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Glassdoor, Inc. v. Superior Court (Machine Zone, Inc.)

California Court of Appeals, Sixth District

March 10, 2017

GLASSDOOR, INC., Petitioner,
v.
SUPERIOR COURT OF SANTA CLARA COUNTY, Respondent MACHINE ZONE, INC., Real Party in Interest.

         Santa Clara County Superior Court CV282558 The Honorable Mary E. Arand Judge

          Attorneys for Petitioner Glassdoor, Inc.: Seubert French Frimel & Warner LLP William J. Frimel Rebecca L. Epstein

          Attorneys for Real Party in Interest Machine Zone, Inc.: Arnold & Porter LLP Michael A. Berta Sean M. SeLegue Sean Morris

          RUSHING, P.J.

         Petitioner Glassdoor, Inc. (Glassdoor), operates a Web site on which workers can post “reviews” of past and current employers. Real party in interest Machine Zone, Inc. (MZ) is a developer of software products including the online multiplayer game “Game of War: Fire Age.” During the pendency of this proceeding it has rebranded itself as “MZ” and has released a product labeled RTplatform, which it describes as “a stand-alone real-time platform technology that enables the exchange of data between billions of endpoints worldwide virtually simultaneously.” Prior to this rebranding, MZ brought suit against a former employee named fictitiously as John Doe. MZ contends that in violation of a nondisclosure agreement signed by all MZ employees, Doe posted a review on Glassdoor's Web site disclosing confidential information concerning the RTPlatform technology. When Glassdoor refused to identify Doe, MZ moved for an order compelling it to do so. The trial court granted the motion. Glassdoor brought this petition for a writ directing the trial court to set aside its order. We have concluded that MZ failed to make a prima facie showing that Doe's statements disclosed confidential information in violation of the nondisclosure agreement. Accordingly, we will grant the requested relief.

         Background

         According to the complaint, Doe posted the offending review on Glassdoor's Web site on or about June 21, 2015.[1] Entitled “A Scandal, ” the review commences by identifying three “Pro's” of employment at MZ: “Free food, free massages, [and a] spacial [sic] office.” It then sets out four “Con's, ” as follows:

         “1. Management spreads unreal information to both outside VC's and employees. For example:

         “a) They claim that they have developed a language translator. However, their ‘translator' just calls Google translation API. They actually don't have a product translator.

         “b) In July 2014, their CEO announced that they raised $250, 000, 000 (250 million) from JP Morgan, based on a total value 3 billion dollars. After one year has been passed, it's not verified by any other resources. The CEO has never mentioned it again.

         “3. Terrible work-life balance, except for the platform team, which do not know what to work on. For Data Science team and Game Engineering team, people usually go home after 10:00pm and have on-call duties every month.

         “4. The senior management lost directions. The company has invested heavily in the platform team (there are 70-80 engineers). However, after one year, nothing has been done by that team. The CEO said in the team meeting: I don't expect products and revenue from the platform team. I only want you can show demos. The platform is only for attracting investments from VCs.” (Some punctuation regularized.)

         Under the heading “Advice, ” the review stated, “Stop telling the investors and employees the unreal information. A company cannot survive forever by cheating!” The review went on to assert that employees were “Very Dissatisfied”; that they, or Doe, “ ‘Disapprove' [of] Gabriel Leydon (CEO)”; that Doe would not recommend MZ to a friend; and that MZ's business outlook was “Getting Worse.”

         According to MZ, it notified Glassdoor on June 22, 2015, that, in its view, the post disclosed “confidential information regarding Machine Zone's valuation and fundraising, as well as internal, confidential statements made by Machine Zone's CEO and management regarding Machine Zone's confidential and strategic business plans.” MZ states that the review was removed from the Web site on June 23.

         MZ filed its complaint on July 1, 2015, asserting a single cause of action against Doe for breach of contract. It alleged that Doe breached the nondisclosure agreement by “disclosing to third parties Machine Zone's confidential, non-public information.” MZ did not identify the statements in the review supposedly having this effect; nor did it specify the confidential information supposedly disclosed. Instead it broadly alleged that Doe had “provided details concerning undisclosed technology Machine Zone has and is developing, the stage of development of that technology and the scope of Machine Zone's investment therein.” MZ further alleged that the post “quoted Machine Zone CEO Gabriel Leydon's confidential internal statements concerning that technology.”

