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June 10, 2002
Firing Costs AOL a $5M Jury Award
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ury in Santa Clara, Calif., has concluded that America Online defamed a former executive in connection with his termination and ordered it to pay $5 million in damages, according to The Recorder.

Jurors found that America Online Inc. - now AOL Time Warner Inc. - maliciously defamed Ronald Arnold, a former vice president of its Netscape division, by accusing him of falsifying his administrative assistant's time cards and eventually firing him for it.

Arnold, 49, filed suit two years ago for age discrimination and defamation after being fired as national head of information systems in Netscape's Mountain View, Calif., office. A judge dismissed the discrimination claim on summary judgment, but allowed a jury to decide the defamation claims.

Arnold's lawyers argued at trial that it was clear AOL wanted to clean house after its acquisition of Netscape Communications Corp. in 1999. AOL executives, they claimed, used the overtime accusations to unfairly sweep Arnold out the door.

Lawless told jurors in the punitive damages phase that America Online's attitude toward Netscape employees was "the AOL way or no way. We'll get rid of them one by one." She urged jurors to punish AOL, to send the message that "in your next acquisition, don't do it again."

The award includes $3.5 million in punitive damages, on top of $1.5 million in compensatory damages for lost wages and stock options.

The Recorder reports that Arnold's lawyer, Therese Lawless, had suggested several figures to the jury during the award phase. They ranged from $41 million, or one-tenth of 1 percent of America Online's stated worth, to $15 million, or 10 times the compensatory damages.

AOL lawyer Dov Grunschlag told jurors that AOL executives had already gotten the message with the $1.5 million compensatory award.

"This is not about making windfalls for people or the lottery or making multi-millionaires," Grunschlag said. "In this case, we are telling you the company has heard the message loud and clear."

But afterward, an AOL spokesman vowed an appeal.

"We strongly disagree with the verdicts rendered in both the compensatory and punitive phases of this trial," said AOL spokesman Nicholas Graham in Dulles, Va. "We will file an appeal with the court and expect in the end our legal arguments will prevail."

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