2010 AMERICAN BAR ASSOCIATION SYDNEY CONFERENCE MOOT COURT COMPETITION CUTHBERT STERLING LETTER M. DAVIDMAN BENCH MEMORANDUM

Transcription

1 2010 AMERICAN BAR ASSOCIATION SYDNEY CONFERENCE MOOT COURT COMPETITION CUTHBERT STERLING V. LETTER M. DAVIDMAN UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BENCH MEMORANDUM PREPARED FOR: THE HONORABLE ANTONIN SCALIA BY: DAVID N. CINOTTI EMILY JONES ERNESTO SANCHEZ AMERICAN BAR ASSOCIATION, INTERNATIONAL LAW SECTION INTERNATIONAL LITIGATION COMMITTEE

2 TABLE OF CONTENTS PART 1: GENERAL INFORMATION... 1 INTRODUCTION... 1 STATEMENT OF FACTS... 1 PART 2: LEGAL ANALYSIS... 3 DISCUSSION... 3 I. LEGAL BACKGROUND... 3 II. III. A. Motion to dismiss for failure to state a claim for which relief can be granted. 3 B. Summary judgment... 3 C. Recognition and enforcement of foreign money judgments... 4 SHOULD THIS COURT REFUSE RECOGNITION ON THE BASIS THAT THE NEW SOUTH WALES COURT LACKED PERSONAL JURISDICTION OVER DAVIDMAN?... 6 A. Is the tag jurisdiction obtained through personal service on Davidman at the Sydney airport sufficient grounds for recognition and enforcement of the Australian judgment under U.S. law?... 6 B. Was Davidman tricked into attending the mediation in Australia, invoking an exception to tag jurisdiction?... 8 SHOULD THIS COURT REFUSE RECOGNITION BECAUSE THE NEW SOUTH WALES JUDGEMENT VIOLATES THE FIRST AMENDMENT AND THUS NEW YORK PUBLIC POLICY?... 9 A. Mandatory protections under the First Amendment B. Australian component of the New South Wales judgment C. U.S. component of the New South Wales judgment IV. SHOULD THIS COURT REFUSE RECOGNITION BECAUSE THE NEW SOUTH WALES PROCEEDINGS WERE SERIOUSLY INCONVENIENT FOR DAVIDMAN?...17 CONCLUSION...19 PART 3: APPENDIX... 1 TABLE OF CONTENTS

3 PART 1: GENERAL INFORMATION INTRODUCTION This memorandum discusses the facts, law, and parties likely arguments in the case of Cuthbert Sterling v. Letter M. Davidman. Plaintiff Cuthbert Sterling sued and obtained a money judgment against Defendant Letter M. Davidman in Australia for defamation. Now Sterling seeks to have this judgment recognized and enforced in the United States. STATEMENT OF FACTS Cuthbert Sterling is a well known, New York based media baron with global media interests. Sterling, who was born in Australia, renounced his Australian citizenship in He was naturalized as a U.S. citizen and currently maintains his domicile in Connecticut. Davidman is a U.S. citizen and is domiciled in New York. Prior to the events leading up to this dispute, Davidman had never left the island of Manhattan. Davidman, a former high profile presenter on the Sterling network, is now the host of a current affairs program on a rival U.S. television network. Davidman has made no secret of his dislike for Sterling following Davidman s dismissal from the Sterling network and a subsequent exposé in the Sterling press about Davidman s complex personal life. Davidman s regular U.S. audience exceeds 10 million viewers per show. Although his show is not broadcast by any network in Australia, he has a small following in Australia among a group of fans who download podcasts from the Davidman website an average of 1,268 times per episode. In 2007, Davidman presented a biographical portrait of Sterling on his program, describing Sterling as obsessive, indifferent to the truth of media reports, focused exclusively on circulation, tending to megalomania in both his business and private life, and actively interfering in editorial policy for personal political purposes. On September 11, 2007, Sterling sued Davidman in the Supreme Court of New South Wales, claiming damages for defamation in both Australia and the United States. Sterling served process on Davidman in the United States. Davidman retained Australian counsel, who advised him that he could challenge the jurisdiction of the New South Wales court and/or seek to stay the proceedings without entering an appearance or submitting to jurisdiction. His attorneys also advised him, however, that the practice of Judge Wisecrack, the New South Wales judge assigned to the case, was to insist that the parties personally attend a mediation in Sydney before the retired Hon. Roger J. Andrews, QC, before any jurisdictional challenge would be heard. On the advice of his attorneys and with great reluctance Davidman flew to Australia for the mediation, which ended unsuccessfully in a shouting match between Davidman and Sterling. Davidman stormed out, but was personally served with Sterling s Statement of Claim in the New South Wales proceedings while waiting to board a flight back to the United States. BENCH MEMORANDUM

