Entertainment Quarterly Roundup

Ninth Circuit: Website Moderators May Be Agents of ISPs

By John M. Gatti, Co-Chair, Entertainment, Sports and Media Litigation | Robert A. Jacobs, Co-Chair, Entertainment, Sports and Media Litigation | Emil Petrossian, Partner, Litigation | Prana A. Topper, Partner, Litigation

Why it matters: On April 7, 2017, the Ninth Circuit revived a copyright infringement case filed by a paparazzi group against social media platform LiveJournal that the district court had dismissed on summary judgment. The paparazzi group Mavrix Photographs LLC alleged that a celebrity-fan community run by LiveJournal posted Mavrix’s photographs without authorization. In a decision with far-reaching implications regarding internet service providers’ (ISPs’) ability to use the Digital Millennium Copyright Act’s (DMCA’s) “safe harbor” defense under 17 U.S.C. § 512(c), the Ninth Circuit applied the common law of agency and held that there was a genuine issue of material fact as to whether the volunteer moderators of the celebrity-fan community were acting as LiveJournal’s agents when they posted Mavrix’s photographs. If so, then the moderators’ actions were attributable to LiveJournal and were not taken at the “direction of a user,” which the court ruled is a threshold requirement for reliance on the § 512(c) safe harbor defense.

Detailed discussion: On April 7, 2017, in Mavrix Photographs LLC v. LiveJournal Inc., the Ninth Circuit reversed the summary judgment dismissal by a Central District of California court of the copyright infringement suit brought by paparazzi group Mavrix Photographs against social media platform LiveJournal. Mavrix had sued LiveJournal for copyright infringement because a moderated celebrity-fan community run by LiveJournal, called “Oh No They Didn’t!” (ONTD), posted 20 of Mavrix’s photographs without a license. In dismissing the case, the district court found that LiveJournal was protected from liability under the DMCA’s safe harbor defense set forth in 17 U.S.C. § 512(c). The district court concluded that the photographs were posted at the “direction of a user,” not by LiveJournal—a threshold requirement under § 512(c).1 The district court further ruled that LiveJournal, in its capacity as an ISP, had met all the other requirements to satisfy § 512(c)’s safe harbor.

On appeal, the Ninth Circuit panel reversed the district court’s ruling. Applying the common law of agency, the Ninth Circuit found that there was a genuine issue of material fact as to whether ONTD’s moderators were acting as LiveJournal’s agents when they posted Mavrix’s photographs. The court explained that if the moderators were acting as LiveJournal’s agents, then the photographs were not posted “at the direction of a user” and LiveJournal thus could not meet this threshold requirement of § 512(c)’s safe harbor defense. LiveJournal is seeking a rehearing en banc.

LiveJournal and ONTD (Oh No They Didn’t!)

The Ninth Circuit identified LiveJournal as a “social media platform” that “allows users to create and run thematic ‘communities’ in which they post and comment on content related to the theme.” While the online communities are permitted to make their own rules regarding the submission of user posts, LiveJournal requires three types of unpaid administrator roles to run its online communities. One type of administrator is a “moderator” whose job is to “review posts submitted by users to ensure compliance with the rules.” As an ISP, LiveJournal protects against copyright infringement in its communities by, among other things, following the notice and takedown procedures outlined in the DMCA.

The court identified ONTD as a “popular LiveJournal community which features up-to-date celebrity news.” ONTD moderators review and post user submissions, which can include “photographs, videos, links and gossip about celebrities’ lives.” The court gave as one example of such submissions a post that contained a photograph of Beyoncé taken by Mavrix where users speculated in the comments section about whether she was pregnant. ONTD has created its own rules for submitting and commenting on posts that include guidance for users on avoiding potential copyright infringement and not copying content from any specifically listed sources that have put ONTD on notice in the past.

