Metropolitan News-Enterprise


Wednesday, April 19, 2006


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Witness Must Identify Source of Anonymous Web Postings—C.A.

Justices Say Third Party Lacks Standing to Assert First Amendment Challenge


By KENNETH OFGANG, Staff Writer/Appellate Courts


A third party who refused to answer deposition questions about the identity of persons who allegedly posted defamatory statements on the Internet lacks standing to assert those persons’ First Amendment rights, the Sixth District Court of Appeal ruled yesterday.

The justices rejected an appeal by Stephen L. Worthington, a hedge fund manager ordered to answer questions about the identities of two persons who allegedly posted disparaging remarks about Matrixx Initiatives, Inc., a pharmaceutical company, in 2003 and 2004.

Phoenix-based Matrixx, which makes and sells the Zicam line of cold and cough remedies, brought suit in Arizona against a number of named and Doe defendants. Matrixx claims the defendants published false and injurious statements on investment Web sites, causing damage to the company’s stock prices.

Sophisticated Software

Some of the anonymous postings were made under the names Veritasconari and Gunallenlies. While the posters used sophisticated software to avoid being identified, Gunallenlies neglected to activate the software on one occasion prior to posting a message on Yahoo! Finance, where the poster claimed that an FDA investigation and/or lawsuits were impending over claims that Zicam nasal gel caused a loss of smell.

Matrixx was able to obtain information from Yahoo!  tracing Gunallenlies to Worthington’s firm, Barbary Coast Capital Management in the San Francisco Bay Area. At his deposition, which was taken in San Francisco, Worthington refused to answer any questions about Veritasconari and Gunallenlies, including whether he was Veritasconari or Gunallenlies.

He did admit knowing Floyd Schneider, a named defendant who had once been a co-defendant of his in a lawsuit, which was settled, in which the defendants were also accused of posting defamatory messages on investment-related message boards.

Argument Rejected

Santa Clara Superior Court Judge James P. Kleinberg ordered Worthington to answer the questions, rejecting his contention that whoever posted the messages had a First Amendment right to do so anonymously.

On appeal, Worthington argued that at a minimum, Matrixx should be required to demonstrate that it has a viable cause of action before it can take discovery with respect to the identities of anonymous posters. Matrixx responded that Worthington lacked standing to assert the First Amendment rights of persons other than himself.

Justice Franklin Elia, writing for the Court of Appeal, agreed with Matrixx, saying it was not required to have raised the standing issue in the trial court.

Elia distinguished cases holding that a party to litigation may, in some circumstances, assert the rights of a non-party, such as when a criminal defendant was allowed to assert that race-based peremptory challenges violate the equal protection rights of potential jurors or when a booksellers group was allowed to litigate whether a state statute violated the First Amendment rights of book buyers.

“Where a third party is brought into the litigation, typically through a discovery order, the anonymous plaintiff or defendant normally steps forward to oppose the disclosure of his or her identity,” the justice explains.

Where the court has allowed another entity to oppose discovery of the anonymous party’s identity, Elia continued, it was because of a close relationship between the subpoenaed entity and the anonymous person, as when internet service providers have been allowed to contest efforts to force them disclose the identities of customers.

Worthington, by contrast, is not alleging a close relationship, “or, indeed, any relationship” with Veritasconari and Gunallenlies, the justice noted, nor is he alleging that those persons are unable to protect their own interests.

The case is Matrixx Initiatives, Inc. v. Doe, 06 S.O.S. 1967.


Copyright 2006, Metropolitan News Company