After False-Bankruptcy Stock Crash, United Shareholders Sh** Out of Luck

In the wake of Monday’s United Airlines false-bankruptcy scandal, some angry stockholders were wondering who they could sue over the reposted story that caused them to lose 76 per cent of their investment (for an hour or two). Slate takes up that question and points out that there’s not much United or its shareholders can do.

Slate: Potential targets include the Tribune Co. and one of its newspapers, the South Florida Sun-Sentinel (whose 2002 article triggered the sell-off Monday); Google (whose Google News service picked up the piece); Bloomberg; Income Securities Advisors (whose analyst posted the headline on the Bloomberg Professional network); and NASDAQ (which suspended trading at 11:30 a.m. but then refused to “bust,” or cancel, the trades that happened during the time people were acting on the misinformation). United has announced a full investigation but says it’s premature to discuss legal action. Spokeswoman Jean Medina said the stock drop “was a serious issue, and it’s what happens when people are careless and don’t check facts.”

Still, if it’s damages that United, or anyone else, is seeking, good luck. The law provides strong protections for Internet linkers, which seems to exonerate Google, Bloomberg, and Income Securities Advisors. The Communications Decency Act of 1996 unambiguously states, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

What about the original source of the news, the Tribune Co.? Yesterday it acknowledged that the link to the 2002 bankruptcy article was indeed pushed to the “most viewed” list on the Sun-Sentinel‘s site, which caught Google’s eye. But despite this admission, the threshold for libel is pretty high. There has to be malicious intent, and mere negligence isn’t enough. Public entities like United (as opposed to private individuals) generally have an even higher threshold; reckless indifference is not enough.

See Also: Tribune Blames United Airlines Bankruptcy Screw-Up On Anyone But Themselves


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