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In a case where an electronics firm argued an America Online subscriber was libeling it, and where AOL relied on Hustler Magazine v. Falwell to defend its user’s First Amendment rights, the Virginia Supreme Court ruled that AOL must reveal the member’s identity. Responding to an Internet posting about it, Hong Kong-based Nam Tai Electronics Inc. sued various unnamed parties in a California court alleging libel and violations of California unfair business practices law. Among the postings, which appeared on a Yahoo investment site, were some by an entity using the screen name “scovey2.” In one message, titled “Sinking Again,” scovey2 said, “Sinking is not a province in China but an observation of this company’s stock market performance. This low tech crap that they produce is in an extremely competitive and low profitability industry. I see see-sawing of the stock with no real direction. (See-sawing is also not a province.)” Through discovery, Nam Tai learned that scovey2 had joined Yahoo through an AOL account. Nam Tai obtained an out-of-state discovery commission from the California court, and then a subpoena seeking information about scovey2 from a court in Loudon County, Va., near AOL’s corporate offices. AOL moved to quash, arguing that forcing it to reveal subscriber information would infringe on the user’s First Amendment right to speak anonymously, adding that the right applied to both Nam Tai’s libel and unfair business practices claims. Nam Tai countered that, under the principle of comity, Virginia should honor the California commission. Although the trial court held that Nam Tai’s defamation claims would not be viable in Virginia, it added that Nam Tai’s California unfair business practices claims were “not offensive to the public policy of Virginia.” Relying on the Virginia Supreme Court’s 1985 decision in Chaves v. Johnson, the trial court held that AOL’s First Amendment defenses were not applicable to Nam Tai’s unfair business practices claim and ordered AOL to comply. AOL appealed. Basing its argument on the U.S. Supreme Court’s 1988 Hustler decision (in a case stemming from the magazine’s parody depicting the evangelist Falwell committing unnatural acts with his mother in an outhouse), AOL argued that the trial court erred in applying Chaves. In her brief, AOL lead counsel Laura Heymann wrote, “where a plaintiff alleges that a false statement has caused him reputational injury, and that statement is found to be constitutionally protected speech, that plaintiff cannot commit an end run around the First Amendment simply by bringing an alternative tort claim based on that same speech.” Nam Tai replied that even if scovey2′s posting was not defamatory, it still violated the law. “Legally actionable statements are not always defamatory, but often target business interests in an effort to manipulate corporate stock prices, or securities markets generally by ‘improper methods,’ (i.e., commit unfair business practices),” his argument said. Kirkpatrick & Lockhart’s Jon Talotta, who represented Nam Tai, added, “The right to speak anonymously does not permit an individual to violate the law.” Quoting from Chaves, the Virginia Supreme Court concluded that where a speaker uses nondefamatory words in a scheme to enrich himself at the expense of another, “the constitutional guarantees of free speech afford no more protection to the speaker than they do to any other tortfeasor who employs words to commit a criminal or a civil wrong.”

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