Wikipedia Entries Still Aren't Admissible Evidence

An article in the North Jersey Crime Examiner reports that an appellate court in New Jersey reversed the judgment in a collection case because the lower court mistakenly admitted a Wikipedia entry into evidence during a bench trial. The case is a good example of what not to do at trial.

The plaintiff collections agency allegedly acquired the defendant debtor's delinquent credit card account as part of a portfolio of delinquent accounts originating from Bank One Corporation. It sued the defendant alleging $30,000 in unpaid credit card debt. See Palisades Collection, L.L.C. v. Graubard, 2009 WL 1025176 (N.J.Super.A.D. Apr. 17, 2009).

At the beginning of the trial, the plaintiff, invoking the doctrine of judicial notice, offered a Wikipedia entry into evidence "to establish that Bank One Corporation was purchased by J.P. Morgan & Company in 2004," which the trial court accepted. At the conclusion of the trial, the court entered a judgment against the defendant for approximately $18,000.

On appeal, the defendant argued that the trial court should not have admitted the Wikipedia entry into evidence. Consequently, the plaintiff failed to meet its burden with regard to standing because it lacked sufficient evidence to prove ownership of the debt. The appellate court agreed.

The court reasons,

[t]he trial court's acceptance of Wikipedia was...contrary to the principle that judicial notice must be based upon "sources whose accuracy cannot be reasonably questioned."

The court further explains,

it is entirely possible for a party in litigation to alter a Wikipedia article, print the article, and thereafter offer it in court in support of any given position. Such a malleable source of information is inherently unreliable, and clearly not one "whose accuracy cannot be reasonably questioned."

As a final note, the court's reasoning here is also consistent with a case decided late last year in Texas. In Flores v. Texas, the court noted that Wikipedia's openness--its greatest strength--is also its greatest weakness. Again, since anyone can edit the material on Wikipedia, the court declined to rely on its accuracy. See Flores v. Texas, No. 14-06-00813-CR., 2008 WL 4683960 (Tex. App. Oct. 23, 2008).

With One Billion Apps Downloaded, Should Apple Be Worried About iPhone Hackers?

As I write this post, about 965,000,000 iPhone applications have been downloaded from Apple's App Store. Apple is celebrating by giving away a variety of free Apple products to the lucky billionth downloader. Nevertheless, Apple wants the right to sue iPhone owners who jailbreak their phones.

However, as law professor Mark Roark points out in a column published in the Daily Journal (subscription required) yesterday, [t]here is just one problem. The law does not necessarily afford Apple a remedy. See Mark L. Roark, Will iPhone Network Hacking Shake Apple to Its Core?, L.A. Daily J., Apr. 15, 2009, at 5.

Presently, according to Roark, Apple cannot sue under the Digital Millennium Copyright Act ("DMCA") (that may change in October). However, Roark suggests that Article 2 of the Uniform Commercial Code ("UCC"), may allow Apple to maintain control of endusers' behavior through the terms of the iPhone's warranty. In short, Apple's warranty for the iPhone could include enforceable terms stating that if a user alters the hardware or software, the user loses the warranty. See Id.

Finally, Roark discusses some empirical research he conducted with 150 individuals. The results essentially suggest that the threat of losing the warranty is enough to deter a decent percentage of consumers from altering their iPhones, depending on how valuable the consumer perceives the warranty to be. See Id.

In essence, Apple, or any other device-maker, can lawfully maintain a certain level of control over their products, without resorting to threats of litigation because it can still reduce the value of the device post-purchase. But, for Apple it doesn't seem to be enough.

  • Apple's warranty for the iPhone most likely already prohibits jailbreaking.

The Genius Bar at your local Apple Store probably won't provide service for an iPhone that is obviously jailbroken because the warranty is already rather restrictive.

The relevant terms of the iPhone 3g's warranty already includes the following language:

This warranty does not apply...to damage caused by operating the product outside the permitted or intended uses described by Apple; [or]...to a product or part that has been modified to alter functionality or capability without the written permission of Apple. See Apple's Limited Warranty for the iPhone 3g (warning: pdf).

Apple also has similar provisions in its warranties for its other products although they generally aren't quite as strict with regard to software.

  • Jailbreaking an iPhone is not the same thing as unlocking it.

One thing that Roark overlooks in his column is that there is a distinction between jailbreaking and unlocking an iPhone. The process of jailbreaking entails altering the iPhone so as to allow it to run applications other than those from Apple's official App Store. Unlocking, on the other hand, refers to enabling the iPhone to be used on other cellular networks. Presumably, unlocked phones threaten the profits of both Apple and AT&T whereas jailbroken phones really only threaten Apple's monopoly over the software distribution channel.

