ViroLogic v. Does [1]

ViroLogic, a biotechnology company, sued ten anonymous users of the Yahoo! Finance forum dedicated to it, after they allegedly posted internal ViroLogic information and made statements critical of the company and its officers. The original complaint included claims for defamation, trade libel, misappropriation of trade secrets, unfair competition, and intentional interference with prospective economic advantage. ViroLogic subsequently amended its complaint, limiting its claims to misappropriation of trade secrets and unfair competition. 

ViroLogic subpoenaed Yahoo! to uncover the identity of the Doe defendants. Yahoo! notified the Does of the subpoena, and one of them (Doe 1) filed a motion to quash.  Doe 1 also filed a motion to strike the complaint under California's anti-SLAPP statute [2], arguing that the lawsuit was an attempt to stifle his right to free speech. 

Meanwhile, ViroLogic moved for permission to take limited discovery regarding Doe 1.  The court granted the company permission to take his deposition, with the proviso that ViroLogic's attorneys could not reveal Doe 1's identity to ViroLogic employees. In the deposition, ViroLogic's lawyers discovered that Doe 1 had previously been a consultant for the company, and that he was closely related to a current company employee. The lawyers asked the court for permission to reveal this information, including Doe 1's identity, to ViroLogic, so that it could make a case in opposition to Doe 1's anti-SLAPP motion to strike.

In a subsequent hearing, the court granted [3] Doe 1's motion to strike under the anti-SLAPP statute and denied ViroLogic's motion to permit its lawyers to disclose Doe 1's identity to it. The court ruled that the Doe 1's posts were an exercise of his protected right to free speech, and that ViroLogic had failed to show a sufficient likelihood of success should the case proceed.  The court dismissed the case and awarded attorneys' fees to Doe 1. It denied Doe 1's motion to quash the Yahoo! subpoena because dismissing the case mooted the issue.

ViroLogic appealed the decision and argued [4] that the lower court had violated its due process rights by granting the anti-SLAPP motion to strike without permitting it to fully prepare a defense to that motion through access to Doe 1's identity. The California appeals court held that ruling on the anti-SLAPP motion to strike without giving ViroLogic access to Doe 1's identity deprived the company of a meaningful opportunity to oppose the motion. It recognized that Doe 1 has a right to anonymous speech, but reasoned that this right had to be balanced against ViroLogic's due process rights. See ViroLogic, Inc. v. Doe, 2004 WL 1941335, at *1, 5-7 (Cal. Ct. App. Sept. 1, 2004).

The appeals court set out a standard for lower courts to consider when deciding whether a plaintiff has shown "good cause" to discover a defendant's identity after an anti-SLAPP motion has been filed. Under this standard, the plaintiff seeking discovery must show: (1) the plaintiff's claims describe actionable conduct by the defendant; and (2) discovery of the defendant's identity is necessary for the plaintiff to present evidence in opposition to the special motion to strike. The court also indicated that, given the early stage when anti-SLAPP motions are usually litigated, it is not appropriate to impose upon the plaintiff a burden of supporting its claims with evidence.  See ViroLogic, Inc., 2004 WL 1941335, at *6. Applying this standard to the facts of the case, the appeals court determined that ViroLogic had shown "good cause" to uncover Doe 1's identity. It therefore reversed the lower court's grant of the anti-SLAPP motion to strike and its award of attorneys' fees to Doe 1, and directed the trial court to enter an order permitting disclosure of Doe 1's identity to ViroLogic.

UPDATE:

On 3/15/2005, the trial court permitted the disclosure [5] of the identity of Doe. A series of case management conferences followed this disclosure. These conferences appear to have produced a settlement.

On 11/28/2005, ViroLogic filed a notice of settlement [6] and dismissed the complaint [5] with prejudice.