Free Speech

Injunction in Libel Case Against the Spamhaus Project

An interesting decision stemming from a dispute about whether the Spamhaus Project properly placed DatabaseUSA.com on a blocklist.

|The Volokh Conspiracy |

From today's decision by Joseph F. Bataillon in DatabaseUSA.com LLC v. Spamhaus Project:

Earlier, the Court entered a default judgment … against defendant The Spamhaus Project (Spamhaus) and in favor of DatabaseUSA. The Court found the allegations of DatabaseUSA's complaint, deemed admitted by Spamhaus's default, properly established the elements of its claims and satisfied the standards for entry of a default judgment against Spamhaus for defamation and tortious interference with a business relationship….

DatabaseUSA now seeks damages in the nominal amount of one dollar, as well as injunctive relief. It contends its damages are difficult to ascertain and also argues that it will suffer irreparable harm absent an injunction. DatabaseUSA proposes that the Court enter an injunction ordering defendant Spamhaus to:

  1. Publish a statement on the blocklist website that com LLC was wrongfully included on the blocklist from May 2017 until the date of this order;
  2. include in its published statement a reference to this action by name and case number; and
  3. remove DatabaseUSA from the blocklist going forward, or provide DatabaseUSA with an explanation for why DatabaseUSA is on the blocklist and an explanation for how DatabaseUSA can be removed from the …

Traditionally, American courts have abided by the rule that "equity will not enjoin a libel" because "damages provide an adequate remedy at law … and to enjoin defamation is to effect an unconstitutional prior restraint on speech." Sid Dillon Chevrolet, Inc. v. Sullivan (Neb. 1997). However, there is an exception to the general rule where there has been a prior adjudication of falsity.

See Pittsburgh Press Co. v. Pittsburgh Comm'n on Hum. Rels. (1973) (stating the Supreme Court "has never held that all injunctions are impermissible" and noting that "[t]he special vice of a prior restraint is that communication will be suppressed … before an adequate determination that it is unprotected by the First Amendment"); Auburn Police Union v. Carpenter (1st Cir. 1993) (stating "a judicial injunction that prohibits speech prior to a determination that the speech is unprotected … constitutes a prior restraint" (emphasis added)); Sid Dillon Chevrolet ("Absent a prior adversarial determination that the complained of publication is false or a misleading representation of fact, equity will not issue to enjoin a libel or slander, unless such libel or slander is published (1) in violation of a trust or contract or (2) in aid of another tort or unlawful act, or injunctive relief is essential for the preservation of a property right." (emphasis added)). A restraint via an injunction is permissible if the speech has "been adjudicated to be libelous and therefore not to be protected under the First Amendment." Nolan v. Campbell (Neb. Ct. App. 2004); see also TM v. MZ (Mich. Ct. App. 2018); Hill v. Petrotech Res. Corp. (Ky. 2010); Balboa Island Village Inn, Inc. v. Lemen (Cal. 2007); San Antonio Comm. Hosp. v. S. Cal. Dist. Council of Carpenters (9th Cir. 1997); Lothschuetz v. Carpenter (6th Cir. 1990); Advanced Training Sys., Inc. v. Caswell Equip. Co., Inc. (Minn. 1984); Organovo Holdings, Inc. v. Dimitrov (Del. Ch. 2017) (all holding that a trial court may enjoin a defendant from making defamatory statements after there has been a determination that the speech is, in fact, false).

Once the speech is found to be false, the question becomes whether the injunction is sufficiently narrow to survive strict scrutiny. In order for an injunction to pass constitutional muster, the suppression must be limited to the precise statements already found libelous. Nolan; see also Advanced Training Sys. v. Caswell Equip. Co. (Minn. 1984) ("We therefore hold that the injunction below, limited as it is to material found either libelous or disparaging after a full jury trial, is not unconstitutional and may stand."); O'Brien v. Univ. Cmty. Tenants Union, Inc. (Ohio 1975) ("Once speech has judicially been found libelous, if all the requirements for injunctive relief are met, an injunction for restraint of continued publication of that same speech may be proper.").

