America Online v. ANONYMOUS PUB. TRADED, 000974.

• Decision Date: 02 March 2001
• Docket Number: No. 000974.,000974.
• Parties: AMERICA ONLINE, INC., v. ANONYMOUS PUBLICLY TRADED COMPANY.
• Court: Virginia Supreme Court

542 S.E.2d 377

261 Va. 350

AMERICA ONLINE, INC., v. ANONYMOUS PUBLICLY TRADED COMPANY.

No. 000974.

Supreme Court of Virginia.

March 2, 2001.

Patrick J. Carome (Melanie D. Coates, Mc-Lean; Steven M. Dunne; Laura E. Jehl, Dulles; Laura A. Heymann; Wilmer, Cutler & Pickering, on briefs), for appellant.

Douglas M. Palais (Laura W. Khatcheressian; Dale W. Eikenberry; McCandish,

Present: CARRICO, C.J., LACY, KOONTZ, KINSER, and LEMONS, JJ. and STEPHENSON, Senior Judge.

LEMONS, Justice.

In this appeal, we consider whether an anonymous litigant may utilize the coercive powers of Virginia courts under the Virginia Uniform Foreign Depositions Act, Code § 8.01-411 et seq. ("UFDA"). Pursuant to Rules 4:1(c) and 4:9(c), America Online, Inc. ("AOL") sought to quash a subpoena duces tecum issued to it by the Clerk of the Circuit Court of Fairfax County and sought a protective order barring the discovery sought by an anonymous litigant proceeding as "Anonymous Publicly Traded Company" ("APTC"). The trial court¹ refused to quash the subpoena duces tecum or issue a protective order. Because the trial court abused its discretion in permitting APTC to proceed anonymously under the UFDA, we reverse the judgment of the trial court and remand for further proceedings.

I. Facts and Proceedings Below

APTC is a publicly traded Delaware corporation with its principal place of business in Indianapolis, Indiana. On February 9, 1999, APTC filed a complaint, captioned "Anonymous Publicly Traded Company v. John Does 1 through 5," in the Indiana court. In its complaint, APTC asserted that the John Doe defendants, whose identities and residences were unknown,² "made defamatory and disparaging material misrepresentations" about APTC in internet chat rooms.³ Additionally, APTC asserted its belief that the defendants were current and/or former employees who breached their fiduciary duties and contractual obligations by publishing "confidential material insider information" about APTC on the internet. Although it did not specify what harm would be incurred by identifying itself in the Indiana court, APTC contended that it had to proceed anonymously "because disclosure of its true company name will cause it irreparable harm."

On August 11, 1999, in response to APTC's application for assistance in discovery and for an order authorizing discovery in Virginia, the Indiana court issued an order permitting APTC to "proceed with a non-party production request to America Online, Inc. by obtaining a Subpoena Duces Tecum from the Virginia trial courts having jurisdiction over America Online, Inc." The order authorized APTC to request assistance from Virginia courts in obtaining from AOL, the names, addresses, telephone numbers, and any other identifying information pertaining to four AOL subscribers. In granting the request, the Indiana court noted:

[APTC] is directed and authorized to seek assistance of the Virginia state trial courts for the reason that under principles of comity and reciprocity, under Indiana Trial Rule 28, Indiana would, in the reverse situation, assist Virginia residents in the discovery of information from persons or entities domiciled or residing in Indiana through the assistance of subpoenas or other matters in support of discovery procedures and practices in the State of Virginia.

On September 3, 1999, the Clerk of the Circuit Court of Fairfax County issued a subpoena duces tecum to AOL requesting the names, addresses, telephone numbers, and all other identifying information regarding the four AOL subscribers. AOL indicated to APTC its intention to contest the issuance of the subpoena duces tecum in part because of the anonymity of APTC. Thereafter, APTC filed a motion in the Indiana court on October 14, 1999, for permission to proceed anonymously until it could amend its complaint to specifically name the John Doe defendants.

AOL filed its motion to quash in the trial court on October 15, 1999, arguing that APTC should not be permitted to proceed until it revealed its identity. On October 19, 1999, the Indiana court issued an order granting APTC's motion to proceed anonymously. The Indiana court stated that APTC:

[S]hall be allowed to proceed as anonymous in this action up and until it determines the identity of the Defendants and further determines whether to proceed with this action against the named Defendants at which time should it determine to proceed and file an amended complaint, in the amended complaint [APTC] shall list itself by its proper legal name and list those Defendants against whom it is proceeding by proper legal name.

The Indiana court did not conduct an evidentiary hearing and no reasons were given for its decision, which was rendered ex parte.

After an in camera examination of copies of the internet postings that were the subject of the underlying litigation in Indiana, the trial court issued an opinion and order denying AOL's motion to quash and request for a protective order. Although the trial court conceded that there is a First Amendment interest in ensuring that courts remain open to the public, it nevertheless ruled that APTC should be permitted to proceed anonymously.⁴ Specifically, the court stated:

As any First Amendment right of the public to know the identity of the plaintiff in the Indiana proceedings will only be marginally affected at these preliminary stages of those proceedings, this Court believes that comity should be accorded to the Indiana court's decision, under its Trial Rules, to allow APTC to proceed anonymously for a limited period of time. Although the Indiana court did not have the benefit of a brief from AOL when it authorized APTC to maintain its anonymity after AOL filed the instant motion, counsel herein agree that the Indiana court was then aware of AOL's objection. In additional, at least part of the salutary prophylactic effect of requiring openness in judicial proceedings has been assured by the Court's requirement that APTC supply copies of the relevant Internet postings to opposing counsel and to the Court. Both this Court and the John Does now either know or can readily ascertain the true identity of APTC. Consequently, any possible abuses of the judicial system by APTC in initiating either the proceeding in the Indiana court or in this Court can be addressed by the respective courts under applicable statutes authorizing sanctions. Hence, this Court defers, in its analysis of the issues before this Court, to the Indiana court's determination to allow APTC to maintain its anonymity for a limited period of time.

AOL appeals the adverse ruling of the trial court.

On appeal, AOL contends that the trial court erred in permitting its subpoena power to be invoked by APTC without requiring APTC to make a showing of any legitimate and compelling need to proceed anonymously and that the trial court should not have deferred on grounds of comity to the Indiana court's decision to allow APTC to proceed anonymously. Specifically, AOL argues that the Indiana court's ruling arose out of a nonadversarial, ex parte proceeding in which either no legal principles or legal principles that differ from Virginia law and public policy were applied.

APTC contends that the trial court exercised sound discretion in granting comity to the order of the Indiana court. Furthermore, APTC contends that, even if comity were not afforded the Indiana court's order, it has a valid privacy interest that is advanced by permitting it to anonymously utilize the Virginia courts for discovery purposes in aid of the Indiana litigation.

II. Standard of Review

Ordinarily, a trial court's discovery orders are not subject to review on direct appeal because they are not final within the contemplation of Code § 8.01-670. However, an order granting or refusing a motion to quash or issue a protective order, in a proceeding brought in a court of this Commonwealth pursuant to the UFDA, is a final Court's requirement that APTC supply order subject to appellate review.

The original and appellate jurisdiction of the Supreme Court of Virginia is conferred by Article VI, § 1 of the Constitution of Virginia which provides in part that, subject to constitutional limitations, "the General Assembly shall have the power to determine the original and appellate jurisdiction of the courts of the Commonwealth." The UFDA does not provide for appeal of orders pursuant to its provisions; consequently, we must look to Code § 8.01-670 for the source of the Court's appellate jurisdiction in this matter. Because this matter arises on the law side rather than the chancery side of the Circuit Court, the Court's authority to review the order of the trial court is found in Code § 8.01-670(A) which enumerates particular matters which may be the subject of appeal and concludes with subsection (3) which provides appellate jurisdiction over any matter where a "person" is "aggrieved . . . [b]y a final judgment in any other civil case."

An action under the UFDA is a separate action, distinct from, although ancillary to, the underlying cause of action in the foreign jurisdiction. In the case before us, when the trial court rendered its order, it disposed of every aspect of the case before it and settled all issues raised by the parties. In Warford v. Childers, 642 S.W.2d 63 (Tex.Ct.App.1982), the Texas Court of Appeals, applying statutory language identical to that adopted in the Virginia UFDA statute,⁵ held that the resolution of the discovery dispute was a final, appealable judgment.

To hold that such an order is interlocutory and non-appealable would forever foreclose review by the orderly process of appeal and would relegate the parties to an extraordinary proceeding. Obviously, the order 'cannot be reviewed by this court as part of an appeal from a final judgment of the [foreign] court and cannot be reviewed by the [foreign] appellate court under any circumstances. Thus, although the order may have an interlocutory

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