America Online, Inc. v. Anonymous Publicly Traded Co.

Present: Carrico, C.J., Lacy, Koontz, Kinser, and Lemons, JJ.
and Stephenson, S.J.

AMERICA ONLINE, INC.

v.   Record No. 000974      OPINION BY JUSTICE DONALD W. LEMONS
                                       March 2, 2001
ANONYMOUS PUBLICLY TRADED COMPANY

            FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
                     Stanley P. Klein, Judge

      In this appeal, we consider whether an anonymous litigant

may utilize the coercive powers of Virginia courts under the

Virginia Uniform Foreign Depositions Act, Code § 8.01-411 et

seq. (“UFDA”).   Pursuant to Rules 4:1(c) and 4:9(c), America

Online, Inc. (“AOL”) sought to quash a subpoena duces tecum

issued to it by the Clerk of the Circuit Court of Fairfax

County and sought a protective order barring the discovery

sought by an anonymous litigant proceeding as “Anonymous

Publicly Traded Company” (“APTC”).   The trial court 1 refused to

quash the subpoena duces tecum or issue a protective order.

Because the trial court abused its discretion in permitting

APTC to proceed anonymously under the UFDA, we reverse the

judgment of the trial court and remand for further

proceedings.

                 I. Facts and Proceedings Below



      1
        We will refer to the Fairfax County Circuit Court as
the “trial court” and the Marion Superior Court in Indiana as
the “Indiana court.”
     APTC is a publicly traded Delaware corporation with its

principal place of business in Indianapolis, Indiana.       On

February 9, 1999, APTC filed a complaint, captioned “Anonymous

Publicly Traded Company v. John Does 1 through 5,” in the

Indiana court.   In its complaint, APTC asserted that the John

Doe defendants, whose identities and residences were unknown, 2

“made defamatory and disparaging material misrepresentations”

about APTC in internet chat rooms. 3   Additionally, APTC

asserted its belief that the defendants were current and/or

former employees who breached their fiduciary duties and

contractual obligations by publishing “confidential material

insider information” about APTC on the internet.    Although it

did not specify what harm would be incurred by identifying

itself in the Indiana court, APTC contended that it had to

proceed anonymously “because disclosure of its true company

name will cause it irreparable harm.”

     On August 11, 1999, in response to APTC’s application for

assistance in discovery and for an order authorizing discovery

in Virginia, the Indiana court issued an order permitting APTC

to “proceed with a non-party production request to America


     2
        APTC claimed that the John Does used pseudonyms to
protect their real names.
     3
        APTC defined an internet chat room as “a virtual room
on the Internet where a conversation session takes place
between individuals who often use pseudonyms to maintain
anonymity.”

                                2
Online, Inc. by obtaining a Subpoena Duces Tecum from the

Virginia trial courts having jurisdiction over America Online,

Inc.”    The order authorized APTC to request assistance from

Virginia courts in obtaining from AOL, the names, addresses,

telephone numbers, and any other identifying information

pertaining to four AOL subscribers.    In granting the request,

the Indiana court noted:

             [APTC] is directed and authorized to seek
             assistance of the Virginia state trial
             courts for the reason that under
             principles of comity and reciprocity,
             under Indiana Trial Rule 28, Indiana
             would, in the reverse situation, assist
             Virginia residents in the discovery of
             information from persons or entities
             domiciled or residing in Indiana through
             the assistance of subpoenas or other
             matters in support of discovery procedures
             and practices in the State of Virginia.

        On September 3, 1999, the Clerk of the Circuit Court of

Fairfax County issued a subpoena duces tecum to AOL requesting

the names, addresses, telephone numbers, and all other

identifying information regarding the four AOL subscribers.

AOL indicated to APTC its intention to contest the issuance of

the subpoena duces tecum in part because of the anonymity of

APTC.    Thereafter, APTC filed a motion in the Indiana court on

October 14, 1999, for permission to proceed anonymously until

it could amend its complaint to specifically name the John Doe

defendants.



