ML-Implode Wins Reversal In NH Supreme Court Case; Re-Posts Materials on Mortgage Specialists’ Fraud
In a resounding ruling for free speech, the New Hampshire Supreme Court has reversed a superior court’s ruling ordering the Implode-o-Meter web site to take down contributed materials and divulge the identity of a whistleblower. Read the ruling.
The case was The Mortgage Specialists vs. Implode-Explode Heavy Industries, Inc. (the owner of ML-Implode.com). It concerned items posted to MoSpec’s “Ailing/Watch List” entry — the 2007 “Loan Chart” data for the company, and a post by username “Brianbattersby” accusing MoSpec and its President, Michael Gill, of habitual/systemic fraud.
In light of the ruling, the original content has been restored at the company’s ML-Implode profile here.
The portions of the post written by ML-Implode chiefly concerned MoSpec being fined in 2008 by the New Hampshire and Massachusetts banking departments for its practices. (MoSpec’s President, Michael Gill, called these “compliance” issues; the ML-Implode whistleblower argued otherwise.)
Included in the comments regarding Gill, censored until today, were
This guy is no stranger to REGULATORY ACTIONS. He was caught for FRAUD back in 2002 FOR SIGNING BORROWERS NAMES and bought his way out. He just paid 700,000 FRAUD FINE IN NH AND MA FOR SIGNING BORROWERS NAMES AGAIN ON 20 LOANS. He isn’t really even the owner. He is listed as president of the company but the shares are in his wife’s name. He is NOT ELIGABLE for a brokers license in NH. OH MAN WHAT WAS THE NH BANKING DEPT. THINKING?
The Nashua Telegraph reported on the implications of the case:
The court, for the first time in New Hampshire, set a precedent for how lower courts should treat cases involving the protection of anonymous online commenters. They instructed the courts to weigh claims of defamation against the backdrop of the media’s right to protect its sources.
The case drew national attention for its potential First Amendment implications. The case also had broad implications in determining who constitutes the media in an Internet age that has blurred the line between traditional news outlets and bloggers or citizen journalists.
[Update: Here is the Reporter's Committee coverage of the decision. (They were one of our amici on the case).]
Since the MoSpec lawsuit against ML-Implode, Gill and MoSpec have been sued by former Operations Executive, Jean Duerr, for large-scale fraud. The suit argues that the company’s managers were forced to implement systemic doctoring of loan files. The allegations in this suit, filed in January 2010, are of the same nature as, but go well beyond the information originally released through ML-Implode.
Says site founder and publisher Aaron Krowne in a statement released on the decision,
We are pleased with the court’s ruling on the fundamental questions of free speech and find little to complain about in the analysis. We have always been confident that there was no legitimacy to MoSpec’s complaint directed towards us, especially in the absence of any actual evidence as to libel or defamation.
We are, however, perplexed that the case was not completely dismissed. The court seemed to acknowledge that the sheer nature of such a suit against us, not the anonymous “Does”, was frivolous; yet it simply let the matter survive and remanded it back to the lower court.
Besides the overall frivolity of the original action, we are unclear what valid issues involving us remain in play, considering that a former manager at the company has come out and sued them publicly. This suit contains substantially more detailed allegations of the same character as the ones the whistleblower(s) were attempting to release through us, which in our opinion, not only vindicates us, but undermines the legal cause of action against us.
At any rate, since we have been rendered insolvent by the expense of this and similar frivolous SLAPP suits, we aren’t sure how we will be able to mount a continuing “defense” at all.
As events have unfolded, the nature of this suit has become clear: it is meant to limit the public’s knowledge about financial fraud, even though it is from a known offender, as the offender (and perhaps the banking regulator itself) wishes to accept a limited “settlement” in lieu of the full truth. The fact that this matter has been allowed to continue on so long, achieving many of its tactical objectives against the whistleblowers, sets a bad precedent.
Thus, the general threat of “SLAPP” suits to bloggers and small-time, independent online media remains very much intact. We recommend that all such parties intending to comment on significant matters of public concern take strategic (if not legal) steps to inoculate themselves, rather than assuming the courts will protect their actual (rather than theoretical) right to free speech.