CHURCH OF SCIENTOLOGY OF CALIFORNIA, a Nonprofit California Corporation,
Plaintiff-Appellant,
v.
James E. ADAMS, Elaine Viets, Pulitzer Publishing Co., Inc., et al.,
Defendants-Appellees.
No. 75-1954.
United States Court of Appeals,
Ninth Circuit.
Oct. 23, 1978.
California church brought libel action against Missouri publisher of newspaper
and authors of allegedly libelous newspaper articles appearing in Missouri
newspaper. The United States District Court for the Central District of
California, Francis C. Whelan, J., dismissed the action, and appeal was taken.
The Court of Appeals, Kennedy, Circuit Judge, held that: (1) Missouri
publisher's revenues from California advertisers did not constitute sufficient
basis for establishing personal jurisdiction over publisher, and (2) where
California events were not topic of allegedly libelous newspaper articles,
California readers were not principal or secondary target of articles, articles
were not written or researched in California, articles mentioned California
resident only by reference and California church was not mentioned in articles,
Missouri publisher could not be held to have reasonably foreseen that
any substantial risk of defamation would arise from circulation of articles in
California so that its distribution in California of approximately 150 copies
of allegedly libelous articles was insufficient contact with California to
support personal jurisdiction over publisher.
Affirmed.
[1] FEDERAL COURTS
In ruling on motion to dismiss for lack of personal jurisdiction libel action
brought by California church against Missouri newspaper and Missouri residents,
district court properly applied California law.
[2] FEDERAL COURTS
California law permits state courts to exercise personal jurisdiction over
nonresident defendants to the full extent permitted by the Constitution.
West's Ann. Cal.Code Civ.Proc. s 410.10.
[3] FEDERAL COURTS
If defendant is not present for all purposes in the forum, due process requires
that jurisdiction be based on contacts which have some nexus to cause of action
alleged.
[4] FEDERAL COURTS
Missouri publisher's revenues from California advertisers did not constitute
sufficient basis for maintaining personal jurisdiction in California over
publisher sued by California church for libel where advertising revenues were
unrelated to libel action based on articles appearing in Missouri newspaper and
publisher earned that revenue by giving California advertisers opportunity to
reach persons outside California.
[5] FEDERAL COURTS
Where Missouri publisher of allegedly libelous newspaper articles in Missouri
newspaper owned only 17 percent of California advertising corporation and no
parent-subsidiary relationship existed between Missouri publisher and
California corporation, Missouri publisher's relationship to California
corporation was insufficient to give California district court personal
jurisdiction over Missouri publisher in libel action.
[6] FEDERAL COURTS
It is the quality and nature of defendant's activity in relation to cause of
action alleged which determines whether exercise of personal jurisdiction
comports with fair play and substantial justice.
[7] FEDERAL COURTS
Where there have been commercial dealings between the parties, personal
jurisdiction in large part depends upon whether consensual activity potentially
touched forum state in that such indicates whether or not there is some act by
which defendant purposefully availed itself of privilege of conducting
activities within forum.
[8] FEDERAL COURTS
In determining whether exercise of personal jurisdiction in a tort action
comports with fair play and substantial justice, inquiry extends beyond whether
there has been submission to sovereignty of forum by some consensual act but
requires examination of expected consequences of defendant's conduct.
[9] FEDERAL COURTS
Determination whether exercise of personal jurisdiction in products liability
case comports with fair play and substantial justice resolves into inquiry as
to whether defendant could reasonably foresee that his product, when injected
into stream of commerce, would come to rest in the forum.
[10] FEDERAL COURTS
Physical presence of product within forum state is critical factor in
conferring personal jurisdiction in products liability case.
[11] FEDERAL COURTS
In a libel case, likelihood that offending publication will enter forum is not
fair measure of reasonableness on exercising personal jurisdiction over
nonresident publisher.
[12] FEDERAL COURTS
In a defamation case, appropriate jurisdictional analysis is to determine
whether it was foreseeable that risk of injury by defamation would arise in the
forum state.
[13] FEDERAL COURTS
Where California events were not topic of allegedly libelous articles appearing
in Missouri newspaper, California readers were not principal or secondary
target of articles, articles were not written or researched in California,
articles mentioned California resident only by reference and California church
which brought libel action was not mentioned in articles, Missouri publisher
could not be held to have reasonably foreseen that any substantial risk of
defamation would arise from circulation of articles in California so that its
distribution in California of approximately 150 copies of allegedly libelous
articles was insufficient contact with California to support personal
jurisdiction over publisher.