                                  3
     AOL filed its motion to quash in the trial court on

October 15, 1999, arguing that APTC should not be permitted to

proceed until it revealed its identity.    On October 19, 1999,

the Indiana court issued an order granting APTC’s motion to

proceed anonymously.     The Indiana court stated that APTC:

          [S]hall be allowed to proceed as anonymous
          in this action up and until it determines
          the identity of the Defendants and further
          determines whether to proceed with this
          action against the named Defendants at
          which time should it determine to proceed
          and file an amended complaint, in the
          amended complaint [APTC] shall list itself
          by its proper legal name and list those
          Defendants against whom it is proceeding
          by proper legal name.

The Indiana court did not conduct an evidentiary hearing and

no reasons were given for its decision, which was rendered ex

parte.

     After an in camera examination of copies of the internet

postings that were the subject of the underlying litigation in

Indiana, the trial court issued an opinion and order denying

AOL’s motion to quash and request for a protective order.

Although the trial court conceded that there is a First

Amendment interest in ensuring that courts remain open to the

public, it nevertheless ruled that APTC should be permitted to

proceed anonymously. 4   Specifically, the court stated:


     4
       The trial court also determined that AOL had standing to
raise this issue and that APTC was required to satisfy a

                                  4
               As any First Amendment right of the
          public to know the identity of the
          plaintiff in the Indiana proceedings will
          only be marginally affected at these
          preliminary stages of those proceedings,
          this Court believes that comity should be
          accorded to the Indiana court’s decision,
          under its Trial Rules, to allow APTC to
          proceed anonymously for a limited period
          of time. Although the Indiana court did
          not have the benefit of a brief from AOL
          when it authorized APTC to maintain its
          anonymity after AOL filed the instant
          motion, counsel herein agree that the
          Indiana court was then aware of AOL’s
          objection. In addition, at least part of
          the salutary prophylactic effect of
          requiring openness in judicial proceedings
          has been assured by the Court’s
          requirement that APTC supply copies of the
          relevant Internet postings to opposing
          counsel and to the Court. Both this Court
          and the John Does now either know or can
          readily ascertain the true identity of
          APTC. Consequently, any possible abuses
          of the judicial system by APTC in
          initiating either the proceeding in the
          Indiana court or in this Court can be
          addressed by the respective courts under
          applicable statutes authorizing sanctions.
          Hence, this Court defers, in its analysis
          of the issues before this Court, to the
          Indiana court’s determination to allow
          APTC to maintain its anonymity for a
          limited period of time.

AOL appeals the adverse ruling of the trial court.



three-pronged test to determine whether issuance of the
subpoena would unreasonably burden the First Amendment rights
of the John Doe defendants. The trial court further
determined that APTC satisfied this test. Although AOL does
not concede that the three-pronged test sufficiently protects
free speech and privacy interests or that APTC satisfied the
requirements of the test as laid out by the trial court, it
acknowledges that these issues are not before us on appeal.

                               5
     On appeal, AOL contends that the trial court erred in

permitting its subpoena power to be invoked by APTC without

requiring APTC to make a showing of any legitimate and

compelling need to proceed anonymously and that the trial

court should not have deferred on grounds of comity to the

Indiana court’s decision to allow APTC to proceed anonymously.

Specifically, AOL argues that the Indiana court’s ruling arose

out of a non-adversarial, ex parte proceeding in which either

no legal principles or legal principles that differ from

Virginia law and public policy were applied.

     APTC contends that the trial court exercised sound

discretion in granting comity to the order of the Indiana

court.   Furthermore, APTC contends that, even if comity were

not afforded the Indiana court’s order, it has a valid privacy

interest that is advanced by permitting it to anonymously

utilize the Virginia courts for discovery purposes in aid of

the Indiana litigation.

                     II.   Standard of Review

     Ordinarily, a trial court’s discovery orders are not

subject to review on direct appeal because they are not final

within the contemplation of Code § 8.01-670.    However, an

order granting or refusing a motion to quash or issue a

protective order, in a proceeding brought in a court of this




                                 6
Commonwealth pursuant to the UFDA, is a final order subject to

appellate review.