During the relevant time period, ONTD had nine moderators who performed the following functions for ONTD once users submitted proposed posts to an internal queue: “Moderators review the submissions and publicly post approximately one-third of them. Moderators review for substance, approving only those submissions relevant to new and exciting celebrity news. Moderators also review for copyright infringement, pornography and harassment.” As ONTD grew in popularity and into a “household name,” the court stated that LiveJournal sought to “take over” the site by hiring in 2010 one of ONTD’s active moderators as the “primary leader” (the community elected this new LiveJournal employee as “owner,” another of LiveJournal’s administrator roles, in 2011).

ONTD Moderators Acting as Agents for LiveJournal

The court began its analysis by stating that, to rely on the Section 512(c) safe harbor, “LiveJournal must make a threshold showing that Mavrix’s photographs were posted on ONTD at the direction of the user …. In the context of this case, that inquiry turns on the role of the moderators in screening and posting users’ submissions and whether their acts may be attributed to LiveJournal.” After reviewing the common law principles of agency and applicable case precedent, the court said that, unlike the district court, “[w]e … have little difficulty holding that common law agency principles apply to the analysis of whether a service provider like LiveJournal is liable for the acts of the ONTD moderators.”

Applying those common law principles to the evidentiary record on which the district court based its grant of summary judgment, the Ninth Circuit concluded that “there are genuine issues of material fact as to whether the moderators are LiveJournal’s agents.” These genuine issues of material fact included questions of whether ONTD’s moderators were acting (1) on the actual authority of LiveJournal (“[a]lthough LiveJournal calls the moderators ‘volunteers’… [t]here is evidence in the record that LiveJournal gave moderators express directions about their screening functions, including criteria for accepting or rejecting posts”); (2) on the apparent authority of LiveJournal (“Mavrix presented evidence that LiveJournal users may have reasonably believed that the moderators had authority to act for LiveJournal”); and (3) under the control of LiveJournal (“[e]vidence presented by Mavrix shows that LiveJournal maintains significant control over ONTD and its moderators”). All these considerations caused the court to conclude that “[f]rom the evidence currently in the record, reasonable jurors could conclude that an agency relationship existed” and to reverse the district court’s grant of summary judgment.

The Ninth Circuit also pointed out that if there is a finding of agency on remand, “the factfinder must [then] assess whether Mavrix’s photographs were indeed posted at the direction of the users in light of the moderators’ role in screening and posting the photographs” or whether ONTD’s moderators only performed “accessibility enhancing” functions for users. If there is no finding of agency on remand and LiveJournal successfully proves Section 512(c)’s threshold requirement that the ONTD posts were “at the direction of the user,” the other requirements that LiveJournal would have to prove to establish the Section 512(c) defense would be “lack of knowledge of infringements and lack of any financial benefit from infringement that it had the right and ability to control.”

Motion for Rehearing En Banc

On May 5, 2017, LiveJournal filed a motion for rehearing en banc with the Ninth Circuit, arguing that the panel decision “dramatically reshapes” the Section 512(c) safe harbor because it “creates an enormous cloud of uncertainty for service providers, who necessarily (and laudably) want to screen what is posted, in order to protect against unsavory or illegal material such as spam, pornographic content and copyright-infringing materials …. Ironically, the panel’s decision punishes those who seek to root out copyright infringement.” LiveJournal also argued that the panel misread the wording and meaning of Section 512(c), improperly substituting the word “posted” for “storage” in connection with what must be “at the direction of the user,” thereby changing the statute’s meaning to contradict controlling case law. A decision on the rehearing motion is expected in the near future.

1Section 512(c) of the DMCA provides, in relevant part, that “[a] service provider shall not be liable … for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider … (A)(i) does not have actual knowledge that the material … is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove or disable access to the material; (B) does not receive a financial benefit directly attributable to the infringing activity …; and (C) upon notification of claimed infringement … responds expeditiously to remove … the material that is claimed to be infringing. 17 U.S.C. § 512(c)” (emphasis added).

back to top

Flo, Eddie and Pre-1972 Sound Recordings: Happy Together?