[14] CONSTITUTIONAL LAW
First Amendment protections are better developed in the context of substantive
defenses on the merits rather than at initial jurisdiction stage of defamation
proceeding. U.S.C.A.Const. Amend. 1.
*895 Richard M. Coleman (argued), Los Angeles, Cal., for plaintiff.
Theodore B. Olson (argued), Gibson, Dunn & Cruther, Los Angeles, Cal., for
defendants.
Appeal from the United States District Court for the Central District of
California.
Before CHOY and KENNEDY, Circuit Judges, and PALMIERI,[FN*] District Judge.
FN* Honorable Edmund L. Palmieri, Senior United States District Judge for
the Southern District of New York, sitting by designation.
KENNEDY, Circuit Judge:
The Church of Scientology of California (California Church), a California
corporation, appeals from a judgment dismissing its action for libel. The suit
is against the Pulitzer Publishing Co., publisher of the St. Louis Post-
Dispatch newspaper, and James E. Adams and Elaine Viets, principal authors of
the newspaper articles in question.[FN1] The district court dismissed the
action against appellees for lack of personal jurisdiction and ruled,
alternatively, that the complaint fails to state a claim upon which relief may
be granted. We hold that the trial court was correct in concluding that it did
not have jurisdiction over the appellees, and it is not necessary for us to
address the district court's alternative ruling.
FN1. Eric, Nancy, and John McLean were also named as defendants, but the
action against them was dismissed for lack of prosecution by order of the
district court on March 25, 1975, and appellant does not contest that
ruling.
The Post-Dispatch published a series of five articles about Scientology on
March 3 through 7, 1974. The articles discussed Scientology generally and made
particular reference to the Church of Scientology of Missouri. In preparing
the articles, Adams and Viets interviewed local leaders of the Missouri Church
of Scientology and former members of that Scientology branch as well as former
staff members of the Toronto Scientology office. The articles were written in
St. Louis and at no time did the reporters enter California for research or any
other purpose. At the suggestion of a staff member of the Missouri Church, the
reporters did interview Emily Watson, who was connected with a national
Scientology office located in California, while she was visiting in St. Louis.
No reference to the California Church or any of its individual members was made
in the articles.
Two months after the articles were published, the California Church filed this
action in a California superior court. Notwithstanding the lack of any
reference to the California Church in the articles, the complaint attempted to
establish that they pertained to the appellant. We summarize the complaint's
allegations of libel, which were specific and lengthy, as follows:
(1) that Scientology is not a religion but rather a commercial enterprise and
that appellant is a commercial business;
(2) that appellant exploits individuals for money and confers no benefits of
a spiritual, religious, or other nature on its members;
*896 (3) that appellant is operated solely for the personal and financial
aggrandizement of L. Ron Hubbard, the founder of Scientology, at the financial
and emotional expense of its members;
(4) that appellant is operated by "a group of paramilitaristic fanatics who
motivate and control members by instilling a fear of reprisal, and who drive
members insane and harass members" who leave the organization (quoting from
complaint).
Further, it was alleged that appellant was defamed by reason of untruthful and
highly derogatory remarks about Scientology's founder, L. Ron Hubbard.
The appellees filed a motion to dismiss for lack of personal jurisdiction, and
the motion was heard in the federal district court to which the action had been
removed. In contesting the motion, the California Church did not dispute the
facts adduced by appellees as to their respective contacts with the State of
California. It is thus agreed that Pulitzer makes no attempt to market the
Post-Dispatch in California. Circulation in California to mail subscribers and
to a few independent news dealers amounts to 0.04% Of the newspaper's total
circulation. Approximately 156 copies of one of the allegedly libelous
publications and 121 copies of each of the other articles reached California in
this manner. The Post-Dispatch does not direct any advertising whatsoever to
California readers, but California companies do advertise in the paper to reach
markets in Missouri and elsewhere. It is agreed that 2.91% Of the newspaper's
general advertising revenue is from this source. In addition, Pulitzer owns
approximately 17% Of Million Market Newspapers, Inc., an advertising firm
licensed to do business in California, which solicits advertising for Pulitzer
and other newspaper publishers by providing potential advertisers with
information about the newspapers and their market areas. Finally, the
reporters are residents of St. Louis County, Missouri, and neither has been in
the State of California during the last fifteen years.
[1][2] In ruling on appellees' motion to dismiss for lack of personal
jurisdiction, it was correct for the district court to apply California law.