4 Davidman moved to dismiss the New South Wales action based on lack of subject matter and personal jurisdiction. In the alternative, he moved to stay the action because New South Wales was an inconvenient forum for the suit. The rules of the Supreme Court of New South Wales authorize service of process on a defendant outside Australia when: (1) the proceedings are founded on a cause of action arising in New South Wales; (2) the proceedings are founded on a tort committed in New South Wales; or (3) the proceedings are wholly or partly founded on, or are for the recovery of damages in respect of, damage suffered in New South Wales caused by a tortious act or omission wherever it occurred. Davidman s motion was removed to the High Court of Australia, which denied the motion after argument. The case then proceeded to trial before Judge Wisecrack. Davidman failed to appear at the trial, which was conducted in his absence. Judge Wisecrack applied U.S. defamation law to Sterling s claim that he suffered harm to his reputation in the United States (although the record is unclear whether Judge Wisecrack applied the law of a particular State) and Australian defamation law to the claim that Sterling suffered harm in Australia. Judge Wisecrack received evidence of U.S. law relating to defamation and concluded that Sterling was not required to show that Davidman s statements about Sterling were motivated by malice. In any event, Judge Wisecrack concluded that Davidman was not motivated by malice, according to an Australian lawyer s understanding of that concept. He did not receive any evidence as to the definition of malice under U.S. federal or state law. The trial resulted in a verdict in favor of Sterling for $5 million, with $200,000 of the damages attributed to harm that Sterling suffered in New South Wales. Despite his failure to appear at trial, Davidman had the right to appeal the judgment, but did not do so. On the basis of diversity of citizenship, Sterling now seeks to have the New South Wales judgment recognized and enforced in this Court. Davidman has moved to dismiss Sterling s complaint for failure to state a claim for which relief could be granted or, alternatively, for summary judgment in regard to the judgment s enforceability pursuant to Rules 12(b)(6) and 56(c) of the U.S. Federal Rules of Civil Procedure respectively. In response, Sterling has cross moved for summary judgment in his own favor on the enforceability issue, also on the basis of Rule 56(c). BENCH MEMORANDUM PAGE 2

5 PART 2: LEGAL ANALYSIS DISCUSSION Davidman will likely base his motions to dismiss or for summary judgment on the grounds that: (1) the New South Wales court lacked personal jurisdiction over him; (2) enforcing the judgment would violate the First Amendment and, therefore, New York public policy; and (3) the New South Wales proceeding was a seriously inconvenient forum for him. Sterling, on the other hand, should respond that these defects do not exist in this matter, thereby justifying entry of a judgment against Davidman based on the outcome of the New South Wales proceedings. 1 This legal analysis, then, is divided into four sections. The first section outlines the general law governing this action the standards for reviewing Davidman s motions and whether U.S. courts can recognize and enforce foreign money judgments. The next three sections will respectively discuss the arguments Sterling and Davidman should raise in regard to each of the substantive issues underlying the motions before the Court. I. LEGAL BACKGROUND A. Motion to dismiss for failure to state a claim for which relief can be granted On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court accepts as true all factual allegations in the complaint and draws all reasonable inferences in the plaintiff's favor. 2 The complaint's allegations, however, must be enough to raise a right of relief above the speculative level. 3 Only a plausible claim for relief survives a motion to dismiss. 4 Thus courts are not bound to accept as true a legal conclusion couched as a factual allegation, and [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. 5 B. Summary judgment Davidman alternatively seeks summary judgment holding that this Court can enforce the New South Wales judgment. Sterling seeks summary judgment holding just the opposite. Under Federal Rule of Civil Procedure 56(c), summary judgment should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. 6 The plain language of Rule 56(c) mandates the entry of summary judgment... against a party who fails to make a showing sufficient to establish 1 The parties have agreed that the upcoming oral argument will only concern the issue of whether the Australian judgment is enforceable and not the matter of how much Sterling could collect in U.S. currency. 2 In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 692 (2d Cir. 2009). 3 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). 4 LaFaro v. N.Y. Cardiothoracic Group, PLLC, 570 F.3d 471, 476 (2d Cir. 2009). 5 Ashcroft v. Iqbal, 129 S. Ct. 1937, (2009) (internal quotation marks omitted). 6 Fed. R. Civ. P. 56(c). BENCH MEMORANDUM PAGE 3

6 the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. 7 A party moving for summary judgment may discharge its burden by showing that is, pointing out to the district court that there is an absence of evidence to support the nonmoving party's case. 8 Federal Rule of Civil Procedure 56(e) requires that a party opposing summary judgment may not rely merely on allegations or denials in its own pleading; rather, its response must by affidavits or as otherwise provided in this rule set out specific facts showing a genuine issue for trial. 9 [S]peculation alone is insufficient to defeat a motion for summary judgment. 10 The law is well established that conclusory statements, conjecture, or speculation are inadequate to defeat a motion for summary judgment. 11 C. Recognition and enforcement of foreign money judgments The underlying case law principle governing the recognition and enforcement of foreign judgments is that of comity, first defined by the U.S. Supreme Court in 1895 as neither a matter of absolute obligation nor of mere courtesy and good will. 12 Comity is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws. 13 If a foreign forum provides a full and fair trial before a court of competent jurisdiction, under a system of procedural fairness akin to those of U.S. courts, and there is nothing to show either prejudice in the court or fraud in procuring the judgment, the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh... upon the mere assertion of [a] party that the judgment was erroneous in law or fact. 14 These principles have not been codified in any federal law or reflected in any treaty to which the United States is a party. But most states, New York included, have accordingly adopted some version of the Uniform Foreign Country Money Judgments Recognition Act ( Recognition Act ) to govern the recognition and enforcement of foreign money judgments. 15 As this is a diversity action, New York s Recognition Act and surrounding case law are consequently the main points of reference here Celotex Corp. v. Catrett, 477 U.S. 317, 321 (1986). 8 Id. at Fed. R. Civ. P. 56(e). 10 McPherson v. N.Y. City Dep't of Educ., 457 F.3d 211, 215 n.4 (2d Cir. 2006). 11 Woodman v. WWOR TV, Inc., 411 F.3d 69, 85 (2d Cir.2005). 12 Hilton v. Guyot, 159 U.S. 113, (1895). 13 Id. at Id, at N.Y. C.P.L.R (2007). Although New York substantially amended the Recognition Act in 2008, the parties agree that the 2008 amendments do not apply to this case. All citations to the Recognition Act refer to the 2007 version of the statute. 16 The relevant statutory provisions are set out in the appendix to this Bench Memorandum, and are quoted as necessary. BENCH MEMORANDUM PAGE 4

