Present: Carrico, C.J., Lacy, Hassell, Koontz, Kinser, and
Lemons, JJ., and Stephenson, S.J.
AMERICA ONLINE, INC.
OPINION BY
v. Record No. 012761 JUSTICE LAWRENCE L. KOONTZ, JR.
November 1, 2002
NAM TAI ELECTRONICS, INC.
FROM THE CIRCUIT COURT OF LOUDOUN COUNTY
Thomas D. Horne, Judge
In this appeal and in the context of the Uniform Foreign
Depositions Act, Code § 8.01-411 through –412.1 (UFDA), we
consider whether a Virginia trial court properly applied
principles of comity in refusing to quash a subpoena duces tecum
obtained under a commission for out-of-state discovery issued by
a California trial court.
BACKGROUND
On January 26, 2001, Nam Tai Electronics, Inc. (Nam Tai)
filed a complaint in the Superior Court of the State of
California for the County of Los Angeles (the California court)
against fifty-one unknown individuals alleging libel, trade
libel, and violations of California Business and Professions
Code Section 17000 et seq. (California’s unfair business
practices statutes). In summary, Nam Tai alleged that the
unknown individuals had posted “false, defamatory, and otherwise
unlawful messages” on an Internet message board devoted to
discussion of Nam Tai’s publicly traded stock.
The message board was maintained by Yahoo! Inc. (Yahoo), an
Internet services company located in California. The message
board was available to be viewed by any Internet user. However,
in order to post a message an Internet user must first establish
a Yahoo account, for which the company does not charge a fee,
and create a “login name,” which is subsequently used to
identify the user when posting messages on the service. In its
complaint, Nam Tai identified one of the unknown defendants by
the Yahoo login name “scovey2.” Attached to the complaint was a
printout of a single message posted by “scovey2” to the message
board devoted to Nam Tai’s stock. Dated as having been posted
on January 8, 2001 at 10:03 p.m. Eastern Standard Time, the
message was titled “sinking again,” and read as follows:
Sinking is not a province in China but an observation
of this company’s stock market performance. This low
tech crap that they produce is in an extremely
competitive and low profitability industry. I see
see-sawing of the stock with no real direction. (See-
sawing is also not a province.)
Nam Tai alleged that this message “among others” posted by
“scovey2” was part of a concerted effort by the unknown
defendants to defame Nam Tai in order to discourage investors
from purchasing or holding stock in Nam Tai. Nam Tai further
alleged, in part, that the defendants’ intent was to “interfere
2
with [Nam Tai’s] relationship with its shareholders and the
general public and to manipulate the price of Nam Tai stock to
their advantage.” It further alleged that the acts of the
defendants “constitute unlawful, unfair, and deceptive business
practices against [Nam Tai] . . . in violation of” California’s
unfair business practices statutes. Nam Tai sought both
compensatory and punitive monetary damages and injunctive
relief. 1
Following the filing of the complaint, Nam Tai obtained a
subpoena duces tecum in California directing Yahoo to disclose
its subscriber data on “scovey2.” 2 Based on the information
subsequently disclosed by Yahoo, Nam Tai was able to determine
that “scovey2” obtained his Internet access through America
Online, Inc. (AOL), an online services company that also serves
as a portal site to the Internet. Specifically, Yahoo disclosed
1
Because no defendant was identified with specificity, Nam
Tai’s complaint has not been served on any party, and all the
proceedings in the California court have occurred ex parte.
2
Although Yahoo requires its users to provide certain
personal information when registering, it does not attempt to
verify the accuracy of the information provided. Yahoo
discloses in a privacy statement that it will “respond to
subpoenas, court orders, or legal process” requiring it to
disclose registration and usage information.
3
the Internet protocol (IP) address 3 used by “scovey2” to access
Yahoo’s Nam Tai message board on January 8, 2001 and the
“alternate email address” given by “scovey2” when registering
for a Yahoo login name. The Internet protocol address recorded
when “scovey2” posted the January 8, 2001 message was
“152.163.194.186,” which is registered to AOL. The alternate
email address “scovey2” supplied to Yahoo was “scovey@aol.com.”
Nam Tai obtained a commission for out-of-state discovery
from the California court to depose AOL’s custodian of records.