Further, a determination that statements were false and defamatory may be based upon an adjudication that results from the entry of a default judgment. See Loden v. Schmidt (Tenn. Ct. App. 2015); see also Lothschuetz (reversing district court's denial of injunctive relief as an unwarranted restraint on freedom of speech and granting a narrow injunction limited to the statements that had been found, on default, to be false and libelous); Baker v. Kuritzky (D. Mass. 2015) (enjoining specific statements that had been found, by virtue of the default, to be libelous). Also, injunctive relief is a common and non-controversial remedy for tortious interference with prospective economic advantage. Organovo Holdings, (recognizing that a request for equitable remedies for tortious interference with prospective economic advantage can provide the requisite basis for equitable jurisdiction that can justify a related injunction against future speech)….

Continuing defamatory conduct has been held to irreparably injure plaintiffs. Also, "[l]oss of intangible assets such as reputation and goodwill can constitute irreparable injury." … DatabaseUSA has demonstrated an irreparable injury. It has shown damage to its reputation, a loss of customers, and loss of potential revenue as a result of Spamhaus's defamation and tortious interference. Spamhaus's continued wrongful listing of DatabaseUSA as a spammer has a potentially to greatly impact DatabaseUSA's business. DatabaseUSA has shown that its generally good business reputation that was damaged by Spamhaus's tortious conduct and the loss associated with damage to its brand or goodwill is difficult to quantify. The inability to calculate DatabaseUSA's future loss with reasonable precision makes legal remedies inadequate in this case….

In contrast, the burden on Spamhaus in complying with the terms of the narrowly drawn injunction appears slight. Spamhaus did not appear or respond to Database's allegations in this case. The effort required to post a notice in the nature of a retraction on its website is negligible. The Court finds the negligible harm inflicted on Spamhaus by a narrowly drawn injunction is outweighed by the potential harm to DatabaseUSA in denying the injunction. The public's interest is furthered by allowing vindication of tortious conduct.

 

The Court also finds that entry of a narrowly drawn injunction in this case will not implicate constitutional concerns. This is a case involving commercial speech, which is afforded less deference under the First Amendment. Because there has been an adjudication, by virtue of the default judgment, of the falsity of the challenged statements, the constitutional problems associated with a prior restraint are not present. Enjoining Spamhaus's continuing course of repetitive defamatory conduct does not affect an improper and unconstitutional prior restraint on protected speech.

DatabaseUSA's proposed injunction passes constitutional muster in part. Its proposed injunction is directed only at the speech that has been adjudicated to be false—the 2017 inclusion of DatabaseUSA on the spammer list. It is properly limited to prohibiting Spamhaus from repeating statements that have been determined to be defamatory. Accordingly, the Court will adopt the plaintiff's proposal to the extent it is directed at Spamhaus's past conduct…

Nonetheless, an injunction on future speech must be no more broad than necessary to remedy the wrongful conduct alleged in the complaint. In its complaint, DatabaseUSA challenged its inclusion on a domain block list represented to contain only the domain names of entities "that send emails including phishing, fraud, '419,' malware, or viruses" despite the fact that Database "has never partaken in any of [those] prohibited actions," without providing "any reason or justification for placing Database on the blocklist." The conduct addressed in this action is Spamhaus's wrongful listing of DatabaseUSA.com on its DBL without justification. Going forward, the Court will tailor the injunction as precisely as possible to the needs of the case and the injunction will be aimed only at the conduct that has been found objectionable.

A blanket injunction ordering the defendant not to include DatabaseUSA.com on the DBL in the future would be overly broad and could prohibit speech that is not defamatory. The Court will not enjoin all future listing of DatabaseUSA.com on the DBL but will require Spamhaus to provide a rationale for the listing to DatabaseUSA. Spamhaus is not prevented from including DatabaseUSA.com on its list if it furnishes legitimate reasons for doing so.

