12:30pm PT by Eriq Gardner
Judge Agrees Broadcasters Have First Amendment Right to Refuse Advertisements
SiriusXM has just scored a victory that also provides a lesson in this fraught political time where refusing to run an advertisement engenders cries of censorship. According to a California federal judge, not running an ad is an exercise in free speech.
This week, the satellite radio broadcaster got U.S. District Court judge David Carter to reject a lawsuit from InfoStream Group, which runs the dating sites WhatsYourPrice.com and SeekingMillionaire.com. In California federal court, InfoStream complained how SiriusXM stopped running ads for the websites. SiriusXM deemed the ads as falling short of a revised policy on standards and practices. InfoStream argued the broadcaster's refusal was "pretextual," one designed to garner favor from SiriusXM's preferred customers.
In response to the lawsuit, SiriusXM brought a motion to strike the complaint pursuant to California's anti-SLAPP statute, which was designed to curtail legal efforts chilling First Amendment activity. As a result, Carter had to examine whether a broadcaster's decision to decline an advertisement was indeed protected activity.
This is a subject of greater consequence than the dispute at hand. For example, CNN, ABC, CBS and NBC earlier this month refused to air Donald Trump commercials because of a "Fake News" banner overlaid on the faces of well-known anchors. In response, Lara Trump, the daughter-in-law of the president, made a statement how "the mainstream media are champions of the First Amendment only when it serves their own political views."
Trump added, "This is an unprecedented act of censorship in America that should concern every freedom-loving citizen."
She has it backwards. The First Amendment prohibits Congress from making laws abridging free speech. This essentially means the government can't interfere with the exercise of free speech. It doesn't mean that everyone always gets unfettered access to the platform of their choosing in speaking their minds. And while lawmakers pass statutes used by private parties to govern relationships — and these contracting individuals sometimes restrict what someone can say or do — broadcasters like CNN are still ultimately self-determining on what appears on their network. If Trump were to attempt to compel a broadcaster into running his advertisement, that would be the First Amendment outrage.
In the InfoStream case, Carter pretty much agrees.
"Precluding a broadcaster from refusing to sell airtime is inconsistent with the First Amendment protections enjoyed by private broadcasters," he writes.
InfoStream argued that SiriusXM hadn't identified any "speech," that it was really "conduct" at issue. Specifically, InfoStream pointed to Sirius' choice to not enter into additional contracts.
Carter responds that it doesn't matter because InfoStream's complaint arises from act in furtherance of SiriusXM's right of free speech.
"In any event, 'speech results from what a speaker chooses to say and what he chooses not to say,'" writes the judge, who then quotes a prior case for the proposition that "the right in question comprises both a right to speak freely and also a right to refrain from doing so at all, and is therefore put at risk both by prohibiting a speaker from saying what he otherwise would say and also by compelling him to say what he otherwise would not say."
The judge also accepts SiriusXM's contention that its decision to refuse ads was "in connection with a public issue" and that an exception for commercial speech isn't applicable here because the broadcaster and InfoStream are not competitors.
After confirming that First Amendment rights are definitely at play here, Carter then turns to the question of whether InfoStream has any probability of prevailing on its claims.
The dating service argued that SiriusXM was breaching the implied covenant of good faith and fair dealing by applying its Standards and Practices in a "dishonest and unfair manner, singling out InfoStream for termination while allowing others in similar businesses to continue to advertise."
The judge doesn't see the merit and also doesn't think it makes a difference on Sirius' reasons for why it chose to stop running InfoStream ads.
"InfoStream has offered no evidence that there was an operative contract between the parties in August 2014," Carter writes in deciding to strike plaintiff's complaint. "A contract is the first requirement of a breach of implied covenant claim."
SiriusXM was represented by O'Melveny litigator Daniel Petrocelli, who previously represented Donald Trump in the Trump University fraud case.