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Yahoo Loses Nazi Memorabilia Free Speech Case
The Ninth Circuit U.S. Court of Appeals has ruled against Yahoo, which had argued that a French court order affecting content on its U.S.-based website was unconstitutional. A majority of the U.S. Court of Appeals, in a narrowly-split decision dated January 16, 2006, held that, while the U.S. court had personal jurisdiction over the French advocacy groups that had initiated the French proceedings, the First Amendment free speech issues raised by Yahoo in the U.S. proceedings were not ripe for adjudication.
La Ligue Contre le Racism et L’Antisemitisme (“LICRA”) had sued Yahoo in French court in 2000, arguing that sales of Nazi-related material on Yahoo's U.S.-based auction site violated French law because the material was available to French citizens. The French court ruled in favour of LICRA, ordering Yahoo to block French residents from accessing auction listings or Web pages on its site that contained offending material.
The French order raised important issues regarding the ability of courts in other countries to apply their local laws to foreign-based websites that are accessible to persons in their local jurisdiction (even if not specifically directed to that audience), and whether courts in one country should be able to assume jurisdiction over foreign Internet companies that operate globally-accessible websites.
Yahoo commenced proceedings in the U.S. against LICRA, seeking a declaration that the orders of the French court are not recognizable or enforceable in the U.S. LICRA argued that the U.S. court could not assert personal jurisdiction over it. The U.S. District Court ruled, in separate 2001 decisions, that the Court had personal jurisdiction over LICRA, and that the First Amendment precludes enforcement of the French order in the U.S. LICRA appealed both rulings.
On the jurisdictional issue, 8 of the 11 panel judges of the U.S. Court of Appeals applied the Calder effects test to establish that the exercise of personal jurisdiction was proper in this case. The Calder test required that the LICRA must have: (1) committed an intentional act, (2) expressly aimed at the forum state, and (3) that caused harm that it knew was likely to be suffered in the forum state. While LICRA’s issuance of a cease and desist letter in the U.S. and its service of process in the U.S. were insufficient, the substance of the French suit directing Yahoo to take actions in California, and (notwithstanding LICRA’s stated intention not to pursue further enforcement measures) the remaining potential for substantial penalties under the French court’s order if enforced, were sufficient to assert jurisdiction under the Calder test. The effect of this aspect of the ruling may be to give further protection to U.S. companies that are found to have violated foreign laws online.
However, 3 of those 8 judges ruled against Yahoo on the First Amendment issue. This minority of the Court observed that (1) Yahoo appeared to have brought itself into substantial compliance with the French order as a matter of internal policy, (2) it was unclear whether LICRA would pursue enforcement, and (3) there was a lack of clarity on the record regarding the actual and potential practical effects of the French order on Yahoo. These judges found it to be unclear how much was now actually in dispute, and held that the issue of the unenforceability of the French order on First Amendment grounds was therefore not ripe for adjudication. In combination with the opinions of the three remaining judges that found personal jurisdiction over LICRA to be improper in this case, the decision of the District Court was reversed by a 6-5 majority of the appeals court.
For a copy of the U.S. Court of Appeals decision, visit:
http://caselaw.findlaw.com/data2/circs/9th/0117424P.pdf.