INTERNET LAW BLOG

A Spanish court recently asked Internet-search provider Google to remove data about a private individual from its index.  Spain and other members of the European Union made this request under a doctrine that is commonly referred to in Europe as “the right to be forgotten.”

In 1991, a Spanish newspaper published a critical profile of Spanish plastic surgeon, Dr. Hugo Guidotti Russo.  The article referenced a dispute Dr. Russo had with a patient, but failed to mention how meritorious the claims were or how the dispute was ultimately resolved.  According to Dr. Russo’s attorney, the lawsuit was dropped once Dr. Russo was cleared, but no media covered that aspect of the case so it never appeared on the Internet.  Dr. Russo is still a practicing plastic surgeon in Spain and when potential patients use Google to search for him, the critical article regularly appears on page one of the search results.  Dr. Russo believed that the article was harming his ability to attract patients and, with the support of a Spanish court and the Spanish Data Protection Authority (“SDPA”), asked Google to remove the article from its index.

Google refused to remove the article claiming that the Spanish regulators exceeded their authority and that their directive was equivalent to censorship.  The important issue raised was how much control private individuals should have over the information about them that appears on the Internet.  Currently, there is a groundswell of support in Europe for the “right to be forgotten” movement such that it may be codified as law.  The SDPA has previously ruled that freedom-of-expression laws in Spain protect only newspapers and other publications and do not protect search engines.

Other examples of private individuals seeking to “be forgotten” in Spain include:

A high school principal whose citation for urinating in public was published by an official regional government gazette and may still be seen by students and parents alike via a Google search.

A prison guard concerned that a job-related sanction that appeared in Google search results might lead criminals to determine where he works.  Spanish police and prison guards are often granted anonymity due to fears that they might be identified, located, and targeted by the armed Basque separatist group ETA.

An individual accused of homicide forty years prior but acquitted due to mental illness.  A Google search performed forty years later reveals news of the accusation, but no news of his acquittal or the mental illness that justified the acquittal.

Google’s response is that Spain should require the publications that make the material available via the Internet to embed coding that would tell search engines not to index the information.  Privacy experts agree that requiring Google to remove information from its index could have a profound chilling effect on free expression.  Advocates of the “right to be forgotten” rules counter that users of the Internet should have a right to be forgotten when the data is no longer needed or when an affected individual requests that the data be removed.  The legislation being considered by the European Union would focus mainly on data, photos and, videos that individuals post of themselves on sites such as Facebook and Twitter, that the individuals may later want removed.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

On April 7, 2011, the First Department of New York’s Appellate Division upheld a trial court’s dismissal of a lawsuit for defamation.  Akpinar v. Moran, 2011 WL 1311902 (1^st Dept. 2011).  The plaintiff, Reverend Dr. Bill Akpinar, sued attorney William Moran; Moran’s law firm; and the firm’s client, Wachovia Mortgage, FSB (“Wachovia”) for defamation.  Akpinar alleged that Moran defamed him in a newspaper article about a pending criminal investigation into a mortgage fraud and a lawsuit brought against Akpinar by Wachovia alleging mortgage fraud.

When referring to Akpinar, Moran told the newspaper, “I’m looking forward to getting him under oath” and “I want to get to the bottom of many questions myself.”  Id.  Akpinar argued that when considered in the context under which the statements were made, they amounted to defamation.  Akpinar claimed “that he lost $17 million in venture funding from unspecified individuals who read the [defamatory] statements.”  Id.

The Appellate Division dismissed Akpinar’s complaint, holding that “a reasonable reader would understand the statements defendant made about plaintiff as mere allegations to be investigated rather than as facts.”  Id.  (Emphasis in original).  The court reasoned that “the statements neither impute to him the commission of a serious crime nor tend to injure him in his trade, occupation or profession, and therefore do not constitute slander per se.”  Id.  Neither Akpinar’s reference to the pending criminal investigation nor the civil lawsuit were sufficient to establish a claim for “defamation by innuendo” – whether the statements are defamatory requires a balancing between the alleged defamatory words and the facts and circumstances that surround their publication.