By John M. Gatti, Co-Chair, Entertainment, Sports and Media Litigation | Robert A. Jacobs, Co-Chair, Entertainment, Sports and Media Litigation | Emil Petrossian, Partner, Litigation | Prana A. Topper, Partner, Litigation

Why it matters: Is there a common law exclusive right of public performance for copyright holders of pre-1972 sound recordings? Because such sound recordings are not covered by the federal copyright laws, the issue becomes one of state law, and the way that question is ultimately answered in the courts could have serious financial ramifications to both copyright holders who own pre-1972 sound recordings and broadcasters who “perform” them. Both sides of the issue are closely watching a series of class action lawsuits filed in 2013 and 2014 in three states, including California and New York, by Flo & Eddie Inc. (F&E) against digital broadcasters Sirius XM Radio Inc. (SiriusXM) and Pandora Media Inc. (Pandora). The hefty amount that SiriusXM agreed to pay in past and prospective royalties under the terms of a settlement executed in California on the eve of trial in November 2016 is subject to reduction based on the favorable outcome of the other class action litigations. Indeed, that amount already has been reduced once because of a resolution in SiriusXM’s favor in the New York litigation in February 2017. Read on for a recap of where things stand in this long-running—and potentially earth-shattering—royalties dispute.

Detailed discussion: Is there a common law exclusive right of public performance for copyright holders of pre-1972 sound recordings? Because federal copyright law doesn’t apply to such sound recordings, the question is one of state law. Federal and state courts in California, New York, and Florida have been grappling with the issue ever since F&E, a group comprised of members of the 1960s band The Turtles, simultaneously initiated a series of class action lawsuits in those states against SiriusXM in September 2013 and Pandora in October 2014. The class actions, which were filed in federal district courts, allege that digital broadcasters SiriusXM and Pandora infringe on the exclusive public performance rights of F&E and other similarly situated copyright owners of pre-1972 sound recordings when they “perform”—i.e., digitally broadcast—the copyright owners’ pre-1972 sound recordings without licensing them. F&E claimed exclusive public performance rights under the state copyright and misappropriation statutes in the states where the class action litigations were filed.

Here is a brief recap of where things currently stand with these long-running litigations:

California: Flo & Eddie Inc. v. Sirius XM Radio Inc.: F&E filed its 2013 California putative class action (later certified) against SiriusXM in the Central District of California. In September 2014, Judge Philip Gutierrez ruled in F&E’s favor, finding on summary judgment that, under Section 980(a)(2) of California’s copyright statute, copyright ownership of a pre-1972 sound recording “includes the exclusive right to publicly perform that recording” under California law. In November 2014, Judge Gutierrez denied SiriusXM’s motion for interlocutory appeal to the Ninth Circuit and set the case for trial to determine damages. In November 2016, F&E and SiriusXM settled the case on the eve of the trial, with SiriusXM agreeing to pay almost $100 million in past and future royalties, subject to reduction pending the outcome of the cases on appeal in New York, Florida and California (with respect to Pandora). The settlement amount and SiriusXM’s exposure have already been reduced once to reflect the favorable resolution of the New York lawsuit by the Second Circuit in February 2017, discussed below. Judge Gutierrez approved the revised class action settlement on May 8, 2017.

California: Flo & Eddie Inc. v. Pandora Media Inc.: F&E filed its putative class action against Pandora in the Central District of California in October 2014, and the case was again assigned to Judge Gutierrez. In February 2015, Judge Gutierrez denied Pandora’s anti-SLAPP (strategic lawsuit against public participation) motion after reiterating his earlier conclusion that Section 980(a)(2) of the California copyright statute provides copyright owners of pre-1972 sound recordings an exclusive right of public performance. Pandora appealed the denial of its motion to the Ninth Circuit. On March 15, 2017, the Ninth Circuit determined the issue to be one of state law and certified the following questions for the California Supreme Court to decide under California law: (1) whether “[u]nder Section 980(a)(2) of the California Civil Code … copyright owners of pre-1972 sound recordings that were sold to the public before 1982 possess an exclusive right of public performance,” and (2) if not, whether “California’s common law of property or tort otherwise grants copyright owners of pre-1972 sound recordings an exclusive right of public performance.” Oral argument before the California Supreme Court has not yet been scheduled, but as mentioned above, the court’s decision could potentially have an impact on the amount that SiriusXM ultimately will be required to pay under its settlement agreement with F&E.

