Yelp, Inc. v. Hadeed Carpet Cleaning, Inc.

• Court: Virginia Supreme Court
• Writing for the Court: Opinion by Justice ELIZABETH A. McCLANAHAN.
• Citation: Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 770 S.E.2d 440, 289 Va. 426 (2015)
• Decision Date: 16 April 2015
• Docket Number: Record No. 140242.
• Parties: YELP, INC. v. HADEED CARPET CLEANING, INC.

289 Va. 426

770 S.E.2d 440

YELP, INC.

v.HADEED CARPET CLEANING, INC.

Record No. 140242.

Supreme Court of Virginia.

April 16, 2015.

Paul Alan Levy (Scott Michelman; Raymond D. Battocchi ; Public Citizen Litigation Group, on briefs), for appellant.

Raighne C. Delaney (James Bruce Davis ; Rachelle E. Hill ; Zachary G. Williams ; Bean, Kinney & Korman, Arlington, on briefs), for appellee.

Automattic, Inc., Facebook, Inc., Google Inc., Medium, Pinterest, TripAdvisor LLC, and Twitter, Inc. (Eric D. Miller ; John K. Roche, Perkins Coie, on briefs), Electronic Frontier Foundation (Matthew J. Erausquin ; Andrew Crocker ; Consumer Litigation Associates, on brief), Reporters Committee for Freedom of the Press and 16 Others (Bruce D. Brown; Kevin M. Goldberg ; Fletcher, Heald & Hildreth, on brief), Three Yelp Reviewers Whose Identities Appellee Seeks to Obtain (Jay Ward Brown ; Shaina Jones Ward; Matthew E. Kelley ; Levine Sullivan Koch & Schulz, on brief), in support of amici curiae appellant.

Present: LEMONS, C.J., GOODWYN, MILLETTE, MIMS, McCLANAHAN, and POWELL, JJ., and KOONTZ, S.J.

Opinion

Opinion by Justice ELIZABETH A. McCLANAHAN.

Yelp, Inc. (“Yelp”), appeals from the judgment of the Court of Appeals affirming the order of the Circuit Court of the City of Alexandria holding Yelp in civil contempt for failing to comply with a non-party subpoena duces tecum served upon it by Hadeed Carpet Cleaning, Inc. (“Hadeed”). The subpoena duces tecum directed Yelp, a Delaware corporation with its principal place of business in California, to produce documents located in California in connection with a defamation action filed by Hadeed against John Doe defendants. Because we conclude the circuit court was not empowered to enforce the subpoena duces tecum against Yelp, we will vacate the judgment of the Court of Appeals and the contempt order of the circuit court.

I. BACKGROUND

Yelp operates a social networking website that allows registered users to rate and describe their experiences with local businesses. Since Yelp does not require users to provide their actual names, users may post reviews under pseudonyms. Hadeed, a Virginia corporation doing business in Virginia, filed a defamation action in the circuit court against three John Doe defendants alleging they falsely represented themselves as Hadeed customers and posted negative reviews regarding Hadeed's carpet cleaning services on Yelp.

Hadeed issued a subpoena duces tecum to Yelp, seeking documents revealing the identity and other information about the authors of the reviews. The information provided by users of Yelp upon their registration and the Internet Protocol addresses used by registered users who post reviews are stored by Yelp on administrative databases accessible only by specified Yelp employees located in San Francisco.¹ Yelp has no offices in Virginia.

Although Yelp's headquarters are located in California, Yelp is registered to do business in Virginia and has designated a registered agent for service of process in Virginia. Hadeed served the subpoena duces tecum on Yelp's registered agent in Virginia. Yelp objected to an initial subpoena duces tecum for, among other reasons, Hadeed's failure to comply with the requirements of Code § 8.01–407.1. Hadeed then issued a second subpoena duces tecum that complied with the procedural requirements of Code § 8.01–407.1. That section sets forth the procedure that must be followed for any subpoena seeking information identifying a tortfeasor “[i]n civil proceedings where it is alleged that an anonymous individual has engaged in Internet communications that are tortious.” Code § 8.01–407.1(A).²

After Yelp filed written objections to the subpoena duces tecum, Hadeed moved to overrule the objections and enforce the subpoena duces tecum. The circuit court issued an order enforcing the subpoena duces tecum and subsequently holding Yelp in civil contempt when it refused to comply.³ The Court of Appeals affirmed the circuit court's decision. Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 62 Va.App. 678, 752 S.E.2d 554 (2014).

With specific regard to the exercise of subpoena power over Yelp, the circuit court and Court of Appeals ruled that service of the subpoena on Yelp's registered agent in Virginia provided the circuit court with jurisdiction to enforce the subpoena duces tecum.⁴ Id. at 709–10, 752 S.E.2d at 569.

