SALT LAKE CITY, April 15 /PRNewswire-FirstCall/ -- Overstock.com, Inc.
(Nasdaq: OSTK) today announced it intends to file a demurrer (dismissal) to
claims recently filed by Gradient Analytics in Overstock.com et al. v.
Gradient Analytics et al. "We didn't oppose Gradient's request to file this
because we know we can beat it. To date we have defeated every effort
Gradient and Rocker Partners have made to avoid trial on the merits, and now
at the eleventh hour, Gradient wants to launch its last remaining legal smoke
screen," said Jonathan Johnson, Overstock.com's chief legal officer. "As we
have previously, we will simply turn on the fans and blow that smoke right
back at them." Johnson observed that several of the claims appear to be
beyond the statute of limitations, and the others simply are not justified for
other legal and factual reasons.
Overstock CEO Patrick Byrne added, "This lawsuit is an attempt by Gradient
to distract attention from their failing business model. Besides, my
criticisms of Gradient are protected by the First Amendment."
In a battle now more than two and a half years along, checkered with
failed attempts by Gradient and Rocker Partners to avoid trial, Overstock.com
continues to pursue defendants for libel, unfair business practices and
tortuous interference. The trial court and the California Court of Appeals
denied both Gradient's and Rocker's early exit bids, finding the case legally
sufficient to take to trial. The California Supreme Court impliedly endorsed
those decisions when it declined Gradient and Rocker's arguments that the
trial and appellate courts were in error.
In an apparent last ditch effort, Gradient filed cross-claims on April 14,
essentially claiming that Overstock.com and Patrick Byrne, Overstock.com's
chairman and CEO, have publicized and discussed openly the allegations of the
Overstock.com complaint. The Overstock.com complaint presents serious
allegations that during 2004 and 2005, Gradient, holding itself out as an
investment analyst, and Rocker Partners, a well-known short-selling hedge
fund, worked in concert to publicize Gradient reports on Overstock.com
containing false statements in order to drive down the Overstock.com share
price so that Rocker Partners could profit from its short positions in the
stock.
Overstock.com's complaint is supported by sworn declarations from four
ex-Gradient employees who assert that the Gradient business model allowed
short selling hedge fund subscribers to pay up to $40,000 for negative special
reports which were then released to other Gradient subscribers and the media.
Several of the declarations assert that Gradient actually allowed the hedge
funds' editorial input into the report content, and provided advance notice of
the report content to the paying subscriber hedge fund, and that Gradient
would withhold publication for a period of time, allowing the subscriber hedge
fund to position its portfolio to profit from the report's release and
negative stock price consequence.
"Ultimately, truth is a defense to Gradient's cross-claims. We have
maintained all along that our allegations are true and fully supported by
substantial evidence," said Byrne. He added, "It's hard to think that for
more than two years they have been running from this fight, that these claims
could not have surfaced sooner, and so this desperate launch of cross claims
cannot be seen as anything other than another effort at delay, delay, delay.
I will not give up. We are going to prove this case to a jury."
Among the most surprising of the contents of the ex-Gradient employees
statements concerned Gradient's practice of marketing its subscriptions to
short-selling hedge funds by using a list called, "Blow-ups By Grade." This
list was said to contain the names of companies whose stocks experienced a
sharp, sometimes one-day decline following the release of a negative Gradient
report.
Statements of the ex-Gradient employees can be viewed at:
http://www.overstock.com/cgi-bin/d2.cgi?page=staticpopupfull&sta_id=11151
Trial of the case is now set for September 9, 2008.
About Overstock.com
Overstock.com, Inc. is an online "closeout" retailer offering discount,
brand-name merchandise for sale over the Internet. The company offers its
customers an opportunity to shop for bargains conveniently, while offering its
suppliers an alternative inventory liquidation distribution channel.
Overstock.com, headquartered in Salt Lake City, is a publicly traded company
listed on the NASDAQ Global Market System and can be found online at
http://www.overstock.com.
Overstock.com is a registered trademark of Overstock.com, Inc.
This press release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements include, but
are not limited to, statements regarding moving to trial, the results of any
trial or portion thereof, the strength of evidence of either side related to
the litigation, as well as all such other risks as identified in our Form 10-K
for the year ended December 31, 2007, and all our subsequent filings with the
Securities and Exchange Commission, which contain and identify important
factors that could cause the actual results to differ materially from those
contained in our projections or forward-looking statements.
SOURCE Overstock.com
