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A Santa Clara, Calif., jury slapped America Online with $5 million in damages, including $3.5 million in punitives Thursday, for defaming a former executive in connection with his termination. 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. Jurors awarded $1.5 million in compensatory damages for lost wages and stock options Tuesday. Arnold’s attorney Therese Lawless suggested several figures to the jury, ranging from $41 million, or one-tenth of 1 percent of America Online’s stated worth, to $15 million — 10 times the compensatory damages. 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 Santa Clara County Superior Court judge dismissed the discrimination cause of action on summary judgment, but allowed a jury to decide the defamation claims. During the trial, Arnold’s attorneys argued that it was clear that AOL wanted to clean house after its acquisition of Netscape Communications Corp. in 1999 and that AOL executives 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.” During arguments, jurors were told that America Online’s worth was $41 billion, as listed in Securities and Exchange Commission filings. However, defense counsel tried to keep that figure a secret, asking the judge to throw spectators out of the court before the issue was to be argued Wednesday. Judge Robert Foley said he had sealed the document in the court file but would take no further action. “This trial is a public trial. I am certainly not going to exclude members of the public,” Foley said. AOL attorney 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,” argued Grunschlag, a partner with San Francisco’s Steinhart & Falconer. “In this case, we are telling you the company has heard the message loud and clear.” But after the verdict, an AOL spokesman said jurors wouldn’t have the final word in Arnold v. America Online, 792235. “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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