Dendrite International, Inc. v. Doe, No. 3

Dendrite International, Inc. (Dendrite) (plaintiff) provided products and services related to pharmaceutical and consumer packaging. In August 1999, Dendrite filed a quarterly report stating that some of its newer software products did not require customization and that therefore, Dendrite might be able to recognize license-fee revenue upon delivery of those products. In September 1999, the Center for Financial Research and Analysis (CFRA) issued a report characterizing Dendrite’s statement as describing a “change in revenue recognition,” concluding that this change had caused Dendrite’s improved financial condition and commenting that the earnings boost might have masked weaknesses. Dendrite responded to the CFRA’s report, denying that Dendrite had changed its revenue-recognition policy. Nevertheless, on a Yahoo! message board from early to mid-2000, a pseudonymous poster (John Doe No. 3) (defendant) authored nine posts that echoed the CFRA’s characterization of a change to Dendrite’s revenue-recognition policy. In one post, John Doe No. 3 stated that Dendrite, with knowledge of its president, had unsuccessfully tried to sell the company. Alleging falsity of those statements, Dendrite filed a defamation and trade-secret-misappropriation action against John Doe No. 3 and others. Dendrite subpoenaed Yahoo! for information concerning John Doe No. 3’s identity. Yahoo!, which had a policy of maintaining confidentiality of its users’ personally identifiable information, refused to comply. Dendrite filed a motion to compel expedited discovery from Yahoo!. Denying Dendrite’s motion, the district court mentioned that a declaration submitted by Dendrite’s vice president stated only that John Doe No. 3’s statements “may” have negatively impacted Dendrite’s ability to hire and retain employees. Furthermore, Dendrite’s stock value increased during one of the weeks within the period of John Doe No. 3’s posts. The district court concluded that Dendrite had not established a sufficient nexus between John Doe No. 3’s posts and Dendrite’s alleged harm and that Dendrite therefore had failed to present a prima facie case of defamation. Dendrite, with the Sixth Circuit’s permission, filed an interlocutory appeal. On appeal, Dendrite argued that the district court had imposed a greater burden on Dendrite than was required, because precedent required Dendrite only to present a claim that could withstand a dismissal motion. Dendrite argued that it had met that standard because Dendrite had sufficiently pleaded damage as a defamation element.