Date: 08-02-2002

Case Style: ZIXIT CORPORATION and ZIXCHARGE.COM, INC. v. VISA U.S.A., INC. AND VISA INTERNATIONAL SERVICE ASSOCIATION

Case Number: 99-10187

Judge: Judge Merrill Hartman

Court: 192nd District Court, Dallas County, Texas

Plaintiff's Attorney: Kenneth McNeil, Neal Manne, H. Lee Godfrey, Barry Barnett, Stewart Kusin and Johnny Carter of Susman Godfrey, Houston, Texas and Professor Ellen Pryor of SMU Law School, Dallas, Texas

Defendant's Attorney: Mike Lynn, Jeff Tillotson, Adolfo R. Rodriguez of Lynn Tillotson & Pinker, LLP, Dallas, TX.

Description: Business Disparagement, Defamation (Individual Statements), Defamation (Statements as as a Whole), and Tortious Interference with Prospective Business Relationships.

In what may be the first case of it's kind to be resolved at trial, Dallas-based ZixIt Corporation sued Visa USA and Visa International Service Association in December 1999, alleging that a Visa employee had caused Zixit's stock price to drop due to negative "postings" on a Yahoo! Internet discussion board dedicated to ZixIT. Jurors heard testimony that the employee, Paul Guthrie, contributed more than 400 posts between May and November, 1999. Guthrie no longer works at Visa. Experts for ZixIT testified that the postings had a negative, cumulative effect on the company's stock and caused it to lose ground when compared to representative stock indexes such as the NASDAQ. ZixIT sought $577 million in damages, alleging that Guthrie was working in concert with Visa to stop ZixIT from successfully launching it's ZixCharge software designed to make on-line shopping and payment more secure. Attorneys for Visa introduced evidence showing that ZixCharge was not a viable product and that Guthrie had made the message board posting without authorization from Visa and in violation of Visa's corporate policies. Also, Visa's defense team showed that the postings had no measurable impact on ZixIt's stock price. Guthrie testified that no one at Visa knew about his postings. He stood by his opinion, manifested in many of his postings, that ZixCharge was "just hype." Defense attorneys introduced expert witness testimony that ZixIt's revenue projections and damage estimates were speculative and not verifiable by objective, statistical analysis. Trial began on July 9, 2002. Testimony and final argument concluded on Monday, July 29th. The jury deliberated for approximately 17 hours over three days and returned a "take nothing" verdict for defendants Visa, USA and Visa International Service Association.

Outcome: Defense verdict - no damages.

Plaintiff's Experts: Gary Craft, San Francisco, California - Secure on-line payment technology industry (live testimony), Mark Zmijewski, Chicago, IL - Damages (live testimony), Bruce Shirey, Agoura Hills, CA - Technology & Cryptography

Defendant's Experts: James T. McClave, PhD, Gainesville, FL - Statistics and Econometrics, Neal J. Beaton, CPA/ABV, CFA, ASA, Seattle, WA - Business Valuation

Comments: Reported by Mike Androvett at Androvett Legal Media: 214-559-4630