Tuesday, March 03, 2020

Cal. court says "controversial" claim is therefore not factual

Serova v. Sony Music Entertainment, 44 Cal.App.5th 103 (2020)

Hard to believe the reasoning in this case could get worse, but they may have achieved it. The California Supreme Court told the court of appeals to reconsider its earlier decision in light of FilmOn.com Inc. v. DoubleVerify Inc., 439 P.3d 1156 (Cal. 2019).  Same result, slightly different reasoning: Because there is a dispute over the vocalist on certain recordings advertised as “Michael Jackson” recordings, this is a “controversial” question that therefore cannot be factual for purposes of commercial speech doctrine. In fairness to the court of appeals, this is a known problem of using “controversial” as a standard in a lawsuit over compelled commercial speech, where there is by definition a controversy. I’m not even strongly committed to this decision being wrong on the merits given the special context of an entertainment product. But it is a bad sign of where First Amendment cases are going: disclosure cases are now contaminating ordinary falsity cases.

Serova alleged that the album cover and a promotional video wrongly represented that Jackson was the lead singer on each of the 10 vocal tracks on the album, when in fact he was not the lead singer on three of those tracks. Previously, the court of appeals held that: (1) Serova’s claims arose from conduct furthering Appellants’ right of free speech “in connection with a public issue” under the anti-SLAPP law; and (2) Serova did not show a probability that her claims under the UCL and the CLRA would succeed because the claims concern noncommercial speech that is not actionable under those statutes.   

Reaffirming its earlier reasoning, the court of appeals concluded that FilmOn concerned only the first step of the anti-SLAPP analysis, i.e., whether particular claims arise from conduct that the anti-SLAPP statute protects. Specifically, FilmOn considered “whether the commercial nature of a defendant’s speech is relevant in determining whether that speech merits protection” under the anti-SLAPP law, and concluded that the context of a statement—including “the identity of the speaker, the audience, and the purpose of the speech” —is “relevant, though not dispositive, in analyzing whether the statement was made ‘in furtherance of’ free speech ‘in connection with’ a public issue.”

Here, the representations that Michael Jackson was the lead singer on the three disputed tracks “did not simply promote sale of the album, but also stated a position on a disputed issue of public interest.” Before the album was released, “certain Jackson family members and others publicly claimed that Jackson was not the lead singer,” while the Estate made a public statement about the authenticity, making the identity of the artist “a controversial issue of interest to Michael Jackson fans and others who care about his musical legacy.”  Sony’s financial interest in authenticity didn’t change that.

This case arguably falls within an exception to an exception: the legislature amended the anti-SLAPP law to exclude commercial speech, but then excluded ads for “any dramatic, literary, musical, political, or artistic work” from that exclusion. Still, the court reasoned, that didn’t mean that all such ads were necessarily within the scope of the anti-SLAPP law. There still needs to be some connection to a “public issue” or an “issue of public interest”; otherwise, an ad falsely claiming that a musical album contains a particular song would be covered by the anti-SLAPP law.

In FilmOn, the state Supreme Court held that a court must consider the context as well [as] the content of a statement in determining whether that statement furthers the exercise of constitutional speech rights in connection with a matter of public interest.” FilmOn alleged disparaging statements about the Web-based entertainment programming distributed by FilmOn.com by defendant’s confidential reports to paying clients classifying FilmOn Web sites under categories of sites that engage in copyright infringement and contain “adult content.” The court held that these reports were not “ ‘in connection with’ ” an issue of public interest. It was “ ‘not enough that the statement refer to a subject of widespread public interest; the statement must in some manner itself contribute to the public debate.’ ”

Here, the issue of public interest was whether Michael Jackson was in fact the singer on the three tracks. And the issue doesn’t simply concern some trivial fact about his life, but relates to his artistic legacy; the dispute was of widespread interest among Michael Jackson fans. This public controversy distinguished this case from other cases about allegedly misleading descriptions of a particular commercial product or service.

The connection between the issue and the speech is also relevant. The speaker and the audience for the statements at issue suggested a commercial purpose: appellants sell the album, and they made the statement to an audience of potential purchasers. But the content still was not merely commercial speech, and anyway FilmOn was clear that “[s]ome commercially oriented speech will, in fact, merit anti-SLAPP protection.” The content of the statements related directly to the issue of public interest, rather than being tangentially connected through a generalization of the statements’ subject matter (the  “‘synedoche theory’ of public interest”); cf. Commonwealth Energy Corp. v. Investor Data Exchange, Inc. (2003) 110 Cal.App.4th 26, 34, 1 Cal.Rptr.3d 390 [“The part is not synonymous with the whole. Selling an herbal breast enlargement product is not a disquisition on alternative medicine”].)   Even though the challenged statements didn’t refer to the controversy, they took a position on that controversy.  Unlike the statements in FilmOn, the statements here were public and contributed to the public conversation.  

