The New York Supreme Court Appellate Division has upheld BehindMLM’s appeal against GSB Gold Standard Corporation’s subpoenas.

In upholding BehindMLM’s appeal, the NYSC Appellate Division ordered GSB’s subpoenas quashed.

Through subpoenas issued on two service providers fraudster Josip Heit (right), through his company GSB Gold Standard Corporation, sought to harass BehindMLM for reporting on fraudulent financial activity.

Said activity pertained to GSPartners, through which Heit defrauded primarily US and Canadian investors.

In handing down its decision, the NYSC Appellate Division noted;

  • GSB supported its NYSC petition with German court orders, which were granted default judgments;
  • “the record does not show that GSB made any attempt to notify BehindMLM of [German] proceeding[s]”;
  • “the [Supreme] court’s decision to give preclusive effect to the German orders was not supported by the record;
  • “the issue of whether BehindMLM’s statements were defamatory was not actually litigated and determined in” the German proceedings; and
  • “BehindMLM was not a party to the German proceedings, was not notified of the proceedings and was not given an opportunity to litigate the matter”.

In light of the above findings, the NYSC Appellate Division went on to conclude;

We hold that when a party seeks an anonymous online speaker’s identifying information, courts must first require the party to take reasonable efforts to provide the speaker with notice and an opportunity to appear in the action or proceeding.

Even though the Website contains an online contact form, GSB has not alleged that it took any steps to notify BehindMLM before filing the petition.

As a result, BehindMLM did not learn that her identity was being sought until after the court issued the order on default.

Moreover, when a speaker asserts a First Amendment right to anonymous online speech … a court should consider the First Amendment rights at stake, whether the party seeking disclosure has stated a showing of a prima facie defamation claim, and the balance of the equities.

This Court has stated that “we should protect against the use of subpoenas by corporations and plaintiffs with business interests to enlist the help of ISPs via court orders to silence their online critics, which threatens to stifle the free exchange of ideas”.

In this case, GSB undisputedly set forth the precise statements alleged to be defamatory.

However, even if GSB had stated a valid claim of defamation per se by alleging that the statements were false and harmed its business, the broad and conclusory allegations in the verified petition did not sufficiently establish the falsity of BehindMLM’s statements.

Upon our consideration of all relevant factors, including the weak evidentiary showing and BehindMLM’s asserted First Amendment right to speak anonymously on matters of public concern, we conclude that, on the record as now presented, BehindMLM is constitutionally entitled to maintain her anonymity.

It should be noted that while the NYSC Appellate Division’s order quashes GSB’s subpoenas, legal proceedings have not yet concluded.

We’ll keep you posted on any updates.