7 The Recognition Act applies to any foreign country judgment which is final, conclusive, and enforceable where rendered even though an appeal therefrom is pending. 17 Default judgments are considered conclusive. 18 The Recognition Act provides only two instances where a foreign country judgment is deemed not to be conclusive, and non recognition is mandatory. 19 These instances consist of when a judgment is rendered in a system that does not provide impartial tribunals or procedures compatible with due process of law or when a foreign court lacks personal jurisdiction over a defendant. 20 The party asserting conclusiveness must establish prima facie: (1) a final judgment, conclusive and enforceable where rendered; (2) subject matter jurisdiction; (3) jurisdiction over the parties or the res; and (4) regular proceedings conducted under a system that provides impartial tribunals and procedures compatible with due process. 21 In other words, the party seeking to enforce a foreign judgment, namely Sterling, bears the burden of proving that no mandatory basis for non recognition exists. 22 New York case law has dictated that occasions reflecting procedural unfairness or lack of due process are rare, especially when the foreign forum is, like Australia, a sister common law jurisdiction with procedures akin to our own. 23 And mere divergence from American procedure does not render a foreign judgment unenforceable. 24 Any arguments to the opposite effect on Davidman s part, then, would bear little chance of success. All other grounds for non recognition are discretionary. 25 They are: (1) a lack of subject matter jurisdiction on the foreign court s part; (2) foreign proceedings where a defendant did not receive notice of the proceedings in time to prepare a sufficient defense; (3) procurement of a judgment through fraud; (4) where a cause of action underlying a judgment is repugnant to New York public policy; (5) a judgment that conflicts with another final and conclusive judgment; (6) foreign proceedings contrary to an agreement between the parties to settle a given dispute in another manner; and (7) forum non conveniens. 26 As further explained below, this case only appears to raise the matter of public policy, on account of the First Amendment implications in any action related to a defamation claim, and forum non conveniens. New York courts have held that a party opposing a judgment s recognition and enforcement bears the burden of proving that a 17 C.P.L.R See Watary Servs. v. Law Kin Wah, 668 N.Y.S.2d 458 (App. Div. 1st Dep t 1998) (holding that a default judgment should be recognized unless one of the exceptions in the Recognition Act applies). 19 C.P.L.R. 5304(a)(2007); see also id Id. 21 Ackermann v. Levine, 788 F.2d 830, 842 n.12 (2d Cir. 1986). 22 See Watts v. Swiss Bank Corp., 27 N.Y.2d 270, 275 (1970). 23 Clarkson Co. v. Shaheen, 544 F.2d 624, 630 (2d Cir. 1976) (addressing the enforceability of a Canadian judgment); see also CIBC Mellon Trust Co. v. Mora Hotel Corp. N.V., 100 N.Y.2d 215, (2003) (noting that the overall fairness of the English legal system is beyond dispute ); Blacklink Transport Consultants Pty. Ltd. v. Von Summer, No /07, 2008 WL 89958, at *2 3 (N.Y. Sup. Ct. Jan. 9, 2008) (recognizing an Australian judgment, specifically one from the Supreme Court of New South Wales). 24 See Ackermann, 788 F.2d at C.P.L.R. 5304(b) (stating that a foreign country judgment need not be recognized on the specified grounds). 26 See id. BENCH MEMORANDUM PAGE 5

8 discretionary basis for non recognition applies. 27 The high standards described here, however, are not insurmountable for the party opposing recognition and enforcement, especially if the judgment was sufficiently offensive (i.e., more than just a variance with local public policy and even if the judgment was rendered in a common law jurisdiction). 28 II. SHOULD THIS COURT REFUSE RECOGNITION ON THE BASIS THAT THE NEW SOUTH WALES COURT LACKED PERSONAL JURISDICTION OVER DAVIDMAN? Because a foreign court s lack of personal jurisdiction is one of the grounds (and the only applicable one here) upon which the foreign money judgment is not conclusive between the parties 29, it presents the strongest defense, if proven, for Davidman against enforcement of the Australian court s judgment. Although personal jurisdiction for purposes of recognition and enforcement of foreign money judgments in the United States has been addressed by U.S. courts, 30 the facts of this moot problem are different from those cases in that both parties here are U.S. citizens. Thus, no question exists as to whether a U.S. court has jurisdiction over one or both parties for purposes of recognizing and enforcing the judgment in the United States. 31 In that regard, no minimum contacts analysis is required. A sophisticated argument likely will not discuss the personal jurisdiction over the parties in the recognition proceeding, other than to identify it as a non issue or to briefly distinguish the facts of this case from those cases. The real issue here is whether the Australia court had personal jurisdiction over Davidman sufficient to render a judgment against him. A. Is the tag jurisdiction obtained through personal service on Davidman at the Sydney airport sufficient grounds for recognition and enforcement of the Australian judgment under U.S. law? Although lack of personal jurisdiction is a defense to recognition of a foreign money judgment, the Recognition Act specifically provides that a foreign country judgment shall not be refused recognition for lack of personal jurisdiction if the defendant was personally 27 See Dresdner Bank AG v. Haque, 161 F. Supp. 2d 259, (S.D.N.Y. 2001). New York federal courts have not been as definitive as New York state courts as to whether the burden of proving a judgment can be enforced. Compare Watts, 25 N.Y.2d at 275 with Dresdner, 161 F. Supp. 2d at 263 ( Although the [Second Circuit has not specified] how these burdens apply with respect to Article 53 of the CPLR, it would appear that the plaintiff seeking enforcement of the foreign judgment bears the burden of proving that no mandatory basis for non recognition pursuant to CPLR 5304(a) exists, and that the defendant opposing enforcement has the burden of proving that a discretionary basis for non recognition pursuant to CPLR 5304(b) applies. )(citations omitted). 28 See Matusevitch v. Telnikoff, 877 F.Supp.1, 3 6 (D.D.C. 1995) (refusing to enforce a British libel judgment that was found to deprive one s First Amendment rights); Abdullah v. Sheridan Square Press, Inc., No. 93 Civ 2515, 1994 WL , at *1 (S.D.N.Y. May 4, 1994). 29 C.P.L.R. 5304(a). 30 See, e.g. Yahoo! Inc. v. La Ligue Contre le Racisme, 433 F.3d 1199 (9th Cir. 2006) (en banc); Ehrenfeld v. Bin Mahfouz, 518 F.3d 102 (2d Cir. 2008). 31 But see Yahoo!, 433 F.3d 1199; Ehrenfeld. 518 F.3d 102. BENCH MEMORANDUM PAGE 6

