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EAGLE BROADBAND v. DOES

Introduction

According to the plaintiff:

This is an action for unfair business practices and defamation. Defendants, who are certain unidentified individuals and/or entities, acting alone or in concert with others, have deliberately engaged in relentless misinformation campaigns in an effort to denigrate Plaintiff's business in order to reap profits for themselves.
(Complaint, docket #2, at 1 (October 5, 2005))

Defendants are trying to hide behind California's Anti-SLAPP law to escape responsibility for deliberately posting fabricated press releases, SEC filings, and emails on Yahoo!'s Finance Message Board about Eagle Broadband's financial health and business operations to harm the company financially and to drive its stock price down.
(Opposition to anti-SLAPP motions, docket #23, at 1 (January 20, 2006))

According to some of the defendants:

This lawsuit is an effort by a financially troubled company to silence its critics and a public relations ploy (filed two weeks before the annual shareholders' meeting) to create an illusion that its management is looking out for shareholders' interests.
(Reply memo of Does 4 and 5 re: motion to strike, docket #35, at 1 (February 15, 2006))

The plaintiff in this case seeks to distract the investing public and the court from the simplest and most direct explanation for a decline in the price of their shares: a lack of faith in the company's long-term prospects for growth – or even viability as an organization, together with the company's consistent pattern of issuing additional shares, thereby deflating the value of existing shares.
(Reply memo of Does 2 and 3 re: motion to strike, docket #39, at 1 (February 16, 2006))

For the benefit of anyone researching any of the issues involved in this case, I've put together this web site, http://eagle.petrofsky.org. It is a compilation of information from the web sites of the courts that are involved in the case, with the addition of many of the court records that the courts do not make available online. I obtained some of the records from the courts (mostly on paper, from which I scanned them into electronic form) and some from parties' counsel, whose help I appreciate.

These pages could very well be out of date at the time you are reading them. For current docket information, please follow the links to the court web sites.

Please direct any questions or comments about this site to Al Petrofsky <al@petrofsky.org>. (To answer one question: No, I am not a party to this case. At least, I don't believe I am, but I suppose it's impossible to say so definitively when most of the parties have only been identified as Does 8 through 25. I can say that I have never used any of the seven pseudonyms named in the complaint, that I have never had any pecuniary interest in Eagle Broadband, and that I hadn't even heard of Eagle Broadband until I read a news report about this case.)