New York: Flo & Eddie Inc. v. Sirius XM Radio Inc.: F&E filed a putative class action against SiriusXM in the Southern District of New York in 2013. In November 2014, the district court ruled in F&E’s favor, finding on summary judgment that copyright owners of pre-1972 sound recordings have the “exclusive public performance rights” in their sound recordings under New York common law. In February 2015, the district court granted SiriusXM’s motion for interlocutory appeal to the Second Circuit, which determined the question to be one of state law and certified the issue to the New York Court of Appeals. In December 2016, the New York Court of Appeals answered the certified question in the negative, holding that New York’s common law of copyright does not recognize an exclusive right of public performance for copyright holders of pre-1972 sound recordings. Shortly thereafter, on February 16, 2017, the Second Circuit directed the district court to dismiss F&E’s lawsuit with prejudice. The amount that SiriusXM was obligated to pay under the California settlement discussed above was reduced to reflect this favorable outcome for SiriusXM.

Florida: Flo & Eddie Inc. v. Sirius XM Radio Inc.: F&E filed a putative class action against SiriusXM in the Southern District of Florida in 2013. In July 2014, the district court ruled in SiriusXM’s favor, finding on summary judgment that Florida common law does not recognize an exclusive right of public performance in pre-1972 sound recordings. F&E appealed to the Eleventh Circuit, and like the Second and Ninth circuits, the Eleventh Circuit on June 29, 2016, certified the question to the Florida Supreme Court. A decision by the Florida Supreme Court is pending and, again, its decision could have an impact on the ultimate amount SiriusXM will be required to pay under its settlement with F&E in the California case.

back to top

No Federal Preemption in New York Netflix “Throttling” Case

By John M. Gatti, Co-Chair, Entertainment, Sports and Media Litigation | Robert A. Jacobs, Co-Chair, Entertainment, Sports and Media Litigation | Emil Petrossian, Partner, Litigation | Prana A. Topper, Partner, Litigation

Why it matters: In February 2017, New York Attorney General Eric. T. Schneiderman sued Charter Communications Inc. (Charter) and its subsidiary, Spectrum Management Holdings LLC, formerly Time Warner Cable Inc. (Spectrum-TWC), in New York State court, alleging that these internet service providers (ISPs) committed fraud and deceptive business practices under New York law by, among other things, “throttling” Netflix and other content providers that refused to pay fees to ensure unimpeded internet access to subscribers. Charter thereafter removed the case to federal district court, arguing that the “throttling” claims and other allegations concerning deceptive broadband internet speeds are covered by the federal telecommunications laws and thus preempt state law claims. On April 27, 2017, the district court found no federal preemption and remanded the case back to state court. Although the district court’s decision to remand was reached by strictly applying the federal preemption doctrine, the court made a brief but important reference to recent remarks by the new Federal Communications Commission (FCC) chairman, Ajit Pai, that stringent federal regulation of broadband internet providers such as Charter—specifically via the net neutrality rule adopted by the FCC in 2015—may soon be a thing of the past. The implication is that if the net neutrality rule and other strict federal regulations on ISPs are rolled back, state laws may soon be increasingly relied upon to fill the regulation void.

Detailed discussion: On February 1, 2017, after conducting a lengthy investigation and fielding “thousands” of consumer complaints, New York Attorney General Schneiderman announced that his office had filed a complaint in New York State court against Charter and its subsidiary, Spectrum-TWC. In the complaint, the state of New York alleges that, among other things, Charter and Spectrum-TWC conducted “a deliberate scheme to defraud and mislead New Yorkers by promising internet service that they knew they could not deliver.” The complaint asserts causes of action under New York law for fraud, deceptive business practices, and false advertising.