9 served in the foreign state. 32 Under New York law, Sterling likely bears the initial burden of establishing a prima facie case that the New South Wales court had personal jurisdiction over Davidman. 33 Once Sterling meets that burden, Davidman then bears the burden of rebutting that showing. 34 Sterling should argue that the plain language of the statute suggests that the Australia court had jurisdiction over Davidman through the personal service on him at the Sydney airport. Sterling may also cite federal case law to support his position. 35 This discussion should point out that not only has the U.S. Supreme Court held that personal service alone confers personal jurisdiction, where service is made within the territorial boundaries, but also that personal service upon an individual physically present within those boundaries alone comports with due process. 36 Therefore, Sterling should argue, personal service on Davidman at the Sydney airport was consistent with the requirements of due process under the Constitution of the United States, as well as the State of New York. 37 Counsel should note that this is also consistent with proposed federal legislation regarding the recognition of foreign judgments, mandating that personal jurisdiction over the defendant comport with the due process requirements imposed on domestic courts by the Constitution of the United States. 38 Sterling should also discuss the recent consolidated cases opinion handed down by the U.S. District Court for the District of ABA. 39 The Court acknowledged the plaintiff s argument that no basis existed for attacking the foreign court s jurisdiction over the defendant because, although the defendant did not appear in the foreign court for the proceedings, she was personally served within the foreign country, thus meeting the jurisdictional requirements of an ABA statute identical to the Recognition Act. 40 Without analysis, the Court held: there is no question that the [foreign] court had personal jurisdiction over the defendant. 41 Because of the plain language of the statute, Davidman s best argument is that an exception to this rule exists that is sufficient to challenge the Australian court s jurisdiction over him under C.P.L.R. 5304(a)(2). Davidman may also raise the assertion that, even though he was physically present in Australia and personally served there, such service does not comport with U.S. notions of due process because there was not a sufficient 32 C.P.L.R. 5305(a)(1). 33 See CIBC Mellon Trust Co. v. Mora Hotel Corp., 296 A.D.2d 81 (App. Div. 1st Dep t 2002). 34 Id. 35 Burnham v. Superior Ct., 495 U.S. 604 (1990). 36 Id. at 619 (using due process standard of traditional notions of fair play and substantial justice and recognizing that such a standard was developed by analogy to physical presence, and it would be perverse to say it could now be turned against that touchstone of jurisdiction ). 37 See Hilton, 159 U.S. at H.R. 2765, 111th Congress, 1st Sess., June 9, In re Consol. Actions, Docket No. 09 CV 0001 (2010). 40 Id. at Id. at 7. BENCH MEMORANDUM PAGE 7

