{"id":13220,"date":"2022-02-14T21:52:58","date_gmt":"2022-02-14T21:52:58","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/14\/the-intersection-of-section-230-slapp-threats-the-streisand-effect-and-sex-discrimination-in-corporate-structures\/"},"modified":"2022-02-14T21:52:58","modified_gmt":"2022-02-14T21:52:58","slug":"the-intersection-of-section-230-slapp-threats-the-streisand-effect-and-sex-discrimination-in-corporate-structures","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/14\/the-intersection-of-section-230-slapp-threats-the-streisand-effect-and-sex-discrimination-in-corporate-structures\/","title":{"rendered":"The Intersection Of Section 230, SLAPP Threats, The Streisand Effect And Sex Discrimination In Corporate Structures"},"content":{"rendered":"

<\/a>\n<\/p>\n

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from the so,-so-much<\/i> dept<\/h3>\n

\nMake sure you read the update at the end<\/em>\n<\/p>\n

\nThis is a story that appears like it was created just<\/em> to get Techdirt coverage, given how many issues we cover it touches on. Here’s how it starts: Tulane law professor Ann Lipton<\/a>, an expert on corporate governance and corporate law, wrote an academic paper about “Capital Discrimination.”<\/a> It’s really interesting, and you should read it — and a lot more people have been reading it over the last few days because of the situation I’m about to describe. The gist of the paper is that sex and gender discrimination happens in disputes regarding corporate structures\/ownership, but that we don’t generally have language in typical discussions of corporate ownership that recognize this very real dynamic. The article highlights multiple examples where courts try to apply the more traditional language of corporate ownership disputes in cases where there is clearly an element of sex discrimination.\n<\/p>\n

\nOne of the examples cited is In re: Shawe & Elting LLC, et al.<\/a>, which involves a somewhat incredible dispute between two people, Philip Shawe and Elizabeth Elting, who founded a company together, Transperfect Global. Without getting into all of the sordid details, Shawe and Elting had been in a relationship very early on, around the time of the formation of the business. At some point they were engaged to be married, though, according to the documents, Elting called off the engagement in 1997. From all of the details discussed in the opinion in the legal dispute between them, one could surmise that Shawe and Elting — despite working together as co-CEOs, being the only two members of the board, and building up the company into a massive success, employing thousands of employees, and making hundreds of millions of dollars in revenue a year — spent an awful lot of time fighting with each other in incredibly immature ways. It seems like they had been able to work together semi-amicably for over a decade after their personal relationship broke off, but things went off the rails sometime around 2012. The opinion linked above has detail after detail of incredibly petty and ridiculous behavior, sometimes on both of their parts, but quite frequently driven by Shawe. Here’s just one example from the ruling:\n<\/p>\n

<\/p>\n

\nOn February 6, 2013, Elting was asked to approve a bonus for an employee working in one of the divisions (TDC) Shawe managed. Elting was willing to approve the bonus if Shawe approved other \u201craises that [were] being held up.\u201d Intent on eliminating dual approvals, Shawe would not sign off on the raises Elting wanted to implement unless she would agree that \u201cother small TPT\/TDC decisions go through with eitherpartner\u2019s approval…to avoid hostaging and eventual nuclear war.\u201d Elting would not agree: \u201cNo, Phil. Not how it works here . . . the arrangement is to share it all with both of us. If there is good justification and transparency I will never hold things up.\u201d Shawe would not relent. He instructed Boodram not to release any of the raises: \u201cThey will remain hostaged… until we figure out how to make decisions in general without
\nhostaging.\u201d The episode was played out in an email string on which many of the Company\u2019s senior managers were copied.\n<\/p>\n

\nIn an email exchange on February 14, 2013, Shawe put a new hire for one of Elting\u2019s divisions (TPT) \u201c[o]n hold\u201d to pressure Elting to abandon dual approvals. Kevin Obarski, Senior Vice President of Sales, who was copied on the email string, chimed in with a private email to Shawe telling him that he was acting like a child:\n<\/p>\n

<\/p>\n

\nYou told me in New Orleans that I should tell Liz when she is being crazy- This is me telling you that you are being crazy. I know you are going through a tough time- but you are acting like a child, ruining the rep that you have spent two decade[s] to build and all for what. Because you need to run things by people. It is wasting your own and everyone\u2019s time- just so you can be right. Who cares about being right. We are about to change the world and you are wasting your energy and time on something that does not matter.\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nIn his private response to Obarski, Shawe revealed his plan to \u201ccreate constant pain\u201d for Elting until she acquiesced to his demands. He wrote, in relevant part:\n<\/p>\n

