The Dormant Commerce Clause, Publishers, the Internet, and Tort Law
[Jack Goldsmith and I will have an article out about the Dormant Commerce Clause, geolocation, and state regulations of Internet transactions in the Texas Law Review early next year, and I’m serializing it here. There is still plenty of time for editing, so we’d love to hear any recommendations you folks might have; in the meantime, you can read the entire PDF of the latest draft (though with some formatting glitches stemming from the editing process) here.]
Considering how various state laws treat nationwide publishers, especially internet publishers, helps show the problems with courts’ occasional condemnation of laws for which the “practical effect . . . is to control conduct beyond the boundaries of the State.”. This focus shows how the Dormant Commerce Clause has been applied to internet communications, introduces the importance of geographic filtering in this context, and thus sets up the analysis of the more recent social media platform issues addressed in Part V. To make things concrete, imagine a major online publisher—say, Fox News—and the state laws that it might be subject to and therefore must consider. We’ll focus on the publisher’s own materials, thus avoiding any possible problem under Section 230 of the Communications Decency Act.
For starters, like all publishers, Fox News must worry about libel law. Some basic principles of libel law are of course dictated uniformly by the First Amendment, but beyond that the rules vary. A few states, for instance—including New York, where Fox is headquartered—require a showing of “actual malice” for all statements of public concern, including statements about private figures. Most other states allow recovery of proven compensatory damages for libel based on a showing of mere negligence.
Presumably Fox would want to avoid even negligent mistakes, just as a matter of editorial policy. But even when editors believe that a statement is correct, and that they’ve reasonably investigated the facts, they may recognize that there’s a risk that a jury will see things differently. If so, they may publish if they know they’re protected by the “actual malice” standard, but refrain from publishing if they are subject to the negligence standard. Indeed, the purpose of the New York Times v. Sullivan “actual malice” standard, and of some states’ decisions to extend the standard to all public-concern speech, is to prevent this chilling effect.
Likewise, all states recognize a “fair and accurate report” privilege that allows news outlets to freely publish reports of government proceedings (such as trials), even if some of the allegations aired by parties or witnesses in those proceedings are false. But some states exclude reports of confidential or sealed proceedings; others don’t.
Similarly, some states recognize a “neutral reportage” privilege, under which (to oversimplify slightly) neutral reports of a controversy are immune from libel liability. Say that, for instance, City Councilman Glenn accuses fellow City Councilman Norton of sexual battery; the reporter thinks that Glenn’s accusation is nonsense, but wants to publish a story about it, since the accusation reflects badly on Glenn (the accuser) and can shed light on why there’s tension in the City Council. In some states, the reporter is free to publish a “neutral report” of the controversy. But other states (such as Pennsylvania) follow the usual “republication rule,” under which repeating Glenn’s accusation, even in the course of reporting on the dispute, could lead to defamation liability. There are many other important differences among state libel laws as well.
All those state libel rules have potential extraterritorial effect on Fox.
If, for instance, Fox is about to report on the Glenn–Norton feud, it can’t just confidently assume that a uniform federal law would apply, or that the law of its main place of business (New York) would apply. Rather, it would likely need to determine where the people it’s writing about are domiciled, since under most states’ choice of law principles, libel cases follow the law of the plaintiff’s domicile. And if, for instance, it learns that Norton is domiciled in Pennsylvania, and Pennsylvania doesn’t recognize a neutral reportage privilege, then Fox runs a risk of liability if it repeats Glenn’s accusations in the story (however newsworthy they might be), and might decide not to run it as a result. In that respect, Pennsylvania’s law is influencing what Fox in New York is allowed to say to people all over the country (indeed, all over the world).
To be sure, if Pennsylvania’s law is applied in a lawsuit in New York, because the New York court applies Pennsylvania law pursuant to New York choice-of-law rules, one might argue that Pennsylvania law isn’t really being applied extraterritorially, either (1) on the ground that New York law is being applied to Fox, but New York law imports Pennsylvania law libel rules for libel lawsuits brought by Pennsylvanians, or (2) on the ground that New York is choosing to make the Pennsylvania law govern in its courts. But even if one views this situation as non-extraterritorial, which is not obvious, there is no assurance that Norton will sue F
Article from Reason.com