California law permits state courts to exercise personal jurisdiction over
nonresident defendants to the full extent permitted by the Constitution.
A court of this state may exercise jurisdiction on any basis not inconsistent
with the Constitution of this state or of the United States.
Cal.Civ.Proc.Code s 410.10 (West 1973). The California courts have ruled
that this statute permits state courts to exercise the broadest possible
jurisdiction, limited only by constitutional considerations. Sibley v.
Superior Court of Los Angeles County, 16 Cal.3d 442, 128 Cal.Rptr. 34, 546 P.2d
322 (1976), Cert. denied, 429 U.S. 826, 97 S.Ct. 82, 50 L.Ed.2d 89 (1978).
"Thus, the usual two-step analysis (in inquiries respecting personal
jurisdiction) collapses into a single search for the outer limits of what due
process permits." Forsythe v. Overmyer, 576 F.2d 779, 782 (9th Cir. 1978).
[3] The California Church concedes that Pulitzer and the individual
appellees do not have such substantial contacts with the forum that they are
present there for purposes of defending against all types of actions. See
Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96
L.Ed. 485 (1952). If a defendant is not present for all purposes in the forum,
due process requires that jurisdiction be based on contacts which have some
nexus to the cause of action alleged. Forsythe, 576 F.2d at 782. The
Supreme Court has described "the relationship among the defendant, the forum,
and the litigation" as "the central concern of the inquiry into personal
jurisdiction." Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2580,
53 L.Ed.2d 683 (1977).
[4] We dispose at the outset of the claim that Pulitzer's revenues from
California advertisers are a sufficient basis for jurisdiction in this case.
The advertising revenues are unrelated to appellant's action for libel.
Pulitzer earned that revenue by giving California *897 advertisers an
opportunity to reach persons outside of California. Those contacts with
California companies are not evidence of an intent to publish in California or
of an effort to reach readers there.
[5] Pulitzer's relationship to Million Market Newspapers, Inc. is also an
insubstantial basis for jurisdiction. Pulitzer owns only seventeen percent of
the stock in the California company and no parent-subsidiary relationship
exists. Even in cases where the contacts of a parent or subsidiary corporation
are sufficient to subject it to personal jurisdiction, we recognize that the
activities of one related corporation are irrelevant to the issue of
jurisdiction over the other, so long as a separation between the corporations
has been maintained. Uston v. Grand Resorts, Inc., 564 F.2d 1217, 1218 (9th
Cir. 1977). Nothing in the record indicates that the California advertising
corporation is not operated wholly independently of Pulitzer.
The sole contact between appellees and the forum which is relevant to our
jurisdictional inquiry is thus the distribution in the forum of approximately
150 copies of each allegedly libelous article.
[6][7][8] It is the "quality and nature of the defendant's activity,"
Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283
(1958), in relation to the cause of action alleged which determines whether or
not the exercise of personal jurisdiction comports with "fair play and
substantial justice," International Shoe Co. v. Washington, 326 U.S. 310,
320, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Where there have been commercial
dealings between the parties, jurisdiction in large part depends upon whether
consensual activity potentially touched the forum state, as this indicates
whether or not there is "some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the forum," Hanson,
357 U.S. at 253, 78 S.Ct. at 1240. See, e. g., Forsythe v. Overmyer, 576
F.2d 779 (9th Cir. 1978). In an action based on tort, however, the inquiry
necessarily extends beyond whether there has been submission to the sovereignty
of the forum by some consensual act, and it requires an examination of the
expected consequences of the defendant's conduct. In such cases we have held
that the demands of due process are satisfied when jurisdiction is asserted
over a defendant who "purposefully sets his product or his designs into the
stream of commerce, knowing or having reason to know that they will reach the
forum state and that they create a potential risk of injury." Jones
Enterprises, Inc. v. Atlas Service Corp., 442 F.2d 1136, 1140 (9th Cir. 1971);
Accord, Duple Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d 231, 235 (9th
Cir. 1969).
[9][10][11][12] In products liability cases, this determination resolves
into an inquiry as to whether the defendant could reasonably foresee that his
product, when injected into the stream of commerce, would come to rest in the
forum. See, e. g., Duple Motor Bodies, supra; Buckeye Boiler Co. v.