AOL’s principal corporate offices are located in Loudoun County
and, accordingly, the commission was directed to a registered
court reporting service authorized to take depositions within
Virginia. On March 19, 2001, Virginia counsel for Nam Tai filed
a praecipe in the Circuit Court of Loudoun County (the trial
court) for a foreign subpoena duces tecum. On the same date,
the clerk of the trial court issued the subpoena directing AOL’s
custodian of records to produce, among other things, records
3
An IP address is a string of four integer numbers between
0 and 255 separated by periods that identifies the location of a
specific computer connected to the Internet. While many
Internet connections are permanent and, thus, are assigned fixed
IP addresses, the IP address assigned to a personal computer
accessing the Internet through a portal site is drawn from a
pool of open addresses and identifies that computer only during
the time that computer is connected to the Internet.
4
related to the opening of the account assigned the email address
“scovey@aol.com” and “[d]ocuments sufficient to identify the AOL
customer or subscriber . . . assigned the AOL Internet Protocol
Address 152.163.194.186 . . . on January 8, 2001, at 10:03 PM
EST.”
On April 17, 2001, AOL filed a motion to quash Nam Tai’s
subpoena duces tecum. In that pleading, AOL acknowledged that
counsel for Nam Tai had provided it with a copy of a second
message, posted by “scovey2” on June 3, 1999, which criticized
the company’s stock trading practices and accused Nam Tai’s
president of “manipulat[ing] the stock [of] this and other
smaller companies.” 4 AOL contended that it should not be
required to reveal subscriber information because this would
“infringe on the well-established First Amendment right to speak
anonymously,” and that Nam Tai could not meet the heightened
scrutiny required to overcome that right. AOL further contended
that the First Amendment protection applied to all claims made
in Nam Tai’s California complaint, including the statutory
unfair business practices claim.
4
As AOL noted, this message was not set forth, referenced
in, or attached to Nam Tai’s complaint. On appeal, Nam Tai
assigns cross-error to the trial court’s failure to consider
this message in ruling on AOL’s motion to quash.
5
On April 27, 2001, Nam Tai filed a brief opposing AOL’s
motion to quash. Nam Tai contended that AOL was seeking a
review of both the procedural process already approved by the
California court and a substantive review of the merits of the
underlying cause of action stated in the California complaint.
Nam Tai asserted that principles of comity required the trial
court to give deference to the procedures used in obtaining the
commission from the California court. Nam Tai further asserted
that “scovey2” had been notified by AOL of the subpoena, but had
not joined in the motion to quash. Thus, Nam Tai contended that
AOL did not have standing to challenge the merits of the
underlying claim.
On May 1, 2001, AOL filed a reply to Nam Tai’s brief
opposing AOL’s motion to quash. AOL contended that Nam Tai had
not met the criteria for applying principles of comity because
Nam Tai could not show that its California complaint stated a
viable cause of action. AOL further contended that the absence
of the real party in interest did not deprive AOL of standing to
challenge the underlying merits of the case because the notice
6
to “scovey2” was informal and that “scovey2” might have elected
not to join the motion for strategic or economic reasons. 5
Following a hearing on May 4, 2001, the trial court,
relying on America Online, Inc. v. Anonymous Publicly Traded
Co., 261 Va. 350, 542 S.E.2d 377 (2001) (hereinafter AOL v.
APTC), determined that before enforcing Nam Tai’s subpoena it
was required to “determine whether comity should be granted to
the California court’s Order and, if not, whether the subpoena
should nevertheless be enforced in light of the merits of Nam
Tai’s underlying California law-based claims.” Having
determined that it could not address either issue “without
further guidance from the California court,” the trial court
entered a protective order barring the discovery until it had
received and reviewed “guidance from the California court . . .
with respect to the procedural and substantive law applicable to
the California court’s Order.”
Responding to the trial court’s request for guidance, the
California court made the following findings in an order dated
5
Subsequent to the proceedings in the trial court, the
General Assembly enacted Code § 8.01-407.1, which, effective
July 1, 2002, set procedures governing the right of an anonymous
Internet user to receive notice of discovery directed at seeking
his identity and providing the method for the user to oppose
that discovery. Neither party asserts that this statute impacts
the issues raised in this appeal.
7
June 22, 2001 clarifying the commission for out-of-state
discovery:
1. That Nam Tai has alleged sufficient facts in its
complaint, under California law, for libel, trade
libel and for injunctive relief under California
Business and Professions Code Section 17200, such
that Nam Tai is entitled under California law to
conduct discovery to identify the anonymous
defendant in this matter notwithstanding the First
Amendment privacy concerns raised in AOL’s motion
to quash.
2. That, under the facts and circumstances of this
case, the First Amendment privacy concerns of the
anonymous defendant are outweighed by the State of
California’s interest in the ability of its
litigants to conduct out-of-state discovery.