10 connection between the defendant and the forum state as to make it fair to require defense of the action in the forum. 42 The parties will likely address the hypothetical issue of whether, if personal jurisdiction was not obtained by personal service, other bases of jurisdiction 43 existed. Sterling should contend that the New South Wales court s exercise of personal jurisdiction over Davidman was proper if any basis for jurisdiction under New York law would apply. 44 The parties may also discuss whether Davidman had sufficient minimum contacts with Australia to confer jurisdiction. 45 Sterling should focus on the fact that Davidman s shows were available by podcast in Australia through Davidman s website. Each Davidman show is downloaded by Australian fans in Australia an average of 1,268 times per episode. Davidman should focus on the fact that his show is not broadcast by any network in Australia, and Davidman had never traveled to Australia prior to the mediation of the dispute. The facts are silent as to whether Davidman s show was promoted or advertised in Australia, whether Davidman owned any assets in Australia, or whether any other basis sufficient to satisfy the minimum contacts test exists. Both parties should discuss whether Davidman s contacts with Australia were purposeful and whether he availed himself of the privilege of conducting business there. 46 B. Was Davidman tricked into attending the mediation in Australia, invoking an exception to tag jurisdiction? The question for Davidman then becomes whether any exceptions to tag jurisdiction serve to bar recognition and enforcement of the judgment under the personaljurisdiction exception to recognition. The perceived harshness of the transitory jurisdiction rule has been mitigated somewhat by judicially fashioned exceptions. 47 One such exception is when the defendant s presence was procured by the plaintiff s fraud or force. 48 It is generally recognized that where a defendant is enticed into the jurisdiction of the court through fraud or trickery on the part of the plaintiff or someone acting in his behalf, in order that personal service of process upon the defendant may be obtained, the service will be set aside upon proper application. 49 Davidman will likely argue that he was tricked into attending the mediation in Australia so that Sterling could personally serve him there. He should discuss U.S. federal case law which recognizes an exception to personal jurisdiction for persons who enter the 42 Kulko v. Superior Ct., 436 U.S. 84, (1978). 43 C.P.L.R 5305(b). 44 Id. 45 Int l Shoe Co. v. Washington, 326 U.S. 310 (1945). 46 See id. 47 Gary B. Born, International Civil Litigation in United States Courts 123 (3d ed. 1996). 48 See Annotation, Attack on Personal Service as Having Been Obtained by Fraud or Trickery, 98 A.L.R.2d 551 (1964). 49 Id. BENCH MEMORANDUM PAGE 8

11 forum for the purpose of negotiating a settlement. 50 Davidman will likely argue that this exception should apply to him because he had never left the island of Manhattan prior to the mediation, and would not have traveled to Australia but for the mediation. Moreover, he received no assurances from Sterling that he would not subject himself to the New South Wales court s personal jurisdiction over him. 51 Furthermore, Davidman may argue that he left his home and country in order to make a good faith effort at settling the dispute, and solely for that purpose, and therefore should not have been subjected to the personal jurisdiction of the New South Wales court. Sterling should argue that this exception does not apply because Davidman was not enticed to Australia by Sterling or anyone acting on Sterling s behalf. Davidman had retained Australian counsel and was independently represented. The mediation was required before Judge Wisecrack would consider Davidman s jurisdictional challenge, and therefore Sterling did not lure Davidman to Australia under the auspices of a settlement discussion. 52 Rather, [o]n the advice of his attorneys and with great reluctance, Davidman broke the habit of a lifetime, flew to Australia and attended the mediation. 53 Sterling should point out that although the Henkel court recognized an exception to personal jurisdiction for purposes of settlement, the facts of Henkel are distinguishable because the plaintiff in Henkel induced the defendant to attend the settlement conference for the purpose of personal service. 54 Here, the mediation was court ordered and not suggested by Sterling. III. SHOULD THIS COURT REFUSE RECOGNITION BECAUSE THE NEW SOUTH WALES JUDGEMENT VIOLATES THE FIRST AMENDMENT AND THUS NEW YORK PUBLIC POLICY? Davidman will likely argue that the Court should deny recognition and enforcement of the New South Wales judgment because recognizing the judgment would violate the First Amendment to the U.S. Constitution. 55 Although the 2007 version of the Recognition Act does not explicitly contain a defense to recognition of a foreign defamation judgment based on the First Amendment, it does provide that a court need not recognize a foreign 50 Henkel Corp. v. Degremont, SA, 136 F.R.D. 88 (E.D. Pa. 1991); see also Fid. & Deposit Co. v. Bussa, 22 So.2d 562 (La. 1945); W. States Refining Co. v Berry, 313 P.2d 480 (Utah 1957) A.L.R But see Henkel, 136 F.R.D Statement of Moot Problem 3 (emphasis added). 54 Henkel, 136 F.R.D For purposes of this moot problem, Davidman does not intend to challenge recognition of the judgment pursuant to the New York State Constitution, which affords more protection to certain types of speech than the First Amendment. See Immuno AG v. Moor Jankowski, 567 N.E.2d 1270, 1278 (N.Y. 1991) ( [T]he protection afforded by the guarantees of free press and speech in the New York Constitution is often broader than the minimum required by the Federal Constitution. (internal quotation marks omitted)). Therefore, we do not discuss that issue in this Bench Memorandum. BENCH MEMORANDUM PAGE 9

12 judgment if the cause of action on which the judgment is based is repugnant to the public policy of this state. 56 The New York Court of Appeals has not considered whether the First Amendment provides a defense to enforcement of a foreign defamation judgment under this publicpolicy defense. But the Second Circuit has considered the issue and has held that [f]oreign judgments that impinge on First Amendment rights will be found to be repugnant to public policy. 57 The Second Circuit has also explained that a district court must follow a two step process in deciding whether a foreign defamation judgment violates New York public policy. 58 First, the court must identify[] the protections deemed constitutionally mandatory [under the First Amendment] for the defamatory speech at issue. 59 Second, the court must determin[e] whether the foreign [defamation] laws provide comparable protection. 60 Thus, for the First Amendment to prevent recognition of the New South Wales judgment, Davidman would need to show that the defamation law applied by the New South Wales court provided less protection than the First Amendment to Davidman s criticism of Sterling on his current affairs program. Based on the Second Circuit s framework for analysis, we discuss below: (1) the mandatory protections that the First Amendment would likely require for Sterling to recover damages against Davidman; (2) whether the New South Wales court s award of damages for violation of Australian defamation law violated First Amendment standards; and (3) whether the New South Wales judgment complied with the First Amendment to the extent that it applied U.S. law and, if it did not, whether misapplication of U.S. law is sufficient to refuse recognition of the judgment. A. Mandatory protections under the First Amendment States may regulate defamatory speech, 61 but the U.S. Supreme Court has held that the First Amendment limits States power to award damages against media defendants for defamation. 62 The extent of these constitutional limits depends on whether the speech at issue is of public or private concern and the plaintiff is a public figure or private person C.P.L.R. 5304(b)(4). As explained above, denial of recognition under the public policy exception is discretionary rather than mandatory; however, some New York State Supreme Court justices have held that the statute required them to deny recognition to foreign judgments that would violate the defamation defendant s constitutional rights if enforced. See, e.g., Bachchan v. India Abroad Pubs. Inc., 585 N.Y.S.2d 661, 662 (Sup. Ct. 1992). 57 S.A.R.L. Louis Feraud Int l. v. Viewfinder, Inc., 489 F.3d 474, 480 (2d Cir. 2007). 58 Id. at Id. 60 Id. 61 See R.A.V. v. St. Paul, 505 U.S. 377, (1992). 62 N.Y. Times Co. v. Sullivan, 376 U.S. 254 (1964); see also Phila. Newspapers, Inc. v. Hepps, 475 U.S. 767, 775 (1986). 63 Hepps, 475 U.S. at 775. BENCH MEMORANDUM PAGE 10

13 In a defamation action against a newspaper or broadcaster, a public official or public figure bears the burden of showing that statements pertaining to a matter of public concern were made with actual malice. As the Supreme Court has explained, [w]hen the speech is of public concern and the plaintiff is a public official or public figure, the Constitution clearly requires the plaintiff to surmount a much higher barrier before recovering damages from a media defendant than is raised by the common law. 64 A public figure cannot recover unless he proves by clear and convincing evidence that the defendant published the defamatory statement with actual malice. 65 Despite the usual denotation of the term, malice in this context does not require evil motive or ill will. 66 Instead, actual malice is defined as knowledge that the statement was false, or reckless disregard as to whether it was false. 67 A statement was recklessly made if there is sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication. 68 Although the Supreme Court does not appear to have expressly considered whether a public figure defamed on a purely private matter must prove malice, the Second Circuit in Weldy v. Piedmont Airlines, Inc. 69 read the Supreme Court cases to require a public figure to prove actual malice by clear and convincing evidence, whether or not the speech at issue concerned a matter of public concern. 70 Because the issue was not squarely presented in Weldy, this Court might view the Second Circuit s statement in Weldy as dictum. However, if it is dictum, it appears to be a persuasive interpretation of Supreme Court case law. In Hustler Magazine v. Falwell, 71 the Supreme Court held that the Reverend Jerry Falwell, a public figure, needed to prove actual malice before he could recover for intentional infliction of emotional distress against Hustler Magazine for publishing a parody that depicted Falwell as having engaged in a drunken incestuous rendezvous with his mother in an outhouse. 72 The Supreme Court explained that the First Amendment protects even vulgar and tasteless criticism of public figures, provided that the speech is not false and made with malice. 73 This holding suggests that public figures must always show actual malice, whether or not the topic of the speech meets the definition of a matter of public concern Id. 65 Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 510 (1991). 66 Id. 67 Id. 68 Church of Scientology Int l. v. Behar, 238 F.3d 168, 174 (2d Cir. 2001) (quoting St. Amant v. Thompson, 390 U.S. 727, 731 (1968)) F.2d 57 (2d Cir. 1993). 70 Id. at U.S. 46 (1988). 72 Id. at 48, See id. at See Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1197 (9th Cir. 1989) (holding that Falwell forecloses the argument that a public figure need not prove actual malice for defamation concerning a matter of purely private concern). BENCH MEMORANDUM PAGE 11

14 If the defendant is a private person who was allegedly defamed on a matter of public concern, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood, provided that the standard does not impose liability without a showing of fault. 75 The Supreme Court drew the distinction between public and private figures because public figures usually enjoy significantly greater access to channels of effective communication and hence have a more realistic opportunity to counteract false statements than private individuals normally enjoy. 76 In addition, public figures have voluntarily exposed themselves to increased risk of injury from defamatory falsehood concerning them. 77 In addition to proving malice, public figures and private persons alike are constitutionally required to prove that the defamatory statements were actually false in cases against media defendants regarding matters of public concern. 78 Thus, the commonlaw presumption that defamatory speech is false cannot stand when a plaintiff seeks damages against a media defendant for speech of public concern. 79 It is not clear whether this rule applies if the plaintiff sues based on speech outside the public concern. Whether a plaintiff is a public figure is an issue of law for the court to decide. 80 Those who have voluntarily sought and attained influence or prominence in matters of social concern are generally considered public figures. 81 As noted above, public figures also have greater access to means of mass communication. 82 Applying this test, the Second Circuit held in Celle that a well known radio commentator and the owner and operator of a prominent media outlet in the Filipino American community were public figures. 83 Whether the allegedly defamatory statements pertained to a matter of public concern is also an issue of law for the court. 84 The court must examine the content, form, and context of the speech. 85 A matter of public concern is any matter of political, social, or other concern to the community. 86 The Supreme Court has also defined a matter of public concern as the subject of legitimate news interest; that is, a subject of general interest and of value and concern to the public at the time of publication. 87 [A] speaker s motive is not dispositive in determining whether his or her speech addresses a matter of public concern Gertz v. Robert Welch, Inc., 418 U.S. 323, 332 (1974). 76 Id. at Id. at Hepps, 475 U.S. at Id. at Celle v. Filipino Reporter Enters., 209 F.3d 163, 176 (2d Cir. 2000). 81 Id. 82 Gertz, 418 U.S. at Celle, 209 F.3d at See Sousa v. Roque, 578 F.3d 164, 171 (2d Cir. 2009) (noting that question whether employee was speaking on matter of public concern for First Amendment purposes is issue of law). 85 Connick v. Myers, 461 U.S. 138, 147 (1983). 86 Id. at City of San Diego v. Roe, 543 U.S. 77, (2004) (per curiam). 88 Sousa, 578 F.3d at 173. BENCH MEMORANDUM PAGE 12

