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Keeping AOL Accountable

Corporate American has again spoken out against being held accountable for civil wrongs they commit. The America Online (AOL) web site currently has an article entitled "Most Outrageous Lawsuits" in its money and finance section and also prominently displayed on the AOL home page. Mr. Jon Haber, CEO, American Association for Justice reminds us that these kinds of attacks are not new. "Tort reform", "lawsuit abuse" and "frivolous lawsuits" are nothing more than worn out cliches, and the public is now more educated about the special interests behind these very one-sided issues. "We have seen this propaganda before. The "crazy lawsuits" they describe come directly from groups like Citizens Against Lawsuit Abuse (CALA) and the American Tort Reform Association (ATRA), groups whose sole mission is to dismantle the civil justice system and eliminate accountability for corporate negligence. In the past, when such front groups have provided examples of "cases," they haven't even been real." Haber points out that "AOL is preying on an unsuspecting public that assumes what is posted on its site is news, all to make the case that they, and other negligent corporations, should not be held accountable for wrongdoing in our courts.

So, why is AOL speaking out against the right of Americans to seek justice through the civil justice system? In the past few years, it is the civil justice system that has been the last resort for AOL's shareholders and investors to hold AOL accountable for AOL's violation of civil laws that exist to protect the public. Consider the following cases that AOL voluntarily settled to avoid a court finding of AOL's civil laws violations:

• Just this week AOL agreed to pay $246 million to compensate the University of California for losses to their pension and endowment funds after the company's stock prices plunged in 2001-2002. The University alleged that AOL inflated it stock price prior to its merger with Time-Warner by misrepresenting its sales, revenues and subscriber numbers.
• On February 26, 2007, Time Warner reached agreements to pay $405 million to settle lawsuits related to past accounting problems at AOL.
• On February 7, 2007, AOL reached a $105 million settlement with the California State Teachers' Retirement System that claimed that AOL executives and bankers had artificially boosted the value of its stocks prior to buying Time Warner.
• In December, 2006, AOL settled a securities fraud case for $50 million with the state of Alaska.
• In September, 2006, AOL members joined together in a class action suing AOL for violating their privacy by posting their search queries online. AOL made public the search queries of over 600,000 members.
• In January, 2006, AOL settled a class action for $25 million after the company was accused of wrongfully billing its customers.
• In 2005, Time Warner settled a $2.4 billion securities fraud lawsuit stemming from their misstatement of advertising revenue on the eve of its merger with AOL.
• In 2004, AOL settled two class actions that claimed it had continued to bill plaintiffs after their subscriptions were cancelled.

It is clear why AOL has spoken out. It is clear why AOL took a position against lawsuits. It is also clear why AOL opted to settle these cases instead of proceed to trial and prove its innocence. Instead of blaming everyone else for it's problems, AOL should focus on itself and concentrate on being a good corporate citizen and respecting it's shareholders, investors and customers instead of violating civil laws to their detriment and then lashing out about how the civil justice system failed it. Worn out cliches are just that.

Robert A. Schwartz, Attorney at Law

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