UnknownRachel Ehrenfeld v. Khalid Salim Bin Mahfouz

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 who "(1) 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." Because these
contacts do not constitute the transaction of business in 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 A Bin Mahfouz -- a Saudi Arabian
businessman, financier and former head of the National Commercial
Bank -- 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 website, 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 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 plaintiff's 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]
jursdiction[,] . . . 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 claimantfriendly
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 Law,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 website
(see Bin Mahfouz Information, http://www.binmahfouz.info/
news20050503.html? [accessed December 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 website posting, "however persistent, vexing or
otherwise meant to coerce, do not appear to support any business
objective." Further, the court concluded that plaintiff's
reliance upon Yahoo!, Inc. v La Ligue Contre Le Racisme et
L'Antisemitisme (433 F3d 1199 [9th Cir 2007] [en banc]) which
affirmed a finding of personal 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 long-arm statute, which unlike CPLR 302 (a) (1), is
"coextensive with Federal Due Process" standards for exercising
personal jurisdiction.

On appeal, the Second Circuit asked defendant 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
amici 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. Fischbarg v Doucet, __ NY3d
__, p. 10 [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 within
the state" if the cause of action asserted arises out of that
transaction. To determine what constitutes a transaction of
business we have been guided -- as was the Legislature in
enacting CPLR 302 (a) (1) -- by U.S. Supreme Court opinions
delineating proper bases for personal jurisdiction under the
Federal Due Process Clause (see e.g. Longines-Wittnauer v Barnes
& Reinecke, Inc., 15 NY2d 443, 452, 458 [1965] [quoting, among
other precedents, Int'l Shoe Co. v Washington, 326 US 310, 316
[1945]). Thus, we have held that "the overriding criterion"
necessary to establish a transaction of business is "some act by
which the defendant purposefully avails itself of the privilege
of conducting activities within [New York]" (McKee Elec. Co. v
Rauland-Borg, Corp., 20 NY2d 377, 382 [1967] [quoting Hanson v
Denckla, 357 US 235, 253 [1958]; accord Deutsche Bank Sec., Inc.
v Montana Bd. of Invs., 7 NY3d 65, 71 [2006]). When a defendant
engages in purposeful activity here, personal jurisdiction is
proper because it has "invoked the benefits and protections of
our laws" (Reiner & Co., Inc. v Schwartz, 41 NY2d 648, 652 [1977]
[citations omitted]; accord Matter of Sayeh R., 91 NY2d 306, 319
[1997] ["[R]espondent deliberately and affirmatively sought the
protection of this State's laws, and thereby [was] rendered
amenable to our general long-arm jurisdiction"]) and thus "should
reasonably expect to defend its actions [] here" (Deutsche Bank,
7 NY3d at 71 [quoting Kreutter v McFadden Oil Corp., 71 NY2d 460,
466 [1988]).

Here, none of defendant's relevant New York contacts
have invoked the privileges or protections of our State's laws.6
director, supports CPLR 302 (a) (1) jurisdiction. In an age
where information about many New Yorkers can be accessed by those
outside our state through a simple "Google" search, we decline to
find that such "monitoring," without more, constitutes the
transaction of business in New York under CPLR 302 (a) (1).

Quite to the contrary, his communications in this State were
intended to further his assertion of rights under the laws of
England. As defendant points out -- and plaintiff does not
dispute -- his pre-filing demand letter and his service of
documents were required under English procedural rules governing
the prosecution of defamation actions. And in none of his
letters to plaintiff did defendant seek to consummate a New York
transaction or to invoke our State's laws (compare e.g.
Fischbarg, __ NY3d __, p. 11 [decided today] [CPLR 302 (a) (1)
jurisdiction proper because "defendants established a substantial
ongoing professional commitment . . . governed by the laws of our
state"]).

