The Ehrenfeld/Mahfouz Case: How "Libel Tourism" Undermines the First Amendment and, in the Internet Age, Compels An International Solution

Currently, a case pitting American journalist Rachel Ehrenfeld against mega-wealthy Saudi investment banker Khalid bin Mahfouz is percolating through the New York courts. Its resolution may have significant First Amendment implications. Ehrenfeld's own attorneys say it is the most important case in the last 50 years. Yet oddly, media interest has so far been minimal - unjustifiably so.

In this column, I'll explain why the case is important, and consider solutions to the problem it raises -- of plaintiffs' ability to exploit the differences between pro-defendant, pro-speech American defamation law and pro-plaintiff, pro-reputation British defamation law.

The gap between American and British defamation law is so dramatic, it is the cause of a phenomenon that has been nicknamed "libel tourism," where plaintiffs choose to sue in the United Kingdom (U.K.), as opposed to the U.S., whenever possible, because law in the U.K. on defamation is dramatically more pro-plaintiff than law in the U.S.

Make no mistake, this is a clash of cultures: one that so values speech and openness that it leaves significant room for irremediable, damaging error; and another that so values reputation and privacy, that it errs in favor of what is, in effect, government censorship accomplished by the courts.

The Legal Battles Between Ehrenfeld and Mahfouz

Ehrenfeld's book Funding Evil: How Terrorism Is Financed - and How to Stop It, published in 2003, claimed that Mahfouz is an al Qaeda financier. He is adamant, however, that he has nothing to do with al Qaeda. If he is right, one can hardly imagine a more damaging allegation. He has used, or threatened to use, the British courts dozens of times to sue writers and publishers who have claimed such a connection.

When Mahfouz sued Ehrenfeld, she refused to travel to the U.K. to appear in the suit, for she claimed that her book was not targeted at a U.K. audience, and that no U.K. business ties or other facts established a basis for the U.K. court to exercise jurisdiction over her. Thus, as the Guardian reported, the Court issued what is called a "default judgment" - a judgment triggered by the defendant's failure to appear and defend the case -- of £110,000 (about $218,000). While this sum may be relatively minor to Mahfouz, one of the world's richest men, it is doubtless significant to Ehrenfeld.

Now, Mahfouz is trying to enforce that judgment in the U.S. Ehrenfeld, however, is fighting back. She is asking New York courts to issue a declaratory judgment determining that they have personal jurisdiction over Mahfouz, and then hold that Mahfouz's judgment is unenforceable in the United States, because it is against New York public policy and contrary to the First Amendment.

The Sharp Contrast Between U.K. and U.S. Defamation Law

As noted above, the U.K. notoriously has much more pro-plaintiff defamation laws than the United States. Not only does the U.S. afford its citizens the core protection provided by the First Amendment, but Supreme Court precedent has solidified that protection.

New York Times Co. v. Sullivan famously established the "actual malice" standard in cases involving public-figure defendants - requiring that defendants have knowledge, or at least reckless disregard, of the probable falsity of the statement at issue before they may be held liable for defamation.

Subsequent cases made the hurdles even higher, stating that "clear and convincing evidence" is required to prove actual malice. Then, in St. Amant v. Thompson, the Court stated that the "actual malice" inquiry is subjective -- examining the defendant's actual (and perhaps unreasonable) state of mind, not, for instance, the state of mind a reasonable person would have possessed under the circumstances.

Though these may sound like technical legal distinctions, they are actually very helpful from a litigation perspective. For example, if a reporter has a case file that is produced in discovery, then the fact that the standard is subjective may mean that the plaintiff cannot go very far outside that file.

The plaintiff's attorney would ideally love to present the jury with a laundry list of everything the defendant did not bother to do - from giving the plaintiff sufficient time to respond, to checking with a multitude of other sources. But the subjective intent standard of St. Amant more or less cabins the inquiry to what the defendant actually did do, and how that affected his or her state of mind. That matters a lot, because one can always point to more reportage that might have been done, and when reporters are on deadline, they do not always do as much checking as they ideally should.

Thus, let's suppose that the reporter did not call the plaintiff seeking a response, or did call, but did not wait very long for a response before publishing. A jury will likely think that the reporter should have waited longer. To go ahead with a bombshell allegation with no response, the jury might think, is unreasonable. But the standard isn't what the reporter should have done or thought, it is what he or she actually did think: Was the reporter subjectively aware the story was probably false - or did he or she at least recklessly disregard this probability? Under this standard, the failure to wait for a response from the plaintiff is a lot less significant. The jury will still keep in mind that the reporter knew that no response had been received from the plaintiff, but that will be only one part of the answer to the big picture question, Was the reporter subjectively aware the story was probably false, or did he or she recklessly disregard that probability? There's a large gap between being a somewhat careless (but not reckless) reporter and publishing a story with a state of mind that reaches to the level of the actual malice standard.

Since the U.K. has none of these protections, it's no surprise at all that one often sees a different, tamer U.K. version of a U.S. book or magazine. In the U.K., authors have more to fear, and less room to speak.

The Influence of the Internet

To this difficult situation, the Internet adds another level of complexity - and in the future, the Internet's role will only increase.

