EFF Summary of Stratton-Oakmont & Porush v. Prodigy 

Prodigy Potentially Liable for User Postings

Shari Steele, Electronic Frontier Foundation Director of Legal Services
June 6, 1995

In a case that could have major ramifications for BBS system operators and
Internet newsgroup moderators, a New York state trial court ruled that
communications service provider Prodigy Services Company may be liable for
potentially libelous statements made by one of its users.  Prodigy was sued
by the securities investment banking firm of Stratton Oakmont, Inc., and
its president, Daniel Porush, for statements made by an unidentified poster
on Prodigy's Money Talk bulletin board.  The statements claimed that
Stratton Oakmont committed criminal and fraudulant acts in connection with
the initial public offering of stock of Solomon-Page, Ltd.

Stratton Oakmont and Porush sued Prodigy, the volunteer moderator of the
Money Talk forum, and the anonymous user who made the postings.  Prodigy
asked to be dismissed from the case on the claim that Prodigy could not 
be held responsible for the postings of its users, but the judge disagreed
and issued the ruleing in response to plaintiff's motion for partial 
summary judgement.

On May 24, 1995, the court held that Prodigy had editorial control over the
messages in the Money Talk forum and was therefore liable for the content
of those messages.  According to the New York Supreme Court (which is a
trial level court in New York), Prodigy's policy of systematically
monitoring messages made it liable for the content of these messages.

In addition, the court held that since Prodigy directed and controlled the
actions of volunteer Board Leaders, at least for the limited purpose of
monitoring and editing the Money Talk bulletin board, Prodigy was
responsible for the actions of its Board Leaders.