Superior Court of Los Angeles County, 71 Cal.2d 893, 80 Cal.Rptr. 113, 458 P.2d
57 (1969) (en banc); Gray v. American Radiator & Standard Sanitary Corp., 22
Ill.2d 432, 176 N.E.2d 761 (1961). It is assumed in such cases, indeed it is
so almost by definition, that the locus of the risk of injury is the situs of
the product. Physical presence of the product within the forum state is thus
the critical factor in conferring jurisdiction, and the due process inquiry
turns in large part on whether it was foreseeable that the defective product
would be introduced into the state. In a libel case, however, we do not think
the likelihood that an offending publication will enter a forum is a fair
measure of the reasonableness of the exercise of jurisdiction over a
publisher. The nature of the press is such that copies of most major
newspapers will be located throughout the world, and we do not think it
consistent with fairness to subject publishers to personal jurisdiction solely
because an insignificant number of copies of their newspapers were circulated
in the forum state. In a defamation case, therefore, the appropriate
jurisdictional analysis should be to determine whether or not it was
foreseeable that a risk of injury by *898 defamation would arise in the
forum state. Certain of our other tort cases which do not involve product
liability or conduct causing personal injury are consistent with this
approach. Taylor v. Portland Paramount Corp., 383 F.2d 634, 640-44 (9th
Cir. 1966); Amba Marketing Systems, Inc. v. Jobar International, Inc., 551
F.2d 784 (9th Cir. 1977).
[13] While it was reasonably foreseeable that the allegedly libelous
articles would find their way to California, we think it was not reasonably
foreseeable that any substantial risk of defamation would arise from their
circulation in that state, even assuming the articles to be untrue and
maliciously published. Although Pulitzer did mail the Post-Dispatch To regular
subscribers and delivered it to some independent distributors, based on its
knowledge that no more than 150 copies of the articles would find their way to
California it had little reason to expect a risk of injury from defamation in
that state. Under some circumstances a publisher could be held to a duty to
anticipate injury to reputation from distribution of a small number of copies.
For example, in Anselmi v. Denver Post, Inc., 552 F.2d 316 (10th Cir. 1977),
Cert. denied, 432 U.S. 911, 97 S.Ct. 2960, 53 L.Ed.2d 1084 (1977),
jurisdiction was predicated on distribution of an even smaller number of
newspapers in the State of Wyoming, but jurisdiction was conferred in part by
the fact that "when the story was written and published it was foreseeable that
it would be given substantial attention within the State of Wyoming since there
was more reader interest there than in any of the other states." Id. at
325. The action was brought by Wyoming residents who were specifically named
in the allegedly libelous article, entitled "U. S. Tries to Close Up 'Wide
Open' Wyoming," which carried a Wyoming dateline. Also of substantial
significance in the court's analysis was that the article had been written by
three reporters dispatched to Wyoming.
In the present appeal, California events were not the topic of the allegedly
actionable writings, nor were California readers a principal or secondary
target of the articles. No research was done in California and the articles
were not written in that state. The only mention of a California resident was
by way of reference to a person who spoke as a representative of the national
Scientology organization. The California Church is a separate corporation, and
it was not mentioned in any of the articles. The appellant is included in the
discussion only to the extent that one article makes reference to "about 300
branches" of the Scientology movement in the context of discussing the St.
Louis Scientology office, and to the extent that the articles concern
Scientology in general.
We think it is relevant to the jurisdictional ruling, and to the issue of
foreseeable risk of defamation injury, that were we to reach the merits of this
case a difficult question would arise as to whether the articles were
published "of and concerning" the California Church, as they must be before
this action for libel will lie.[FN2] While it is unnecessary to make a final
ruling on this *899 substantive issue, we think there is serious doubt that
the articles refer to the appellant. That doubt bears strongly upon the risk
of injury by defamation that could have been foreseen by the publisher. The
few copies of the articles circulated in California, when considered in
relation to the diffuse, nonspecific direction of the writings as to this
California plaintiff, suggest that the publisher's relationship to the
California forum with respect to this cause of action is too attenuated to
support an assertion of jurisdiction over the person.
FN2. In California, as in most other states, an allegedly libelous
statement is not actionable unless "published or spoken Concerning the
plaintiff." Cal.Civ.Proc.Code s 460 (West 1973) (emphasis supplied);
Harris v. Curtis Publishing Co., 49 Cal.App.2d 340, 121 P.2d 761 (1942);
See generally New York Times Co. v. Sullivan, 376 U.S. 254, 288, 84
S.Ct. 710, 11 L.Ed.2d 686 (1964). As a corollary of this requirement,
California courts have held that
general language against a class or group of people cannot constitute
libel. Where a group is very large and nothing that is said applies in
particular to the plaintiff he cannot recover.
Noral v. Hearst Publications, Inc., 40 Cal.App.2d 348, 351, 104 P.2d
860, 862 (1940). Although recovery may be allowed when suit is brought by
a member of a small group where the defamation applied to all members of a
group, See, e. g., Neiman-Marcus v. Lait, 107 F.Supp. 96 (S.D.N.Y.1952),
this court has stated that "libels against groups consisting of large
numbers of persons cannot satisfy the fundamental requirements of the law
of libel . . . ." Golden North Airways, Inc. v. Tanana Publishing Co.,
218 F.2d 612, 620 (9th Cir. 1954). Cf. Kentucky Fried Chicken of
Bowling Green, Inc. v. Sanders, 563 S.W.2d 8 (Ky.1978) (individual
franchisee may not bring action for defamation where Colonel Sanders
stated, Inter alia, That franchise gravy was "wallpaper paste.").
Under the circumstances, the impact in California of publication which
appellees could have foreseen was not such as to put them on notice of a risk
of injury. Sustaining personal jurisdiction on so tenuous a basis would be
inconsistent with the notions of fairness embodied in the concept of due
process.[FN3]
FN3. We are mindful that if jurisdiction properly may be exercised in
California based on the articles at issue here, appellees equally may be
called upon to defend against defamation charges in every state where a
Scientology branch is located. This court has recognized
that lawsuits can be brought on frivolous demands or groundless claims as
well as on legitimate ones, and that procedural rules must be designed and
appraised in the light of what is fair and just to both sides in the
dispute. Interpretations of basic rights which consider only those of a
claimant are not consonant with the fundamental requisites of due process.
Taylor v. Portland Paramount Corp., 383 F.2d 634, 643 (9th Cir. 1967),
Quoting with approval, Gray v. American Radiator & Standard Sanitary
Corp., 22 Ill.2d 432, 176 N.E.2d 761, 766 (1961). Although "(t)he
differences between individuals and corporations may . . . lead to the
conclusion that a given set of circumstances establishes state jurisdiction
over one type of defendant but not over the other," Shaffer v. Heitner,
433 U.S. 186, 204 n.19, 97 S.Ct. 2569, 2580, 53 L.Ed.2d 683 (1977), this
does not mean that inconvenience and potential for harassment should not be
important considerations even where a corporate defendant is concerned.
[14] Counsel for both parties gave considerable attention to the argument
that by reason of the first amendment a newspaper is entitled to increased
protection from imposition of personal jurisdiction. In New York Times Co.
v. Connor, 365 F.2d 567 (5th Cir. 1966), the Fifth Circuit held that in order
to accommodate first amendment concerns, more contacts than the requisite
minimum for other tort actions are required to sustain personal jurisdiction in
defamation actions against out-of-state publishers. See also Rebozo v.
Washington Post Co., 515 F.2d 1208 (5th Cir. 1975); Edwards v. Associated
Press, 512 F.2d 258 (5th Cir. 1975); Curtis Publishing Co. v. Golino, 383
F.2d 586 (5th Cir. 1967); Buckley v. New York Times Co., 338 F.2d 470 (5th
Cir. 1964). We do not find it necessary to reach this point in view of our
holding above, but we note that the proposition advanced by the appellees is
not a factor in our decision and that its soundness is open to question. The
Tenth Circuit has rejected the applicability of first amendment concerns to the
jurisdictional inquiry, Anselmi v. Denver Post, Inc., 552 F.2d 316, 324
(10th Cir.), Cert. denied, 432 U.S. 911, 97 S.Ct. 2960, 53 L.Ed.2d 1084
(1977), and the Fifth Circuit itself recently has referred to first amendment
considerations as "not so much a rule as . . . a cautionary note," in the
context of a jurisdictional analysis. Edwards v. Associated Press, 512 F.2d
at 266. See also Appleyard v. Transamerican Press, Inc., 539 F.2d 1026 (4th
Cir. 1976), Cert. denied, 429 U.S. 1041, 97 S.Ct. 740, 50 L.Ed.2d 753
(1977) (upholding the exercise of personal jurisdiction over an out-of-state
magazine publisher without mention of the first amendment). We observe that
first amendment protections are better developed in the context of substantive
defenses on the merits rather than at the initial jurisdictional stage of a
defamation proceeding. See Buckley v. New York Post Corp., 373 F.2d 175 (2d
Cir. 1967).
The order of the district court dismissing this action for lack of personal
jurisdiction is AFFIRMED.