BDO USA, LLP v. EverGlade Global, Inc.

• Court: Court of Chancery of Delaware
• Decided: January 5, 2022
• Docket: C.A. No. 2021-0244-KSJM
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE KATHALEEN ST. JUDE MCCORMICK LEONARD L. WILLIAMS JUSTICE CENTER CHANCELLOR 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734

January 5, 2022

Ashley R. Altshuler, Esquire Julia B. Klein, Esquire Ethan H. Townsend, Esquire Klein LLC Kevin M. Regan, Esquire 225 W. 14th Street, Suite 100 McDermott Will & Emery LLP Wilmington, DE 19801 1007 N. Orange Street, 10th Floor Wilmington, DE 19801 Matthew F. Davis, Esquire Potter Anderson & Corroon LLP Jason C. Jowers, Esquire 1313 N. Market Street, 6th Floor Sarah T. Andrade, Esquire Wilmington, DE 19801 Bayard, P.A. 600 N. King Street, Suite 400 Wilmington, DE 19801

Re: BDO USA, LLP v. EverGlade Global, Inc., C.A. No. 2021-0244-KSJM

Dear Counsel:

On November 4, 2021, I heard oral argument on Plaintiff’s Motion for Court

Authorization for Twitter, Inc. to Comply with Subpoenas (the “Motion”).1 I granted the

motion in a bench ruling during the hearing but indicated that I intended to elaborate upon

my ruling at a later time.2 Hence this letter.

As background, Plaintiff BDO USA, LLP (“Plaintiff” or “BDO”) served two

subpoenas on Twitter, Inc. (“Twitter”) seeking identifying information associated with four

1 See generally C.A. No. 2021-0244-KSJM, Docket (“Dkt.”) 210 (“Oral Arg. Tr.”). 2 See id. at 36:7–14. C.A. No. 2021-0244-KSJM January 5, 2022 Page 2 of 12

anonymous Twitter accounts relevant to this case.3 Those accounts were @boycottbdo,

@boycottbdo1, @boycottbdo2, and @bdoboycott (collectively, the “Twitter Accounts”). 4

Plaintiff alleges that those accounts are or were operated by Defendant EverGlade Global,

Inc. (“Defendant” or “EverGlade”) and EverGlade’s CEO Eric Jia-Sobota, a former BDO

partner.5 Plaintiff further alleges that the accounts were used to launch a “smear campaign”

against BDO.6 EverGlade and Jia-Sobota deny association with the accounts.7 Twitter

objected to providing the requested information absent a court order,8 so Plaintiff filed the

Motion.9

While the scope of permissible discovery is broad under Delaware law,10 subpoenas

intended to reveal anonymous internet speakers implicate countervailing First Amendment

issues.11 Taking these constitutional issues into account, the Delaware Supreme Court

3 See Dkt. 157, Transmittal Decl. of Sarah T. Andrade, Esq. in Supp. of Pl.’s Mot. for Ct. Authorization for Twitter, Inc. to Comply with Subpoenas (“Andrade Decl.”) Ex. 8, 9. 4 Id. 5 Dkt. 156, Pl.’s Mot. for Ct. Authorization for Twitter, Inc. to Comply with Subpoenas (“Mot.”) at 2–3. 6 Id. at 3–4. 7 See Dkt. 48, Answer to Am. Verified Compl. ¶¶ 33, 159, 160, 163; Andrade Decl. Ex. 6 at 14:20–25, 163:7–10. 8 See Andrade Decl. Ex. 10, Ex. 11; Mot. at 7 n.3. 9 See generally Mot. 10 See, e.g., Prod. Res. Grp., L.L.C. v. NCT Grp., Inc., 863 A.2d 772, 802 (Del. Ch. 2004). 11 See generally Reno v. Am. Civ. Liberties Union, 521 U.S. 844, 870 (1997) (holding that there is “no basis for qualifying the level of First Amendment scrutiny that should be applied to [the internet].”); Doe v. 2TheMart.com Inc., 140 F.Supp.2d. 1088, 1097 (W.D. C.A. No. 2021-0244-KSJM January 5, 2022 Page 3 of 12

articulated the standard that Delaware courts apply when faced with a discovery request

seeking to expose the identity of an anonymous figure who has posted allegedly defamatory

material on the internet in the 2005 decision Doe v. Cahill.12

In Cahill, someone anonymously posted statements on an internet blog that accused

a Smyrna city councilman of character flaws, mental deterioration, and paranoia.13