Accordingly, contrary to plaintiff's assertions, our
decisions in Parke-Bernet Galleries, Inc. v Franklyn (26 NY2d 13,
18 [1970] [defendant transacted business in New York by
participating in and purchasing paintings from New York
auctioneer via telephone]) and Sayeh R. (91 NY2d at 318-19 [longarm
jurisdiction proper because "[r]espondent has repeatedly
invoked the aid and protection of our courts [and] . . . enlisted
the aid of local police" to enforce a Florida court order]) do
not support her position (see also e.g. Deutsche Bank, 7 NY3d at
72 [long-arm jurisdiction proper because "sophisticated
institutional trader knowingly enter[ed] our state . . . to
negotiate and conclude a substantial transaction"]).

Moreover, plaintiff's reliance upon the Second
Circuit's decision in PDK Labs, Inc. v Friedlander (103 F3d 1105
[2d Cir 1997]) is misplaced. There, the plaintiff, a promoter of
weight-loss products, engaged a New York attorney to contact a
New York corporation regarding an alleged infringement of his
patents (see id. at 1107). In the course of his communications
with the corporation, the attorney not only threatened to sue
under Georgia law, he also "solicit[ed] PDK's investment in [the
plaintiff's] weight loss product" (id. at 1107, 1109). It was
this "persistent campaign . . . to secure PDK's investment" that,
the court held, "constitute[d] business transacted in New York
under CPLR § 302 (a) (1)" (id. at 1109). By contrast in Beacon
Enterprises, Inc. v Menzies, (715 F2d 757 [2d Cir 1983]), the
Second Circuit held that the plaintiff's mailing of a "cease and
desist" letter to the defendant in New York was not a sufficient
predicate for long-arm jurisdiction (see id. at 766). The court
reasoned that, "[i]t is difficult to characterize [a] letter
alleging infringement in an unspecified locale and threatening
litigation in an unspecified forum as an activity invoking the
'benefits and protections' of New York law" (id.). Confronted,
as we are, with a demand letter sent by English solicitors
requesting -- among other things -- "[a]n undertaking to the High
Court of England" not to repeat plaintiff's alleged defamatory
statements as well as defendant's service of documents and other
mailings related to the English action, we, too, conclude that
the defendant has not purposefully availed himself of the laws of
New York.7

Plaintiff urges us, however, to hold that defendant's
refusal to waive whatever rights he may have to enforce the
English judgment in New York, constitutes a purposeful availment
of this state's laws. Indeed, according to her, the "future New
York contact" of potential enforcement is "crucial" to finding
jurisdiction over defendant. This is so, she says, because that
judgment could only be enforced here, where she resides and
works, and where all her assets are located. In addition,
plaintiff claims that the ongoing threat of enforcement in New
York has led her to decline publishing certain articles and to
attempt to conform her writing to the standards of English libel
law. Plaintiff also asserts that the alleged chill caused by the
English judgment has been felt by certain publishers who have
accepted her work in the past, but decline to do so now for
unspecified reasons, and by other authors engaged in the
investigation of international terrorism whom she alleges must
now tailor their writing to avoid foreign libel suits.
Furthermore, plaintiff argues that the English judgment requires
her to take action -- issue an apology and prevent leakage of the
allegedly defamatory statements into England and Wales -- in New
York. Because defendant purposefully filed the English action to
cause these alleged New York effects, plaintiff argues that CPLR
302 (a) (1) jurisdiction is proper.

Our decision in Ferrante Equipment Co. v Lasker-Goldman
Corp. (26 NY2d 280 [1970]) undercuts plaintiff's position.
There, the appellant argued that "although respondent's acts
occurred in New Jersey, they had a substantial effect on the
performance of [work in] New York . . . and for that reason we
should sustain jurisdiction under CPLR 302 [(a) (1)]" (id. at
284). We concluded, however, that we could not do so "because
appellant has been unable to point to a single transaction of
business by respondent in New York" (id. at 284). In so holding
we adopted the Appellate Division's reasoning that "[t]he mere
receipt by a non-resident of a benefit or profit from a contract
performed by others in New York is clearly not an act by the
recipient in this state sufficient to confer jurisdiction under
our long-arm statute" (id. at 285 [quoting 31 AD2d 355, 355-56
[1st Dept 1970]). Here, as in Ferrante, the alleged effects of
threatened enforcement of the English judgment may benefit
defendant by chilling plaintiff's speech, but those effects do
not arise from his invocation of the privileges and benefits of
our state's laws. Rather, they arise from an English remedy and
plaintiff's unilateral activities in New York (see Ferrante, 26
NY2d at 285). As such, those effects do not form a proper basis
for CPLR 302 (a) (1) jurisdiction.

