On April 16, 2015, the Virginia Supreme Court threw out a contempt citation against social media company Yelp, Inc. (Yelp) in a closely watched case involving anonymous free speech rights on the internet. Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., No. 140242 (April 16, 2015). The decision arose out of a defamation case brought by Hadeed Carpet Cleaning, Inc. (Hadeed) against Yelp over negative comments anonymously posted on the website by seven people. Hadeed served a Virginia subpoena on Yelp — a Delaware corporation with its principal place of business in California — and the Circuit Court for the City of Alexandria held that it had the power to enforce that subpoena and ordered Yelp to produce information regarding the identities of the anonymous posters.

When Yelp refused to produce the information, the Circuit Court held it in contempt; the Virginia Court of Appeals subsequently affirmed this decision, holding that the anonymous posters’ “free speech rights must be balanced against Hadeed’s right to protect its reputation.” (Arent Fox had previously reported about the Virginia Court of Appeals’ affirmation. To view this alert, click here.)

Yelp appealed to the Virginia Supreme Court, arguing that the anonymous posters were engaging in constitutionally protected free speech and that Hadeed was required to do more than file a good-faith complaint before the court could impose upon the posters’ free speech rights. The appeal attracted a good deal of attention from media organizations (many being social media companies active on the internet), and an amicus brief was filed on their behalf siding with Yelp.

In its April 16 opinion, the Virginia Supreme Court handed Yelp a victory. However, it did not issue an opinion providing guidance on the balance that must be struck between defamation plaintiffs’ rights to discovery, on the one hand, and anonymous posters’ free speech rights, on the other. The majority instead held that a Virginia trial court does not have the power under Va. Code section 8.01-407.1 (the Virginia code section governing the seeking of information regarding the identity of individuals communicating anonymously over the internet) to compel an out-of-state corporation to comply with a Virginia subpoena — even if the corporation has registered to conduct business in Virginia and has appointed a registered agent in the Commonwealth (as Yelp had done). By deciding the case on these procedural grounds, the Virginia Supreme Court avoided the Constitutional free speech issues that had many observers holding their breath.

Yelp’s ability to keep the identities of the seven anonymous posters secret may not last long, however. While the Virginia Supreme Court held that Hadeed could not use Va. Code 8.01-407.1 to get the information, it helpfully pointed out that Hadeed may be able to gain access to the posters’ identities by obtaining a subpoena from a California court (since the information is stored in San Francisco) pursuant to the Uniform Interstate Depositions and Discovery Act (UIDDA), which was enacted by the Virginia General Assembly in 2009. In fact, while the Virginia Supreme Court tossed the contempt citation against Yelp, it refused to quash the subpoena altogether noting that “Hadeed may choose to seek enforcement of the subpoena duces tecum through the versions of the UIDDA enacted in California…”

The upshot of the Virginia Supreme Court’s opinion is that while it provides needed guidance on the limited territorial reach of subpoenas obtained pursuant to Va. Code section 8.01-407.1, it provides no guidance on the proper balance to be struck in anonymous speech defamation cases between plaintiffs and anonymous internet posters. In Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 752 S.E.2d 554 (Va. App. 2014), the Virginia Court of Appeals struck that balance in favor of the plaintiff, and interested parties should stay tuned to see if the Court of Appeals’ analysis of the Constitutional issues eventually carries the day.