     The original and appellate jurisdiction of the Supreme

Court of Virginia is conferred by Article VI, § 1 of the

Constitution of Virginia which provides in part that, subject

to constitutional limitations, “the General Assembly shall

have the power to determine the original and appellate

jurisdiction of the courts of the Commonwealth.”   The UFDA

does not provide for appeal of orders pursuant to its

provisions; consequently, we must look to Code § 8.01-670 for

the source of the Court’s appellate jurisdiction in this

matter.   Because this matter arises on the law side rather

than the chancery side of the Circuit Court, the Court’s

authority to review the order of the trial court is found in

Code § 8.01-670(A) which enumerates particular matters which

may be the subject of appeal and concludes with subsection (3)

which provides appellate jurisdiction over any matter where a

“person” is   “aggrieved . . . [b]y a final judgment in any

other civil case.”

     An action under the UFDA is a separate action, distinct

from, although ancillary to, the underlying cause of action in

the foreign jurisdiction.   In the case before us, when the

trial court rendered its order, it disposed of every aspect of

the case before it and settled all issues raised by the


                                7
parties.      In Warford v. Childers, 642 S.W.2d 63 (Tex. Ct. App.

1982), the Texas Court of Appeals, applying statutory language

identical to that adopted in the Virginia UFDA statute, 5 held

that the resolution of the discovery dispute was a final,

appealable judgment.

               To hold that such an order is
               interlocutory and non-appealable would
               forever foreclose review by the orderly
               process of appeal and would relegate the
               parties to an extraordinary proceeding.
               Obviously, the order cannot be reviewed by
               this court as part of an appeal from a
               final judgment of the [foreign] court and
               cannot be reviewed by the [foreign]
               appellate court under any circumstances.
               Thus, although the order may have an
               interlocutory relationship with the
               [foreign] suit, we conclude that it is a
               final judgment on all issues in
               controversy in Texas and that we have
               jurisdiction to review it by appeal.

Id. at 66.       See also, Lougee v. Grinnell, 582 A.2d 456 (Conn.

1990), overruled on other grounds by State v. Salmon, 735 A.2d

333 (Conn. 1999).

       We agree with the reasoning of our sister states, Texas

and Connecticut, and conclude that under the UFDA, an order of

the trial court disposing of all issues before it and

concluding the entirety of the proceedings in a Virginia

court, is a final order subject to appeal under Code § 8.01-

670.       Discovery orders in suits brought in Virginia are

       5
           Tex. Rev. Civ. Stat. Ann. art. 3769a (Vernon Supp.


                                    8
interlocutory and not subject to immediate appeal.   Such

orders are subject to appellate review at the conclusion of

the underlying suit. 6

     We review the trial court’s refusal to quash the issuance

of a subpoena duces tecum or issue a protective order under an

abuse of discretion standard.   O’Brian v. Langley Sch., 256

Va. 547, 552, 507 S.E.2d 363, 366 (1998) (noting that,

“[g]enerally, the granting or denying of discovery is a matter

within the discretion of the trial court”).

                         III.   Analysis

     Virginia has adopted the UFDA, which provides in part:

          Whenever any mandate, writ or commission
          is issued out of any court of record in
          any other state, territory, district or
          foreign jurisdiction, or whenever upon
          notice or agreement it is required to take
          the testimony of a witness or witnesses or
          produce or inspect designated documents in
          this Commonwealth, witnesses may be
          compelled to appear and testify and to
          produce and permit inspection or copying
          of documents in the same manner and by the
          same process and proceeding as may be
          employed for the purpose of taking
          testimony or producing documents in
          proceedings pending in this Commonwealth.

Code § 8.01-411.   This legislative provision is rooted in

principles of comity and provides a mechanism for discovery of


1981).
     6
       Of course, we have previously recognized that an order
of contempt for disobedience of a discovery order may be



                                9
evidence in aid of actions pending in foreign jurisdictions.

Some states have adopted the UFDA while others have adopted

the Uniform Interstate and International Procedure Act.

Additionally, some states have modeled their rules of civil

procedure after the Federal Rules and still others have

crafted their own unique rules concerning discovery

proceedings in aid of foreign litigation. 7

     Under the UFDA, reciprocity is required, and the

“privilege extended to persons in other states by § 8.01-411

shall only apply to those states which extended the same

privilege to persons in this Commonwealth.”   Code § 8.01-412.

