Mul­tivi­sion’s Naz­er­ali wants Over­stock kept on hook

Mul­tivi­sion Com­mu­ni­ca­tions Corp.’s Aly Naz­er­ali is fight­ing a no-ev­i­dence mo­tion from Over­stock, one of the de­fen­dants in his defama­tion trial against the Deep Cap­ture web­site. Over­stock says it is not vi­car­i­ously li­able for ma­te­rial pub­lished by its CEO.

Stockwatch Daily - - FRONT PAGE - by Stock­watch Busi­ness Re­porter

ALY NAZ­ER­ALI, the plain­tiff in a defama­tion trial against the Deep Cap­ture web­site, spent Thurs­day morn­ing fight­ing a no-ev­i­dence mo­tion brought by one of the de­fen­dants, on-line re­tailer Over­stock.com Inc. The CEO and founder of Over­stock is Pa­trick Byrne, who pub­lishes Deep Cap­ture and is another de­fen­dant in the trial. Over­stock says there is no ev­i­dence that it had any­thing to do with what Mr. Byrne pub­lished on Deep Cap­ture about Mr. Naz­er­ali. Mr. Naz­er­ali’s lawyer coun­tered to­day that Mr. Byrne is “es­sen­tially the face of Over­stock” and should be held vi­car­i­ously li­able.

Mr. Naz­er­ali’s com­plaint arose from a se­ries of 21 chap­ters that ap­peared on Deep Cap­ture in 2011. He says the chap­ters falsely ac­cuse him of as­so­ci­at­ing with ter­ror­ists, mar­ket ma­nip­u­la­tors and other ne­far­i­ous types. Mark Mitchell, who wrote the chap­ters, is another de­fen­dant in the case.

Mr. Naz­er­ali is rep­re­sented by Dan Bur­nett. Roger McConchie rep­re­sents all of the de­fen­dants ex­cept Over--- stock, which is rep­re­sented by Stephen Schachter.

Thurs­day morn­ing brought Mr. Bur­nett’s re­sponse to a no-ev­i­dence mo­tion filed by Mr. Schachter to have the claims against Over­stock dis­missed. Mr. Schachter ar­gued yesterday that Mr. Bur­nett brought no ad­mis­si­ble ev­i­dence against Over­stock dur­ing the trial and did not even try to gather ev­i­dence be­fore the trial by con­duct­ing pre­trial in­ter­views with any Over­stock rep­re­sen­ta­tives. He also cited cases re­lat­ing to when an em­ployer can be held vi­car­i­ously li­able for the con­duct of an em­ployee, such as when the “con­duct [was] au­tho­rized by the em­ployer.” As well, he pointed out that the de­fen­dants rep­re­sented by Mr. McConchie are not fight­ing the no-ev­i­dence mo­tion, so the com­mon prob­lem of ap­por­tion­ment — when de­fen­dants bicker over who gets how much blame — does not ex­ist.

In re­sponse, Mr. Bur­nett strongly dis­agreed that there was no ev­i­dence against Over­stock. He drew at­ten­tion to Mr. Byrne’s doc­u­mented use of his Over­stock e-mail ac­count when con­tact­ing Mr. Mitchell or post­ing about Mr. Naz­er­ali on-line. Other e-mail ex­changes be­tween Over­stock em­ploy­ees and Mr. Mitchell showed that Mr. Mitchell did not have to or­ga­nize or pay for the trips he took on Deep Cap­ture busi­ness. As well, Over­stock it­self de­scribed Deep Cap­ture as a “re­lated com­pany” in board meet­ings. All this “is ab­so­lutely enough to de­feat the no-ev­i­dence mo­tion,” con­cluded Mr. Bur­nett.

Mr. Bur­nett also brought up ap­por­tion­ment, and said the is­sue should not be brushed aside as easily as Mr. Schachter would like. “In this case, it’s no sur­prise that the de­fen­dants don’t point fin­gers at each other. That would be a bad tac­tic,” said Mr. Bur­nett. He sug­gested that Mr. Mitchell, for ex­am­ple, may have an in­cen­tive to let all the blame fall on him so he could pro­tect Mr. Byrne, his “boss and bene­fac­tor.” Re­gard­less, con­tin­ued Mr. Bur­nett, no-ev­i­dence mo­tions are not sup­posed to be granted when there are mul­ti­ple de­fen­dants, so Mr. Schachter’s mo­tion could be dis­missed on that ba­sis alone.

Mr. Bur­nett next turned to the vi­car­i­ous li­a­bil­ity of em­ploy­ers for ac­tions by em­ploy­ees. One mem­o­rable case he cited had to do with an em­ployer be­ing found vi­car­i­ously li­able for sex­ual abuse com­mit­ted by one of its em­ploy­ees. The case ul­ti­mately went to the Supreme Court of Canada. Mr. Bur­nett said the Supreme Court’s de­ci­sion over­turned the pre­vi­ous test for de­ter­min­ing vi­car­i­ous li­a­bil­ity, which was es­sen­tially to ask whether the em­ployer au­tho­rized the em­ployee’s ac­tions. The new ap­proach, ex­plained Mr. Bur­nett, is to ask “whether the en­ter­prise cre­ated a po­ten­tial for abuse.” He went on to say that Mr. Byrne would have even more room to abuse his power than a nor­mal em­ployee of Over­stock be­cause he is the CEO.

Lastly, Mr. Bur­nett con­sid­ered pos­si­ble so­lu­tions to some of the prob­lems that Mr. Schachter had pre­sented, such as the lack of pre­trial in­ter­views with Over­stock rep­re­sen­ta­tives. He sug­gested that Mr. Byrne’s pre­trial in­ter­views could be con­sid­ered in­ter­views with an Over­stock rep­re­sen­ta­tive. He also sug­gested that the case could be re­opened, not to gather new ev­i­dence against Over­stock, but to bring Mr. Byrne and Mr. Mitchell in to au­then­ti­cate the ex­ist­ing ev­i­dence and strengthen his case.

Mr. Schachter, ris­ing to re­spond, re­peated that noth­ing he had seen was ad­mis­si­ble ev­i­dence against Over­stock. Mr. Byrne’s use of his Over­stock e-mail “of­fers noth­ing in the way of im­pli­ca­tion against Over­stock as a party that did any­thing,” he ar­gued. Fur-

ther, just be­cause Mr. Byrne is Over­stock’s CEO, it does not mean that “Over­stock is there­fore pub­lish­ing or caus­ing these publi­ca­tions to be made.”

As for Mr. Mitchell’s travel ex­penses, there is no proof that Over­stock paid for them, said Mr. Schachter. He pointed out that in a pre­trial in­ter­view, Mr. Byrne said he paid for the trips through his own per­sonal com­pany. Mr. McConchie had wanted that sec­tion of the in­ter­view to be read aloud in court, but Mr. Bur­nett was not re­quired to do so, said Mr. Schachter.

Turn­ing to Over­stock’s ac­knowl­edge­ment of Deep Cap­ture as a re­lated party, Mr. Schachter said Over­stock con­sid­ers “thou­sands of sites” to be re­lated par­ties, in­clud­ing Google. If some­one vis­its those sites and clicks on a link to Over­stock, Over­stock makes a pay­ment — hence the re­la­tion­ship. Mr. Schachter con­cluded, “Over­stock is no dif­fer­ent vis-a-vis Deep Cap­ture as its vis-a-vis Google ... [or] thou­sands of other sites on sim­i­lar com­mer­cial terms.” (Mr. Bur­nett would later dis­agree, point­ing out that one ad­ver­tise­ment ex­plic­itly stated, “You can sup­port Deep Cap­ture by click­ing on Over­stock here.”)

Mr. Schachter did not care for any of the so­lu­tions that Mr. Bur­nett had pro­posed. Mr. Byrne’s pre­trial in­ter­view was per­sonal and can­not sud­denly be taken as an in­ter­view of an Over­stock rep­re­sen­ta­tive, he said. He also did not like the idea of re­open­ing the trial, say­ing that would go be- yond the court’s au­thor­ity and would be “prej­u­di­cial” to Over­stock.

Af­ter hear­ing the ar­gu­ments for and against the no-ev­i­dence mo­tion, the judge said he would take time to con­sider them. The trial was ad­journed un­til Fri­day morn­ing.

You can send com­ments to Karen Bax­ter: karenb@stock­watch.com

Moe Dilon, Jer­ah­miel Sam­son Graf­stein, Altaf Naz­er­ali, Bruce Dou­glas Reid, Harold Roy Shipes

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