Selected Rulings

Filed 2005-10-25: "ORDER GRANTING EX PARTE APPLICATION FOR LEAVE TO ISSUE SUBPOENAS" (2 pages) (docket #4 in the trial court)
Grants Eagle leave to issue its proposed subpoena to Yahoo, and to issue subsequent subpoenas to Internet Service Providers based on Yahoo's response.
Filed 2006-03-07: "Order re: Special Motion to Strike Complaint, Special Motion to Strike Complaint, and Motion to Permit Discovery" (12 pages) (docket #44 in the trial court)
Strikes Eagle's complaint as to Mould (Doe 5); denies Williams's (Doe 4's) motion to strike; and orders specified discovery re: Berger (Doe 3) and Mowers (Doe 2).
Filed 2006-06-23: "DISCOVERY ... Order" (2 pages) (docket #92 in the trial court)
Orders Mowers (Doe 2) and his original attorney (Gregory Broiles) to pay $4,000 in sanctions to Eagle. Mowers is also ordered to appear for a deposition, to provide answers to Eagle's first set of interrogatories, and to comply with Eagle's first set of document requests.
Filed 2006-08-09: "Order re: ... DOE 5's Motion for Attorney Fees ... DOE 2's Special Motion to Strike EAGLE's Complaint" (2 pages) (docket #149 in the trial court)
Orders Eagle to pay Mould (Doe 5) $66,451.68 for his attorney fees and costs. Decision on Mowers's (Doe 2's) motion to strike is further postponed, pending discovery compliance and satisfaction of the $4,000 sanctions owed to Eagle.
Filed 2006-10-17: "[Granted] REQUEST FOR DISMISSAL" (1 page) (docket #177 in the trial court)
Dismisses with prejudice Eagle's complaint, as to Berger (Doe 3), at Eagle's request.
Dated 2006-10-31: "Minute Order - CIVIL LAW AND MOTION" (1 page) (filed in the trial court)
Records that Berger's (Doe 3's) anti-SLAPP motion had been taken off the calendar at his request. (Although the dismissal had made the anti-SLAPP motion moot as to striking the complaint, Berger still could have pursued his demand for fees and costs, per Liu v. Moore, 69 Cal.App.4th 745 (1999). Eagle and Berger were presumably fulfilling some of the terms of a written settlement agreement between them when they made these mutual withdrawals of the demands that they had had pending in the court. However, no copy of the agreement was filed, and there is no public record of whether it also called for any payment by either party to the other.)
Filed 2007-04-05: "[Granted] REQUEST FOR DISMISSAL" (1 page) (docket #284 in the trial court)
Dismisses with prejudice Eagle's complaint, as to Mowers (Doe 2), at Eagle's request.
Filed 2007-04-09: "BY THE COURT: The motion to seal records is granted in part. ..." (2 pages) (filed in the second appeal)
Seals parts of the record that relate to confidential settlement negotiations, and refuses to seal the part of a declaration by Eagle's lead counsel (Karineh Khachatourian) that made this disclosure: "As of May 22, 2006, Eagle Broadband has spent $77,198.12 in costs and fees for the prosecution of its claims against all the DOE Defendants."
Dated 2007-04-19: "Minute Order - CIVIL LAW AND MOTION" (2 pages) (filed in the trial court)
Records that Mowers's (Doe 2's) anti-SLAPP motion had been taken off calendar at his request. (See the notes above about the 2006-10-31 minute order.)
Filed 2007-07-12: "ORDER ON DEFENDANT MOULD'S MOTION FOR ASSIGNMENT OF RIGHTS AND RELATED RELIEF" (2 pages) (docket #288 in the trial court)
Orders Eagle to post a bond within 30 days for at least $104,401.96 (one and a half times the 2006-08-09 judgment plus some interest), and prohibits Eagle, under explicit threat of being held in contempt, from "assigning, mortgaging, selling, or otherwise disposing of any and all accounts receivable, rights to payment of money, or claims for payment of money due from third parties", until the bond is posted. It is also ordered that Mould (Doe 5) is entitled to recover his fees and costs for collection activity, in an amount to be determined later.
Filed 2007-08-01: "STIPULATION AND ORDER RE ORDER OF JULY 12, 2007" (2 pages) (docket #290 in the trial court)
Stays the parts of the previous order that required Eagle to post a bond and prohibited Eagle from disposing of any of its accounts receivable. This order was entered at the joint request of Mould and Eagle, and it provides that the stay shall not last beyond such time as Mould's attorneys "file and serve notice that said stay shall be lifted".
Filed 2007-12-14: Opinion (56 pages) (filed in the first appeal)
Reverses the denial of Williams's anti-SLAPP motion, and affirms the granting of Mould's anti-SLAPP motion.
Filed 2007-12-14: Opinion (11 pages) (filed in the second appeal)
Affirms the trial court's $66,451.68 fees and costs award to Mould.

Site Navigation

Links to the pages on this site:

Miscellaneous

Cubley: Eagle's self-described history of having a fraud-practicing executive

H. Dean Cubley was Eagle Broadband's Chief Executive Officer from March 1996 to October 2003, and then its Chief Technology Officer from October 2003 to September 2004. He was also a member of the board of directors from March 1996 to September 2006.

In October 2005, Eagle Broadband alleged in its Eagle vs. DOEs complaint that Daniel Berger (Doe 3), in September 2004, had "deliberately posted false and misleading information concerning the trading activity of Dr. H. Dean Cubley, the company's then Chief Technology Officer[,] on the Yahoo! Finance message board to undermine public confidence in Eagle Broadband" (p. 8:22-24).

Something that it seems would undermine public confidence in Eagle Broadband a good deal more than a statement that Cubley had been selling stock would be a statement that Cubley had been practicing fraud. Eagle itself would later make just such a statement about Cubley, on September 15, 2006. (One month later, Eagle dropped its complaint against Berger.)

