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Federal judge denies Greek tycoon preliminary injunction against Go Daddy -- but misses the lack of federal jurisdiction

By Paul Levy

by Paul Alan Levy

Eric Goldman carries a report today of a decision earlier this month by Judge David Campbell of the United States District Court for the District of Arizona.  George Bobolas, a Greek real estate and media magnate, brought suit in that court against several Doe defendants who manage an  allegedly defamatory blog about him (entirely in the Greek language).  Plaintiffs sued in Arizona because they wanted a preliminary injunction against Go Daddy, which hosts the blog, and they sued in federal court alleging diversity jurisdiction ?on information and belief.?   Judge Campbell denied injunctive relief against Go Daddy on the ground that a non-party cannot be enjoined absent proof that it is an agent or employee or is ?in active concert or participation? with the defendants.  He denied the requested preliminary injunction against the Does on the merits, because plaintiff insisted on arguing about the allegedly defamatory statements together rather than individually, because many of the statements claimed to be ?false? were actually, according to the translations provided, non-actionable opinion, and because there was no proof of fault, whether negligence or actual malice.   The court recognized that plaintiffs? failure to make such proof is understandable, because the identity of the anonymous bloggers is unknown, but, as he noted, the fact that the absence of proof is  understandable is no substitute for the proof needed to sustain emergency relief against otherwise-protected speech.  Indeed, Judge Campbell ruled that the requested preliminary injunction would be an impermissible prior restraint.

Professor Goldman?s analysis, and the court?s discussion of the merits, largely seem right to me, but there is a more fundamental flaw in the decision that Professor Goldman does not mention ? the absence of subject matter jurisdiction.  I discuss it here because it is disappointing how often federal judges get this issue wrong when they are faced with ex parte requests for injunctive relief about alleged online torts.

Judge Campbell addressed diversity jurisdiction sua sponte, noting that some of the anonymous bloggers appear to be citizens of Greece or of other foreign states.  He noted, quite properly, that a diversity action cannot be maintained unless diversity is complete, and if at least one defendant is a citizen of a foreign state, there is not complete diversity with plaintiff Bobolas.  However, plaintiff tried to avoid this problem by arguing that at least some of the Does appear to be citizens of the United States, and that the complaint is intended to state a claim only against those Does who are citizens of the United States.  The judge accepted this approach, stating that, for the purpose of his opinion, he would just assume that all of the defendants were citizens of the United States.

It was just such sloppiness about diversity jurisdiction that enabled Rocky Mountain Bank to obtain a TRO against Google, shuttering the email account of one of its users because Rocky Mountain had erroneously sent confidential files to that user, and that enabled Bank Julius Baer to obtain a TRO purporting to shut down Wikileaks based on that Bank?s claim that it had published some of its confidential documents.

What judges need to remember when they receive ex parte requests for emergency injunctions like this is that the citizenship of the allegedly diverse parties must be affirmatively shown on the face of the complaint, and cannot be ?presumed.?  Precisely because the identity of anonymous defendants is not known, Doe defendants cannot be sued in diversity (a point discussed in our opposition to injunctive relief in the Wikileaks case, and in briefs seeking to unseal Google?s compliance report in the Rocky Mountain case.

Here, plaintiff plainly prefers to be in federal court because such a court can wield greater power over the anonymous bloggers than the Arizona state courts could ? just as Rocky Mountain and Bank Julius Baer preferred to be in the District of Northern California instead of the California state courts.  But plaintiffs make clear in their papers that they really have no way of knowing who the Doe bloggers are and it is therefore apparent that they have no way of knowing which defendants are citizens of states in the United States.  Indeed, there is really no basis for assuming that the dispute about the blog is between anybody except Greek citizens.  In all likelihood, plaintiffs should be filing suit in Greece and not in the United States at all. 

A plaintiff cannot file in federal court and eventually use discovery to figure out whether it has a basis for invoking the powers of the federal courts.  Although Judge Campbell has written an interesting opinion in light of his assumptions about the possible existence of diversity jurisdiction, it is too bad that he did not recognize this fundamental defect in his jurisdiction.
   
There is one other interesting aspect of this decision.  The order discusses the affidavits on which the motion for a preliminary injunction was based at some length, but the affidavits themselves were filed under seal.  The order denying the preliminary injunction grants the motion for leave to file under seal without any explanation whatsoever about why the common law rule favoring the right of public access to judicial documents was overcome and why even redacted papers could not be filed. 

Plaintiff?s argument was that filing the documents openly would provide further publication of allegedly defamatory statements.  But that argument seems silly ? the statements are currently online, and according to the complaint the site itself has been discussed in a ?major? Greek newspaper which gave the URL.  Although the site is in Greek, presumably it is Greek citizens who care the most about whether Bobolas is a bad guy.  Moreover, this argument gives no deference to our interest as Americans in knowing how our federal courts are being used ? or abused. 

I have asked Bobolas? counsel to explain the need for absolute secrecy, but so far they have declined to do so.  I plan to send them a link to this post and invite them to respond.

Full post as published by CL&P Blog on October 12, 2010 (boomark / email).