Punitive Damages in Harlan & Cimoszewicz v. Wprost

Students of Freedom of Speech law might find interest in materials from following litigation:

Russell J. Harlan and Malgorzata-Natasza Cimoszewicz
v.
Wprost, Agencja Wydawniczo-reklamowa “Wprost” Sp. z o.o., Marek Krol, Fijor Publishing, Jan M. Fijor, Maciej Rybinski, and Lowell International Co.

This case can be relevant for the intersection of several concepts:

• protection against libel/defamation,
• freedom of expression and press,
• jurisdiction in international litigation,
• enforcement of foreign default judgments.

Wprost and other Defendants published or disseminated materials that Plaintiffs considered libelous.

Initially (in 2005), the law suit was brought in a Federal Court in South Carolina (SC). The SC Court dismissed the complaint. You can read the opinion here. The Defendants successfully argued that the Court lacked personal jurisdiction over them. Under the long arm statute of SC, the Court only needed to examine whether its exercise of jurisdiction over a party would comply with due process requirements. This test requires two steps: 1. A party must have minimum contacts with South Carolina. 2. Exercise of personal jurisdiction is consistent with traditional notions of fair play and substantial justice. Both conditions are necessary, and step 2 comes into consideration only if test 1 is fulfilled.

In the assessment if the minimum contacts (step 1), the SC Court followed the guidelines formulated by the U.S. Supreme Court in Keeton v. Hustler in 1984 (listen to the oral arguement in Keeton). The Supreme Court said that for a state to exercise jurisdiction, an allegedly libelous publication must achieve an adequate circulation in the state, so that the contact with the state is not random, isolated, or fortuitous. For example in Keeton, the magazine circulation of 10,000 to 15,000 in a state was not “random, isolated, or fortuitous” but sufficient to meet the minimum contacts requirement. In the SC case against Wprost, the distribution in South Carolina was limited to 1 (one) piece in subscription.

However, even this small number would allow for establishing jurisdiction, had the Plaintiffs shown that they had suffered harm from this particular one contact. They failed to demonstrate this.

Still looking at the minimum contacts requirement, another alleged link with SC jurisdiction was that Wprost can be read in South Carolina via the Internet. The Court noted that there is scarce case-law pertaining to this issue (no Supreme Court decision was quoted). The SC Court relied on a decision in Cybersell, Inc. v. Cybersell, Inc. by the Ninth Circuit Court of Appeals from 1997 in which the relevant factor for establishing jurisdiction is “the nature and quality of commercial activity conducted by an entity over the Internet in the forum state”. The Plaintiffs offered no evidence that would allow to assess the nature and quality of Wprost’s Internet activity in SC, thus the Court dismissed the theory that Internet could make the jurisdiction link.

The last jurisdiction link within the minimum contact theory that the SC analyzed was whether South Carolina had been “the focal point both of the story and of the harm suffered.” Under Calder v. Jones, had these criteria been met, the SC Court would have jurisdiction even though the previous tests came out negative. The understanding of the focal point in further jurisprudence requires that Defendants expressly aim their tortious conduct at South Carolina. The Court found no evidence of such directed activity, namely because of nominal circulation of Wprost in SC.

Having lost in South Carolina, the same Plaintiffs sued in Chicago in a state court (Circuit Court of Cook County, Illinois, County Department, Law Division).

The materials from the state courts are often not as readily available via Google, Westlaw, or PACER as federal ones. This was the case of the litigation at hand in Chicago, so I can present the documents below only thanks to wonderful support from Steve Young of The Catholic University of America who is a professional in retrieving such information.

In the Complaint, the Plaintiffs ask for trial by jury, and assert that Wprost published articles which had amounted to defamation, and seek actual and punitive damages. They claim that accusations in Wprost about the Plaintiffs are false, and were made maliciously with the intent to injure the Plaintiffs.

According to the recent press release by one of the Defendants – Wprost, the magazine is questioning the fact of effective petition delivery, and claims not having received any information about the proceedings in question or verdict of the American court. From this position, I assume that this Defendant never showed up in court in order to fight the law suit. However, here is an account from the Polish press which claims that Wprost has been served.

One of the other Defendants (Lowell International Co.), a company which distributes Wprost in the U.S., did contest the Complaint in its Answer. The majority of this brief consists of one sentence — repeated 29 times: The Defendant neither admits nor denies, but has insufficient knowledge about the allegations in paragraph x and demands strict proof thereof (with x designating the number of the respective paragraph of the Complaint).

