ZL Techs., Inc. v. Doe

Decision Date19 July 2017
Docket NumberA143680
Citation220 Cal.Rptr.3d 569,13 Cal.App.5th 603
CourtCalifornia Court of Appeals Court of Appeals
Parties ZL TECHNOLOGIES, INC., Plaintiff and Appellant, v. DOES 1-7, Defendants and Respondents; Glassdoor, Inc., Real Party in Interest and Respondent.

Kerr & Wagstaffe LLP, Jasmine Kaur Singh, James M. Wagstaffe, Michael von Loewenfeldt, and Anna P. Chang, for Plaintiff and Appellant, ZL Technologies, Inc.

No appearance, for Defendants and Respondents, Does 1-7.

Seubert French Frimel & Warner LLP, William Joseph Frimel, for Real Party in Interest and Respondent, Glassdoor, Inc.

Public Citizen Litigation Group, Paul Alan Levy and Scott Michelman; Wilson Sonsini Goodrich & Rosati P.C., Corina I. Cacovean, for Amici Curiae, Public Citizen, Inc. and Twitter, Inc. on behalf of Real Party in Interest and Respondent.

Rivera, Acting P.J.Plaintiff and appellant ZL Technologies, Inc. (ZL) appeals from an order and judgment dismissing its complaint with prejudice for failure to serve defendants, and from an order denying its motion to compel compliance with the subpoena it served on real party in interest and respondent Glassdoor, Inc. (Glassdoor). ZL contends the trial court erred in denying its motion to compel, prohibiting it from identifying Doe defendants whom it contends anonymously defamed it on Glassdoor's website, and then improperly dismissed its action for failing to serve the same individuals, after denying it access to the information necessary to identify them. We agree and therefore shall reverse the judgment.


According to its complaint, ZL is a California corporation that provides email archiving, eDiscovery, and compliance software and support to businesses throughout the country. Glassdoor operates a website for job seekers on which people may anonymously post information and express opinions regarding current or past employers. Between September 2010 and June 2012, individuals representing themselves as current or former ZL employees posted seven anonymous reviews on Glassdoor's website criticizing ZL's management and work environment. On August 29, 2012, ZL filed a complaint against the individuals who posted the critical reviews, naming them as Doe defendants. The complaint alleged causes of action for libel per se in violation of Civil Code section 45, and online impersonation in violation of Penal Code section 528.5 to the extent any of the defendants was not actually a ZL employee. The following month, ZL served a subpoena on Glassdoor, requesting records identifying and providing contact information for defendants.

Glassdoor objected to the subpoena, among other things contending that: compulsory disclosure of defendants' identities would violate their free speech rights under the First Amendment of the United States Constitution (First Amendment), and their privacy rights under the California Constitution; the posted statements were "protected opinion, patently hyperbolic, not harmful to reputation," or uncontested statements of fact; Glassdoor's reputation would be harmed if it disclosed defendants' identities; and, under Krinsky v. Doe 6 (2008) 159 Cal.App.4th 1154, 72 Cal.Rptr.3d 231 ( Krinsky ), ZL was obligated to make a prima facie showing the statements were libelous before it could compel disclosure. The parties corresponded regarding Glassdoor's objections, but did not reach a resolution.

ZL then filed a motion to compel Glassdoor to comply with the subpoena (motion to compel). The trial court issued a tentative ruling denying the motion to compel, reasoning that defendants had a First Amendment right to remain anonymous, their critical reviews of ZL were "similar to that written on bathroom walls—anonymous, angry, opinionated, and not very reliable," and it was "unclear" whether ZL, as defendants' former employer, might have alternatives for discovering their identities. After hearing argument from the parties the same day, the trial court took the matter under submission. The following day, it issued an order adopting the tentative ruling. The order recited the trial court's finding that ZL "failed to make a sufficient showing ... the [defendants] engaged in wrongful conduct causing harm to [ZL]." "In the context of [Glassdoor's] website," the order stated, defendants' reviews were "primarily opinion and would not be considered reliable by the average person."

After the trial court issued its order, ZL explored independent methods for identifying defendants, without success. More than a year after ruling on the motion to compel, the trial court issued an order to show cause (OSC) why the case should not be dismissed given ZL's continued failure to serve defendants. At the subsequent OSC hearing, the trial court requested briefing about whether it should retain jurisdiction. ZL filed its motion to retain jurisdiction the following month. Contending it presented a prima facie case of libel (apparently by attaching copies of defendants' reviews to its complaint),1 had taken reasonable steps to identify defendants, and had no remaining alternatives for securing that information, ZL requested renewal of the subpoena to compel Glassdoor to identify defendants, so that it might serve the complaint on them. The trial court denied ZL's request. The following month, after a hearing on the matter, the court dismissed the action with prejudice in light of ZL's failure to serve the defendants.

