October/November 2010

New Federal Law Protects Authors, Interactive Computer Services From Foreign Defamation Judgments

Holland & Knight Newsletter
Jennifer A. Mansfield

President Obama has signed into law the “Securing the Protection of our Enduring and Established Constitutional Heritage Act,” or “SPEECH Act,” aimed at preventing “libel tourism.” Libel tourism occurs when a plaintiff sues for defamation in a foreign country with plaintiff-friendly defamation laws because similar suits in the United States would not withstand First Amendment scrutiny. The legislation addresses the libel tourism problem by ensuring that plaintiffs cannot evade free speech and press protections by obtaining defamation judgments in foreign courts, only to return to the United States in order to enforce the judgments obtained.

The new federal law, which the President signed on August 10, 2010, follows attempts by Congress in 2008 and 2009 to pass similar legislation. In 2008, New York became the first state to pass libel tourism legislation, often referred to as “Rachel’s Law.” It was named after Rachel Ehrenfeld, who wrote a book in 2003 alleging that a prominent Saudi businessman, Khalid bin Mahfouz, financed terrorism. The book was only published in the United States, but a few copies were sold over the Internet and made their way to England, which the British courts found sufficient for jurisdiction over the Saudi’s libel suit. The British court then allowed a default judgment against Ehrenfeld of $250,000 plus other penalties. She attempted to have a federal court in New York declare the foreign judgment non-enforceable but the court dismissed the suit for lack of personal jurisdiction over Khalid bin Mahfouz, thus prompting the New York legislation. Illinois, Florida, Utah, and Maryland followed suit with their own anti-libel tourism laws, and New Jersey has similar legislation pending.

In a written statement to Congress on February 12, 2009, Ehrenfeld stated that instances such as hers cause self-censorship, chilling free speech and the press. Congress agreed. Section 2 of the federal SPEECH Act declares, in part:

These foreign defamation lawsuits not only suppress the free speech rights of the defendants to the suit, but inhibit other written speech that might otherwise have been written or published but for the fear of a foreign lawsuit.

. . . The advent of the internet and the international distribution of foreign media also create the danger that one country’s unduly restrictive libel law will affect freedom of expression worldwide on matters of valid public interest.

The SPEECH Act provides a party with both a shield and a sword to protect himself from a foreign defamation judgment. The “shield” aspect of the law allows a defamation defendant to remain passive, as a foreign defamation judgment cannot be enforced unless the judgment holder proves that the judgment meets the requirements of the SPEECH Act. There is no requirement that the defendant seek the affirmative help of the courts in order to be protected. The SPEECH Act is also a sword, though, as it creates a declaratory judgment cause of action in federal court to challenge the validity of a foreign defamation judgment.

When acting as a shield, the SPEECH Act takes a three-pronged approach. First, it requires that in an action to enforce a foreign defamation judgment, the person seeking to enforce the judgment must prove three different things. First, he must prove that the foreign defamation law provides at least as much protection as the First Amendment and state law, or that the defendant would have been liable anyway under the state’s liable law. Second, where applicable, he must prove that the foreign defamation judgment is consistent with section 230 of the Communication Decency Act of 1934 (CDA), which provides immunity to websites that host content provided by others. Finally, he must prove that the foreign court’s exercise of personal jurisdiction over the defamation defendant comports with United States’ due process requirements under the Constitution. In the absence of any of these three prongs, a state or federal court cannot recognize or enforce the foreign defamation judgment.

The law applies to both federal and state courts, thus providing protection nationwide. And although applicable to state courts, defendants can remove a case to federal court with no minimum amount in controversy. The law also provides that reasonable attorneys’ fees shall be awarded to the party opposing recognition or enforcement of a foreign defamation judgment. The attorneys’ fees provision is notable in that its one-sided, favoring only the defendant, and is mandatory.

The SPEECH Act can act as a sword, too. It provides that “any United States person” may bring an action in federal court for a declaratory judgment that the foreign defamation judgment is repugnant to the Constitution or laws of the United States; i.e., that the foreign judgment does not comport with the First Amendment, the CDA, or due process limitations on personal jurisdiction. It is, however, a double-edged sword to the person seeking a declaratory judgment. Of benefit to the challenger is a nationwide service of process provision, which will make it easier to obtain personal jurisdiction over the foreign defamation plaintiff. On the other hand, a challenger filing a declaratory judgment action has the burden to prove the foreign judgment repugnant, whereas the foreign judgment holder has the burden of proof if the lawsuit arises because of efforts to enforce the foreign judgment.

Interestingly, the attorneys’ fees provision would also appear to not apply to declaratory judgment actions. This provision allows attorneys’ fees only in an action “to enforce a foreign judgment for defamation.” Since declaratory judgment actions under the Act seek to declare the foreign judgment invalid, instead of seeking to enforce it, the language of the Act appears to restrict awards of attorneys’ fees to only those cases where the defamation defendant acts solely in a defensive manner.

This favoritism toward a defensive posture is very different from the prior version considered by Congress. A 2009 bill titled the Free Speech Protection Act of 2009, (S. 449 and H.R. 1304), would have been a stronger sword for defamation defendants, as it would have allowed writers subjected to libel tourism suits in foreign countries to countersue in the United States for treble damages. The SPEECH Act does not have such a provision.

Ultimately, though, the SPEECH Act does provide nationwide protection to writers and Internet providers in the United States from foreign defamation judgments. It therefore helps to secure the freedom of speech and of the press that is so essential to our free society. It will be interesting to observe what effect, if any, this law will have on foreign defamation law and how foreign countries, such as Great Britain, apply those laws.

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