Councilman Cahill and his wife sued the anonymous poster and others for defamation. The

plaintiffs served a subpoena on Comcast seeking the identity of the poster through the

poster’s IP address.14 The trial court denied a motion for a protective order, applying a

“good faith” standard to determine whether the plaintiffs could compel Comcast to disclose

the poster’s identity.15

The Delaware Supreme Court reversed on appeal, announcing the standard that

governs the instant analysis.16 A party seeking to uncover an anonymous speaker’s identity

through the discovery process must (i) make reasonable efforts to notify the speaker and

allow the speaker an opportunity to respond, and (ii) introduce facts sufficient to create a

Wash. 2001) (concluding that “the constitutional rights of Internet users, including the First Amendment right to speak anonymously, must be carefully safeguarded.”). 12 See Doe v. Cahill, 884 A.2d 451, 461 (Del. 2005). 13 Id. at 454. 14 Id. at 455. 15 See Cahill v. John Doe-Number One, 879 A.2d 943, 954–56 (Del. Super. Ct. 2005). 16 Cahill, 884 A.2d at 466–68. C.A. No. 2021-0244-KSJM January 5, 2022 Page 4 of 12

genuine issue of material fact that would defeat a motion for summary judgment. 17 As I

previously ruled, Plaintiff has met both of those burdens.

First, Cahill requires that “to the extent reasonably practicable under the

circumstances, the plaintiff must undertake efforts to notify the anonymous poster that he

is the subject of a subpoena or application for order of disclosure.” 18 Twitter notified the

two accounts identified in the first subpoena, @boycottbdo and @boycottbdo1, by sending

notice and a copy of the first subpoena to the email addresses associated with those

accounts.19 Initially, Twitter could not locate email addresses for the two accounts

identified in the second subpoena, @boycottbdo2 and @bdoboycott, but sent notice and a

copy of the second subpoena to the email addresses for the first two accounts. 20 Later,

Twitter found an email address for @boycottbdo2 and sent it the same documents.21

17 Id. at 460–61. 18 Id. at 460. 19 See Andrade Decl. Ex. 8 (first subpoena); Ex. 10 (“Twitter has sent notice and a copy of your subpoena to any email address(es) associated with any account(s) properly identified in your subpoena.”). 20 See Andrade Decl. Ex. 9 (second subpoena); Ex. 18 (Twitter’s counsel informing Plaintiff’s counsel in an email that “the accounts covered by the second subpoena (@boycottbdo2 & @bdoboycott) have not been notified because they were deleted sufficiently far in advance of Twitter’s receipt of the second subpoena that identifying information for those 2 accounts was no longer available in Twitter’s regular production tools. . . . notice of the second subpoena was actually sent to the email addresses for the accounts covered by the first subpoena (@boycottbdo & @boycottbdo1).”). 21 See Andrade Decl. Ex. 18 (Twitter’s counsel informing Plaintiff’s counsel in an email that Twitter had “been able to locate some IP addresses for @boycottbdo2 & @bdoboycott, as well as an email address for @boycottbdo2, but not for @bdoboycott. Notice went out to the email address associated with @boycottbdo2”). C.A. No. 2021-0244-KSJM January 5, 2022 Page 5 of 12

Defendant argued that notice had not been properly provided because Cahill states

that “when a case arises in the internet context, the plaintiff must post a message notifying

the anonymous defendant of the plaintiff's discovery request on the same message board

where the allegedly defamatory statement was originally posted.”22 Thus, Defendant

argued that “BDO was required to inform the anonymous Twitter poster(s) on the Twitter

platform of the pending subpoenas.”23 Satisfying notice in this manner, however, would

have proven difficult if not pointless for Plaintiff; with the exception of @boycottbdo, the

Twitter Accounts had been deleted.24

Even if the accounts had not been deleted, Defendant’s argument is unpersuasive.

In Cahill, the court observed that a federal statute required Comcast to notify the

anonymous speaker of the plaintiffs’ discovery request but expressed concern that such a

statute may not apply to future cases.25 Thus, the court held that “regardless of the medium

in which the allegedly defamatory statement is published, the plaintiff must undertake

reasonable efforts to notify the anonymous defendant of the discovery request and must

withhold action to allow the defendant an opportunity to respond.”26

22 Cahill, 884 A.2d at 461. 23 Dkt. 182, Def.’s Opp’n to Pl.’s Mot. for Ct. Authorization for Twitter, Inc. to Comply with Subpoenas (“Answering Br.”) at 10–11. 24 See Dkt. 196, Pl.’s Reply in Further Supp. of Its Mot. for Ct. Authorization for Twitter, Inc. to Comply with Subpoenas at 12. 25 Cahill, 884 A.2d at 461. 26 Id. (emphasis added). C.A. No. 2021-0244-KSJM January 5, 2022 Page 6 of 12

Twitter’s notice to the email addresses associated with the Twitter Accounts

satisfied Plaintiff’s reasonable-efforts obligation established in Cahill. To hold otherwise

would be nonsensical; the entire point of Plaintiff’s subpoena is to identify the person

responsible for the Twitter Accounts’ activity. Twitter has better access to that information

than Plaintiff, and @boycottbdo2 is a good example. The @boycottbdo2 account owner

deleted the account, and Plaintiff would have therefore wasted its time by attempting to

notify @boycottbdo2 of the subpoena by sending a Tweet on the Twitter platform.27

Twitter was eventually able to locate an email address for @boycottbdo2 and send notice

to that address, which is a more reliable method of contacting the anonymous user than

posting a Tweet about a subpoena would have been regardless. Plaintiff was not required

to duplicate Twitter’s efforts on that front; what matters is that the anonymous speaker was

notified.

Next, Plaintiff satisfied the summary judgment standard. Summary judgment is

granted where there is no genuine issue as to any material fact. A plaintiff who wishes to

satisfy the Cahill standard must set forth “facts to defeat a summary judgment motion” and

“must submit evidence sufficient to establish a prima facie case for each essential element

27 See also Ciabattoni v. Teamsters Local 326, 2018 WL 2418388, at *3 (Del. Super. Ct. May 29, 2018) (rejecting the plaintiff’s claim “that he is unable to provide notice until he knows the identity of the speaker. Yet the Supreme Court anticipated this conundrum and articulated that ‘when a case arises in the internet context, the plaintiff must post a message notifying the anonymous defendant of the plaintiff's discovery request on the same message board where the allegedly defamatory statement was originally posted.’ If for some reason Plaintiff would be unable to do so, he must still have made a reasonable effort to notify the speaker. He has not done so here.”). C.A. No. 2021-0244-KSJM January 5, 2022 Page 7 of 12

of the claim in question.”28 In other words, here, BDO had the burden of showing that it

would overcome a summary judgment motion on its claims. BDO asserted that it met the

Cahill standard for its defamation claim, and I agree.29

Under Delaware law, the elements of defamation are “1) the defendant made a

defamatory statement; 2) concerning the plaintiff; 3) the statement was published; and 4) a

third party would understand the character of the communication as defamatory.”30 Public

figures must establish two additional elements to prevail on a defamation claim: “that 5) the

statement is false and 6) that the defendant made the statement with actual malice,” though

the sixth factor is irrelevant to the anonymous speaker revelation standard.31

Cahill instructs that the first element is the most important because the remaining

factors are relatively easy to meet.32 Thus, a court must determine “first, whether alleged

28 Cahill, 884 A.2d at 460. 29 See Mot. at 9. This letter, much like Defendant’s answering brief and oral argument, does not address Plaintiff’s arguments that it has also satisfied the Cahill standard for its claim under the Deceptive Trade Practices Act. See generally Answering Br.; Oral Arg. Tr. 30 Cahill, 884 A.2d at 463. 31 Id. at 463–64 (clarifying that “we do NOT hold that the public figure defamation plaintiff is required to produce evidence on this element of the claim. We hold only that a public figure plaintiff must plead the first five elements and offer prima facie proof on each of the five elements to create a genuine issue of material fact requiring trial. In other words, a public figure defamation plaintiff must only plead and prove facts with regard to elements of the claim that are within his control.”). 32 Id. at 463. C.A. No. 2021-0244-KSJM January 5, 2022 Page 8 of 12

defamatory statements are expressions of fact or protected expressions of opinion; and

[second], whether the challenged statements are capable of a defamatory meaning.”33

To decide whether a statement is one of fact or opinion, the question is whether “the

ordinary reader could infer the existence of facts which are capable of being proved true or

false.”34 This inquiry is critical because “courts cannot, and should not, evaluate the

objective validity of an opinion. To do so violates First Amendment standards.” 35 Thus,

“political, cultural, and ideological critiques that accuse institutions or individuals of being

racist or bigoted are not actionable but are [protected] expressions of name calling and

rhetorical hyperbole.”36

Defendant argues that online media outlets such as chat rooms, Twitter, and

Facebook are informal outlets of personal opinion and not reliable sources of information.37

Defendant relies on Cahill, where the high court reversed the trial court in part based

on the platform for the speech—an internet blog expressly dedicated to “opinions” about

Smyrna—and concluding that “no reasonable person could have interpreted these

statements as being anything other than opinion.”38

33 Id. (citing Riley v. Moyed, 529 A.2d 248, 251 (Del. 1987)) (emphasis and brackets in original). 34 Sunstar Ventures, LLC v. Tigani, 2009 WL 1231246, at *7 (Del. Super. Ct. Apr. 30, 2009). 35 Cousins v. Goodier, 2021 WL 3355471, at *2 (Del. Super. Ct. July 30, 2021). 36 Id. at *4. 37 Oral Arg. Tr. at 28:15–30:24. 38 Cahill, 884 A.2d at 467. C.A. No. 2021-0244-KSJM January 5, 2022 Page 9 of 12

Defendant also relies on SunEnergy1, LLC v. Brown, where the Delaware Superior

Court concluded that anonymous reviews on Glassdoor.com are informal outlets of

personal opinions and not reliable sources of information. The court in SunEnergy1

observed that Glassdoor “is a website for employment and company evaluation—it is not

a news website (e.g. WSJ.com or NYT.com) where there is an expectation of objective

reporting and journalistic standards.”39 Further, Glassdoor was not “a website where a

person would go to find detailed factual information about a company such as earnings

reports and SEC filings.”40

Although the court in SunEnergy1 held that reviews on Glassdoor fell in the opinion

column, it noted that “[s]ince the Cahill opinion in 2005, the internet has evolved

considerably.”41

That’s a dramatic understatement. Social media in the 2020s is a far cry from the

blogs, forums, and chatrooms of the mid-2000s. For better or worse, social media

platforms like Twitter, which did not even exist in 2005, are being used increasingly as a

news source and people expect that at least some of what they encounter on the site is

factual. For this proposition, Plaintiff cited a 2019 Pew Research Center study that found

55 percent of U.S. adults often or sometimes rely on social media for their news. 42 That

39 SunEnergy1, LLC v. Brown, 2015 WL 7776625, at *4 (Del. Super. Ct. Nov. 30, 2015). 40 Id. 41 Id. 42 Dkt. 196, Pl.’s Reply in Further Support of its Mot. for Ct. Authorization for Twitter, Inc. to Comply with Subpoenas at 5–6 (citing Elizabeth Grieco and Elisa Shearer, C.A. No. 2021-0244-KSJM January 5, 2022 Page 10 of 12

statistic has remained consistent for Twitter in more recent studies conducted by Pew

Research Center in 2021.43 Other studies similarly show what is likely unsurprising to any

person walking down the street—that adults often obtain their news from a smartphone,

computer, or tablet.44

Even in the absence of such academic research, it is patently obvious that Twitter is

not remotely akin to the small-town blog at issue in Cahill or the comparatively limited-

purpose platform of Glassdoor. When billionaires like Elon Musk Tweet, the stock market

moves.45 The last three White House administrations have distributed official

communications through the President’s Twitter account.46 Because readers rely on social

media platforms for real-time news, those platforms have become battlegrounds for

Americans Are Wary of the Role Social Media Sites Play in Delivering News, PEW RES. CTR. (Oct. 2, 2019), https://www.pewresearch.org/journalism/2019/10/02/americans-are- wary-of-the-role-social-media-sites-play-in-delivering-the-news/. 43 See Mason Walker & Katerina Eva Matsa, News Consumption Across Social Media in 2021, PEW RES. CTR. (Sept. 20, 2021), https://www.pewresearch.org/journalism/2021/09/ 20/news-consumption-across-social-media-in-2021/. 44 See Elisa Shearer, More than eight-in-ten Americans get news from digital devices, PEW RES. CTR. (Jan. 12, 2021), https://www.pewresearch.org/fact-tank/2021/01/12/more-than- eight-in-ten-americans-get-news-from-digital-devices/. 45 See Will Davies, Tesla Shares Slide as Musk Tweets on Lack of Hertz Contract, BLOOMBERG (Nov. 1, 2021, 11:06 PM, updated Nov. 2, 2021, 4:20 PM), https://www. bloomberg.com/news/articles/2021-11-02/musk-emphasizes-hertz-deal-not-signed-in- tweet-on-tesla-chart. 46 See generally Barbara Ortutay, @POTUS Resets as Twitter Juggles Presidential Accounts, U.S. NEWS & WORLD REPORT (Jan. 19, 2021, 7:42 PM), https://www.usnews .com/news/business/articles/2021-01-19/potus-resets-as-twitter-juggles-presidential- accounts. C.A. No. 2021-0244-KSJM January 5, 2022 Page 11 of 12

nefarious actors’ information wars.47 These information wars have, in turn, resulted in

Congress introducing bills to compel platforms to expand their account verification

practices.48 In today’s world, Tweets cannot be categorically pushed into the “opinion”

column for Cahill purposes.

With the understanding that statements on Twitter can constitute actionable

expressions of fact, I turn to the Tweets at issue. Some fall under the category of opinion,

such as those that generally accuse Plaintiff and its CEO of racism.49 Others, however, are

more concrete, such as those that accuse the CEO of having an affair, sending inappropriate

sexual pictures to staffers, and refusing to offer transgendered employees healthcare

benefits.50 These statements are susceptible of proof; either they occurred, or they did not.

Thus, they are actionable statements of fact, and Plaintiff satisfied the summary judgment

47 See Gabby Deutch, Social Media Has Become a Global Battlefield, THE ATLANTIC (Oct. 2, 2018), https://www.theatlantic.com/international/archive/2018/10/social-media-battle field-internet/571960/. See also Craig Timberg & Cristiano Lima, Today’s Taliban uses sophisticated social media practices that rarely violate the rules, THE WASHINGTON POST (Aug. 18, 2021, 9:00 AM), https://www.washingtonpost.com/technology/2021/08/18 /taliban-social-media-success/. 48 See Anita Joseph & Michele Paselli, Verifying the Identity of People Behind High-Reach Profiles, META (May 28, 2020), https://about.fb.com/news/2020/05/id-verification-high- reach-profiles/; Social Media Accountability and Account Verification Act, H.R. 6586, 116th Cong. (2020); Social Media Accountability and Account Verification Act, H.R. 4653, 117th Cong. (2021). 49 See Andrade Decl. Ex. 3. 50 See Andrade Decl. Exs. 3, 4, 5. C.A. No. 2021-0244-KSJM January 5, 2022 Page 12 of 12

standard as to the first element of its defamation claim in addition to the remaining

elements.51

For the above reasons, I granted the Plaintiff’s Motion for Court Authorization for

Twitter, Inc. to Comply with Subpoenas.

Sincerely,

/s/ Kathaleen St. Jude McCormick

Kathaleen St. Jude McCormick Chancellor

cc: All counsel of record (by File & ServeXpress)

51 It does not matter whether Plaintiff is a public figure on this procedural posture, which would add the fifth element, falsity, as it has denied the truth of the statements time and again.