The court therefore issued an injunction that said,

  1. Defendant The Spamhaus Project shall publish a statement, referring to this action by name and case number (i.e., DatabaseUSA.com LLC v. The Spamhaus Project, No. 8:19-CV423 (D. Neb), on its domain block list website stating that DatabaseUSA.com LLC was wrongfully included on the blocklist from May 2017 until the date of this order.
  2. If defendant The Spamhaus Project lists DatabaseUSA.com on its blocklist from and after the date of this order, it shall provide DatabaseUSA.com LLC with an explanation for doing so and an explanation as to how DatabaseUSA.com can be removed from the blocklist.

My quick reaction:

[1.] I agree that properly tailored injunctions against repeating material that had been to be libelous are constitutional (see my Anti-Libel Injunctionsarticle); most states allow such injunctions, as do federal courts in most circuits.

[2.] I have seen only two decisions on the question before in the Eighth Circuit (Vickland v. Am. Royal Ass'n, Inc., 2008 WL 4748184 (W.D. Mo.), which generally held, though without much discussion, that such injunctions "are not ordinarily appropriate," and American Dairy Queen Corp. v. Blume, 2013 WL 1748434 (D. Minn.), which generally just mentioned that anti-libel injunctions pose "First Amendment concerns"). This decision may therefore prove influential there.

[3.] This injunction, though, doesn't just ban repeating such material, or require the removal of the material from defendant's web site: It requires Spamhaus to affirmatively publish a retraction, and to affirmatively explain to DatabaseUSA the basis for any future block. Though the judge tried to make the injunction narrow, I think it is broader than the precedents allow.

[4.] I also think the judge erred in characterizing this case as involving "commercial speech." The commercial speech doctrine provides lesser protection for commercial advertising—speech that proposes a commercial transaction between the speaker (or the speaker's business partners) and readers. Spamhaus is providing something more akin to a third-party review of a product or a service, which doesn't fit within the commercial speech doctrine.

[5.] Finally, and unrelated to the merits of the judge's decision, Spamhaus is a British nonprofit, which says that it has "no U.S. ties or presence and therefore does not recognize orders issued against it by U.S. courts." And while DatabaseUSA could try to enforce the injunction in English court, I suspect that would work only if English courts conclude that Spamhaus was subject to personal jurisdiction in Nebraska—which seems far from clear (though I can't speak with confidence about how English courts resolve such matters).

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  1. Time to start blocking these spammers directly, I suppose.

    Easy enough if you’re a Spamhaus subscriber – you already have the lists. Someone will stand up an extraterritorial ‘spamhaus-addenda’ list soon enough.

  2. Why does British citizenship protect a person (or corporation) from harm he does in Nebraska? It’s the same issue as requiring the collection of sales taxes on purchases. If you are going to do libel in Nebraska, then you are subject to Nebraska law (absent a Federal exercise of the commerce clause).

    Just like if you run over someone’s cow in Nebraska.

    1. Under your line of reasoning, every government in the world has jurisdiction over every website.
      Let’s say your comment violates Kenyan law. Even though you have never been to Kenya, you think that you should be able to be sued in Kenya?

      1. Not correct. It’s not enough to violate Kenyan law. But if the victim of a libelous comment is in Kenya, that traditionally supplies the jurisdictional hook for personal jurisdiction.

        If this plaintiff is in Nebraska, and was harmed by a British company’s defamatory statement, it can seek relief from a court in Nebraska.

        1. “If this plaintiff is in Nebraska, and was harmed by a British company’s defamatory statement, it can seek relief from a court in Nebraska.”

          But the Nebraska court can only create relief if there are assets in Nebraska which can be attached, or if the court is recognized as authoritative wherever the assets actually are.

