(Victoria – Fotolia)

Pseudonymous letters sent to the U.S. government alleging a Kuwaiti-based government contractor was engaging in illegal business activity with Iran were political speech, a split Superior Court has ruled in ordering the trial court to apply a heightened standard in determining whether the letters’ authors could be disclosed.

In Kuwait & Gulf Link Transport v. Doe, the majority reversed the Cumberland County Court of Common Pleas decision that determined the letters, admittedly authored by undisclosed employees of the contractor’s competitor, were commercial speech and that the identity of the authors should be disclosed.

“We conclude that the [letters] represent political speech because the award of substantial government contracts to contractors who are claimed to illegally engage in business with a prohibited foreign government directly implicates ‘the manner in which government is operated or should be operated,’” Superior Court Judge Christine Donohue said for the majority.

In February 2011, Kuwaiti-based Kuwait & Gulf Link Transport, referred to as KGL, was awarded a contract through the U.S. government’s Defense Logistics Agency to operate a military storage and distribution depot in Kuwait. A company not related to the litigation protested the award.

A few weeks later, a person under the pseudonym “Scott Wilson” sent two letters to the contracting officers at DLA and the U.S. Army Sustainment Command. The letters, according to the opinion, said KGL had violated the Comprehensive Iran Sanctions, Accountability and Divestment Act by maintaining business relationships with Iranian entities. The letters contained email chains to support the allegations, Donohue said.

The company that had protested the contract award to KGL supplemented its protest with the “Wilson letters.” KGL said that while it was able to get the protest dismissed, it sustained losses and costs associated with defending itself in the DLA contract as well as in another government contract bid with the U.S. Army Sustainment Command.

In March 2012, KGL sued Agility Public Warehousing Co. and John Doe, alleging defamation, tortious interference with contractual and other business relationships, respondeat superior, conspiracy, aiding and abetting, and negligent supervision. Agility admitted that employees of the company authored the Wilson letters and were acting within the scope of their employment, Donohue said.

As part of discovery, KGL sought the identity of the authors of the letters. Agility objected, citing a First Amendment right to speak anonymously and the Superior Court’s 2011 decision in Pilchesky v. Gatelli.

Pilchesky outlined a four-pronged test for determining whether an anonymous speaker’s identity should be revealed. The trial court in Kuwait & Gulf Link Transport determined that Pilchesky only applied to literary, religious and political speech, not the commercial speech the court found the Wilson letters to be, Donohue said.

On appeal, Agility argued the letters were not commercial speech and that they are entitled to heightened First Amendment protection because they discussed a public figure in a matter of public concern. Agility further argued that, in the event the court found the letters were commercial speech, Pilchesky applies to commercial speech as well as political, religious and literary speech, Donohue said.

In reviewing U.S. Supreme Court cases defining political speech, Donohue said the high court has characterized political speech as that which involves the exchange of ideas to bring about political and social change and that which includes “‘discussions of candidates, structures and forms of government, the manner in which government is operated or should be operated, and all such matters relating to political processes.’” Donohue noted the Supreme Court has protected political speech in many forms, including that from corporations.

Commercial speech, Donohue said, is that which does no more than propose a commercial transaction. The three-factor test outlined in the U.S. Supreme Court’s ruling in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council defines commercial speech as that which is an advertisement, references a specific product and for which the speaker has an economic motivation in making the communication.

In Pilchesky, the Superior Court outlined a four-factor test for determining whether the court could compel the disclosure of anonymous commenters in a defamation case. First, the court must ensure the anonymous commenter received proper notification that someone was seeking to reveal his identity. The party seeking disclosure must show the elements of a defamation claim are presented to the point that they would survive a motion for summary judgment.

Thirdly, the party seeking disclosure must submit an affidavit showing the information was requested in good faith, is directly related to the claim, is unavailable any other way and is fundamentally necessary to secure relief. Finally, the court must balance the defendant’s First Amendment rights against the strength of the plaintiff’s prima facie case, Donohue said.

The judge said the majority found the Wilson letters to be political speech that is afforded “extensive constitutional protection.”

Donohue said the Wilson letters discuss affairs of the government that are at the heart of First Amendment protections. She said the letters were written to inform DLA and the U.S. Army Sustainment Command that KGL—a government contractor performing multimillion-dollar contracts for the U.S. military—allegedly maintained business relationships with Iranian entities.

“Additionally, KGL’s alleged misconduct involved its possible connection to Iran businesses, misconduct that is a national and newsworthy issue,” Donohue said. “Thus, at their core, the Wilson letters represent political speech involving the operation of the government and the questionable expenditure of public funds.”

Donohue, who was joined by Judge Victor Stabile, also ruled the letters could not be characterized as commercial speech because they did not propose a transaction.

But in his dissent, Senior Judge William H. Platt disagreed, noting he found the letters to be commercial speech at best. He said Agility would have been a direct beneficiary of the debarment of its competitor.

Platt said the emails don’t advocate social or political change or support a political candidate. And they don’t support or oppose a policy position or disclose government misfeasance, he said. At most, Platt said, they disclose statutory noncompliance of a competitor and at worst they “present defamatory forged reports for private gain.”

“This is not the stuff of the Federalist Papers, or even the Pentagon Papers,” Platt said. “It is more akin to Gimbels versus Macy’s.”

This case got a heavy lineup of lawyers and amici filers involved. The American Civil Liberties Union of Pennsylvania and the Center for Individual Rights in Washington, D.C., each filed amicus briefs.

Agility was represented by attorneys at Skadden, Arps, Slate, Meagher & Flom in Washington, D.C., along with local counsel Jeffrey B. Rettig of Johnson, Duffie, Stewart & Weidner in Lemoyne, Pa. KGL was represented by attorneys at Crowell & Moring in Washington and locally by attorneys at Rhoads & Sinon in Harrisburg, Pa.

“KGL looks forward to the trial court’s further attention to this matter,” said Clifford J. Zatz, a partner at Crowell & Moring and chairman of the firm’s products liability and torts group, in a statement.

A call to Skadden wasn’t returned. Donohue ordered the trial court to use Pilchesky to determine whether the authors’ identities should be disclosed.

Gina Passarella can be contacted at 215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI.

(Copies of the 19-page opinion in Kuwait & Gulf Link Transport v. Doe, PICS No. 14-0720, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •