Monday, August 22, 2022

California Supreme Court reaffirms strict liability for false advertising in Serova

Serova v. Sony Music Entertainment, --- P.3d ----, 2022 WL 3453395, S260736 (Cal. Aug. 18, 2022)

Not bound by Article III, the California Supreme Court issued a ruling despite the parties’ settlement.

Serova bought Michael, “an album of music billed as Michael Jackson’s first posthumous release,” which promised “9 previously unreleased vocal tracks performed by” Jackson. Serova alleged that some of these tracks featured a Jackson imitator. She sued under the UCL and CLRA for misrepresentations on the album’s packaging and in a promotional video.

The Court of Appeal upheld an anti-SLAPP motion because the statements were noncommercial speech “directly connected to music that itself enjoyed full protection under the First Amendment” and “concerned a publicly disputed issue about which [the speaker] had no personal knowledge.” The California Supreme Court reversed.

The statements were “commercial advertising meant to sell a product, and generally there ‘can be no constitutional objection to the suppression of commercial messages that do not accurately inform the public.’” Not all marketing of artistic works is noncommercial speech. Specifically, and dealing with the most serious error in the lower court’s reasoning,

a seller’s purported lack of knowledge of falsity does not tell us whether that seller’s speech is commercial or noncommercial, and commercial speech does not shed its commercial nature simply because a seller makes a statement without knowledge or that is hard to verify. The First Amendment has long coexisted with no-fault false advertising laws.

There was also no copyright preemption.

Serova alleged that people familiar with Jackson’s voice, including family members (some of whom performed with him in The Jackson 5), disputed the authenticity of three of the album’s tracks. Sony, the publisher, allegedly offered the public “complete confidence in the results of our extensive research as well as the accounts of those who were in the studio with Michael that the vocals on the new album are his own.” The Jackson estate, urging the authenticity of the tracks, offered the opinions of “six of Jackson’s former producers or engineers, who reviewed raw vocals at a listening session; one of Jackson’s previous musical directors; one of Jackson’s vocal directors; two hired forensic musicologists; and two other industry professionals with connections to Jackson.” (The estate’s letter is not part of the case any more but provides context for Sony’s claims.)

Based on the parties’ arguments, the court considered only whether Sony’s speech was noncommercial. The parties agreed that the CLRA and UCL “can constitutionally restrict speech properly classified as commercial.” [The court did not need to resolve whether Sony could be compelled to say that the tracks “might not” contain Jackson vocals as a remedy.]

So, were Sony’s statements, “a brand new album from the greatest artist of all time” with “9 previously unreleased vocal tracks performed by Michael Jackson,” commercial speech?

The speaker—a seller promoting sales of an album—and the audience—potential buyers—supported categorizing the speech as commercial. Content is typically commercial if it makes “representations of fact about the business operations, products, or services of the speaker (or the individual or company that the speaker represents) ... for the purpose of promoting ... the speaker’s products or services.” This includes identifying “those affiliated with a product or service.” Whether there was a public controversy was not relevant; commercial speech routinely “relates to a matter of significant public interest or controversy,” and is not immunized from regulation thereby. As the US Supreme Court said in Bolger, “[a] company has the full panoply of protections available to its direct comments on public issues, so there is no reason for providing similar constitutional protection when such statements are made in the context of commercial transactions.” Here, the content of the statements, made in traditional advertising contexts, was commercial, touting “Jackson’s vocal contributions” to increase sales.

Sony argued that its statements were noncommercial because they pertained to art and identified an artist, whose identity “can be an important component of understanding the art itself.” “But if Sony’s assertion that Jackson contributed lead vocals affects consumers’ experience of Michael, this illustrates how misrepresentations about an artist’s contributions can harm consumers in ways that matter to them.” [Citing Dastar and Rogers; noting in a footnote that Dastar suggested that Lanham Act false advertising claims might sometimes govern statements about artistic provenance without raising any First Amendment concern.] As Rogers noted, artistic works “are also sold in the commercial marketplace like other more utilitarian products, making the danger of consumer deception a legitimate concern that warrants some government regulation.”

