OMDA Oil & Gas, Inc. v. Porcari

OMDA Oil & Gas sued Arthur J. Porcari after he posted comments on private investor boards including the Yahoo! OMDA Investor Chat Board.

In June 2004, Porcari, a large stockholder of publicly traded shares in OMDA, told the Chairman of OMDA Adam Barnett that he believed that OMDA shares were undervalued and offered to assist the firm in expanding its operations. Barnett accepted the offer, and Porcari took over the firm's communications operations (he did not, however, become an officer of the company). In March 2006, Barnett and Porcari had a falling out over Barnett's management of the company, and Barnett put an end to Porcari's work for OMDA.

Before and after his involvement with Barnett, Porcari posted comments on the Yahoo! chat board criticizing OMDA's management and replying to Barnett's posts.

On March 1, 2007, OMDA sued Porcari in Texas state court, alleging that his Yahoo! posts were defamatory, constituted business disparagement, and breached Porcari's fiduciary duties to OMDA by disclosing confidential information obtained during his involvement with the firm.

The trial court granted OMDA a temporary injunction restraining Porcari from publishing defamatory, disparaging or negative statements about OMDA or any of its officers, directors, members, shareholders or affiliates, and from disclosing information he obtained between June 1, 2004 and March 31, 2006.

In June 2007, Porcari appealed the trial court's grant of the injunction. In October, a Texas appellate court reversed the trial court's decision, finding that the injunction constituted an unconsistutional prior restraint on Porcari's speech. The court ruled that claims of defamation and trade libel are not themselves sufficient to justify prohibiting a litigant from making negative statements about a company because damages can redress the harm. The court further held that the order requiring Porcari to refrain from disclosing any information obtained in the period from June 2004 to March 2006 was overbroad in restricting Porcari from communicating matters of public knowledge, rather than restricting the disclosure of confidential information only.

Update:

1/7/2008 - OMDA filed a petition for review to the Texas Supreme Court.