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Strategies & Market Trends : ZixIt Corporation (ZIXI)
ZIXI 3.68-1.6%5:20 PM EDTNews

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To: Kevin Podsiadlik who started this subject7/7/2003 3:04:41 PM
From: Kevin Podsiadlik of 4119
 
Interesting article on the Visa lawsuit:

law.com

'So What?' Defense Turns Back Visa Suit

CASE TYPE: defamation
CASE: ZixIt Corp. v. Visa USA Inc. and Visa International Service Association Inc., No. 99-10187-K (Dallas Co., Texas, Dist. Ct.)
PLAINTIFF'S ATTORNEYS: Neal S. Manne, Kenneth E. McNeil, Stuart V. Kusin from the Houston office of Susman Godfrey, and Barry C. Barnett from Susman Godfrey's Dallas office.
DEFENSE ATTORNEYS: Michael P. Lynn, Jeffrey M. Tillotson and Aldolfo R. Rodriguez Jr. of Lynn Tillotson & Pinker of Dallas
JURY VERDICT: for the defense

Defense attorney Michael P. Lynn promised jurors that they would dislike one of his most important witnesses. The man at the heart of the defamation case they were hearing might very well be the worst witness ever, the attorney warned the Dallas jury.

And that witness—Paul Guthrie, Visa's former vice president of technology and research—didn't disappoint. He fidgeted, appeared to lie and evaded questions, Lynn said. Guthrie's unimpressive showing could have been the death knell for the defense, but it apparently didn't sway jurors.

The panel awarded nothing to ZixIt Corp., which had claimed that Visa—with Guthrie as its agent—defamed the Internet credit-card-clearing center with more than 400 postings on Internet message boards that trashed the start-up.

ZixIt was vying with giant Visa for customers for the same concept, encryption of credit cardholders' identification information on the Internet. ZixIt's lawyers showed that Guthrie had used a half-dozen pseudonyms on Yahoo! message boards to criticize the company. He accused ZixIt of hyping its stock and being unable to deliver the services it promised.

The plaintiffs alleged that Guthrie's 437 messages, posted in 1999 from his Visa office and San Francisco home, sabotaged investor confidence in ZixIt's product and defamed the company. They sought $701 million in damages, reflecting the loss in value of the company's stock and lost profits. The defense honed its strategy in four mock trials.

"We found that if we tried to distance ourselves from Guthrie and claim [Visa had] no responsibility for his actions, the jury was angry," Lynn said. "But if we took responsibility, the jury was angry." The defense team opted to use a "so what?" defense—"he did it but it didn't cause any harm"—Lynn said. He showed a film clip of 50,000 cheering fans and explained that "the voice of Paul Guthrie was not unlike one person screaming in a stadium." Defense attorneys also presented a causation expert who testified that there was no connection between ZixIt's stock activity and Guthrie's postings.

Jurors deliberated for three-and-a-half days before returning a 10-2 verdict in favor of the defense. They said after the trial that they disliked Guthrie but did not feel he was acting at Visa's behest. Plaintiff's attorney Neal S. Manne of Susman Godfrey's Houston office said the defense won because its attorneys were "incredibly effective." If he'd had his way, he would have forced ZixIt to accept a multimillion-dollar settlement offer made at the trial's start.
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