November 12, 2007 16:33 ET

Rocker/Gradient Finally Answer Complaint; Overstock Hails Progress Towards Trial Eager to Begin Discovery and Move to Trial on the Merits

SALT LAKE CITY, UT--(Marketwire - November 12, 2007) -, Inc. (NASDAQ: OSTK) today announced that Rocker Partners and Gradient Analytics have finally answered Overstock's complaint, filed over two years ago.

"For over two years they have been trying to get this kicked out of court by every contrivance known to man and law," said Overstock Chairman and CEO Patrick Byrne, "but having failed at every stage, and in every court, in front of every judge (all four of them), they have run out of excuses, and had to answer. Now we look forward to getting this matter to trial. To that end I welcome to the fray Mr. Rocker's new attorney, David Shapiro, the elite white-collar criminal defense specialist from Boies, Schiller & Flexner."

Rocker's answer was accompanied by a cross complaint, seeking unspecified damages. The cross complaint, which mirrored several of the original claims in Overstock's complaint, includes state law claims for stock manipulation, unfair business practices, tortious interference with contract and prospective business advantage, deception, and equitable indemnification, a claim that actually asserts that if Rocker is held to account for damages to the plaintiffs then Overstock and the cross defendants should have to pay them.

In essence, Rocker alleges Overstock caused a "short squeeze" in the latter part of 2004, resulting in losses to Rocker when Overstock's stock climbed from $28 to over $70 a share after Rocker had taken a short position in the stock. Rocker also named John J. Byrne and John Fisher, both former members of the Overstock board of directors, as well as current members Allison Abraham, Patrick Byrne and Jason Lindsey, who also serves as President and Chief Operating Officer.

"Rocker Partners has threatened to launch this since day one, but now it arrives it contains nothing but smoke," said Jonathan E. Johnson III, Senior Vice President of Corporate Affairs and Legal. "The fact that they did not submit it until all other avenues were exhausted speaks to the weakness of their claims. Overstock has alleged that Rocker Partners paid Gradient Analytics to publish reports with provably false information to drive down Overstock's share price, that the defendants shared and discussed drafts of these reports, and that Gradient, at Rocker's request, held up publication while Rocker positioned its portfolio. Three courts have looked at our support for this case, and all three have ruled in our favor and against Rocker Partners and Gradient Analytics. Rocker's allegations simply restate the failed defensive positions to which the defendants clung in the past."

In September 2007, the California Supreme Court cleared the way for Overstock to proceed on all causes of action when it refused to review both defendants' arguments that their behavior is protected under the First Amendment, an argument which lost at the trial court and in a unanimous, three judge panel ruling in the California Court of Appeals handed down earlier in this year.

Overstock alleged in its complaint that the Rocker Defendants paid Gradient Analytics to publish negative reports about Overstock, and that Gradient supplied pre-publication copies of these reports to Rocker Partners to edit and front-run. Whistleblowers within Gradient provided affidavits attesting to these claims, with statements such as: "I heard many hedge funds request that [Gradient executive] Vickrey delay the public release of reports from 3 to 7 days to allow them to take a position in the stock."

About, 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., headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at is a registered trademark of, Inc.

The Gradient affidavits are available here: bin/d2.cgi?page=staticpopupfull&sta_id=11151

To view Patrick Byrne's narrated presentation explaining how Wall Street hijacked the very institutions that are supposed to be protecting investors, go to

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, 2006, 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.