The court also found Akpinar’s allegation that he lost “$17 million in venture funding from unspecified individuals” inadequate to plead special damages as required in a defamation action.  Id.  Finally, the court noted that Moran’s statements were protected under Civil Rights Law §74 as a “fair and true report of a judicial proceeding.”  Id.  The court similarly dismissed Akpinar’s claim for intentional infliction of emotional distress as duplicative of his defamation claim and on the ground that Moran’s statements were “not so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency.”  Id.  Thus, the court upheld the decision of the trial court dismissing Akpinar’s lawsuit in its entirety.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

In 2008, the legislature of New York State amended its Tax Law to require out-of-state sellers to pay state taxes if they use New York residents to solicit business from other New York residents through a web site.

Under New York’s Tax Law (the “Tax Law”) an out-of-state seller is presumed to be

“soliciting business [in New York] through an independent contractor or other representative if the seller enters into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an internet website or otherwise, to the seller, if the cumulative gross receipts from sales by the seller to customers in the state who are referred to the seller by all residents with this type of an arrangement with the seller is in excess of ten thousand dollars during the preceding four quarterly periods ending on the last day of February, May, August, and November.”

New York Tax Law §1101(b)(8)(vi).

Two days after the amendment to the Tax Law took effect, Internet vendors, Amazon.com LLC (“Amazon”) and Overstock.com (“Overstock”), initiated separate lawsuits in New York State Court against the New York State Department of Taxation and Finance claiming that Tax Law §1101(b)(8)(vi) was unconstitutional as amended.  Amazon claimed the statute violated the Commerce, Due Process and Equal Protection Clauses of the United States Constitution.  Overstock claimed the statute violated the Commerce Clause of the United States Constitution.

In early 2009, the trial court heard the State of New York’s motions to dismiss each complaint and, in two separate orders, dismissed the lawsuits filed by Amazon and Overstock.  The trial court rejected all arguments made by Amazon and Overstock that the statute was unconstitutional.  Amazon and Overstock each appealed their respective decision to New York State’s Appellate Division, First Department.

On appeal, Amazon claimed that the statute was unconstitutional as applied because it lacked a “substantial nexus” to the State of New York.  Amazon.com, LLC v. New York State Dep’t of Taxation & Fin., 2010 N.Y.SlipOp. 07823 (1^st Dep’t 2010).  Amazon also took the position that the statute violated “the Due Process Clause because, facially and as applied, it enacts an irrational and irrebuttable presumption, and is also vague.”  Id.  Lastly, Amazon argued that the statute violated the Equal Protection Clause because it specifically targeted Amazon.  Id.

On appeal, Overstock claimed that the statute violated the Commerce Clause, both on its face and as applied to Overstock, and that it violated the Due Process Clause because of its vagueness.  Id.  The Appellate Division considered the appeals by Amazon and Overstock at the same time.

When considering the facial challenges to the Tax Law, the court noted that, generally, facial challenges to a statute’s constitutionality are disfavored and that “parties challenging a duly enacted statute face the initial burden of demonstrating the statute’s invalidity ‘beyond a reasonable doubt.’”  Id. citing LaValle v. Hayden, 98 N.Y.2d 155, 161 (2002).  Courts are also required to “avoid, if possible, interpreting a presumptively valid statute in a way that will needlessly render it unconstitutional.”  Id. citing LaValle, 98 N.Y.2d at 161.

The Appellate Division determined that the test for determining whether a state tax violated the Commerce Clause developed in Matter of Moran Towing Corp. v. Urbach was applicable.  99 N.Y.2d 443 (2003).  Under that test, a tax will be upheld, 1) when the tax is applied to an activity with a substantial nexus with the taxing State; 2) is fairly apportioned; 3) does not discriminate against interstate commerce; and 4) is fairly related to services provided by the State.”  Moran Towing, 99 N.Y.2d at 449.  The challenges to the tax by Amazon and Overstock implicated only the first prong; whether the activity involved had a substantial nexus with the taxing state.

In order to find that Amazon had a substantial nexus with New York, Amazon must maintain a physical presence within that state that need not be substantial, but is more than the slightest presence.  Such a nexus “may be manifested by the presence in the taxing State of the vendor’s property or the conduct of economic activities in the taxing State performed by the vendor’s personnel or on its behalf.” Amazon.com, LLC 2010 N.Y.SlipOp. 07823.   After applying that analysis to the facts, the court held that the Tax Law did not violate the Commerce Clause.  The tax was imposed upon an out-of-state vendor “only where the vendor enters into a business-referral agreement with a New York State resident, and only when that resident receives a commission based on a sale in New York.  The statute does not target the out-of-state vendor’s sales through agents who are not New York residents.  Thus, the nexus requirement is satisfied.”  Id.

The court reasoned that New York had a legitimate basis upon which to conclude that in-state agents would engage in direct solicitation, rather than simply advertising.  The Tax Law created a presumption that the New York agent for an out-of-state vendor would solicit business in New York.  The statute provides out-of-state vendors with an “escape hatch” in that the vendor may include in its contract with the in-state agent a provision prohibiting the agent from engaging in solicitation activities in New York that would refer potential customers to the out-of-state vendor.  In that instance, the in-state agent is responsible for providing an annual certification that it has not engaged in any prohibited solicitation activities.  Based upon this reasoning, the court held that the facial challenge to the Tax Law failed because a set of circumstances existed under which the statute would be valid, i.e. when a New York agent proactively solicits business within New York which results in a sale by Amazon or Overstock and a commission to the agent.

The Appellate Division also analyzed the claim that the statutory presumption violated the Due Process Clause of the U.S. Constitution.  The court noted that the general test for assessing the validity of a presumption “is that there be a rational connection between the basic facts proven and the ultimate fact presumed.”  Id. citing County Court of Ulster Cty v. Allen, 442 U.S. 140, 165 (1979).  The test in New York is even more stringent, “the connection must assure ‘a reasonably high degree of probability’ that the presumed fact follows from those proved directly.”  Id. citing People v. Leyva, 38 N.Y.2d 160, 166 (1975).  The presumption made by the statute – that in-state solicitation occurs when an in-state agent is paid a commission on a per sale basis after a New York purchaser accesses the out-of-state vendor’s web site and “clicks” through to make a purchase on that web site – was not considered an irrational one by the court.  In fact, the court reasoned that solicitation by the in-state agent was an extremely plausible and likely way for that agent to raise revenues.  Thus, the court held that the statutory presumption did not violate the Due Process Clause.

The court also held that the Tax Law was not unconstitutionally vague on its face.  The court reasoned that the terms “or indirectly,” “or other consideration,” and “solicitation” as used in the statute were not confusing at all.  Instead, the terms were easily definable in the context of the statute’s purpose.  For example, “or indirectly” refers to the in-state agent referring a consumer to an out-of-state vendor’s web site by any manner other than a direct click, perhaps by sending that consumer an e-mail.  “Or other consideration” refers to compensation to in-state agents that is other than direct payment.  For example, a bonus program or discounts on the out-of-state vendor’s goods.  Finally, “solicitation” was not an imprecise term requiring a specific meaning when used in the context of the Tax Law.  Whether an in-state agent’s activities amount to “solicitation” may be determined using the traditional definition of the word.

Before considering the claims of Amazon and Overstock that “as applied” the statute violated the Commerce Clause, Due Process Clause and Equal Protection Clause, the court determined that those issues were ripe for resolution.  The court reasoned that the New York Department of Taxation and Finance (“DTF”) would seek to enforce the Tax Law against Amazon and Overstock.  Thus, the threat of harm to Amazon and Overstock was direct and immediate.  “Where threatened action by government is concerned, we do not require a plaintiff to expose himself to liability before bringing suit to challenge the basis for the threat – for example, the constitutionality of a law threatened to be enforced.”  Id. citing MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128-29 (2007).

The court refused to determine whether the statute as applied to Amazon and Overstock violated either the Commerce Clause or the Due Process Clause.  The court reasoned that there was insufficient evidence in the record to make such a determination and remanded the case to the trial court for additional discovery on those claims.

Finally, the court determined that the statute as applied to Amazon did not violate the Equal Protection Clause.  First, Amazon could not establish that it was exclusively targeted as the statute also applied to Overstock.  Second, Amazon could not establish that it was treated differently than out-of-state vendors that did not maintain in-state agents like Amazon.  The court reasoned that those vendors were not similarly situated, so there was no proof that Amazon “was singled out with an ‘evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances.’”  Id. citing Bower Assoc. v. Town of Pleasant Val., 2 N.Y.3d 617, 631 (2004).

