Recent Developments in Defamation Law: Dow Jones & Company Inc. v. Gutnick

By Kirsten Murphy, Silha Fellow

The High Court of Australia, that country's highest court, unanimously dismissed an appeal by Dow Jones on Dec. 10, 2002, seeking to stop the progress of a defamation suit by Australian mining magnate Joseph Gutnick. The decision in Dow Jones & Company Inc. v. Gutnick (2002) HCA 56 means that Gutnick can sue New York-based Dow Jones in his home state of Victoria, Australia. The High Court ruled that the Internet story was published where it was read, but did not address the merits of the libel case. A copy of the case is available online at http://www.austlii.edu.au/au/cases/cth/high_ct/2002/56.html.

Gutnick contended that a 7,000-word article entitled "Unholy Gains," appearing in Barron's October 2000 issue, portrayed him as a schemer who engaged in stock scams, money laundering and fraud. He also claimed the article described him as having business associations with suspicious characters such as a convicted tax evader. The Barron's article was also published on the magazine's Web site.

This is the first time a country's highest court has defined where Internet publication takes place in a libel case, according to Reuters.

Dow Jones' petition had already been dismissed in two other Victorian courts before the High Court granted review. In the first case, Gutnick v. Dow Jones & Co Inc [2001] VSC 305 (28 August 2001), before the Supreme Court of Victoria at Melbourne, Justice Hedigan ruled that Victoria was "both the appropriate forum and convenient forum" where Gutnick should have his case heard.

Hedigan concluded that the alleged defamatory statements were "published in the State of Victoria when downloaded by Dow Jones subscribers who had met Dow Jones's payment and performance conditions and by the use of their passwords."

Using this definition, Hedigan said the most important justification for Victorian jurisdiction is that the suit was brought by a "Victorian resident conducting his business and social affairs in this State in respect of a defamatory publication published in this State, suing only upon publication in this State and disclaiming any form of damages in any other place." Dow Jones appealed the decision to the Supreme Court of Victoria-Court of Appeal in Dow Jones Inc. v. Gutnick [2001] VSCA 249. which affirmed the previous opinion. Dow Jones then appealed to the High Court.In December 2002, the seven-member High Court unanimously dismissed the Dow Jones appeal. Chief Justice Anthony Gleeson, joined by three other justices, wrote the majority opinion. Justice Michael Kirby, Justice Ian Callinan and Justice Mary Gaudron wrote separate concurring opinions.

Dow Jones argued that the case should be heard in the United States, where libel laws are considered relatively liberal compared to other countries. But the Australian High Court did not agree with Dow Jones that the alleged defamation occurred in New Jersey, the location of Dow Jones' Web servers and editorial offices. Instead, the court said it occurred in Victoria, Australia, where a few readers downloaded the story.

Gleeson further ruled that the location of the servers in New Jersey did not play a significant role in the case, writing ". . . it is defamation's concern with reputation, and the significance to be given to damage (as being of the gist of the action) that require rejection of Dow Jones's contention that publication is necessarily a singular event located by reference only to the publisher's conduct. Australian common law choice of law rules do not require locating the place of publication of defamatory material as being necessarily, and only, the place of the publisher's conduct."

In a separate opinion, Justice Kirby found the use of the long-arm jurisdiction of the Supreme Court of Victoria appropriate since Victoria would be where Gutnick would suffer the most damage. He noted, "that the Internet is such a new and different medium of human communication that it demands a radical reconceptualisation [sic] of the applicable common law, specifically with respect to the tort of defamation."

Kirby continued, "When the new problem is as novel, complex and global as that presented by the Internet in this appeal, a greater sense of legal imagination may be required than is ordinarily called for." He added that any modification of the law would be the task of the legislature. Kirby also observed that it would be costly and impractical for most litigants to bring a lawsuit against a foreign publisher. Even if a plaintiff received a damage award, a publisher without assets could ignore it and wait to see whether a court in its own country would enforce it. In the United States, judgments of this type would most likely be declared unconstitutional.

In a separate opinion, Justice Callinan commented, "Publishers are not obliged to publish on the Internet. If the potential reach is uncontrollable, then the greater the need to exercise care in publication." Justice Gaudron's separate opinion rejected Dow Jones' concern that multiple defamation cases could arise from one publication. Defamation claims should be decided in a single jurisdiction, she wrote, adding that a claim could be brought only if the person had a reputation in the place where the material was published.

Stuart Karle, a Dow Jones associate general counsel, told the Boston Globe that the case involved a "United States media publication which is really focused on United States markets and United States investors" and "a journalist who operated completely out of the United States. This dramatically changes how you can communicate within this country." Several observers expressed fears that the ruling would subject American journalism to legal challenges in countries with a far more restrictive view of the First Amendment.

The Guelph Mercury of Canada reported that Gutnick told Australia's Channel Nine television, "It will certainly be re-established that the Net is no different than the regular newspaper. You have to be careful what you write."

Brigitte Trafford, a Dow Jones spokeswoman, said the ruling will not change the magazine's Internet offerings or the types of stories it pursues. "We have no intention of changing our high editorial standards," she told the The Guelph Mercury.

Dow Jones also said in a statement that it would continue to defend the case brought by Gutnick.

In the United States, federal appeals courts in the Fourth (Young v. New Haven Advocate, 315 F. 3d 256 (4th Cir. 2002)) and Fifth (Revell v. Lidov, 317 F. 3d 467 (5th Cir. 2002)) circuits, and the highest state court in Minnesota (Griffis v. Luban, 646 N.W. 2d 527 (Minn. 2002)) have adopted Dow Jones' argument. These courts agree that even though a story can be downloaded anywhere in the world, the publisher can only be sued in places where it intended to target. (See "Print, Internet Newspapers Wrestle with Questions of Jurisdiction" on page 18 of this issue of the Silha Bulletin.)

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This page contains a single entry by cla published on November 9, 2009 1:34 PM.

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