<\/p>\n

\nI will not run small things by anyone for my divisions. I will make decisions for my division…and I will hold up Liz\u2019s TPT stuff till they are pushed through. I cannot fight on every small decision. I cannot and will not live that way. I will not change my position. I will simply create constant pain until we go back to the old way of doing things…\n<\/p>\n

<\/em><\/p><\/blockquote>\n

<\/em><\/p><\/blockquote>\n

\nThere are multiple stories along these lines — many of which appeared to be petty disputes between two co-CEOs posturing over who had power (there’s a side issue in which technically Elting owned 50% of the business and Shawe 49%, but the other 1% was ostensibly held by Shawe’s mother, in order to take advantage of being a “majority woman-owned business,” but in practice, Shawe controlled his mother’s share, so it was a 50\/50 company). Many of the business disputes seem incredibly counter-productive, and seem to involve trying to make life difficult for the other one by delaying\/hindering business decision making. As they argued, some of the behavior went into really, really questionable territory:\n<\/p>\n

<\/p>\n

\nOn the evening of December 31, 2013, when he knew \u201c[w]ith virtual certainty\u201d that Elting would not be in her office, Shawe secretly accessed her locked office on four different occasions using a master key card with the intent to obtain the hard drive from her computer. Having gained this access, Shawe dismantled Elting\u2019s computer, removed the hard drive, made a mirror image of it, and reinstalled the hard drive later that night. A log of the key card access reflects that Shawe entered Elting\u2019s office on New ear\u2019s Eve at 4:29 p.m., 5:34 p.m., 7:22 p.m., and 7:47 p.m. Shawe began reviewing the contents of the hard drive image the next day.\n<\/p>\n

\nIn addition to breaking in to Elting\u2019s computer, Shawe arranged to access the hard drive on her office computer remotely. Using the personal identification number he had previously obtained from the back of Elting\u2019s computer, he mapped to her hard drive from his computer through the Company\u2019s computer network. Shawe accessed Elting\u2019s computer in this manner on at least twenty separate occasions from April 3, 2014, to July 23, 2014. At some point, either through reviewing the hard drive image or his remote access snooping (he could not remember precisely when or which method he used), Shawe discovered that there was a .pst file of Elting\u2019s Gmails on her hard drive. Thereafter, when Shawe remotely accessed Elting\u2019s hard drive, he downloaded a replica of the .pst file of Elting\u2019s Gmails (each later .pst file having accumulated more of Elting\u2019s Gmails) to thumb drives so he could view Elting\u2019s Gmails privately on his laptop, which allowed him to conceal what he was doing. Through these stealthy actions, Shawe gained access to approximately 19,000 of Elting\u2019s Gmails, including approximately 12,000 privileged communications with her counsel at Kramer Levin and her Delaware counsel in this litigation. Presumably concerned about the nature of Shawe\u2019s actions, Sullivan & Cromwell LLP, Shawe\u2019s lead litigation counsel in this Court, told him at the outset of its retention in March 2014 not to send information about the substance of Elting\u2019s Gmails to anyone at the firm.\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nBut some of the issues go way beyond arguments over how the business should be run or how its finances should work — including some pointers that suggest odd behavior in response to the failure of the personal relationship. From a footnote:\n<\/p>\n

<\/p>\n

\nElting\u2019s testimony on these events gives color to her and Shawe\u2019s relationship. After the break-up, Shawe became very angry and \u201cgot under the bed and he stayed there for at least a half hour.\u201d Shawe repeated the same bizarre behavior years later when Elting was in Buenos Aires, Argentina, on business. Shawe showed up unannounced at Elting\u2019s hotel room, refused to leave and again \u201cgot under the bed\u201d for about a half hour. Shawe also oddly invited himself and his mother (Ms. Shawe) to Elting\u2019s wedding in Montego Bay, Jamaica. Id. 13-17 (Elting). Shawe did not deny taking any of these actions.\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nYou can see how this dispute was of interest to Lipton’s paper. It’s one of multiple examples that fits right in and she quotes from the opinion directly. A draft of her paper was uploaded (like many pre-publication papers) to the Elsevier-owned SSRN website, and it was scheduled to be published in the Houston Law Review<\/a>. However, if you go to the SSRN link now<\/a> it shows the following:\n<\/p>\n

