Media Matters Acted Too Late in Moving in U.S. Court to Block X’s Irish Lawsuit

From Friday’s decision in Media Matters for America v. X Corp., decided by Ninth Circuit Judges Daniel Bress and Salvador Mendoza, and visiting Sixth Circuit Judge Danny Boggs:

Media Matters published an article claiming that X Corp.’s (“X”) content moderation policies permitted the placement of “pro-Nazi” content next to advertisements for major brands. In response, X and its foreign subsidiaries sued Media Matters in three jurisdictions, including Ireland. After litigating for over a year in Ireland, Media Matters brought suit in the Northern District of California, invoking a forum selection clause in X’s terms of service. The district court entered an anti-suit injunction that enjoined X from pursuing the Ireland litigation….

The parties dispute whether Media Matters has the right to enforce X’s terms of service against X’s foreign affiliates. But we conclude that even if Media Matters had such a right, it waived the right to exercise the forum selection clause in X’s terms by actively litigating the Ireland case for over a year without raising the forum selection clause in either Ireland or the Northern District of California.

Waiver can be based on a party’s litigation conduct. In this case, Media Matters had knowledge of X’s terms of service from the beginning of the Ireland litigation (and cited them in its briefs for other jurisdictional defenses before the Irish court), so it had all the information it needed to defend its rights. Yet instead of invoking the forum selection clause, Media Matters litigated in Ireland for over a year before it raised the issue for the first time in this action. Whether Media Matters failed to raise the forum selection clause earlier due to gamesmanship or the potential negligence of its prior counsel is not dispositive, as the parties agreed at oral argument.

X has also demonstrated prejudice resulting from Media Matters’ litigation conduct. In the Ireland litigation, the parties submitted hundreds of pages of affidavits and other evidence that would have otherwise been unnecessary in the context of the underlying dispute. Media Matters’ excessive delay in raising the forum selection clause, coupled with the litigation already conducted in Ireland, prejudiced X. This conclusion is, if anything, even stronger in the context of an anti-suit injunction, which turns on principles of equity.

Media Matters argues that it has consistently contested jurisdiction in Ireland. But that is not determinative. The right that Media Matters seeks to enforce through the forum-selection clause is the contractual right to litigate the case before a different tribunal in San Francisco—not the right to terminate the Irish litigation on jurisdictional grounds.

Media Matters also urges us to look to our arbitration case law to find that a party needs to “actively litigate[ ] the merits of a case” for there to be waiver. But these cases are inapposite, as the parties there affirmatively raised their right to arbitrate early on. In contrast, Media Matters never invoked the forum selection clause until over a year into the Ireland litigation. And it actively litigated the case on other grounds in Ireland.

Media Matters argues that it did not waive reliance on the forum selection clause because it had no obligation to raise that issue in Ireland. But even so, Media Matters failed to raise the forum-selection clause in either Ireland or California for over a year while it actively litigated the Irish case using other theories. That is enough to find waiver. Indeed, Media Matters’ position would seemingly permit it to litigate in a foreign forum right up to the expiration of the statute of limitations, then sue to enjoin the foreign litigation in the United States. We are aware of no precedent supporting that approach.

For these reasons, we conclude that the district court erred in enjoining the Ireland litigation because Media Matters waived its right to invoke the forum selection clause in a California court….

The district court’s injunction also prevents the “X entities … from prosecuting or initiating litigation outside of the United States against Media Matters that arises from [the] same conduct alleged in the Ireland and Singapore complaints.” This portion of the injunction appears contingent on the anti-suit injunction issued against the Ireland litigation, which we have vacated. For this reason, we vacate the district court’s injunction in full. On remand, the district court may consider whether an injunction against other possible foreign litigation is necessary or appropriate.

Paul Clement argued the case for X.