Fifth Circuit Affirms SPEECH Act

A majority of states adopted some version of the Uniform Foreign Money Judgments Recognitions Act of 1962 (UFMJRA). The UFMJRA provides that there is a general presumption that a foreign country’s judgment should be recognized in the United States.  Enforcement under the UFMJRA could be precluded, however, if the foreign country failed to afford “procedures compatible with the requirements of due process of law.” But the UFMJRA fails to specifically address judgments based on defamation from foreign courts, courts that often have less stringent standards for the claimant to prove defamation in order to prevail.

In 2005, the UFMJRA was updated as the Uniform Foreign-Country Money Judgments Recognitions Act (UFCMJRA). The revised UFCMJRA offers substantive differences from its predecessor, but it again fails to specifically address defamation judgments. 

In particular, neither of the uniform acts expressly preclude the enforcement of a foreign country’s judgment of libel if that foreign country does not provide the same protections to free speech that are available in the United States under the First Amendment. Moreover, both uniform acts are subject to varied state-specific interpretations and inconsistent enforcement.  Adding to the confusion, some states have not adopted either of these acts, relying instead on common law. In short, there is no consistency from state to state.

Threat of International Forum-Shopping and Libel Tourism

Given the states’ lack of uniformity in enforcing libel judgments from foreign counties, a new threat emerged. The globalization of media and the internet made it easier than ever to publish in foreign countries that maintain lenient defamation standards.  This opened up new venues for libel suits and a practice known as “libel tourism.”  Libel tourism is a form of international forum-shopping in which a potential libel plaintiff seeks out a foreign country with fewer free-speech protections than the United States (e.g., Canada or the United Kingdom), obtains a defamation judgment under the less stringent standards, and then seeks to enforce that judgment in the United States. The effect is to chill free speech in the United States. See Ehrenfeld v. Mahfouz, 518 F.3d 102, 104 (2d Cir. 2008) (general discussion).

Libel tourism reached the cultural mainstream in 2003 with the publication of Rachel Ehrenfeld’s book Funding Evil: How Terrorism Is Financed—and How to Stop It. Ehrenfeld’s book was highly critical of certain Saudi businessmen and their connections to terrorism. The Saudis sued Ehrenfeld in 2004 for libel in London, where a handful of her books were sold over the internet. Ehrenfeld v. Bin Mahfouz, 881 N.E.2d 830, 831 (N.Y.S.2d  2007). The UK’s system is undeniably more claimant-friendly than the United States in defamation actions, in part because the burden of proof is less stringent. After Ehrenfeld did not appear in London, a default judgment was entered against her. Ehrenfeld filed a countersuit against the Saudi businessmen in New York federal court, see Ehrenfeld, 881 N.E.2d 830, supra. Ehrenfeld sought a declaratory judgment that any foreign country’s judgment entered against her was unenforceable. The Second Circuit certified the jurisdictional issue to the New York Court of Appeals, which agreed with the district court that the case should be dismissed for lack of personal jurisdiction over the Saudi businessman. Ehrenfeld v. Mahfouz, 518 F.3d 102 (2d Cir. 2008). The London judgment stood. Afterward, Ehrenfeld began to promote her book as "the book the Saudis don’t want you to read."

The alleged “libel tourism” against Ehrenfeld prompted U.S. lawmakers to enhance free speech protections for authors and others in the United States whose works are sold, published and seen abroad.

Congressional Approval of SPEECH Act

The SPEECH Act (formally known as the Securing the Protection of our Enduring and Established Constitutional Heritage” Act) was unanimously passed by both the U.S. House of Representatives and Senate in 2010. The act was the congressional pushback against libel tourism and an attempt to diffuse the arguable threat to free speech.

The SPEECH Act allows state court actions involving the enforcement of judgments from foreign countries to be removed to federal court. The act also provides a two-prong analysis for whether a foreign defamation judgment is enforceable in the United States.   In relevant part, the Act provides a foreign judgment is not enforceable unless: (1) the "law applied in the foreign court’s adjudication provided at least as much protection for freedom of speech and press … as would be provided by the [F]irst [A]mendment to the Constitution of the United States" and unless (2) “the party opposing recognition or enforcement of that foreign judgment would have been found liable for defamation by a domestic court applying the [F]irst [A]mendment…” 28 U.S.C. § 4102(a)(1).  The SPEECH Act requires that the exercise of personal jurisdiction over a libel defendant comport with the same due process standards required in the United States.