<\/p>\n

\nThis paper has been removed from SSRN at the request of the author, SSRN, or the rights holder.\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nIt was not removed at the request of the author or of “the rights holder.” It was removed by SSRN because Shawe had a lawyer send a ridiculous SLAPPy cease-and-desist letter<\/a>, claiming that the law review article was defamatory. The cease and desist<\/a>, from lawyer Martin Russo demands that the article be removed.\n<\/p>\n

<\/p>\n

\n\u2018The defamatory article defines \u201ccapital discrimination\u201d as \u201cwhen women
\nprincipals experience sex discrimination\u201d and then incorrectly identifies four alleged
\ninstances of litigated cases, including one involving Mr. Shawe, that demonstrate
\n\u201cThe Many Faces of Capital Discrimination.\u201d The article admits that “sex
\ndiscrimination was neither alleged nor proved,\u201d but nonetheless falsely asserts that
\nthe lack of allegations and proof was “because there is no clear avenue of recourse\u201d
\nand that \u201cthese stories exemplify instances where firm … partners acted against
\n\u2018women principals for reasons that at least appear to have stemmed from the.
\nprincipals\u2019 status as women, and the managers\u2019 relationship to the principals
\nspecifically as women… What these scenarios have in common is that the managers
\nmay have acted because of the woman’s sex.\u201d\n<\/p>\n

\n\u201cThe first of several false examples of alleged discrimination is called \u201cClash of
\nthe Founders,\u201d and details certain findings of the Delaware Chancery Court
\nregarding Mr. Shawe\u2019s alleged conduct. After one paragraph about a failed
\nromantic relationship between Elizabeth Elting and Mr. Shawe in 1999, the article:
\nfactually ignores 12 years of profitable joint business operations to arrive at the
\n2012 disagreements between the co- CEOs over the direction of the company. What
\nfollows are anecdotes plucked from the record which have no obvious connection to
\nsex or gender except for the fact that the co-CEO\/founders were aman and a
\nwoman. Without any factual basis, the article falsely states *[rJeading the Delaware
\ncourt\u2019 findings and the parties\u2019 submissions, the gendered aspects of the conflict
\nare difficult to miss.\u201d In fact, the gendered aspects of the conflict are dificult to find,
\nbecause they do not exist. The article then goes on to more specifically falsely accuse
\nMr. Shawe of so-called capital discrimination by \u201crefusing to pay dividends\u201d and
\n\u201cmaking a low-ball buyout offer\u201d to his former partner. Finally, the article falsely
\nstates, in the absence of any claim or proof of sex or gender-based conduct, that if
\n\u2018Shawe\u2019s stalking and undermining of Elting\u2019s authority had been identified as
\ngender-based harassment, his breach of fiduciary duty to the TransPerfect
\ncorporation may have persuaded the court to impose a non-competition order,
\nallowing for a sales process that would have been more favorable to Elting.”\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nThe crux of Shawe’s complaint is that their legal dispute had nothing to do with their previous relationship, and was entirely a more traditional business dispute. But… that’s an opinion. As is Lipton’s opinion regarding how it relates the thesis of her paper. And, opinions are not defamatory. Other elements in the paper, including the references to Shawe’s terrible behavior, seem obviously protected under fair reporting privilege<\/a>. Honestly, the crux of Shawe\/Russo’s complaint is that they don’t like how Lipton characterizes the nature of the dispute, but that’s easily protected opinion<\/b> and not defamatory.\n<\/p>\n

\nAlso, if Shawe wants to contend that the behavior at issue in the lawsuit was solely because of differences in how the business should be run, and not having anything to do with his failed personal relationship with Elting, he maybe should not have done the following, as detailed in the court’s opinion:\n<\/p>\n

<\/p>\n

\nShawe sought to have Elting criminally prosecuted by referring to her as his ex-fianc\u00e9e seventeen years after the fact when filing a \u201cDomestic Incident Report\u201d as a result of a seemingly minor altercation in her office.\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nSo, maybe it wasn’t Lipton who was connecting the failed relationship with the business dispute — perhaps it was Shawe himself who sought to make use of the failed relationship claim to give him leverage in the business dispute, including seeking to have Elting criminally prosecuted by filing a “domestic incident report.”\n<\/p>\n

