Digital Music News LLC v. Superior Court of L. A. Cnty.

• Decision Date: 14 May 2014
• Docket Number: B242700
• Citation: 171 Cal.Rptr.3d 799,226 Cal.App.4th 216
• Court: California Court of Appeals Court of Appeals
• Parties: DIGITAL MUSIC NEWS LLC, Petitioner, v. SUPERIOR COURT of Los Angeles County, Respondent; Escape Media Group, LLC, Real Party in Interest.

226 Cal.App.4th 216

171 Cal.Rptr.3d 799

DIGITAL MUSIC NEWS LLC, Petitioner,

v. SUPERIOR COURT of Los Angeles County, Respondent;Escape Media Group, LLC, Real Party in Interest.

B242700

Court of Appeal, Second District, Division 1, California.

Filed May 14, 2014

See 2 Witkin, Cal. Evidence (5th ed. 2012) Discovery, § 9 et seq.

Petition for extraordinary writ. Richard Stone, Judge. Petition is granted. (Los Angeles County Super. Ct. No. SS022099)

McKenna Long & Aldridge, Charles A. Bird, San Diego; Public Citizen Litigation Group, Paul Alan Levy; Micah Gabriel Katz for Petitioner.

No appearance for Respondent.

McPherson Rane, Edwin F. McPherson and Pierre B. Pine, Los Angeles; Rosenberg & Giger, John J. Rosenberg, Woodland Hills, for Real Party in Interest.

CHANEY, J.

Escape Media Group (Escape) operates an Internet service called Grooveshark through which users may upload and retrieve digital music files. UMG Recordings, Inc. owns an extensive music catalog that includes songs by such artists as Buddy Holly, The Jackson 5, Marvin Gaye, and The Who. In 2010, UMG sued Escape in the Supreme Court of the State of New York, alleging Escape infringed on copyrights afforded by New York common law by reproducing user-uploaded, copyrighted sound recordings, storing them on its servers, and distributing copies to other users, to its own profit. Escape denied liability, asserting its conduct was permissible under federal copyright law.

Digital Music News (Digital) publishes the online newsletter Digital Music News, which focuses on the digital music industry. In 2011, Digital Music News reported that a music artist unaffiliated with UMG had also accused Escape of copyright infringement.

The article was followed by approximately 100 reader comments, two of which are of interest here. In them, a reader identified only as “Visitor” represented he or she was an Escape employee and routinely received “direct orders from the top” to upload music to its servers, where it was stored and made available to third party users and never removed, even if artists or music labels complained.

Under the auspices of the Supreme Court of the State of New York, County of New York, Escape served a subpoena on Digital (which is not a party to the litigation between UMG and Escape), seeking Visitor's identity. When Digital refused to comply, Escape petitioned the Los Angeles Superior Court pursuant to the Interstate and International Depositions and Discovery Act, Code of Civil Procedure section 2029, et seq., for enforcement. The court ordered Digital to comply with the subpoena, from which order Digital now appeals.

Digital argues information identifying Visitor will not reasonably lead to the discovery of admissible evidence in the New York lawsuit and is protected by Visitor's right to privacy. We agree with both contentions, and will therefore issue a writ of mandate directing the trial court to vacate its order enforcing Escape's subpoena.

Statement of Facts

1. The New York Lawsuit

Grooveshark enables third party users to upload, share, download and stream files containing audio recordings. On January 6, 2010, UMG sued Escape in New York state court for state common law copyright infringement and unfair competition, alleging Escape enabled and encouraged Grooveshark users to upload unauthorized copies of UMG's recordings to Grooveshark, which Escape then copied to its servers and subsequently distributed to other Grooveshark users. ( UMG Recordings v. Escape Media Group (Supreme Ct. New York County, 2010, No. 100152).) ¹

Escape denied the allegations and asserted a number of affirmative defenses and counterclaims. Among other defenses, Escape claimed immunity under the Digital Millennium Copyright Act (DMCA), which shields from federal copyright infringement liability an Internet service provider that hosts solely third party user materials, so long as it promptly removes copyrighted materials when it becomes aware of the infringement.² ( 17 U.S.C. § 512(a)- (c).) On April 23, 2013, this defense was ordered stricken by the Appellate Division of the Supreme Court of New York on the ground that DMCA affords immunity only against federal copyright claims, not state common law claims. ( UMG Recs., Inc. v. Escape Media Group, Inc. (N.Y.App.Div. 1st Dep't 2013) 107 A.D.3d 51, 59, 964 N.Y.S.2d 106.) In its answer, Escape also asserted counterclaims for interference with Escape's contracts, interference with its business relations, and anti-competitive conduct, alleging UMG caused other companies to end their business relationships with Escape.³