3. This Court reaffirms its March 15, 2001, Order for
the issuance of a commission for out-of-state
discovery notwithstanding the concerns raised in
AOL’s motion to quash related to the First
Amendment privacy rights of the anonymous defendant
and the sufficiency of the allegations in Nam Tai’s
complaint.
In making these findings, the California court apparently
reviewed the briefs and arguments made in the trial court as
previously recited herein. Accordingly, the California court
was aware of, and may have considered, the content of the June
3, 1999 message, although the content of that message and
allegations related to it had not been included in Nam Tai’s
complaint.
Following a subsequent teleconference, during which the
parties stated arguments that essentially parallel the positions
asserted in this appeal, the trial court issued an opinion
8
letter dated August 7, 2001. Applying the standards enunciated
in AOL v. APTC, the trial court first concluded that “[n]either
of the defamation claims would withstand demurrer if filed in
Virginia.” Thus, the trial court concluded that comity did not
require enforcement of the subpoena as to those claims because
“it would facilitate process not otherwise available to
litigants in the Commonwealth.” In reaching this conclusion,
the trial court focused solely on the January 8, 2001 message
and did not consider the alleged defamatory content of the June
3, 1999 message.
The trial court determined, however, that the statutory
unfair business practices claim stated in the California
complaint “is not offensive to the public policy of Virginia and
states a claim predicated upon an alleged malicious interference
with the operation of [Nam Tai’s] business.” Relying on Chaves
v. Johnson, 230 Va. 112, 122, 335 S.E.2d 97, 103 (1985), the
trial court concluded that the First Amendment concerns
expressed by AOL were not applicable to this claim. Based upon
this reasoning, in an order dated September 11, 2001, the trial
court denied AOL’s motion to quash, lifted the protective order
previously entered, and directed AOL to comply with the subpoena
duces tecum. We awarded AOL this appeal and accepted
assignments of cross-error raised by Nam Tai.
9
DISCUSSION
“We review the trial court’s refusal to quash the issuance
of a subpoena duces tecum . . . under an abuse of discretion
standard.” AOL v. APTC, 261 Va. at 359, 542 S.E.2d at 382; see
also O’Brian v. Langley School, 256 Va. 547, 552, 507 S.E.2d
363, 366 (1998).
The issues of comity central to this appeal arise from the
trial court’s application of the UFDA. Relevant to those
issues, Code § 8.01-411 provides that:
Whenever any mandate, writ or commission is
issued out of any court of record in any other state
. . . 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 § 8.01-412 requires that “[t]he 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.” Although California has repealed its version of
the UFDA, it has enacted California Code of Civil Procedure
Section 2029, which provides for the same privileges to out-of-
state parties as does the UFDA. Accordingly, we hold that
California is a reciprocal state for purposes of applying the
UFDA in Virginia to a commission for out-of-state discovery from
a court of that state. See Smith v. Givens, 223 Va. 455, 460,
10
290 S.E.2d 844, 847 (1982) (recognizing UFDA reciprocal status
of Indiana based upon equivalent process available under Indiana
Trial Procedure Rule 28(E)).
In AOL v. APTC, we recognized “the importance of comity as
a guiding principle in the relationship between sovereigns and
as a tool of judicial economy.” 261 Va. at 361, 542 S.E.2d at
383. Nonetheless, comity has its limitations and will not be
“given effect when to do so would prejudice [Virginia’s] own
rights or the rights of its citizens.” McFarland v. McFarland,
179 Va. 418, 430, 19 S.E.2d 77, 83 (1942).
Drawing on our prior case law examining questions of
comity, we have stated the principles that must be considered by
the trial court before affording comity to an order of a foreign
court. First, the foreign court must have personal and subject
matter jurisdiction to enforce its order within its own
judicatory domain. Second, the procedural and substantive law
applied by the foreign court must be reasonably comparable to
that of Virginia. Third, the foreign court’s order must not
have been falsely or fraudulently obtained. And, fourth,
enforcement of the foreign court’s order must not be contrary to
the public policy of Virginia, or prejudice the rights of
Virginia or her citizens. See AOL v. APTC, 261 Va. at 361, 542
S.E.2d at 383, and cases cited therein. Guided by these
principles in the present case, we will address seriatim each of
11
the “numerous deficiencies” in the California court’s commission
alleged by AOL.