We have previously recognized reciprocity with the state of

Indiana based upon the UFDA.   See Smith v. Givens, 223 Va.

455, 460, 290 S.E.2d 844, 847 (1982).

     The initial question for decision in this case is whether

the trial court erred in finding that the UFDA and principles

of comity permit APTC to utilize the coercive power of

Virginia courts while remaining anonymous.    We have no

reluctance to show due deference to the orders of the Indiana

courts on any occasion when the circumstances are proper for



appealed pursuant to Code § 19.2-318. See HCA Health Services
of Virginia v. Levin, 260 Va. 215, 530 S.E.2d 417 (2000).
     7
       For a survey of the laws concerning foreign depositions
in the 50 states and the District of Columbia, see The
Virginia Law Foundation, Civil Discovery in Virginia, Chapter
7 (1999).

                               10
the application of the principles of comity.   We do not think

this is one of those occasions.

     In the case before us, the trial judge carefully reviewed

the record and required an in camera review of the allegedly

tortious internet chat room postings presumably to verify the

bona fides of the underlying action in the Indiana court.   The

legitimacy of the underlying claim is an issue separate and

distinct from permitting a plaintiff to proceed anonymously.

In the ultimate analysis, on the basis of comity, the trial

court deferred to the Indiana court’s determination to permit

APTC to proceed anonymously for a “limited period of time” and

denied AOL’s motion to quash and for a protective order.

     As we have previously noted:

          Virginia courts should grant comity to any
          order of a foreign court of competent
          jurisdiction, entered in accordance with
          the procedural and substantive law
          prevailing in its judicatory domain, when
          that law, in terms of moral standards,
          societal values, personal rights, and
          public policy, is reasonably comparable to
          that of Virginia.

Oehl v. Oehl, 221 Va. 618, 623, 272 S.E.2d 441, 444 (1980).

We have also stated:

               Comity is not a matter of obligation.
          It is a matter of favor or courtesy, based
          on justice and good will. It is permitted
          from mutual interest and convenience, from
          a sense of the inconvenience which would
          otherwise result, and from moral necessity
          to do justice in order that justice may be


                              11
          done in return. Comity is not given effect
          when to do so would prejudice a State’s
          own rights or the rights of its citizens.

McFarland v. McFarland, 179 Va. 418, 430, 19 S.E.2d 77, 83

(1942) (internal quotation marks omitted).

     While fully appreciating the importance of comity as a

guiding principle in the relationship between sovereigns and

as a tool of judicial economy, we have recognized limitations

upon its application.   Before according the privilege of

comity, we have required a showing of personal and subject

matter jurisdiction, Oehl, 221 Va. at 623, 272 S.E.2d at 444,

that “the procedural and substantive law applied by the

foreign court [was] reasonably comparable to that of

Virginia,” id., that the decree was not “falsely or

fraudulently obtained,”   McFarland, 179 Va. at 430, 19 S.E.2d

at 83, that the order sought to be enforced was not “contrary

to the morals or public policy of this State,” id., and that

the enforcement of the order would not “prejudice [Virginia’s]

own rights or the rights of its citizens,”    Eastern Indem. Co.

v. Hirschler, Fleischer, Weinberg, Cox & Allen, 235 Va. 9, 15,

366 S.E.2d 53, 56 (1988) (citations omitted).

     The action filed in Indiana is unique.     The plaintiff is

anonymous, as are all five John Doe defendants. 8   Although the


     8
       APTC seeks discovery of the identity of only four of the
John Doe defendants in the Virginia proceeding.

                               12
pleading certainly invokes the subject matter jurisdiction of

the Indiana court, it is uncertain whether personal

jurisdiction may be obtained over any of the anonymous

defendants.   Further, while the Indiana court permitted APTC

to proceed anonymously, it is clear that no hearing was held

concerning the question, no evidence was received by the

court, 9 no reasons for the decision were given, and the order

permitting anonymous maintenance of the action was granted in

a non-adversarial, ex parte proceeding.   Significantly,

because no evidence was received and no reasons for the

decision were given by the Indiana court, we cannot determine

whether the procedural and substantive law applied by the

Indiana court was “reasonably comparable to that of Virginia.”

See Oehl, 221 Va. at 623, 272 S.E.2d at 444.   Accordingly, we

find that these circumstances do not present a situation where

comity should be granted to the Indiana court’s order

permitting APTC to proceed anonymously.

     Irrespective of the question of comity, a Virginia trial

court may conduct an independent inquiry concerning anonymous

maintenance of an action.   Although there are several reported

cases in Virginia wherein a plaintiff proceeded anonymously,


     9
       An affidavit of counsel to APTC was filed in support of
the motion to proceed anonymously. The affidavit recites what
the unnamed client believes and offers counsel’s gratuitous
conclusion that his client’s beliefs are reasonable.

                               13
the issue of anonymity was resolved by consent and never

presented to this Court. 10   Accordingly, we must decide, for

the first time, the circumstances under which a plaintiff may

proceed anonymously in Virginia courts.

     Over half a century has passed since the United States

Supreme Court noted, “[a] trial is a public event. . . . There

is no special perquisite of the judiciary which enables it, as

distinguished from other institutions of democratic

government, to suppress, edit, or censor events which

transpire in proceedings before it.”        Craig v. Harney, 331

U.S. 367, 374 (1947).   However, “[t]he equation linking the

public’s right to attend trials and the public’s right to know

the identity of the parties is not perfectly symmetrical.”

Doe v. Stegall, 653 F.2d 180, 185 (5th Cir. 1981).

Accordingly, there is no absolute bar to a plaintiff

proceeding anonymously.   In exceptional cases, “the need for

party anonymity overwhelms the presumption of disclosure

mandated by procedural custom.”       Id.   Upon proper

circumstances, courts must balance the need for anonymity

     10
       We noted in A.H. v. Rockingham Publ’g Co., 255 Va. 216,
219 n.2, 495 S.E.2d 482, 484 n.2 (1998), that “[b]ecause this
claim arises out of a sexual assault on a minor, the plaintiff
used a pseudonym to protect his identity.” See also Doe v.
Doe, 222 Va. 736, 284 S.E.2d 799 (1981); Baby Doe v. John and
Mary Doe, 15 Va. App. 242, 421 S.E.2d 913 (1992); C.P. v.
Rockingham Publ’g Co., 34 Va. Cir. 79 (1994); Jane and John



                                 14
against the general presumption that parties’ identities are

public information and the risk of unfairness to the opposing

party.   See Does I Thru XXIII v. Advanced Textile Corp., 214

F.3d 1058, 1068 (9th Cir. 2000).     As the Eleventh Circuit has

stated, “[t]he ultimate test for permitting a plaintiff to

proceed anonymously is whether the plaintiff has a substantial

privacy right which outweighs the customary and

constitutionally-embedded presumption of openness in judicial

proceedings.   It is the exceptional case in which a plaintiff

may proceed under a fictitious name.”     Doe v. Frank, 951 F.2d

320, 323 (11th Cir. 1992) (citation and internal quotation

marks omitted).

     In a review of decisions from throughout the country, the

Fourth Circuit compiled a list of “factors that should be

considered by courts considering anonymity requests.”     James

v. Jacobson, 6 F.3d 233, 238 (4th Cir. 1993).     Such factors

included:

            [W]hether the justification asserted by
            the requesting party is merely to avoid
            the annoyance and criticism that may
            attend any litigation or is to preserve
            privacy in a matter of sensitive and
            highly personal nature; whether
            identification poses a risk of retaliatory
            physical or mental harm to the requesting
            party or even more critically, to innocent
            non-parties; the ages of the persons whose


Roe v. Richmond Metro. Blood Serv., Inc., 22 Va. Cir. 111
(1990).

                                15
           privacy interests are sought to be
           protected; whether the action is against a
           governmental or private party; and,
           relatedly, the risk of unfairness to the
           opposing party from allowing an action
           against it to proceed anonymously.

Id.   Types of cases in which plaintiffs have been permitted to

proceed anonymously in other courts in the nation include

birth control cases, abortion cases, welfare cases involving

illegitimate children, and cases involving issues of

homosexuality.    See Doe v. Deschamps, 64 F.R.D. 652, 653

(D. Mont. 1974) (citing Roe v. Wade, 410 U.S. 113

(1973) (abortion); Doe v. Gillman, 347 F.Supp. 483 (N.D. Iowa

1972) (child born out of wedlock); Doe v. Chafee, 355 F.Supp.