Further, the complaint alleges that, in addition to “falsely promising” fast and reliable internet speed and connectivity to subscribers, Spectrum-TWC began falsely representing to subscribers in 2012 that “they would get fast, reliable access to content online like Netflix.” The complaint alleges that Spectrum-TWC knew this claim was false because “the company was aware of, and sometimes deliberately created, bottlenecks at interconnection points, which resulted in slowdowns and disruptions to subscribers’ service.” Spectrum-TWC allegedly created these bottlenecks and slowdowns, also known as “throttling,” when Netflix and other “backbone and content” providers refused to pay fees to Spectrum-TWC to ensure unimpeded access to subscribers, resulting in “subscribers getting poorer quality streams during the very hours when they were most likely to access Netflix.”

On February 24, 2017, Charter and Spectrum-TWC removed the case to the Southern District of New York on the grounds that the complaint was preempted by the Federal Communications Act (FCA) and the rules of the FCC. In the removal notice, Charter and Spectrum-TWC argued that removal was appropriate because the complaint identified Charter (a “common carrier” as defined in the FCA) as “the largest broadband internet access service (BIAS) in New York.” Because the “crux” of the complaint is that Spectrum-TWC “misled the FCC and customers about its BIAS speeds,” Charter argued that the “FCC regulates both BIAS speeds and representations thereof.” Further, with respect to the complaint’s “throttling” claims, Charter argued that “the FCC’s open internet rules prohibit ‘throttling’ as an ‘unjust and unreasonable practice’ and provide for oversight of interconnection arrangements with other network operators (such as … content delivery networks).”

On March 13, 2017, the state of New York moved to remand the case back to New York State court, and on April 27, 2017, the district court found no federal preemption and granted the motion, remanding the case back to state court.

The court began its analysis by citing the “well pleaded complaint” rule, which provides that, in questions of federal preemption, a court must look solely to the plaintiff’s state law causes of action and cannot consider the defendant’s federal defenses. One exception to this rule is the “doctrine of ‘complete preemption,’” where a federal statute “wholly displaces” a state law cause of action and provides the exclusive remedy for the plaintiff’s asserted claims. The court continued, “[t]he instant complaint alleges only state law claims, and there is no diversity, so the Defendants’ only argument for why this Court has original jurisdiction is that the Federal Communications Act (‘FCA’) provides the exclusive cause of action for false advertising and consumer protection claims against broadband internet providers such that those claims are properly said to be arising under federal law.” Included in this analysis, the court noted, were the FCC regulations promulgated under the FCA.

To see whether the FCA provides such an exclusive remedy, the court first reviewed at length the FCA’s specific preemption and “savings clause” sections, finding that the federal remedies in the FCA are intended to be in addition to any state or common law remedies unless specifically preempted via notice and comment. Thus, the court held, the “clear text” of these provisions indicates that “Congress did not intend for the federal statute to be the exclusive remedy for redressing false advertising and consumer protection claims against common carriers.” The court reached the same conclusion after reviewing the relevant FCC regulations and pronouncements: “Nothing the FCC has said suggests that the FCA completely preempts state law causes of action against telecommunications services for consumer protection and false advertising claims. In fact, in numerous regulations the FCC has said the opposite.” Because the court found no complete preemption, which it observed would be “needed for this court to have original jurisdiction over this case,” the court ruled that removal was improper and granted the motion to remand.

As a potential harbinger of things to come with respect to the “throttling” claims, the court reviewed the Open Internet Order (the net neutrality rule) adopted by the FCC in 2015 that made ISPs like Charter subject to stricter regulation under Title II of the FCA. The court summarized the history of the “back-and-forth” that resulted in the net neutrality rule to see whether the FCC intended remedies under that rule to be exclusive. As part of this broader discussion, the court noted that the FCC did not categorize broadband ISPs such as Charter and Spectrum-TWC as common carriers subject to Title II regulation until “very recently, and it is quite possible that they will cease being regulated as such in short order.” The court also cited Chairman Pai’s recent remarks on “The Future of Internet Freedom” at the Newseum in Washington, D.C., on April 26, 2017. During those remarks, Pai communicated his views regarding the need for less federal regulation of ISPs—starting with the complete rollback of the net neutrality rule—to bring about a return to the “light-touch regulatory framework” that existed before 2015. If the net neutrality rule and other strict federal regulations on ISPs are rolled back, as Chairman Pai intends, state laws may soon be increasingly relied on to fill the regulation void.