It was also relevant that Sony wasn’t selling “a typical consumer product” but rather a product that is itself subject to First Amendment protection. “[T]he challenged conduct in this case helped shape the experience of the music that consumers purchased,” which was indeed the basis for Serova’s complaint. Without anti-SLAPP protection, Sony might have decided not to sell the disputed tracks at all; others might decide not to include songs or other artistic works with disputed provenance in a collection “rather than either (1) risk the expense of consumer litigation, or (2) dilute their marketing by acknowledging doubts about the provenance of the work that they do not share.” That would discourage protected speech.   

Then, Serova couldn’t show a probability of success because the UCL and CLRA apply only to commercial speech. Again, the speaker and the intended audience suggested a commercial purpose. But the content of the challenged speech was “critically different” from purely commercial speech for two reasons: (1) Sony’s statements “concerned a publicly disputed issue about which they had no personal knowledge” and (2) “the statements were directly connected to music that itself enjoyed full protection under the First Amendment.”

Personal knowledge matters because one reason commercial speech receives less constitutional protection than political speech is its greater verifiability. In Nike v. Kasky, the California Supreme Court “ascribed great significance to the fact that, ‘[i]n describing its own labor policies, and the practices and working conditions in factories where its products are made, Nike was making factual representations about its own business operations.”” Thus, “Nike was in a position to readily verify the truth of any factual assertions it made on these topics,” and that commercial regulation was “unlikely to deter Nike from speaking truthfully or at all about the conditions in its factories.” [Important note: not its factories. The factories were owned by subcontractors.] Here, by contrast, Sony’s representations about the identity of the lead singer didn’t concern its own business operations or a fact of which it had personal knowledge. Other defendants, not the Sony defendants, allegedly “jointly created, produced, and recorded the initial versions” of the tracks, so the vital element of personal knowledge was missing. The court of appeals commented that Kasky might well have come out differently “if the statements at issue concerned the labor practices of an independent commercial supplier who simply sold products to Nike for resale,” whereas the Kasky court specifically noted that Nike had entered into a memorandum of understanding assuming responsibility for its subcontractors’ compliance with local labor laws. [Assuming responsibility is not the same thing as having personal knowledge, by the way.]

Without personal knowledge, Sony’s statements didn’t fit into the definition of speech that is “ ‘less likely to be chilled by proper regulation,’ ” given the strict liability of consumer protection law.  Personal knowledge about the content of speech is “an important feature” in determining whether speech is commercial. Without direct involvement in the recording, from Sony’s perspective, its statements about the identity of the lead singer “were therefore necessarily opinion.” Appellants “could only draw a conclusion about that issue from their own research and the available evidence.” Thus, Sony’s representations about the identity of the singer were just statements of opinion. 

To avoid potential liability, it would have had to put a disclaimer on the album or leave the songs off entirely. The second option shows a chilling effect, and the first option is also constitutionally dubious because compelled commercial speech is a First Amendment problem, as shown by National Institute of Family & Life Advocates v. Becerra, ––– U.S. –––  (2018), which in response to Breyer’s dissent stated that it accepted [only] “the legality of ... purely factual and uncontroversial disclosures about commercial products.” Here, any compelled disclosure would not be “uncontroversial” by definition because “controversy has surrounded” the disputed tracks, and it wouldn’t be “purely factual” from Sony’s perspective because it lacked personal knowledge of the facts. Forcing Sony to put a claim in its advertising materials with which it doesn’t agree would be bad compelled commercial speech. Even a statement about uncertainty “implies the existence of real controversy or doubt about the identity of the singer even though Appellants might not believe that any reasonable doubt exists.” [Although Sony doesn’t actually know, according to the court of appeals, so the basis of its certainty is … an interesting question.]

Aaaaaaaaargh. The epistemological confusion here is so deep it’s more like rot.  Sony doesn’t have “personal” knowledge because it is a corporation and does not “know” anything. Imputing knowledge to a corporation serves many functions, but it’s distracting rather than helpful here.  If we took this concept seriously for commercial speech purposes—which, to be clear, we absolutely should not—then the companies selling quack autism cures are exempt from regulation precisely to the extent that they are ignorantly or avariciously parroting claims from bogus anti-scientific literature and didn’t do the research themselves.

