United States: Ninth Circuit Holds Yahoo! Can Invoke Jurisdiction over French Defendants Based on "Effects Test"

In a recent en banc opinion, the U.S. Court of Appeals for the Ninth Circuit upheld the district court’s exercise of personal jurisdiction over two French organizations on the basis of their attempt to enforce a French court’s order directed to a California-based operator of an internet website. Yahoo! Inc. v. La Ligue Contre le Racisme et l’Antisemitisme, Case No. 01-17424 (9th Cir. Jan. 12, 2006) (en banc) (Fletcher, J.).

This is the most recent in a series of cases to address the complex issues of cross-border conflict of laws and jurisdiction brought about by the global reach of the internet. In April 2000, French organizations La Ligue Contre le Racisme et l’Antisemitisme (LICRA) and L’Union des Etudiants Juifs de France (UEJF) filed suit against Yahoo! in the French court (the Tribunal de Grande Instance de Paris). These organizations claimed the sale of Nazi-related goods through Yahoo!'s auction site—accessible in France—violated French law. The French court agreed and issued an order directing Yahoo! to block French users from accessing its website. Since Yahoo!’s web servers are located in California, the blocking measures would have to be implemented in California. In response, Yahoo! filed a complaint in the U.S. District Court for the Northern District of California seeking a declaratory judgment that the French court's orders were not recognizable or enforceable in the United States. The French defendants moved to dismiss on the basis that the district court lacked personal jurisdiction over them.

The district court held the exercise of personal jurisdiction over LICRA and UEJF was proper under the "effects test" of Calder v. Jones. The court found the French organizations’ attempts to modify the operation of Yahoo!’s California-based web servers were "(1) intentional actions (2) expressly aimed at the forum state (3) causing harm, the brunt of which is suffered—and which the defendant knows is likely to be suffered—in the forum state." The district court also found the dispute was ripe, abstention was unnecessary and the French orders were not enforceable in the United States because such enforcement would violate the First Amendment. LICRA and UEJF appealed only the personal jurisdiction, ripeness and abstention holdings.

A three-judge panel of the Ninth Circuit reversed in a split decision. The majority held that personal jurisdiction was improper because the "effects test" required the defendants’ actions to be wrongful conduct, and LICRA’s and UEJF’s litigation efforts against Yahoo! did not qualify.

A majority of the en banc court of the Ninth Circuit would have upheld jurisdiction on the grounds that Calder does not require that jurisdictionally relevant effects are caused by wrongful acts. Nevertheless, the case was dismissed on the votes of three judges in the majority who found the suit was unripe (combined with three dissenting judges who would dismiss the suit for lack of personal jurisdiction).

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