The Virginia Court of Appeals — in an important First Amendment case deciding an issue that it noted had never arisen in Virginia appellate courts, the Fourth Circuit, or the US Supreme Court — recently required Yelp to unmask some of its anonymous users who allegedly posted defamatory online reviews. Earlier this month, Yelp asked the Supreme Court of Virginia to hear that case on appeal and offer greater protections to anonymous online speakers.

In Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 62 Va. App. 678 (2014), anonymous Yelp users posted seven reviews complaining that Hadeed Carpet Cleaning had unfairly overcharged them. Hadeed sued these anonymous Yelp users, alleging that they were not truly its customers and that they had defamed it by posting bogus reviews. Hadeed issued a subpoena to Yelp that requested documents that would enable Hadeed to unmask the identities of the anonymous Yelp users. Interpreting a Virginia statute that permits — in some circumstances — a person to unmask anonymous internet users, the Circuit Court for the City of Alexandria, Virginia ordered Yelp to produce those documents.

On appeal, Yelp argued that the First Amendment and precedent outside of Virginia required Hadeed to make a sufficient showing of facts on the merits and the law before Yelp could be compelled to unmask its anonymous users. The appellate court disagreed. It recognized that the First Amendment protects a person’s right to speak — including on the internet — anonymously. But it also stressed that the First Amendment protects only lawful speech, not defamatory speech. Applying Virginia’s statute, the appellate court affirmed the trial court’s decision ordering Yelp to produce information unmasking the Yelp users. Specifically, the court ruled that Hadeed had submitted sufficient evidence to show that the Yelp reviews were or may have been defamatory, and that Hadeed had a good faith belief that the Yelp reviews were defamatory because they may not have been written by actual customers of Hadeed. In ruling that Hadeed’s evidence met that standard, the appellate court underscored that Hadeed had submitted evidence that it could not match the negative Yelp reviews to actual customers in its records.

But in a dissenting opinion, one judge concluded that Hadeed’s evidence was insufficient to unmask the anonymous users because Hadeed had claimed merely that the Yelp users maynot have been customers after a search of its records. The dissenting judge added that the majority had set too low of a standard for unmasking the Yelp users and emphasized that the standard could not be met with mere speculation that the anonymous Yelp users “may not be customers” based on only its representation that it had searched its own records for customers raising the users’ complaints.

This decision is a significant new precedent assessing the First Amendment’s protections of anonymous online speech and the showing that a business must make before it can protect its reputation by unmasking anonymous speakers that it has sued for defamation. Because Yelp recently appealed this decision to the Supreme Court of Virginia, these important issues may be reconsidered and decided in a different way. Arent Fox will continue to monitor these developments.