An Internet advertising firm, Hitsgalore.com, has filed a $500 million
libel suit against Bloomberg News, claiming that a series of
“defamatory” articles caused its stock price to drop by 53 % in one
day, according to a company spokesperson.
Hitsgalore claims in the lawsuit, filed Thursday, April 27 in Los
Angeles Superior Court, that Bloomberg and its reporter David Evans
created a “false and misleading impression” by reporting that founder
Dorian Reed had not disclosed past fraud accusations at a previous job.
The Internet advertising firm claims that the Evans articles, which were
published in May, 1999, prompted two class-action lawsuits against
Hitsgalore that have since been dismissed.
Christine Taylor, a spokesperson for Bloomberg, said that the claims by
Hitsgalore are “completely false.” She added: “We believe the suit is
without merit and we stand by the story and our reporter.”
Hitsgalore claims that the publication of the first Bloomberg article,
headlined “Hitsgalore.com Omitted Founder’s Link to Fraud in SEC
Filing,” caused its stock price to drop from $20.69 per share to $9.38
per share.
The company claims that Bloomberg and Evans failed to properly
investigate the facts before publishing the articles.
William Turner, a Berkeley, California, lawyer who specializes in First
Amendment cases, said it was unusual for a company to sue for loss of
stock value because of libel and that such cases are more often filed as
product disparagement suits.
A spokesperson for Hitsgalore referred questions about the lawsuit to
the company’s lawyers who were not available for comment.
