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In action against Dow Jones & Co. for libel over Internet, Australian High Court rules that tort took place at point where subscribers downloaded it in Victoria State, plaintiff's work place, thus Victorian defamation law governs and its courts are appropriate fora in which to litigate.

Dow Jones & Co., Inc. (Dow) publishes the "Wall Street Journal" newspaper and Barron's weekly print magazine. It is a Delaware corporation with its World Wide Web servers in New Jersey and its editorial offices in New York. For the last six years, Dow Jones has run WSJ.com, a subscription news site on the Web. It includes Barron's Online where it publishes the text and pictures set forth in the current Barron's magazine.

The Web enables a document to be stored in such a way on one computer connected to the Internet (the web server) that a person using another computer linked to the Internet (a web browser) can ask for and get an electronic copy of the document. A collection of documents or "web pages" is usually called a "web site."

The originator of a document wishing to make it available on the World Wide Web has it placed in a storage area managed by a web server by "uploading" it. A stranger wishing to get hold of that document has to send a request to the relevant server, identifying the location of the originator's web page by its "uniform resource locator (URL)." When the server delivers the requested document to the stranger's computer, the process is usually referred to as "downloading."

Barron's Online for October 28, 2000, and the corresponding edition of Barron's magazine dated two days later, featured an article entitled "Unholy Gains." It referred several times to Mr. Joseph Gutnick, as allegedly involved in money laundering. Gutnick (plaintiff) lives in Victoria, Australia and has his business headquarters there.

He sued Dow in the Supreme Court of Victoria for libel. Plaintiff had the original process served on Dow outside Australia without leave of court under Victoria's civil procedure rules. Dow made a conditional appearance. It then moved the Court either to set aside the service and complaint or to permanently stay further proceedings on the grounds of forum non conveniens. The plaintiff countered by insisting that his suit seeks only to have the courts of Victoria neutralize and repair Dow's attack on his good Victorian reputation.

The trial court dismissed Dow's application. The judge found that defendant had published its allegedly libelous statements in the State of Victoria when Dow fee subscribers had used their passwords to download the material in that State. This finding is central to resolving questions of jurisdiction, choice of law, and forum non conveniens in this litigation.

After Victoria's Court of Appeal had denied Dow leave to appeal to it, Dow got special leave to obtain review by the High Court of Australia. That Court, however, unanimously dismisses Dow's appeal.

Both sides agreed about two main principles of Australian law. First, an Australian court, whose jurisdiction a plaintiff has validly invoked, whether by personal service or "long-arm" statute, will forego the exercise of this jurisdiction on the grounds of forum non conveniens only if the plaintiff has chosen a clearly inappropriate forum.

Secondly, in trying a tort action in which the parties or the events have some links to a foreign jurisdiction, an Australian court will apply the lex loci delicti as the applicable law. As a result, the parties' arguments centered on determining the relevant place in which Dow had published the alleged libels to third parties. Dow insisted that this situs was New Jersey while plaintiff pointed to Victoria as the locus delicti. From the latter proposition, plaintiff reasoned that Victoria was an appropriate forum.

The High Court preliminarily points to the general rationale underlying the law of defamation. "...[T]he law of defamation seeks to strike a balance between, on the one hand, society's interest in freedom of speech and the free exchange of information and ideas ... and, on the other hand, an individual's interest in maintaining his or her reputation in society free from unwarranted slur or damage."

"The way in which those interests are balanced differs from society to society. ... [C]omparing the law of defamation in different countries can reveal differences going well beyond matters of detail lying at the edge of debate." [Slip op. 14-15] Thus, the choice of the applicable law may substantially affect the outcome of a multistate case.

Under Australian law, for example, defamation is a tort of strict liability. A defendant may be liable even though no injury to plaintiff's reputation was intended and reasonable care was taken. Moreover, defamation is bilateral. A party who may have spoken or written a statement defaming X does not commit the tort until it is "published," that is, until one or more third parties understandingly hears or reads the statement. The Court notes that about 27 U.S. States, including California, Illinois, New York, Pennsylvania and Texas, by legislation (see The Uniform Single Publication Act of 1952) or by judicial decision, have adopted the so-called "single publication" rule in the defamation sector. Section 577A of the Restatement of Torts 2d (1977) sets out an American version of that doctrine. It provides in part that "(2) A single communication heard at the same time by two or more third persons is a single publication. (3) Any one edition of a book or newspaper, or any one radio or television broadcast, exhibition of a motion picture or similar aggregate communication is a single publication."

"It was not until the middle of the twentieth century and the advent of widely disseminated mass media of communication (radio and nationally distributed newspapers and magazines) that choice- of-law problems were identified. In some cases, the law of the forum was applied without any explicit recognition of the possible application of some other law."

"But then, by a process of what was understood as logical extension of the single publication rule, the choice of law to be applied came to be understood [in the U.S.] as largely affected by, perhaps even to be determined by, the proposition that only one action could be brought in respect of the alleged defamation, and that the place of publication was where the person publishing the words had acted." [Slip op. 24-25]

The present Court, however, finds analytical problems with this approach. "For present purposes, what it is important to notice is that what began as a term describing a rule that all causes of action for widely circulated defamation should be litigated in one trial, and that each publication need not be separately pleaded and proved, came to be understood as affecting, even determining, the choice of law to be applied in deciding the action. To reason in that way confuses two separate questions: one about how to prevent multiplicity of suits and vexation of parties, and the other about what law must be applied to determine substantive questions arising in an action in which there are foreign elements." [Slip op. 26]

The Court concludes that the global reach of the Internet does not require a novel legal approach. "It must be recognised ... that satellite broadcasting now permits very wide dissemination of radio and television and it may, therefore, be doubted that it is right to say that the World Wide Web has a uniquely broad reach. It is no more or less ubiquitous than some television services."

"In the end, pointing to the breadth or depth of reach of particular forms of communication may tend to obscure one basic fact. However broad may be the reach of any particular means of communication, those who make information accessible by a particular method do so knowing of the reach that their information may have. In particular, those who post information on the World Wide Web do so knowing that the information they make available is available to all and sundry without any geographic restriction." [Slip op. 30-31]

"Other territorial connections may also be identified. In the present case, Dow Jones began the process of making material available at WSJ.com by transmitting it from a computer located in New York city. For all that is known, the author of the article may have composed it in another State. Dow Jones is a Delaware corporation. Consideration has been given to these and indeed other bases of territorial connection in identifying the law that might properly be held to govern an action for defamation where the applicable choice of law rule was what came to be known as the proper law of the tort." [Slip op. 31-32]

"Australian common law choice-of-law rules do not require locating the place of publication of defamatory material as being necessarily, and only, the place of the publisher's conduct (in this case, being Dow Jones' uploading the allegedly defamatory material onto its servers in New Jersey)." [Slip op. 32]

"In defamation, the same considerations that require rejection of locating the tort by reference only to the publisher's conduct, lead to the conclusion that, ordinarily, defamation is to be located at the place where the damage to reputation occurs."

"Ordinarily that will be where the material which is alleged to be defamatory is available in comprehensible form assuming, of course, that the person defamed has in that place a reputation which is thereby damaged. It is only when the material is in comprehensible form that the damage to reputation is done and it is damage to reputation which is the principal focus of defamation, not any quality of the defendant's conduct."

"In the case of material on the World Wide Web, it is not available in comprehensible form until downloaded on to the computer of a person who has used a web browser to pull the material from the web server. It is where that person downloads the material that the damage to reputation may be done. Ordinarily then, that will be the place where the tort of defamation is committed." [Slip op. 34]

Dow also seeks a stay of proceedings, contending that Victoria is clearly an inconvenient forum in which to litigate plaintiff's claims. Rule 7.01(1) of the Victorian Rules provide that: "(1) Originating process may be served out of Australia without order of the Court where - - (j) the proceeding is brought in respect of damage suffered wholly or partly in Victoria and caused by a tortious act or omission wherever occurring."

"Dow Jones contended that Victoria was a clearly inappropriate forum because the substantive issues to be tried would be governed by the laws of one of the States of the United States. ... Dow Jones submitted that the defamation had occurred in New Jersey and that the substantive issues in the proceeding were, therefore, to be governed by the law of that State."

"As has been noted earlier, Mr Gutnick has sought to confine his claim in the Supreme Court of Victoria to the damage he alleges was caused to his reputation in Victoria as a consequence of the publication that occurred in that State. The place of commission of the tort for which Mr Gutnick sues is then readily located as Victoria. ..."

"It follows, of course, that substantive issues arising in the action would fall to be determined according to the law of Victoria. But it also follows that Mr Gutnick's claim was thereafter a claim for damages for a tort committed in Victoria, not a claim for damages for a tort committed outside the jurisdiction. There is no reason to conclude that the primary judge erred in the exercise of his discretion to refuse to stay the proceeding." [Slip op. 36-37]

"Finally, ... the spectre which Dow Jones sought to conjure up in the present appeal, of a publisher forced to consider every article it publishes on the World Wide Web against the defamation laws of every country from Afghanistan to Zimbabwe is seen to be unreal when it is recalled that, in all except the most unusual of cases, identifying the person about whom material is to be published will readily identify the defamation law to which that person may resort." [Slip op. 41]

Citation: Dow Jones & Co., Inc. v. Gutnick, [2002] H.C.A. 56 (Aust. High Ct., December 10, 2002).
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Publication:International Law Update
Date:Dec 1, 2002
Words:1996
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