FOURTH CIRCUIT–A columnist’s opinions questioning a technology company’s stock value were “subjective and speculative supposition” and therefore protected by the First Amendment, the U.S. Court of Appeals in Richmond (4th Cir.) held in mid-August in upholding the dismissal of the company’s claim against Forbes magazine.
Biospherics Inc. of Beltsville, Md., sued the magazine in July 1997 after Caroline Waxler’s Jan. 13, 1997, column reported that the sugar substitute under development by the company “isn’t up to the company’s claims,” and that “the few independent analysts who follow the company think the stock is worth $2 on current business.” The stock, which had been trading at as much as $7 per share, lost 26 percent of its value over the next five months.
The unanimous three-judge panel held that the “general tenor” of the article — short quips, puns, and a “breezy” tone — indicated that it contained subjective views, not factual statements. The court noted that “rarely would a stock tip article of this tenor and in this context prove actionable,” but noted that it was not creating a “doctrinal exemption” for such articles.
The court also noted that Waxler’s opinions on the company’s prospects were followed by factual statements on which she relied, namely that FDA approval was speculative, that the substitute would cost five times as much as natural sugar, and that other companies, including Johnson & Johnson and the maker of NutraSweet, were working on cheaper sugar substitutes. Biospheric’s failure to challenge the accuracy of these claims “dooms” its challenge, the court said.
The column also added that the company has been “developing” — placing the word in quotation marks — the product for 15 years. Even if the company had only developed the product over a nine-year period as the company claimed, the false report of 15 years did not alter the effect of the story on the reader, the panel held. In addition, the use of the quotation marks could indicate many things, including that the product was not worthy of the long development period, but do not support the company’s claim that Waxler suggested the company lied about its claim that it developed the sugar substitute, the court held.
The company also claimed that Waxler called it a “liar” when she said the product is not up to the company’s claims. But the court pointed to her “cute” language, such as the comment that investors would “sour” on a sugar substitute, as “negating the conclusion that this is really a statement of fact rather than the tipster’s own interpretation.” (Biospherics, Inc. v. Forbes, Inc.; Media Counsel: Douglas Connah, Jr., Baltimore)