Furthermore, the SPEECH Act establishes an attorney fee provision for parties who successfully defeat the enforcement of a libel judgment from a foreign country. 28 U.S.C. § 4105.

In 2011, a district court in Florida entered a stipulated final judgment regarding the applicability of the SPEECH Act to a libel judgment from Canada, a judgment in which the parties agreed it was not enforceable. Investorhub.com, Inc. v. Mina Mar Group, Inc., No. 4:11cv9-RH/WS (N.D. Fla., June 20, 2011).  In part, the district court stated, Canadian law did not require the plaintiff to prove actual malice against the public figure sued, something that would have been required under Florida law. Id.

But until 2013, the scope and effectiveness of the SPEECH Act had not been tested in a federal appellate court.

SPEECH Act Affirmed As Complete Defense to Libel Judgment from Nova Scotia

In Trout Point Lodge, Ltd. v. Handshoe, 729 F.3d 481 (5th Cir. 2013), hotel owners in Nova Scotia sued an internet blogger who lived in Mississippi.  The blogger published on his Website various statements – described by the district court as “derogatory, mean spirited, sexist and homophobic” –  about the hotel and its alleged connection to a corrupt political official in Louisiana, an official who ultimately pleaded guilty to charges of bribery and theft.  The hotel owners sued the blogger in Nova Scotia for defamation, and obtained a judgment in excess of $400,000.

With the judgment in hand, the hotel owners enrolled it in the Hancock County, Mississippi in an attempt to collect.  The blogger removed the enforcement action pursuant to the SPEECH Act, and then sought to defend under the SPEECH Act’s protections.

The Fifth Circuit stated that there was no dispute that the Canadian defamation law is less protective of free speech rights than Mississippi.  Indeed, the Court stated “Canadian defamation law is derivative of the defamation law of the United Kingdom, which has long been substantially less protective of free speech.” Trout Point Lodge, 729 F.3d at 488. For example, the Court explained that "falsity" need not be proven in Canada in order to win, unlike in the United States. In light of this, the first prong of the SPEECH Act was met.

The second prong—whether there was sufficient evidence under U.S. and Mississippi defamation law to find the blogger liable—was also met because the hotel owners failed to prove falsity of the statements made on the website. By not proving falsity, there was not sufficient evidence to enforce the judgment.  Moreover, some of the alleged statements were unverifiable opinions, which, though offensive, are not actionable in Mississippi.  Consequently, the Nova Scotia judgment was not enforceable under the SPEECH Act.  After the Fifth Circuit’s affirmance, the attorneys for the blogger who precluded enforcement of the Nova Scotia judgment were awarded attorney fees of $48,000.  Trout Point Lodge Ltd. v. Handshoe, 2013 WL 6524650 (S.D. Miss., Dec. 11, 2013). The SPEECH Act was fully affirmed and enforceable. (As an interesting aside, England's new Defamation Act of 2013 took effect January 2, 2014, adding substantive restrictions to England's libel law to combat libel tourism, including making it difficult to bring a libel claim in England unless the defendant is domiciled somewhere in the United Kingdom. But the new law still does not change the burden of proof regarding falsity, leaving it squarely at odds with US law. See Angela Gregorits, Big Changes in English Defamation Law On Horizon, 41 Media Law Reporter 48 (Bloomberg BNA, Dec. 10, 2013.)

As the age of globalization and the Internet make it easier than ever to sue for libel anywhere in the world, and with much of the world offering fewer protections to free speech than the United States, the SPEECH Act marks a turning point in enforcement of libel judgments from foreign countries. And it offers a new and critical tool in the arsenal of media defense lawyers.

Keywords: litigation, trial practice, SPEECH Act, libel tourism, international law, forum shopping

_{Copyright © 2014, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).}