IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA OTC SOLUTIONS, LLC; GOLDEN

DRAGON MEDIA, INC.; and PUDONG, LLC, Plaintiffs, v. JOHN DOES 1-50, Defendants. Case No. 1:10-cv-500

MEMORANDUM IN SUPPORT OF MOTION FOR ACCELERATED, PRE-CONFERENCE DISCOVERY (FED. R. CIV. P. 26(D))

Plaintiffs OTC Solutions, LLC, Golden Dragon Media, Inc., and Pudong, LLC (Plaintiffs), by and through counsel, submit this memorandum in support of their Motion for Accelerated, Pre-Conference Discovery (Fed. R. Civ. P. 26(d)) in the underlying action against John Does 1-50 (John Doe Defendants). I. INTRODUCTION Plaintiffs seek leave of this court to conduct limited discovery prior to the normally-required Federal Rule of Civil Procedure Rule 26(f) conference so that they may ascertain the true identity of the John Doe Defendants, their locations, and their legal status for purposes of serving the Complaint. As set forth more fully in the Complaint, the John Doe Defendants have committed several unlawful acts against Plaintiffs in violation of federal and state law. The prima facie case for Plaintiffs claims outlined in the Complaint establishes the necessity of obtaining the identifying information. Indeed, without the sought-after information to identify the John Doe Defendants, Plaintiffs

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would be unable to proceed with litigation against the John Doe Defendants, whose malicious and willful conduct has caused Plaintiffs substantial damage. Therefore,

Plaintiffs seek to serve third-party subpoenas on, inter alia, iContact Corporation (iContact) and Moniker Online Services, LLC (Moniker) in order to learn who committed the unlawful acts against Plaintiffs as set forth in the Complaint. (Attached hereto as Exs. A and B are the proposed third-party subpoenas to iContact and Moniker.) II. RELEVANT FACTS Plaintiffs are financial communications and consulting companies that specialize in distributing newsletters and information regarding micro-cap and small-cap companies. (Declaration of Anthony J. Thompson, Jr. (Thompson Decl.) 3, attached hereto as Ex. C; Declaration of Jay Fung (Fung Decl.) 3, attached hereto as Ex. D; Declaration of Eric Van Nguyen (Van Nguyen Decl.) 3, attached hereto as Ex. E; see also Complaint 8.) Fundamental to the success of Plaintiffs enterprises is the

development, maintenance, protection, and promotion of lists of individuals who have affirmatively opted to receive Plaintiffs product (Subscriber Lists). (Id.) Plaintiffs spend tens of thousands of dollars every day promoting and expanding the list of persons on the Subscriber Lists, and the value of each of Plaintiffs several lists is estimated at $2.5 to $4 million. (Thompson Decl. 4; Fung Decl. 4; Van Nguyen Decl. 4.) Plaintiffs employed the services of iContact Corporation for the purpose of managing the process of distributing their newsletters to members of the Subscriber Lists, and entrusted iContact with the Subscriber Lists for that purpose. (Thompson Decl. 5;

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Fung Decl. 5; Van Nguyen Decl. 5.) Sometime in April 2010, the contents of the Subscriber Lists held by iContact were unlawfully accessed and downloaded. (Thompson Decl. 7; Fung Decl. 7; Van Nguyen Decl. 7.) Plaintiffs became aware of the theft when their seed emailsprivate email accounts that are used solely for the purpose of monitoring the Subscriber Listsbegan receiving illegal spam newsletters. (Thompson Decl. 8; Fung Decl. 8; Van Nguyen Decl. 8.) Plaintiffs knew the

Subscriber Lists had been compromised when their seed email accounts, which are known only to Plaintiffs and only receive electronic messages that are distributed to the Subscriber Lists, began receiving illegal and unauthorized messages. (Id.) The only way that unauthorized access to the Subscriber Lists may have been achieved is if iContacts security was breached, or someone unlawfully obtained Plaintiffs passwords and codes and then accessed the Subscriber Lists maintained at iContact. (Thompson Decl. 9; Fung Decl. 9; Van Nguyen Decl. 9.) Either way, one or more persons unlawfully gained access to the iContact computers and/or the iContact network. Following the unlawful access to the Subscriber Lists, the Subscriber Lists were then uploaded to iContact accounts belonging to others. (Id.) Those accounts were then used by some of the John Doe Defendants to distribute illegal spam newsletters. (Id.) Plaintiffs have made every effort to discover the identity of the person or persons who have misappropriated the Subscriber Lists. (Thompson Decl. 10; Fung Decl. 10; Van Nguyen Decl. 10.) Specifically, Plaintiffs have been in communication with

