For companies suffering from symptoms commonly associated with being forced to defend themselves in remote and inhospitable locales, the recently-concluded U.S. Supreme Court term brought some much-needed relief. In addition to its blockbuster patent-venue ruling in TC Heartland, the Court issued a major decision limiting nonresident plaintiffs’ ability to invoke loose specific jurisdiction standards to force out-of-state defendants to litigate claims that have no substantial connection to the forum. See Bristol-Myers Squibb Co. v. Superior Court of Cal., No. 16-466, 2017 WL 215687 (U.S. June 19, 2017). In doing so, the Court rejected plaintiffs’ reliance on a company’s general business and promotional contacts with the forum state when those contacts are insufficiently related to the claims asserted.
But just days after the Court decided Bristol-Myers Squibb, it declined to intervene in TV Azteca v. Ruiz, a defamation case in which the Texas Supreme Court had found specific jurisdiction over a Mexican broadcaster. See TV Azteca, S.A.B. de CV, 490 S.W.3d 29 (Tex. 2016). The plaintiff in TV Azteca is the Mexican pop star commonly known as Gloria Trevi. Often described as “Mexico’s Madonna,” Trevi was accused in the late 1990’s of luring underage girls into sexual relationships with her manager. She spent nearly five years in prison in Brazil and Mexico before her acquittal by a Mexican judge in 2004.
In 2009, Trevi sued TV Azteca in state court in Texas—where she was living at the time—based on its reporting on the decade-old scandal. TV Azteca filed a special appearance challenging personal jurisdiction, noting that its broadcast had been directed at Mexican viewers and was received in South Texas only as a result of involuntary “signal bleed” across the border. The Texas Supreme Court agreed with TV Azteca that the “mere knowledge that its programs will be received in another jurisdiction is insufficient to establish” specific jurisdiction. This holding was an important victory not only for broadcasters in border areas, but also for online publishers, whose content reaches a nationwide (and sometimes worldwide) audience.
The Texas Supreme Court next held that the “subject-and-sources” test applied by the Fifth Circuit and other federal courts in defamation cases did not support specific jurisdiction over TV Azteca. That test looks to whether the subject of the challenged publication relates to the forum state and whether the defendant relied on sources from within the forum state. See, e.g., Clemens v. McNamee, 615 F.3d 374, 380 (5th Cir. 2010). TV Azteca’s broadcasts were about the Mexican activities of a Mexican pop star and did not rely on Texas sources.
But the Texas Supreme Court did not stop there. It went on to note that TV Azteca engaged in general business and promotional activities in South Texas. Even though none of these activities caused Trevi’s alleged injuries, the court cited them as evidence that TV Azteca had taken intentional action to serve the Texas market.
TV Azteca filed a cert. petition in October 2016, and the U.S. Supreme Court held the petition in abeyance after it granted cert. in Bristol-Myers Squibb. The Texas Supreme Court’s decision looked particularly vulnerable after Bristol-Myers Squibb was decided, but after a round of supplemental briefing, the Court denied TV Azteca’s petition. Essentially, the Court declined to dispense the medicine it had deemed necessary for defendants in the mass tort context, instead adopting a wait-and-see approach for the publication-tort context.
The Court’s cert. denial in TV Azteca creates confusion for media companies at an inopportune time. Facing challenges to their traditional business models and revenue sources, many publishers and broadcasters have looked to conferences, products, and e-commerce initiatives to provide a more secure economic foundation for their reporting operations. The Court’s Bristol-Myers Squibb decision and its cert. denial in TV Azteca send mixed signals about the relevance of such general business and promotional activities to the specific jurisdiction analysis.
Perhaps even more troubling was the Court’s discussion of Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984). In Keeton, the Court held that New Hampshire courts could exercise personal jurisdiction over Hustler in a defamation case brought by a nonresident, even though the magazine distributed only approximately 1% of its circulation in the State. Distinguishing Keeton, the Court in Bristol-Myers Squibb pointed out that the plaintiffs had not suffered any injury in California based on their use of the defendant’s drug Plavix, whereas Keeton had noted that “[f]alse statements of fact harm both the subject of the falsehood and the readers of the statement.”
Any suggestion that some vague “harm” to the public at large could constitute a forum contact relevant to the specific jurisdiction analysis is unsettling. If the publication of an allegedly false statement to viewers or readers—especially combined with a publisher’s general business and promotional activities—in the forum can sustain specific jurisdiction, online publishers could be exposed to jurisdiction even where neither the plaintiff nor the publication at issue has any substantial connection to the forum. This is contrary to the “subject-and-sources” test and inconsistent with the Court’s recent trend of limiting the scope of personal jurisdiction. It also raises Due Process fairness concerns and, in these days when a single state-court judgment can bankrupt a publisher, the possibility of being hauled into a remote and inhospitable forum will chill speech.
Ultimately, the resolution of this issue and the doctrinal clarity it will bring will have to await another day (indeed, another term). Meanwhile, TV Azteca, a Mexican broadcaster, will be forced to defend itself in Texas state court in a case brought by a Mexican citizen over reporting prepared and broadcast in Mexico about events that took place entirely outside Texas.