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28 EBRDlI 035362191 05343

) CASE NO. 1-05-CV-050179 )

) EX PARTE APPLICATION FOR ORDER ) GRANTING LEAVE TO SERVE

) SUBPOENAS; MEMORANDUM OF ) POINTS AND AUTHORITIES IN

) SUPPORT THEREOF; AND

) DECLARATION OF JEFFREY M.

) RATINOFF IN SUPPORT THEREOF )

--------------- ACCOMPANYING DOCUMENTS:

Declaration of Amy Maclear; [Proposed Order]

Complaint filed: October 5, 2005

KARINEH KHACHATOURIAN (SBN 202634) JEFFREY M. RATINOFF (SBN 197241)

AMY P. MACLEAR (SBN 215638)

GORDON & REES LLP

Embarcadero Center West

275 Battery Street, Suite 2000

San Francisco, CA 94111

Telephone: (415) 986-5900

Facsimile: (415) 986-8054

Attorneys For Plaintiff EAGLE BROADBAND, INC.

SUPERIOR CO;URT OF CALIFORNIA COUNTY QF SANTA CLARA

EAGLE BROADBAND, INC.,

Plaintiff,

vs.

DOES 1 through 25, inclusive,

Defendants.

EX PARTE APPLICATION

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE THAT, pursuant to Code of Civil Procedure Section 2019.020(b) and California Rule of Court 379, Plaintiff EAGLE BROADBAND, INC.

(hereinafter referred to as "Plaintiff' or "Eagle Broadband") brings this Ex Parte Application for

an order granting leave to serve a subpoena pursuant to Code of Civil Procedure Section

2020.410 (subpoena for business records) and/or Section 2020.510 (subpoena for testimony and documents) on Yahoo! Inc. ("Yahoo!") and on a yet-to-be identified Internet Service Provider(s).

The true identifies of the Doe Defendants in this action have not yet been ascertained and cannot

be ascertained without the discovery sought by this Application. Declaration of Jeffrey M. -1-

EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

18 Eagle Broadband is a leading provider of advanced broadband, Internet Protocol and

19 communications technology and services that create new revenue opportunities for broadband

20 providers and enhance communications for government, military and enterprise customers.

21 RatinoffDecl., Exh. A at ~~ 1-2. Doe Defendants, who are certain unidentified individuals

22 and/or entities, acting alone or in concert with others, have used the Eagle Broadband message

23 board on Yahoo! Finance to deliberately engaged in relentless misinformation campaigns in an

24 effort to denigrate Eagle Broadband's business in order to reap profits for themselves. Id., Exh.

25 A at ~~ 13-15, 33-34, 36.

26 In short, Eagle Broadband has fallen victim to organized, Internet-based stock market

27 manipulation schemes, which have included, among other activities, posting false and misleading

28 information about the financial health and corporate activities of Eagle Broadband on Yahoo!

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EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

Ratinoffin Support of Ex Parte Application ("RatinoffDecl."), ~ 4. Consequently, no notice of

this Application has been or can be provided to Doe Defendants or their counsel, as required by

California Rule of Court 379(b). Id.

Eagle Broadband requires the discovery sought from Yahoo! Inc.("Yahoo!") to ascertain the true identities of the Doe Defendants in this Action so that Eagle Broadband may serve the Complaint on those defendants and enjoin them from causing further damage to Eagle Broadband's stock price and business. RatinoffDecl., ~~ 5-6. If Eagle Broadband cannot immediately ascertain the true identities and addresses of the Doe Defendants so that it may seek legal and equitable relief, it will continue to suffer irreparable harm to its business. Id. Thus, the present Ex Parte Application is necessary to prevent any further prejudice to Eagle Broadband.

This Application is based on the Memorandum of Points and Authorities and the

Declaration of Jeffrey M. Ratinoffbelow, the Declaration of Amy Maclear filed herewith, the Complaint in this Action, and on such other and further argument as the Court may permit in the hearing on this Application.

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF EX PARTE APPLICATION

INTRODUCTION AND STATEMENT OF FACTS

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10 not limited to, "advanced_headlines" (DOE 1), "team_3339" (DOE 2), "upanddownl00" (DOE 11 3), "richwiIl21" (DOE 4), "benderanddundat" (DOE 5), "phil_phd2003" (DOE 6), and

~ g 12 "bubbazo" (DOE 7). RatinoffDecl, Exh. A at ~~ 17-33. The following are examples of the

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:.j ~ .~ i 13 posts authored by these Doe Defendants:

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.g ~ ~ ~ 15 On July 12, 2005, DOE 1, only known as "advanced_headlines," posted a fabricate

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~ ;!:' VJ 16 news article on the Yahoo! Finance message board falsely stating in the headline that "Eagle To

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I Finance's widely visited financial Internet message board in order to deflate the price of Eagle 2 Broadband stock and reap illegal gains from short sales. RatinoffDecl, Exh. A at ~~ 13-15.

3 Because of the anonymous nature of Yahoo! Finance's Internet message board and the

4 individuals that post on it, Eagle Broadband must obtain discovery from Yahoo! and third party

5 internet service providers to ascertain the real identity of the Doe Defendants.

6 Specifically, the Yahoo! Finance message board for Eagle Broadband contains many

7 specific incidences of postings of false information that have had a negative impact on Eagle

8 Broadband's business. RatinoffDecl, Exh. A at ~~ 16. These defamatory posts are attributable

9 to several posters on the message board known only by their Yahoo! user names, including but

17 File Bankruptcy APF News." RatinoffDecl, Exh. A at ~~ 19-20. The fraudulent news article

18 contained a byline: "APF Reports Michelle Verdani" and stated "Houston area broadband firm to 19 file Chapter 11." This statement was false. Not only was there no such news report, but Plaintiff

20 has not filed for any type of bankruptcy protection.

21 On July 25,2005, DOE 1, only known as "advanced_headlines," posted yet another

22 fabricated press release on the Yahoo! Finance message board falsely stating that Eagle

23 Broadband had filed for Chapter 7 bankruptcy protection and that "full liquidation in progress." 24 Ratinoff Dec1, Exh. A at ~~ 21-22. Not only was no such press release issued, but the statements

25 contained therein were blatant misrepresentations. Id.

26 DOE 2 - "team 3339"

27 On February 15,2005 at 8:53 a.m., DOE 2, only known as "team_3339," posted a forged

28 email exchange between him/herself and a purportedly high level representative of Alltel

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EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

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Corporation, a company doing business with Eagle Broadband. Ratinoff Decl, Exh. A at ~ 17. In

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that purported email exchange, the high ranking Alltel Corporation representative stated that Alltel does not do business with Plaintiff. Id. This purported "email exchange" never occurred and the statements made therein are false. Id.

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5 6 7

On July 12, 2005 and July 13,2005 respectively, "team_3339" struck again and posted two false and misleading statements about the potential sale of Eagle Broadband's MediaPro settop box products to On Command and Samsung. RatinoffDecl, Exh. A at ~~ 25-26. In this

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second round of attacks by "team _3339" against the core of Plaintiff's business, "team _3339"

writes "Direct From On Command/Samsung" and attached purported "official" statements from

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On Command and Samsung giving the false impression that On Command and Samsung had

announced that they will not purchase Eagle Broadband's MediaPro set-top box products. Id.

No such statements were made. Id.

DOE 3 - "upanddownlOO"

On September 3,2004, DOE 3, only known as "upanddown100," posted a forged SEC filing Form 144 indicating that "Cubley files 144 to sell 815,933 shares." RatinoffDec1, Exh. A

at ~~ 29-30. No such trade was ever accomplished and no SEC Form 144 filing occurred on this

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date. Id.

DOE 4 - "richwill21"

18 19 20

On June 10,2005, DOE 4, only known as "richwillz l ," posted a fabricated press release purportedly issued by Eagle Broadband announcing that the company had been deleted from the

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Russell 3000 Index due to poor performance and business failures, including a fictitious quote

from the company's Chief Executive Officer. RatinoffDec1, Exh. A at ~ 16. The posting had the "look and feel" of an official company press release but Plaintiff never issued such a press

release, nor was Plaintiff ever delisted from the Russell 3000 Index. Id.

DOE 5 - "benderanddundat"

On January 24, 2005, DOE 5, only known as "benderanddundat," posted a fabricated announcement that "Change at Eagle is Coming" and that Eagle Broadband was suffering from

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continued financial losses causing the share price to drop and encouraging others to "share their

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EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

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28 1 positions long ... then go short to make some of your money back .... " RatinoffDecl, Exh. A at ~~ 2 27-28.

3 DOE 6 - "phil phd2003"

4 On September 1,2005, DOE 6, only known as "phil_phd2003," posted a fabricated

transcription of a purported conversation he/she had with Frederick Reynolds, the investor

relations contact for Eagle Broadband. RatinoffDecl, Exh. A at,-r,-r 23-24. In his/her post, "phil_phd2003" states that "FR said he does not and will not own any shares!" [d. This

statement is false. [d. Not only did this conversation never transpire, but Frederick Reynolds

owns Eagle Broadband stock. [d.

DOE 7 - "bubba2o"

On August 22,2005, "bubba?o," posted a fabricated quote that was purportedly taken

from a Eagle Broadband Form 8-K indicating that "We are heading directly towards a reverse

split." RatinoffDecl, Exh. A at,-r,-r 31-32. No such statement was ever made by Eagle Broadband and no Form 8-K filed by Eagle Broadband contained such a statement. [d.

When Eagle Broadband discovered these and other false and misleading posts, along with the resulting damage to Plaintiff's stock price and business, Eagle immediately contacted Yahoo!

to ascertain the real identities of the otherwise anonymous Yahoo! users that were responsible for

these damaging posts. Declaration of Amy Maclear in Support of Ex Parte Application ("Mac1ear Decl."),,-r,-r 4-5. Pursuant to Yahoo!'s privacy policy, Yahoo! refused to provide

Eagle Broadband with any information about the true identities. of "advanced _ headlines,"

"team_3339," "upanddownIOO," "richwi1l21," "benderanddundat," "phil_phd2003," and

"bubba?o," without first serving Yahoo! with a subpoena. [d. Accordingly, Eagle Broadband

brings this Application in order to ascertain the true identifies of these Yahoo! users for the

purposes of amending the Complaint in this action and to name those persons and to serve the

Complaint in this action on them.

III. ARGUMENT.

Code of Civil Procedure Section 2019.020(b) provides that "on motion and for good'

cause shown, the court may establish the sequence and timing of discovery for the convenience

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EX PARTE APPLICA nON FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

6 DOES 1-7, alone or in concert with others, have intentionally posted false information

7 about Plaintiff's core business and technology on various Internet message boards in an attempt 8 to damage Eagle Broadband by manipulating the market and depressing the price of the stock in 9 order to make a profit on short sales and will continue to do so until Eagle Broadband is able

10 obtain legal and equitable relief against them. Due to the anonymous nature of Yahoo! Finance's 11 message board and Yahoo!'s privacy policy, however, Plaintiff's good faith efforts to discover

.... :5 12 the true identities of DOES 1-7 have failed.! Maclear Decl., ,-r,-r 4-5. Until Eagle learns the true

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::J ~ .~ ~ 13 identities of the DOES 1-7, Eagle will continue to suffer significant hann to its stock value and cn~c5S~

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IX: U ~ 0 14 business. RatinoffDecl.,,-r,-r 4-6. 06 ~ t5 .~

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.g ~ ~ e 15 Plaintiffs seek leave to request categories of documents that are narrowly tailored to only

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~ ~ cJl 16 obtain documents sufficient to identify the person or persons responsible for the false and

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1 of parties and witnesses and in the interests of justice." Cal. Civ. Proc. Code § 2019.020; see 2 also Cal. Civ. Proc. Code § 2019.020(c) (for good cause shown, court may grant leave of

3 plaintiff to make an inspection demand earlier than statutorily allowed under section (b)). Good

4 cause exists for immediate discovery of documents and other information in the possession of

5 Yahoo! to identify the true identities of the Doe Defendants in this Action.

17 defamatory messages on Yahoo! Finance's Eagle Broadband message board, as described above

18 and in the Complaint. See Ratinoff Decl., Exh. A. Specifically, these requests are drafted to 19 only obtain the internet protocol addresses of the Defendants and any information that they

20 provided to Yahoo!, as required by Yahoo! 's user agreements for its various free and paid

21 subscriber services, that identifies the true names and physical addresses of DOES 1-7. See

22 RatinoffDec1., Exh. B.

23 Yahoo! offers many of its subscriber services, such as the message boards in Yahoo!

24 Finance, for free. As such, Yahoo! may not require subscribers to provide proper names,

25 residential addresses, billing addresses or telephone numbers upon registration, and if provided

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27 I Although Eagle Broadband currently does not intend to take a deposition of Yahoo! or the as yet unidentified Internet Service Provider or Providers, Eagle Broadband seeks leave for the authority to do

28 so now in conjunction with its request for leave to serve document discovery to conserve the resources of both this Court and Eagle Broadband.

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EX PARTE APPLICA nON FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

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EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

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by its subscribers, YahOO! may not verify any such information. As such, information concerning the identities of the Defendants is likely limited to only the internet protocol addresses used by Defendants when posting on Yahoo! Finance's Eagle Broadband message board. To trace the Defendants' internet protocol addresses to their true names, Eagle Broadband also seeks leave to serve a subpoena on the Internet Service Provider(s) that services the Defendants' internet protocol addresses. The identity of the Internet Service Provider(s), however, cannot be determined without the discovery sought by Eagle Broadband from Yahoo!.

As discussed above, Eagle Broadband's proposed discovery is narrowly tailored to determine the true identities of DOES 1-7. Without this discovery Eagle cannot ascertain the true identities of these defendants in this action and properly serve the Complaint without this discovery. Until Eagle discoveries the identities of DOES 1-7 and can then seek all proper legal

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and equitable remedies, it will continue to sustain significant damage to its business. Consequently, good cause exists for granting this immediate and focused discovery.

IV. CONCLUSION.

For the reasons set forth in this Application, Eagle Broadband respectfully requests that this Court grant this Ex Parte Application for Leave to Serve Subpoenas (directly or through

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commissions ifnecessary) for documents on Yahoo! and an as yet unidentified Internet Service

Provider(s).

19 Dated: October 24,2005

GORDON & REES LLP

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28 DECLARATION OF JEFFREY M. RATINOFF IN SUPPORT OF EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

I, Jeffrey M. Ratinoff, declare as follows:

1. I am an attorney at law duly licensed to practice before all courts of the State of

California. I am Senior Counsel with the firm of Gordon & Rees LLP, attorneys for Plaintiff

Eagle Broadband, Inc. ("Eagle Broadband").

2. If called upon to testify as to the matters set forth herein, I could and would

competently testify thereto as the matters set forth in this declaration that are personally known to me to be true. As to those matters stated on information and belief, I would competently

testify thereto as I believe those matters to be true.

3. I make this declaration in support of Eagle Broadband's Ex Parte Application for

Order Granting Leave to Serve Subpoenas.

4. The true identities of the Doe Defendants in this action have not been and cannot

be ascertained at this time without the discovery sought by this Application. Consequently, I did not and could not provide notice of Eagle Broadband's Ex Parte Application for Order Granting

Leave to Serve Subpoenas to defendants or their counsel.

5. It is Eagle Broadband's intent prevent the Doe Defendants from further posting

defamatory and false statements on the Internet that have the negative effect of lowering Eagle's stock price and damaging its business, while the Doe Defendants illegally profit from such

activity.

6. Eagle Broadband requires the discovery sought from Yahoo! Inc. to ascertain the

true identities of the Doe Defendants in this Action so that Eagle Broadband may serve the

Complaint on those Defendants and enjoin them from causing further damage to Eagle Broadband's stock price and business. If Eagle Broadband cannot immediately ascertain the true

identities and addresses of the Defendants so that it may seek legal and equitable relief, it will

continue to suffer irreparable harm to its business.

7. Attached hereto as Exhibit A is a true and correct copy of the Complaint filed by

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EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS

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28 Plaintiff Eagle Broadband, Inc. on or about October 5,2005.

8. Attached hereto as Exhibit B is a true and correct copy of Plaintiff Eagle

Broadband, Inc.'s proposed business records subpoena to Yahoo! Inc.

I declare under penalty of perjury under the laws of California that the foregoing statements are true and correct. Executed this 24th day of October 2005, at San Francisco,

California.

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EX PARTE APPLICATION FOR ORDER GRANTING LEAVE TO SERVE SUBPOENAS