II. ANALYSIS

Yelp contends that the Court of Appeals erred in holding that “a Virginia trial court may assert subpoena jurisdiction over a non-party California company, to produce documents located in California, just because the company has a registered agent in Virginia.”⁵

In determining whether the circuit court was empowered to enforce the subpoena duces tecum against Yelp, we first observe that while the General Assembly has expressly provided for the exercise of personal jurisdiction over nonresident defendants under certain circumstances, it has not expressly provided for the exercise of subpoena power over nonresident non-parties. In particular, the General Assembly has provided for the exercise of personal jurisdiction over nonresident defendants, including foreign corporations, through enactment of the long-arm statute, Code § 8.01–328.1, and has provided a range of options for the manner in which nonresident defendants may be served when “exercise of personal jurisdiction is authorized by this chapter.” Code § 8.01–329(A).⁶ When personal jurisdiction is based upon the long-arm statute, “only a cause of action arising from acts enumerated in this section may be asserted against [the defendant].”

Code § 8.01–328.1(C).⁷ In contrast to the express provisions authorizing the exercise of personal jurisdiction over nonresident defendants and the manner of service of process on such nonresident defendants, the General Assembly has not expressly authorized the exercise of subpoena power over non-parties who do not reside in Virginia.⁸

Similarly, our Rules do not recognize the existence of subpoena power over nonresident non-parties. Rule 4:9A sets forth the procedure for issuing a subpoena duces tecum to a non-party. The subpoena duces tecum may be issued by the clerk pursuant to Rule 4:9A(a)(1) or by an attorney pursuant to Rule 4:9A(a)(2). Rule 4:9A does not address the issuance of a subpoena duces tecum to persons who reside or have a principal place of business outside of Virginia. Likewise, Rule 4:9A does not address the issuance of a subpoena duces tecum for documents located outside of Virginia. Rule 4:9A also does not address service on the non-party of the subpoena duces tecum or service upon a nonresident or foreign corporation.⁹

The General Assembly's authorization of the exercise of personal jurisdiction over nonresident defendants does not confer upon Virginia courts subpoena power over nonresident non-parties. It is axiomatic that “ [t]he underlying concepts of personal jurisdiction and subpoena power are entirely different.” In re National Contract Poultry Growers' Ass'n, 771 So.2d 466, 469 (Ala.2000). “Personal jurisdiction is based on conduct that subjects the nonresident to the power of the [state] courts to adjudicate its rights and obligations in a legal dispute.” Id. “By contrast, the subpoena power of [a state] court over an individual or a corporation that is not a party to a lawsuit is based on the power and authority of the court to compel the attendance of a person at a deposition, or the production of documents by a person or entity.” Id.; Phillips Petroleum Co. v. OKC Ltd. Partnership, 634 So.2d 1186, 1187 (La.1994) (“The concepts, and/or underlying purposes, of personal jurisdiction and subpoena power are simply different.”).

Therefore, the power to compel a nonresident non-party to produce documents in Virginia or appear and give testimony in Virginia is not based on consideration of whether the nonresident non-party would be subject to the personal jurisdiction of a Virginia court if named as a defendant in a hypothetical lawsuit.¹⁰ See, e.g., In re National Contract Poultry Growers' Ass'n, 771 So.2d at 469 (“The fact that NCPGA may have sufficient contacts with the State of Alabama to subject it to the jurisdiction of the Alabama courts under the Alabama long-arm personal-jurisdiction provisions is irrelevant to the question [of whether it is required to respond to a subpoena in a lawsuit in which it is not a party].”); Colorado Mills, LLC v. SunOpta Grains & Foods Inc., 269 P.3d 731, 734 (Colo.2012) (There is no “authority applying our long-arm statute, or the long-arm statute of any other state for that matter, to enforce a civil subpoena against an out-of-state nonparty.”); Ulloa v. CMI, Inc., 133 So.3d 914, 920 (Fla.2013) (“The long-arm statute does not extend the subpoena power of a Florida court to command the in-state attendance of a nonresident, non-party person or entity, or compel that person or entity to produce documents.”); Phillips Petroleum Co., 634 So.2d at 1188 (“Whereas the long-arm statute extends Louisiana's personal jurisdiction over persons or legal entities beyond Louisiana's borders, there is no similar authority for extending the subpoena power of a Louisiana court beyond state lines to command in-state attendance of nonresident nonparty witnesses.”); Syngenta Crop Prot., Inc. v. Monsanto Co., 908 So.2d 121 (Miss.2005) (“[A] Mississippi court cannot subpoena a nonresident nonparty to appear and/or produce in Mississippi documents which are located outside the State of Mississippi, even if that nonresident nonparty is subject in another context to the personal jurisdiction of the court.”); Craft v. Chopra, 907 P.2d 1109, 1111 (Okla.Ct.App.1995)(rejecting the assertion that “discovery of documents from non-resident non-parties by subpoena issued in the State of Oklahoma” is permitted “so long as the non-resident has sufficient due process ‘minimum contacts' with the State of Oklahoma”).¹¹

Thus, enforcement of a subpoena seeking out-of-state discovery is generally governed by...