Yahoo Can't Win For Losing

If hard cases make bad law, perhaps it follows that unusual cases produce bizarre results.

Proof of that can be seen in a recent ruling of an 11-judge en banc panel of the 9th U.S. Circuit Court of Appeals involving Yahoo's battle against French groups that oppose the sale of Nazi memorabilia.

Statistics show that the party that lost in the trial court faces an uphill battle on appeal, because most appeals result in affirmance of the judgment or order under review (see, www.uscourts.gov/caseload2005/tables/B05mar05.pdf).

And you might think that the likelihood of affirmance would become a certainty once each argument for overturning the trial court's decision is rejected. But, as the 9th Circuit's en banc ruling earlier this month in Yahoo! Inc. v. La Ligue Contre Le Racisme et L'Antisemitisme demonstrates, you'd be wrong. (The decision is available online

at http://caselaw.lp.findlaw.com/data2/circs/9th/0117424p.pdf.)

SOME BACKGROUND

The Yahoo! case arose after anti-racism groups sued the technology company in France, alleging it was violating French law by allowing access to Internet sites that offer Nazi memorabilia for sale and that deny the existence of the Holocaust. A French court agreed and issued an order imposing daily fines against Yahoo.

Dissatisfied with that result, Sunnyvale, CA-based Yahoo decided to seize the initiative by filing a declaratory judgment action in U.S. District Court in San Francisco in the hope of obtaining a ruling that the French court's order could not be enforced against Yahoo in the United States. In its lawsuit, Yahoo maintained that allowing enforcement of the foreign court's order in the United States would violate the First Amendment. U.S. District Judge Jeremy Fogel of the Northern District of California agreed with Yahoo and entered a declaratory judgment in the company's favor.

The French anti'racism groups were dissatisfied with Fogel's ruling and, as a result, appealed to the 9^th Circuit. Eventually, the matter came up for decision before an 11-judge en banc panel of that court.

The anti-racism groups advanced two arguments on appeal. First, they argued that the California-based U.S. District Court lacked personal jurisdiction over them and, therefore, the declaratory judgment had to be set aside. And second, they argued that Yahoo's lawsuit wasn't ripe, meaning that it was filed too early, before Yahoo faced any realistic prospect of harm.

On the first issue, involving personal jurisdiction, the en banc panel voted 8-3 in Yahoo's favor, holding that the California-based federal district court properly exercised judicial power over the French anti-racism groups that had sued Yahoo in France. And, on the issue of ripeness, the panel voted 5-3 (with three judges expressing no opinion on the point) to conclude that the declaratory judgment action was ripe, not premature.

On each of the two issues raised on appeal to challenge the declaratory judgment in Yahoo's favor, more 9^th Circuit judges voted in favor of Yahoo than voted in favor of the French anti-racism groups. Thus, one could reasonably conclude that Yahoo won the appeal. But, on the contrary, Yahoo lost.

What happened? The three 9^th Circuit judges who dissented from the en banc court's personal jurisdiction holding combined with the three other judges who thought personal jurisdiction existed but that Yahoo's lawsuit was unripe to produce a 6-5 majority in favor of overturning the declaratory judgment in Yahoo's favor. Thus, although Yahoo seemingly won on both of the issues raised on appeal, it nevertheless lost the appeal.

UNORTHODOX, BUT IT COUNTS

It's tempting, but incorrect, to blame this result on the wacky 9^th Circuit or the unique method of deciding cases en banc, using a subset of the full court, that the 9^th Circuit employs. Rather, the result in the Yahoo! case ' where the party in whose favor the issues on appeal were resolved nevertheless lost the appeal ' could have happened in any appellate court.

Nevertheless, the method of reaching the outcome of the Yahoo! case is certainly out of the ordinary. And the outer limits of a doctrine that permits judges in the minority, who are dissenting from the resolution of the issues raised on appeal, to cobble together their own controlling majority to determine the result remains to be determined.

For example, assume an appeal from a criminal conviction is pending before an 11-judge 9th Circuit en banc panel. By a vote of 8-3, the panel rejects the defendant's argument that the judicial district where the prosecution occurred was an improper venue. And, by a vote of 8-3, the panel rejects the defendant's argument that the evidence failed to establish guilt beyond a reasonable doubt. Assume further that the dissenters on the first issue were in the majority on the second issue.

Should the prosecution prevail in this appeal, because both of the defendant's challenges to his conviction were rejected by 8-3 votes? Or, should the six dissenting judges combine (either of necessity or at their discretion) to cause the overturning of the defendant's criminal conviction, even though a majority of the en banc court rejected each of the defendant's challenges?

Equally as puzzling is the precedential effect of an appellate court's ruling of this sort, where the ultimate result contradicts what a majority of the court has agreed to in the opinion accompanying the decision. A common understanding of what distinguishes a court's holding from dicta is that a holding consists of the legal reasoning that controls the outcome of the case. Yet in the Yahoo! case, it was not the judges in the 8-3 majority ' which held that personal jurisdiction could properly be exercised over the French anti-racism groups ' who controlled the outcome of the case; rather, it was the three dissenters on that point, combined with the three dissenters on the ripeness issue, who caused the 9th Circuit's judgment to be in favor of the French defendants.

As the statistics referenced earlier reveal, it may be easier to achieve an affirmance on appeal than to achieve a reversal. But, as the Yahoo! case demonstrates, achieving an affirmance is sometimes more difficult than emerging victorious on each ground for reversal that has been urged on appeal.