    2. The issue is whether the courts of Nebraska (including federal courts) may exercise jurisdiction over someone outside Nebraska. The fact that their actions cause harm in Nebraska is not enough.

      Under Calder v. Jones, the defamation has to be directed at Nebraska. For example, in that case Florida reporters wrote an allegedly defamatory article about Hollywood actress Shirley Jones. The article discussed her activities in California, including charges that she habitually showed up drunk to work in the Hollywood studio. The Court found jurisdiciton proper because the article was clearly and knowingly directed at a California resident and her California activities.

      1. I think Calder is broader than that. Defamation about a resident of California, where the defendant knows the plaintiff resides there, is enough, because the harm is directed in California. It wouldn’t matter if it discussed non-California activities, as long as the defendant intended to harm the plaintiff and knew the plaintiff resided in California and would be harmed there.

    3. It is extremely difficult to run over a cow in Nebraska without first traveling to Nebraska, which decision is adequate to support personal jurisdiction.

      1. It’s hard to run over a cow no matter where you are. Running into a cow, though, is much easier.

        1. Depends on what you are driving…. 🙂

          Seriously. 50 ton truck and 1/2 to 3/4 ton cow — it might wreck the truck, but the truck’s still going over it.

    4. The question is where a Nebraskan allegedly libeled by a Briton should sue: In Nebraska or in Britain. And that question is especially important if the Briton has no assets in Nebraska but only has them in Britain: The Nebraskan would need to ultimately get the judgment enforced by a British court.

      So in light of this, let me ask you this, Dr. Ed: Say you say something in the U.S. about an English company. Should they be able to sue you in England, and then, if you decline to participate in the lawsuit, be able to enforce the judgment against you here in the U.S.? Or should they have to sue you where you live?

      Under American law, this can be a difficult question, and the answer may turn a lot on the facts (and may even vary from jurisdiction to jurisdiction within the U.S.). But I just want to highlight that it’s not as simple as “Surely the Nebraskan should be able to sue the Briton in Nebraska, and then get the judgment enforced by British courts.”

      1. There is surely no serious question about the rights and wrongs here, not just of the plaintiff’s but of the judge’s behaviour. Compare e360Insight v The Spamhaus Project as discussed in the “Official Statements” of Spamhaus as reported on their website.
        This also had to do with a default judgement, this time of an anti-SLAPP motion itself used strategically as a SLAPP device to stop Spamhaus listing e360Insight on their blocklist.
        To bring that complaint before a US court the plaintiff ‘simply fabricated a claim that Spamhaus “operates a business in Illinois”.’ Whereupon ‘the US court judge took the Plaintiff’s false claim at face value, declared the British organization to be in Illinois jurisdiction and issued a default judgment in Spamhaus’s absence.’
        Year later in 2007 “On reviewing the case, the US Court of Appeals quashed both the absurd injunction and the $11.7M award and remanded the case back to the District Court, instructing Judge Charles Kocoras to require the Plaintiff to actually prove his damages claims.”
        (… three years of discovery-dodging by the Plaintiff later …)
        By mid-2010 the errant judge finally obeyed the superior court but issued a $27,000 judgement against Spamhaus for another infringement invented from whole cloth not by the plaintiff, but by the judge.
        It took till September 2011 before the US Court of Appeals for the Seventh Circuit reduced that award down to a token value of $3 (three dollars), having twice vacated judgments made by naughty Judge Charles Kocoras and remanding the case to the District Court. Spamhaus got their costs, but sheesh.

        1. To bring that complaint before a US court the plaintiff ‘simply fabricated a claim that Spamhaus “operates a business in Illinois”.’ Whereupon ‘the US court judge took the Plaintiff’s false claim at face value, declared the British organization to be in Illinois jurisdiction and issued a default judgment in Spamhaus’s absence.’

          That would be a tendentious way of describing it. In fact, Spamhaus appeared in the case, but then withdrew its answer and knowingly allowed a default to be entered against it. If you don’t appear in a case because the court lacks jurisdiction over you, you can later vacate the default. But that’s not what happened here; Spamhaus did appear, and then withdrew its answer challenging jurisdiction.

          By mid-2010 the errant judge finally obeyed the superior court but issued a $27,000 judgement against Spamhaus for another infringement invented from whole cloth not by the plaintiff, but by the judge.

          No; that’s not at all what happened. Not even a little bit. They held a trial on damages. There was no “another infringement.” The $27,000 was a damages estimate based on the testimony of the plaintiffs, not the judge. However, the 7th Circuit reduced it because it was lost revenues rather than the appropriate measure, which was lost profits.

          1. You make two points, the first being “Spamhaus appeared in the case, but then withdrew its answer”. Not according to their official statement: Spamhaus filed “an Answer strongly contesting jurisdiction, declaring it was a British organization based solely in the UK and conducted no business outside of the UK”. In short Spamhaus filed an answer contesting jurisdiction, and therefore not conducting a defense – apparently thinking they did not need to. The final appeal court notes “Spamhaus asserted a lack of personal jurisdiction, but for reasons that remain unclear, later withdrew its answer and informed the district court that it would no longer defend against e360’s suit”. It’s so unclear that Spamhaus’ official statement nowhere says they withdrew, though the Court of Appeal scolded them that as a procedural matter their lawyer should still have attended the case, see footnote 1: “Spamhaus argued that its ability to assert a lack of personal jurisdiction in a Rule 60(b) motion had nothing to do with whether its attorney appeared or not”. They were mistaken, but not unreasonably; the Appeal court had only a short time before ruled otherwise in a different case.
            In any event, once the district judge ruled against them on jurisdiction and accordingly entered a default judgement, Spamhaus was entitled to file an appeal on the basis that the judgement was void, did so, and won: as they put it, “On reviewing the case, the US Court of Appeals quashed both the absurd injunction and the $11.7M award and remanded the case back to the District Court, instructing Judge Charles Kocoras to require the Plaintiff to actually prove his damages claims.”
            Your second point involves the consequent ‘trial on damages’ you refer to, which Spamhaus won in that e360Insight’s claim for $11.7 million in damages for certain ‘lost contracts’ was dismissed. The court did impose a $1 fine for defamation and another $1 fine for “tortious interference with prospective economic advantage”. It was then that the judge in question also imposed a $27,000 damage award sua sponte, in that e360Insights had not asked for it, and Spamhaus vacated that on appeal also.
            The Court of Appeal never reached the question of jurisdiction. They did not need to, for the damages were essentially dismissed. The $27,000 seems to have been for other ‘lost contracts’ the evidence for which had already been ruled inadmissible, never disclosed to defendants during discovery. Accordingly justices Posner, Kanne, and Hamilton sitting for the 7th Circuit Court of Appeal, for the second time vacated the award and remanded the case back to the judge with face-saving but specific instructions to reduce the $27,000 down to the “nominal” fee of $3.
            That’s a grand total of $5 Spamhaus owed plaintiff, and I doubt e360Insight saw any of it, because by then e360Insights was ‘defunct’.

            1. Richard, instead of relying solely on Spamhaus’s press releases you might also consult the publicly available court records, like this one. They recount that Spamhaus responded to the complaint with an answer that denied many of its allegations and asserted 14 affirmative defenses, including lack of personal jurisdiction. One month later Spamhaus withdrew its answer and abandoned its defense, knowing that the result would be a default. The 7th Circuit distinguished this from cases where foreign defendants fail to appear, and held that by asserting and then abandoning its defenses Spamhaus had waived them. They blundered, whether because they received bad advice and followed it or received good advice and ignored it, but this is not the tale that Spamhaus tells.

      2. There are English candy companies, some quite good and selling their product throughout the world. Now if I were to hack into their email ordering system and screw it up, I could (would) be prosecuted here. Criminal versus civil, but if I had assets making it worthwhile, couldn’t there be a subsequent civil suit?

