Author’s loss in N.Y. court isn’t First Amendment defeat

Thursday, December 27, 2007

If Ehrenfeld v. Mahfouz were a case about the First Amendment, potential libel defendants in the U.S. would have good reason to be alarmed.

In the case, after all, the New York Court of Appeals rejected author Rachel Ehrenfeld’s attempt to shield herself from a libel judgment entered in England. Because of that judgment, Ehrenfeld says, she has not published some articles she otherwise would have and has watered down others to satisfy the requirements of English libel law. In addition, she claims, some publishers that previously distributed her work now refuse to do so.

Fortunately, however, Ehrenfeld is not a case about the First Amendment. Rather, it’s a case about civil procedure, and a relatively routine one at that.

At issue in the case was whether Ehrenfeld, who lives in New York, could sue a Saudi Arabian businessman in U.S. federal court. Ehrenfeld’s attempt to invoke this jurisdiction was somewhat ironic, as one of her primary complaints about the English judgment is that the foreign court did not have jurisdiction over her. The 2nd U.S. Circuit Court of Appeals ultimately referred the jurisdiction issue — which is a question of state law — to New York’s highest court. On Dec. 20, the state court held that the businessman’s mere possession of a judgment against Ehrenfeld — without action on his part to enforce the judgment — was insufficient to subject him to jurisdiction.

This saga began in 2003, when Ehrenfeld published a book, Funding Evil: How Terrorism Is Financed — and How to Stop It. In it, Ehrenfeld claimed Saudi Arabian financier Khalid Salim A. Bin Mahfouz and his family had financially supported al Qaeda and other Islamist terrorist groups. Although Funding Evil was published only in the U.S., 23 copies were purchased in England over the Internet and a chapter of the book was available there through the Web site.

In 2004, Mahfouz initiated libel proceedings against Ehrenfeld in England. Mahfouz selected the English courts, Ehrenfeld maintained, because of the country’s plaintiff-friendly libel laws. Ehrenfeld received several notices of the English action but chose not to appear, citing the high cost of defending herself there, the likelihood she could not prevail under England’s libel laws and her lack of any connection with England.

In May 2005, the English court entered a default judgment against Ehrenfeld, awarding £10,000 (then approximately $18,000) in damages to each of Mahfouz and his two sons, requiring that Ehrenfeld publish an apology and enjoining further publication of the defamatory statements about Mahfouz in England and Wales.

Ehrenfeld then sued Mahfouz in federal court in New York, seeking a declaratory judgment that Mahfouz could not prevail against Ehrenfeld under federal and New York libel laws and that he therefore could not enforce the English judgment against her in the U.S. Mahfouz moved to dismiss the action, on grounds that the court did not have jurisdiction over him.

The federal trial court agreed, saying Mahfouz’s English action and Web site postings regarding the case, “however persistent, vexing or otherwise meant to coerce, do not appear to support any business objective” that would confer jurisdiction. Most significant to the court’s ruling, of course, was that Mahfouz had made no effort in the U.S. to enforce the British court judgment.

When Ehrenfeld appealed the federal trial court ruling to the 2nd Circuit, that court also was interested in Mahfouz’s intentions regarding the English judgment. The court therefore took the unusual step of asking Mahfouz whether he would commit to not seek enforcement of the judgment in the U.S. When Mahfouz refused to so commit, the 2nd Circuit referred the jurisdiction issue to the New York Court of Appeals.

In its 6-0 decision, the New York court analyzed whether Mahfouz had sufficient contacts with the state to justify jurisdiction. Under New York law, personal jurisdiction is proper if a defendant transacts business in the state that gives rise to the legal action asserted. In determining whether a defendant has transacted business in New York, the “overriding criterion” is whether the defendant has invoked the benefits and protections of New York law.

In this case, the court said, no evidence existed that Mahfouz had sought to use New York law to enforce the English judgment or take any other action in regard to the foreign case. It therefore held that New York law did not confer jurisdiction over Mahfouz. In doing so, the court recognized that the 9th U.S. Circuit Court of Appeals had reached the opposite conclusion in a similar California case involving Yahoo! but noted that New York’s jurisdictional requirements are stricter than California’s.

With the holding of the New York court, the 2nd Circuit presumably will affirm the federal trial court’s dismissal of the case. Dismissing Ehrenfeld’s current suit, however, is a far cry from allowing victorious libel plaintiffs in other jurisdictions to enforce their judgments here.

Indeed, the New York Court of Appeals went out of its way to emphasize the narrowness of its decision. “The Second Circuit has not asked us to opine upon the propriety of English libel law or its differences from its United States and, particularly, New York State counterparts,” the court said. “And we decline to do so.”

The court also noted the dangers of “libel tourism,” the practice of using libel judgments procured in plaintiff-friendly foreign countries to chill free speech here. But “[h]owever pernicious the effect of this practice may be,” the court said, “our duty here is to determine whether defendant’s New York contacts establish a proper basis for jurisdiction under” New York law.

Given the limits of New York law, the court’s holding is hardly surprising. Moreover, courts generally aren’t terribly concerned about cases, like this one, in which the primary worry is about what a person might do. Were Mahfouz to seek to enforce the English judgment in New York, however, the courts’ jurisdiction over him would be clear — as would the First Amendment issues Ehrenfeld prematurely but understandably tried to raise.

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