New York High Court Rules in Libel Tourism Case

State Legislators Consider Bill that would Increase Protections for New York Authors

The New York Court of Appeals, the state’s highest court, ruled Dec. 20, 2007 that author Rachel Ehrenfeld could not continue her suit seeking to enjoin enforcement of a 2004 British libel judgment against her. But a month later, New York legislators introduced a bill that would effectively overrule the court’s decision and provide increased protections for New York authors.

The original lawsuit, filed by Saudi businessman Khalid bin Mahfouz in England, contested claims in Ehrenfeld’s book, Alms for Jihad: Charity and Terrorism in the Islamic World, that bin Mahfouz channeled funds from charities he controlled to terrorist groups in the Middle East. Ehrenfeld did not contest that suit and the British court granted a default judgment. (See “‘Libel Tourism’ Suit Leads Publisher to Destroy Book on Terrorism Funding, Pay Damages and Apologize” in the Fall 2007 Silha Bulletin.)

The suit was filed in England, rather than the United States where the book was published, because British libel laws favor plaintiffs and provide limited protections for authors. In England, the defendant generally must prove the contested claims are true to avoid liability. In the United States, the plaintiff carries the burden of proof and must show the contested claims are false and defamatory.

After bin Mahfouz won the default judgment in England, Ehrenfeld filed suit on Dec. 8, 2004 in U.S. District Court in New York seeking a declaratory judgment that the English ruling was unenforceable in the United States because it was contrary to the First Amendment. No court has reached the constitutional question in the case. Instead, every decision has turned on a procedural question governed by state law: whether a court sitting in New York can exercise personal jurisdiction over bin Mahfouz under the state’s long-arm statute.

“Personal jurisdiction” refers to whether a court has the power to compel a non-resident defendant to appear in court and comply with the ultimate judgment. The defendant must have some minimum amount of contact with the state. In federal courts like the court where Ehrenfeld initially filed her lawsuit, the question is governed by the laws of the state in which the federal court sits.

In April 2006 the U.S. District Court for the Southern District of New York, sitting in diversity jurisdiction, dismissed Ehrenfeld’s complaint for lack of personal jurisdiction over the defendant, bin Mahfouz. 2006 WL 1096816 (S.D.N.Y. April 26, 2006). Ehrenfeld appealed to the 2nd Circuit Court of Appeals. 489 F.3d 542 (2d Cir. 2007). On June 8, 2007 the 2nd Circuit held that the question of personal jurisdiction over bin Mahfouz turns on a novel question of state law. Rather than rule on a legal issue on which the New York Court of Appeals, rather than any federal court, is the ultimate authority, the federal court certified a question to the state high court.

The New York Court of Appeals answered that question December 20, 2007 in Ehrenfeld v. bin Mahfouz, 9 N.Y.3d 501 (2007), holding that state law does not permit courts sitting in the state to exercise personal jurisdiction over bin Mahfouz because the Saudi man had never “transacted business” related to the Ehrenfeld lawsuit in New York. On March 3, 2008 the 2nd Circuit affirmed the U.S. District Court’s April 26, 2006 order dismissing Ehrenfeld’s complaint.

Under New York law, N.Y. C.P.L.R. section 302 (2006), courts sitting in the state can exercise personal jurisdiction over a defendant not present in the state if the defendant “transacts any business,” engages in tortious conduct, or owns property in New York.

Although bin Mahfouz was not present in New York and he did not own property or commit a tort in the state, Ehrenfeld alleged bin Mahfouz “transacted business” in New York when he sent letters and e-mails to her New York address related to the libel suit in England. A process server also delivered bin Mahfouz’s British lawsuit to Ehrenfeld’s New York apartment. But the New York high court disagreed, holding that bin Mahfouz’s contacts with New York did not amount to transacting business in the state.

The letters sent to Ehrenfeld were required by the British court; they were not an effort by bin Mahfouz to take advantage of the New York market or laws, the court held. The letters were required to “further his assertion of rights under the laws of England,” and not intended to “avail” himself to the laws of New York. The opinion said that in order to fit the definition of “transacted business” as developed by New York case law, bin Mahfouz would have had to “purposely avail” himself to New York’s laws.

Under the ruling, Ehrenfeld cannot proceed with her lawsuit to enjoin enforcement of the British judgment. However, if bin Mahfouz were to file a lawsuit to enforce the British judgment in New York, he would “purposely avail” himself to the laws of New York and waive any procedural claims based on personal jurisdiction. If bin Mahfouz were to initiate an enforcement action against Ehrenfeld in New York, Ehrenfeld would likely prevail.

Under New York statute, N.Y. C.P.L.R. section 5304 (2006), foreign judgments based on a “cause of action” that “is repugnant to the public policy of this state” will not be “recognized” in New York. Courts in the state have held that British libel judgments against media defendants are unenforceable in New York because British libel law generally places the burden of proving the claims are false on the defendant.

In Bachchan v. India Abroad Publications, Inc., 585 N.Y.S.2d 661 (N.Y. Sup. Ct. 1992), a New York trial court refused to enforce a British libel judgment won by Bachchan, an Indian plaintiff, against India Abroad Publications, a company with its principle place of business in New York. The court held that switching the burden of proof from the plaintiff to the defendant in a libel case violated the public policy contained in the First Amendment to the U.S. Constitution.

“The protection to free speech and the press embodied in [the First Amendment] would be seriously jeopardized by the entry of foreign libel judgments granted pursuant to standards deemed appropriate in England but considered antithetical to the protections afforded the press by the US Constitution,” the Bachchan court held.

More recently, a three-judge panel of the 2nd Circuit U.S. Court of Appeals reached a similar conclusion based on New York law in Sarl Louis Feraud International v. Viewfinder, Inc., 489 F.3d 474 (2d Cir. 2007). In a case based on French intellectual property law, Judge Rosemary S. Pooler wrote approvingly of the Bachchan decision.

In Viewfinder, French fashion design companies sought to enforce two French judgments holding Viewfinder liable under French copyright laws for posting pictures of the designers’ clothing lines on the Internet. The pictures were taken at fashion shows.

Citing section 5304 and Bachchan, Pooler wrote that foreign judgments based on laws repugnant to the First Amendment will not be enforced in New York.

The 2nd Circuit panel sent the case back to the same New York District Court where Ehrenfeld filed her original lawsuit. Noting that First Amendment protections are not absolute, the Appeals Court directed the trial court to provide further consideration of whether Viewfinder’s actions complied with the “fair use” doctrine and the First Amendment.

“Fair use” refers to the rule that copyrighted materials can be used for certain purposes, depending on the nature of the use, the amount of the work used, and the economic impact of the use. Limited use of copyrighted works by academics and journalists, for example, is fair use.

In January, less than a month after Ehrenfeld’s loss in the New York high court, state legislators introduced bills in both houses that would provide for personal jurisdiction over libel tourists like bin Mahfouz and explicitly amend section 5304 to ensure that New York state courts would not recognize British libel judgments.

The Libel Terrorism Protection Act, S.6687 and A.9652, would extend New York’s long-arm statute to cover plaintiffs in foreign libel suits who obtain judgments against New York residents. The bill requires that the publication at issue be published in New York and that the defendant in the foreign suit have assets in New York that may be used to pay the judgment or that the defendant in the foreign suit would be required to take actions in New York related to the foreign judgment. The bill grants personal jurisdiction for the limited purpose of determining whether New York courts should recognize the foreign judgment.

Under the proposed bill, a court sitting in New York could exercise personal jurisdiction over bin Mahfouz in the Ehrenfeld case for the limited purpose of determining whether a New York court should recognize the British libel judgment because bin Mahfouz was the plaintiff in a foreign libel suit related to a book published in New York, Alms for Jihad, and the defendant in the foreign suit, Ehrenfeld, is a New York resident with assets in the state that might be used to pay the foreign judgment.

The bill passed in the state senate on Feb. 27, 2008, but as of press time, the New York Assembly had yet to vote on it. According to a Feb. 29, 2008 report in the New York Law Journal, the senate vote was unanimous.

The bill, which is also frequently referred to as the Libel Terrorism Reform Act or the Libel Terrorism Prevention Act in the popular press, also amends section 5304 to ensure that libel judgments in foreign jurisdictions with less stringent press and speech protections will not be recognized in New York state courts. The proposed amendment states that foreign libel judgments cannot be recognized by New York courts unless the “foreign jurisdiction provides at least as much protection for freedom of speech and press as provided for by both the [U.S.] and New York Constitutions.”

In addition to granting personal jurisdiction in New York courts over libel tourists like bin Mahfouz, the bill would codify the rule in Bachchan and ensure that British libel judgments will not be enforced in New York state courts.

If New York legislators pass the bill, Ehrenfeld would have to file a new complaint in federal court and convince that court that the exercise of personal jurisdiction over bin Mahfouz, as provided in the bill, does not violate due process protections contained within the Fifth and Fourteenth Amendments to the U.S. Constitution.

In Yahoo!, Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199 (9th Cir. 2006), the 9th Circuit U.S. Court of Appeals exercised personal jurisdiction over two French civil rights groups in a case based on similar facts. Yahoo! began when the French civil rights groups obtained orders in French courts requiring Yahoo! to block users of its French Web site from accessing Web pages associated with Nazism. (See “Recent Developments in Internet Law: Court Clears Yahoo!” in the Winter 2003 Silha Bulletin and “Yahoo! Bans Sales of Nazi Memorabilia After French Ruling” in the Spring 2001 Bulletin.)

Yahoo! then sued in federal district court in California seeking a declaratory judgment to enjoin enforcement of the French order arguing, in part, that it violated the First Amendment. The District Court exercised personal jurisdiction over the French groups, and eight of 11 Circuit Court judges, sitting en banc, agreed.

The only substantial difference between Yahoo! and Ehrenfeld is the state in which the action was brought. California’s long-arm statute, unlike New York’s, extends personal jurisdiction to the limits imposed by constitutional due process requirements. However, under the 9th Circuit ruling, which is not binding on federal courts in the 2nd Circuit, if the New York legislature amends New York’s long-arm statute to cover foreign plaintiffs like bin Mahfouz, a federal court in New York would be likely to hold that exercise of personal jurisdiction over bin Mahfouz in New York complies with constitutional due process.

Passage of the Libel Terrorism Protection Act would mean that Ehrenfeld could file a new complaint in Federal District Court in New York, and that court would be likely to reach the substance of her claim that enforcement of the British judgment in the United States would violate speech and press freedoms guaranteed by the First Amendment.

In a Feb. 25, 2008 op-ed in the New York Post, criminal defense and civil rights attorneys Samuel A. Abady and Harvey Silverglate hailed the bill as a necessary reform to strengthen press and speech freedoms in New York. The article said that 13 percent of libel suits in England are filed by libel tourists, and that reforms in New York could lead to broader reforms enacted by the U.S. Congress.

“Americans certainly differ about how to fight terrorism but can all agree that we can’t protect our way of life without a free press. As [Assemblyman] Rory Lancman [D-Queens] put it: ‘The ability of our journalists, authors and press to expose ... the truth is the most important weapon we have in the War on Terror,’” the op-ed said.

– Michael Schoepf
Silha Research Assistant

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This page contains a single entry by cla published on October 14, 2009 3:53 PM.

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