         On July 2, Machine Zone promulgated a subpoena directing Glassdoor to produce a copy of Doe's review as well as information identifying its author. Glassdoor produced a copy of the review, but otherwise objected to the subpoena on the grounds, among others, that disclosure of the poster's identity would violate his “right to speak anonymously under the First Amendment, ” and that Machine Zone had “failed to make a prima facie showing that any statement in the review... is actionable.”[2]

         MZ filed a motion to compel. It challenged Glassdoor's standing to assert Doe's First Amendment rights and argued that MZ had “made a sufficient showing to entitle it to disclosure of Defendant's identity.” MZ also moved to file the entire review under seal, asserting that the review “contains information that is confidential, non-public and competitively sensitive, ” and that “[d]isclosure of this kind of confidential information is highly detrimental to Plaintiff and would cause Machine Zone competitive and irreparable business harm by providing competitors with insight into technology development and business plans at Machine Zone.”

         Glassdoor opposed the motion to compel, insisting that it had standing to object and arguing that MZ had not presented adequate evidence of either a breach of the nondisclosure agreement or of resulting injury. With respect to breach, it contended that MZ had failed to establish that the review disclosed any information that was covered by the nondisclosure agreement. It emphasized that MZ had not specified which statements in the review were supposed to have revealed confidential information, nor the confidential information they supposedly revealed. It also presented evidence that some of the more concrete statements in the review disclosed information that was already publicly available.

         The trial court granted the motion to compel. Glassdoor petitioned this court for an extraordinary writ vacating the order and directing the trial court to deny the motion. We issued a stay, followed by an order to show cause why the requested relief should not be granted.

         Discussion

         I. Standing

         A. State of the Law

         There is no question that Doe had a right, protected by the First Amendment, to speak anonymously. (See Krinsky v. Doe 6 (2008) 159 Cal.App.4th 1154, 1163-1164 (Krinsky), citing Talley v. California (1960) 362 U.S. 60, 64, McIntyre v. Ohio Elections Com'n (1995) 514 U.S. 334, 341-342 & Watchtower Bible and Tract Society of New York, Inc. v. Village of Stratton (2002) 536 U.S. 150, 166.) However MZ contends that Doe's First Amendment rights are personal to him and may not be erected by Glassdoor as a barrier to discovery. This contention raises a true question of jus tertii standing, i.e., the ability “to defeat a claim by asserting the paramount rights of a third person.” (Jasmine Networks, Inc. v. Superior Court (2009) 180 Cal.App.4th 980, 989-991.)

         A decade ago, such a contention presented a relatively novel question. Now, however, a substantial preponderance of national authority favors the rule that publishers, including Web site operators, are entitled to assert the First Amendment interests of their anonymous contributors in maintaining anonymity. (See Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 228, fn. 12, quoting Rancho Publications v. Superior Court (1999) 68 Cal.App.4th 1538, 1541 [“ ‘a nonparty ‘to civil litigation (such as a newspaper) [may] assert the constitutionally protected rights of an author to remain unknown' ”]; McVicker v. King (W.D. Pa. 2010) 266 F.R.D. 92, 95 [“The trend among courts which have been presented with this question is to hold that entities such as newspapers, internet service providers, and website hosts may, under the principle of jus tertii standing, assert the rights of their readers and subscribers.”]; In re Indiana Newspapers Inc. (Ind.Ct.App. 2012) 963 N.E.2d 534, 549 [“when a third-party entity, such as a newspaper, is subpoenaed to reveal the identity of an anonymous commenter who has used that third party as a forum for his anonymous speech, the third-party has standing to contest the subpoena under the principle of jus tertii”]; Pilchesky v. Gatelli (Pa. Super. Ct. 2011) 12 A.3d 430, 437, fn. 9 [dictum; standing not raised and not subject to determination sua sponte]; Trawinski v. Doe ( N.J.Super. Ct. App. Div., Jun. 3, 2015) 2015 WL 3476553, at p. 5; In re Subpoena Duces Tecum to America Online, Inc. (Va. Cir. Ct. 2000) 52 Va. Cir. 26, 2000 WL 1210372 (AOL), revd. on another ground in America Online, Inc. v. Anonymous Publicly Traded Co. (2001) 261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350 [542 S.E.2d 377]; In re Verizon Internet Services (D.D.C.2003) 257 F.Supp.2d 244, 257-258 (Verizon), revd. on another ground in Recording Industry Ass'n. of America, Inc. v. Verizon Internet Services, Inc. (D.C.Cir.2003) 351 F.3d 1229, 1239.)