“Relief has long been available in California to unwitting purchasers of imitation art who relied on false representations about authenticity.” [Citing Smith v. Zimbalist, 38 P.2d 170 (Cal. Ct. App. 1934) (finding unenforceable the sale of a violin represented as a Stradivarius when buyer and seller were both mistaken and the violin was a cheap copy).] And, while Dastar took out the statutory foundation for some Lanham Act claims, “numerous courts have entertained false advertising claims premised on statements about creative contribution.” [citing both UCL and Lanham Act claims, including false advertising claims.]

“The reasons commonly given for why commercial speech is subjected to greater regulation — a commercial speaker’s close relationship to a product or service, profit motive, and the government’s traditional role in preventing commercial harm— still have relevance when an artistic product is marketed.” And there was no evidence of a chilling effect from allowing false advertising claims.

True, “[t]here may be instances where statements about artistic contribution, or artistic works more generally, are not offered to convey product information but are themselves part of an expressive enterprise, possibly parody or satire.” [citing Hustler v. Falwell and Mattel v. Walking Mountain] “And it is conceivable that an album seller might include, in liner notes, an essay theorizing about artistic contributions that is itself an expressive work.” Also, “artists might choose to obscure their identities for expressive reasons through pen names or pseudonyms.” But this case didn’t implicate those scenarios; it instead involved “an explicit promise of a superstar’s vocal contributions to a product,” which was commercial. [The distinction here, despite the framing as being about commercial speech, doesn’t seem to be about commerciality; it seems to be about falsifiability/materiality.]

In addition, Sony’s claims weren’t inextricably intertwined with or adjunct to an expressive work. True, several California cases have held that “the truthful use of a name and likeness to promote an expressive work cannot support a claim for violation of the right of publicity,” but another held that, where advertisements “did not reflect any character or portion of” an expressive work and instead “contained a fictitious critic’s favorable opinion,” the advertisements were not entitled to heightened protection as adjuncts to an expressive work and were instead subject to consumer protection laws. [citing Rezec v. Sony Pictures Entertainment, Inc., 116 Cal.App.4th 135 (2004); cf. Keimer v. Buena Vista Books, Inc. 75 Cal.App.4th 1220 (1999) (holding that “even promotional materials on book cover reflecting false claims of book could be commercial speech”). A footnote noted that Keimer, which concerned material directly excerpted from the underlying book, “has been criticized as insufficiently protective of free speech,” but given that Sony’s ads didn’t reproduce the music from Michael, the court declined to address that criticism “or, for that matter, address the full contours of a doctrine governing the promotion of expressive works.”].

Charles v. City of Los Angeles, 697 F.3d 1146 (9th Cir. 2012), also held that “although a television program was itself noncommercial, expressive speech, a billboard advertising the program was commercial speech, because “speech inviting the public to watch” a program “is not inherently identical to the speech that constitutes the program itself.” [This was in the context of billboard time/place/manner regulations, which don’t involve truth/falsity as the relevant line between lawful and unlawful speech, and thus pose different questions about the risks of liability.] Charles pointed out that “the principle motivating California’s protection of advertisements adjunct to expressive works ‘is the need to protect advertisers from tort actions that would otherwise threaten the ability of publishers to truthfully promote particular works’ by accurately conveying the content of those works, even when that content is itself false.” Protecting advertisements for protected works is “justified only to the extent necessary” to achieve this purpose.

But Sony’s identification of Jackson as lead vocalist wasn’t covered by this principle. “No legal command nor law of nature compelled Sony to include what, for present purposes, it concedes are false claims ….” The alleged falsehoods were “distinct from, rather than adjunct to or reflective of, any artistic expression on Michael. Serova is not suing because Michael’s artistic expression has spilled over into promotional advertising, but because she believes Sony falsely advertised the lead vocalist.”

