Judge Refuses to Block Harrods Libel Suit in Britain

Mark Hamblett
New York Law Journal
10-21-2002

The Wall Street Journal's bid to have a federal judge in New York block a purportedly frivolous libel suit in England has been denied.

In a case that started out as an April Fool's joke, Judge Victor Marrero of the Southern District of New York declined to apply the Declaratory Judgment Act and issue a ruling preventing Harrods department store from suing the newspaper.

"To the question 'What is in a joke?' this lawsuit gives a decidedly wooden answer: a federal case," Judge Marrero said in Dow Jones & Co. Inc v. Harrods Ltd., 02 Civ. 3979.

The dispute began on March 31, 2002, when a mock press release announcing Mohammed Al Fayed's intention to offer shares in a floating version of Harrods moored in the Thames River was misinterpreted by The Wall Street Journal as an announcement to "float shares." The newspaper ran an item on the supposed offering on April 1.

After realizing the hoax, the newspaper published a correction the following day. But three days later, on April 5, it printed an item about the April Fool's joke, in which it conceded being taken in by the prank. And although the newspaper intended the piece to be tongue in cheek, Al Fayed and Harrods were not pleased by "The Enron of Britain?" headline.

Lawyers for Harrods said the article caused serious damage to the company's reputation, and demanded a correction and an apology as well as the payment of "substantial damages."

When the Harrods lawyers asked for disclosure of Wall Street Journal circulation figures and the number of hits on the newspaper's Web site for Great Britain, Dow Jones & Co. Inc., the paper's parent company, filed suit in the Southern District of New York on May 24 seeking to block a London action that Harrods ultimately filed five days later.

Judge Marrero said that Dow Jones was eager to avoid a trial in Britain because libel laws there are far more friendly to plaintiffs.

He said the Declaratory Judgment Act, 28 U.S.C. § 2201(a), "was designed as a means to facilitate early and effective adjudication of disputes at a time when a controversy, though actual, may still be incipient, but before it expands into a larger conflict."

But Marrero said the case fell short of being an "actual controversy," because Dow Jones had offered only an "abstract tower of hypotheticals stacked like a house of cards on suppositions piled on top of speculations."

The judge said that if he were to grant the relief sought by Dow Jones, "the conflict may be fully resolved," but only if the courts in the United Kingdom and elsewhere recognized and enforced the New York court's judgment.

Dow Jones had argued that a declaratory judgment was appropriate because it would be freed from "vexatious and oppressive" litigation abroad. The company said that its assets in the United Kingdom were minimal, that no court in the United States would find for Harrods under the law of defamation in this country, and that the expense of defending the action would be significant.

Essentially, Marrero said the company was seeking to apply the act "as a defensive shield, a preemptive means to immunize a litigant" from the costs of litigation.

But Marrero said there was nothing in the statute or the pertinent case law that supports using the act to serve "such a sanctuarial purpose." The judge said it made no difference that the "asserted harmful conduct relates to an exercise of First Amendment rights."

SETTLED DOCTRINE

Moreover, the judge said, it is settled doctrine that the "authority of federal courts to enjoin foreign lawsuits" involving litigants within their jurisdiction "should be used sparingly and granted only with care and restraint."

And even though Dow Jones considered the April 5 article as a "jocular response to Harrods' April Fool's prank," and the judge doubted whether there was any real injury caused by the Enron remark, he said it could not be "summarily declared" that the Harrods action must be dismissed as a matter of law "as frivolous and motivated by bad faith."

Jack M. Weiss of Los Angeles-based Gibson Dunn & Crutcher represented Dow Jones. Zachary Carter of Minneapolis-based Dorsey & Whitney represented Harrods.
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