U.S. Foodservice threatens to sue gossipy Web site aimed at industry

Operator gets testy letter from ailing firm's lawyer

March 14, 2003|By Paul Adams | Paul Adams,SUN STAFF

Columbia-based U.S. Foodservice has threatened legal action against the operator of a Web site that has become a conduit for food-service employees to exchange news and gossip and view articles related to the company's recent accounting scandal.

The site's operator, Steve Hoschler, a food-service industry veteran who is now a fifth-grade schoolteacher in Sacramento, Calif., has temporarily shut down its "news and comment" section and is seeking legal help from a New York law firm. Though convinced he has the law on his side, Hoschler said, "I immediately complied with everything they asked me to do."

But he plans to fight.

The legal threat - contained in a letter he received Wednesday - is the latest attempt by U.S. Foodservice to defend its corporate image after the disclosure by its Dutch parent Royal Ahold NV that it overstated 2001 and 2002 earnings by at least $500 million.

The nation's second-largest institutional food distributor is under investigation by the Securities and Exchange Commission and a federal grand jury in Manhattan.

In a letter to Hoschler, a lawyer for U.S. Foodservice suggested the grade-school teacher crossed the line by soliciting the company's employees to share documents and other confidential information so that it could be passed on to news media. The letter also said Hoschler could be held liable for what the company called "false and defamatory" statements posted on the Web site.

"It is reprehensible for you to importune USF's employees to, perhaps unwittingly, engage in wrongful conduct against the company by soliciting this information," wrote Robert S. Brennen, an attorney at Miles & Stockbridge in Baltimore.

In a statement distributed to media yesterday, Brennen stressed that the letter did not seek "any restriction of Mr. Hoschler's legitimate First Amendment rights or those of any individual contributor to his Web site."

A spokesman for Royal Ahold said U.S. Foodservice was acting on its own in going after the Web site. A spokesman for U.S. Foodservice referred questions to Brennen.

Popular site

Hoschler's Web site, foodservicerumors.com, has become popular among the tens of thousands of employees, executives, brokers and vendors who work in the food-service industry.

Contributors to the message board post news, rumors and, occasionally, internal memos sent to U.S. Foodservice employees. In one example, Hoschler posted a memo that instructed U.S. Foodservice employees not to talk to the media.

Hoschler said he screened the e-mails, removing any that he said were vicious individual attacks or contained overly offensive remarks. Most of the rest were posted.

Legal experts said courts have consistently ruled in favor of on-line operators of message boards.

"The courts have held that the bulletin board is really nothing more than a facilitator, something through which information passes," said James B. Astrachan, a Baltimore intellectual property attorney. "They've declined to find any liability on the part of the operator."

The Communications Decency Act of 1996 makes it extremely difficult for someone to successfully sue the operator of a Web site for posting information that was provided by another party, said Jonathan Zittrain, an assistant professor at Harvard Law School and an expert on Internet law.

Even if the courts ruled that Hoschler was acting more as a news reporter in this case, U.S. Foodservice would have to prove that he recklessly passed on information that he knew was false, or published material on his site that dealt with trade secrets. Either way, the burden of proof is considerable, especially for a public company, legal experts said.

A 25-year veteran of the food-service industry, Hoschler and a small group of friends launched the Web site five years ago as a joke. Initially, it featured a spoof advice column written by Hoschler under a pseudonym.

Later, the group added a message board targeted at brokers in Southern California's food-service business. From there it grew to become a sounding board for the whole industry.

Gained stature

The site gained stature in 2000 with the bankruptcy of Ameriserve, the nation's largest supplier to fast-food restaurants.

Employees of the embattled company began flooding the site with claims of improper behavior on the part of certain executives. The site later got a mention in The Wall Street Journal, which was investigating the claims.

After that, Hoschler said, the site also began attracting the attention of members of the financial community, who kept an eye on the message board for news about food-service companies.

Today, the site gets 15,000 to 20,000 hits a day. Since shutting down the site, Hoschler said he has received numerous e-mails from supporters, including offers of cash for his legal defense.

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