This whole thing is not even a correct description of Kasky! Nike didn’t have “personal knowledge” of conditions in the factories of its subcontractors because it had made the business decision to set itself up in a way that offloaded risk and control to its subcontractors. Subcontractors are independent third parties. That was the point.  Nike had hired other third parties to monitor, but even if those third parties had “personal knowledge” of the conditions, Nike still didn’t, by the exact same logic that is in play in this decision.

The imposition of strict liability for factual claims made to sell products should not depend on—and never has before depended upon—the corporate form a company has chosen to adopt, which by the way is usually unknown to consumers.  Nike and Sony both decided to have certain tasks performed outside the boundaries of the corporation; they did so for reasons that are doubtless well-founded in economics, but should not be encouraged by the structure of false advertising law—especially since, if corporations do take advantage of this new rule, there will often be no one to hold liable for resulting falsity. For example, ingredient suppliers don’t engage in “advertising” to the public, and the sellers of the final product won’t have personal knowledge of whether the ingredients are truly the ingredients. The ingredients list on the product will therefore, according to the reasoning of the court of appeals here, merely be the seller’s “opinion” about the ingredients.  Contrary to what the court of appeals says, what is “purely factual” should not be and never before has been measured by the “perspective” of the advertiser.

That’s not even getting into the invited error around controversiality/disclosure precedents. Under this interpretation, an advertiser seems to get to create controversy by disagreeing with the regulator, at least if the advertiser has enough market power to get its voice heard.

But even if you think that “controversial” serves an important purpose in mandatory disclosure situations, the court of appeals’ reasoning here has turned every deception case into a mandatory disclosure case, which makes no sense.  Consider: the shark cartilage seller wants to advertise that shark cartilage cures cancer. The regulator says: no, that’s false.  The seller says: now my choices are to not sell shark cartilage or to put a disclaimer on my shark cartilage saying it doesn’t cure cancer, and that’s bad compelled speech about a controversial subject!  Those are the exact choices Sony has. But if a commercial speaker is saying something false, those are legitimate choices to put it to—shut up and stop fooling people, or say something true instead—even if it believes its own claims.  

All the real work in this case is being done by the idea that the factuality of “Michael Jackson sang this” is of a different order/regulability than the factuality of “shark cartilage cures cancer” because of the former’s connection to an expressive work. Making other arguments than that just screws up First Amendment doctrine for everyone.

The court of appeals does go on to say that there’s a deep connection between the challenged statements and the First Amendment-protected art they promote.  Unlike the foregoing, this is actually a legitimate argument. As long as there is a distinction between speech that is sold and other things that are sold that happen to have speech on them (e.g., cans of corn), this rationale will not destroy false advertising law generally.

The court of appeals notes that “[t]he identity of a singer, composer, or artist can be an important component of understanding the art itself. No one could reasonably dispute that knowing whether a piece of music was composed by Johann Sebastian Bach or a picture was painted by Leonardo Da Vinci informs the historical understanding of the work.” I think that’s true, but it’s interesting to consider the ideological work being done here: “Thus, the marketing statements at issue here are unlike the purely factual product or service descriptions constituting commercial speech in cases that Serova cites.” There’s nothing “thus” about it!  There is a ground truth about who was the lead vocalist on these songs, at least as much as there is about a “representation that products were manufactured in the United States” and about an “attorney’s certification as an expert,” two of the cited cases.  Indeed, what counts as “made in the USA” once you know the historical facts is often substantially more subject to debate than how to decide who’s the lead singer on a song once you know the historical facts, as far as I can tell.  The implications to the consumer of the “purely factual” question of who sang a song may be complex—but then again, so are the effects on the consumer of “made in the USA,” and of knowing how much alcohol is in a can of beer. And there are a lot of factual statements that are, because of how science works, provisional: right now, we think some things about aspirin are true because that’s what the scientific consensus is; false advertising law should rely on scientific consensus even though the ground truths it seeks are subject to revision.

Anyway, the court continued, some statements about art could be commercial speech—like film ads featuring fictional endorsements from a nonexistent critic, or a statement falsely stating that a particular song is included in an album. But not these statements, where (1) the identity of the artist was itself an issue of public discussion and interest; and (2) Sony had no personal knowledge of the issue.

Final note: this standard is out of whack with the usual First Amendment rules for defamation, which are usually thought of as pretty strong. Defamation of a public figure requires malice—knowledge or reckless disregard for a high probability of falsity. Even if the court of appeals was right that Sony’s scienter should matter, why shouldn’t it be enough to allege that Sony was reckless about the truth?  Suppose, for example, that a non-Sony defendant had privately acknowledged to Sony that MJ probably wasn't the singer. 

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