The Australian libel lawsuit that sent shockwaves around the Internet world two years ago was settled last week. The defendant, Dow Jones Co., got off relatively easily, to hear a defiant editorial in Barron?s tell it. The company forked over just $150,000 to cover a "fraction" of the plaintiff?s legal costs, while "paying no damages and offering no apologies." But as the editorial acknowledged, the scary precedent set by the case, Gutnick v. Dow Jones, is alive and well ? and spreading.
The December 2002 ruling allowing the libel suit against U.S.-based Barron?s to proceed in an Australian court asserted that any publication accessible online can be held to account for violating the laws of any jurisdiction reached by the Internet. Which is to say Web publishers can be sued anywhere. Rulings in other countries have recently seconded that notion.
A court in the United Kingdom, in a decision in February that was upheld in an Oct. 19 appellate ruling, allowed boxing promoter Don King to sue boxer Lennox Lewis and his lawyer in a U.K. court for allegedly defamatory remarks published on two California-based Web sites, fightnews.com and boxingtalk.com. In deciding which jurisdiction is appropriate for such a suit, the U.K. courts, citing Gutnick, "dismiss out of hand any suggestion that there should be any other test than where the article is downloaded," said Thomas Burke, a media lawyer in San Francisco with Davis Wright Tremaine LLP. "And an article on the Internet can be downloaded anywhere in the world."
A February court ruling in Ontario suggested that the Washington Post could be sued in virtually any court anywhere under the laws that apply in that jurisdiction for an allegedly defamatory story published online about the activities in Kenya of a United Nations official Cheickh Bangoura. The ruling in Bangoura v. Washington Post, which also cited the Gutnick case, "is worse than Gutnick because the plaintiff had no connection at all to Canada when the story was published," said Kurt Wimmer, a lawyer in Washington D.C. with Covington and Burling. "The Post couldn?t have been charged with knowledge that it would damage the reputation of anyone in Ontario because Bangoura at the time was living in Africa," said Wimmer, who has filed a brief on behalf of 50 media companies urging an appeals court in Ontario to overturn the lower court ruling.
"That case really worries us because it applies to every Web publisher," added Wimmer. "There?s some very good language in that opinion demonstrating just how wacky courts can be on Internet jurisdiction. The court basically said that the Washington Post is an internationally recognized paper and if they don?t have insurance to cover a libel suit anywhere in the world, they should have it, which is a very tough way to run a business. If you accept the universal jurisdiction as posited by the Bangoura court, how do you as a publisher know what standards to apply? Should you look at the laws of Australia or Zimbabwe or somewhere in between to figure out what you can say or can?t say? And there are some real differences in libel laws."
Meanwhile, the first big case asserting that a U.S. based Web publisher can be charged with violating laws in foreign countries, a suit filed by an anti-racism group in France against Yahoo for allowing the sale of Nazi memorabilia on its auction site, continues to wend its way through the courts more than four years after it was filed. The plaintiff, La Ligue Contre Le Racisme et L?Antisemitisme (LICRA), won a judgment in France in November 2000 after Yahoo said it would not and could not prevent French Web users from gaining access to Nazi-related materials on the company?s U.S. Web site. Even since then, a fine against Yahoo has been piling up at the rate of nearly $10 a minute or nearly $5 million a year.
LICRA is in no rush to force the issue by seeking to collect on the fine in a U.S. court. "They?re essentially playing a game where they?re allowing the judgment to get really, really, really huge," said John Morris, a lawyer with the Center for Democracy and Technology. "Yahoo, as a publicly traded company, is of course risk averse, and LICRA knows they?re going to have some anxiety about a multi-million dollar fine hanging over them."
DODGING FOREIGN JUDGMENTS
So far, few other plaintiffs have jumped on the bandwagon with Gutnick, King, Bangoura and LICRA. But those cases illustrate that the threat that a Web publisher could get sued abroad is real. "The specter of 200 countries around the world imposing potential liability for speech that is lawful in the United States is worrisome," said Morris. "There is lots of content on the Internet critical, for example, of China and Saudi Arabia that is innocent commentary by U.S. standards but is in fact illegal in those countries." Under the theory of Internet jurisdiction advanced in Gutnick and the other cases it has spawned, Web publishers around the world could be sued for showing women with bare shoulders in countries where that is illegal, Morris added.
U.S.-based Web publishers, at least those that don?t have assets in foreign countries which could be seized, can take some solace in the fact that foreign plaintiffs are likely to have a tough time enforcing foreign judgments in U.S. courts, particularly in cases attacking speech that would be protected in the United States. Libel judgments in the United Kingdom and other Commonwealth countries where speech is accorded less protection, as well as judgments for political speech handed down in repressive countries, would fall into that category of cases.
