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

Court of Appeals of Virginia, Alexandria

January 7, 2014


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

Raighne C. Delaney (James Bruce Davis; Rachelle E. Hill; Bean, Kinney & Korman, P.C., Arlington, on brief), for appellee.

Amici Curiae: The Reporters Committee for Freedom of the Press, American Society of News Editors, Gannett Co., Inc., and The Washington Post (Kevin M. Goldberg; Bruce D. Brown; Gregg P. Leslie; Robert J. Tricchinelli; Barbara W. Wall; John B. Kennedy; James A. McLaughlin; Kalea S. Clark; Fletcher, Heald & Hildreth PLC, Washington, DC, on brief), for appellant.

Present: FRANK, PETTY, JJ., and HALEY, S.J.

PETTY, Judge.

[62 Va.App. 685] Yelp, Inc. (" Yelp" ) appeals from an order of the Circuit Court for the City of Alexandria holding it in civil contempt for failing to comply with a subpoena duces tecum served upon it by Hadeed Carpet Cleaning, Inc. (" Hadeed" ).[1] On appeal, Yelp assigns two errors to the circuit court's decision. First, Yelp argues that the circuit court " violated the First Amendment by ordering Yelp to identify seven anonymous Doe defendants, and then by holding Yelp in contempt for its failure to comply with the order, thus stripping the Doe defendants of their First Amendment right to speak anonymously, all without requiring Hadeed to show that it had legally and factually sufficient claims against each defendant." Second, Yelp argues that the trial court erred " by asserting [62 Va.App. 686] subpoena jurisdiction over Yelp, which is a non-party, foreign corporation." For the reasons stated below, we affirm the ruling of the circuit court.


Yelp is a Delaware corporation with its principal place of business in California. Yelp is a social-networking website that allows its users to post and read reviews on local businesses. In the first quarter of 2013, Yelp had an average of approximately 102 million monthly, unique visitors. Contributors to Yelp have written over thirty-nine million local reviews.

Yelp users must register to post reviews. The registration process requires users to provide Yelp with a valid email address. Users are then free to choose a screen name to use when posting their reviews. Yelp further allows users to designate a zip code of their own choosing as their location. Yelp does not require users to use their actual name or place of residence. Yelp typically records the Internet Protocol (" IP" ) address from which each posting is made. This information is stored in Yelp's administrative database, which is accessible to Yelp's custodian of records in San Francisco.

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During registration, Yelp users are required to agree to Yelp's Terms of Service and Content Guidelines (" TOS" ). The TOS require users to have actually been customers of the business in question before posting a review. The TOS further require users to base their reviews on their own personal experiences. Yelp may remove posts that it deems in violation of the TOS. Moreover, Yelp employs a proprietary algorithm to filter potentially less reliable reviews. These reviews are moved to a separate page that a user can access by clicking on a filtered reviews link at the bottom of a business listing.

Hadeed is a Virginia corporation doing business in the City of Alexandria. Hadeed takes customers' carpets to its premises for cleaning.

As of October 19, 2012, Yelp's website displayed seventy-five reviews about Hadeed and eight reviews about a related company, Hadeed Oriental Rug Cleaning. These reviews [62 Va.App. 687] were posted by various Yelp users, and a number of the reviews were critical of Hadeed. Hadeed filed suit against the authors of seven specific critical reviews. In these reviews, the authors implicitly or explicitly held themselves out to be Hadeed customers. In its complaint, Hadeed alleged that it tried to match the negative reviews with its customer database but could find no record that the negative reviewers were actually Hadeed customers. Consequently, Hadeed alleged that the negative reviewers were not actual customers; instead, the Doe defendants falsely represented themselves to be customers of Hadeed. Hadeed's complaint further alleged that the negative comments were defamatory because they falsely stated that Hadeed had provided shoddy service to each reviewer.

Hadeed filed its complaint on July 2, 2012. On July 3, 2012, Hadeed issued a subpoena duces tecum to Yelp, seeking documents revealing information about the authors of each of the challenged reviews. On July 19, 2012, Yelp served written objections to the subpoena duces tecum. In its objections, Yelp contended that Hadeed had not complied with Virginia's procedure for subpoenas to identify anonymous Internet users, Code § 8.01-407.1, among other objections. On July 27, 2012, Hadeed served a renewed subpoena duces tecum on Yelp that complied with the procedural requirements of Code § 8.01-407.1. Yelp filed written objections to the renewed subpoena duces tecum. Hadeed moved to overrule the objections and cross-moved to enforce the subpoena duces tecum.