iContact and have hired a private investigator, all to no avail. (Id.) Plaintiffs have been
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unable to obtain sufficient reliable information to identify the John Doe Defendants with certainty based upon their own investigations, and now turn to this Court for permission to proceed with service of subpoenas upon the third parties holding information that Plaintiffs believe will enable them to positively identify the true culprits in this matter. III. PLAINTIFFS MUST BE ALLOWED TO PROCEED WITH ACCELERATED DISCOVERY TO DETERMINE THE IDENTITIES OF THE JOHN DOE DEFENDANTS This Court has broad discretion in regulating discovery. Hickman v. Wash. Gas Light Co., 1996 WL 331158, at *1 (4th Cir. Jun. 18, 1996). Normally, under the Federal Rules of Civil Procedure, parties to litigation must first participate in a pre-discovery conference pursuant to Federal Rule of Civil Procedure 26(f) before engaging in discovery from any source. Fed. R. Civ. P. 26. However, Rule 26(d)(2) allows a court, upon motion by a party, to issue an order for the parties and witnesses convenience and in the interests of justice allowing methods of discovery . . . [to be] used in any sequence. Fed. R. Civ. P. 26(d)(2). Here, it is in the interests of justice to allow Plaintiffs to engage in early, pre-conference discovery for the purpose of determining the identities of the John Doe Defendants who caused them injury. As the facts currently stand, it would be impossible for Plaintiffs counsel to first engage in a Rule 26(f) conference with counsel for the John Doe Defendants because the John Doe Defendants have not been, and at present cannot be, identified. In an analogous circumstance, where a plaintiff makes a prima facie showing that an anonymous individuals conduct on the Internet is otherwise unlawful, the plaintiff is

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entitled to compel production of his identity in order to name him as a defendant and to obtain service of process. Alvis Coatings, Inc. v. John Does One Through Ten, No. 3L94CV374-H, 2004 WL 2904405, at *3 (W.D.N.C. Dec. 2, 2004) (upholding the underlying magistrates order granting plaintiffs Emergency Motion for Leave to Conduct Limited Expedited and Preliminary Discovery). Likewise, in the present case it would serve the interests of justice to allow Plaintiffs to pursue limited pre-conference discovery so that they may identify the real defendants and obtain service of process. Moreover, despite the limited amount of case law dealing with this exact issue, other jurisdictions have also allowed a plaintiff to utilize discovery tools to identify unknown defendants using the Internet to engage in unlawful acts. See, e.g., Columbia Ins. v. Seescandy.com, 185 F.R.D. 573, 578-80 (N.D. Cal. 1999); In re Subpoena Deuces Tecum to America Online, Inc., No. 40570, 2000 WL 1210372, at *7-8 (Va. Cir. Ct. Jan. 31, 2000), revd on other grounds sub nom, America Online, Inc. v. Anonymous Publicly Traded Co., 542 S.E.2d 377 (Va. 2001); Immunomedics, Inc. v. Doe, 775 A.2d 773 (N.J. Supr. Ct. App. Div. 2001) (applying Dendrite Intl, Inc. v. Doe No. 3, 775 A.2d 756 (N.J. Supr. Ct. App. Div. 2001)). Additionally, this Court has broad power to permit expedited discovery. See Physicians Interactive v. Lathian Sys., No. CA-03-1193-A, 2003 WL 23018270, at *8, (E.D. Va. Dec. 5, 2003) (allowing for expedited discovery because electronic evidence was at issue and such evidence can easily be erased and manipulated); Ameriwood Indus., Inc. v. Liberman, No. 4:06CV524-DJS, 2006 WL 3825291, at *2 (E.D. Mo. Dec. 27, 2006) (noting that in cases involving trade secrets and electronic evidence, courts
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have granted permission to parties to obtain mirror images of the computer equipment which may contain electronic data related to the alleged violation) (citing Balboa Threadworks, Inc. v. Stucky, No. 05-1157-JTM-DWB, 2006 WL 763668, at *3 (D. Kan. Mar. 24, 2006)). Expedited discovery is warranted in this matter as Plaintiffs continue to suffer harm at the hands of the John Doe Defendants and evidence leading to the redress of these harms is electronic in nature and remains in a highly-vulnerable state. A. Allowing Plaintiffs to Subpoena the Identified Third-Parties Will Provide the Most Efficient Administration of Justice

Justice is most efficiently served by allowing Plaintiffs to serve the third-party subpoenas in advance of a Rule 26(f) conference. Plaintiffs have utilized all independent and available resources in identifying the John Doe Defendants, but have been unable to do so. Plaintiffs need the subpoena power of this Court in order to amend their