III.

Finding little support in our precedents, plaintiff
next asks us to adopt the holding of the Ninth Circuit in Yahoo!
v La Ligue Contre Le Racisme et L'Antisemitisme (433 F3d 1199
[2006] [en banc]). The facts are, indeed, similar to those
present here. In Yahoo!, two French civil rights groups obtained
French court orders that required a California-based internet
service provider to prevent users of its French website from
accessing certain web pages associated with Nazism (see id. at
1202-1204). By the terms of those orders, Yahoo! was required to
alter its servers, located in California, under threat of a
substantial monetary penalty. Yahoo! then sued the French groups
in federal court in California, seeking a declaratory judgment
that the French orders were not enforceable or recognizable in
the United States based, in part, upon their interference with
Yahoo!'s First Amendment rights. Affirming the federal district
court, a majority of the en banc panel ruled that exercising in
personam jurisdiction over the French groups was proper.8
lack of personal jurisdiction and ripeness, respectively (see 433
F3d at 1224 ["When the votes of the three judges who conclude
that the suit is unripe are combined with the votes of the three
dissenting judges who conclude that there is no personal
jurisdiction . . . there are six votes to dismiss"]).

The critical distinction between Yahoo! and the present
case, however, is that the California long-arm statute applicable
there is "coextensive with federal due process requirements" and
thus "the jurisdictional analyses under state and federal due
process law are the same" (433 F3d at 1205; compare CPLR 302 [a]
[1] with Cal. Civ. Proc. Code § 410.10 ["A court of this state
may exercise jurisdiction on any basis not inconsistent with the
Constitution of this state or of the United States"]). By
contrast, we have repeatedly recognized that New York's long-arm
statute "does not confer jurisdiction in every case where it is
constitutionally permissible" (Kreutter, 71 NY2d at 471; accord
Talbot v Johnson Newspaper Corp., 71 NY2d 827, 828 [1988]).
"Thus, a situation can occur in which the necessary contacts to
satisfy due process are present, but in personam jurisdiction
will not be obtained in this State because the statute does not
authorize it" (Banco Ambrosiano, S.p.A. v Artoc Bank & Tr. Ltd.,
62 NY2d 65, 71 [1984]). The Ninth Circuit's analysis in Yahoo!
confirms that this is just such a situation.
Utilizing the "effects test" announced by the United
States Supreme Court in Calder v Jones (465 US 783 [1984]) the
Ninth Circuit majority held that by virtue of obtaining the
French orders, the civil rights groups had "(1) committed an
intentional act, (2) expressly aimed at the forum state, (3)
causing harm that the defendant knows is likely to be suffered in
the forum state" (Yahoo!, 433 F3d at 1206, 1209). Because CPLR
302 (a) (3) expressly provides for jurisdiction in cases where --
in contrast to transacting business in New York -- a defendant
"commits a tortious act without the state causing injury to
person or property within the state," use of such an effects test
here "would be an unwarranted extension of [Section] 302 [(a)(1)]
and a usurpation of a function more properly belonging to the
Legislature" (Ferrante, 26 NY2d at 285-286 [rejecting attempt to
"superimpose" the language of CPLR 302 (a) (3) onto Section 302
(a) (1) based upon New York effect of breach of contract]). Our
Legislature, unlike California's, has seen fit to confer
jurisdiction in a limited subset of cases concerning nondomiciliaries.
And, as we have in the past, we continue to
adhere to that express mandate here.9

(Yahoo!, 433 F3d at 1229 [O'Scannlain, J., concurring]; see also
id. at 1231 [concluding that district court lacked personal
jurisdiction because the French groups "actions and contacts with
. . . California were, at most, incidental to the legitimate
exercise of their rights under French law"]).

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http://www.courts.state.ny.us/ctapps/decisions/dec07/174opn07.pdf