On November 19, 2012, the circuit court issued an order enforcing the subpoena duces tecum. The circuit court ruled that the service of the subpoena duces tecum on Yelp's registered agent in Virginia provided jurisdiction. Furthermore, the circuit court ruled that Hadeed's subpoena duces tecum complied with both the First Amendment and the standards enumerated in Code § 8.01-407.1. In order to appeal the circuit court's order, and protect its users' rights, Yelp informed Hadeed that it would not comply with the circuit court's order. Hadeed moved to have Yelp held in contempt. The circuit court held Yelp in civil contempt, [62 Va.App. 688] imposing a monetary sanction of $500 and awarding Hadeed an additional $1,000 in attorney's fees. This appeal followed.[2]

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On appeal, Yelp presents two arguments. First, Yelp argues that the First Amendment requires a showing of merit on both the law and facts before a subpoena duces tecum to identify an anonymous speaker is enforced. Second, Yelp argues that the circuit court lacked jurisdiction to subpoena its documents.

A. Subpoena Duces Tecum and Code § 8.01-407.1

We usually review a " ‘ trial court's refusal to quash the issuance of a subpoena duces tecum ... under an abuse of discretion standard.’ " America Online, Inc. v. Nam Tai Elec., Inc., 264 Va. 583, 590-91, 571 S.E.2d 128, 132 (2002) (quoting America Online, Inc. v. Anonymous Pub. Traded Co., 261 Va. 350, 359, 542 S.E.2d 377, 382 (2001)). On issues involving the First Amendment, however, we have " an obligation to ‘ make an independent examination of the whole record’ in order to make sure that ‘ the judgment does not constitute a forbidden intrusion on the field of free expression.’ " [62 Va.App. 689] Bose Corp. v. Consumers Union, 466 U.S. 485, 499, 104 S.Ct. 1949, 1958, 80 L.Ed.2d 502 (1984) (quoting New York Times v. Sullivan, 376 U.S. 254, 284-86, 84 S.Ct. 710, 728-29, 11 L.Ed.2d 686 (1964)).

The First Amendment to the United States Constitution provides, in relevant part, that " Congress shall make no law ... abridging the freedom of speech." U.S. Const. amend. I. The First Amendment was originally applied only to federal action; however, it was extended to the states via the Fourteenth Amendment. See Gitlow v. New York, 268 U.S. 652, 666, 45 S.Ct. 625, 630, 69 L.Ed. 1138 (1925) (" [F]reedom of speech and of the press— which are protected by the First Amendment from abridgement by Congress— are among the fundamental personal rights and ‘ liberties' protected by the due process clause of the Fourteenth Amendment from impairment by the States." ).[3]

Anonymous speech is protected by the First Amendment. Buckley v. American Constitutional Law Found., 525 U.S. 182, 197-99, 119 S.Ct. 636, 644-46, 142 L.Ed.2d 599 (1999); McIntyre v. Ohio Elections Comm., 514 U.S. 334, 115 S.Ct. 1511, 131 L.Ed.2d 426 (1995); Talley v. California, 362 U.S. 60, 80 S.Ct. 536, 4 L.Ed.2d 559 (1960).

" Anonymous pamphlets, leaflets, brochures and even books have played an important role in the progress of mankind." Great works of literature have frequently been produced by authors writing under assumed names. Despite [62 Va.App. 690] readers' curiosity and the public's interest in identifying the creator of a work of art, an author generally is free to decide whether or not to disclose his or her true identity. The decision in favor of anonymity may be motivated by fear of economic or official retaliation, by concern about social ostracism, or merely by a desire to preserve as much of one's privacy as possible. Whatever the motivation may be, at least in the field of literary endeavor, the interest in having anonymous works enter the marketplace of ideas unquestionably outweighs any public interest in requiring disclosure as a condition of entry. Accordingly, an author's decision to remain anonymous, like other decisions concerning omissions or additions to the content of a publication, is an aspect of the freedom of speech protected by the First Amendment.

McIntyre, 514 U.S. at 341-42, 115 S.Ct. at 1516 (quoting Talley, 362 U.S. at 64, 80 S.Ct. at 538).

In Talley, there was a California statute that prohibited the distribution of " any handbill

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in any place under any circumstances" that did not identify the person who prepared, distributed, or sponsored the handbill. 362 U.S. at 60-61, 80 S.Ct. at 536-37. The Supreme Court held that the statute was void on its face because " identification and fear of reprisal might deter perfectly peaceful discussions of public matters of importance." Id. at 65, 80 S.Ct. at 539.