Initially, we note that AOL does not contest the subject
matter jurisdiction of the California court over the claims
asserted in Nam Tai’s lawsuit. Rather, AOL first contends that
the California court did not have “jurisdiction over any party
other than Nam Tai itself.” Nam Tai responds that California
law permits the filing of a “John Doe” lawsuit against an
unknown defendant pending discovery of the defendant’s identity
and the appropriate amendment of the pleading. 6 See California
Code of Civil Procedure Section 474.
In AOL v. APTC, we observed that where, as here, an action
is filed against unknown parties, “it is uncertain whether
personal jurisdiction may be obtained over any of the anonymous
defendants.” 261 Va. at 361, 542 Va. at 383. We recognize,
however, that it is not uncommon for a plaintiff to use the
“John Doe” pleading style to initiate a lawsuit against a
defendant whose identity is unknown at the time the lawsuit is
6
Nam Tai also asserts that AOL did not raise this specific
argument in the trial court and, thus, it should not be
considered for the first time on appeal. Rule 5:25. However,
for purposes of this appeal, we will assume, without deciding,
that AOL’s arguments in the trial court opposing the subpoena
duces tecum were sufficiently broad to challenge the trial
court’s entire analysis of the request for comity.
12
filed for the purpose of subsequently using discovery to learn
the identity of the defendant so that proper service of process
on the defendant can be obtained. See Code § 8.01-290.
Accordingly, for the purpose of determining whether to afford
comity to the California court’s commission, we need not be
concerned with whether that court will ultimately be able to
exercise personal jurisdiction over the unidentified defendant
in this case. 7 Rather, because the procedural requirements for
maintaining suits against unknown defendants in California are
reasonably comparable to those in Virginia in the context of the
present case, we hold that comity is not barred on that ground. 8
7
AOL notes on brief that in Nam Tai Electronics, Inc. v.
Titzer, the California Court of Appeals has ruled that personal
jurisdiction could not be had over an out-of-state defendant,
originally named as a “John Doe,” where that defendant lacked
sufficient contacts with California. 113 Cal. Rptr. 2d 769,
774-76 (Cal. Ct. App. 2001). Because the identity of “scovey2”
has not been clearly established and no factual determinations
concerning his contacts with California have been made, it is
not possible to determine at this time whether the rationale of
Titzer would be applicable to the present case.
8
AOL also contends that the California court lacks personal
jurisdiction over AOL. However, we need not consider whether
California’s long-arm statute would permit it to exercise
jurisdiction over AOL on the facts of this case for the obvious
reason that AOL is not being subjected to the personal
jurisdiction of the California court, but to that of the trial
court under the UFDA. Indeed, it is self-evident that the UFDA
and its equivalent in California exist principally to permit the
courts of foreign jurisdictions, through comity, to extend the
13
AOL next contends that the ex parte proceedings in the
California court resulted in “a superficial or abstract
judgment” that “was not the product of a full-fledged,
adversarial consideration of the First Amendment issues at the
core of this matter.” Thus, AOL asserts that “[t]hese are
plainly not the circumstances in which a Virginia court should
defer to the findings of a foreign court.” AOL does not contend
that the California court’s commission was obtained falsely or
fraudulently, but only that, due to the ex parte nature of the
proceedings, “there is no indication that the California court
devoted any substantive attention” to the issues.
Unlike AOL v. APTC, where no clarifying order was requested
by the Virginia trial court, 261 Va. at 356, 542 S.E.2d at 381,
the record here supports the conclusion that, upon application
for the clarifying order, the California court undertook a
review of the record developed in Virginia and issued its order
thereon after reasoned consideration of the First Amendment
issues asserted by AOL in its pleadings filed in the trial
court. Moreover, it is clear that the trial court did not
arbitrarily defer to the California court, as AOL implies, but
reach of their discovery proceedings to third parties not
immediately within their jurisdiction.
14
undertook its own analysis of the issues with respect to their
viability under the law of Virginia, and in doing so gave proper
consideration to the adversarial proceedings before it. Under
these circumstances, we find no abuse of discretion by the trial
court in accepting those elements of the California court’s
clarifying order which supported the ultimate determination to
grant comity based on one of the three claims approved by the
California court.
AOL next contends that the California court did not
properly apply the substantive law of California in ruling that
First Amendment concerns did not apply to the alleged violation
of California Business and Professions Code Section 17200. AOL
premises its contention that the California court misapplied
California law by citing a series of cases beginning with Blatty
v. New York Times Co., 728 P.2d 1177 (Cal. 1986), where the
state and federal courts in California have rejected attempts to
bring non-defamation tort actions where the “gravamen [of the
underlying action] is the alleged injurious falsehood of a
statement,” and, where the statement in question qualified as
protected speech under the First Amendment. Id. at 1180.