  • Apple contends that merely jailbreaking an iPhone should be illegal under the DMCA.

In February, the Electronic Frontier Foundation ("EFF") submitted exemption requests to the U.S. Copyright Office as part of the 2009 DMCA Triennial Rulemaking. One of them pertains specifically to jailbreaking.

  • Proposed Class #1: Computer programs that enable wireless telephone handsets to execute lawfully obtained software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications with computer programs on the telephone handset. (The entire text is available here as a PDF).

In its opposition, Apple argues that the EFF is trying to use the DMCA exemption to change Apple's business model.

Specifically, [the EFF] seeks through the proposed exemption to clear the path for those who would hack the iPhone's operating system so that a proprietary mobile computing platform protected by copyright can be transformed into one on which any third party application can be run, without taking account of the undesirable consequences that would ensue from the transformation. (The entire text of Apple's Comment is available here).

The Copyright Office will issue its final rulemaking order in October.

  • So, should Apple have the right to sue individuals who run unapproved third-party software on their iPhones?

I'm still somewhat undecided. In any case, I don't think it would be particularly worthwhile for Apple to start suing its customers. I doubt that the threat of litigation will prove an effective deterrent to iPhone hackers. Moreover, both the EFF and Apple agree that there are only a few hundred thousand jailbroken iPhones even though millions have been sold.

At best, Apple may get a few popular websites to shutdown. At worst, Apple will find itself in a position similar to that of the RIAA.

Bits that Bite Back: Republishing Your MySpace Blog Without Your Consent Is Not An Invasion of Privacy

  • "Undo Send"—Five More Seconds to Change Your Mind

undosend.pngGmail Labs added a new feature a few weeks ago—Undo Send. If enabled, a user has about 5 seconds to "hit the panic button" before the message is sent.

On one hand, given the time limitation, the feature's uses are limited. On the other hand, five seconds may, for example, be just long enough to realize that one made the commonly embarrassing and potentially damaging mistake of selecting "Reply to All" instead of "Reply."

  • Hitting the Panic Button Too Late—Moreno v. Hanford Sentinel, Inc.

Unfortunately, there generally isn't a simple way to undo the damage an ill-conceived email or blog post (or Tweet) can do—as is the case in Moreno v. Hanford Sentinel, Inc., No. F054138, 2009 WL 866795 (Cal. Ct. App. April 2, 2009). See also Mike Mckee, MySpace Musings Aren't Private, Appeals Court Rules, Law.com, April 6, 2009.

  • Background: Moreno v. Hanford Sentinel, Inc.

In 2005, after returning from a visit with her family in her hometown of Coalinga, CA, Cynthia Moreno, an undergraduate at UC Berkeley, wrote "An Ode to Coalinga" and posted it on her MySpace page. Apparently, she didn't have anything positive to say. As the court describes it,

[t]he Ode opens with "the older I get, the more I realize how much I despise Coalinga" and then proceeds to make a number of extremely negative comments about Coalinga and its inhabitants. Moreno, No. F054138, 2009 WL 866795, at *1-2.

Six days after posting the Ode, Moreno decided to take it down, but it was too late. Cynthia's high school principal in Coalinga had already read the post and given a copy to his friend, the editor of a local newspaper. The editor then republished Ode in the paper, and, of course, attributed it to Cynthia Moreno. Id. at *2.

Moreno's family received hate mail and death threats. Her father was forced to close the 20 year-old family business, and, ultimately, the family was forced to move. Id.

The family sued the principal, the school district, the editor, and the newspaper for invasion of privacy and intentional infliction of emotional distress ("IIED"). The editor and the newspaper were dismissed as defendants after winning an anti-SLAPP motion and motion to strike. The principal and the school district demurred to both of the plaintiffs' theories of liability, and the trial court sustained the demurrer on both claims without leave to amend.

On appeal, the court upheld the trial court's dismissal of the invasion of privacy claim, holding that the author of an article published on MySpace.com cannot state a cause of action for invasion of privacy against those who republished the article in a local newspaper. However, the court still allowed the case to move forward on at least one theory of liability by reversing the ruling of the trial court with regard to the claim of IIED. See Id.

  • Where nothing private is revealed, there is no invasion of privacy.

Eric Goldman, at his Technology & Marketing Blog, explains the court's decision as follows:

The privacy invasion claim was easily rejected. Once Moreno posted the essay to an open-to-the-public MySpace page (even if only briefly), it was no longer private. As the court says, "the fact that Cynthia expected a limited audience does not change the above analysis. By posting the article on myspace.com, Cynthia opened the article to the public at large. Her potential audience was vast." It also did not matter that Moreno did not use her last name on her MySpace page; the court says that her identity was readily ascertainable from her MySpace page (which included a photo)...

