COURT OF APPEALS OF THE STATE OF NEW YORK
- against -
KHALID SALIM A BIN MAHFOUZ,
Docket No. 06-2228-cv
This is a "perfect storm" of an appeal. It combines international terrorism, free speech, the Internet, and something called "libel tourism." Fused into one appeal, these various elements come to this Court from federal court filtered through a certified question of long-arm jurisdiction. The specific question to be decided concerns the scope of CPLR 302(a)(1),1 and these larger issues bear on that decision.
Lew responds to new developments, what Holmes famously called "the felt necessities of the time." O. W. Holmes, The Common Law 5 (Little Brown 1963) (1881). A new development in our time is libel tourism. This appeal asks the Court to help mitigate the pernicious effects of libel tourism by finding personal jurisdiction over a foreign serial libel tourist who has obtained a libel judgment in England against a New York author. Threatened enforcement of that judgment has had a chilling effect in New York on that author and others.
The certified question gives the Court an opportunity to protect the rights of plaintiff and other New York residents to write about -- and all New Yorkers to read about -- urgent public issues such as the financing of international terrorism. A finding of personal jurisdiction over this defendant will enable New York authors and publishers to obtain effective relief from foreign libel judgments designed to target and restrict their speech in New York.
What Is Libel Tourism?
A recent, mounting, and insidious trend, libel tourism occurs when a person, usually prominent and wealthy, sues for libel in a country that lacks the protections afforded by the First Amendment.2 Such suits smack of forum-shopping because the authors, the publishers, and the publications at issue have little, if any, connection to the country where the litigation is commenced. See, e.g., Rodney A. Smolla, The Law of Defamation § 1.9 (2d ed. 2004); Note, "England's Chilling Forecast: The Case for Granting Declaratory Relief to Prevent English Defamation Actions from Chilling American Speech," 74 Fordham L. Rev. 3073, 3074, 3135 (2006). With the advent of the Internet and Internet commerce, including websites such as Amazon.com, it has become easier for foreign plaintiffs to allege that a publication written and distributed primarily in the United States was also "sold" or "published" in a foreign jurisdiction, even when the author and publisher took no actions to market or distribute the publication there.
England is a favorite destination, the "perfect locale" for libel tourists, Note, "England's Chilling Forecast," 74 Fordham L. Rev. at 3075, because English libel law provides substantially less protection for speech than does U.S. law. See, e.g., id. at 3077-92; Smolla, The Law of Defamation at 1.9; Telnikoff v. Matusevitch, 347 Md. 551, 598, 702 A.2d 230, 248 (1997). "London is the libel capital of the Western world and attracts endless foreign claimants. They are often seen as overseas 'forum shoppers' convinced that English common law offers the best hope of burnishing their reputations." "Be Reasonable: British Courts Should Beware the Dangers of Libel Tourism," The Times (London), May 19, 2005, at 19. See also David Hooper, Representation Under Fire: Winners and Losers in the Libel Business 428 (2000) ("London has become known to many foreign 'forum-shoppers' as a Town named Sue -- a place where you can launder your reputation on the basis of a few sales in the UK of some overseas publication.").
Some of the wealthiest people have recognized libel tourism as an effective public relations weapon to quell unwanted international criticism. Saudis, like defendant, have taken particular advantage of this situation. "In a growing phenomenon that lawyers have dubbed 'libel tourism,' the Saudis are seeking to invoke Britain's plaintiff-friendly libel laws to silence critics in the United States and in the international community." Mark Hosenball & Michael Isikoff, "Libel Tourism: Anxious Over Allegations of Terrorist Ties, Rich Saudis Are Trying to Silence Their Critics in Court," Newsweek, Oct. 22, 2003, http://msnbc.msn.com/id/3339584/. See also Sarah Lyall, Are Saudis Using British Libel Law to Deter Critics?" N.Y. Times, May 22, 2004, at B7.
Libel tourism led to this appeal. Plaintiff Dr. Rachel Ehrenfeld, a New York resident, wrote a book called Funding Evil: How Terrorism Is Financed -- and How to Stop It, which was published only in the United States. She seeks a judgment from federal court here in New York declaring an English libel default judgment against her totaling $221,000 unenforceable under the United States Constitution and New York law. A 33-35, 54.3 Defendant -- Khalid Salim A Bin Mahfouz -- sued Dr. Ehrenfeld for libel in England based on constitutionally protected statements in her book discussing his alleged financial support of terrorist organizations. He is not a citizen of England. He is a citizen of Saudi Arabia, and one of the wealthiest men in the world. A
Mahfouz won his UK libel judgment only by default. Dr. Ehrenfeld did not appear. She could not afford to defend herself in the English courts and was unwilling, as a matter of principle, to submit the libel issues to a legal system less protective of free speech than ours, when her book had nothing to do with England. A 54.
Although Mahfouz has a UK judgment for monetary damages and injunctive relief, he has intentionally not enforced it. But he has reserved the right to do so, thereby leaving a sharp Sword of Damocles hanging ominously over Dr. Ehrenfeld in New York.
Dr. Ehrenfeld's suit, which seeks to remove Mahfouz's dangling threat, involves an issue of personal jurisdiction over Mahfouz. By simply postponing judgment enforcement indefinitely, Mahfouz wants to choose if and when he will submit to personal jurisdiction. This is really an affirmative assertion of power on Mahfouz's part -- his power to hush critics with the fear of impending enforcement of a foreign judgment. If the Court does not find jurisdiction, Mahfouz will have that sole power for as long as he wants. Mahfouz could then wait for years to enforce the UK judgment -- with full knowledge that the mere existence of the judgment and the continued threat of enforcement are enough to chill Dr. Ehrenfeld's speech, to discourage publishers from publishing her writings, and to deter other New York journalists from writing about him.
The United States Court of Appeals for the Second Circuit
has asked this Court to decide whether, as Dr. Ehrenfeld asserts, the courts of this State have jurisdiction over Mahfouz by virtue of CPLR 302(a)(1) in light of his contacts with New York.
Defendant's New York Contacts
Mahfouz's UK case was part of a purposeful scheme to intimidate Dr. Ehrenfeld and others in New York and to chill Dr. Ehrenfeld's and others' freedom of speech in New York on matters of vital public interest. Mahfouz, who has sued or threatened to sue for libel dozens of times in the UK, has waged a systematic campaign intended to suppress critics (in New York and elsewhere) and to discourage investigation of any role he may have had in the funding of terrorism that led to the 9/11 attacks. A 58, 61. The scheme includes Mahfouz's use of his website, accessible in New York, to announce to the world his "successes" in his UK libel cases, including the one against Dr. Ehrenfeld. A 58, 61. Mahfouz continues to monitor Dr. Ehrenfeld's activities in New York. A 59.
In connection with his UK case, Mahfouz has communicated with and served litigation papers on Dr. Ehrenfeld in New York. On one occasion, in March 2005, Mahfouz sent an agent to Dr. Ehrenfeld's home in New York who told her menacingly: You had better respond. Sheikh bin Mahfouz is a very important person, and you ought to take very good care of yourself." A 56. On five occasions, Mahfouz's agents have mailed letters and documents relating to the UK case to Dr. Ehrenfeld's home in New York. A 56-58. On five occasions, Mahfouz's agents have intrusively sent e-mails relating to the UK case that Dr. Ehrenfeld read at her home computer in New York. A 56-58.
The UK judgment and Mahfouz's communications and actions have had and were designed to have an impact and effect in New York. The UK judgment seeks to require Dr. Ehrenfeld to take certain steps (apologize, issue a retraction, cease making certain statements) in New York. A 76, 85-86. Mahfouz's attorneys have written to Dr. Ehrenfeld in New York demanding that she destroy all copies of her book in New York, prevent "leakage" of her book into England, and make a payment to an agreed-upon charity. A 70, 72. And Mahfouz refuses to say he will not try to enforce the UK monetary judgment in New York, the only jurisdiction in which Dr. Ehrenfeld has any assets, thereby creating a lingering, continuing threat and chilling effect in New York.
