Computer underground Digest Wed May 31, 1995 Volume 7 : Issue 44

Computer underground Digest Wed May 31, 1995 Volume 7 : Issue 44
ISSN 1004-042X

Editors: Jim Thomas and Gordon Meyer ([email protected]
Archivist: Brendan Kehoe
Shadow Master: Stanton McCandlish
Field Agent Extraordinaire: David Smith
Shadow-Archivists: Dan Carosone / Paul Southworth
Ralph Sims / Jyrki Kuoppala
Ian Dickinson
Tibia Editor: Who built the Seven Towers of Thebes?

CONTENTS, #7.44 (Wed, May 31, 1995)

File 1--The Trivia Winner----
File 2--ACLU Cyber-Liberties Alert #5
File 3--Sen. Feinstein S.2375 (Wiretap bill)
File 4--Full text of _Stratton Oakmonth v. Prodigy_
File 5--Prodigy decision location and amateur analysis
File 6--Cu Digest Header Info (unchanged since 19 Apr, 1995)

CuD ADMINISTRATIVE, EDITORIAL, AND SUBSCRIPTION INFORMATION APPEARS IN
THE CONCLUDING FILE AT THE END OF EACH ISSUE.

---------------------------------------------------------------------

Date: Tue, 30 May 1995 15:29:25 -1000
From: [email protected](Frank Tutt)
Subject: File 1--The Trivia Winner----

((MODERATORS' NOTE: And the first who knew it was not a
A Monkey.....))

Please pass to your "Trivia Editor":

> Trivia Editor: Writer of the song "Daydream Believer Is: ??????

That would be John Stewart, originally with the Kingston Trio, later a solo
act from early seventies through ??.
Frank Tutt
[email protected]
Comin' at ya from Aiea, Hawaii (Consonant-free!)
"Consistency is the hog-goblin of little minds"

------------------------------

Date: Fri, 26 May 1995 18:35:05 -0400
From: [email protected]
Subject: File 2--ACLU Cyber-Liberties Alert #5

ACLU Cyber-Liberties Alert: 05/26/95
Feinstein Amendment Would Censor Online Info About "Explosive Materials"

Senator Feinstein (D-CA) has indicated that she will offer an
amendment to the broad counter-terrorism bill (an incredibly
unconstitutional and anti-liberty bill) now pending in the U.S.
Senate.

The ACLU opposes the Feinstein amendment as a blatant violation of the
First Amendment's free speech guarantees. While the amendment applies
to all media, it grew out of Senator Feinstein's vilification of the
internet at the Senate's May 11 counter-terrorism hearings.

The Feinstein amendment must be **rejected** -- it cannot be "fixed."

Join the ACLU, People for the American Way, and others in opposing
this amendment.

**ACT NOW**

Fax, write, or call Senator Feinstein to express your opposition to the
amendment.

Senator Dianne Feinstein
FAX 202/228-3954
Voice 202/224-3841
SH-331 SOB
Washington, DC 20510-0504
-----------------------------------

Earlier today, the ACLU faxed the following letter in opposition to the
amendment to all U.S.
Senators.

i---------------------------------------------------------

American Civil Liberties Union
Washington National Office
122 Maryland Avenue, NE

VIA FAX

RE: The Feinstein Amendment on Disseminating Information on
Explosives

Dear Senator:

The American Civil Liberties Union has already communicated its
position on the proposed anti-terrorism legislation. Senator
Feinstein has indicated she intends to introduce an amendment making a
criminal offense out of the dissemination of information about
manufacturing explosives.

The Feinstein amendment would, for example, make it a felony,
punishable by 20 years imprisonment, for any person "to disseminate by
any means information pertaining to, in whole or in part, the
manufacture of explosive materials if the person . . . reasonably
should know that" the materials are likely to be used to further a
federal crime.

Because it covers pure speech, without even a focus on a
particularized threat of violence, the Feinstein amendment is clearly
unconstitutional. In fact, it is difficult to contemplate an
amendment in this area that would be more demonstrably
unconstitutional.