back to top

Net Neutrality and the First Amendment

By John M. Gatti, Co-Chair, Entertainment, Sports and Media Litigation | Robert A. Jacobs, Co-Chair, Entertainment, Sports and Media Litigation | Emil Petrossian, Partner, Litigation | Prana A. Topper, Partner, Litigation

Why it matters: On May 1, 2017, the District of Columbia Circuit declined to rehear its landmark June 2016 decision upholding the Federal Communication Commission’s (FCC’s) 2015 Open Internet Order, also known as the net neutrality rule. In the concurrence and one of the dissents, the judges addressed one of the issues frequently raised in the net neutrality debate—namely, whether the net neutrality rule is consistent with the First Amendment (the concurrence said yes, the dissent said no). While the topic may be moot as the FCC is currently considering a proposed rule that would completely roll back the net neutrality rule in its current form, the lively back-and-forth between the concurrence and dissent—both of whom made compelling arguments—gives interesting insight into the judges’ thinking and provides a possible indication on how they would come down on the First Amendment issue in connection with any replacement rule that comes before the circuit for consideration.

Detailed discussion: On May 1, 2017, the D.C. Circuit denied a petition for rehearing en banc the court’s June 2016 decision in United States Telecom Association v. Federal Communications Commission and United States of America, which upheld the net neutrality rule adopted by the FCC in June 2015. A lengthy concurrence and two equally lengthy dissents accompanied the rehearing denial.

In the concurrence, written by Judge Sri Srinivasan and joined by Judge David S. Tatel, Judge Srinivasan took the view at the outset that en banc review would be “particularly unwarranted at this point” because the FCC will soon be considering the adoption of a notice of proposed rulemaking titled “Restoring Internet Freedom,” applicable to internet service providers (ISPs), which would “replace the existing rule with a markedly different one.”

Judge Srinivasan, however, felt compelled to address one of the issues raised by Judge Brett Kavanaugh in his dissent, namely Judge Kavanaugh’s “misconceived” notion that the net neutrality rule “infringes the First Amendment rights of broadband ISPs.” Judge Srinivasan said that his dissenting colleague mistakenly “understands Supreme Court precedent to recognize a First Amendment entitlement on the part of an ISP to block its subscribers from accessing certain internet content based on the ISP’s own preferences, even if the ISP has held itself out as offering its customers an indiscriminate pathway to internet content of their own—not the ISP’s—choosing.” Judge Srinivasan continued:

Under that view, an ISP, for instance, could hold itself out to consumers as affording them neutral, indiscriminate access to all websites, but then, once they subscribe, materially degrade their ability to use Netflix for watching video—or even prevent their access to Netflix altogether—in an effort to steer customers to the ISP’s own competing video-streaming service. Alternatively, an ISP, again having held itself out as affording its customers an unfiltered conduit to internet content, could block them from accessing (or significantly delay their ability to load) the Wall Street Journal’s or the New York Times’s website because of a disagreement with the views expressed on one or the other site.

Judge Srinivasan concluded that “[a]n ISP has no First Amendment right to engage in those kinds of practices” because “[t]he First Amendment does not give an ISP the right to present itself as affording a neutral, indiscriminate pathway but then conduct itself otherwise. The FCC’s order requires ISPs to act in accordance with their customers’ legitimate expectations. Nothing in the First Amendment stands in the way of establishing such a requirement in the form of the net neutrality rule.”

