Jan. 22, 2016 – An Australian newspaper in 2010 published an allegedly untrue statement about a man who now lives in Shorewood, Wisconsin. It said he faced prosecution in the U.S. “for allegedly producing a revolver at his daughter’s wedding.”

He sued for defamation. The circuit court dismissed the case. In Salfinger v. Fairfax Media Limited, 2015AP150 (Jan. 20, 2016), a three-judge Appeals Court panel affirmed, concluding the newspaper did not have minimum contacts with Wisconsin.

Lawyers, Guns, Money

In 2010, the Sydney Morning Herald published an article titled, “Lawyers, guns, money: The Sting in Yellow Tail.” It was about the family behind an Australian wine label, Yellow Tail, and the family’s relationship with Rodney Salfinger, who was born in Australia but moved to Wisconsin at some point. Some comments placed him in a negative light.

But Salfinger said the one statement about him facing prosecution for producing a gun at his daughter’s wedding was factually false. He filed his defamation lawsuit against Australian-based Fairfax Media Limited, which owns the newspaper. He filed the suit in Milwaukee, which meant the newspaper would have to defend the lawsuit in Milwaukee.

Salfinger claimed the article – accessed via Internet by more than 800,000 people located in Wisconsin over three years – hurt his business, potential business, and his relationships with people. He also said the fallout caused him to suffer depression.

About two years after publication, Salfinger took an ownership interest in Threshold Aeronautics LLC, registered in Wisconsin. Salfinger claimed that investors were unwilling to invest in that Wisconsin business after reading the Herald’s article.

Fairfax Media said the court lacked personal jurisdiction and the court agreed that the newspaper’s contacts with Wisconsin were “too insubstantial” to trigger jurisdiction. Salfinger appeals.

Jurisdiction

As the appeals court explained, state courts must have general or specific jurisdiction over nonresident defendants. Specific jurisdiction requires the claim to be “substantially connected to or arise out of the defendant’s contacts with Wisconsin.”

Salfinger argued the court had specific jurisdiction because people in Wisconsin accessed the article, and his defamation claim arises from the article.

Fairfax Media conceded on appeal that Wis. Stat. section 801.05, Wisconsin’s long-arm statute, authorized the circuit court to exercise personal jurisdiction.

One provision of that statute says Wisconsin courts have personal jurisdiction if claims arise from products, materials, or other things “processed, serviced, or manufactured” by the defendant and are consumed in Wisconsin in the ordinary course of trade.

Salfinger said the newspaper “processed” the article and it was read (consumed) by people in Wisconsin. The appeals court noted that the term “process” was broad enough to include the processing of news and ads for online consumption.

“Attempting to limit the meaning of a broad term such as ‘process’ is contrary to the well-established principle that our long-arm statute is to be liberally construed in favor of exercising personal jurisdiction,” wrote Judge Patricia Curley. 

However, the appeals panel noted that an exercise of personal jurisdiction must also comport with the due process requirements under the Fourteenth Amendment to the U.S. Constitution, as interpreted in decisions of the U.S. Supreme Court.

Minimum Contacts

Under the Due Process Clause, courts first ask whether a defendant “purposefully established minimum contacts in the forum State.” If so, the court then determines whether exercising jurisdiction “would comport with fair play and substantial justice.”

Salfinger argued that Fairfax purposefully established minimum contacts in Wisconsin because 11 Wisconsin residents had subscriptions to the Herald, the Herald received online advertising revenue from Wisconsin businesses, and its subsidiary published a magazine specifically targeted to Wisconsin readers (with two Wisconsin employees).

The panel ruled that a nonparty subsidiary’s publication of the magazine, The Wisconsin Agriculturist, does not mean Fairfax had sufficient minimum contacts with the state.

“Salfinger likewise fails to cite to any legal authority to support the position that sufficient minimum contacts can be established through a subsidiary,” Judge Curley wrote.

The panel also rejected Salfinger’s claim that the Sydney Morning Herald does enough business in Wisconsin to satisfy the minimum contact requirement.

It noted that the article was published two years before the Herald offered subscriptions in Wisconsin. And the panel rejected Salfinger’s claim that minimum contacts can be established by placing an article in worldwide circulation for a worldwide audience.

“To the contrary, merely placing an article online on an Australian newspaper’s website, particularly where the article does not even mention Wisconsin, fails to evince any connection with or conduct in Wisconsin,” Judge Curley wrote.

“We are not convinced that the fact that Wisconsin users have accessed the Sydney Morning Herald website connects the Fairfax parties to Wisconsin in any meaningful way,” citing a U.S. Supreme Court decision that says contacts should be “meaningful.”

Ads Based on Geographic Location

Finally, the panel ruled that the Sydney Morning Herald did not have minimum contacts with Wisconsin, even though it uses an advertising system to populate local business advertisements within articles based on the reader’s geographic location.

“[I]t appears that numerous parties – the user, businesses that purchase advertisement space, third parties such as Google and Adobe, and the Fairfax parties – ultimately play a role in which advertisements appear to a user accessing the Sydney Morning Herald website,” Judge Curley wrote.

“[T]he record does not establish that the Fairfax parties proactively take any affirmative or purposeful step in directly targeting Wisconsin internet users or in independently placing Wisconsin-based advertisements on the Sydney Morning Herald website.”

Because the panel ruled that Fairfax did not have minimum contacts with Wisconsin, it was unnecessary to determine whether it would be fair to exercise jurisdiction.