it difficult of the defendants to defend and to object to discovery. That is because it is known to the company that the suit is frivolous from the outset, and the plaintiffs are counting on the inability of defendants to hire sufficient legal counsel due to economic and other circumstances. For example, one California law firm will not even make a telephone consultation to a defendant without first receiving a $10,000.00 cash retainer. Therefore, many SLAPP plaintiffs are relying on the odds that a defendant will not have the cash resources to launch a substantial defense and counterclaims, and therefore the plaintiff may win by default.
The John Does Anonymous Foundation provides a free legal referral service for anonymous defendants in jurisdictions where lawyers have made their services available to defend on a pro bono or reduced fee basis. In situations where the Foundation is unable to make a referral, or, in cases such as Ashton where the Defendant wanted to represent herself, the johndoes.org web site provides various networking tools where pro se defendants can share information and experiences with one another.
Ashton Technology Group and Freddie Rittereiser were represented by the Pennsylvania law firm of Frank & Rosen. The lawyers for the plaintiffs have requested that the judge in the case reconsider her ruling. The defendant, Mary Cummins, a commercial real estate appraiser in southern California, represented herself pro se.
Staff Report