Complaint and move forward with their claims in the most efficient manner by summoning the proper parties before this Court at the earliest opportunity. Plaintiffs have made every attempt available to them to identify the John Doe Defendants. For example, Plaintiffs have been in contact with iContact on numerous occasions and sought its aid and cooperation in discovering how the Subscriber Lists might have been unlawfully accessed. (Thompson Decl. 9-10; Fung Decl. 9-10; Van Nguyen Decl. 9-10.) Plaintiffs have also sought iContacts cooperation in discovering who might have used iContact computers and/or iContacts network to distribute illegal spam newsletters to the subscribers of the Subscriber Lists. (Thompson Decl. 10; Fung Decl. 10; Van Nguyen Decl. 10.) While iContact has made certain information relating
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solely to Plaintiffs own accounts available to Plaintiffs, iContact has been unwilling to provide any information to Plaintiffs about other account holders they suspect may have been involved in the misappropriation of the Subscriber Lists at iContact or, indeed, the methods used by iContact to determine what has happened to Plaintiffs Subscriber Lists. (Thompson Decl. 10-11; Fung Decl. 10-11; Van Nguyen Decl. 10-11.) Consequently, efforts to work outside the subpoena power of this Court have been of limited use, and Plaintiffs have reached the limits of their ability to obtain additional information from iContact. Plaintiffs have also independently investigated the ownership of the domain names that were used in the illegal spam emails that were sent to its Subscriber Lists. (Thompson Decl. 10; Fung Decl. 10; Van Nguyen Decl. 10.) However, Plaintiffs have had very limited success in identifying actual legal persons upon whom service of process can be effected. Simply put, the registrant for three of the websites involved in the illegal spam emails does not appear to be a real person. (Id.) Consequently, Plaintiffs seek leave of court to issue subpoenas to other third parties who may have relevant evidence regarding the true identity of the registrant, such as Moniker, the registrar for the currently known websites at issue. Plaintiffs believe that if they are allowed to subpoena certain account information from Moniker, they may be able to determine the true identity(ies) of the individual(s) who registered the domains at issue.

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B.

The Discovery Requested by Plaintiffs Is Contemplated by Fourth Circuit and North Carolina State Law

Discovery under the Federal Rules of Civil Procedure generally assumes knowledge of the identity of the parties, as evidenced by the requirement for a Rule 26(f) conference. Under the current circumstances, however, a Rule 26(f) conference would be impossible as the identity of the John Doe Defendants is unknown. Notably, the

discovery sought by Plaintiffs is precisely the reason suits against John Does are permissible in the Fourth Circuit against real, but unidentified, defendants. Schiff v. Kennedy, 691 F.2d 196, 197 (4th Cir. 1982). That is, although the designation of a John Doe defendant is generally disfavored by federal courts, Njoku v. Unknown Special Unit Staff, No. 99-7644, 2000 WL 903896, *1 (4th Cir. July 7, 2000), the designation of John Does as defendants is appropriate where the identity of the defendants is not know at the time a complaint is filed, but is likely to be found through further discovery. Id. (citing Gillespie v. Civiletti, 629 F.2d 637, 642 (9th Cir. 1980)). Consistent with federal law and applicable to situations like the one at hand, North Carolina state law also provides for the designation of John Doe defendants. N.C. Gen. Stat. 1-166 (West 2010). Given the nature of the damages and injuries suffered by Plaintiffs, as outlined in Plaintiffs Complaint, the existence of the John Does as real parties is unquestionable. Certain individuals have worked in concert to gain unauthorized and unlawful access to Plaintiffs Subscriber Lists. Moreover, these same individuals, and/or others, have used the list to contact subscribers to the Subscriber Lists through at illegal spam newsletters,

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and possibly other means. This is evidenced by Plaintiffs monitoring of the Subscriber Lists and its use. The nature of the necessary discovery, as well as the legal justifications for such discovery, may require Plaintiffs to broaden the parameters of their initial subpoenas. At this time, based on the information available to Plaintiffs, there are no other parties that might provide Plaintiffs with the indentifying information necessary to amend the Complaint. However, through this requested initial discovery Plaintiffs may discover that other parties have crucial identifying information. Accordingly, Plaintiffs seek the limited authority to pursue additional discovery solely for the purpose of determining the real identity(ies) of the John Doe Defendants. DATED this 29th day of June, 2010. /s/ M. Todd Sullivan
M. Todd Sullivan, NCSB # 24554 Womble Carlyle Sandridge & Rice, PLLC Post Office Box 831 Raleigh, North Carolina 27602 Telephone: (919) 755-2100 Facsimile: (919) 755-6058 Email: tsullivan@wcsr.com

ATTORNEYS FOR PLAINTIFF OF COUNSEL: Brent R. Baker Juliette P. White John E. Delaney Michael W. Young PARSONS BEHLE & LATIMER 201 South Main Street #1800 Salt Lake City, UT 84111 Phone: 801-532-1234 Fax: 801-536-6111 BBaker@parsonsbehle.com JWhite@parsonsbehle.com
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WCSR 4404882v1

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CERTIFICATE OF SERVICE I hereby certify I electronically filed the MEMORANDUM IN SUPPORT OF ACCELERATED DISCOVERY with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following non-CM/ECF participants by United States first class mail, postage prepaid and addressed as follows:

DATED this 29th day of June, 2010. /s/ M. Todd Sullivan

M. Todd Sullivan, NCSB # 24554 Womble Carlyle Sandridge & Rice, PLLC Post Office Box 831 Raleigh, North Carolina 27602 Telephone: (919) 755-2100 Facsimile: (919) 755-6058 Email: tsullivan@wcsr.com

ATTORNEYS FOR PLAINTIFF OF COUNSEL: Brent R. Baker Juliette P. White John E. Delaney Michael W. Young PARSONS BEHLE & LATIMER 201 South Main Street #1800 Salt Lake City, UT 84111 Phone: 801-532-1234 Fax: 801-536-6111 BBaker@parsonsbehle.com JWhite@parsonsbehle.com

WCSR 4390044v1

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