Designer Skin LLC v. S & L Vitamins, Inc., et al.
Dendrite International v. John Does, et al.
Docket No. MRS C-129-00 (Sup. Crt. N.J., Chancery Div., November 28, 2000) aff'd. 343 N.J. Super. 134, 775 A.2d 756 (N.J. Super. Ct., App. Div., July 11, 2001)
Court denies plaintiff's application for the issuance of a subpoena and other process to permit it to obtain from the non-party Yahoo Inc. ("Yahoo") the identity of two individuals who posted anonymous messages on internet-based financial boards maintained by Yahoo. The court's decision was based, in part, on its determination that plaintiff had failed to adequately demonstrate the validity of the claims it sought to advance in its complaint against these John Doe defendants arising out of such postings.
Plaintiff Dendrite International ("Dendrite") is a global provider of specialized integrated products and services for pharmaceutical and consumer product customers. Dendrite is a publicly traded company. Defendants John Does 3 and 4 posted various messages pertaining to Dendrite on internet-based financial boards maintained by Yahoo. Plaintiff claimed that some of the messages so posted by John Doe 3 were defamatory and improperly disclosed its trade secrets, while messages posted by John Doe 4 improperly disclosed its trade secrets. Plaintiff commenced the instant action seeking redress for these alleged wrongs.
To aid it in pursuing this lawsuit, plaintiff sought the issuance of an order permitting it to take limited discovery sufficient to identify John Does 3 and 4. Adopting the test first enunciated in Columbia Ins. Co. v. Seecandy.com, 185 F.R.D. 573 (N.D.Cal. 1999), the court determined that:
[T]he following four requirements ... must be satisfied in order to discover the actual identity of a defendant: (1) identify the missing party with sufficient specificity such that the court can determine that defendant is real person or entity who could be sued in federal or state court; (2) identify all previous steps taken to locate the elusive defendant; (3) establish, to the court's satisfaction, that plaintiff's suit could withstand a motion to dismiss; and (4) file a statement of reasons justifying the specific discovery requested, as well as the identification of a limited number of persons or entities on whom discovery process might be served and for which there is a reasonable likelihood that the discovery process will lead to identifying information about the defendant that would make service of process possible.
Applying this test, the court denied plaintiff's application for discovery of the identity of John Does 3 and 4 because plaintiff had failed to adequately demonstrate the meritiousness of its claims against them.
The court stated that in determining the meritoriousness of plaintiff's claim, it will require "that plaintiff establish that its suit against Defendant could withstand a motion to dismiss. ... In reviewing a complaint that is to be dismissed ... the inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint."
To establish a prima facie case of defamation, one of the claims asserted against John Doe 3, "a plaintiff must show that defendant communicated to a third person a false statement about plaintiff that tended to harm plaintiff's reputation in the eyes of the community or to cause others to avoid plaintiff." The court determined that plaintiff had made a sufficient showing that John Doe 3 had made defamatory statements about it. However, the court held that plaintiff had failed to make an adequate showing that the issuance of such statements caused it harm, a requisite element of a defamation claim according to the court.
Plaintiff argued that it had made the requisite showing of harm by submitting evidence that showed that by the close of business on the day on which each of the postings in question was made, the companies' stock price had dropped. This showing, however, was inadequate for the court. Said the court:
In his reply certification, Michael Vogel, Dendrite's counsel, attempts to link the messages posted in this case to a drop in Dendrite's stock price. ... Mr. Vogel has not purported to be an expert in the field of stock valuation and analysis, thus, he cannot draw the conclusion that the fluctuations in Dendrite's stock prices are anything more than coincidence. Despite the fact that Plaintiff is entitled to every reasonable inference of fact in this analysis of whether a case against John Doe No. 3 could survive dismissal, the Court will not take the leap to linking messages posted on an internet message board regarding individual opinions, albeit incorrect opinions, to a decrease in stock prices without something more concrete. Between March 1, 2000, and July 1, 2000, Dendrite's stock price fluctuated from $26 to $14. No messages were posted on the day of Dendrite's highest asking price, nor were they posted on Dendrite's lowest asking price. The inference sought by Plaintiff is clearly unreasonable, and this Court is unwilling to acknowledge any nexus between the posting of allegedly defamatory messages on the internet and a drop in stock prices.
The court further held that plaintiff had failed to demonstrate that it possessed a valid misappropriation of trade secrets claim against either John Does 3 or 4 sufficient to warrant issuance of the requested relief. To state such a claim, the court held, required plaintiff to demonstrate, among other things, that defendant disclosed a trade secret belonging to the plaintiff, and that this trade secret had been communicated by plaintiff to defendant when he was an employee of the company.
The court held that plaintiff had failed to show that the information contained in defendant John Does 3 and 4's postings constituted a trade secret. This information included an apparently accurate statement that plaintiff had be unsuccessful in its efforts to obtain a certain contract, which apparently went instead to one of it competitors. "[T]he mere fact Siebel did not choose to contract with Dendrite certainly does not rise to the level of a protectable trade secret."
The court further held that plaintiff had failed to establish that John Does 3 and 4 were employees of plaintiff at the time of disclosure, another prerequisite to such a claim.
The court noted that the First Amendment of the United States Constitution protects anonymous speech. The court also recognized that such protections are "not absolute. The Supreme Court of the United States has also noted that the right to remain anonymous, however, is abused when it is used to shield fraudulent conduct." Because plaintiff had failed to show that John Does 3 and 4 had used their anonymous speech either in a manner which is unlawful or that would warrant the Court to revoke their constitutional protections, the court further found that their identities were protected from disclosure by the First Amendment.
There were two other defendants involved in this proceeding, John Does 1 and 2. They, however, did not appear or seek to protect their rights. As a result the court held that:
As stated previously, the Court will not address the rights of John Doe Nos. 1 and 2, as they have not responded in this case. John Doe Nos. 1 and 2 must assert a right before the Court will recognize and assess it. Therefore, the Court will grant Dendrite's request as to these two defendants.
Of interest to those following this area of the law are a number of citations contained in the court's decision to rulings by other courts faced with similar applications to that at bar. The citations can be found on page 20 of the court's decision.