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Doe v. Mahoney

Court of Appeals of Arizona, First Division

February 6, 2018

JOHN DOE, Petitioner
THE HONORABLE MARGARET MAHONEY, Judge of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of MARICOPA, Respondent Judge, U.S. AMERICAN RESOURCES, INC., Real Party in Interest.

         Petition for Special Action from the Superior Court in Maricopa County No. CV2017-000910 The Honorable Margaret R. Mahoney, Judge

          Ellman Weinzweig LLC, Phoenix By Robert L. Ellman (argued), David D. Weinzweig Counsel for Petitioner

          Manning & Kass Ellrod Ramirez Trester LLP, Phoenix By Debora L. Verdier Counsel for Real Party in Interest

          Presiding Judge Paul J. McMurdie delivered the opinion of the Court, in which Judge Peter B. Swann and Judge Lawrence F. Winthrop joined.


          MCMURDIE, JUDGE:

         ¶1 Petitioner John Doe seeks special action relief from a superior court order denying his motion to quash a subpoena served by Real Party in Interest U.S. American Resources, Inc. ("USAR") requiring Doe's identity to be disclosed because of alleged defamatory statements he made on an internet blog. We accept jurisdiction and grant relief, holding that under the controlling analysis set forth in Mobilisa, Inc. v. Doe, 217 Ariz. 103 (App. 2007), and considering the First Amendment's protection of anonymous and pseudonymous speech, USAR's claims would not survive a motion for summary judgment based on the six statements reviewed in the superior court's order.


         ¶2 USAR is a mining and exploration company founded by John Owen, who currently serves as its CEO. As part of its business, USAR seeks investors to develop various mining projects by promising them profits from those mining investments. From 2005 to 2007, USAR and its subsidiaries received cease and desist orders from Washington, California, and Maryland, based on its conduct in soliciting investments.

         ¶3 In September 2005, Washington's Department of Financial Institutions Securities Division issued a "Statement of Charges and Notice of Intent to Enter Order to Cease and Desist and to Impose Fines." The securities administrator that issued the statement found USAR "failed to provide material information regarding the investment, including . . . the risks involved with gold mining." The statement further concluded that USAR "made misstatements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading." USAR was fined $5000 as part of a consent order related to the statement of charges issued by the State of Washington.

         ¶4 In June 2006, California's Department of Corporations issued a "Desist and Refrain Order, " which found USAR was offering securities "by means of written or oral communications which included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statement made . . . not misleading . . . ." As part of the stipulation with the California Department of Corporations, USAR acknowledged, without admitting or denying fault, that the California Corporations Commissioner found USAR made three material omissions when soliciting potential investors regarding a mine in Arizona (the "Chastain" mine). The omissions listed in the stipulation included failing to tell potential investors that (1) USAR was promising more gold on its properties than had been recovered from the entire state of Arizona since the late 1800s; (2) at that time no gold mines were currently active in Arizona; and (3) no Bureau of Land Management ("BLM") mining plan had been approved and USAR was therefore not yet authorized to mine, despite claims that it was mining tons of ore a day.

         ¶5 In September 2007, the Securities Commissioner of Maryland issued to International Energy and Resources, Inc. ("IER"), a wholly owned subsidiary of USAR, a "Final Order to Cease and Desist." In the order, the commissioner found IER had made "materially false and misleading statements regarding the value of [investment] interests and the promised investor profits, " and had omitted material facts, "including full representation of the risk associated with an investment in IER."

         ¶6 From May to December 2016, Doe made a series of posts on a blog hosted on, a website that organizes online debates for investors regarding various companies and prospective investments. Doe's posts concerned the viability of USAR mining investments in Arizona and accused USAR of fraud. Doe is a moderator of the blog on which he posted, which is entitled "Mining Company Research Board" and is described as "a place to bring concerns and questions about penny stock mining companies and their mining claims or to just discuss the merits of individual penny stock mining companies and share/build research on those companies." Doe commented on the blog under the username "gitreal."

         ¶7 In January 2017, USAR filed a defamation complaint against Doe for his posts on the blog. Afterwards, USAR served a subpoena on Cox Communications, Inc., seeking Doe's IP address. Doe filed a motion to quash the subpoena, and after oral argument, the superior court denied the motion and ordered Doe's identity revealed. In its order, the superior court did not evaluate all the statements challenged by USAR, but instead focused on just six of the defamatory statements alleged by USAR. The court found that at least one of the statements, if proven true, could render USAR's claim of defamation capable of surviving summary judgment under the test set forth in Mobilisa. Doe filed this petition for special action seeking review of the superior court's ruling.


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