If hard cases make bad law, perhaps it follows that unusual cases produce bizarre results.

Proof of that can be seen in a recent ruling of an 11-judge en banc panel of the 9th U.S. Circuit Court of Appeals involving Yahoo's battle against French groups that oppose the sale of Nazi memorabilia.

Statistics show that the party that lost in the trial court faces an uphill battle on appeal, because most appeals result in affirmance of the judgment or order under review (see, www.uscourts.gov/caseload2005/tables/B05mar05.pdf).

And you might think that the likelihood of affirmance would become a certainty once each argument for overturning the trial court's decision is rejected. But, as the 9th Circuit's en banc ruling earlier this month in Yahoo! Inc. v. La Ligue Contre Le Racisme et L'Antisemitisme demonstrates, you'd be wrong. (The decision is available online

at http://caselaw.lp.findlaw.com/data2/circs/9th/0117424p.pdf.)

SOME BACKGROUND

The Yahoo! case arose after anti-racism groups sued the technology company in France, alleging it was violating French law by allowing access to Internet sites that offer Nazi memorabilia for sale and that deny the existence of the Holocaust. A French court agreed and issued an order imposing daily fines against Yahoo.

Dissatisfied with that result, Sunnyvale, CA-based Yahoo decided to seize the initiative by filing a declaratory judgment action in U.S. District Court in San Francisco in the hope of obtaining a ruling that the French court's order could not be enforced against Yahoo in the United States. In its lawsuit, Yahoo maintained that allowing enforcement of the foreign court's order in the United States would violate the First Amendment. U.S. District Judge Jeremy Fogel of the Northern District of California agreed with Yahoo and entered a declaratory judgment in the company's favor.

The French anti'racism groups were dissatisfied with Fogel's ruling and, as a result, appealed to the 9^th Circuit. Eventually, the matter came up for decision before an 11-judge en banc panel of that court.

The anti-racism groups advanced two arguments on appeal. First, they argued that the California-based U.S. District Court lacked personal jurisdiction over them and, therefore, the declaratory judgment had to be set aside. And second, they argued that Yahoo's lawsuit wasn't ripe, meaning that it was filed too early, before Yahoo faced any realistic prospect of harm.

On the first issue, involving personal jurisdiction, the en banc panel voted 8-3 in Yahoo's favor, holding that the California-based federal district court properly exercised judicial power over the French anti-racism groups that had sued Yahoo in France. And, on the issue of ripeness, the panel voted 5-3 (with three judges expressing no opinion on the point) to conclude that the declaratory judgment action was ripe, not premature.

On each of the two issues raised on appeal to challenge the declaratory judgment in Yahoo's favor, more 9^th Circuit judges voted in favor of Yahoo than voted in favor of the French anti-racism groups. Thus, one could reasonably conclude that Yahoo won the appeal. But, on the contrary, Yahoo lost.

What happened? The three 9^th Circuit judges who dissented from the en banc court's personal jurisdiction holding combined with the three other judges who thought personal jurisdiction existed but that Yahoo's lawsuit was unripe to produce a 6-5 majority in favor of overturning the declaratory judgment in Yahoo's favor. Thus, although Yahoo seemingly won on both of the issues raised on appeal, it nevertheless lost the appeal.

UNORTHODOX, BUT IT COUNTS

It's tempting, but incorrect, to blame this result on the wacky 9^th Circuit or the unique method of deciding cases en banc, using a subset of the full court, that the 9^th Circuit employs. Rather, the result in the Yahoo! case ' where the party in whose favor the issues on appeal were resolved nevertheless lost the appeal ' could have happened in any appellate court.

Nevertheless, the method of reaching the outcome of the Yahoo! case is certainly out of the ordinary. And the outer limits of a doctrine that permits judges in the minority, who are dissenting from the resolution of the issues raised on appeal, to cobble together their own controlling majority to determine the result remains to be determined.

For example, assume an appeal from a criminal conviction is pending before an 11-judge 9th Circuit en banc panel. By a vote of 8-3, the panel rejects the defendant's argument that the judicial district where the prosecution occurred was an improper venue. And, by a vote of 8-3, the panel rejects the defendant's argument that the evidence failed to establish guilt beyond a reasonable doubt. Assume further that the dissenters on the first issue were in the majority on the second issue.

Should the prosecution prevail in this appeal, because both of the defendant's challenges to his conviction were rejected by 8-3 votes? Or, should the six dissenting judges combine (either of necessity or at their discretion) to cause the overturning of the defendant's criminal conviction, even though a majority of the en banc court rejected each of the defendant's challenges?

Equally as puzzling is the precedential effect of an appellate court's ruling of this sort, where the ultimate result contradicts what a majority of the court has agreed to in the opinion accompanying the decision. A common understanding of what distinguishes a court's holding from dicta is that a holding consists of the legal reasoning that controls the outcome of the case. Yet in the Yahoo! case, it was not the judges in the 8-3 majority ' which held that personal jurisdiction could properly be exercised over the French anti-racism groups ' who controlled the outcome of the case; rather, it was the three dissenters on that point, combined with the three dissenters on the ripeness issue, who caused the 9th Circuit's judgment to be in favor of the French defendants.

As the statistics referenced earlier reveal, it may be easier to achieve an affirmance on appeal than to achieve a reversal. But, as the Yahoo! case demonstrates, achieving an affirmance is sometimes more difficult than emerging victorious on each ground for reversal that has been urged on appeal.