15 Based on these precedents, Davidman will likely argue that: (1) he made the statements as a member of the media on a news program, (2) his statements were made about a matter of public concern (his personal motives notwithstanding) the credibility of information published by Sterling s global media outlets, and (3) Sterling is a public figure because he has sought and attained worldwide influence in the media and has easy access to means of communication to respond to Davidman s statements. Accordingly, Davidman will likely argue that the First Amendment required Sterling to prove by clear and convincing evidence that Davidman knew the statements were false or had serious doubts about the truth of the statements, and that the statements were in fact false. Sterling might respond that Davidman s speech was not on a matter of public concern because: (1) Davidson was motivated by his own dislike of Sterling; and (2) the television biography focused in large part on Sterling s personal life, which is not a subject of general interest and of value and concern to the public at the time of publication. 89 Thus, Sterling might contend that this Court should not require him to show malice, as neither the Supreme Court nor the Second Circuit has expressly held that the malice standard applies when a public figure sues for defamation regarding a purely private matter, and private matters such as Sterling s alleged egotism are no impediment to the unfettered interchange of ideas for the bringing about of political and social changes that the First Amendment protects. 90 Sterling might seek to distinguish Falwell because it concerned a cartoon parody, a traditional means of political and social commentary wellknown to the Framers. 91 Once the Court resolves the applicable First Amendment standard, it will need to address whether the New South Wales court s application of Australian and U.S. defamation law violates the standard. 92 The Court need not recognize the entire judgment: Where a foreign judgment contains discrete components, the enforcing court should endeavor to discern the appropriate extent of recognition, with reference to applicable public policy concerns. 93 We refer below to the portion of the judgment issued under Australian defamation as the Australian component of the judgment, and to the portion of the judgment issued under U.S. defamation law as the U.S. component. B. Australian component of the New South Wales judgment Davidman will likely argue that the New South Wales court s application of Australian defamation law did not comply with the mandatory First Amendment protections discussed above and that this Court should not recognize the Australian component of the judgment. To resolve this issue, the Court would need to evaluate whether Australian defamation law provides protections comparable to those required 89 City of San Diego, 543 U.S. at See N.Y. Times, 376 U.S. at 269 (internal quotation marks omitted). 91 See Falwell, 485 U.S. 46 at See S.A.R.L. Louis Feraud Int l., 489 F.3d at Ackermann, 788 F.2d at 844 (internal quotation marks and citation omitted). BENCH MEMORANDUM PAGE 13

16 under the First Amendment. 94 The record is barren as to the content of Australian defamation law. Despite this deficiency in the record, the Court can consult any material it chooses to decide the content of Australian law. 95 Australia has a federal system, but the common law is uniform throughout all Australian states, unless displaced by state statute. 96 The common law of Australia largely follows English common law, and includes the traditional common law defense to defamation of qualified privilege, which provided that a defendant may avoid liability for defamation by proving that he reasonably published false statements and that he and the recipient had either a reciprocal duty and interest in the making of the statement or a common interest in the making of the statement. 97 Because of this reciprocity requirement, the common law qualified privilege provide[d] no defence for the mistaken publication of defamatory matter concerning government and political matters to a wide audience. 98 But the Australian High Court has held that the Australian common law must provide such a defense to be consistent with the implicit guarantee in the Australian Commonwealth Constitution of freedom of communication concerning political and governmental matters. 99 The Lange court therefore established a common law privilege that allows a defamation defendant to show that he acted reasonably in widely disseminating defamatory statements concerning political matters. 100 This privilege is limited, however, by the freedom it is meant to protect. [T]he freedom which the [Australian] Constitution protects... is limited to what is necessary for the effective operation of that system of representative and responsible government provided for by the Constitution. 101 A defendant does not act reasonably unless he had reasonable grounds for believing that the imputation was true, took proper steps, so far as they were reasonably open, to verify the accuracy of the material and did not believe the imputation to be untrue. 102 The defendant must also have sought a response from the person defamed and published the response made (if any) except in cases where the seeking or publication of a response was not practicable or it was unnecessary to give the plaintiff an opportunity to respond. 103 In addition to the qualified privilege, a defendant may prove justification as a defense to defamation under New South Wales law by demonstrating that his statements 94 See id. 95 See Fed. R. Civ. P ( In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. (emphasis added)). 96 Susanna Frederick Fischer, Rethinking Sullivan: New Approaches in Australia, New Zealand, and England, 34 Geo. Wash. Int l L. Rev. 101, 120 (2002). 97 Id. at Lange v. Australian Broad. Corp. (1997) 189 C.L.R. 520, See id. at 566, See id. at Id. at Id. at Id. BENCH MEMORANDUM PAGE 14

