Two lawsuits in the last year and a half have been filed against Virginia House of Delegates candidate Jeff Frederick’s Internet service company alleging it held Internet domain names hostage to force clients to pay bills.
Frederick, 28, defeated 18-year incumbent John A. “Jack” Rollison in the June Republican primary for the 51st House District. During that campaign, Rollison threatened legal action when Frederick’s campaign bought up the domain name www.jackrollison.com.
Frederick’s lawyers say the lawsuits are simple collection matters. His campaign says they are politically motivated.
Judicial Watch, a conservative watchdog group, took GXS Strategies to court in May 2002 after Frederick threatened to shut down the group’s Web site for failure to pay a $15,000 bill.
“If a twerp like that thinks he’s going to do a number on us, make our day. We pay our bills,” said Judicial Watch founder Larry Klayman, in a June 17, 2002, U.S. News and World Report article.
Judicial Watch and GSX reached an out-of-court settlement for an undisclosed amount of money. But remarks Frederick made in that news magazine article caused Judicial Watch to file a defamation suit against him which is still pending.
In the other case, GXS Strategies in September 2002 filed a collection claim of more than $5,000 against former client Veritas Media Group, a communications consultant that targets pro-life, pro-family, traditional values-oriented clients.
Veritas struck back on June 6, four days before the GOP primary with a lawsuit alleging unfair business practices.
The timing was suspect, said Matt Robbins, Frederick’s campaign manager. And Frederick poll workers said they saw worker’s for Rollison’s campaign handing out copies of the lawsuit at the polls.
Frederick declined to comment because of pending suits.
On Sept. 3, an Alexandria Circuit Court judge ordered Veritas to pay $4,598 in overdue fees plus interest.
At the heart of the challenges against GXS Strategies is whether the company could register clients’ Internet domain names and continue to hold them even after the clients requested control be transferred.
Judicial Watch on Dec. 27, 2001, wrote that it learned its domain name was registered in the name of Gen-X Strategies, the former name of GXS Strategies, according to court records. The registration needed to be changed to Judicial Watch so that it could take over the hosting function of its Web sites, a Judicial Watch lawyer wrote.
In a Jan. 3, 2002, e-mail Frederick responded that changing the user identification and password was not possible because of rules by the registration service his company goes through.
But GXS Strategies will “promptly respond and act on any request” regarding its domain names even when GXS Strategies is no longer Judicial Watch’s Internet vendor, Frederick wrote.
Web site traffic was transferred to Judicial Watch computers on Jan. 30, according to e-mail records. But in April 2002, GXS Strategies sent Judicial Watch a bill for $14,785 for five months of unpaid bills.
A Judicial Watch lawyer in a May 14 e-mail responded it would pay only $4,185 which represented the fees assessed through the end of January.
An hour later, Frederick e-mailed back that he had “been patient regarding this matter, but I find your letter today unacceptable and evidence that Judicial Watch again wishes to engage in games. I have no further patience for this, nor do I have the time to play along. We will begin our shut down procedures… if we do not receive payment … by Friday at 5 p.m. eastern time, we will shut them down.”
That Friday, Judicial Watch won an injunction to stop the shutdown.
Tom Fitton, president of Judicial Watch, said he is angry at how Frederick treated them.
“He had no right to take control of [the dominion names] or pretend that he was the owner, which is what he effectively did,” Fitton said.
Frederick’s lawyers would not comment on how GXS Strategies could legally shut down the site.
The campaign manager for Frederick’s Democratic opponent Charlie Taylor said the lawsuits bring to light possible ethical lapses on Frederick’s part that voters should be asking about. Buying up domain names may not be illegal, but it is not ethical, said Matt Harrison.
“We don’t know if the accusations are true, but it seems there are a lot of people who don’t like him for the same reason,” Harrison said.
GXS Strategies chief operating officer William Schamberger said in a statement that lawsuits are sometimes the cost of doing business.
“These lawsuits are not about Jeff Frederick the candidate — they are about GXS and our past clients that refused to pay their bills for services rendered,” Schamberger wrote.
GXS Strategies is a small Alexandria-based Internet consulting company started in 1998. It has developed communications strategies and Web sites for more than 100 clients across the country and only had three have gone to court over billing, company officials said.
GXS Strategies won two of the cases, and the third, the Judicial Watch case, was settled out of court, Schamberger said
Whether GXS Strategies was in the wrong depends on the Web services contract, said Gerry Stegmaier, adjunct professor of technology law at the George Mason University School of Law.
It is fairly common in Web development agreements to have the Internet service provider registering the domains in its name, he said. That streamlines renewals and upkeep, although it can turn out to be “a handy way to hold someone up,” he said.
“Generally the person or entity that registers the domain name owns it, but registration companies have dispute procedures, he said. “Possession is nine-tenths of the law.”
That was the case when a Frederick campaign consultant bought www.jackrollison.com earlier this year. Frederick’s campaign said it could argue Rollison had no legal claim to it, especially since Jack is not his real name, but they turned it over to Rollison anyway.
Frederick said the purchase was made without his knowledge.
Frederick admitted to buying domain names to block a candidate from using them in a December 2001 article published in the Herald-Mail newspaper in Maryland.
Sue Hecht, a delegate in the Maryland state legislature, told the newspaper she believed she had a right to the domain names since as a public official her name is her trademark. Frederick said his company was open to offers from her to purchase the name.
Frederick supporters say one factor behind the lawsuits could be eccentricities of Judicial Watch’s founder.
Klayman, who left Judicial Watch last month to run for the U.S. Senate in Florida, has taken the Clinton administration to court at least 80 times and also gone after Osama bin Laden, the House and Senate and even his own mother.
Klayman declined to comment for this story. Fitton said this dispute has nothing to do with Klayman.
Veritas lawyer Michael Wasylik, meanwhile, referred to the case on his Web site www.perpetualbeta.com in early September: “I suspect the plaintiff [Frederick] spent more on legal fees than the court awarded on their ridiculous claims — and even then, I doubt they’ll ever see a penny since defendant no. 2 [Veritas] is in essence a defunct corporate entity.”
Wasylik said last week said Veritas is still legally in existence in Maryland, but he would not say if Veritas will pay the bill, to which interest is still accruing. Wasylik acknowledged his lawsuit would have to be rewritten in light of the payment order.
Staff writer Chris Newman can be reached at (703) 878-8062.