Yahoo!’s Nazi auctions appeal dismissed in US

Out-Law News | 13 Jan 2006 | 12:31 pm | 3 min. read

A US court yesterday dismissed an appeal in a landmark case over Yahoo!’s hosting of internet auctions selling Nazi memorabilia, but dodged the central issue in the case – whether free speech rights protect Yahoo! from prosecution from abroad.

Background

The case began with a civil lawsuit filed in France against Yahoo! in 2000 by two civil liberties groups, La Ligue Contre le Racisme et l'Antisemitisme and L'Union des Etudiants Juifs de France. A Paris court ordered Yahoo! to block internet users in France from accessing its auction sites selling Nazi memorabilia.

The court reasoned that French law prohibits the display or sale of anything that incites racism. It was the first time a French court had issued such an order on a foreign company.

The court also imposed fines of around $13,300 per day upon the company for non-compliance.

Yahoo! did not appeal the French court's decision in France; instead, it sought a declaration from a federal court in California. It claimed that the order to ban French users from accessing certain auction sites affected the operations of its US servers, and was therefore unenforceable under the First Amendment provisions on free speech.

Yahoo.fr was not the issue; the company already tried to ensure that its French site complied with French law. But the French court's concern was that yahoo.com could still be accessed by French users. Yahoo! did not continue the fight because it wanted to sell Nazi memorabilia from yahoo.com. Instead, Yahoo! wanted to fight the point of principle: that a French court should not control the content of its US site.

In 2001 the US District Court accepted Yahoo!'s arguments and ruled that the French court could not regulate the company's speech on the internet. The two French groups then appealed the decision to the 9th US Circuit Court of Appeals, arguing that the First Amendment cannot prevent the order from being enforced. They also argued that Yahoo! had made no attempt to comply with the order before suing in the US.

In August 2004, a divided Court of Appeals reversed the lower court decision, ruling that the District Court did not have jurisdiction to hear the case. Yahoo! appealed.

Yesterday's ruling

An 11-judge panel of the 9th US Circuit Court of Appeals issued a majority ruling yesterday which dismissed Yahoo!'s appeal. The six judges who gave the majority ruling were themselves split into two factions.

The first group of three judges ruled that US courts did not have jurisdiction on the issue at all.

The second group of three judges found that, as Yahoo! had voluntarily amended its site so as to exclude the sale of Nazi memorabilia, it was unlikely that the French groups would ever seek to enforce the French ruling. The case was therefore premature, although the US courts would have jurisdiction if US enforcement of the ruling was ever sought.

"It is extremely unlikely that any penalty, if assessed, could ever be enforced against Yahoo in the United States. Further, First Amendment harm may not exist at all, given the possibility that Yahoo has now 'in large measure' complied with the French court's orders through its voluntary actions, unrelated to the orders," reads the majority ruling, given by Judge William A Fletcher.

In effect, the Appeals Court decided that the case was moot and that that they did not need to consider the First Amendment arguments put forward by Yahoo!.

“Yahoo! wants a decision providing broad First Amendment protection for speech and speech-related activities on the Internet that might violate the laws or offend the sensibilities of other countries,” says the ruling. “As currently framed, however, Yahoo!’s suit comes perilously close to a request for a forbidden advisory opinion.”

In contrast, the five dissenting judges found that there were issues to be answered and that the First Amendment arguments should have been considered.

Giving the minority opinion, Judge C Fisher criticised the majority opinion for imposing “a heightened standard on a US plaintiff seeking to vindicate its First Amendment rights when that plaintiff is challenging a foreign prior restraint.”

“We should not allow a foreign court order to be used as leverage to quash constitutionally protected speech by denying the United States-based target an adjudication of its constitutional rights in federal court,” he said.

Reaction

A Yahoo! spokeswoman told the LA Times: “The majority of the court could not agree as to whether the case was ready to be decided on the first amendment issue."

“Based on today’s ruling, Yahoo! believes that free speech rights would prevail if the French court orders were attempted to be enforced in the US,” she added.