Mahfouz is no stranger to New York. He has had past and will have future contacts with New York. During the 1990s, he was a major figure in the Bank Credit and Commerce International ("BCCIu) banking scandal, paying a massive fine to resolve a New York indictment. A 59. Until August 2004 -- seven months after he first demanded that Dr. Ehrenfeld destroy all copies of her book and issue a public apology, and two months after the initial filings in his UK libel action against Dr. Ehrenfeld -- Mahfouz owned two condominiums in New York City. A 71, 94-97. He is a defendant in several civil cases in New York arising out of 9/11. And he is almost certainly paying his U.S. attorneys in dollars requiring a Clearing House Payments System transfer and settlement on the books of the Federal Reserve Bank of New York. Moreover, since Dr. Ehrenfeld's assets are only in New York, enforcement of the UK judgment for money damages can take place only in New York.
Why Personal Jurisdiction Exists
The circumstances of this case, including Mahfouz's many New York contacts, make personal jurisdiction over him appropriate. Any other result would give Mahfouz and other libel tourists a powerful new tool to chill the protected speech of New York citizens on crucial issues like international terrorism. The facts satisfy the jurisdictional requirements of our long-arm statute, CPLR 302(a)(1). The defendant "transacts business" in New York because the "totality" of his New York contacts are sufficient, purposeful, materially affect events and people in New York, and make it foreseeable and fair for such a defendant to answer for his actions in New York.
This conclusion is buttressed by Yahoo! Inc. v. La Lique Contre Le Racisme et L'Antisemitisme, 433 F.3d 1199 (9th Cir. 2006) (en banc), cert. denied, 126 S.Ct. 2332 (2006). In that important recent case, similar but lesser contacts than Mahfouz's supported jurisdiction under California's long-arm statute. Even if not technically binding, Yahoo! is persuasive and illuminating precedent.
Once the "transacting business" hurdle is cleared, the remaining statutory issue is readily satisfied. Dr. Ehrenfeld's lawsuit "arises from" the activities that constitute Mahfouz's transacting of business in New York. It grows out of and is based on those very activities.
The exercise of personal jurisdiction in this case only requires a holding based on the facts of this case. Such a holding would be narrow, drawn from existing precedent, fair, sensitive to fundamental rights, and without any untoward consequences. According to that limited holding, a non-New Yorker subjects himself or herself to personal jurisdiction in New York in a declaratory judgment action challenging the enforceability of a foreign libel judgment even before New York enforcement proceedings have started when the following three factors are met:
1. The non-New Yorker has obtained a foreign libel judgment against a New York resident;
2. That foreign libel judgment is based on a publication published exclusively in the U.S. by a Newyork resident, and
3. That judgment awards money damages or injunctive relief requiring any actions to be taken in New York.
Sheikh bin Mahfouz has made the claim in the UK court system that since books linking him to terrorism can be bought there via the Internet, the UK court system has jurisdiction so he can sue the authors there -- and the legal system there greatly favors His Wealthy Worshipfulness.
Well, Dr. Rachel Ehrenfeld is fighting back, and her premise is that since His Wealthy Worshipfulness, Sheikh Khalid bin Mahfouz, Financier of Holy Terror, has far more extensive business contacts in the State of New York, then New York courts have jurisdiction over him, so bin Mahfouz can be sued in New York!
Ah, but the Sharif don't like that!
Sheikh bin Mahfouz, we have a saying in English:
Sauce for the goose is sauce for the gander.
Dr. Ehrenfeld's website is The American Center for Democracy. It has a page that provides an overview of this legal battle, and one entitled Legal Action where you can download and read all these "boring" legal papers. (Personally, I think they read like a best-seller.)
On any page, there is a link where you can go to provide real monetary support to Dr. Ehrenfeld, so she can fight and defeat this libel terrorist, and protect our freedom against this guy's blatant legal jihad.
This is our fight and Dr. Ehrenfeld is fighting it, so let's help her out. Remember, this guy that she is battling is a multi-billionaire, one of the richest men in the world, and has been consistently linked to funding terrorism, on top of conducting his own legal jihad to dhimmify our free speech, so let's help Rachel take this Financier of Holy Terror through the court system and cook him up right.
I'll have my cooked gander with extra sauce, please.