         B. The Matrixx Decision

         MZ contends that a contrary rule was adopted by this court in Matrixx Initiatives, Inc. v. Doe (2006) 138 Cal.App.4th 872 (Matrixx). But that case did not involve the standing of a publisher or service provider. The person attempting to assert the rights of the anonymous online speaker there was a deponent who denied any connection to the offending posts, even though one of them had been traced to a hedge fund he managed. (Id. at p. 876.) This made him a “third part[y] in a lawsuit that may have nothing to do with [him].” (Id. at p. 879.) As such, he had no right to assert the interests of “presumably unrelated third parties.” (Id. at p. 881.) The court did not disagree with decisions, including some of those cited above, in which service providers had successfully asserted standing to defend their subscribers' First Amendment right to anonymity. (Id. at pp. 880-881, citing AO, supra, 261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350 [542 S.E.2d 377]; Verizon, supra, 257 F.Supp.2d 244, 257-258.) Rather the court distinguished those cases on the ground that each of them had found standing in “an entity with a sufficiently close relationship to the anonymous user that judicial consideration was warranted.” (Matrixx, supra, at p. 880.)

         Glassdoor is not an avowed stranger to the speaker, as was the objector in Matrixx. It is the acknowledged publisher of the speech at issue. Such a publisher has a strong interest in protecting the right of its users to speak anonymously. Thus the court in AOL, supra, 261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350');">261 Va. 350 [542 S.E.2d 377], observed that the service provider would be harmed by disclosure of the user's identity because “ ‘[i]f [it] did not uphold the confidentiality of its subscribers... one could reasonably predict that [its] subscribers would look to [its] competitors for anonymity.' ” (Matrixx, supra, 138 Cal.App.4th at p. 880, quoting AOL, supra, 52 Va. Cir. 26, 32.) Similarly, failure by the service provider in Verizon, supra, to protect its users' anonymity would diminish its “ ‘ability to maintain and broaden its customer base.' ” (Matrixx, supra, 138 Cal.App.4th at p. 880, fn. omitted, quoting Verizon, supra, 257 F.Supp.2d 244, 258.) Another court found that a newspaper had standing to defend a poster's anonymity, where “preventing [it] from asserting the First Amendment rights of anonymous commentators” on its Web site would “compromise the vitality of the newspaper's online forums, sparking reduced reader interest and a corresponding decline in advertising revenues.” (Enterline v. Pocono Medical Center (M.D. Pa. 2008) 751 F.Supp.2d 782, 786.)

         The situation here is the same as in the cases distinguished by Matrixx. As Glassdoor's corporate counsel declared, its business model “relies on maintaining its users' anonymity. The reliability of the information on glassdoor.com would likely decrease if litigants could readily obtain users' identities, because users would fear retaliatory litigation based on the information they posted.” This would naturally tend to harm Glassdoor's interests, because its usefulness to potential readers depends on the degree to which posters feel able to frankly recount their employment experiences without fear of adverse consequences. In the case of a current employee, such consequences can be severe, up to and including termination of employment. Even a past employee may be exposed to retaliation by, for instance, unfavorable references. Anonymity may provide a would-be poster's only real protection against such consequences. By providing it, Glassdoor creates an opportunity for users to safely provide content of interest to other users. In exchange Glassdoor receives content which, it hopes, will draw readers to its site and from which it undoubtedly hopes to derive revenue.

         Anonymous publication thus furnishes not only the medium through which persons like Doe exercise their First Amendment rights, but is also a significant asset in Glassdoor's business-an asset in which Glassdoor possesses a direct pecuniary interest squarely aligned with the interest of each anonymous content provider.[3] This symbiosis constitutes a “sufficiently close ...


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