In stark contrast to EAG's PR claiming the case was order to proceed, Judge Elfving actually ruled in favor of one of the defendants - benderanddundat. The judge indicated in the ruling that EAG had not presented any evidence that the defendant's statements were not true and granted the motion to strike. So EAG clearly lost with respect to that defendant.

With regard to two other defendants - team3339 and upanddown100 - the judge has not issued a ruling yet. Instead, he is allowing some very limited discovery into trading records to give EAG a chance to demonstrate malice on the part of the defendants. This is probably a very high standard that EAG is unlikely to be able to meet. Another hearing is scheduled for June on the motions to strike per the California anti-SLAPP statute.

The only defendant in which it appears EAG could even come close to claiming success to this point is with regard to the defendant richwill21. In his case, he posted a parody news release on the Yahoo! message board. Well - any reasonable person would surely recognize it as parody, but Judge Elfving apparently felt that was a question he could not rule on. Seems to me that EAG has no chance of winning on that one. In any case, there is some indication that richwill21 is planning an appeal.

Besides ruling on these motions, Judge Elfving also denied EAG's motions for discovery related to Yahoo!. So, hardly the resounding victory that EAG would have one believe.

Over this past weekend, EAG managed to get some more press out of the ruling (why the Houston Business Journal is writing about it now is beyond me - then again, I'm finally writing about it). Anyway, in the article Eagle flies above short-sellers, the author(Mary Ann Azevedo) included many factual mistakes (like failing to recognize that one of the defendants WON their motion to strike) and generally shows a great deal of bias toward EAG. I did kind of get a laugh out of the comments from Craig Ball, a forensics expert quoted in the article. Apparently the "journalist" failed to mention to Mssr. Ball that one of the defendants had won their motion and Mssr. Ball apparently commented without reading or researching the case. Unfortunately, the article was also picked up by MSNBC.

So, I've written e-mails to both MSNBC and the Houston Business Journal to try to help set the record straight. My e-mail is reproduced below for your enjoyment.

Thanks for reading,
Jeff Causey

Dear Editor,

I am writing to you today concerning the article "Eagle flies above short-sellers" written by Mary Ann Azevedo that appeared with a date of April 21, 2006 on your web site. Unfortunately, I feel compelled to write as the story contains some factual inaccuracies of significance.

First, the article notes that "allegedly false information included filings with the Securities and Exchange Commission". This would seem to imply that someone made a false filing with the SEC. That is not the case. Eagle has alleged that a poster on an Internet message board posted something from the SEC on the message board.

Perhaps the most egregious error was later in the article when the author wrote:

'In March, Judge William J. Elfving of California Superior Court of Santa Clara County shot down that argument by allowing discovery in the case to go forward."

In fact, Judge Elfving ruled in favor of one of the defendents that filed an Anti-SLAPP motion. In other words, it was ruled that Eagle was trying to surpress free speech. The particular defendant was "benderanddundat" who was referenced later in the article.

In the case of a second defendant, richwill21, Judge Elfving denied the motion to dismiss per Anti-SLAPP. However, he did indicate the only issue was whether the post in question was a parody or not. As such, he denied discovery into the defendant's trading history and financial records. In addition, that particular defendant is planning an appeal of that decision.

Finally, in the case of the other two defendants who filied Anti-SLAPP motions, the Judge has not ruled on those motions yet. Your article gives the impression that the judge is allowing the case to continue into the discovery phase of the actual case (e.g. at the end of the article - "judge has given the green light to pursue discovery"). However, Judge Elfving's order is to allow some very limited discovery for Eagle to try to show malice on the part of those two defendants. Once that is done, a hearing is scheduled for June to find out whether Eagle can demonstrate malice on the part of those two defendants. That is likely going to be a very difficult hurdle for Eagle to get over.

In addition to these inaccuracies regarding the judge's ruling on the Anti-SLAPP motions, the author of the story failed to note that all of Eagle's motions to try to get a wide-ranging set of information from Yahoo! were denied. That hardly sounds like the case has "gained momentum" as the author of the article alleges.

At the current pace, it will be almost a year since the initial filing before Eagle may expect to start seeing answers from defendants (if they can keep the suit alive that long). And those will likely contain a whole new set of motions for dismissal based on a variety of legal principles.

I rather suspect that once the dust settles, this case will demonstrate the folly of companies with poor business plans and weak operations trying to blame a handful of posters to message boards for their woeful performance. While Ms. Azevedo's choice of portraying the status of the case as one of being good or bad for Eagle is hers to make as a journalist (and I would have hoped the Houston Business Journal would have recognized how strongly this article was biased in one direction), I find most disturbing the number and scope of factual errors that were allowed in the article. It displays a poor level of fact-checking, especially in the case of Ms. Azevedo who apparently chose not to read the ruling herself, but instead relied upon Eagle representatives and associated parties for an interpretation.

Thank you for your attention to this matter. I look forward to seeing the Houston Business Journal take steps to correct the errors in the article. Please feel free to contact me if you have any questions or would like additional information.

Sincerely,

Jeffrey G. Causey