Limit on Virginia courts to enforce subpoena duces tecum on nonresident non-parties

In Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 2015 Va. LEXIS 51 (April 16, 2015), the Supreme Court of Virginia considered the issue of whether a Virginia Circuit Court was empowered to enforce a subpoena duces tecum against a non-party California company having a registered agent in Virginia. The Court held that Virginia circuit courts do not hold subpoena power over non-party foreign companies notwithstanding the foreign company’s act of designating a registered agent in Virginia.

The plaintiff filed a defamation suit against three John Doe defendants claiming that the three had posted false negative reviews on Yelp, a social networking website which allows users to rate local businesses. Yelp, Inc. is headquartered in California but is registered to do business in Virginia and has designated a registered agent in Virginia. Yelp users are able to use pseudonyms when posting reviews of businesses so Hadeed issued a subpoena duces tecum to Yelp seeking documents that might reveal the identities of the three John Doe defendants. The subpoena was served on Yelp’s registered agent in Virginia.

Yelp objected to the subpoena duces tecum. The Circuit Court for the City of Alexandria issued an order enforcing the subpoena duces tecum and holding Yelp in contempt for failure to comply. The Virginia Court of Appeals affirmed the decision of the Circuit Court and adopted its reliance upon Va. Code § 8.01-301 (1) which authorizes service of process on the registered agents of foreign corporations registered to do business in Virginia.

The Virginia Supreme Court observed that, while the General Assembly has provided for the exercise of personal jurisdiction over some nonresident defendants, subpoena power has never been expanded so as to allow it to be exercised over nonresident non-parties. A nonresident party to a legal dispute is subject to the power of the court by way of the pending litigation but a nonresident corporation does not subject itself to the power and authority of Virginia courts by simply registering to do business in Virginia. The court cited numerous opinions from other states holding that nonresident non-parties were not subject to subpoena power.

The Virginia Supreme Court further observed that the General Assembly enacted the Uniform Interstate Deposition and Discovery Act (UIDDA) to facilitate the issuance of out-of-state discovery. Va. Code §§ 8.01-412.8 et seq. The UIDDA act provides a reciprocal streamlined process for obtaining discovery via subpoena in other foreign jurisdictions. Under the UIDDA acts, a party seeking out of state discovery from a non-party should have a subpoena issued by the court in which the litigation is pending. That subpoena would then be presented to the court having jurisdiction over the territory in which discovery is sought which would be empowered to issue and enforce a subpoena.

The Supreme Court of Virginia held that the Circuit Court for the City of Alexandria could not enforce a subpoena duces tecum directing Yelp, a non-party, to produce documents located in California and the contempt order against Yelp was vacated. Based on the reasoning presented by the court, it is likely that Hadeed would have been able to subpoena documents located in Yelp’s California headquarters using procedures outlined in the UIDDA acts, by presenting a Virginia subpoena duces tecum to the California court for issuance and enforcement of a subpoena.

Categories: Virginia