First, let's talk about the future: Given that, for example, Amazon.com has introduced its high-profile Kindle ebook reader, it is beginning to seem increasingly likely that, sometime in the relatively near future, a significant chunk of publication will be e-publication, many books will be downloaded, and only advertising, not distribution, will define what an e-book's target market is.

Indeed, "distribution" may largely consist of readers pressing a button to download a book onto their Kindles or similar gadgets.

In this case, however, the role of the Internet was not to enable immediate global download, but rather simply to expedite the purchase of a traditional-style, bound-paper book. While less technologically exciting and interesting, the ability to access book information, search book databases, and read reviews on the Internet worldwide does increase the chance that a particular book may be read even in countries in which it has no local publisher.

There's also another major wrinkle, and another way the Internet matters, too: In this particular case, Ehrenfeld says only 23 copies of her book were purchased in the U.K. over the Internet, and the book's target audience was the U.S. audience. Yet Mahfouz might reasonably point out that the gist of her claims has leaked all over the Internet, affecting his reputation in the U.K. as well - and that she knew full well this would happen. That is significant because, in defamation cases (including American defamation cases), writers are responsible for not only the publication of their statements, but their foreseeable republication as well. Otherwise, one could send a defamatory fax to a reporter friend, yet only pay for the damage to the defendant's reputation in the eyes of the reporter, not in the eyes of all the reporter's many readers -- the audience for the foreseeable republication of the fax.

Mahfouz's attorneys also defend his decision to sue in the U.K. by pointing out that he possesses a substantial reputation in England - making it logical for him to sue in the U.K. courts to try to get a judgment that will make U.K. headlines and clear his name. This argument, though somewhat persuasive today, may also be outmoded, if media outlets converge on the Internet as part of the continuing process of globalization. Reputation may well become a truly global phenomenon - and to some extent, it already is.

A Possible Solution: A Treaty Splitting Cases Between the U.S. and U.K.

In light of this situation, is there any fair solution? Let's first assume that the courts simply rule in favor of Ehrenfeld, and thus refuse to enforce Mahfouz's judgment in the U.S. on the ground that to do so would be contrary to public policy and the First Amendment. Is that unfair to Mahfouz?

At first, one might think so - for it will leave Mahfouz with no remedy if he has, indeed, been defamed. But to some extent, that situation would be his own fault, for he could surely have sued Ehrenfeld in the U.S. had he not waited and allowed statutes of limitations (which are brief for libel - usually a year) to lapse. Foreign citizens do have the right to sue in U.S. courts. Also, if he had sued in the U.S., damages incurred to his U.K. reputation, if proven, could have been part of the judgment he received. In that sense, he would have had a full remedy.

Yet the argument in favor of Mahfouz is subtler than that. His attorneys would likely argue that an American defamation suit would not be sufficient recourse, even though it would encompass U.K. damages (if the plaintiff proffered evidence of such damages), because a party defamed in the U.K. should have the benefit of the law of the U.K.. It is not fair, on this argument, that a writer should distribute her work in the U.K., yet claim herself not subject to its law.

Granted, in this particular case, there's a genuine question as to whether Ehrenfeld actually did aim her work at the U.K. at all, since 23 Internet sales are a slim peg to hang a case on. But what if she had? If she publishes in a jurisdiction, should she not be also subject to its laws? Doesn't the U.K. have the right to regulate those who publish there, and more generally, to impose its pro-privacy, pro-reputation policies, rather than the U.S.'s pro-speech policies?

This argument won't be very popular with Americans, because we all cherish the First Amendment. Yet the U.K. doesn't have a formal First Amendment at all, and perhaps this should not be yet another instance of America's imposing its way upon the world. We might be right on the merits - indeed, I absolutely think we are - but we aren't the ones authoring or amending British law.

That's where my possible solution comes in. Rather than contending with these elusive trans-hemispheric cases as the Internet slowly makes borders and oceans less and less relevant for distribution and reputation purposes, it might make the most sense for the U.S. and U.K. to enter into a defamation treaty. The treaty would ask both U.S. and U.K. courts to give up jurisdiction in defamation cases in which the other country has a stronger interest, based on factors such as the intended dissemination of the allegedly defamatory statement, personal jurisdiction over the defendant, and the location of the plaintiff's primary reputation, and therefore, of his or her alleged damages.

Under such a treaty, concurrent jurisdiction - which existed in this case - would no longer exist. However, there could be provisions in the treaty requiring each jurisdiction to factor in the other jurisdiction's damage calculus for when such cases go to trial.

How would the treaty apply in the Ehrenfeld case? In favor of U.S. jurisdiction would be Ehrenfeld's overwhelmingly U.S. book sales, and the ability to exercise personal jurisdiction over her here. In favor of U.K. jurisdiction would be Mahfouz's claim, if it is correct, that he has a substantial U.K. reputation, as compared to his U.S. reputation (thought this claim might be undercut by his global prominence and strong reputation in Saudi Arabia as well).

Overall, the U.S. would be the venue of choice - but not because our First Amendment-informed defamation law is better on the merits (though I think it is), but because a U.S. forum would, on balance, be more fair.