Metropolitan News-Enterprise


Tuesday, July 13, 2010


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In Case Involving Anonymous Online Comments:

Ninth Circuit Rejects Stringent Standard for Commercial Speech


By STEVEN M. ELLIS, Staff Writer


The First Amendment’s protection of anonymous speakers’ identities is less stringent when commercial speech is involved, the Ninth U.S. Circuit Court of Appeals ruled yesterday.

A three-judge panel said a federal judge in Nevada erred in using a heightened standard for protecting those who make anonymous political speech when he granted discovery in a defamation action by Amway Corporation successor Quixtar Ind. against a company founded by former affiliates.

The judges declined, however, to block disclosure of the identities of three speakers who were allegedly part of an online smear campaign disparaging Quixtar, concluding that the judge could have ordered disclosure under the lower standard.

The suit is one of several across the country involving Quixtar—a multi-level marketing business that distributes consumer products such as cosmetics through “independent business owners”—and Signature Management TEAM, a company founded by former Quixtar IBOs Orrin Woodward and Chris Brady that provides business training and support materials.

Raiding Alleged

Quixtar claims that Woodward and Brady violated non-compete and non-solicitation agreements in their contracts, and brought suit in the U.S. District Court in Nevada alleging that TEAM orchestrated the campaign to induce other IBOs to leave Quixtar and join TEAM.

When TEAM’s online content manager, Benjamin Dickie, refused in a deposition to answer questions related to the identities of the online speakers, Quixtar moved to compel testimony about the authors of statements from five online sources. The sources included a “Save Us Dick DeVos” blog, referring to the former head of Alticor, Quixtar’s parent company, which was created during a corporate restructuring of Amway in 2000; a “Hooded Angry Man” video; a “Q’Reilly” blog; an “Integrity is TEAM” blog; and an “IBO Rebellion” blog.

Quixtar claimed that statements on the blogs and in the video—including allegations that the company acknowledged that its products were overpriced and unsellable, refused to pay bonuses, terminated IBOs without due process, suffered from “systemic dishonesty” and facilitated “systematic noncompliance” with Federal Trade Commission rules—supported a claim for tortious interference, and that the speakers were affiliated with TEAM.

Judge’s Order

Senior U.S. District Judge Edward C. Reed ordered Dickie to testify about the “Save Us Dick DeVos” and “Q’Reilly” blogs, and the “Hooded Angry Man” video, and the speakers petitioned for a writ of mandamus blocking the order. Quixtar, meanwhile, sought its own writ directing Reed to order Dickie to reveal the other two speakers, but the Ninth Circuit denied both requests in an opinion by Judge M. Margaret McKeown.

Examining the speakers’ request, the judge said mandamus was not appropriate because they failed to show that Reed’s order was clearly erroneous as a matter of law, one of five factors necessary for relief.

McKeown said it was understandable that Reed, relying on case law involving political speech, would apply a heightened standard to disclosure of anonymous speakers’ identities, But she wrote that such a limit on disclosure extended too far in the context of commercial speech balanced against a discretionary discovery order.

She also said that Reed’s decision was not “clearly erroneous” where his order requiring testimony as to the three speakers’ identities would have been the same had he employed a less exacting standard.

In a separate portion of the opinion, McKeown rejected Quixtar’s request for an order to compel testimony as to the other two speakers, labeling it a “garden variety discovery dispute” that offered “no extraordinary circumstances” meriting an exercise of mandamus power.

Judges Sidney R. Thomas and Jay S. Bybee joined McKeown in her opinion.

The case is In re Anonymous Online Speakers, 09-71265.


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