Sony offered an even broader argument, one that I think should be rejected even if you think that this opinion is wrong about the relationship between the artistic content and the claims here. Sony argued that its statements couldn’t be commercial because their truth was not “readily verifiable,” and that Sony’s knowledge of the controversy didn’t give it knowledge of falsity. The Court of Appeal adopted this argument, which is why it is very important that the California Supreme Court rejected it.

False advertising laws cover representations of fact made to promote products or services, without requiring that covered representations be made with personal knowledge or be readily verifiable. True, the traditional justifications for regulating commercial speech include that it is relatively more verifiable than noncommercial claims “in that ordinarily the advertiser seeks to disseminate information about a specific product or service that he himself provides and presumably knows more about than anyone else,” as Kasky said (emphasis added). But that doesn’t mean that personal knowledge or ready verifiability is always required. The court here pointed out that the statements held regulable in Kasky were about subcontractors’ operations, not its own—it was the connection to Nike’s own operations that made Nike’s speech commercial. Nike was likely in a position to verify those statements, but that wasn’t required.

Moreover, it seems problematic to assess the commercial or noncommercial content of speech by measuring a speaker’s level of personal knowledge. For example, if we correlate knowledge with commercial speech, then two identical promotional statements might face differing regulations because of something invisible to consumers: the speaker’s mental state. Also, if actual knowledge were the standard, that knowledge could be easily avoided.…

Looking at the speech’s ease of verifiability, as opposed to its falsifiability/not being puffery, was similarly mistaken. Consumer protection laws incentivize commercial speakers to verify their claims. “And it is when statements about products or services are hard to verify that the need for consumer protection may be strongest.”

Moreover, whether Jackson sang lead vocals “may be more easily verifiable” by Sony “in exactly the sense that justifies commercial speech regulation more broadly. … Few were likely better positioned to identify the Cascio tracks’ singer than Michael’s producers and sellers, who had not only profit motive, but also access to and business dealings with the album’s primary creators.” Sony had an incentive to secure any necessary licenses and warranties, and it allegedly claimed to have “overwhelming objective evidence” of authenticity, “a message at least in tension with its present claim that verifiability was unattainable.” Expert disagreement about product characteristics doesn’t change the fact that sellers can be presumed to know relatively more about the product than anyone else. Difficulties of proof at trial don’t render promotional speech noncommercial.

Sony could argue that its speech was not sufficiently false or misleading to be regulable, but that’s a separate liability question, not a speech classification question. [In other words, even puffery is commercial speech—as Charles implicitly accepts, at least for billboard regulation.]

The court rejected Sony’s related argument that strict liability for its speech would wrongly chill expression, a revival of a claim made in Kasky. Strict liability regulation of commercial speech is common and has been for a hundred years. It exists in the CLRA, the UCL, the FTC Act, and the Lanham Act. Fault requirements have been applied to torts that cover noncommercial speech, but “the leeway for untruthful or misleading expression that has been allowed in [these] other contexts has little force in the commercial arena.” As the US Supreme Court has said, “[a]ny concern that strict requirements for truthfulness will undesirably inhibit spontaneity seems inapplicable because commercial speech generally is calculated. Indeed, the public and private benefits from commercial speech derive from confidence in its accuracy and reliability.”

Penultimately, what about the album title, Michael, and artwork, featuring images of Jackson? These might be expressive and inextricably intertwined with the underlying work, but the court didn’t need to reach that issue given the framing of the case.

Finally, Sony’s answering brief to the state supreme court raised, for the first time, copyright preemption, arguing that challenges to a court’s subject matter jurisdiction can be raised at any time. Whether or not this was true, the underlying argument was wrong. Consumer deception was an extra element avoiding preemption, and Serova’s claims didn’t depend on who owned what, nor did she seek to enjoin reproduction or distribution of the sound recordings. [§1202 preemption might have made for a more interesting argument there.]

No comments: