Ehrenfeld v. Bin Mahfouz

• Citation: 881 N.E.2d 830,9 N.Y.3d 501
• Decision Date: 20 December 2007
• Docket Number: No. 174.,174.
• Parties: Rachel EHRENFELD, Appellant, v. Khalid Salim BIN MAHFOUZ, Respondent.
• Court: New York Court of Appeals

881 N.E.2d 830

9 N.Y.3d 501

Rachel EHRENFELD, Appellant, v. Khalid Salim BIN MAHFOUZ, Respondent.

No. 174.

Court of Appeals of New York.

December 20, 2007.

Kornstein Veisz Wexler & Pollard, LLP, New York City (Daniel J. Kornstein, Mikaela A. McDermott, Mark Platt, Ina R. Bort, Catherine C. Montjar, David T. McTaggart and Amy C. Gross of counsel), for appellant

Jones Day (Timothy J. Finn and Stephen J. Brogan, of the District of Columbia bar, admitted pro hac vice, and Christian G. Vergonis of counsel), and Bonner, Kiernan, Trebach & Crociata, Washington, D.C. (Michael Nussbaum of counsel), for respondent.

Covington & Burling LLP, New York City (Jason P. Criss of counsel), Weil, Gotschal & Manges LLP (R. Bruce Rich and Jonathan Bloom of counsel), Jan Friedman Constantine, Fletcher, Heald & Hildreth, PLC, Arlington Virginia (Kevin M. Goldberg of counsel), Angela Mills Wade, Brussels, Belgium, Kurt A. Wimmer, McLean, Virginia, Patrick D. Moines, Arlington, Virginia, Richard T. Kaplar, Rene P. Milam, Vienna, Virginia, Lucy A. Dalglish, Arlington, Virginia, Gregg' P. Leslie, Matthew B. Pollack, David A. Zapolsky, Seattle, Washington, Wiley Rein & Fielding, Washington, D.C. (Kathleen A. Kirby of counsel), Kai Falkenberg, New York City, Dow Lohnes PLLC, Washington, D.C. (Jonathan D. Hart of counsel), and Sabin, Bermant & Gould LLP, New York City (Neil M. Rosenhouse of counsel), for Advance Publications, Inc. and others, amici curiae.

OPINION OF THE COURT

CIPARICK, J.

The United States Court of Appeals for the Second Circuit has certified to us the question of whether CPLR 302(a)(1) confers personal jurisdiction over a person "(1) who sued a New York resident in a non-U.S. jurisdiction; and (2) whose contacts with New York stemmed from the foreign lawsuit and whose success in the foreign suit resulted in acts that must be performed by the subject of the suit in New York" (489 F.3d 542, 545 (2nd Cir. 2007) ). Because these contacts do not constitute the transaction of business M this state, we conclude that CPLR 302(a)(1) does not confer jurisdiction.

I.

Plaintiff Rachel Ehrenfeld is an author whose writing focuses on international terrorism. In 2003, Chicago-based Bonus Books published her book, Funding Evil: How Terrorism Is Financed—and How to Stop It. In that book, plaintiff asserts that defendant, Khalid Salim Bin Mahfouz—a Saudi Arabian businessman, financier and former head of the National Commercial Bank of Saudi Arabia—and his family have provided direct and indirect monetary support to al Qaeda and other "Islamist terror groups." Funding Evil was published in the United States. However, 23 copies were purchased in the United Kingdom via the Internet and a chapter of the book, accessible from the ABCNews.com Web site, was also available in that country.

Defendant maintains that plaintiff's claims regarding his ties to terrorism are false. On January 23, 2004, defendant's English 505 counsel wrote to plaintiff and sought to have her: (i) promise the "High Court in England" that she would refrain from repeating similar allegations, (ii) destroy or deliver to him all copies of Funding Evil, (iii) issue a letter of apology (to be published at plaintiffs expense), (iv) make a charitable donation and (v) pay his legal costs in exchange for defendant's agreement to not bring a defamation action against her. When plaintiff did not accept this offer, defendant sued her, seeking damages and injunctive relief under the English Defamation Act of 1996, in the High Court of Justice, Queens Bench Division, in London.

Pursuant to an order of the English court, defendant served papers upon plaintiff at her New York City apartment on four occasions: October 22, 2004, December 30, 2004, March 3, 2005 and May 19, 2005. Plaintiff alleges that the process server who visited her on March 3 threatened her, stating: " "You had better respond, Sheikh bin Mahfouz is a very important person, and you ought to take very good care of yourself."¹ In addition to serving litigation papers, defendant's English lawyers contacted plaintiff at her home in New York via mail and e-mail. These communications—received on September 22, 2004, December 9, 2004, April 26, 2005, April 27, 2005, May 2, 2005 and May 9, 2005—all concerned the English action. By these letters and e-mails, defendant's English counsel provided plaintiff with the claim in the English action, witness statements, documents supporting defendant's alleged damages and court orders. For example, the December 9 letter advised plaintiff that pursuant to an injunction issued by the English court she was under a duty to prevent Funding Evil from "leak[ing] into the [English court's] jurisdiction," "England and Wales," and that if she failed to do so she could "be held in contempt of court."

Plaintiff elected not to appear in the English action.² She did so because of the cost of litigating in England, the procedural barriers facing a libel defendant under English law and her disagreement in principle with defendant's alleged attempt to chill her speech in New York by suing in a claimant-friendly libel jurisdiction to which she lacked any tangible connection.³ On December 7, 2004, the English court entered a default judgment against plaintiff and Bonus Books, providing for an award of damages and enjoining the further publication of the allegedly defamatory statements in. England and Wales. On May 3, 2005, the English court entered a second order declaring the allegedly defamatory statements false, setting damages owed to defendant and his sons at 10,000 each, requiring plaintiff and Bonus Books to publish an apology in accordance with section 9(2) of England's Defamation Act of 1996,⁴ mandating that the December 7 injunction "shall continue in full force and effect," and awarding defendant his costs in prosecuting the English action. Defendant reported the contents of the May 3 order on his Web site (see Bin Mahfouz Information, http://www. binrnahfouz.info/news_20050503.html [accessed Dec. 3, 2007]), which is accessible in New York.

Plaintiff filed suit against defendant in the United States District Court for the Southern District of New York. There, she sought a declaratory judgment that, under federal and New York law, defendant could not prevail on a libel claim against her based upon the statements at issue in the English action and that the December 7 default judgment is unenforceable in the United States and, particularly, in New York State. Defendant moved to dismiss, arguing that the court lacked subject matter and personal jurisdiction.

The district court held that it lacked personal jurisdiction under CPLR 302(a)(1) because defendant's communications to plaintiff in New York regarding the English action and his Web site posting, "however persistent, vexing or otherwise meant to coerce, do not appear to support any business objective" (2006 WL 1096816, *4, 2006 U.S. Dist LEXIS 23423, *14). Further, the court concluded that plaintiff's reliance upon. Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199 [(9th, Cir.2006, en banc)], which affirmed a finding of person al jurisdiction based upon facts similar to those here, was misplaced. This was so, said the district court, because the Ninth Circuit was interpreting California's longarm statute, which unlike CPLR 302(a)(1), is "coextensive with Federal Due Process" standards for exercising personal jurisdiction (2006 WL 1096816, *5, 2006 U.S. Dist LEXIS 23423, *19).

On appeal, the Second Circuit asked deferulant whether he would commit to not seek enforcement of the English court's orders in the United States. In a letter to the court, defendant "decline[d] to . waive ... whatever rights he may have to seek enforcement of the damage award in a U.S. court." On June 8, 2007, the Second Circuit certified to us the above-quoted question. We now answer that question in the negative, concluding that CPLR 302(a)(1) does not confer in personam jurisdiction over defendant.

II.

At the outset, it is important to emphasize that we are called upon to decide a narrow issue. The Second. Circuit has not asked us to opine upon the propriety of English libel law or its differences from its United States and, particularly, New York State counterparts. And we decline to do so. Plaintiff and her amid argue that this case is about "libel tourism," a phenomenon that they variously describe as the use of libel judgments procured in jurisdictions with claimant-friendly libel laws—and little or no connection to the author or purported libelous material—to chill free speech in the United States. However pernicious the effect of this practice may be, our duty here is to determine whether defendant's New York contacts establish a proper basis for jurisdiction under CPLR 302(a)(1).⁵ It is to that inquiry to which we now turn.

Plaintiff claims that defendant has transacted business in New York because he purposefully projected himself into the state to further a "foreign litigation scheme" designed to chill her speech. Defendant counters that this alleged scheme consists of contacts that are insufficient bases for jurisdiction. He states that he has transacted no business here and that his communications and activities in New York were merely incidental to the prosecution of a foreign litigation. Because none of the contacts here establish that defendant purposefully availed himself of the privileges of and benefits of New York's laws, we agree with defendant (compare e.g. Fisckbarg v. Doucet, 9 N.Y.3d 375, 382, 849 N.Y.S.2d 501, 880 N.E.2d 22 [2007] [decided today] [purposeful availment requires a "sustained and substantial transaction of business in New York," such as the solicitation and establishment of a continuing attorney-client relationship]).

Under CPLR 302(a)(1) "a court may exercise personal jurisdiction over any non-domiciliary," such as defendant, "who in person or through an agent transacts any business...