The Hotel, the Blogger and Libel Tourism

-->

This opinion examines an issue that arose in an opinion the U.S. Court of Appeals for the 5^th Circuit recently issued in a civil case:  Trout Point Lodge, Ltd. v. Handshoe, 729 F.3d 481 (2013).  As the Court of Appeals noted, the issue involved the

newly-enacted Securing the Protectionof our Enduring and Established Constitutional Heritage Act (the `SPEECH Act’), 28U.S. Code § 4102. 

Trout Point Lodge, Ltd., Vaughn Perret and Charles Leary (collectively, `Trout Point’) seek to enforce a defamation-based default judgment that they obtained against Doug K. Handshoe in Nova Scotia, Canada.

Trout Point Lodge, Ltd. v. Handshoe, supra. 

As Wikipedia explains, the SPEECH Act is a federal statute “that makes foreign libel judgments unenforceable in U.S. courts, unless those judgments are compliant with the U.S. First Amendment.”  More precisely, the Act was designed to provide U.S. citizens with some protection against libel tourism, which, as Wikipedia also explains,

is a term, first coined by Geoffrey Robertson, to describe forum shopping for libel  suits. It particularly refers to the practice of pursuing a case in England and Wales, in preference to other jurisdictions, such as the United States, which provide more extensive defences for those accused of making derogatory statements.

As to how this case arose, the Court of Appeals explains that Handshoe, who is a

Mississippi citizen, owns and operates Slabbed.org, a public-affairs blog with the tagline `Alternative New Media for the Gulf South.’ He describes Slabbed.org as a `forum for local residents and other interested parties to gather and share information regarding various political and legal issues that impact the Gulf Coast.’

One of the blog's focal points over the last few years has been Aaron Broussard, the former Parish President of Jefferson Parish, Louisiana.  Broussard was indicted in the U.S. District Court for the Eastern District of Louisiana and pleaded guilty to charges of bribery and theft in September 2012. Handshoe claims that Slabbed.org has been `instrumental’ in reporting the `ongoing corruption scandal, indictment, and guilty plea’ involving Broussard.

During his time in office, Broussard owned property in Nova Scotia. The property sat on Trout Point Road, very close to Trout Point Lodge, a hotel that Perret and Leary own and operate.  In about January 2010, Handshoe began publishing entries on Slabbed.org alleging a link between Broussard and Trout Point Lodge, Perret, and Leary.

At or near the same time, the Times–Picayune, a New Orleans newspaper, published an article indicating that Broussard had an ownership interest in Trout Point Lodge and that Jefferson Parish contractors had paid to rent the premises. The Times–Picayune retracted this assertion and issued a correction after Perret and Leary alerted the paper to purported `factual errors in [its] reporting.’ It appears that the corporate parent of the Times–Picayune also took the Slabbed.org blog offline after Perret and Leary demanded this retraction.

The district court determined that Handshoe, `apparently in reaction to his blog being taken offline,’ found another web host for his site and `began an internet campaign to damage Perret and Leary.’  Specifically, Handshoe posted several updates regarding Trout Point Lodge, Perret, and Leary, which the district court noted `can be characterized as derogatory, mean spirited, sexist, and homophobic.’

Trout Point Lodge, Ltd. v. Handshoe, supra.  You can read a little more about the background of the suit in the news story you can find here.

Perret and Leary (“Trout Point”) filed a lawsuit in the Supreme Court of Nova Scotia

on September 1, 2011, alleging defamation and related claims. Trout Point's First Amended Statement of Claim referred to publications on Slabbed.org and related third-party web sites, which it asserted `were directly defamatory and were also defamatory by both true and false innuendo in that they would tend to lower the opinion or estimation of the plaintiffs in the eyes of others who read the defamatory publications as a series, or alternatively, in parts.’ . . .

[T]he First Amended Statement of Claim asserted four primary sources of reputational harm: (1) content linking Trout Point with the `Jefferson Parish Political Corruption Scandal,’ the `sting’ of which was that `Trout Point Lodge and its owners were somehow involved in corruption, fraud, money laundering, and “pay to play” schemes involving Jefferson Parish President Aaron Broussard and his administration’; (2) the `clear imputation’ that Trout Point `misled investors and court officials in litigation’ with the Atlantic Canada Opportunities Agency (ACOA), the `sting] of which was that `Leary perjured himself, investors were misled, businesses nefariously changed ownership, and that the ACOA litigation is ongoing, with the plaintiffs [losing] every step of the way’; (3) the `imputation’ that the `Trout Point Lodge business is actively failing, near bankruptcy, having once relied on the good graces of Aaron Broussard,’ along with the `related imputation’ that Perret and Leary `have had a series of failed businesses that used other people's money, creating a pattern,’ the `sting’ of which was that Trout Points' `13-year-old business is on the verge of bankruptcy, that the plaintiffs will take the money and run, and that the plaintiffs are either con artists or have no business acumen whatsoever’; and (4) the `unabashed anti-gay, anti-homosexual rhetoric and rants of the defendant,’ used to `amplify and support the three other stings listed above’ and “support[ ] . . . all the other defamatory imputations.’

Trout Point Lodge, Ltd. v. Handshoe, supra. 

The court also notes that in

stating its defamation claim, Trout Point generically alleged that Handshoe's publications were false and malicious. It did not, however, make any specific statements to refute the truth of the individual blog posts at issue.  For example, the First Amended Statement of Claim included no information regarding Trout Point's actual connection to Broussard, if any, or its financial solvency.

Trout Point Lodge, Ltd. v. Handshoe, supra. 

Trout Point “purportedly served Handshoe with a notice of the First Amended Statement of Claim in Mississippi,” but he did not appear and defend himself in the Nova Scotia action. Trout Point Lodge, Ltd. v. Handshoe, supra. Therefore, in December 2011, the Nova Scotia Court entered a default judgment against Handshoe which stated that “`[i]n accordance with the Civil Procedure Rule 31.12(4), Douglas K. Handshoe is now taken to have admitted, for the purposes of this action, the claims made against him in the Statement of Claim.’” Trout Point Lodge, Ltd. v. Handshoe, supra. 

The Nova Scotia court held a hearing to determine the damages due Trout Point and the judge then “awarded Trout Point Lodge $75,000 in general damages, and Leary and Perret each $100,000 in general damages, $50,000 in aggravated damages, and $25,000 in punitive damages.”  Trout Point Lodge, Ltd. v. Handshoe, supra.  The judge also awarded them $2,000 in court costs. Trout Point Lodge, Ltd. v. Handshoe, supra. 

The plaintiffs filed this judgment in the Circuit Court of Hancock County, Mississippi “in an attempt to collect” the damages against Handshoe.  Trout Point Lodge, Ltd. v. Handshoe, supra.  Handshoe removed the case to federal court which, as Wikipedia notes, lets a federal court exercise jurisdiction over a case filed in state court if it involves an issue of federal law.

The Mississippi federal judge entered summary judgment for Handshoe, finding that

Trout Point failed to meet its burden under the SPEECH Act to show that `Handshoe was afforded at least as much protection for freedom of speech in [the Nova Scotia] action as he would have in a domestic proceeding or, alternatively, that Handshoe would have been found liable for defamation by a domestic court.’

 

Trout Point Lodge, Ltd. v. Handshoe, supra. Trout Point then appealed.

Under the SPEECH Act -- 28 U.S. Code§ 4102 -- a foreign defamation judgment will not be enforced by a U.S. court unless one of the following applies:

(A) the defamation law applied in the foreign court's adjudication provided at least as much protection for freedom of speech and press in that case as would be provided by the 1st Amendment . . . and by the constitution and law of the State in which the domestic court is located; or

(B) even if the defamation law applied in the foreign court's adjudication did not provide as much protection for freedom of speech and press as the 1^st Amendment . . . and the constitution and law of the State, the party opposing recognition or enforcement of that foreign judgment would have been found liable for defamation by a domestic court applying the 1^st Amendment . . . and the constitution and law of the State in which the domestic court is located.

The Court of Appeals addressed each issue, in this order.

As to the first issue, it noted that there was

no meaningful dispute that the law applied by the Nova Scotia Court provides less protection of speech and press than 1st Amendment and Mississippi law. Canadian defamation law is derivative of the defamation law of the United Kingdom, which has long been substantially less protective of free speech.

Trout Point Lodge, Ltd. v. Handshoe, supra.

The court explained that the

most critical legal difference here is that a Canadian plaintiff -- unlike a plaintiff subject to 1st Amendment and Mississippi state law -- need not prove falsity as an element of its prima facie defamation claim. Rather, in Canada, truth is a defense that a defamation defendant may raise and, if so, must prove.   Compare Grant v. Torstar, (2009) 3 S.C.R. 640 (Supreme Court of Canada) (holding that `falsity and damages are presumed’ if a plaintiff proves the elements of a prima facie defamation case), with Blake v. Gannett Co., 529 So.2d 595 (Mississippi Supreme Court 1988) (holding that a defamation plaintiff bears the burden of proving falsity). . . .

Thus, Trout Point cannot satisfy the first prong of the First–Amendment considerations inquiry; that is, the law applied in the Nova Scotia proceeding did not provide at least as much protection for freedom of speech and press as Handshoe would have received under domestic law.

Trout Point Lodge, Ltd. v. Handshoe, supra. You can read more about Canadian defamation law here.

The Court of Appeals then took up the second option, i.e., “whether a Mississippi court presented with the same facts and circumstances would have found Handshoe liable for defamation.”  Trout Point Lodge, Ltd. v. Handshoe, supra.