Thirty-five years after Talley, the Supreme Court upheld the right to speak anonymously on election-related matters. In McIntyre, there was an Ohio law that prohibited the distribution of campaign literature that did not identify the person issuing the literature. 514 U.S. at 344, 115 S.Ct. at 1517-18. The Supreme Court held, " [U]nder our Constitution, anonymous pamphleteering is not a pernicious, fraudulent practice, but an honorable tradition of advocacy and dissent. Anonymity is a shield from the tyranny of the majority." Id. at 357, 115 S.Ct. at 1524. Four years after McIntyre, the Supreme Court heard a similar, election-related anonymous-speech case, and upheld the right to speak anonymously. See Buckley, 525 U.S. at 200, 119 S.Ct. at 646 (invalidating, on [62 Va.App. 691] First Amendment grounds, a Colorado statute that required initiative petition circulators to wear identification badges).

An Internet user does not shed his free speech rights at the log-in screen. The right to free speech is assiduously guarded in all mediums of expression, from the analog to the digital. The anonymous pamphleteer has the right to distribute literature without the looming specter of government interference. Similarly, the anonymous speaker has the right to express himself on the Internet without the fear that his veil of anonymity will be pierced for no other reason than because another person disagrees with him.

1. The Rights of the Anonymous Speaker vs. The Right to Protect One's Reputation

The freedom of speech— and within this, the freedom to speak with anonymity— is not absolute. See Chaplinsky v. New Hampshire, 315 U.S. 568, 572, 62 S.Ct. 766, 769, 86 L.Ed. 1031 (1942) (" It is well understood that the right of free speech is not absolute at all times and under all circumstances." ). If we assume that the Yelp reviews of Hadeed are lawful, then the John Does may remain anonymous. But if the reviews are unlawful in that they are defamatory, then the John Does' veil of anonymity may be pierced, provided certain procedural safeguards are met. This is because defamatory speech is not entitled to constitutional protection: " Our constitutional guarantees of free speech, as we have seen, protect expressions of opinion from action for defamation. Those constitutional guarantees have never been construed, however, to protect either criminal ... or tortious conduct." Chaves v. Johnson, 230 Va. 112, 121-22, 335 S.E.2d 97, 103 (1985); see also Chaplinsky, 315 U.S. at 572, 62 S.Ct. at 769 (" It has been well observed that such utterances are no essential part of any exposition of ideas, and are of such slight social value as a step to truth that any benefit that may be derived from them is clearly outweighed by the social interest in order and morality." ); Sullivan, 376 U.S. at 269, 84 S.Ct. at 720 (" [Defamation] can claim no talismanic immunity from constitutional limitations. It must be measured by standards that satisfy the [62 Va.App. 692] First Amendment." ). The bottom line is that " [s]preading false information in and of itself carries no First Amendment credentials." Herbert v. Lando, 441 U.S. 153, 171, 99 S.Ct. 1635, 1646, 60 L.Ed.2d 115 (1979).

Furthermore, courts have long recognized a distinction in the level of protection the First Amendment accords to literary, religious, or political speech as compared to that accorded to commercial speech.[4] Where, as here, speech constitutes an " expression related solely to the economic interests of the speaker and its audience,"

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Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of N.Y., 447 U.S. 557, 561, 100 S.Ct. 2343, 2349, 65 L.Ed.2d 341 (1980), " any First Amendment right to speak anonymously ‘ enjoys a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values, and is subject to modes of regulation that might be impermissible in the realm of noncommercial expression,’ " Lefkoe v. Jos. A. Bank Clothiers, Inc., 577 F.3d 240, 248-49 (4th Cir.2009) (quoting Bd. of Trustees of SUNY v. Fox, 492 U.S. 469, 477, 109 S.Ct. 3028, 3033, 106 L.Ed.2d 388 (1989)). Thus, the John Does' " First Amendment right to anonymity is subject to a substantial governmental interest in disclosure so long as disclosure advances that interest and goes no further than reasonably necessary." Id. (citing Central Hudson Gas & Elec. Corp., 447 U.S. at 566, 100 S.Ct. at 2351).

a. The Law of Defamation

" Since the latter half of the 16th century, the common law has afforded a cause of action for damage to a person's reputation by the publication of false and defamatory statements." Milkovich v. Lorain Journal Co., 497 U.S. 1, 12, 110 S.Ct. 2695, 2702, 111 L.Ed.2d 1 (1990). A person's, or business's, reputation is a precious commodity. Perhaps, Shakespeare said it best:

[62 Va.App. 693] " Good name in man and woman, dear my lord,
Is the immediate jewel of their souls.
Who steals my purse steals trash;
‘ Tis something, nothing;
‘ Twas mine, ‘ tis his, and has been slave to thousands;
But he that filches from me my ...

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