In conclusion, the court held that New York Tax Law §1101(b)(8)(vi) was constitutional on its face and did not violate the Equal Protection Clause as applied to Amazon or Overstock.  The court reinstated the complaints filed by Amazon and Overstock and ordered further discovery on the issues of whether the Tax Law violated the Commerce Clause or Due Process Clause.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

Recently, an appellate court in Texas refused to deem a lawyer representing a native American tribe a “public figure” for purposes of a libel lawsuit.  A newspaper article covering an increasingly public controversy within the Kickapoo Indian Tribe stated that the tribe’s lawyer, Gloria Hernandez, was “skimming 10% of casino profits off the top.”  In fact, what she had said was that “she was hired to be legal counsel for the tribe in October 2002, and was on retainer at the time of the hearing.  In response to a question about how much of her legal practice is devoted to work for the tribe, Hernandez testified, ‘I make roughly about ten percent of my income from the tribe.’” ZYZY Corp. v. Hernandez, No. 04-10-00311-CV, 2011 WL 228101 at *1 (Tex.App.-San Antonio 2011)

Hernandez sued the newspaper for libel.  The newspaper argued that Hernandez had injected herself into the public controversy in an attempt to influence its outcome.  As a result, the newspaper argued, Hernandez was a “limited-purpose public figure” and could only prove libel by showing the newspaper acted with actual malice.  The trial court disagreed with the newspaper and denied its motion for summary judgment.

The appellate court agreed with the trial court and upheld its decision.  The appellate court held that Hernandez’s actions, which included accompanying the tribe to meet with elected officials to discuss the controversy, did not render her a public figure.  Instead, the evidence showed that Hernandez provided legal advice and representation to the tribe.  There was no evidence she became involved in the controversy beyond her role as legal advocate.  There was also no evidence that she thrust herself into the public eye by engaging the media, had any special access to the media or attempted to use the media to influence the outcome of the controversy in any way.  As a result, Hernandez was not a “limited-purpose public figure” under the law and did not have to show that the newspaper acted with actual malice to prove libel.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

A billboard in Atlantic City, New Jersey has recently garnered national attention.  The billboard for “Moonshine Follies”, a show running at the Resorts Casino Hotel (“Resorts”) from February 20th to April 17th, pictures a woman’s bare bottom as part of the advertisement.   NJ Transit owns the land on which the billboard is situated and received several complaints about the explicit nature of the advertisement.

NJ Transit informed Resorts that it wanted it to take down the billboard.  Resorts then filed a lawsuit seeking an injunction to keep the billboard up.  Judge Nelson C. Johnson of the Superior Court of New Jersey, Atlantic County, preliminarily ruled that the billboard would stay up until he could convene a March 10^th hearing to determine its fate.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

The NJ Supreme Court is currently considering an appeal that may determine once and for all whether a person can proceed with an online per se libel suit even though there is no evidence that his reputation has been actually harmed.

In W.J.A. v. D.A., 416 N.J. Super. 380 (App. Div. 2010), the nephew created a website in which he posted allegations that his uncle had molested him years ago. The uncle then sued his nephew for defamation.

Defamation is when the defendant communicates to another person a false statement about the plaintiff that harms the plaintiff’s reputation in the eyes of the community or causes others to avoid him. There are two types of defamation, libel which is when the false statement is written or printed and slander which is when the false statement is spoken.

New Jersey law provides that someone suing for defamation must show actual damages. However, there is an exception to that requirement in which damages will be presumed. It is called “per se” slander or libel. The usual examples are set out in the standard New Jersey jury charges:

• • The statement charges someone with the commission of a crime.

• • The statement accuses someone of having an offensive or loathsome disease that would tend to deprive the person of companionship.

• • The statement concerns matters that are incompatible with business, trade, profession or office.

• The statement charges serious sexual misconduct.

In this case, the Appellate Division of the Superior Court of New Jersey determined that per se defamation is not limited to the spoken word (slander), but also applies to the written word (libel). The Court reasoned that:

“[F]or purposes of summary judgment, no one disputed that the defamatory statements attributed to defendant were defamatory. Thus, dismissal of the action at that stage-merely because plaintiff presented no proof of actual damage – provides defendant with a license to defame. If there has been a wrong, there should be a remedy, and the time-honored approach of allowing such a case to be decided by a jury, which may then assess a proper amount of damages based upon their experience and common sense, does not offend us.”

W.J.A. v. D.A., 416 N.J. Super. At 606-607 (App. Div. 2010)

The opinion is also notable because it clarifies that a defamatory Internet posting is libel, not slander.

This case is now on appeal to the NJ Supreme Court, which should issue its ruling sometime this term.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC