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Case of the Day: Mees v. Buiter

The case of the day is Mees v. Buiter (2d Cir. 2015). This is the second significant appellate decision on § 1782 in a matter of days—I covered the new Posco case last week. Willem H. Buiter had made accusations against Heleen Mees that had led to her being arrested and charged with misdemeanors for stalking, menacing, and harassment in New York. Buster had claimed that Mees “had sent him thousands of emails and on several occasions attempted to meet him at his residence, despite numerous requests that she cease all contact with him.” He also claimed that her expressed wish that his “plane falls out of the sky” or her “sending him a picture of dead birds” caused him to fear for his safety. There were some racy bits too, which I won’t cover here. Because of the parties’ prominence—both are prominent economists, and Buiter coined the term “Grexit”—the case was covered in the press. The criminal case ended with an adjournment in contemplation of dismissal, contingent on Mees’s agreement to participate in counseling and to comply with an order of protection Buiter and his wife had obtained.

Mees brought a § 1782 application, seeking discovery from Buiter “as part of her Dutch attorneys’ investigation of a defamation claim against Buiter” in the Netherlands “and to prepare for the prosecution of such claim.” The basis of Mees’s claim was that she wasn’t a stalker, but instead, she and Buiter had “regularly had romantic encounters.” She wanted discovery in order to corroborate her claim that she had met Buiter on twenty-seven “Romantic Encounter Dates.”
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Case of the Day: Trout Point Lodge v. Handshoe

The case of the day is Trout Point Lodge, Ltd. v. Handshoe (5th Cir. 2013). It is, as far as I know, the first federal appellate decision to focus on the SPEECH Act in a major way. Readers may want to refer to overview post of the Act. In short, the Act creates a rule against recognition of foreign defamation judgments if the foreign law is less protective of freedom of speech than US law and if the plaintiff would not have prevailed had the action been brought in the United States.

Handshoe was a Mississippi blogger. The claim was that he had defamed Vaughan Perret, Charles Leary, and Trout Point Lodge, Ltd., all of Nova Scotia, by tying them to a Louisiana political scandal on his blog. Perret, Leary, and Trout Point sued in the Nova Scotia Supreme Court. They alleged that they Handshoe’s statements were “directly defamatory and were also defamatory by both true and false innuendo in that they would tend to lower the opinion or estimation of the plaintiffs in the eyes of others who read the defamatory publications as a series, or alternatively, in parts.” The plaintiffs alleged generically that the defamatory statements were false, but they did not, in their pleadings, make allegations to specifically refute any particular defamatory statement.

Handshoe defaulted in the Nova Scotia action, and the court held a hearing to assess damages. Perret and Leary testified. After the hearing, the court entered judgment for compensatory and punitive damages and also permanently enjoined Handshoe from writing about the plaintiffs. 1

Trout Point sought recognition and enforcement in the Circuit Court of Hancock County, Mississippi. Handshoe removed the case to the US District Court for the Southern District of Mississippi under 28 USC § 4103 and the parties cross-moved for summary judgment. The judge granted Handshoe’s motion, and Trout Point appealed.

The Fifth Circuit held that Nova Scotia’s law did not provide “at least as much protection for freedom of speech and press in that case as would be provided by the first amendment to the Constitution of the United States and by the constitution and law of the State in which the domestic court is located,” as the statute requires. This is an easy one. In Nova Scotia, the defendant has the burden to prove the truth of the defamatory statements as an affirmative defense; in the United States, as a general matter, the plaintiff has the burden to prove the falsity of the defamatory statements as part of the prima facie case. 2

The more difficult question was whether a Mississippi court would have found Handshoe liable. The district court had held that a Mississippi court would not have found Handshoe liable because Trout Point had failed to prove the falsity of the defamatory statements. On appeal, Trout Point pointed to the Nova Scotia default, which, in Canada, meant that Handshoe was deemed to have admitted the allegations of the complaint. Trout Point also pointed to the Nova Scotia court’s findings of fact entered after the assessment of damages hearing.

The Fifth Circuit’s approach was to say that a Mississippi court would not have entered a default judgment on the pleadings Trout Point had made, because Trout Point failed to allege sufficiently (for US law purposes) that the defamatory statements were false. This approach seems at least problematic to me, because it’s not clear whether the policy of the statute is to require US defendants to appear and defend in the foreign defamation case in order to claim the protection of the statute. See, e.g., Marissa Gerny, The SPEECH Act Defends the First Amendment: A Visible and Targeted Response to Libel Tourism, 36 Seton Hall Legis. J. 409, 437 (2012) (Under § 4104 of the statute, “If an American finds him or herself in the position of defending a defamation suit abroad, he or she can default on the suit and seek declaratory relief in the United States”). Indeed, one of the English libel cases that motivated enactment of the SPEECH Act, Khalid bin Mahfouz’s case against Rachel Ehrenfeld arising out of her book, Funding Evil: How Terrorism Is Financed—and How to Stop It, was a default judgment case. It doesn’t seem right to permit a foreign plaintiff, by adding allegations to its foreign complaint that would be sufficient to permit a US court to enter a default judgment, to avoid the SPEECH Act even though, if the US defendant defended the case at trial, the foreign plaintiff would not be required to prove the added allegations. On the other hand, the declaratory judgment provision of the statute, 28 USC § 4104, provides for a declaratory judgment action, in the US, but only by a person “against whom a foreign [defamation] judgment is entered,” not a person against whom a foreign defamation action is pending. Still, I think the better approach is to ask whether a US court would have entered a judgment against the defendant after a trial on the merits, not whether a US court would have entered a judgment for procedural reasons given the same circumstances as existed in the foreign case.

