Non-party deponent's identity cannot be hidden from litigants, Fourth Circuit rules

The Fourth Circuit issued an interesting opinion today affirming a protective order issued by the District of Maryland that allows the identity of an anonymous deponent to be revealed to the litigants in the case. Lefkoe v. Jos. A. Bank Clothiers, Inc., No. 08-2059 (4th Cir. Aug. 13, 2009) (PDF).

The primary suit between Lefkoe and Jos. A. Bank is a securities fraud case in which stockholders of the company claim that Jos. A. Bank and insiders issued a series of false and misleading statements about the company’s earnings, profits, and inventory and thereby allowed the insiders to profit from inflated stock prices. That's the boring part.

The interesting part involves the deposition of an anonymous tipster who, through his legal counsel, had written a letter in March 2006 to the company's auditor questioning the integrity of the company's financial statements. The complaint caused a delay in the release of the company's financial statement, which in turn caused a dip in the stock price.

The anonymous tipster was, of course, a person of interest in this suit. So, the defendant notice a Rule 30(b)(6) corporate deposition of the Massachusetts law firm that wrote the letter on his or her behalf to find out the identity of the "Doe Client." Although the suit was pending in the District of Maryland, the defendant caused a subpoena to be issued from the District of Massachusetts under Rule 45.

The Doe Client's law firm moved to quash the subpoena in the District of Massachusetts, claiming it "is punitive, seeks irrelevant information, and violates [the Doe] [C]lient’s right of anonymity as protected by the First [A]mendment and federal common law." The Massachusetts judge denied the motion to quash and allowed a two-hour deposition to be taken directly under his supervision. He also ordered that the deposition be sealed and directed counsel not to disclose the identity of the Doe Client to anyone "absent an order of the judge presiding in the lawsuit" (in the District of Maryland).

Instead of producing a corporate designee on the day of the deposition, the law firm produced the Doe Client "itself." (The opinion refers to the Doe Client as an "it," which I found a little amusing and awkward--why not say "him or her"?) Anyway, the deposition was taken and the lawyers were sworn to secrecy about Doe Client's identity.

Jos. A. Bank’s outside counsel then filed a motion in the Maryland district court to unseal the deposition of the Doe Client and permit further discovery from the Doe Client. Despite the Doe Client’s opposition to Jos. A. Bank’s motion, the Maryland district court modified the protective order by making the Doe Client’s identity "accessible to parties to this litigation." From the district court’s order, the Doe Client filed an interlocutory appeal, invoking the collateral order doctrine.

On appeal, the Doe Client argued (1) that the Maryland District Court overstepped its authority when it modified the Massachusetts District Court's protective order, and (2) that his or her anonymity should be protected under the First Amendment.

The Fourth Circuit rejected both arguments and affirmed. It held that "When the Maryland district court expanded disclosure of the Doe Client’s identity to the parties to this litigation, it did not overstep its authority under the Federal Rules of Civil Procedure, nor did it overstep anything in the Massachusetts court’s protective order."

Second, it held that because the Doe Client's speech was commercial speech as opposed to political or literary, "the Doe Client’s claimed First Amendment right to anonymity is subject to a substantial governmental interest in disclosure so long as disclosure advances that interest and goes no further than reasonably necessary."

Incidentally, Jos. A. Bank "learned that the Doe Client is a known short seller and that short selling ... as opposed to Jos. A. Bank’s fraud or malfeasance, may have been a cause of the drop in the price of Jos. A. Bank stock."

Lefkoe v. Jos. A. Bank Clothiers, Inc., No. 08-2059 (4th Cir. Aug. 13, 2009)