17 were true. 104 The defendant bears the burden to establish the truth of the defamatory statements because [t]he law presumes that the defamatory words complained of are false and the plaintiff does not have to prove that the defamatory words were untrue. 105 Accordingly, while a public figure in the United States bears the burden of proving that a member of the media knowingly or recklessly published false statements about him, the defendant in Australia must show that he acted reasonably under the circumstances in publishing false material to the public about political or governmental affairs, or that the material was substantially true. Thus, Davidman will likely argue that recognition of the Australian component of the New South Wales judgment would violate the First Amendment and New York public policy because: (1) he bore the burden of proving reasonableness and truth; (2) he may be held liable if he acted unreasonably in publishing the material even if he did not knowingly or recklessly make false statements; and (3) the Lange privilege is limited to matters of political or governmental importance, while U.S. law protects criticism of public figures such as Sterling on any matter in the public interest and probably also protects criticism of public figures on personal matters. 106 Sterling might respond that the New York statute does not require foreign defamation law to be equivalent to U.S. law, but only requires that foreign law provide protections roughly comparable to the First Amendment. Justice Cardozo long ago established that New York is not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home. 107 Sterling might also rely on Yahoo! Inc. v. La Ligue Contre Le Racisme, in which the Ninth Circuit held that [i]nconsistency with American law is not necessarily enough to prevent recognition and enforcement of a foreign judgment in the United States. The foreign judgment must be, in addition, repugnant to public policy. 108 Repugnant means contradictory or offensive, 109 which is a high standard that is infrequently met. 110 Sterling will need to acknowledge the Second Circuit s holding that [f]oreign judgments that impinge on First Amendment rights will be found to be repugnant to public policy, 111 but he could argue that this holding must be read in light of the legal standards discussed above, and that Australian defamation law is not so different from U.S. standards to be contradictory or offensive to New York public policy. 104 See Defamation Act 2005, 25 (N.S.W.) ( It is a defence to the publication of defamatory matter if the defendant proves that the defamatory imputations carried by the matter of which the plaintiff complains are substantially true. ). 105 Herald & Weekly Times Ltd v. Popovic, [2003] V.S.C.A. 161, 274 (V. Ct. App.) (opinion of Gilliard, J.). 106 See, e.g., Matusevitch v. Telnikoff, 877 F. Supp. 1, 10 (D.D.C. 1995) (refusing to enforce British libel judgment because, under U.K. law, the defendant bears the burden of proving allegedly defamatory statements true and the plaintiff is not required to prove malice on the part of the libel defendant ); Bachchan, 585 N.Y.S.2d at 664 (same). 107 Loucks v. Standard Oil Co., 120 N.E. 198, 201 (N.Y. 1918). 108 Yahoo!, 433 F.3d at Webster s New World Dictionary 548 (2003). 110 Ackermann, 788 F.2d at S.A.R.L. Louis Feraud Int l, 489 F.3d at 480. BENCH MEMORANDUM PAGE 15

18 C. U.S. component of the New South Wales judgment The New South Wales court applied U.S. defamation law to the claims that Sterling suffered harm to his reputation in the United States. The court concluded that no malice was required to prove defamation against Davidman but that, even assuming malice was required, Davidman did not act with malice as that term is understood in Australian law. Under Australian law, like English common law, malice means ill will, spite, or some other improper motive. 112 Davidman will likely again argue that the U.S. component of the New South Wales judgment violates public policy because the New South Wales court issued the judgment without finding that he knowingly or recklessly made false statements about Sterling. Indeed, Davidman might point out that the New South Wales court found that he did not act with malice. Sterling might also repeat the same arguments he would make regarding the Australian component of the judgment. He could argue as well that the Recognition Act does not permit non recognition of judgments issued by foreign courts applying U.S. substantive law because the Recognition Act only permits non recognition if the cause of action on which the judgment is based violates public policy. 113 Sterling could contend that the cause of action on which the U.S. component of the judgment was based was U.S. defamation law, the application of which could not violate New York public policy. 114 The mere fact that the New South Wales court may have misapplied U.S. law does not render the U.S. cause of action it considered repugnant to public policy. 115 Finally, Sterling could argue that, because the Court retains discretion to recognize a foreign judgment even if it violates public policy, 116 it should exercise that discretion here in furtherance of international comity because the New South Wales court merely made a mistake of law. Because the main purpose of the Recognition Act is to promote the efficient enforcement of New York judgments abroad by assuring foreign jurisdictions that their judgments would receive streamlined enforcement here, 117 the New York Court of Appeals would expect lower courts in the State to overlook legal errors in foreign judgments, lest mere errors of law by New York courts subject their decisions to rejection abroad. Moreover, Davidman had the opportunity to seek to correct any legal errors by appealing the New South Wales judgment, but he declined to do so. Davidman might 112 Fischer, supra note 96, at C.P.L.R. 5304(b)(4). 114 See Soc y of Lloyd s v. Turner, 303 F.3d 325, 332 (5th Cir. 2002) (holding that the plain language of the public policy exception requires that the cause of action, not the judgment itself, violate Texas public policy); see also C.P.L.R (providing that [t]his article shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact these provisions, making reference to the decisions of other state courts interpreting the Recognition Act appropriate). 115 Cf. Europcar Italia S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310, 316 (2d Cir. 1998) (holding that court could not refuse recognition of foreign arbitral award for violation of U.S. public policy because of legal error). 116 See C.P.L.R. 5304(b). 117 CIBC Mellon Trust Co., 100 N.Y.2d at 221. BENCH MEMORANDUM PAGE 16