O'GRADY v. Superior Court
139 Cal. App. 4th 1423, 79 U.S.P.Q. 2d (BNA) 1398, 44 Cal. Rptr. 3d 72 (2006)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Online journalists are protected by California's statutory reporter's shield and a conditional First Amendment privilege, which prevents them from being compelled to disclose confidential sources or unpublished information in a civil case unless the party seeking the information has exhausted all alternative sources. Furthermore, the federal Stored Communications Act prohibits an electronic communication service provider from disclosing the contents of a user's stored communications in response to a civil discovery subpoena.
Facts:
- Jason O'Grady operated 'O'Grady's PowerPage' and a person using the pseudonym 'Kasper Jade' operated 'Apple Insider,' both of which were online news magazines focused on Apple Computer, Inc. products.
- In November 2004, both PowerPage and Apple Insider published a series of articles containing detailed, confidential information about an unannounced Apple product codenamed 'Asteroid' or 'Q97.'
- The articles included technical specifications, target prices, release dates, and images of the product.
- Apple determined that much of the published information originated from an internal electronic presentation file conspicuously marked 'Apple Need-to-Know Confidential.'
- One image published on PowerPage appeared identical to a drawing in Apple's confidential presentation, except it lacked the 'Apple Need-to-Know Confidential' caption.
- An attorney for Apple sent a demand letter to O'Grady, asserting the information constituted trade secrets and demanding the removal of all references to the product and the disclosure of his sources.
- O'Grady and 'Kasper Jade' later declared that they had received the information about 'Asteroid' from confidential sources.
Procedural Posture:
- Apple Computer, Inc. filed a complaint in the Santa Clara County Superior Court (a trial court) against unknown 'Doe' defendants for misappropriation of trade secrets.
- Apple filed an ex parte application with the trial court to conduct discovery to identify the Doe defendants.
- The trial court granted Apple's application, authorizing it to serve subpoenas on Powerpage.org and Appleinsider.com.
- Apple subsequently sought and received court authorization to issue subpoenas to Nfox.com and its owner, Karl Kraft, who was the e-mail service provider for PowerPage.
- The publishers (Jason O'Grady, 'Kasper Jade,' and Monish Bhatia) filed a motion for a protective order in the trial court to block Apple's discovery efforts.
- The trial court denied the publishers' motion for a protective order.
- The publishers (petitioners) then petitioned the California Court of Appeal for a writ of mandate to compel the trial court to grant the protective order.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a company seeking to identify the source of a misappropriated trade secret have the right to compel disclosure of that source from online journalists or their email service providers, notwithstanding federal statutory protections for stored communications and state constitutional protections for journalists?
Opinions:
Majority - Rushing, P. J.
No, a company cannot compel disclosure from online journalists or their service providers under these circumstances. The court found three independent grounds to grant a protective order against Apple's discovery attempts. First, the Stored Communications Act (SCA) plainly prohibits an email service provider like Nfox from knowingly divulging the contents of stored communications in response to a civil subpoena, and no statutory exceptions apply. Second, the online journalists are protected by California's reporter's shield (Cal. Const., art. I, § 2; Evid. Code, § 1070), which immunizes them from contempt for refusing to disclose sources or unpublished information. The court held that the online news sites qualify as 'periodical publications' and refused to draw a distinction between 'legitimate' and 'illegitimate' journalism. Third, the conditional First Amendment privilege against compelled disclosure applies to these online journalists. Applying the five-factor balancing test from Mitchell v. Superior Court, the court found the balance weighed decisively against disclosure, primarily because Apple failed to exhaust all alternative sources for identifying the leak, such as deposing its own employees under oath or conducting a thorough internal forensic investigation.
Analysis:
This is a landmark case solidifying the extension of traditional journalistic privileges to the digital realm. The ruling establishes that online journalists, bloggers, and web publishers are entitled to the same protections under California's shield law and the First Amendment as their counterparts in print and broadcast media. By refusing to differentiate journalists based on their medium, the court affirmed that the function of newsgathering, not the format, is what triggers the protection. Furthermore, the court's strict interpretation of the Stored Communications Act reinforces privacy for electronic communications, shielding them from discovery by private parties in civil litigation and forcing litigants to seek information directly from the parties to the communication rather than third-party service providers.