In October 2011, Digital Music News reported on an email exchange between Escape executives and a member of a rock band who had complained that Grooveshark illegally hosted the band's copyrighted recordings and refused to take them down. In the comments section of this article, Visitor claimed to “work for Grooveshark” and stated “the administration” required employees to upload files to the Grooveshark database, which contradicted Escape's claim that it hosted solely third party recordings as permitted by the DMCA. The next day, Visitor ⁴ commented that although Grooveshark administrators purported to remove copyrighted music when record labels and artists complained, the music was not actually deleted but merely put on “backup,” to be made available at a later time, when the complaining party's attention turned elsewhere. Visitor stated the music was in fact never deleted: “[T]o confirm the fears of [complaining musicians], there is no way in hell you can get your stuff down.”⁵

2. The Subpoena and Enforcement

On January 9, 2012, Escape served Digital with a subpoena in the New York action for the production of business records, seeking information concerning Visitor's identity and communications between Digital and UMG concerning, or documents relating to, Escape, Grooveshark, or the October 2011 Digital Music News article. Digital objected to the subpoena and notified Escape that any information about Visitor's identity had been deleted as part of Digital's routine business practice of periodically overwriting data.

On March 20, 2012, Escape petitioned the Los Angeles County Superior Court to enforce the subpoena under the Interstate and International Depositions and Discovery Act, Code of Civil Procedure section 2029 et seq.⁶ Digital opposed the petition, arguing the subpoena was moot because any information that would identify Visitor had been overwritten, enforcement of the subpoena would infringe on the First Amendment rights of Digital and Visitor, and disclosure would violate California's journalist shield law ( Cal. Const., art. I, § 2, subd. (b); Evid.Code, § 1070).⁷ In reply, Escape argued Digital had no basis for refusing to comply with the subpoena because the First Amendment does not protect false and defamatory anonymous speech.

Although Digital denied any discoverable material remained on its servers, the trial court found a possibility existed that fragmented data identifying Visitor might yet be retrieved. The court also found Escape established a prima facie case that Visitor's comments were libelous, and thus unprotected by the First Amendment. The court concluded Visitor's identity was therefore discoverable and ordered Digital to comply with the subpoena.⁸

The trial court subsequently issued a supplemental order addressing the compliance process. The court ordered Escape to purchase and provide Digital with a backup server, and ordered Digital to preserve a virtual machine image of its server on the backup server and make the image available to a third party forensic examiner under court supervision. The examiner would first indicate to Digital whether any identifying information was present and then reveal such information to Escape if directed to do so by the court. Escape would pay all expenses related to the data preservation and inspection. Once the inspection was complete, the backup server would be expunged of any material.⁹

Digital timely appealed both orders and we issued a writ of supersedeas staying discovery. Pursuant to our request, the parties submitted supplemental letter briefs addressing whether section 2017.010 and the California Constitution's right of privacy preclude discovery of Visitor's identity.

Discussion

1. Standard of Review

Pursuant to the Interstate and International Depositions and Discovery Act, a party to a proceeding in a foreign jurisdiction may obtain discovery in California by retaining a local attorney to issue a subpoena. (§ 2029.350.) If a dispute arises relating to the subpoena, any party may petition the superior court where the discovery is to be conducted for a protective order or an order enforcing, quashing, or modifying the subpoena. (§ 2029.600.) Such an order may be reviewed only by petition to the Court of Appeal for an extraordinary writ. (§ 2029.650, subd. (a).) Although Digital filed an appeal here, we deem the appeal to be a writ petition.

A discovery order is reviewed under the deferential abuse-of-discretion standard. (Krinsky v. Doe 6 (2008) 159 Cal.App.4th 1154, 1161, 72 Cal.Rptr.3d 231.) An appellate court may reverse a trial court decision for abuse of discretion when the trial court “applies the wrong legal standards applicable to the issue at hand.” (Doe 2 v. Superior Court (2005) 132 Cal.App.4th 1504, 1517, 34 Cal.Rptr.3d 458.)

2. California discovery law prohibits disclosure of Visitor's identity

Although discovery sought under the Interstate and International Depositions and Discovery Act is intended for use in a foreign jurisdiction, it is nevertheless governed by California's Civil Discovery Act, section 2016.010 et seq. (§ 2029.500.) Section 2017.010 of that act sets forth the permissible scope of discovery in California: “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action ... if the matter either is itself...