Bellhead invitation
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Ninth Circuit Gets It Wrong in Yahoo!
Although the Grokster opinion was clearly right, yesterday's Yahoo! decision [pdf] is weak as a matter of both law and policy.
We have declaratory judgment proceedings to avoid the situation where someone who is acting like they want to enforce their rights can constrain the activities of someone else.The court can issue a declaration saying “yes, these rights should be enforced,” or “no, these rights shouldn't be enforced,” without waiting for the threatening actor to actually ask for their rights to be enforced.
Without this avenue, people who are threatened by worthless claims are stuck — they have to act to protect themselves from the ever-present threat of suit, without ever getting things resolved.
In the Yahoo! case, Yahoo! asked the federal courts of California to declare a French judgment against Yahoo! to be unenforceable. Yahoo! was the threatened party; it had received letters in California telling it that the threatening party planned to enforce its rights.
The federal trial court found that the threatening party was acting in a way that was antithetical to our First Amendment, and declared the French judgment unenforceable.
But the Ninth Circuit yesterday decided that the district court hadn't had personal jurisdiction over the threatening French party in the first place. It said that the letter from the party arriving in France, plus the use of the California marshal's service to serve Yahoo!, plus the threatening party's request of a French court to ask Yahoo! to comply with the French order, weren't enough “minimum contacts” with California to support the exercise of personal jurisdiction.
In a lengthy and careful dissent, Judge Brunetti disagreed. He said that the dispute was already ripe enough to be heard, because there was a real controversy between the parties. He said that the threatening party had sufficiently “purposely availed” itself of California's affordances to justify the exercise of personal jurisdiction. The majority opinion seems formalistic and weak in comparison to Judge Brunetti's dissent, which unpacks the cases in detail.
But the larger point here is that both lawsuits are legitimate. France has the right to declare entities within its physical jurisdiction to be violating its laws, and to attempt to enforce that judgment. Yahoo! has the right to seek a declaration that that judgment is unenforceable under US law. If a foreign party does everything it can to sue a non-physically-present party, then its judgment is legitimate but may not be enforceable against that party. If that non-physically-present party attacks the enforceability of that judgment, then it can use its own laws to do so.
Our laws allow for declaratory judgments when someone hangs a threat — a sword of Damocles — over someone else. The threatening parties in this case did just that. The Ninth Circuit should have allowed such a declaratory judgment to be issued. Instead, it read its own personal jurisdiction precedents too narrowly.
Enforceability is where the rubber meets the road in these international online cases, and we should allow disputes over enforceability to be heard and decided. Otherwise, online businesses all over the world will be unable to be certain that they can continue to act. They'll be effectively constrained, even without actual judgments being enforced against them.