It is not, however, the role of the Virginia courts when
asked to afford comity to an order of a court of a foreign
jurisdiction to act as surrogates for the appellate courts of
that jurisdiction. We presume that the foreign court is in a
15
better position than the Virginia courts to determine the
substantive law of its jurisdiction and, thus, afford a high
degree of deference to its judgment in such matters. Such
deference is particularly appropriate where, as here, the
foreign court enters a clarifying order specifically addressing
the substantive law of its judicatory domain upon which the
proceedings there are premised. The determination whether to
grant comity to such an order is not a matter of the ultimate
viability of the underlying claim in the foreign jurisdiction
but, rather, whether the substantive law of the foreign
jurisdiction as addressed and expressed by the foreign court in
its clarifying order is “in terms of moral standards, societal
values, personal rights, and public policy . . . reasonably
comparable to that of Virginia.” 9 Oehl v. Oehl, 221 Va. 618,
623, 272 S.E.2d 441, 444 (1980).
Finally, AOL contends that the trial court erred in
determining that the law applied by the California court with
9
We do not mean to suggest, however, that deference should
be given to the judgment of a foreign court that is plainly
wrong. Because the scope of California’s unfair business
practices statutes is broad and the authority for a California
trial court to determine whether a cause of action falls within
its scope is equally broad, Kasky v. Nike, Inc., 45 P.3d 243,
249 (Cal. 2002), we cannot say that the California court in the
present case was plainly wrong in determining that Nam Tai had
stated a cause of action pursuant to that statutory scheme.
16
respect to Nam Tai’s statutory unfair business practices claim
is reasonably comparable to the law of Virginia. AOL premises
this contention upon the assertion that the trial court’s
reliance on Chaves was misplaced. AOL specifically asserts that
Chaves has been called into question by the United States
Supreme Court’s holding in Hustler Magazine, Inc. v. Falwell,
485 U.S. 46, 56 (1988), that First Amendment protections apply
even though a suit alleging an injurious publication is filed
under a theory of intentional infliction of emotional distress
rather than defamation.
In Chaves, we stated that:
The tort complained of here is an intentional
wrong to the property rights of another, accomplished
by words, not defamatory in themselves, but employed
in pursuance of a scheme designed wrongfully to enrich
the speaker at the expense of the victim. The law
provides a remedy in such cases, and the
constitutional guarantees of free speech afford no
more protection to the speaker than they do to any
other tortfeasor who employs words to commit a
criminal or a civil wrong.
230 Va. at 122, 335 S.E.2d at 103.
Unquestionably, since the Hustler Magazine decision, some
courts have sustained challenges to tort litigation on the
ground that the plaintiff was seeking to “avoid the protection
afforded by the Constitution . . . merely by the use of creative
pleading.” Beverly Hills Foodland, Inc. v. United Food &
Commercial Workers Union, 39 F.3d 191, 196 (8th Cir. 1994)
17
(claim that union tortiously interfered with employer’s right to
contract was subject to First Amendment considerations).
However, in Maximus, Inc. v. Lockheed Information Management
Systems Co., 254 Va. 408, 412, 493 S.E.2d 375, 377 (1997), a
decision rendered after Hustler Magazine, we acknowledged “the
similarity . . . [of] the defamation law construct to business
torts” noted in Chaves, but declined to extend First Amendment
protections to a tortious interference with a contract
expectancy cause of action.
The First Amendment concerns applicable to the law of
California considered by the California court in this case are
the same concerns applicable to the law of Virginia. Those
concerns remain to be ultimately determined in the California
courts rather than in the Virginia courts. Given that the
holding in the Maximus case clearly supports the proposition
that Chaves is sound precedent, we cannot say that the trial
court erred in determining that Nam Tai’s statutory cause of
action for unfair business practices under California law is
reasonably comparable to the law of Virginia and is not
repugnant to the public policy of Virginia. Accordingly, we
hold that the trial court did not abuse its discretion in
concluding that the California court’s commission for out-of-
state discovery was entitled to comity and, thus, properly
18
denied AOL’s motion to quash the subpoena duces tecum issued in
support of that commission.
CONCLUSION
For these reasons, we will affirm the judgment of the trial
court enforcing the California court’s commission for discovery
of AOL’s records regarding “scovey2.” 10
Affirmed.
10
Having resolved the issues raised by AOL in favor of Nam
Tai, we need not consider the assignments of cross-error raised
by Nam Tai in this appeal.
19