        Now say I merely block said company’s ISP throughout the UK — say by falsely reporting them to Interpol for something. I’m not in the UK, but I’m harming them there. See where I am going with this?

        Second issue: A libels B and then C quotes B’s libel (with attribution). A & C are in Nebraska, B is in England. I know it was a different situation, but I am thinking of the underlying concepts of the “holder in due course” rule.

    5. British corporations are legal persons, but not citizens, and unlike natural persons do not generally have rights except as granted by legislation. In fact citizenship, as normally understood, has only existed since 1948. British corporations of course existed long beforehand.
      Prior to the British Nationality Act of that year, the usual term was and for some purposes remains, “British subject” (of the Crown). But while subject to the law corporations were not British subjects either, for a corporation could not swear personal allegiance to the Monarch, having neither a soul to be damned nor a body to be kicked, as the phrase goes.

    6. “Why does British citizenship protect a person (or corporation) from harm he does in Nebraska?”

      Depends on whether there are any assets in Nebraska that can be attached.

  3. Sounds like somebody got caught acting spammy and didn’t like getting caught. Don’t worry, though, President Trump promised he’d take a look at defamation law so I’m sure he’s hard at work, eh, what’s that you say? He’s on the side of the spammers? Oh, dear, that can’t possibly turn out well.

    1. I have to say, even a casual perusal of their website certainly makes them look like spammers….

  4. When I run for President, the sole plank of my platform will be to send Seal teams after spammers. We’ll get the email spammers, the SMS spammers and the phone spammers and drop their bodies in the ocean. #MakingAmericaBetter Good bye, Judy from Card Services and Andy from Microsoft Tech Support, and so long, all you former Nigerian Oil Ministers, hope you find a way to get all your money out of Nigeria.

    1. You know, someone actually could win on that…

      1. Additionally, I am NOT Donald Trump.

        What’s holding me back is the fact that I am also NOT a member of a political party.

  5. Looks like there’s not much the U S Courts can do. DatabaseUSA.com could go to British courts however I don’t know how they’d view a default decision. The plaintiff also could start over in the UK.

  6. There is no treaty between the US and UK regarding enforcement of judgments, and so in the UK enforcement is available only at common law. That law treats monetary judgments as essentially equivalent to contractual debts and so require a suit in the UK to recover the debt, and may be challenged as invalid if the US court did not meet the narrower UK requirements for personal jurisdiction. US injunctions are not enforced, period.

  7. Interesting use of the Streisand Effect.

  8. One aspect that deserves mention here is that Spamhaus is less of a publication for humans to read than a tech tool, which is set up to be used, and is used, by the owners of a large number of computers that handle Internet traffic to perform automated blocking of domain names and IP address ranges listed by Spamhaus, because those domains and addresses include a large number of known and suspected senders of spam.

    I disagree with any orders like this one being given to Spamhaus because, in technical terms, it would be quite easy for others who disagree with Spamhaus’ judgment on questions such as “is this spam?” to create or use competing services that do what Spamhaus does.

    1. This is my point of “harm in Nebraska” because if my IP is blocked in Nebraska then I’m being harmed in Nebraska even if Spamhaus isn’t in Nebraska.

      This is my “if A libels B and then C acts on B’s libel” issue.

      Or does one bring a Sherman act suit against the local ISP?

      1. “Or does one bring a Sherman act suit against the local ISP?”

        One consults an attorney properly licensed to practice law in the appropriate jurisdiction(s) to get advice about how to legally proceed.

  9. Spamhaus left the UK a long time ago and are now incorporated in Andorra. I gather they had no knowledge of this suit until someone noticed a press release (whoever the plaintiff served in the UK, it wasn’t them because that’s not where they are) and I expect that they will simply ignore this default judgement.
    I suppose the plaintiff could try to enforce the decision in Andorra, but good luck with that.

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