Lowell moved for summary judgment arguing that as a matter of law, Lowell being a distributor of Wprost, would be liable for defamation only had it known or had reason to know of the defamatory nature of the articles. According to Lowell the record shows clearly otherwise.

The Plaintiffs met the motion with a Memorandum in Opposition in which they pointed out how in their opinion Lowell knew or had reason to know about the defamatory nature of the articles. In addition they argued that this knowledge is a question of fact that is to be decided by the jury (thus summary judgement should not be available).

Lowell offered a rebuttal (Reply) in which it questioned the account given by Plaintiffs. I don’t know how this exchange ended, since I don’t have all the documents. The only fact that I can make interference from is that Lowell does not show up in the Verdict.

In the Verdict, the Jury awarded Plaintiff Russell J. Harlan $250,000 of actual damages from Defendants: Wprost, Agencja Wydawniczo-Reklamowa “Wprost”, Marek Krol, Maciej Rybinski. The actual damages for Malgorzata Harlan-Cimoszewicz a/k/a Natasha Harlan against the same Defendants are $750,000. The Jury further awards $4,000,000 in punitive damages to both Plaintiffs from the same Defendants.

Should the Plaintiffs proceed with the enforcement of the verdict in Poland, at least two interesting questions might arise.

1. Enforcement of a foreign (and non-EU) judgment which was handed down in absence of the defendant. This can raise the question of the right to defense. Both the Constitution and Code of Civil Procedure would not allow for an enforcement of the judgement in which the defendant was deprived of the right to defense.

First, even if Wprost were aware of the proceedings, are there jurisdictions geographically and culturally so distant from Poland that defending a law suit there would be so hard and expensive for a Polish citizen that the defendant is deprived of the right to defense? How do you defend a claim brought against you in Montevideo, Uruguay? Even if the foreign jurisdiction is internally perfectly fair as regards due process. For an individual Polish citizen, probably there are some jurisdictions which are at least presumably too exotic to guarantee fair play and right to defense, even if he/she has been correctly served with the law suit. As regards U.S., the procedures differ substantially, and litigation is much more costly. Having said that I don’t really see this argument fly as regards a big corporate defendant sued in Chicago.

Second, and more specifically as regards the facts in this case, Polish courts will have to scrutinize whether the defendant’s claim that there was no effective service, holds water. If there was lack of service, objection by Wprost seems reasonable. (According to another newspaper, Wprost has been served).

Speaking more generally, in course of such enforcement, an interesting thing can be the interplay between the insistence of the Polish courts to guarantee the right to defense, and what American courts understand under related notions of fair play and substantial justice.  As we can see in the South Carolina decision above, American courts pay attention not to extend their jurisdiction in a way that jeopardizes fair play or substantial justice. Thus, if there were ideal synchronization between American and Polish courts, the American courts would not extend their jurisdiction beyond the line of what the Polish courts could find as infringement of the right to defense.  There are two caveats to be made here:

• It is likely that differences in the legal culture will expose in some cases the lack of synchronization between the Polish right to defense and the American fair play and substantial justice.
• The Keeton standard arises from matters that are inter-state but not international. I think there is difference in being a defendant in another state and in another country, the latter being usually more expensive and difficult.

2. Punitive damages. European jurisdictions have a history of skeptical approach towards this measure. E.g. see the New York Times account on Germany and Italy. Some jurisdiction in Europe do not like the idea that punitive damages are punitive, i.e. serve repression of the defendant instead of restitution for the injured party. This means that penalties are applied outside the system of protection traditionally afforded to the defendant in constitutional and criminal law.

The issue becomes more sensitive as the defendant is the Press with its constitutionally protected freedoms. A $5Mln verdict can have an extreme chilling effect in Poland. U.S. has remarkable protection for freedom and expression and for the press, so it’s not that easy for a plaintiff to obtain a judgment against the media in a defamation law suit. However, I would not be happy with allowing a practice of suing Polish publishers in Chicago where the jurisdiction link can perhaps be established as in this case by presence of Polish audience. (In this litigation an additional link was the domicile of Plaintiffs who as I understand live in the U.S. but not in Chicago — it is not really clear at this moment what would be the theory of jurisdiction of the Chicago Court should the Polish Defendants object to the jurisdiction). Even with all the protection afforded to freedom of speech and press in the U.S., such forum shopping would constitute an excessive economical hardship for average Polish publishers.