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Del. Chancellor Details Twitter Subpoena Ruling In BDO Case

January 5, 2022

Chancellor Kathaleen S. McCormick’s letter decision backed up a bench ruling in November authorizing subpoenas to identify sources of tweets that allegedly defamed BDO USA LLP and key employees.

The decision put present-day considerations on a state Supreme Court precedent, Doe v. Cahill , from 2005 on unmasking potentially defamatory, anonymous blog or social media statements that can be proved or disproved, rather than shielded as opinion.

Behind the latest ruling is a suit filed in March by BDO, a national public accounting, tax and advisory firm, accusing a competitor formed by a former BDO partner, EverGlade Global Inc., of launching an anonymous social media smear campaign to combat BDO litigation in the Superior Court of the District of Columbia over EverGlade’s alleged efforts to “steal an entire business practice.”

Among other relief, BDO sought court authorization for an order finding that BDO met a standard in the 2005 case “for overcoming the presumptive First Amendment protection associated with anonymous speech and is entitled to obtain identifying information about the Twitter accounts” involved.

“Social media in the 2020s is a far cry from the blogs, forums and chatrooms of the mid-2000s,” Chancellor McCormick wrote in explaining her decision in November. “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.”

The chancellor noted recent research showing that a majority of Americans often or sometimes rely on social media, and that internet-connected smartphones, tablets and PCs are ubiquitous news sources.

“Because readers rely on social media platforms for real-time news, those platforms have become battlegrounds for nefarious actors’ information wars,” prompting congressional efforts to expand account verification, the letter opinion noted.

“In today’s world,” it said, “tweets cannot be categorically pushed into the ‘opinion’ column for Cahill purposes.”

In Cahill, the justices reversed a lower court’s “good faith” authorization for Comcast‘s release of identifying information on a blog poster accused of defaming a central Delaware town councilman and his wife. The Supreme Court instead said reasonable efforts were required to notify and secure a response from the unmasking target, along with facts sufficient to prevail on a motion for summary judgment.

Chancellor McCormick said BDO cleared both hurdles, and noted that Twitter notified or made efforts to notify and provide documents to the anonymous posters accused by BDO.

The BDO complaint accused EverGlade “and its agents” of conducting a “malicious and likely criminal campaign.” The complaint said that the company “created and used accounts on various social media platforms to publish defamatory videos and statements accusing BDO of corruption, fraud, sexual harassment, audit rigging, racism and operation of a criminal enterprise,” all “categorically false.” Allegedly false and defamatory videos were posted on YouTube and allegations spread via anonymous Twitter accounts, according to the complaint.

EverGlade and its founder, former BDO partner Eric Jia-Sobota, denied association with the accounts, although EverGlade opposed BDO’s discovery efforts regarding them. Twitter also objected to providing the information without a court order.

Julia Klein of Klein LLC, counsel to EverGlade, said in a transcript of the Nov. 4 proceeding: “I don’t believe that the motion should be granted. And if it is granted, there definitely should not be a finding in the order that BDO has across the board met its First Amendment presumption.”

In the same Nov. 4 transcript, both sides alleged discovery roadblocks, with BDO in particular citing difficulty in efforts to inspect EverGlade and EverGlade parties’ devices and network activity.

Chancellor McCormick ordered appointment of a special discovery master, Molly DiBianca of Clark Hill PLC, to preside over BDO requests for records on an EverGlade investigation and for “inspection of certain custodial devices and other sources of information that were or should have been examined as part of that internal investigation.”

BDO USA LLP is represented by Ashley R. Altschuler, Ethan H. Townsend, Kevin M. Regan, Michael Sheehan and Russell Hayman of McDermott Will & Emery LLP, and Jason C. Jowers and Sarah T. Andrade of Bayard PA.

EverGlade is represented by Julia B. Klein of Klein LLC.

Non-party Twitter Inc. is represented by Matthew F. Davis of Potter Anderson & Corroon LLP.

The case is BDO USA LLP v. EverGlade Global Inc., case number 2021-0244, in the Court of Chancery of the State of Delaware.

–Editing by Robert Rudinger.

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