Notes:

  1. The plaintiffs did not seek enforcement of this prior restraint in the United States for obvious constitutional reasons.
  2. Actually, US law is not quite so simple—see Noonan v. Staples, Inc. (1st Cir. 2009), for example.

Case of the Day: InvestorsHub.com v. Mina Mar Group

Mina Mar Group, the Canadian firm featured on March 22, is back in the Letters Blogatory news today. The last time we discussed Mina Mar, it was in the context of Belmont Partners, LLC v. Mina Mar Group, Inc., a case where Mina Mar tried, both in Canada and in the US, to escape from an unfavorable arbitral award. In today’s case of the day, InvestorsHub.com, Inc.  v. Mina Mar Group, Inc. (N.D. Fla. 2011), Mina Mar again finds itself on the losing side. According to the complaint, InvestorsHub.com ran a website on which investors could post comments on “investment-related topics.” Apparently, one of the “investment-related topics” was Mina Mar, and the investors’ comments were less than flattering. Mina Mar sued InvestorsHub.com and some of its employees for defamation in Ontario. The Ontario Superior Court entered a default judgment against them, awarding $75,000 in compensatory damages and $10,000 in punitive damages. The judgment, curiously, also contained a declaration that “all of the negative, defamatory and libellous postings made by Posters and members on the InvestorsHub.com web site are untrue and were made without any foundation nor basis for any of their content.” It ordered InvestorsHub and its employees to “apologize and publicly retract the libellous statements” and to provide the names and addresses of the posters who actually wrote the supposedly defamatory posts, and it enjoined InvestorsHub.com and its employees from “making or allowing to be made by any party or Poster, any statements or broadcast, whether orally or in writing and whether libellous, defamatory or not, in any newspaper, broadcast or electronic publication or on the web site(s), InvestorsHub.com, about the Plaintiffs” (emphasis mine). That’s quite a judgment!

Armed with this somewhat draconian judgment, Mina Mar came to Florida, filed the judgment in the Leon County clerk’s office, and apparently sought to enforce the judgment. But Mina Mar’s lawyers didn’t reckon with the SPEECH Act.

In an earlier post, we reviewed the main provisions of the Act, notably the provision allowing U.S. residents and businesses to bring declaratory judgment actions to obtain a declaration that foreign defamation judgments are not entitled to recognition or enforcement in the United States. And in fact foreign defamation judgments are not entitled to recognition and enforcement if the foreign country’s protections for freedom of speech are less vigorous than the First Amendment’s protections, or, in the case of a web site operator, the judgment is inconsistent with the limitations on liability in § 230 of the Communications Decency Act, which, summarized very colloquially, provides that web site operators that post comments written by others are not liable for defamation on account of what others have posted on their sites.

In light of the Act, Mina Mar surrendered, agreeing to entry of a judgment that contained the following terms:

14. The Mina Mar Parties now acknowledge that the Foreign Defamation Judgment is not enforceable in the United States and are agreeable to the entry of a final judgment in favor of the InvestorsHub Parties on both Counts of the Complaint.

* * *

19. The parties acknowledge, and the Court finds, that Canadian law does not provide as much protection of speech as the First Amendment, federal law, and Florida law. For example, the First Amendment  requires that a defamation plaintiff who is either a public official or public figure must prove that the  defendant made the defamatory statement with actual malice, meaning that the defendant either knew the statement was false or acted with reckless disregard to the statement’s truth or falsity. See New York  Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 111 L. Ed. 2d 686 (1964); Curtis Publ’g Co. v. Butts, 388  U.S. 130, 87 S. Ct. 1975, 18 L. Ed. 2d 1094 (1967). The Canadian Supreme Court has specifically refused  to adopt the Sullivan actual malice standards for Canadian defamation actions. See Hill v. Church of Scientology, [1995] 2 S.C.R. 1130 (Can.) (stating that Court will not adopt Sullivan standard in Canada).  See also Grant v. Torstar Corp., [2009] 3 S.C.R. 640 (Can.) (modifying Canadian defamation law while still rejecting First Amendment standards); Rodney A. Smolla, Law of Defamation § 1:9.75, at 1-17 – 1-29  (describing differences between United States law and “the more plaintiff-friendly” Canadian defamation  law).
20. Nor does Canadian law provide the protections for freedom of on-line speech provided by the Communications Decency Act, 47 U.S.C. § 230.

I think this case is a good illustration of why the SPEECH Act makes sense. Maybe the posts on the website were libelous and maybe not. But a judgment that requires defendants to retract a statement, make an apology, and refrain from publishing even true statements on a topic is so far beyond the pale of US public policy that it can’t come as a surprise that the US courts would refuse to enforce it.

H/T to the Trial Warrior Blog, which points out that Mina Mar has not given up. Apparently, Mina Mar is seeking to hold the US defendants in contempt in Ontario. My prediction: the defendants refuse to appear, and whatever ruling Mina Mar obtains in Ontario will continue to be completely unenforceable in the US. The individual defendants may want to be careful about travel to Canada, though! Mina Mar’s lawyer’s letter on the contempt issue says that the company has spent “hundreds of thousands of dollars” in legal fees on the case. I wonder whether this was money well spent, given US law in this area.