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John Doe v. 2Themart.Com Inc.

Court quashes subpoena served by corporation on information service provider seeking the identity of anonymous non-party posters of messages critical of the corporation.  Corporation sought such information to aid it in establishing that the posting of these messages, and not the conduct of the corporation's officers, caused the stock price fluctuations complained of in a shareholders derivative class action lawsuit in which the corporation was a party.

Court holds that to obtain such information, in light of First Amendment concerns, "the party seeking the information must demonstrate, by a clear showing on the record, that four requirements are met: (1) the subpoena seeking the information was issued in good faith and not for any improper purpose,    (2) the information sought relates to a core claim or defense, (3) the identifying information is directly and materially relevant to that claim or defense, and (4) information sufficient to establish or to disprove that claim or defense is unavailable from any other source."  Finding that the corporation failed to satisfy this "high burden," the Court quashed the subpoena.

Silicon Investor/InfoSpace, Inc. ("Info Space") operates the 'Silicon Investor' web site, which contains a series of bulletin boards on which users are allowed to post messages.  One of these message boards is devoted to a company called 2TheMart.Com Inc. ("TMRT").  A number of negative messages were posted about TMRT on this message board by anonymous posters using pseudonyms.  Plaintiff John Doe was not one of these posters, however.  Rather, he was alleged only to have communicated anonymously via the Internet with various of these anonymous posters.

TMRT, its officers and directors were named as defendants in a shareholder derivative class action alleging fraud on the market.  To aid them in establishing one of the many affirmative defenses they advanced in that lawsuit, TMRT served a subpoena on InfoSpace, seeking, among other things, the identity of plaintiff and the anonymous posters.  TMRT argued that such information would aid it in establishing that the price fluctuations complained of by the plaintiffs in the shareholder derivative class action were caused by the postings at issue and not defendants' conduct.

On plaintiff's motion, the court quashed the subpoena.  The court noted that the First Amendment protects the right to speak anonymously on the Internet.  State action (such as a court order directing compliance with a subpoena) which seeks to restrict "core" speech - speech which touches on matters of public political life - is subject to "exacting scrutiny," and will be upheld only where the restriction is "narrowly tailored to serve an overriding state interest."  The speech at issue was not such "core" speech.  Accordingly, the court held, State action affecting the speech at issue was subject to a "normal strict scrutiny analyses."

Balancing the competing First Amendment concerns with a litigant's right to discovery, the court determined that it would analyze four factors in determining whether a subpoena seeking the identity of an anonymous Internet user not a party to the underlying litigation should be sustained: "these are whether: (1) the subpoena seeking the information was issued in good faith and not for any improper purpose, (2) the information sought relates to a core claim or defense, (3) the identifying information is directly and materially relevant to that claim or defense, and (4) information sufficient to establish or to disprove that claim or defense is unavailable from any other source."

The Court found that TMRT did not meet this "high burden" and accordingly quashed the subpoena.  While the court found that the subpoena was not brought in bad faith, it found that the information sought did not relate to a core claim or defense.  The information sought would only aid defendant in establishing one of its many affirmative defenses, which defense was not central to the proceeding at issue. 

More importantly, the court held that the information sought would not materially aid in establishing the affirmative defense defendant sought to sustain.  Said the court:

[A]s to the Internet users such as Truthseeker and Cuemaster who posted messages on the TMRT bulletin board, TMRT has failed to demonstrate that their identities are directly and materially relevant to a core defense.  TMRT argues that the Internet postings caused a drop in TMRT's stock price.  However, what was said in these postings is a matter of public record, and the identity of the anonymous posters had no effect on inventors.  If these messages did influence the stock price, they did so without anyone knowing the identity of the speakers.

Lastly, the court held that information sufficient to establish TMRT's defense, namely the existence, content and timing of the challenged postings, was available from other sources, as the information had been archived.  The court accordingly quashed the subpoena both as to plaintiff as well as to those who anonymously posted negative comments about TMRT.

The full text of the court's decision can be found on a web site maintained by Wendy Seltzer, Adjunct Prof., St. John's University School of Law.