However, Web publishers may have to learn to live with frightening foreign judgments hanging over their heads, unless Yahoo can win on an issue it is now litigating. Yahoo is hoping to banish the specter of the burgeoning French fine by winning a declaratory judgment from a U.S. court asserting that the French judgment is unenforceable in this country. But those hopes were dashed at least temporarily in August when a panel of Ninth Circuit U.S. Court of Appeals ruled 2-1 that Yahoo can?t challenge LICRA?s right to enforce its judgment here until the French group gets around to attempting to collect the fine in a U.S. court.
"Basically the court said, ?Okay Yahoo, you have to sit and wait until they bring an enforcement action before you can find out what your rights are?," Yahoo lawyer Mary Worth complained. "The problem we have with that is that with $13,300 a day in fines accruing every single day, at some point a publicly traded company has to decide whether we are going to censor or whether we are going to subject our shareholders to the risk that when they finally get around to enforcing the judgment, we could face millions of dollars in fines."
Yahoo is now seeking review by the full Ninth Circuit of the 2-1 August ruling. Civil liberties and media groups ranging from the ACLU to Dow Jones Co. have joined in an amicus brief urging the court to reconsider the issue and prevent foreigners from threatening American Web publishers with onerous foreign judgments. "Without an ability to ask a U.S. court to remove the cloud created by such a foreign judgment, a U.S. speaker would face a choice of self-censorship or continuing to speak under the threat of a massive and growing financial risk," the brief asserts. "Although some speakers might have the confidence and resources to withstand such pressure, others would have little choice but to remove lawful content from the Internet."
A MIDDLE GROUND
A handful of court rulings have suggested that there may be a middle ground which would allow local courts to assert jurisdiction over Web sites based elsewhere when those online publications target a local audience or inflict local harm.
Michael Traynor, a lawyer with Cooley Godward LLP in San Francisco, who represented Yahoo in an earlier round of the LICRA litigation, noted that in the infamous Australian case itself, the plaintiff Joseph Gutnick showed some restraint. "His lawyers made a critical decision to tell the court that they were not going to seek damages incurred beyond the state of Victoria and they weren?t going to bring any other actions in other districts. So he was able to focus that case on the harm he suffered only in his home state in Australia."
Traynor added that a case handed down by the European Court of Justice, Shevill v. Press Alliance, took a similar approach to Internet jurisdiction. It held that in a defamation case, if the plaintiff sues in the defendant?s home state, the plaintiff can seek full damages for harm anywhere in the world. But if the plaintiff brings the action in the plaintiff?s own place of residence based on publication and harm there, the plaintiff can only recover damages for harm that occurred in that forum.
"If you take that case and what actually happened in the Gutnick case, you might find emerging a sense that courts ought to be looking to protect those who have been legitimately harmed in their own jurisdiction without attempting to exercise worldwide power to the detriment of the laws of other jurisdictions," said Traynor.
A 2002 ruling, Young v. New Haven Advocate, by the Fourth U.S. Circuit Court of Appeals suggests another way that courts could sensibly limit would-be plaintiffs? attempt to assert jurisdiction over Web sites based elsewhere. The court dismissed a suit filed in Virginia against the Connecticut newspaper by a Virginia prison warden who asserted that he was defamed by an article that was critical of Connecticut?s plan to transfer inmates to the prison he oversaw. The appeals court concluded that even though the article was accessible online in Virginia, the newspaper wasn?t targeting an audience in the state so jurisdiction there was inappropriate.
"That was a pretty well-reasoned decision," said Worth. "If courts around the world went in that direction, we would all be in pretty good shape. But in the short term, given that courts in the U.K. and Australia and Canada seem fairly consistently to be saying if we can see it we can regulate it, businesses are forced to make very careful decisions about where they have their assets located."
"Being sued in a foreign land is not a concern that your average mom and pop newspaper has to worry about," added Burke. "It is unlikely that you would have to worry about being sued in South Africa if you don?t have assets in South Africa that could be frozen. But for companies that are large enough or spread out enough to have assets all over the world, Internet jurisdiction issues are extremely serious."
That message has sunk in with major media companies, according to a survey conducted by the American Bar Association and International Chamber of Commerce that was released in April 2004. More than half of the media companies surveyed said they have adjusted their business operations out of fear of getting sued overseas for content published on the Internet. As Wimmer observed, "I think that is pretty good evidence of a chilling effect."