The answer depends on whether the facts Trout Point proved in the Nova Scotia proceeding were sufficient to demonstrate falsity under the U.S. Constitution and Mississippi state law. In Mississippi, `[t]he threshold question in a defamation suit is whether the published statements are false. Truth is a complete defense to an action for libel. The plaintiff bears the burden to prove such falsity.” Armistead v. Minor, 815 So.2d 1189 (Mississippi Supreme Court 2002).

Significantly, statements that are `substantially true’ are not defamatory in Mississippi.  `As the United States Supreme Court has noted, minor inaccuracies do not amount to falsity so long as the substance, the gist, the sting, of the libelous charge be justified.’ Armistead v. Minor, supra (quoting Masson v. New Yorker Magazine, Inc., 501 U.S. 496 (1991)).

Trout Point Lodge, Ltd. v. Handshoe, supra.

The district court judge found Trout Point “failed to prove falsity in the Nova Scotia” case. Trout Point Lodge, Ltd. v. Handshoe, supra.  On appeal, Trout Point relied on “two key sources to establish the falsity of Handshoe's statements: (1) the allegations in Trout Point's 1st Amended Statement of Claim, deemed admitted by the Nova Scotia Judgment, and (2) the Nova Scotia Court's purported factual findings made in the course of awarding damages.”  Trout Point Lodge, Ltd. v. Handshoe, supra.

The Court of Appeals found Trout Point “failed to show that a state or federal court in Mississippi . . . would have awarded a default judgment in its favor”, based on the allegations in its original pleading. Trout Point Lodge, Ltd. v. Handshoe, supra. While “Handshoe's failure to answer or otherwise defend the case satisfies the basic prerequisite for default,” the allegations in the First Amended Statement of Claim -- particularly those regarding the falsity of Handshoe's statements -- are not particularly well-pleaded for at least three reasons.” Trout Point Lodge, Ltd. v. Handshoe, supra.

One was that Trout Point could not show a Mississippi state or federal court would have granted it default judgment because its First Amended Statement of Claim alleged that “Handshoe's statements were `defamatory by both true and false innuendo.’” Trout Point Lodge, Ltd. v. Handshoe, supra (emphasis in the opinion).  The court found that Trout Point

 “specifically alleges falsity with respect to only a limited few of the statements, and offers no facts to rebut . . . most of Handshoe’s statements.”  Trout Point Lodge, Ltd. v. Handshoe, supra. 

It also noted Trout Point “offer[ed] little guidance” as to whether “some or all of the statements are allegedly false”. Trout Point Lodge, Ltd. v. Handshoe, supra.  The court therefore concluded that a Mississippi court could have denied default judgment because the Statement of Claim “does not clearly and specifically allege that each of the relevant statements is false.”  Trout Point Lodge, Ltd. v. Handshoe, supra.

The second reason was that “some of the publications at issue are statements of unverifiable opinion.” Trout Point Lodge, Ltd. v. Handshoe, supra.  The court noted that

The First Amended Statement of Claim complains Handshoe referred to Perret and Leary as `”girls,” “blow buddies,” “queer f-g scum,” and “b-tches,”’ published more than one reference to a gay-themed movie, and posted video clips of movies and music videos commonly associated with gay stereotypes.'

While less grotesque, many of the other statements . . . also involve expressions of opinion; for example, that Trout Point had `Champagne taste on a beer budget,’ Perret and Leary were a `litigious bunch,’ and that the Nova Scotia action was `foolish and frivolous.’

Trout Point Lodge, Ltd. v. Handshoe, supra.  The Court of Appeals explained that while these statements were “offensive,” they “are generally not actionable in Mississippi.” Trout Point Lodge, Ltd. v. Handshoe, supra.  “Indeed, counsel for Trout Point conceded at oral argument that Handshoe's offensive insults and opinion statements would not be actionable in Mississippi.” Trout Point Lodge, Ltd. v. Handshoe, supra. 

Finally, the Court of Appeals noted that a “ state or federal court in Mississippi could view some of the allegations in the First Amended Statement of Claim as legal conclusions, as opposed to well-pleaded facts.”  Trout Point Lodge, Ltd. v. Handshoe, supra.  More precisely, it explained that in this case, Trout Point’s allegations of

falsity are unaccompanied by any facts that contradict or otherwise undermine the allegedly defamatory statements.  Given the legal significance attached to the word `falsity,’ Mississippi law requires Trout Point to do more than merely cry `false’ to prove its claim.   

Therefore, even deemed admitted, the allegations likely would have been insufficient -- without subsequent evidence, analysis, and fact-finding -- to satisfy Trout Point's burden in a Mississippi court.

Trout Point Lodge, Ltd. v. Handshoe, supra. 

In a presumably unrelated development, it appears that United Kingdom courts have begun cracking down on that country’s contribution to libel tourism.