112 (N.D. Cal. 1973) (homosexuality)).

      The limited situations in which a plaintiff has been

permitted to proceed under a pseudonym involve “the presence

of some social stigma or the threat of physical harm to the

plaintiffs attaching to disclosure of their identities to the

public record.”    Doe v. Rostker, 89 F.R.D 158, 161 (N.D. Cal.

1981).   A common thread throughout these decisions is that the

likelihood of the plaintiff suffering some embarrassment or

economic harm is not enough by itself to permit anonymity.

Doe v. Goldman, 169 F.R.D. 138, 141 (D. Nev. 1996); Doe v.

Hallock, 119 F.R.D. 640, 644 (S.D. Miss. 1987); Doe v.

Rostker, 89 F.R.D. at 163; Doe v. Diocese Corp., 647 A.2d



                                16
1067, 1071 (Conn. Super. Ct. 1994); A.B.C. v. XYZ Corp. and

XYZ Co., 660 A.2d 1199, 1204 (N.J. Super. Ct. 1995).    However,

as the Ninth Circuit Court of Appeals noted in Does I Thru

XXIII v. Advanced Textile Corp., 214 F.3d at 1070, the

proposition that anonymity may never be used to protect

against economic harm is “incorrect as a matter of law.”

Rather, in some instances, the level of retaliation in the

form of economic harm may rise to an extraordinary level

permitting plaintiffs to proceed anonymously.   Id. at 1071.

     Rule 3:3 of the Rules of the Supreme Court of Virginia

embraces the normative principle of disclosure and requires

the “names” of the parties to be stated in pleadings.

However, like other courts that have considered the issue, we

recognize that there are certain circumstances when permitting

a plaintiff to proceed under a pseudonym must be entrusted to

the sound discretion of the trial court.   We are persuaded

that the factors considered by the Fourth Circuit in James,

while not exhaustive, are appropriate for consideration by

state courts in Virginia.   Accordingly, we hold that, upon

showing of special circumstances when a party’s need for

anonymity outweighs the public’s interest in knowing the

party’s identity and outweighs the prejudice to the opposing

party, a court may exercise its discretion to allow a party to

proceed anonymously.   Further, we recognize that circumstances


                               17
may change as litigation progresses, thereby requiring

reconsideration of initial rulings.

     In the case before us, the sole reason APTC has offered

in support of its request to proceed anonymously is fear of

economic harm.   While reasonable concern over potential

economic harm is not excluded from factors to consider, APTC

has not borne its burden to show special circumstances

justifying anonymity.

     In its motion to proceed anonymously, APTC claimed that,

“the filing of this lawsuit under the proper and correct legal

name for the Plaintiff, where Plaintiff at this time is unable

to identify the Defendants, will trigger publicity about this

lawsuit, which Plaintiff believes will damage the value of the

corporation.”    Later, in a hearing before the trial court,

when the attorney for APTC was asked by the court why APTC

should not be required to identify itself, the response was:

          [F]or better or for worse, it may not be a
          good judgment, but my client made a
          business judgment that it would be
          extremely harmful to the corporation and
          to the shareholders of that corporation,
          which the corporation has a duty to
          protect, to file a lawsuit in Indiana
          saying we — and naming yourself — are
          being defamed. We are having our trade
          secrets misappropriated. We are being
          defrauded, and by the way, we can’t even
          tell you, the public, who’s doing it.
               My client made the corporate decision
          in its business judgment — right or wrong
          — that that would hurt the shareholders.


                                18
Significantly, the conclusory nature of APTC’s reasons for

anonymity does not reveal the degree and nature of the

potential economic harm.   APTC would have the trial court

trust its decision rather than submit evidence so that an

independent judicial evaluation can be made concerning the

need for anonymity.

     Accordingly, we will reverse the order of the trial court

denying the relief sought by AOL and remand for further

proceedings consistent with this opinion.

                                            Reversed and remanded.




                               19