AP 24 Oct 95
 
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Prodigy Reaches Libel Pact

   NEW YORK (AP) -- Prodigy Services Co. appeared to emerge from the
cloud of a libel lawsuit Tuesday when its accuser decided not to
challenge new, key evidence the company plans to bring that could end
the $200 million case. 
   The agreement -- while not a legal settlement -- may hasten the end
of the widely watched case, one of the first to define liability for
on-line speech. 
   The case involves a suit brought by investment firm Stratton Oakmont
against Prodigy last November after a Prodigy subscriber anonymously
criticized the firm's handling of an initial public offering. The
subscriber's comment was posted on an electronic bulletin board devoted
to investments. 
   In May, New York State Court Judge Stuar Ain, who presided over the
case, ruled Prodigy was a publisher subject to the rules of libel. He
cited statements the company had made to potential subscribers in 1992
and earlier. 
   Prodigy planned to challenge the ruling. The company came up with
evidence that, long before the posting about Stratton Oakmont, it had
changed its technical structure and marketing to make it clear to
subscribers it was not responsible for content of messages. 
   On Tuesday, Prodigy and Stratton Oakmont announced jointly that the
investment firm would not challenge the new evidence. 
   Prodigy said it was sorry if offensive statements concerning the
firm, Stratton Oakmont, and its president Daniel Porush, about a year
ago caused injury to their reputation. 
   But Prodigy reiterated its belief that it is not a publisher subject
to libel laws since the only review it makes of subscribers' messages is
for obscene language. 
   Jacob Zamansky, attorney representing Stratton Oakmont, said he still
was unsure Prodigy's efforts were adequate to notify subscribers of its
changes. 
   But he said, "They've apologized and we have agreed to step aside and
let the judge reconsider ruling." 
   Prodigy spokesman Brian Ek said the company hoped Ain would take up
its motion for summary judgment quickly. "The two parties are in
agreement," he said. "There is no argument." 
   Zamansky said he believed the suit caused a dialogue in the on-line
industry about the potential damage that can result from anonymous
messages. 
   "The industry should regulate itself to head off government
regulation and further court rulings," he said. 
   In 1991, a federal judge in New York threw out a libel suit against
CompuServe, another large on-line service, that involved a newsletter
distributed electronically.