The amendment is also unnecessary. Current law, 18 U.S.C.sec. 231,
makes it a felony to teach explosives to any person if it is known or
should have been known that that person intended to use the explosives
unlawfully in furtherance of a civil disorder. Current law, however,
focuses on a particular person using the information for a particular
criminal purpose.
The Feinstein amendment, however, criminalizes merely putting out
information -- in print, on radio or television, in cyberspace --
without any requirement of knowledge of the particular would-be
criminal or would-be crime.

In fact, the media coverage of the Oklahoma City bombing has left
everyone with sufficient knowledge so that everyone could be
prosecuted if he or she published information on explosives,
regardless of the purpose. Even an article that described how a
fertilizer-based bomb was built in order to suggest prophylactic
measures to preclude such threats could be the basis of its author's
prosecution.

Under the Feinstein amendment, all the newspapers and broadcasters who
described how bombs are built in the coverage on Oklahoma City could
be prosecuted if they ran similar stories again.

There are many reasons -- quite distinct from engaging in violence --
why individuals might wish to disseminate information about
explosives. These range from county extension agents with suggestions
on tree stump removal, to OSHA guidelines on demolition of buildings,
to construction company planning excavations, to newspapers reporting
on current events. The Feinstein amendment would subject to criminal
prosecution the people involved in all these situations -- because,
after Oklahoma City all of them would meet the absurdly low standard
for criminal culpability in the amendment.

As the ACLU, People for the American Way and others have noted: The
Feinstein amendment takes the lowest standard used for culpability
under the criminal statutes and seeks to apply it to actions the
Constitution requires be given the highest level of protection -- the
exercise of their right of free speech.

Because the Feinstein amendment would criminalize such a broad scope
of First Amendment-protected activity, it would also enormously
increase the investigative and surveillance authority of the FBI. In
order words, the Feinstein amendment would turn a whole host of
actions into crimes thereby establishing the criminal predicate for
which the FBI guidelines allow an investigation to be pursued.

Even worse, the FBI investigates when it merely has a "reasonable
indication" that a crime might have been committed. This means that
anyone who simply disseminates -- on paper, over the airwaves, or in
cyberspace -- information on manufacturing explosives is made subject
to investigation by the FBI.
This would happen even if the disseminator had no grounds to believe
the information could be used for a crime, because the FBI could claim
merely to be investigating to see whether a crime had been committed

The Feinstein amendment would also have the effect of forcing the
internet --as well as libraries, broadcasters and publishers -- to do
the impossible task of prescreening the recipients of their
information. Such a requirement is obviously impossible to meet. It
also destroys the very purpose of both the internet and libraries --
providing the widest possible access to information.

The American Civil Liberties Union strongly urges the United States
Senate to defeat the Feinstein amendment on disseminating information
relating to explosives.

Sincerely,

Laura Murphy Lee, Director
ACLU Washington National Office

Donald Haines
Legislative Counsel
-----------------------------------------------------------------
For more information about the ACLU's Cyber-Liberties efforts and our
opposition to the counter-terrorism bill, see our online resources:

ACLU Free Reading Room -- gopher://aclu.org:6601
ACLU Constitution Hall on America Online -- keyword ACLU
To request our FAQ, or be added to/dropped from our list, write to
[email protected]

------------------------------

Date: Sat, 27 May 95 23:23:09 -0500
From: [email protected]
Subject: File 3--Sen. Feinstein S.2375 (Wiretap bill)

Following is the substance of a letter which I wrote to Senator Dianne Fein-
stein regarding S.2375 (the wiretap bill). Those of you who agree with my
point of view are welcome to use it as a model for writing to your own
senators.

May 20, 1995

The Honorable Dianne Feinstein
United States Senator, State of California
11111 Santa Monica Blvd.
Los Angeles, Ca. 90025

Re: S.2375

Dear Senator Feinstein:

I have obtained a copy of the referenced bill for which you voted, and
which was passed last year. I have read it with interest. I would like to
make the following observations:

(1) The words "or lawfully authorized" which appear in section 2604
may seem innocuous, but they in fact constitute a very powerful
quantifier -- so powerful, in fact, that they render superfluous the other
half of the disjunction in which they appear -- i.e. "any court ordered . .
interception", since court ordered interceptions are obviously a subset
of the class of all lawfully authorized acts.

(2) Although the bill contains a section of definitions (2601), the
expression "lawfully authorized" is not addressed.

(3) Little solace is to be had from the fact that the bill requires that a
wiretap be effected ". . . only with the affirmative intervention of an
individual officer or employee of the carrier.", since such intervention
can be obtained by such means as intimidation, bribery or collusion.
(Section 2604).

(4) The bill contains no provision for the punishment of any federal
employee who should succeed in performing an illegal wiretap by means
of the technology required by this bill.

What this means, in practical terms, is that if I should write a letter to
the editor of my local paper in which I criticize Attorney General Reno
for her handling of the Waco, Texas tragedy, and recommend that she be
dismissed from her position and prosecuted for the unwarranted deaths
of the men, women and children who died there, and Ms. Reno should
learn of this letter, she could then go on a "fishing expedition" by
having my phone tapped in an attempt to retaliate against me. She
could further claim that she had the legal right to require such a
wiretap, since she is the lawfully appointed Attorney General. In the
unlikely event that a court should find that Ms. Reno acted unlawfully,
such a finding would be essentially meaningless, since Congress has
provided no penalty for an illegal wiretap carried out by a federal
employee.

I cannot believe that you would knowingly subject the people of the State
of California to the potential for such abuse. I prefer to think that you
did not fully understand the implications of this bill at the time you voted
for it.

I would like to see the law which emerged from this bill rescinded in its
entirety. Failing that, I believe it should be amended so that a wiretap
can be lawfully performed only if a judge has issued a court order
authorizing it -- no exceptions. In addition, I believe a section should be
added requiring severe penalties for any employee of the federal
government who succeeds in performing a wiretap without such
authorization. I would recommend a minimum ten year prision term, a
minimum $50,000 fine and the forfeiture of all pension and other
benefits which would otherwise appertain to such an employee.

Since this letter is concerned with a matter of public policy, I reserve
the right to place it, along with any reply which you may choose to
provide me, on the Internet.

Thank you for considering my opinions.

Sincerely,

Paul Hinderman

------------------------------

Date: 29 May 1995 13:07:53 -0400
From: [email protected](Carl M. Kadie)
Subject: File 4--Full text of _Stratton Oakmonth v. Prodigy_

[[email protected] found this at
http://www.ziff.com:8001/~pcmag/trends/tr0526b.htm
There is now also a copy at
ftp://ftp.eff.org/pub/CAF/law/stratton-oakmonth-v-prodigy
The _Cubby v. CompuServe_ decision is also on-line:
ftp://ftp.eff.org/pub/CAF/law/cubby-v-compuserve.text
and
ftp://ftp.eff.org/pub/CAF/law/cubby-v-compuserve
- Carl]

=========================================================

SUPREME COURT - STATE OF NEW YORK

Present:
HON. STUART L. AIN
Justice
TRIAL/IAS, PART 34
NASSAU COUNTY

STRATTON OAKMONTH, INC.
and DANIEL PRUSH,

Plaintiff(s),
INDEX No. 31063/94
-against-
MOTION DATE:
3/10/95
PRODIGY SERVICES COMPANY, a
Partnership of Joint Venture with
IBM CORPORATION and SEARS-ROEBUCK &
COMPANY, "JOHN DOE" AND "MARY DOE",

Defendant(S).

The following papers read on this motion:

Plaintiffs' Notice of Motion & Exhibits 1
Plaintiff's Supporting Exhibits P & O (filed separately
under seal pursuant to a confidentiality agreement) 1A
Plaintiffs' Memo of Law in Support 2
Appendix to Plaintiffs' Memo of Law 3
Defendant's Opposing Affidavit and Exhibits 4
Defendant's Memo of Law in Opposition 5
Reply Affidavit 6
Reply Memo of Law 7

Upon the foregoing papers, it is ordered that this
motion by Plaintiffs for partial summary judgment against
Defendant PRODIGY SERVICE COMPANY ("PRODIGY") is granted and
this Court determines, as a matter of law, the following two
disputed issues as follows:

(I) that PRODIGY was a "publisher" of statements
concerning Plaintiffs on its "Money Talk" computer bulletin
board for the purposes of Plaintiffs' libel claims; and,

(ii) that Charles Epstein, the Board Leader of
PRODIGY's "Money Talk" computer bulletin board, acted as
PRODIGY's agent for the purposes of the acts and omissions
alleged in the complaint.

At issue in this case are statements about Plaintiffs
made by an unidentified bulletin board user or "poster" on
PRODIGY's "Money Talk" computer bulletin board on October
23rd and 25th of 1994. These statements included the
following:

(a) STRATTON OAKMONTH, INC. ("STRATTON"), a securities
investment banking firm, and DANIKI PORUSH, STRATTON's
president, committed criminal and fraudulent acts in
connection with the initial public offering of stock of
Solomon-Page Ltd.,
(b) the Solomon-Page offering was a "major criminal
fraud" and "100% criminal fraud";
(c) PORUSH was "seen to be proven criminal"; and,
(d) STRATTON was a "cult of brokers who either lie for
a living or get fired."
Plaintiffs commenced this action against PRODIGY, the owner
and operator of the computer network on which the statements
appeared, and the unidentified party who posted the
aforementioned statement. The second amended complaint
alleges ten (10) causes of action, including claims for per
se libel. On this motion, "in order to materially advance
the outcome of this litigation" (Zamansky affidavit, par.
4), Plaintiffs seek partial summary judgment on two issues,
namely:
(1) whether PRODIGY may be considered "publisher" of
the aforementioned statements; and,
(2) whether Epstein, the Board Leader for the computer
bulletin board on which the statements were posted, acted
with actual and apparent authority as PRODIGY's "agent" for
the purpose of the claims in this action.

By way of background, it is undisputed that PRODIGY's
computer network has at least two million subscribers who
communicate with each other and with the general subscriber
population on PRODIGY's bulletin boards. "Money Talk" the
board on which the aforementioned statements appeared, in
allegedly the leading and most widely read financial
computer bulletin board in the United States, where members
can post statements regarding stocks, investments and other
financial matters. PRODIGY contracts with bulletin Board
Leaders, who, among other things, participate in board
discussions and undertake promotional efforts to
encourage usage and increase users. The Board Leader for
"Money Talk" at the time the alleged libelous statements
were posted was Charles Epstein.

PRODIGY commenced operations in 1990. Plaintiffs base
their claims that PRODIGY is a publisher in large measure on
PRODIGY's stated policy, starting in 1990, that it was a
family oriented computer network. In various national
newspaper articles written by Geoffrey Moore, PRODIGY's
Director of Market Programs and Communications, PRODIGY held
itself out as an online service that exercised editorial
control over the content of messages posted on its computer
bulletin boards, thereby expressly differentiating itself
from its competition and expressly likening itself to a
newspaper. (see, Exhibits I and J to Plaintiffs' moving
papers.) In one article PRODIGY stated:

"We make no apology for pursuing a value
system that reflects the culture of the
millions of American families we aspire to
serve. Certainly no responsible newspaper
does less when it carries the type of
advertising it published, the letters it
prints, the degree of nudity and unsupported
gossip its editors tolerate."
(Exhibit J.)

Plaintiffs characterize the aforementioned articles by
PRODIGY as admissions (see, Dettner v Pokoik, 81 AD2d 572,
app. demd. 54 NY2d 750) and argue that, together with
certain documentation and deposition testimony, these
articles establish Plaintiffs' prima facie case. In
opposition, PRODIGY insists that its policies have changed
and evolved since 1990 and that the latest article on the
subject, dated February, 1993, did not reflect PRODIGY's
policies in October, 1994, when the allegedly libelous
statements were posted. Although the eighteen month lapse of
time between the last article and the aforementioned
statements is not insignificant, and the Court is wary of
interpreting statements and admissions out of context, these
considerations go solely to the weight of this evidence.

Plaintiffs further rely upon the following additional
evidence in support of their claim that PRODIGY is a
publisher:
(A) promulgation of "content guidelines" (the
"Guidelines" found at Plaintiff's Exhibit F) in which,
inter alia, users are requested to refrain from posting
notes that are "insulting" and are advised that "notes that
harass other members or are deemed to be in bad taste or
grossly repugnant to community standards, or are deemed
harmful to maintaining a harmonious online community, will
be removed when brought to PRODIGY's attention"; the
Guidelines all expressly state that although "Prodigy is
committed to open debate and discussion on the bulletin
boards, ... this doesn't mean that 'anything goes'";
(B) use of a software screening program which
automatically prescreens all bulletin board postings for
offensive language;
(B) the use of Board Leaders such as Epstein whose
duties include enforcement of the Guidelines, according to
Jennifer Ambrozek,
the Manager of PRODIGY's bulletin boards and the person at
Prodigy responsible for supervising the Board Leaders (see
Plaintiffs' Exhibit R, Ambrozek deposition transcript. at
p. 191) and
(b) testimony by Epstein as to a tool for Board Leaders
known as an "emergency delete function" pursuant to which a
Board Leader could remove a note and send a previously
prepared message of explanation "ranging from solicitation,
bad advice, insulting, wrong topic, off topic, bad taste,
etcetera." (Epstein deposition Transcript, p. 52).
A finding that PRODIGY is a publisher is the first
hurdle for Plaintiffs to overcome in pursuit of their
defamation claims because one who repeats or otherwise
republishes a libel is subject to liability as if he had
originally published it. In contrast, distributors such as
book stores and libraries may be liable for defamatory
statements of others only if they knew or had reason to know
of the defamatory statement at issue. A distributor or
deliverer of defamatory material is considered a passive
conduit and will not be found liable in the absence of
fault. However, a newspaper, for example, is more than
a passive receptacle or conduit for
news, comment and advertising. [as to the content of the
paper constitute Miami Herald Publishing Co. v Tornillo, 418
US 241, 258.] The choice of material to go into a newspaper
and the decisions made as to the content of the paper
constitute the exercise of editorial control and judgment.
(Id.)., and with this editorial control comes increased
liability. (See Cubby, supra.) In short, the critical issue
to be determined by this Court is whether the foregoing
evidence established a prime facie case that PRODIGY
exercised sufficient editorial control over its computer
bulletin boards to render it a publisher with the same
responsibilities as a newspaper.

Again, PRODIGY insists that its former policy of
manually reviewing all messages prior to posting was changed
"long before the messages complained of by Plaintiffs were
posted". (Schneck affidavit, par. 4.) However, no
documentation or detailed explanation of such a change, and
the dissemination of news of such a change, has been
submitted. In addition, PRODIGY argues that in terms of
sheer volume--currently 60,000 messages a day are posted on
PRODIGY bulletin boards--manual review of messages is not
feasible. While PRODIGY admits that Board Leaders may remove
messages that violate its Guidelines, it claims in
conclusory manner that Board Leaders do not function as
"editors". Furthermore, PRODIGY argues generally that this
Court should not decide issues that can directly impact this
developing communications medium without the benefit of a
full record, although it fails to describe what
further facts remain to be developed on this issue of
whether it is a publisher.

As for legal authority, PRODIGY relies on the Cubby
case, supra. There the defendant CompuServe was a computer
network providing subscribers with computer related services
or forums including an online general information service or
"electronic library". One of the publications available on
the Journalism Forum carried defamatory statements about the
Plaintiff, an electronic newsletter. Interestingly, an
independent entity named Cameron Communications, Inc.
("CCI") had "contracted to manage, review, create, delete,
edit and otherwise control the contents of the Journalism
Forum in accordance with editorial and technical standards
and conventions of style as established by CompuServe". The
Court noted that CompuServe had no opportunity to review the
contents of the publication at issue before it was uploaded
into CompuServe's computer banks. Consequently, the Court
found that CompuServe's product was, "in essence, an
electronic for-profit library" that carried a vast number of
publications, and that CompuServe had "little or no
editorial control" over the contents of those publications.
In granting CompuServe's motion for summary judgment, the
Cubby court held:

A computerized database is the functional
equivalent of a more traditional news vendor,
and the inconsistent application of a lower
standard of
liability to an electronic news distributor
such as CompuServe than that which is applied
to a public library, book store, or newsstand
would impose an undue burden on the free flow
of information.

(776 F. Supp. 135, 140.)

The key distinction between CompuServe and PRODIGY is
two fold. First, PRODIGY held itself out to the public and
its members as controlling the content of its computer
bulletin boards. Second, PRODIGY implemented this control
through its automatic software screening program, and the
Guidelines which Board Leaders are required to enforce. By
actively utilizing technology and manpower to delete notes
from its computer bulletin boards on the basis of
offensiveness and "bad taste", for example, PRODIGY is
clearly making decisions as to content (see, Miami Herald
Publishing Co. v Tornillo, supra), and such decisions
constitute editorial control. (Id.) That such control is not
complete and is enforced both as early as the notes arrive
and as late as a complaint is made, does not minimize or
eviscerate the simple fact that PRODIGY has uniquely
arrogated to itself the role of determining what is proper
for its members to post and read on its bulletin boards.
Based on the foregoing, this Court is compelled to conclude
that for the purposes of Plaintiffs' claims in the action,
PRODIGY is a publisher rather than a distributor.

An interesting comparison may be found in Auvil v. CBS
60 Minutes (supra), where apple growers sued a television
network and local affiliates because of an allegedly
defamatory investigative report generated by the network and
broadcast by the affiliates. The record established that the
affiliates exercised no editorial control over the broadcast
although they had the power to do so by virtue of their
contract with CBS, they had the opportunity to do so by
virtue of a three hour hiatus for the west coast
differential, they had the technical capability to do so,
and they in fact had occasionally censored network
programming in the past, albeit never in connection with "60
Minutes". The Auvil court found:

It is argued that these features, coupled with the
power to censor, triggered the duty to censor.
That is a leap which the Court is not prepared to
join in.
...

... plaintiffs' construction would force the
creation of full time editorial boards at local
stations throughout the country which possess
sufficient knowledge, legal acumen and access to
experts to continually monitor incoming
transmissions and exercise on-the-spot
discretionary calls or face $75 million dollar
lawsuits at every turn. That is not realistic.

...
More than merely unrealistic in economic terms, it
is difficult to imagine a scenario more chilling
on the media's right of expression and the
public's right to know.

(ACO F. Supp. at 931-932.) Consequently, the court dismissed
all claims against the affiliates on the basis of "conduit
liability", which could not be established therein absent
fault, which was not shown.

In contrast, here PRODIGY has virtually created an editorial
staff of Board Leaders who have the ability to continually
monitor incoming transmissions and in fact do spend time
censoring notes. Indeed, it could be said that PRODIGY's
current system of automatic scanning, Guidelines and Board
Leaders may have a chilling effect on freedom of
communication in Cyberspace, and it appears that this
chilling effect is exactly what PRODIGY wants, but for the
legal liability that attaches to such censorship.

Let it be clear that this Court is in full agreement with
Cubby and Auvil, Computer bulletin boards should generally
be regarded in the same context as bookstores, libraries and
network affiliates. [See Edward V. DiLello, Functional
Equivalency and the application to Freedom of Speech on
Computer Bulletin Boards, 26 Colum. J. Law & Soc. Probs.
199, 210-213 (1993),] It is PRODIGY's own policies,
technology and staffing decisions which have altered the
scenario and mandated the finding that it is a publisher.

PRODIGY's conscious choice, to gain the benefits of
editorial control, has opened it up to a greater liability
than CompuServe and
other computer networks that make no such choice. For the
record, the fear that this Court's finding of publisher
status for PRODIGY will compel all computer networks to
abdicate control of their bulletin boards, incorrectly
presumes that the market will refuse to compensate a network
for its increased control and the resulting increased
exposure. [See, Eric Schlachter, Cyberspace, The Free Market
and The Free Marketplace of Ideas: Recognizing Legal
Differences in Computer Bulletin Board Functions, 16
Hastings Communication and Entertainment L.J., 87, 138-139.)
Presumably PRODIGY's decision to regulate the content of its
bulletin boards was in part influenced by its desire to
attract a market it perceived to exist consisting of users
seeking a "family-oriented" computer service. This decision
simply required that to the extent computer networks provide
such services, they must also accept the concomitant legal
consequences. In addition, the Court also notes that the
issues addressed herein may ultimately be preempted by
federal law if the Communications Decency Act of 1995,
several versions of which are pending in Congress, is
enacted. [See, Congressional Quarterly US S 652,
Congressional Quarterly US HR 1004, and Congressional
Quarterly US S314.]

The Court now turns to the second issue presented here,
of whether Epstein was PRODIGY's agent for the purposes of
the acts and omissions alleged in the complaint. Agency is a
legal relationship which results from the manifestation of
consent of one person to allow another
to act on his or her behalf and subject to his or her
control, and consent by the other to so act. [Maurille v.
Park Slope U-Maul, 194 AD2d 142; Restatement (Second) of
agency *1 .] The starting point for an agency analysis in
this case is the "Bulletin Board Leader Agreement" ("the
Agreement" found at Exhibit A to Opposition Affidavit of
William C. Schneck) between PRODIGY and Epstein. This
Agreement sets forth eleven specific responsibilities
expected of a Board Leader including (I) the posting of a
minimum of 120 notes on the bulletin board each month; (II)
working with member Representatives; (III) providing monthly
reports and (IV) following any additional procedures
provided by PRODIGY. The Agreement also requires prior
PRODIGY approval of all promotional efforts. In addition,
the Agreement contains the following language

Although you will not be a PRODIGY
representative, your actions as Board Leader
will still reflect on PRODIGY.

You will be solely responsible for all of
your actions as a Board Leader. While
PRODIGY will certainly support your actions
as a Board Leader as a general matter (so
long as they are not in breach of this
Agreement), we will not assume any liability
for anything you do (or fail to do) as a
Board Leader. You hereby indemnify and agree
to hold PRODIGY harmless from and against all
claims cost, liabilities judgments ...
arising out of or in connection with anything
you do ...
. . .
Being a Board Leader does not make you a
PRODIGY Services Company employee,
representative or agent, and you agree not to
claim or suggest that you are one.

PRODIGY relies on this language to extricate itself from any
alleged agency relationship with Epstein. However,
talismanic language does not determine an agency
relationship. [Matter of Shulman Transport Enterprises,
Inc., 33 B.R. 383, 365, aff'd 744 Fzd 293.) The Court must
look to the substance of the relationship. (fd.) Where one
party retains a sufficient degree of direction and control
over another, a principal-agent relationship exists. [Garcia
v Herald Tribune Fresh Air Fund, Inc., 51 Ad2d *97.] In
addition, whether one is an independent contractor is not
determinative of whether one is an agent. [Columbia
Broadcasting System, Inc. v Stokely-Van Camp, Inc., 522 F2d
369, Ackert v *******, 29 Misc2d 962, aff'd 20 AD2d *50.]

As to the substance of the relationship between PRODIGY and
its Board Leaders, PRODIGY Security Officer McDowell
testified that Board Leaders are required to follow the
Guidelines and the PRODIGY performs a "management function"
with respect to the activities of the Board Leaders.
(McDowell deposition transcript p. 78 found at Exhibit S to
the moving papers.) Furthermore, Epstein's Supervisor,
Jennifer Ambrozek , testified that PRODIGY reviews the
Guidelines with Board Leaders, who are then required to
enforce the Guidelines. (Ambrozek deposition transcript pp.
23 and 191, found at Exhibit R to the moving papers.) Board
Leaders are also given a 28 page "Bulletin Board Leader
Survival Guide" (Exhibit Q to the moving papers), dated
October 1994, wherein many technical terms and procedures
are explained, and the following caveat is given:

IF YOU DON'T KNOW WHAT SOMETHING IS OR WHAT IT'S
SUPPOSED TO DO, LEAVE IT ALONE UNTIL YOU CAN ASK.

Where the facts are not disputed the question of agency
should be resolved by the court. [Plymouth Rock Fuel Corp. v
Leucedia Inc., 100 AD2d 842.] This is such a case. The
aforementioned testimony by PRODIGY employees and
documentation generated by PRODIGY, together with the
Guidelines themselves, cannot be disputed by PRODIGY and
leave no doubt that at least for the limited purpose of
monitoring and editing the "Money Talk" computer bulletin
board, PRODIGY directed and controlled Epstein's actions. In
reaching this conclusion the Court has taken care not to
rely on any testimony by Epstein, inasmuch as it is the
conduct of the principal which must create the impression of
authority, not the conduct of the agent. [See, Ford v Unity
Hosp., 32 NY2d 464, 273.] Based on the foregoing, the Court
holds that Epstein acted as PRODIGY's agent for the purposes
of the acts and omissions alleged in the complaint.

Dated: May 24, 1995
Mineola, New York

------------------------------

From: [email protected]
Subject: File 5--Prodigy decision location and amateur analysis
Date: Mon, 29 May 1995 10:37:19 -500

Here is where you can find the judge's decision:

http://www.ziff.com:8001/~pcmag/trends/tr0526b.htm

I read the whole thing through, slowly, and just finished.
While it's not a happy thing for Prodigy, the judge's reasoning
seems pretty thorough. The logic states:

PUBLISHER QUESTION:
1. Prodigy chose to censor/edit its discussion forums
so as to be a "family" oriented BBS.

2. Prodigy willingly and knowingly marketed itself
to the public as an edited forum.

3. Therefore, Prodigy has editing control, and the
additional responsibilities that go with that control.

4. This distinction makes Prodigy more analogous
to a newspaper, than to a "conduit" of information,
like a bookstore.

5. Prodigy created its own internal staff of editors, who
were required to follow Prodigy policy in their duties.

6. Therefore, Prodigy was actually editing the board,
including at the time of the libelous posting.

7. SO: Prodigy is a publisher who published a libelous
statement. RULE: Publishers, as people who repeat and
perpetuate libelous statements, are liable for their actions
as sure as if they wrote the libelous statement themselves.
Contrast this with conduits, like bookstores, who do not
exercise primary editing control over their wares and so
are responsible only if they know, or have reason to know,
that there is libelous content therein.

AGENCY QUESTION:
Prodigy tried to avoid liability by claiming that the board
leaders are solely responsible for the content of their forum,
and sign a waiver stating that they cannot deny this sole
responsibility. The judge nuked that argument:

8. An agency is where one party (the board leader) agrees
to act on behalf of another party (Prodigy), subject to the
other party's (Prodigy's) control.

9. An agency relationship makes the primary (Prodigy) liable
for the actions of the agent b/c of that control.

10. Prodigy put the agent in such a position of control that
the substance of the relationship must govern, and not the
purported waiver of a relationship: the judge cut through the
B/S and didn't let Prodigy weasel out b/c the board leader
was acting as Prodigy's agent, and held out to the public
as such.

11. Therefore, Prodigy is liable for the actions of the agent,
which means that Prodigy is liable for the libelous statements.

WHOPPING HUGE CAVEAT
The procedural stance of the decision was for a partial
summary judgment. What this means is that the fighting
parties (Prodigy and the financial house) have stipulated the
material facts, and judgment is being issued "as a matter of law"
on the relevant parts.

I might be wrong about this, but it seemed to me that
the financial house might still have to *prove* that the
statements were indeed libelous, unless there's already
been a finding of fact on that issue that isn't mentioned
in the decision. Can somebody confirm whether or not
the question of libel has been decided yet, either by a jury
or as a matter of law?

Thanks for reading this far, if you did. Does my interpretation
hold water?
******************
Life is not a brief candle... It is a splendid torch
that I want to make burn as brightly as possible
before handing it on to future generations.
--with thanks to George Bernard Shaw--

Brendon McNamara [[email protected]]
Boston University School of Law

------------------------------

Date: Sun, 19 Apr 1995 22:51:01 CDT
From: CuD Moderators <[email protected]>
Subject: File 6--Cu Digest Header Info (unchanged since 19 Apr, 1995)

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