Cubley sued Eagle for breach of contract, and in its answer Eagle wrote: "the contract sued upon (the 'Cubley Note') was induced by fraud. ... As a result of the fraud practiced by Plaintiff [Cubley] in the inducement of Defendant's agreement to enter into the Cubley Note, Defendant seeks an order of the Court setting aside the Cubley Note as unenforceable." (p. 1-2)

The contract at issue, which was attached to Cubley's petition, was executed on December 10, 2003. It was filed a year later with the SEC, as Exhibit 10.16 to the Form 10-K/A filed on December 29, 2004.

In the final judgment on June 20, 2007, the court ordered that "H. Dean Cubley is awarded final judgment against Eagle Broadband, Inc. as follows: the unpaid balance of the Promissory Note in the amount of $1,923,052.59; plus interest in the amount of $814,113.41 through March 1, 2007; plus additional prejudgment interest accruing at the rate of 18% from March 1, 2007 through date of this judgment; plus attorney's fees in the amount of $51,489.48; plus costs of suit totaling $1448; and post-judgment interest accruing at the rate of 18% compounded annually from the date of this judgment until the total amount of this judgment is paid in full".

The case is H. Dean Cubley vs. Eagle Broadband, Inc., Cause No. 2006-52676 in the District Court of Harris County, Texas, 333rd Judicial District, Judge Joseph J. Halbach, Jr..

Here are a few of the case documents (retrieved from https://e-docs.hcdistrictclerk.com):

PainCare: a shareholder suit by one of the DOEs

It appears that among the underlying issues in the Eagle Broadband v. Does case are the past possibility and the future possibility of class-action shareholders' suits against Eagle Broadband and/or its officers and directors.

In Roy Thomas Mould's (Doe 5's) February 14, 2006 declaration, he contended that Eagle's suit was brought partly in retaliation for Mould having "publicly suggested a shareholders' lawsuit" in messages he posted to Yahoo in March 2005. (See paragraph 17 of his declaration, and Exhibits P, Q, and R to Clifford's declaration.) Although those March 2005 messages did not culminate in any shareholders' suit against Eagle, Mould has actually filed a class-action shareholders' suit against at least one other publicly traded corporation and some of its officer/directors.

PainCare Holdings, Inc. (AMEX ticker: PRZ) announced on March 15, 2006 that it would be restating its financial results for the previous five years. Six days later, Mould was the first of many shareholders to file a suit against PainCare and its CEO and CFO. A group led by Mould then made one of several bids to be named the lead plaintiff in the consolidated class action. In an order filed on July 28, the court instead selected The Employees' Retirement System of the Government of the Virgin Islands as the lead plaintiff.

The case caption is now In re PainCare Holdings Securities Litigation, Case No. 6:06-cv-362 in the United States District Court, Middle District of Florida.
Links to a few of the documents: docket; complaint; motion; declaration; report; order.

Varian: automatic stays for anti-SLAPP appeals

A question about California's anti-SLAPP statutes, as amended in 1999, was whether or not an appeal from a denial of a defendant's anti-SLAPP motion (such as the appeal in Eagle Broadband v. Does on May 8, 2006 by Richard Williams a/k/a DOE 4) automatically stays all further trial court proceedings on the merits. The Second Appellate District held in 2002 that such an appeal automatically effects a stay (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps, 99 Cal. App. 4th 1179 (2002)), but the Sixth Appellate District, ruling in 2003 on a case from Santa Clara County, disagreed (Varian Medical Systems, Inc. v. Delfino, 113 Cal. App. 4th 273 (2003)). The California Supreme Court addressed the issue on March 3, 2005, ruling that "we agree with Mattel ..., and hold that an appeal from the denial of an anti-SLAPP motion automatically stays further trial court proceedings on the merits", and immediately added in a footnote that "Such an appeal does not, however, stay proceedings relating to causes of action not affected by the motion." (Varian Medical Systems v. Delfino, No. S121400, 35 Cal.4th 180, 195, slip op. at 14, footnote 8 (2005)).

Ampex: an earlier case about a Yahoo stock board

The March 7, 2006 ruling in the Eagle case cites a California appellate court decision from May 5, 2005 in a similar case, Ampex Corp v. Cargle, No. A106345, 128 Cal.App.4th 1569, slip op. (2005), . That decision mentions an earlier unpublished opinion regarding the same trial court case: Ampex Corp v. Cargle, No. A099344, slip op. (April 30, 2003).


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