This timely appeal followed. After the case was fully briefed, we received a request from Public Citizen and Twitter, Inc. to file a brief as amici curiae in support of Glassdoor, which we granted. ZL subsequently filed an answer to amici curiae's brief.

A. The Standard of Review on Appeal

On appeal, ZL challenges the trial court's order and judgment dismissing its complaint for failure to prosecute, and the court's underlying order denying its motion to compel Glassdoor to comply with the subpoena.

The trial court has discretion to dismiss an action for delay in prosecution if "[s]ervice is not made within two years after the action is commenced against the defendant." ( Code Civ. Proc., § 583.420, subd. (a)(1) ; see also Cal. Rules of Court, rule 3.1340 [requiring a noticed hearing on the issue].) When reviewing a discretionary dismissal, we must presume the decision of the trial court is correct, unless the party challenging the decision shows the trial court abused its discretion. ( Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 443, 41 Cal.Rptr.2d 362, 895 P.2d 469.) An appeal from a discovery order also "normally is reviewed under the deferential abuse of discretion standard. [Citations.]" ( Krinsky , supra , 159 Cal.App.4th at p. 1161, 72 Cal.Rptr.3d 231 [" 'the trial court has wide discretion in managing discovery issues' "].)

The trial court's discretion is limited, however, by the applicable legal principles. ( People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1144, 86 Cal.Rptr.2d 816, 980 P.2d 371.) "Thus, where there are no material disputed factual issues, the appellate court reviews the trial court's determination as a question of law. [Citation.]" ( Ibid . ) Here, the trial court grounded its ruling denying ZL's motion to compel on legal conclusions, i.e., that ZL did not make a sufficient showing defendants engaged in wrongful conduct causing ZL harm, and that defendants' Glassdoor reviews of ZL were "primarily opinion" that an average person would not consider reliable. In reaching these conclusions, the trial court referenced the constitutional principle that an "author's decision to remain anonymous ... is an aspect of the freedom of speech protected by the First Amendment." ( McIntyre v. Ohio Elections Com'n (1995) 514 U.S. 334, 342, 115 S.Ct. 1511, 131 L.Ed.2d 426.)

"Thus, in this case, we need not defer to a trial court's resolution of disputed facts and inferences. Instead, we are concerned with the legal significance of the undisputed facts in the record."2 ( People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. , supra , 20 Cal.4th at p. 1144, 86 Cal.Rptr.2d 816, 980 P.2d 371.) We, therefore, review the trial court's exercise of its discretion in denying the motion to compel compliance with the subpoena "as a question of law in light of the pertinent legal principles." ( Ibid . ; see, e.g., California Farm Bureau Federation v. State Water Resources Control Bd. (2011) 51 Cal.4th 421, 436, 121 Cal.Rptr.3d 37, 247 P.3d 112 [appellate courts independently review questions of law]; Krinsky , supra , 159 Cal.App.4th at p. 1161, 72 Cal.Rptr.3d 231 [appellate courts independently review "whether a particular communication falls outside the protection of the First Amendment"].)3

B. The Test for Compulsory Disclosure of an Anonymous Speaker's Identity

"[T]his case presents a conflict between a plaintiff's right to employ the judicial process to discover the identity of an allegedly libelous speaker and the speaker's First Amendment right to remain anonymous." ( Doe 2 v. Superior Court (2016) 1 Cal.App.5th 1300, 1310, 206 Cal.Rptr.3d 60 ( Doe 2 ).) Neither the United States nor the state Supreme Court has established a standard for resolving this conflict. In California, however, after surveying case law from this and other jurisdictions, our colleagues in the Sixth Appellate District, in Krinsky , supra , "agree[d] with those courts that have compelled the plaintiff to make a prima facie showing of the elements of libel" to obtain compulsory disclosure of a defendant's identity. ( Krinsky , supra , 159 Cal.App.4th at p. 1172, 72 Cal.Rptr.3d 231.)

ZL and Glassdoor both cite Krinsky 's requirement of a prima facie showing as providing the appropriate test in deciding ZL's motion to compel compliance with its subpoena. Amici curiae, however, urge us to go further than Krinsky , and to require application of the multifactor test the New Jersey appellate court articulated in Dendrite...

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