\nGiven all of this, it’s hard to see the cease and desist letter as anything more than blustery nonsense. But, ridiculously, SSRN pulled the paper, as has the Houston Law Review. To their credit, Lipton’s employer, Tulane University is standing behind her<\/a>:\n<\/p>\n

<\/p>\n

\nThe article is a thorough and meticulously-source scholarly work. The factual assertions regarding Mr. Shave are sourced from publicly-available court opinions and filings in the litigation between Mr. Shawe and his former business partner. The source of each statement is set forth in the Article’s footnotes. The \u201ccease and desist\u201d letter of December 23, 2021, does not contend that the facts attributed to Mr. Shawe are false. Rather, the letter takes issue with the Article’s conclusions and commentary on the facts presented (i.e., that Mr. Shawe\u2019s conduct is an example of sex discrimination).\n<\/p>\n

\nThe Article\u2019s conclusions constitute opinions protected by the First Amendment. As the United States Supreme Court has observed, \u201c[u]nder the First Amendment there is no such thing. as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas.\u201d\n<\/p>\n

\nFurthermore, it is well-settled that a statement of opinion based on fully disclosed facts is not actionable unless the stated facts are themselves false and defamatory. The rationale behind this rule is clear: When the facts underlying a statement of opinion are disclosed, readers understand they are getting the authors interpretation of the facts presented. \u201cBecause the reader understands that such supported opinions represent the writer’s interpretation of the facts presented, and because the reader is free to draw his or her own conclusions based upon those facts, this type of statement is not actionable in defamation.”\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nThe letter also points out to SSRN that no terms of service have been violated, and they believe SSRN should repost the article.\n<\/p>\n

\nSo combine this all together and we have a situation in which Shawe is angry about how he is portrayed in the paper, but that doesn’t make it defamatory. The cease and desist letter has all the hallmarks of a frivolous SLAPPy legal threat. It highlights no false statements of fact, but merely calls out the statements of opinion made by Lipton in her paper, which are based on the facts that — again — Shawe’s letter does not dispute. So this seems like a pretty blatant SLAPP threat.\n<\/p>\n

\nThen, let’s get to SSRN, which should not be pulling down the article. First, even a semi-competent review of the cease and desist would find that the defamation claims appear baseless. One would hope that SSRN would do such an analysis and not fall prey to a heckler’s veto. Second, even if there were defamatory content (and again, that seems like a huge stretch), SSRN would be easily protected under Section 230. SSRN is an interactive computer service under the law, and cannot be held liable for the speech of third party content providers, such as Lipton.\n<\/p>\n

\nIn fact, this situation highlights the importance of Section 230<\/b>, in that without Section 230, bumptious threats like this one would enable anyone to get just about anything pulled off of an online host. The nature of Section 230’s immunity, is that it allows all sorts of different kinds of websites to host content, without having to freak out at the first sign of a legal threat over the content uploaded by a user. SSRN is within its own rights to pull down any content, of course, but the decision to do so here strongly suggests that (1) it did not carefully review the letter and the paper, or (2) that it doesn’t understand how Section 230 protects it here.\n<\/p>\n

\nFinally, there’s the Streisand Effect. I’d never heard about this paper, or the dispute between Shawe and Elting. And now I and many, many, many more people have read the article (and I went and read the opinion in the Delaware Chancery Court with many, many, many more details on Shawe’s behavior). So, once again, in filing a highly questionable legal threat intended to suppress this information, Shawe and Russo have only served to make people much, much, much more aware of the court record regarding Shawe’s behavior.\n<\/p>\n

\nUpdate<\/b>… and just as I was putting the finishing touches on this post, SSRN put the paper back up<\/a>. On Twitter, it explained itself<\/a> as follows:\n<\/p>\n

<\/p>\n

\nTo add some detail, SSRN has always had the policy of taking down any paper related to a defamation or other legal claim while the claim was being investigated. To date, we have not had problems with this approach and I am sorry how this situation has played out. We have now had lengthy discussions with the legal department and will be amending the approach going forward. Your paper has been reposted, all counts are updated, and I apologize for the confusion.\n<\/p>\n

<\/em><\/p><\/blockquote>\n

\nAnd one can argue that taking it down while you investigate is a reasonable policy — though a key part of the way Section 230 works is that you don’t need to<\/b>. And, frankly, that’s the appropriate setup, because it recognizes that the potential harm from suppressing legal speech is a huge problem. In the end, though, it’s good that SSRN appears to be revising its policy.\n<\/p>\n

\n