  • So, does publication on the internet necessarily bar invasion of privacy actions?

In Moreno, the court doesn't entirely foreclose upon the possibility that one may still have a right to keep something private, even if published on the internet, but it certainly doesn't provide a clear test.

Using language borrowed from a case where alleged trade secrets were leaked online, the court states "[t]he publication was not so obscure or transient that it was not accessed by others." Id. at *3. This language raises at least two questions. First, does the work have to obscure and transient even if it isn't accessed by others? Second, can a work be accessed by others, and still be obscure and transient enough to retain its private status?

The trade secrets case that the court cites in Moreno doesn't provide much guidance because, with regard to leaked trade secrets,

[t]he concern is whether the information has retained its value to the creator in spite of the publication. Publication on the Internet does not necessarily destroy the secret if the publication is sufficiently obscure or transient or otherwise limited so that it does not become generally known to the relevant people, i.e., potential competitors or other persons to whom the information would have some economic value. DVD Copy Control Ass'n Inc. v. Bunner 116 Cal. App. 4th 241, 251 (2004) (citations omitted).

Since there is no dispute over the economic value of Cynthia Moreno's Ode, most of the analysis above is inapplicable in her case. Also, the court in Moreno seems to have conspicuously omitted the language about becoming known to the relevant people.

What if Cynthia Moreno's high school principal was the only person who read the Ode? Would the Ode have then been "transient and obscure" enough to remain private?

New Century v. KPMG - Should Theories of "Gatekeeper Liability" Allow Private Causes of Action for Fraud Against Third Parties?

Kevin La Croix, at his blog, The D&O Diary, writes,

In a development that may foreshadow further "gatekeeper" claims as part of the current credit crisis litigation wave, on April 1, 2009, the trustee for the New Century Financial Corp. liquidation initiated lawsuits in California and New York against KPMG and its international parent, seeking to recover $1 billion in damages for negligence and for aiding and abetting breaches of fiduciary duty. 

After a thorough summary of the complaints filed against KPMG, he further states,

[t]he trustee’s filings in these complaints certainly suggest the possibility that auditors and other "gatekeepers" could be targeted in the wake of the subprime meltdown. Id.

Moreover, The Wall Street Journal points out that

[t]he claims are among the first to attempt to blame auditors for the subprime-mortgage crisis, which spread beyond lenders such as New Century and engulfed the global financial system.

In order for private plaintiffs to successfully litigate claims like the ones the New Century trustee asserts against KPMG, some theory of "scheme liability," or "gatekeeper liability" will most likely need to be accepted by the courts.

In 2007, the Supreme Court rejected a theory of "scheme liability"  in the context of securities fraud litigation in Stoneridge Investment Partners v. Scientific-Atlanta. SCOTUSblog summarized the Court's holding in 2007 as well as the background of the case as follows:

Investors, the Court said, may only sue those who issued statements or otherwise took direct action that the investors had relied upon in buying or selling stock — whether that involved public statements, omissions of key facts, manipulative trading, or conduct that was itself deceptive.

***

The case involved what has been called “scheme liability,” in which everyone involved in a plot to deceive securities investors would be legally at fault, whether or not each of them had issued any public statements.  The Securities and Exchange Commission had previously supported such liability, and wanted to enter the Stoneridge case to say so, but its participation was vetoed by the Bush Administration, with President Bush and Treasury Secretary Henry Paulson directly involved in the decision to keep the SEC out of the case.  The Court took the case apparently to resolve a dispute among federal appeals courts on the issue.

Since "gatekeepers" are generally third parties, e.g., auditors like KPMG, Stoneridge has been construed so as to deny private causes of action for securities fraud based upon almost all theories of "gatekeeper liability." However, the plaintiffs in Stoneridge were investors. Here, the plaintiff is the New Century trustee. Furthermore, the trustee's claims for negligence and aiding and abetting breach of fiduciary duty, at least in California, are brought under California law whereas Stoneridge addressed fraud claims pursuant to federal law. So, one question is whether the holding in Stoneridge is even applicable, at least in California.

Also, in Stoneridge, the Court states that third parties, or "secondary actors" may be held both civilly and criminally liable for their roles in securities fraud; however, only the SEC may pursue civil remedies against said secondary actors. Thus, another question, as to whether these remedies are adequate, may arise.

The outcomes of New Century v. KPMG and similar lawsuits may eventually provide some answers to these questions. In any case, at least one thing that is certain--theories of "gatekeeper liability" are not dead.