Judge Srinivasan further said that “[n]o Supreme Court decision suggests otherwise.” He distinguished the Turner Broadcasting Supreme Court decisions relied upon by his dissenting colleague as arising in the “markedly different context” that “addressed the validity under the First Amendment of statutory ‘must carry’ requirements calling for cable television operators to ‘devote a portion of their channels to the transmission of local broadcast television stations.’” Judge Srinivasan could easily distinguish the Turner Broadcasting cases (noting that the “must carry” obligations were ultimately upheld by the Supreme Court) because:

[w]hereas a cable operator draws the protections of the First Amendment when it exercises editorial discretion about which programming to carry, an ISP falling within the net neutrality rule represents that it gives subscribers indiscriminate access to internet content without any editorial intervention. Cable operators, that is, engage in editorial discretion; ISPs subject to the net neutrality rule represent that they do not. The very practice bringing cable operators within the fold of the First Amendment’s protections is inapplicable in the case of broadband providers subject to the net neutrality rule.

Finally, Judge Srinivasan countered his dissenting colleague’s “slippery slope” argument, stating that “[t]he real slippery-slope concerns run in the reverse direction. Under our dissenting colleague’s approach, broadband ISPs would have a First Amendment entitlement to block and throttle content based on their own commercial preferences even if they had led customers to anticipate neutral and indiscriminate access to all internet content.”

In his dissent, Judge Kavanaugh would have granted rehearing and voted to vacate the net neutrality rule because, among other arguments, “it violates the First Amendment to the U.S. Constitution.” Contrary to the position presented by Judge Srinivasan in his concurrence, Judge Kavanaugh said that “[t]he threshold question is whether the First Amendment applies to ISPs when they exercise editorial discretion and choose what content to carry and not to carry. The answer is yes.”

Judge Kavanaugh disputed the concurrence’s view that once an ISP commits under the net neutrality rule to providing a “neutral, indiscriminate” conduit of content to subscribers, it gives up its First Amendment right to exercise editorial discretion. Judge Kavanaugh found “mystifying” and unsupported by “the Constitution and precedent” the FCC’s (and Judge Srinivasan’s) argument that, because many ISPs “simply allow access to all Internet content providers on an equal basis” under the net neutrality rule, the FCC is thus entitled to “prevent [ISPs] from exercising their editorial discretion or speech rights to favor some content or disfavor other content.” Per Judge Kavanaugh, “[t]hat is not how constitutional rights work. The FCC’s ‘use it or lose it’ theory is wholly foreign to the First Amendment.” Judge Kavanaugh also found the FCC’s argument that an ISP can “opt out” of the net neutrality rule by choosing to exercise editorial discretion to be “half-baked”:

Think about what the FCC is saying: Under the [net neutrality] rule, you supposedly can exercise your editorial discretion to refuse to carry some Internet content. But if you choose to carry most or all Internet content, you cannot exercise your editorial discretion to favor some content over other content. What First Amendment case or principle supports that theory? Crickets.

Judge Kavanaugh interpreted the Supreme Court’s “landmark” Turner Broadcasting decisions, which he said were controlling, to provide that:

the First Amendment bars the Government from restricting the editorial discretion of [ISP]s, absent a showing that an Internet service provider possesses market power in a relevant geographic market. Here, however, the FCC has not even tried to make a market power showing. Therefore, under the Supreme Court’s precedents applying the First Amendment, the net neutrality rule violates the First Amendment.

Finally, Judge Kavanaugh rejected the concurrence’s notion that ISPs should be treated differently from cable operators (to which the Turner Broadcasting decisions applied), stating that:

Internet service providers and cable operators perform the same kinds of functions in their respective networks. Just like cable operators, Internet service providers deliver content to consumers. Internet service providers may not necessarily generate much content of their own, but they may decide what content they will transmit, just as cable operators decide what content they will transmit. Deciding whether and how to transmit ESPN and deciding whether and how to transmit ESPN.com are not meaningfully different for First Amendment purposes.

It will be interesting to see how the First Amendment debate plays out in future rulings by the D.C. Circuit if and when the new “Restoring Internet Freedom” rule or something similar comes before the court for consideration.

back to top



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved