CHDvFacebook 5-5-21.ecl
- Date
- 2021-05-05
Summary
A transcript of proceedings held via Zoom webinar on May 5, 2021 in Children's Health Defense v. Facebook, Inc., No. C 20-5787 SI, before Judge Susan Illston of the U.S. District Court for the Northern District of California, filed May 23, 2021 as Document 101. The hearing concerns each defendant's motion to dismiss the Second Amended Complaint, which the court describes as asserting a Bivens claim, a Lanham Act claim and a civil RICO claim, along with a Rule 15(d) motion to supplement. Counsel for Facebook and Mark Zuckerberg argue that the Bivens claim fails for lack of state action and other defects, and counsel for plaintiff respond, including on the commercial speech requirement. The court takes the matter under submission, and the 84-page transcript ends with the court reporter's certificate.
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Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 1 of 84
Pages 1 - 84
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE SUSAN ILLSTON, JUDGE
CHILDREN’S HEALTH DEFENSE, a )
Georgia nonprofit organization,)
)
Plaintiff, )
)
VS. ) No. C 20-5787 SI
)
FACEBOOK, INC., a Delaware )
corporation; MARK ZUCKERBERG, )
a California resident; SCIENCE )
FEEDBACK, a French corporation;)
THE POYNTER INSTITUTE FOR MEDIA)
STUDIES, INC., a Florida )
corporation; and DOES 1-20, )
)
Defendants. )
) San Francisco, California
Wednesday, May 5, 2021
TRANSCRIPT OF PROCEEDINGS VIA ZOOM WEBINAR
APPEARANCES: (via Zoom Webinar)
For Plaintiff:
ROGER I. TEICH, ESQ.
290 Nevada Street
San Francisco, California 94110
JED RUBENFELD, ESQ.
1031 Forest Road
New Haven, Connecticut 06515
(Appearances continued on next page)
Reported By: Katherine Powell Sullivan, CSR #5812, CRR, RMR
Official Reporter - U.S. District Court
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 2 of 84
APPEARANCES: (via Zoom Webinar; continued)
For Defendants Facebook, Inc. and Mark Zuckerberg:
WILMER CUTLER PICKERING
HALE AND DORR LLP
2600 El Camino Real, Suite 400
Palo Alto, California 94306
BY: SONAL N. MEHTA, ESQ.
WILMER CUTLER PICKERING
HALE AND DORR LLP
1875 Pennsylvania Ave, NW
Washington, District of Columbia 20006
BY: ARI HOLTZBLATT, ESQ.
For Defendant The Poynter Institute for Media Studies, Inc.:
THOMAS & LOCICERO PL
601 South Boulevard
Tampa, Florida 33606
BY: CAROL JEAN LOCICERO, ESQ.
MARK R. CARAMANICA, ESQ.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 3 of 84 3
1 Wednesday - May 5, 2021 10:32 a.m.
2 P R O C E E D I N G S
3 ---000---
4 THE CLERK: Court is now in session. The Honorable
5 Susan Illston presiding.
6 Now calling case number 20-CV-5787, Children's Health
7 Defense versus Facebook, Incorporated.
8 Counsel, please state your appearances for the record,
9 starting with plaintiff.
10 MR. TEICH: Roger Teich for plaintiff.
11 THE COURT: Good morning.
12 MR. RUBENFELD: And Jed Rubenfeld also for plaintiff.
13 Good morning, Your Honor.
14 THE COURT: Say your name one more time, please.
15 MR. RUBENFELD: It's Jed Rubenfeld.
16 THE COURT: Rubenfeld. Thank you. Good morning.
17 MR. RUBENFELD: Good morning.
18 MS. MEHTA: Good morning, Your Honor. Sonal Mehta for
19 defendants Facebook and Mr. Zuckerberg. With me is my partner
20 Ari Holtzblatt. And we have Ian Chen, in-house counsel at
21 Facebook, also listening on the public line.
22 THE COURT: Good morning.
23 MS. LOCICERO: Good morning, Your Honor. My name is
24 Carol LoCicero, with Thomas and LoCicero, representing
25 defendant Poynter Institute for Media Studies, Inc. And my
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 4 of 84 4
1 partner Mark Caramanica is also on.
2 THE COURT: Good morning.
3 Well, welcome to you all. We have on today defendants' --
4 each defendant has moved to dismiss the Second Amended
5 Complaint filed by the plaintiffs. There are three causes of
6 action in the complaint: the Bivens claim; the Lanham Act
7 claim; and the civil RICO claim.
8 Have you spoken with each other about how you'd like to
9 divvy up your time? We have two hours total. You have two
10 hours, an hour each. So what's your plan?
11 MS. MEHTA: Good morning, Your Honor.
12 THE COURT: Or is there a plan?
13 MR. TEICH: The plan, I think, is to receive a plan
14 from you. But in the absence --
15 THE COURT: Okay. In the absence of anything from you
16 folks, I will tell you there are three claims. It seems to me
17 it would make sense to argue the first claim back and forth and
18 then the second claim back and forth, and the third claim back
19 and forth.
20 I leave it up to you how to allocate your time on those
21 three claims. I just know that we have two hours; we've got to
22 get done. So I would suggest that we do it in that way.
23 Does that make sense?
24 MR. TEICH: Yes, Your Honor. This is Roger Teich for
25 plaintiff. How and in what sequence would you like to hear
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 5 of 84 5
1 argument on the Rule 15(d) motion to supplement?
2 THE COURT: We can do that at the end. I don't know
3 if we'll need argument, but it seems to me that it blends in
4 actually a lot -- the issue is going to be futility, I think,
5 of the amendment, and that goes probably as much to the causes
6 of action as anything else --
7 MR. TEICH: Sure.
8 THE COURT: -- so I'm not concerned about that.
9 MR. TEICH: Okay.
10 THE COURT: Okay. So it's defendants' motions.
11 MS. MEHTA: Yes, Your Honor. Thank you.
12 I'll start by addressing the motion on behalf of
13 defendants Facebook and Mr. Zuckerberg, and then the counsel
14 for Poynter may have some additional comments on the issues
15 that are specific to Poynter.
16 And as Your Honor just suggested, we'd like to start with
17 the Bivens claim, which is Count One; and then I'll pass it to
18 my colleague, Mr. Holtzblatt, who can address Counts Two and
19 Three after we ping-pong back and forth.
20 THE COURT: That's fine. Just remember that your
21 side, which includes both defendants; can talk for an hour,
22 their side can talk for an hour. So keep track of that.
23 MS. MEHTA: Understood, Your Honor. And I think we
24 can be very efficient with your time here, Your Honor.
25 I want to start first by focusing in on the task at hand.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 6 of 84 6
1 I think a lot of the briefing and a lot of the pleadings
2 attempt to raise issues that are really collateral to the
3 issues that are before the Court.
4 We're not here today to talk about extremely highly
5 politicized and controversial issues around vaccine science or
6 around misinformation generally. I want to focus the Court's
7 attention and take our time today talking about the specific
8 allegations in the complaint and whether they have been
9 adequately pled.
10 With the -- with respect to the Bivens claim, there are
11 multiple independent reasons why the Bivens claim should be
12 rejected and should be rejected with prejudice based on the
13 pleading, which we now have, you know, at least three
14 pleadings, and, with the supplement, four attempts to plead a
15 Bivens claim. And there are multiple threshold defects with
16 the Bivens claim that should independently support dismissal
17 with prejudice of the Bivens claim.
18 The first defect is that Facebook, as an entity, cannot be
19 liable under Bivens because it is not an individual federal
20 actor. And we would cite Your Honor to the Correctional
21 Services versus Malesko case from the Supreme Court on that in
22 2001.
23 That case foreclosed inferring constitutional tort
24 liability against a private entity, and it explained that the
25 basis for Bivens liability is trying to correct the behavior of
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 7 of 84 7
1 an individual federal officer.
2 THE COURT: Why don't we jump ahead. I agree with you
3 on that. So you don't need to argue that further.
4 MS. MEHTA: Okay.
5 THE COURT: What about Mr. Zuckerberg though?
6 MS. MEHTA: And then with respect to Mr. Zuckerberg,
7 Mr. Zuckerberg has, at best, been alleged to be the CEO of the
8 company who sets policy for the company.
9 There is no allegation that is plausible on the Second
10 Amended Complaint that Mr. Zuckerberg was personally involved
11 in or directed the actual challenged acts here which are the
12 acts relating to CHD's post.
13 There is no allegation nor could there be any plausible
14 allegation that Mr. Zuckerberg was involved in labeling posts,
15 taking down posts, anything relating to CHD's post, which is
16 the challenged conduct at issue here.
17 So even if we were to read their allegations and take them
18 as true for purposes of this motion, which we have to, even
19 though we don't agree with them, what they've argued, at best,
20 is that, as the CEO, he's a hands-on CEO that is involved in
21 setting policy for the company. That is not sufficient to
22 create liability for him as an individual.
23 And this is independent of all the other problems with the
24 Bivens theory, but just right out of the gate Mr. Zuckerberg
25 hasn't been challenged as an individual for actually taking any
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 8 of 84 8
1 of the challenged acts. And that precludes Bivens liability
2 for him as an individual, independent of all the other problems
3 with the Bivens theory.
4 Unless Your Honor has any questions on that, I want to go
5 to point two, which is, second point, independent of that,
6 there's also a fundamental problem with the Bivens theory,
7 which is the attempt to create private liability under the
8 First Amendment.
9 I would point Your Honor to Judge DeMarchi's case --
10 opinion in the Daniels case, which we submitted as supplemental
11 authority, because Judge DeMarchi was addressing incredibly
12 similar allegations, allegations relating to the same set of
13 letters from Representative Adam Schiff to the CEOs of the
14 technology companies relating to these vaccine misinformation
15 questions.
16 And in that case she noted that it's far from clear that
17 under the Ninth Circuit precedent there can be any kind of
18 First Amendment liability for a private actor at all. And she
19 cited the Vega case for that.
20 But even apart from that, the second defect with the
21 theory is that this would expand -- CHD's allegations here as
22 to Mr. Zuckerberg or as to Facebook would fundamentally expand
23 Bivens liability into a new context because this would hold a
24 private actor liable for alleged First Amendment violations.
25 And that is precisely what the Supreme Court and the Ninth
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 9 of 84 9
1 Circuit have both repeatedly cautioned is disfavored and has to
2 be undertaken with great care and only under very narrow
3 circumstances that don't resemble the claims here.
4 THE COURT: Well, they have a Fifth Amendment claim.
5 MS. MEHTA: Yes, Your Honor. But even with respect to
6 the Fifth Amendment claim, that goes to the third defect,
7 actually, in their Bivens theory, which I'm happy to address
8 now --
9 THE COURT: Oh, okay. All right.
10 MS. MEHTA: -- which is the lack of state action.
11 Right --
12 THE COURT: As long as you're coming -- as long as
13 you're coming to it, fine.
14 MS. MEHTA: I absolutely am, and it's a perfect time
15 to get to it.
16 So the third problem -- all of these are independent
17 problems with the theory. The third problem with the theory is
18 that there is no viable claim of state action in this
19 particular case. And there's multiple reasons for that, and
20 I'll quickly go through each of them.
21 The first is, if we look at the allegation, they don't
22 state any plausible inference of state action with respect to
23 the challenged conduct. So if you look at all of the facts
24 that they've pled -- the Schiff letters, the Representative
25 Schiff letters, the alleged partnership or information between
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 10 of 84 10
1 the CDC and Facebook -- none of that is actually specifically
2 tied to the actual challenged conduct here. And that, itself,
3 precludes any finding of state action independently.
4 That alone would be dispositive of the state action
5 question. There's just nothing here that actually connects any
6 of the facts that they've pled to the actual CHD posts that
7 were labeled and that are challenged at issue here.
8 That's the first point -- or the first sub point, I should
9 say.
10 Then there's a second sub point, which is, if we look at
11 their actual legal theory as the state action, there's a bunch
12 of different flaws with that legal theory as a state action.
13 They cite to three different theories for how there could
14 be state action in this case. The first is joint action.
15 On joint action, again, I would point Your Honor to Judge
16 DeMarchi's opinion in Daniels, where she addresses this point
17 and makes clear precisely why the kinds of allegations we're
18 talking about are insufficient.
19 There's just no plausible allegation that a letter from
20 Representative Schiff or some sort of alleged partnership with
21 the CDC would give rise to a joint action theory.
22 And she was addressing the same letters from
23 Representative Schiff in Daniels and addressed them and said
24 that's not sufficient to create joint action. And, of course,
25 even if it were, they don't relate to the alleged -- the
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 11 of 84 11
1 challenged activity.
2 There's nothing in those letters, there's nothing in any
3 of the allegations that connects any of the supposed joint
4 actions to the actual challenged activity. And under the
5 Gorenc case, which we cite -- G-O-R-E-N-C -- which we cite in
6 our briefing, that alone is insufficient because in order to
7 have state action there has to be joint participation in the
8 challenged activity.
9 The second reason, independently, that the state action
10 theory doesn't work or the joint -- the joint action theory
11 doesn't work is, even if we were to look at the points that are
12 in the supplement -- and this goes to the futility of the
13 supplement, even if you were to look at the points in the
14 supplement, none of those change the fundamental facts that the
15 challenged activity is in no way pled to be connected to the
16 state action.
17 So even if we were to look at that, looking at futility,
18 looking at all of the new allegations, they just don't connect
19 back to the actual challenged activity, and they would fail
20 under that.
21 I want to also address a second point, the coercion theory
22 that's been articulated by the plaintiffs.
23 With respect to the coercion theory, again, this is
24 something that Judge DeMarchi addressed in the context of the
25 Representative Schiff letters. And she rejected the theory --
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 12 of 84 12
1 and we would respectfully submit that Your Honor should also
2 reject it -- because, again, at the gate, they don't tie back
3 to the actual challenged activity and that, itself, precludes
4 any finding of coercion.
5 But even beyond that, the letters that were being
6 challenged, the Representative Schiff letters, they suggest, as
7 Judge DeMarchi found -- and as Judge Contreras found in the
8 District of D.C. when he was actually addressing a case
9 involving the same letters, a case against Mr. Schiff -- what
10 he found was these are information-gathering letters. And what
11 they do is they suggest that there is Congressional interest in
12 a problem.
13 And under the Ninth Circuit holding in Mathis versus PG&E,
14 which is 75 F.3d 498 at 503, that is insufficient to create
15 state action under a coercion theory. Congressional interest
16 in solving a problem is not coercion. And that is, at best,
17 what they've pointed to here with respect to that.
18 And then even aside from the pleading insufficiencies,
19 there's also the legal problem, which is under the Sutton case,
20 from the Ninth Circuit -- that's 192 F.3d 826 at 843 -- a truly
21 private entity cannot be liable solely because it is compelled
22 to act by the government.
23 So even if you set aside the pleading defects, we just
24 look at the legal theories, the coercion theory doesn't work
25 because of the Ninth Circuit's precedent in Sutton.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 13 of 84 13
1 The final theory on state action I want to quickly address
2 is encouragement, which is the theory that CHD has pled -- I
3 would give them credit for being creative here, although it's
4 been pled by others as well, so they're not the only one.
5 This is a theory that's been pled that suggests that
6 somehow the combination of CDA 230 and the other acts, the
7 Representative Schiff letters, somehow that combination of
8 activity creates encouragement of the violative conduct that
9 would somehow give rise to a First Amendment violation. And
10 that theory, again, has to be rejected out of the gate for a
11 whole host of reasons.
12 Judge DeMarchi also happened to address this in a
13 different case, which is the Divino Group versus Google case,
14 which is 2021 WL 51715 at star 6. This is from January, in
15 which, again, these were letters from Representative Schiff,
16 and the theory was, well, Section 230 creates some sort of
17 encouragement on the part of the government that transforms
18 otherwise private conduct into government conduct.
19 She rejected that theory for exactly the same reasons that
20 Your Honor should reject them here. First of all, nothing in
21 Section 230 in any way is connected to the specific actions
22 here. In other words if we look at CDA 230 in the face of the
23 statute, it doesn't direct the particular conduct at issue, the
24 particular challenged conduct. It is on its face a neutral
25 statute.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 14 of 84 14
1 And she goes into that in the Divino Group case and
2 explains why that is the case and why that precludes the sort
3 of Skinner-type theory that we have from CHD here. So that
4 itself would be a basis to reject that theory.
5 The other thing was, even if Your Honor were to get past
6 that, the problem with the theory is that it improperly
7 attempts to convert this permissive law into something beyond
8 that. And I think that's based on a fundamental misreading of
9 the Skinner case and of the Hanson case and the other cases
10 that are cited by CHD.
11 Judge DeMarchi explains why in the opinion, but the bottom
12 line is it is a permissive law, and that permissive law itself
13 cannot give rise to this kind of encouragement or coercion
14 theory.
15 And when you add to it a letter of inquiry from a single
16 representative, or even individual letters from multiple
17 representatives of the House of Representatives, that doesn't
18 in any way constitute a threat, coercion, encouragement, let
19 alone something that could take a neutral permissive statute
20 and convert it into the kind of statute that, on very rare
21 occasions, has been found to support this kind if a theory.
22 So I know I've got gone through a lot of different reasons
23 why the Bivens claim doesn't work, but I think the reason for
24 that is the Bivens claim is just fundamentally a mismatch with
25 the allegations in this case.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 15 of 84 15
1 And I think one thing that is -- I think is really
2 important not to lose sight of, that we're going to talk about
3 when we get to the rest of the argument, is that not only are
4 there all these pleading defects and all these legal defects
5 with the theory, but the theory itself creates really
6 substantial First Amendment concerns on Facebook -- on the part
7 of Facebook and the platforms. And that's why the case law has
8 always cautioned that we take great care in extending Bivens
9 liability.
10 And here Your Honor would have to go through multiple
11 extensions of Bivens liability in order to find that the theory
12 that has been pled actually plausibly states a claim or that
13 they could ever plausibly state a claim under Bivens.
14 You would have to find that -- each of the different areas
15 where I said there was an independent problem, you would have
16 to expand Bivens liability in so many different ways. And the
17 reason that the cases tell us that we don't do that is
18 precisely because we have to balance the other First Amendment
19 concerns that are at issue here, which are the First Amendment
20 concerns of Facebook and the platform.
21 Unless Your Honor has any other questions on Bivens, I
22 will stop there and reserve the time for the other issues.
23 THE COURT: Okay. Does the other defendant, Poynter,
24 want to be heard on Bivens, or just Facebook?
25 MS. LOCICERO: Just briefly, Your Honor, for Poynter.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 16 of 84 16
1 THE COURT: Okay.
2 MS. LOCICERO: Your Honor, I want to point out the
3 facts that Face- -- I'm sorry -- CHD alleges specifically
4 related to Poynter because they're very thin on the Bivens, and
5 all the counts, frankly, and important for the Court to
6 understand with respect to analyzing the Bivens claim as it
7 relates to Poynter.
8 Poynter is a journalism institution. I won't belabor
9 Malesko because the Court has already expressed understanding
10 of the Malesko decision, of course. And it's clear from the
11 complaint, just in paragraph 21, that Poynter, too, is a
12 private corporate defendant. It's a nonprofit Florida entity.
13 And Malesko prohibits suing Poynter.
14 But what's important in this case to understand is that,
15 with respect to Poynter, Poynter, through its brand PolitiFact,
16 is providing fact-checking journalistic services on the
17 Facebook platform.
18 What is at issue here with respect to CHD's allegations is
19 primarily about a fact check that Poynter did that actually
20 involves a third party, that's not a party to this litigation,
21 called Collective Evolution.
22 And Collective Evolution wrote an article that CHD later
23 shares that connects a U.S. Armed Forces study about the flu
24 vaccine to whether there are higher incidents of Corona virus
25 in individuals getting that vaccine. The PolitiFact service
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 17 of 84 17
1 rated that headline as false.
2 If the Court takes a look at DE 654, which is Exhibit B to
3 the Second Amended Complaint, the Collective Evolution
4 article -- which I'll point out has a corrected headline
5 because they apparently agreed with Poynter's criticism -- it
6 also contains a full-blown fact check, which is essentially an
7 11-paragraph news article about why Poynter and PolitiFact had
8 concerns about the Collective Evolution headline.
9 CHD may have shared the Collective Evolution article, CHD
10 may not like the journalism about the Collective Evolution
11 article, but the speech was about that article.
12 The only other allegations in the Bivens claim that seem
13 to relate to Poynter and the federal government would involve
14 funding. And Poynter discloses -- it's no secret -- that there
15 is some direct and indirect government funding to Poynter as a
16 nonprofit that, I believe, CHD alleges it's about 10 percent of
17 Poynter's funding.
18 But those are really the facts that CHD attempts to allege
19 to state a Bivens claim against Poynter.
20 In addition to the Malesko problems that the Bivens claim
21 has, there's a fundamental claim with federal action related to
22 Poynter. The only allegation that directly relates to Poynter
23 in federal action has to do with the funding that I mentioned.
24 And I wanted to point out the Morse versus North Coast
25 Opportunities case, 118 F.3d at 1338, in which the Ninth
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 18 of 84 18
1 Circuit analyzed a First Amendment retaliation Bivens claim
2 that involved an employee that wasn't rehired by a Head Start
3 Program.
4 And the claims in that case involved almost exclusive --
5 the Head Start Program was almost exclusively federally funded;
6 it was heavily regulated through federal regulations. And even
7 in that situation, where you've got virtually all funding
8 coming from the federal government and extensive regulations
9 coming from the federal government, there wasn't sufficient
10 action -- federal action for a Bivens claim.
11 Here you have way, way less than that. And I know that
12 Facebook sort of foreshadowed arguing the First Amendment
13 issues, but I want to point out here that what we're
14 fundamentally talking about is journalism by Poynter through
15 its PolitiFact fact-checking service.
16 And, essentially, what the plaintiffs are asking you to do
17 here is to censor Poynter's journalism. And that's a
18 fundamental problem under the First Amendment as it relates to
19 Poynter and the Bivens claim.
20 So we also ask that the Court dismiss the Bivens claim
21 with prejudice. Thank you, Your Honor.
22 THE COURT: Okay. Thank you.
23 Does -- do the plaintiffs wish to respond?
24 MR. TEICH: Yes, please, Your Honor. Roger Teich for
25 plaintiff.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 19 of 84 19
1 And I'm going to say some things on the joint action
2 theory and then turn it over to my colleague, Jed Rubenfeld, to
3 discuss compulsion and the other theories.
4 THE COURT: Okay.
5 MR. TEICH: And I do want to say at the outset, there
6 is a fourth cause of action for declaratory injunctive relief,
7 and that is going to play in later.
8 THE COURT: Okay.
9 MR. TEICH: I'm sure the Court's aware of that.
10 Let me start by saying that plaintiff, Children's Health
11 Defense, publishes facts, data, and opinions that are critical
12 of the CDC, an executive agency, but none of those things --
13 none of the facts, data, or opinions are false.
14 But they are critical, highly critical of the CDC. And
15 that may make CHD, Children's Health Defense, unpopular, but
16 that's the core value the First Amendment protects and never
17 more urgently than now, Your Honor.
18 In 2019, the CDC, the Center for Disease Control and
19 Prevention, unveiled what it called its Vaccinate with
20 Confidence strategic initiative. And this is outlined in
21 paragraph 50 of our Second Amended Complaint. And I think it's
22 a terribly important paragraph.
23 THE COURT: You're going to get to joint action?
24 MR. TEICH: Yes, I am. This is the joint action.
25 The CDC initiative identified as its high priority to,
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1 quote, stop myths and misinformation. The term
2 "misinformation" is the euphemism they used, incredibly, for
3 any statement that conflicts with their own policy regardless
4 of its truth.
5 It reminds us of Humpty-Dumpty's line: The word means
6 just what I choose it to mean, nothing more nor less.
7 And that term "misinformation" we will use today, but bear
8 in mind, in our allegations it is a euphemism for speech that's
9 critical of the CDC. It is not -- that word is being misused
10 by the CDC, and they are directing Facebook to use it in that
11 same way.
12 The CDC said publicly -- and it's in paragraph 50 of our
13 complaint -- that it was engaging partners, that's a quote,
14 using trusted messengers, working with and collaborating with
15 Facebook to contain the spread of, quote --
16 THE COURT: It didn't say Facebook, it said messengers
17 and partners; right?
18 MR. TEICH: It said trusted messengers and partners.
19 And I believe they do identify Facebook as a partner. Both the
20 CDC Foundation does and I believe the CDC does.
21 And collaborating with them to, quote, contain the spread
22 of misinformation on social media. That's public record.
23 And, you know, in preparing for this I did a string of
24 analogies. "Jointly conceived" is the legal standard for joint
25 action. "Engaging partners" is the term they used. "Working
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 21 of 84 21
1 with" is the phrase they used. "Acting in concert," the legal
2 standard. "Using trusted messengers," encourage or direct by
3 an informal policy; somehow reach an understanding.
4 The CDC's statements quoted to you in paragraph 50 are the
5 same as Adickes, Brentwood, Mathis, the legal standard for
6 making out joint action. But that's just the tip of the
7 iceberg.
8 There's the reading between the lines, the reasonable
9 inferences and common sense that you can use to infer collusion
10 from timing and cui bono. Who benefits? The CDC has reaped
11 enormous benefits from this.
12 And we submit there's a triable issue of shared intent
13 between Facebook and the Executive Branch through the CDC to
14 suppress Children's Health Defense's speech and a triable issue
15 as to when it was formed and how it was made manifest in
16 actions directed against CHD.
17 I want to talk later about the timing issue because
18 paragraph 50 is sourced to October 2019. The adverse actions
19 are in May, with the defunding of the button, the Donate
20 button, June and ongoing through the present day on the fact
21 checks, and September of 2019 for the first publication of the
22 warning label on CHD's page.
23 And you might say, well, all of those are adverse actions,
24 but the CDC's strategic initiative postdates them. But I don't
25 believe that's right, Your Honor, because the terms they use --
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 22 of 84 22
1 "engaging with," "using trusted messengers," "working with
2 Facebook," "collaborating with Facebook" -- they're all past
3 actions, uncompleted. They're imperfect, I think is the
4 grammatical term for it.
5 They reference past action undertaken but not completed at
6 the time of the initiative, and conclude, on the face of that,
7 that that initiative only sprang into existence in October. It
8 didn't. I would submit it goes back at least as far as January
9 of 2019 and predates and encompasses the period in which
10 Facebook has taken these adverse actions.
11 The exigency here -- and the law must always meet the
12 exigency of the day, Your Honor. The exigency here is CDC's
13 underhandedness in appointing Facebook not just as its
14 propagandist but as its censor. That's what Bivens was aimed
15 at, the greater capacity for harm from actors acting as federal
16 actors.
17 And, you know, Bivens cites Marbury, and that's no
18 accident. I think here, too, you're dealing with first
19 principles.
20 THE COURT: So you're arguing that the CDC has
21 appointed Facebook as a propagandist and a censor?
22 MR. TEICH: Correct.
23 Now, there is a role for affirmative government speech. I
24 can call it propaganda, but, you know, that's a label. But,
25 you know, appointing them as censor to demote, fact check,
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 23 of 84 23
1 censor, defund, all of those functions, that crosses a
2 constitutional line.
3 And the issue for you now, which is consequential, is will
4 we be permitted the discovery to show evidence that they did
5 reach an understanding, that there is an agreement?
6 THE COURT: Oh, so you want to allege it and then find
7 facts afterwards?
8 MR. TEICH: No, not at all, Your Honor. It is in the
9 public record that they are working with, that they have
10 reached an agreement to dip into the -- I mean, Mark Zuckerberg
11 says that he's working with, you know, the CDC and the World
12 Health Organization to remove vaccine misinformation.
13 He has said that, and that's in the Second Amended
14 Complaint. That's at paragraph 52 of the Second Amended
15 Complaint. He has said that Facebook works with both agencies
16 to remove misinformation. It seems to me that is a
17 plausible -- highly plausible allegation of an agreement.
18 And, dipping into the supplement, we allege that the Biden
19 Administration says it is, quote, directly engaging with
20 Facebook to, quote, clamp down on vaccine misinformation. And
21 Facebook says it has reached out to the White House to offer
22 any assistance it can provide.
23 That's more than merely furnishing the government with
24 information. That's a plausible case that there is an
25 agreement.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 24 of 84 24
1 Again, I do want to say that I think an inference -- a
2 reasonable inference is that these things Facebook has done are
3 unlikely to be undertaken without an agreement; that they
4 benefit the CDC so directly, the warning label redirects users
5 to the CDC for, quote, reliable, up-to-date information.
6 The fact checks refer users to the CDC as, quote,
7 authoritative. That's probably why CHD is still on Facebook at
8 all. Facebook is helping the CDC, the government agency,
9 preach to the unconverted on CHD's page.
10 CDC, the government agency, benefits so directly that it's
11 reasonable to infer they are involved with Facebook in a shared
12 objective, a shared design, and means.
13 THE COURT: "CDC benefits so directly"? What do you
14 mean by that?
15 MR. TEICH: What I mean by that is from warning labels
16 that refer -- that are on -- that are on CHD's page, Children's
17 Health Defense's page, the warning label says "The CDC has
18 reliable up-to-date information. Go to cdc.gov," with a
19 button.
20 THE COURT: That benefits CDC how exactly?
21 MR. TEICH: It's referring Facebook users who are
22 visitors to Children's Health Defense fund's page. It refers
23 them -- it's a form of advertising for the CDC. It's saying
24 they're reliable, they're up-to-date, go there now.
25 THE COURT: And that benefits CDC how again?
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 25 of 84 25
1 MR. TEICH: It directs traffic to the CDC.
2 THE COURT: Does that make money for CDC?
3 MR. TEICH: It's more that it rechannels traffic there
4 from a group who has been highly critical of the CDC on their
5 page. In the prime real estate at the top of their page, it
6 says, essentially, what you're looking at below, this warning
7 label, is unreliable and out of date; and if you want the
8 truth, quote-unquote, go to the Centers for Disease Control. I
9 would say that does benefit them.
10 THE COURT: Does it say that? Does it say "truth"?
11 MR. TEICH: Well, it says "reliable and up-to-date."
12 I think those are synonyms for -- I mean, one of the issues
13 that you'll need to confront is the core allegation that the
14 CDC, the government agency, has put forth the standards of
15 decision by which Facebook judges Children's Health Defense's
16 content.
17 And I would say to you that in Docket 69-4, attached to
18 their motion, is material Facebook put forth on how they handle
19 misinformation. They say openly, Facebook, that the CDC --
20 that the CDC is doing this, is setting the standard. They say,
21 quote, We defer to the CDC, slash, WHO for authoritative
22 judgments.
23 Now, they have lampooned our claim as a conspiracy theory.
24 It's not a conspiracy theory, but conspiracy law has a lot to
25 say about the interpretive rules here.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 26 of 84 26
1 First, it's nearly always necessary to infer that two
2 parties, here the government agency, the CDC, and Facebook,
3 have acted in concert. Almost always necessary to infer that
4 from circumstantial evidence.
5 It's not that we're seeking discovery in search of our
6 case, but it's very unusual to have as much of an agreement,
7 explicit, as we have here, but we believe that the censorship
8 is alluded to euphemistically but not spelled out.
9 But the existence or nonexistence of a conspiracy is
10 essentially a factual issue that the jury should decide.
11 That's Adickes, Justice Black's concurrence; and that's the
12 Earth First! case, Mendocino Environmental Center, from the
13 Ninth Circuit.
14 The other principle of conspiracy law that I think speaks
15 to this situation is that the participants in a conspiracy must
16 share the general objective, but they don't need to know all
17 the details of the plan or possess the same motives.
18 Here, Facebook has huge profit motives to censor
19 plaintiff. What's --
20 THE COURT: And that is what?
21 MR. TEICH: Well, both their interest in diverting
22 Children's Health Defense users to their affiliated nonprofits,
23 the fact-checkers.
24 And it's also the adverse profit motives that are in the
25 Second Amended Complaint: vaccine development that Mark
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 27 of 84 27
1 Zuckerberg is heavily invested in; brand protection for their
2 pharmaceutical company advertisers, it's a billion-dollar
3 income stream a year; and 5G development, of which CHD,
4 plaintiff, has been critical.
5 So I can march through the timeline, but, as I said,
6 paragraphs 50, 51 about the CDC's 2019 Vaccinate with
7 Confidence initiative, we think is a significant marker, public
8 record marker, of ongoing cooperation and joint action with the
9 CDC.
10 We allege that the CDC, the government agency, deputized
11 the World Health Organization as its proxy. And the same day
12 that the warning label was published, Facebook published on
13 CHD's page, the World Health Organization issued a press
14 release saying they had been in discussion with Facebook, with
15 Facebook, for several months to reduce the spread of
16 inaccuracies on Facebook.
17 And we allege that they are acting in this regard as a
18 proxy for the CDC under their charter. As is alleged in the
19 complaint, the World Health Organization needs the express
20 consent of a U.S. Governmental entity for the World Health
21 Organization to cooperate with a domestic corporation. And we
22 allege that they have done so here with the express consent of
23 the CDC.
24 So we feel like that's part of the mix you should consider
25 in determining that we have plausibly alleged a theory of joint
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 28 of 84 28
1 action.
2 Your Honor, I think with that, that -- I would say Mathis,
3 we feel, is a case that strongly supports this joint action
4 theory. The crucial question in Mathis -- I mean, I would say
5 Facebook is not using -- to back up a step -- its own
6 independent medical judgment or its own legal judgment, as in
7 Polk County or Rendell-Baker. They're deferring to the CDC,
8 the government agency, for the judgment. They both emphasize
9 their cooperative relationship in approaching these issues.
10 And similar to Mathis, the CDC is not shrinking from
11 suggesting a standard of decision for the exclusion of speech
12 from Facebook's platform.
13 And the crucial question, as in Mathis, is whether the
14 government provides that standard of decision -- vaccine
15 misinformation circularly defined as any speech that's critical
16 of the CDC -- regardless of its truth. That is the standard
17 that Facebook has -- the mantle that they have taken to do what
18 they're doing to censor speech.
19 Under Mathis, the crucial question is not that the
20 government specifies particular individuals subject to the
21 rule. In Mathis, the particular plaintiff who is denied the
22 security clearance didn't allege that the -- you know, that the
23 nuclear regulatory had him, in particular, on its radar.
24 Here I would suggest to you, given the prominence of
25 Mr. Kennedy and of Children's Health Defense in this scientific
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 29 of 84 29
1 dispute, I think it is plausible that they have been identified
2 by the CDC.
3 But under Mathis, the issue is more is the CDC
4 cooperating, directly engaging, working with trusted
5 messengers, which it considers Facebook to be.
6 I think, with that, I would like to turn it over to Jed
7 Rubenfeld to discuss some other aspects of state action.
8 THE COURT: Thank you.
9 MR. TEICH: Thank you.
10 THE COURT: Mr. Rubenfeld.
11 MR. RUBENFELD: Thank you, Your Honor. I'm just
12 trying to --
13 THE COURT: There.
14 MR. RUBENFELD: There.
15 Good afternoon, Your Honor. Good morning, I guess, on the
16 West Coast. Thank you so much for devoting so much of your
17 time to the --
18 THE COURT: Mr. Rubenfeld, there's a sign on you that
19 says your network bandwidth is low. And, actually, your voice
20 is cutting in and out.
21 (Discussion held off the record.)
22 MR. RUBENFELD: Let me just ask you whether -- I'm so
23 sorry to be causing so many problems. Is that any better? Can
24 you not hear me?
25 THE COURT: It's a little better, but it still cuts in
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 30 of 84 30
1 and out. It's the court reporter we're concerned about, so --
2 MR. RUBENFELD: Oh, this is a disaster.
3 THE COURT: It's not a disaster. It's fine.
4 Is there a way to cut off the vision part and just go with
5 the sound? Would that be better?
6 (Discussion held off the record.)
7 THE COURT: If there's some way just to get on the
8 phone?
9 MR. RUBENFELD: Let me ask you, though, I have tried
10 to move my --
11 THE COURT: No.
12 MR. RUBENFELD: Why not? Can I not do that?
13 THE COURT: Can you -- it's still cutting out. Can
14 you get on the phone?
15 MR. RUBENFELD: So you're still having trouble hearing
16 me; is that right?
17 THE COURT: Right then it's good.
18 MR. RUBENFELD: I can get on the phone if I --
19 THE COURT: Okay. You're good now. What you're doing
20 now is working.
21 MR. RUBENFELD: I'm good now?
22 THE COURT: Yeah.
23 MR. RUBENFELD: Let me go ahead and try to start, and
24 I'm sure I'll be told if things are going haywire.
25 So, yes. Thank you, Your Honor.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 31 of 84 31
1 And let me begin by very briefly taking a step back and
2 broadening the lens, if I might, because this case, Your Honor,
3 from a free speech point of view and the present moment in the
4 United States, are genuinely unprecedented.
5 Today two or three companies, including Facebook, private
6 companies, private behemoth companies, act as gatekeepers for
7 what the Supreme Court has called the modern public square,
8 referring, of course, to the Internet.
9 And, as a result, these companies, including Facebook,
10 excise discourse that no entity, public or private, has ever
11 exercised in American history. In the United States, no
12 governmental official, from the lowest to the highest, has the
13 power to excise a single fact or opinion from even the smallest
14 corner of the public square, public discourse. Yet every day
15 Facebook, Your Honor, dictates for hundreds of millions of
16 Americans what facts, what opinions, what voices.
17 Now, this vast censorship power, of course, does not by
18 itself make Facebook a governmental actor. That's not how
19 state action doctrine works. We all know that. But what it
20 does mean is that courts must stand ready to apply
21 well-established traditional state action doctrine whenever the
22 federal government seeks to harness that censorship power to
23 use it for its own purposes, because, Your Honor, it is
24 axiomatic.
25 And here I'm quoting the Supreme Court's Norwood opinion.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 32 of 84 32
1 It is axiomatic that the government may not induce, promote, or
2 encourage private parties to accomplish what it, the
3 government, is constitutionally forbidden to accomplish or, as
4 the Ninth Circuit held in George versus Edholm, just a few
5 years ago, state action must be found whenever governmental
6 officials are deliberately -- and I'm quoting -- coercing,
7 inducing, or encouraging private parties to do what they
8 themselves, the government officials, cannot constitutionally
9 do.
10 Now, that simple principle is what this case is all about,
11 because since 2019 federal actors have precisely been
12 encouraging, promoting, coercing, and inducing Facebook to take
13 more and more aggressive censorship action against so-called
14 vaccine misinformation.
15 And that's why this case, by the way, is different from
16 all other previously litigated cases concerning state action in
17 the online world.
18 THE COURT: So can CDC publish a brochure that says
19 "We disagree with all the things that CHD is saying"?
20 MR. RUBENFELD: Absolutely.
21 THE COURT: So they can do that?
22 MR. RUBENFELD: Yes, they can.
23 THE COURT: So tell me again what they're harnessing
24 Facebook to do that they can't do?
25 MR. RUBENFELD: Okay. Let me go ahead and do that.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 33 of 84 33
1 So my colleague, Mr. Teich, has gone through joint action. And
2 I'll just say a word about that, and then I will go on to talk
3 about coercion and encouragement.
4 But on the joint action front, what CDC cannot do is
5 partner with a social media organization and decide, Look,
6 here's the speech that we want you to censor. Will you do that
7 for us? Facebook responds. Sure, we'll do that. You tell us
8 what's going to count as misinformation and we'll stamp --
9 we'll restrict it as long as, you know, it follows your
10 protocols, your guidelines.
11 That's exactly what we are alleging they're doing. And
12 it's not that secret. CDC calls Facebook its partner. It says
13 it's "partnering with social media companies" -- who else is
14 that referring to other than Facebook? Certainly plausible
15 inference -- "to curb the spread of vaccine misinformation."
16 It's partnering with them. That's joint action.
17 For its part, Facebook says, "We're partnering with the
18 CDC to help curb the spread of vaccine misinformation."
19 Plausible inference? They're working together. Not even a
20 plausible inference; they're saying it to us.
21 We don't know the details of the partnership. That's for
22 discovery. But we're not alleging something and then seeing if
23 it's true. They're saying it; we're quoting them saying it.
24 It's a plausible inference that they're working together
25 because they're telling us that they're working together.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 34 of 84 34
1 And, similarly, the White House has said "We are directly
2 engaged with Facebook and other" -- Facebook particularly --
3 "and other social media companies." Facebook replies, "Yes,
4 that's right. And we called the White House and said we agreed
5 we would provide any assistance we could."
6 Again, they're telling us they're working together.
7 Working together is joint activity. There's no space between
8 those two words or concepts. So that's a plausible interest.
9 That's all I'm going to say on joint action. With Your
10 Honor's permission, though, I'm happy to answer questions. I
11 would now move on to coercion.
12 THE COURT: Okay.
13 MR. RUBENFELD: And I would just note, Your Honor,
14 these factors, these three factors -- joint action, coercion,
15 encouragement -- they are cumulative. Each one is sufficient,
16 if strong enough, to base the finding of state action.
17 But the Court may use each one as a factor, if the Court
18 finds it, and use it cumulatively, additively, to tip the scale
19 in favor of state action. That's exactly what the Ninth
20 Circuit did in last year's Rawson versus Recovery Innovations
21 case. And Your Honor may do it as well, and we would encourage
22 that.
23 Now, as to coercion, since 2019, high-ranking members of
24 Congress have repeatedly threatened Facebook -- this is our
25 allegation, and it's based on statements in the public
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 35 of 84 35
1 record -- with catastrophic legal consequences, including loss
2 of their Section 230 immunity, which is worth billions of
3 dollars to them, and loss of Instagram and WhatsApp, their
4 crown jewels, through an antitrust breakup if Facebook refused
5 to do more to censor so-called vaccine misinformation.
6 Now, of course, congressmen are permitted to -- to
7 criticize private companies and to exhort them to take whatever
8 action they want. We're not saying otherwise. Of course, they
9 are. But the test for deciding when such exhortation crosses
10 the line into coercion, the test -- the legal test was laid
11 down by the Second Circuit 40 years ago in a case called
12 Hammerhead, which has been quoted and followed all over the
13 country, including by the Ninth Circuit in the American
14 Families case.
15 And the Hammerhead test is objective, and I'm going to --
16 I'd like to quote it to the Court. The test is this:
17 "Where comments of government officials can reasonably
18 be interpreted as intimating that some form of punishment
19 or adverse regulatory action will follow" -- failure to
20 accede to the officials' request -- "a valid First
21 Amendment claim can be stated."
22 And the Ninth Circuit has said squarely that such a threat
23 need not be explicit or --
24 THE COURT: What were the facts in the Hammerhead
25 case?
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 36 of 84 36
1 MR. RUBENFELD: The facts in Hammerhead -- I wish I
2 could answer that question better for Your Honor, and I'm just
3 going to tell you right now, they're not going to be analogous
4 to the facts in this case.
5 THE COURT: Oh.
6 MR. RUBENFELD: But I'm using Hammerhead as a test --
7 as a legal test, and the Ninth Circuit has reaffirmed that as
8 the test in the American Families case. And there have been
9 repeated congressional statements that passed this test, the
10 Hammerhead test.
11 And let me also point out that the Ninth Circuit has said
12 that as long as a reasonable fact-finder, taking all inferences
13 in favor of plaintiff, could find that there was the intimation
14 or insinuation of a threat of governmental power or sanction --
15 that's the Ninth Circuit's phrase for it -- that's all the
16 District Court's job on motion to dismiss should be. After
17 that it's discovery and for a jury. And the Ninth Circuit has
18 said so explicitly in the Brodheim case.
19 THE COURT: Now, you mean that's a threat from one
20 congressman?
21 MR. RUBENFELD: Oh, absolutely not. Although, I --
22 you know, we'd argue that Representative Schiff's comments pass
23 the Hammerhead test.
24 THE COURT: I think he would be very proud if he knew
25 you were saying he could direct what the Congress does. Nobody
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 37 of 84 37
1 seems to be able to do that these days.
2 MR. RUBENFELD: I agree. But when there are a half
3 dozen similar congressional statements, when there are four or
4 five public hearings, when CEOs from big tech, including
5 Mr. Zuckerberg, have been grilled about whether they're going
6 to do more to censor vaccine misinformation, even as
7 congressmen are introducing bills to take away Section 230
8 immunity or to break them up under Facebook, the Speaker of the
9 House of Representatives, last year, 2020, said the following.
10 Here's the exact statement, Your Honor, the exact
11 statement as Congress was holding one of the hearings that I
12 just described: "Social media companies have utterly failed to
13 stop the spread of COVID disinformation on their platforms."
14 And she warned that Congress, quote, "must send a message to
15 social media executives 'you will be held accountable for your
16 misconduct.'"
17 Could a reasonable fact-finder see in that statement the
18 insinuation that some adverse legal action might be taken? I
19 don't see how you could say that a reasonable fact-finder
20 couldn't so interpret that.
21 In fact, I think that's exactly what she was saying, but I
22 think it's surely a reasonable fact-finder could so determine.
23 And that's all that the Hammerhead test requires.
24 And, by the way, there are four or five statements like
25 this. They're public statements. They're in the public
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 38 of 84 38
1 record. They're on the -- Congresswoman and Senator -- Senator
2 Klobuchar, just a few months ago, made a very similar
3 statement, and they're on their websites. So it's not just
4 Schiff.
5 And, you know, I think it's important to say that, once
6 the statements have been made, it is actually not part of
7 plaintiff's proof to show or to allege that Facebook made the
8 decision in response to the threat.
9 The Ninth Circuit held that explicitly in the Carlin
10 Communications case, which we cite in our brief, and reaffirmed
11 that recently in the -- in the Rawson case.
12 Your Honor --
13 THE COURT: Do you have any comments on the recent
14 cases from this district in -- that Judge DeMarchi wrote?
15 MR. RUBENFELD: Absolutely. So defendants make a lot
16 of the Daniels case. And with all due respect to the
17 magistrate judge, she was not informed of the precedent. She
18 rendered her decision explicitly on the ground that the
19 representative did not have legal control over Facebook. Read
20 the opinion. That's what she says. That is not the test.
21 Every circuit court to have reached this question has held
22 to the contrary. The Second Circuit explicitly said that it is
23 reversible error for a district judge to dismiss a case on the
24 ground that the person making the threat -- the official making
25 the threat did not have regulatory or legal control.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 39 of 84 39
1 That's the Okwedy case quoted and followed by courts all
2 over the country. Quoted and followed, by the way, in the
3 Ninth Circuit in Brodheim, although not on this exact issue.
4 But quoted on this exact issue by the Seventh Circuit, the
5 Fifth Circuit.
6 So with all respect to the magistrate judge, it was
7 simply -- the opinion --
8 THE COURT: It was just wrong.
9 MR. RUBENFELD: Yes. It was based on a legal error.
10 She was not informed of the actual precedent. I don't know why
11 the parties didn't inform her. She didn't find it. But she
12 rested on a ground that has been rejected by every circuit
13 court in the country.
14 THE COURT: And that would be exactly what, that's
15 been rejected by every circuit court in the country? The
16 idea --
17 MR. RUBENFELD: The Daniel court's holding that the
18 reason why the statements made by the congressman did not
19 amount to state action was because the congressman did not
20 have, quote, legal control over the actor, the private party in
21 question.
22 And if you read the opinion, you'll see that the opinion
23 rests on that ground, and it is simply incorrect as a matter of
24 law.
25 In addition, I would point out that in the Daniels case,
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 40 of 84 40
1 as the judge expressly noted, no claim of compulsion had been
2 made. So, in fact, the magistrate judge did not have reason to
3 apply the Hammerhead test. So, you know, it wasn't her fault.
4 No claim of compulsion had been made.
5 We, on the contrary, make the claim of compulsion. And
6 defendants' argument that Sutton somehow blocks that, as
7 anybody who reads Sutton and subsequent Ninth Circuit opinions
8 is aware, Sutton only applies when the sole claim of compulsion
9 is coming from a, quote, generally applicable law, a generally
10 applicable statute, like a speed limit that tells everybody
11 they've got to drive under the speed limit. That doesn't turn
12 everybody into state actors, obviously.
13 When particular government officials are making comments
14 threatening the private party to do something unless they do
15 something, that's governed by the Carlin case, which is a Ninth
16 Circuit case where that happened.
17 And the Sutton case specifically says we're not overruling
18 Carlin. That's a different case because there was that kind of
19 governmental official intervention. And, also, it's also
20 governed by Mathis, same thing.
21 And Mr. Teich is absolutely correct, I want to really say
22 this explicitly, Your Honor, defendants make a great deal out
23 of the claim that the government did not specifically direct
24 the specific challenged conduct; that is, the restricting of
25 CHD's content.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 41 of 84 41
1 The Ninth Circuit confronted that argument and rejected it
2 in Mathis and said it doesn't matter if they didn't direct this
3 particular action. What matters is if they gave the private
4 party the standard of decision -- I'm quoting -- the standard
5 of decision, just what we're alleging here.
6 The CDC gives Facebook the standard decision. Here are
7 the truths about COVID and the vaccine. Here are the truths
8 about the treatments for COVID and the -- for COVID. If
9 content departs from those then, please, do suppress it.
10 That's the standard of decision. It makes no difference
11 that the CDC or the White House didn't specifically call for
12 the censoring of plaintiff's content; although they might have,
13 but it doesn't matter if they didn't.
14 THE COURT: And it doesn't matter if what the CDC said
15 was true?
16 MR. RUBENFELD: Well, uhm, false speech -- if Your
17 Honor were to reach the question and decide that CHD content is
18 false, which it's not, but if it were, it would still be
19 constitutionally protected.
20 But, in fact, we believe, if the Court looks at it or if
21 an ultimate fact-finder looks at it, you will find -- I'm going
22 to stop talking for a second because I'm worried that you can't
23 hear me.
24 THE COURT: I can hear you.
25 MR. RUBENFELD: Am I lost?
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 42 of 84 42
1 THE COURT: No.
2 MR. RUBENFELD: Great. Oh, thank heavens. Okay.
3 So false speech is, of course, constitutionally protected,
4 but here -- but I don't think Your Honor needs to reach the
5 question, on a motion to dismiss, whether our speech was false.
6 Our allegation is it's true. I believe those allegations
7 should be accepted as true for purposes of this motion.
8 And so it -- CHD's speech is unquestionably
9 constitutionally protected even if it were false. But on our
10 allegations it's not false, and I believe those allegations
11 should be taken as true here on this motion for -- for sure.
12 Unless Your Honor has further questions about coercion, I
13 believe that factor counts very strongly in favor of a finding
14 of state action here.
15 I will now turn to encouragement.
16 THE COURT: Okay. And just let me give everybody a
17 heads-up. The defendants have used 20 minutes, and the
18 plaintiffs have used 40 minutes. Just so you know.
19 MR. RUBENFELD: Thank you, Your Honor.
20 THE COURT: You're welcome.
21 MR. RUBENFELD: No excuse, but I did have some
22 technical difficulties.
23 But, anyway, so I'm going to turn to encouragement and I'm
24 going to try to cover this briefly.
25 Here what's all important is Section 230, the famous
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 43 of 84 43
1 Section 230 of the Communications Decency Act, which is an
2 immunity statute.
3 THE COURT: Right.
4 MR. RUBENFELD: Section 230 immunizes Facebook if it
5 restricts constitutionally protected speech -- I'm quoting the
6 statute -- if Facebook finds it, quote, objectionable.
7 Why am I emphasizing it's an immunity statute? Because
8 that's unusual and because under Skinner, the Supreme Court
9 Skinner case, an immunity statute plus in combination with
10 governmental involvement is a very strong factor weighing in
11 favor of state action as a form of encouragement and
12 inducement.
13 Skinner, as the Court, I'm sure, is aware, involved
14 federal regulations pertaining to drug tests performed by
15 private railway companies on their own employees, seemingly
16 totally private conduct. But these regulations -- some of the
17 regulations mandated the drug tests. And that, of course,
18 turned the drug tests, the mandated ones, into state action
19 under the compulsion test. That was clear.
20 But one part of the regulation, subpart D, was not
21 mandatory. It was permissive, just like Section 230. It said
22 to the railway companies, you can do it, but you don't have to.
23 But what it did do was it immunized them from any state law
24 liability.
25 It preempted state law, cleared away legal obstacles, and
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 44 of 84 44
1 said you can't be sued, just like Section 230. And the Supreme
2 Court said that, in combination with some evidence of joint
3 action, which I'll get to in a second, was sufficient to turn
4 the private drug tests, though permitted, not required, into
5 state action, because of the immunity.
6 Now, the other two factors the Court emphasized in
7 Skinner, number one, the government said the Court had
8 expressed a -- had made plain -- I'm quoting -- its strong
9 preference -- I'm quoting -- for the drug tests to be
10 conducted.
11 Well, here, Your Honor, governmental actors -- the White
12 House, the CDC, and congressmen -- have made plain their strong
13 preference for vaccine misinformation to be suppressed or
14 curbed online. Exact same.
15 And the final element of Skinner was some evidence that if
16 the private railway companies chose to do the drug tests, that
17 the government would have some involvement if they chose to.
18 Way less than the involvement the government has here with the
19 CDC providing the standards of decision.
20 But in combination those three factors, the Court said,
21 were sufficient to turn private conduct into state conduct,
22 emphasizing the immunity statute.
23 And for that reason, Your Honor, we would argue that
24 Section 230, in combination with the other factors of this
25 case, is another strong factor of encouragement and inducement
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 45 of 84 45
1 weighing in favor of a state action finding.
2 Now, I'm happy to take questions, but what I'd like to do
3 is turn to defendants' Bivens arguments. You'll remember that
4 the defendants had a number of arguments claiming that, even if
5 there is state action, we still have no constitutional claims
6 because of Bivens.
7 May I turn to that, Your Honor --
8 THE COURT: Sure.
9 MR. RUBENFELD: -- or I'm happy to say more about
10 Skinner.
11 So the Bivens arguments, Your Honor, are really very --
12 they're really misconstruing the law.
13 First of all, Bivens has nothing to do with our right to
14 equitable relief for ongoing constitutional violations. This
15 is very important.
16 The Ninth Circuit has specifically held that Bivens,
17 because it's a damages remedy, is neither necessary nor
18 appropriate -- I'm quoting -- neither necessary or appropriate
19 when plaintiffs are seeking equitable relief.
20 Why? Because equitable causes of action -- I'm quoting --
21 equitable causes of action arise directly under the
22 Constitution.
23 And the court, the Ninth Circuit, has singled out -- this
24 is Sierra Club versus Trump, cited just last year -- the First
25 Amendment as one of those provisions that generate a cause of
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 46 of 84 46
1 action, equitable cause of action directly, not the judge-made
2 Bivens cause of action that we all know about from the famous
3 Bivens case.
4 Second, defendants' Bivens arguments also have no
5 applicability to --
6 THE COURT: Wait. The equitable cause of action
7 directly against whom?
8 MR. RUBENFELD: Oh, we have equitable causes of action
9 against Facebook as an entity. So even if Your Honor were to
10 find that the damages action cannot run against Facebook
11 because of Malesko, the equitable cause of action, you've got
12 to put -- you've got to stop curbing CHD's speech. You have to
13 stop stamping it with these unconstitutional fact checks. You
14 have to stop shadow --
15 THE COURT: Is that part of 1983 or something else?
16 MR. RUBENFELD: It's a federal cause of action. As
17 the Court, of course, is aware, 1983 is for state --
18 THE COURT: So it's not 1983, it's something else?
19 MR. RUBENFELD: No, it's a direct equitable cause of
20 action against individuals acting under color of federal law
21 when they are violating the Constitution. 1983 is, you know,
22 of course, when the actors operate under color of state law.
23 And the equitable cause of action does not arise under
24 Bivens; it arises directly under the Constitution. Bivens has
25 nothing to say about it.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 47 of 84 47
1 Bivens also has nothing to say about our takings claim,
2 which, similarly, arises directly under the Fifth Amendment
3 because of the Fifth Amendment's, quote, self-executing nature.
4 I'm quoting the Supreme Court from 50 years ago on this.
5 And Bivens claims, again, can be brought against corporate
6 entities. So even if Bivens claims cannot, if the Court so
7 finds, takings claims undoubtedly can be.
8 The United States Supreme Court's Loretto decision is a
9 takings case brought against a private telephone company. And
10 there are other cases of that sort that we cite in our brief.
11 As long as the state action, the federal action, requirement is
12 satisfied, you can bring a takings case against a private
13 corporation.
14 With respect, finally, to what are our Bivens claims, of
15 course, we are making Bivens claims. Those are our damages
16 claims in particular against Mr. Zuckerberg, who we do allege
17 had a specific individual participatory decision-making
18 responsibility over the fundamental decision to, one,
19 deplatform Mr. Kennedy; and, two, to adopt the partnership with
20 the CDC that we've discussed.
21 The --
22 THE COURT: Deplatform Mr. Kennedy? That's what
23 you're calling it?
24 MR. RUBENFELD: They terminated his Instagram account,
25 yes, Your Honor. And we've so pled in the Rule 15(d)
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1 supplement.
2 But the Bivens damages claim is a First Amendment claim.
3 But, Your Honor, the Ninth Circuit has squarely held that
4 Bivens claims in this circuit can be stated for First Amendment
5 violations and can be stated against private actors for -- that
6 that doesn't prevent a Bivens claim from being stated.
7 The Court so held in the Schowengerdt case back in '87,
8 and reaffirmed that in the Vega case. That's the Ninth
9 Circuit, 2018. Bivens First Amendment claims can be stated
10 against private actors. The only key issue is -- in those
11 cases is whether there are adequate alternative remedies, the
12 famous, you know, Bivens factors.
13 And here, Your Honor, there are no alternative remedies,
14 whatsoever, for the conduct that we're alleging as the First
15 Amendment violation; viewpoint discrimination, prior restraint.
16 No law, federal or state, makes that unlawful. Only the First
17 Amendment can make that unlawful.
18 We have alleged that CHD has suffered hundreds of
19 thousands of dollars in lost donations as a result of what
20 defendants have done. And for that injury, Your Honor, there's
21 no -- nothing other than a Bivens damages claim. It's Bivens
22 or nothing.
23 THE COURT: But could the Congress enact a statute
24 that precluded Facebook from discriminating against what you're
25 calling this vaccine misinformation?
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 49 of 84 49
1 MR. RUBENFELD: What an excellent question, Your
2 Honor.
3 I believe that the very large social media companies can,
4 as Justice Thomas suggested very recently in his Knight
5 concurrence, they can be regulated and treated as public
6 utilities or so-called common carriers. Common carriers were
7 historically under the requirement that they not discriminate
8 on the basis of viewpoint but take all comers.
9 If you accept Justice Thomas's view about this, that
10 Congress or perhaps even the states can legislate -- by
11 legislation, regulate them as common carriers or -- yeah, I
12 guess, "common carriers" is the right word for that, then the
13 answer is yes.
14 Certainly, a question Your Honor does not have to reach in
15 this case, but I believe the answer to that would be yes. And,
16 certainly, Justice Thomas indicated his approval of that
17 approach in his recent Knight concurrence.
18 THE COURT: Okay. So that'd be an alternative then?
19 MR. RUBENFELD: It would be a potential alternative.
20 If it is constitutional, the court -- courts would have to
21 decide if it's constitutional, but it certainly doesn't exist
22 now.
23 The Bivens alternative remedy question does not ask could
24 Congress do something. It asks, is there any remedy available
25 to the plaintiff now under state or federal law for the injury
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 50 of 84 50
1 he has suffered? And the answer is that there is no
2 alternative remedy. And the Ninth Circuit has specifically
3 held it must be an adequate remedy, not a, you know,
4 speculative or a remedy that might or might not happen in the
5 future.
6 So, Your Honor, with that, I will conclude my remarks.
7 And I know that Mr. Teich and I have only, I guess, about 10 or
8 15 minutes left to cover the statutory claims, but I'm sure we
9 can do that.
10 THE COURT: Right.
11 MR. RUBENFELD: I will now sit down, so to speak, and
12 let Mr. Teich handle the RICO claim, if that's all right.
13 THE COURT: Well, I thought we were going to be back
14 and forth on these things.
15 MR. RUBENFELD: Oh, I'm sorry.
16 MR. TEICH: Your Honor, with permission, Roger Teich
17 for plaintiff as well. I would just respond to two points that
18 came up there, if I may, and then --
19 THE COURT: Sure.
20 MR. TEICH: -- turn it back over to defendants to take
21 up the other -- the civil fraud claims.
22 Does that make sense?
23 THE COURT: If you want. It's your time.
24 MR. TEICH: Sure.
25 On paragraph 50, you pointed out that the CDC is engaging
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 51 of 84 51
1 local messengers and partners to contain the spread of
2 misinformation, work with social media companies. You're quite
3 right. They don't identify Facebook by name, although I think
4 it's a highly plausible inference there.
5 But in the next paragraph, the CDC does say Facebook, as
6 with other social media tools, is intended to be part of a
7 larger integrated health communications strategy.
8 And in testimony that the CDC gave in December of 2019,
9 they say: "Stop myths. We will work with local partners to
10 establish new partnerships and contain the spread of
11 misinformation. To advance this, we've recently collaborated
12 with social media companies like Pinterest and Facebook."
13 And this is another point of distinction from the Daniels
14 case. In Daniels, there was no plausible allegation of a
15 meeting of the minds. Here, there's a highly plausible
16 allegation of a meeting of the minds between Facebook and the
17 CDC.
18 And with that, Your Honor, we would be prepared to move on
19 unless you have questions.
20 THE COURT: So, in your view, the only misinformation
21 that the CDC is attempting to keep off the airwaves is your
22 views on vaccines?
23 MR. TEICH: Well, what we allege has occurred here is
24 a systematic attempt to degrade and destroy CHD. We have put
25 into the record, in Exhibit B, 15 fact checks that are driven
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 52 of 84 52
1 by an algorithm Facebook is alleged to have developed with the
2 CDC that spots speech that has terms like "vaccine hesitancy"
3 or "differential outcomes" or "unvaccinated children."
4 THE COURT: I mean, are you okay with other
5 misinformation not being published? It's only your particular
6 misinformation you don't want published?
7 MR. TEICH: I'm confused by the question. We allege
8 that it's not misinformation at all; it's true fact. And if
9 you --
10 THE COURT: I understand that. But what you're --
11 MR. TEICH: Yes.
12 THE COURT: You've coined the "misinformation" word to
13 apply to what CDC is asking Facebook not to do; right?
14 MR. TEICH: They coined it.
15 THE COURT: What to look for.
16 MR. TEICH: They coined it.
17 THE COURT: So they may have a whole lot of ideas that
18 they think are misinformation. But you're calling your
19 information -- there's more than just your information they
20 view to be wrong; right?
21 I just -- I'm having a hard time. Let's say there was
22 something on the Internet that said if you take a COVID vaccine
23 you're going to grow a third head. That's clearly not true.
24 Is it okay not to let that be published?
25 MR. TEICH: Well, I don't think it's okay if the
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 53 of 84 53
1 government is calling the shot, which is the allegation here,
2 is one answer. And the other answer is --
3 THE COURT: Okay. So you think it's inappropriate for
4 the government to say generally, boy, we would really like it
5 if all these private social media outlets didn't publish lies
6 about COVID vaccine. That's not okay to just say that?
7 MR. TEICH: Two answers to that. One is, I think it's
8 the underhandedness of the CDC in using Facebook in this way,
9 which is problematic from a constitutional point of view.
10 And the other point is that's not what has happened here.
11 Children's Health Defense is a reputable nonprofit with Nobel
12 Prize laureates and reputable scientists on an advisory board
13 and an editorial process for determining what to publish, which
14 is alleged at length in the complaint.
15 And every one of those articles that's been fact checked
16 and censored is factual or is opinion on disclosed fact. It's
17 not false. It's not the three-headed cow, you know, thing
18 you're talking about. That's not what happened. That's not
19 this case.
20 THE COURT: But --
21 MR. TEICH: Yes.
22 THE COURT: But the problem I have -- a problem I have
23 is you're talking about constraining misinformation, but by
24 that you mean constraining CHD information? That's the bad
25 thing you're alleging?
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 54 of 84 54
1 MR. TEICH: That is what has occurred here, and it has
2 occurred here because, long before the pandemic, Your Honor,
3 CHD, the plaintiff, was on Facebook from 2017, doing what they
4 do, criticizing the CDC for its capture by industry, you know,
5 for any number of things that they're critical of.
6 Facebook took no issue with that until 2019. And the
7 question is why? And the answer, we submit, is because that's
8 when the CDC, the government agency, decided that vaccine
9 hesitancy was public enemy number one, was public health issue
10 number one.
11 And in the service of that, they announced that in
12 April 2019. And in the service of that they have worked with
13 Facebook to take CHD plaintiff down. And that's -- that's what
14 we are alleging is unconstitutional.
15 THE COURT: Okay. Thank you.
16 MR. TEICH: Thank you.
17 THE COURT: Okay. So do the plaintiffs wish to
18 discuss the other claims?
19 MS. MEHTA: Your Honor, did you mean the defendants or
20 did you mean the plaintiffs?
21 THE COURT: I'm sorry, the defendants. I apologize,
22 yeah.
23 MS. MEHTA: Yes, Your Honor.
24 If I could, I would hope to take just two minutes to very
25 quickly address a couple of the points that were just raised,
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 55 of 84 55
1 and then we'll move on.
2 THE COURT: Sure. You can use your time however you
3 like as long as you recognize you only have so much of it.
4 That's all.
5 MS. MEHTA: Understood, Your Honor. Thank you.
6 So I just want to briefly address a few of the points. I
7 think the last question and answer with Mr. Teich reveals a
8 fundamental problem with the Bivens cause of action
9 irrespective of and sort of, you know, above and beyond all the
10 other problems that we went to, which is the lack of any
11 plausible allegation of any connection between any of the
12 things they allege; the CDC, Representative Schiff, antitrust
13 hearings, all of these things which seem completely orthogonal
14 to the issue at hand.
15 But even if you accept all of those allegations, none of
16 them go to the specific action requirement, which is that there
17 is nothing alleged that suggests that the CDC encouraged,
18 coerced, was jointly acting with Facebook or with the
19 third-party fact-checkers as to the specific challenged conduct
20 which is the CHD posts.
21 At best, they have alleged -- and this is giving them all
22 of the benefit of their allegations, which we don't agree with.
23 At best, they have alleged that what the CDC has done here is
24 said, "We would like social media companies to not have
25 misinformation on their platforms."
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 56 of 84 56
1 The CDC is not alleged to have taken any specific action,
2 jointly or through coercion or through encouragement or
3 otherwise, with respect to CHD. There's no allegation that it
4 said "you should find this particular post to be misinformation
5 or label it as being potentially having inaccurate information
6 in it."
7 Nothing is specifically tied to the actual conduct at
8 issue, and that is a fundamental defect that permeates every
9 theory that you just heard them talk about for the last hour.
10 And, separately from that, I want to talk briefly about
11 the equitable relief claims because we didn't have a chance to
12 touch on that before. With respect to the equitable relief
13 claim, a couple of things.
14 First, there still would have to be state action. So they
15 seem to acknowledge that they have a Malesko problem with
16 respect to Facebook under Bivens. They didn't have any
17 meaningful response to Mr. Zuckerberg's actual personal
18 involvement in these decisions as to a Bivens claim as to him
19 personally.
20 So, instead, what you heard was, "Well, we still have our
21 equitable relief claims." They would still have to have state
22 action. And for all the reasons I talked about before, there
23 is no allegation of state action here, including that there was
24 nothing specific to CHD or nothing specific to the challenged
25 conduct. And because all of the theories that you heard with
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 57 of 84 57
1 respect to coercion, encouragement, all of that, fundamentally
2 are inconsistent with the Ninth Circuit's case law, including
3 the Gorenc case, which I cited, including Mathis, which I
4 cited, and as we've laid out in our briefing.
5 And I'm happy to address, you know, specific points that
6 he made -- that Mr. Rubenfeld made or Mr. Teich made, but at
7 the end of the day it is a theory that takes existing precedent
8 and would require the Court to extend it in multiple different
9 ways but is fundamentally inconsistent of the whole framework
10 of liability under Bivens.
11 So with respect to the equitable relief, they would still
12 have to plead state action, and they haven't done that under
13 any of these theories. The idea that the CDC is saying "We'd
14 like social media companies generally to not have
15 misinformation on their platform" is not joint action with
16 respect to the challenged conduct.
17 The idea that the CDC says, "Don't have misinformation on
18 your platform, but let's have truthful and accurate information
19 on your platform" is not encouraging Facebook to take any
20 action with respect to CHD's particular speech.
21 THE COURT: What about if it's in connection with one
22 phenomenally powerful representative saying, "And if you don't,
23 we're going to take away your 230 immunity"?
24 MS. MEHTA: So, first of all, I don't think it's
25 plausibly alleged that he actually made a threat that would
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 58 of 84 58
1 connect those two things directly.
2 But even if it were, one representative does not have the
3 power to do anything with respect to Facebook. Even half a
4 dozen, which I think Mr. Rubenfeld said, well, there's a half a
5 dozen people who said that, that is not going to actually
6 create a threat that Congress is going to do anything with
7 respect to Facebook, because Congressional action requires a
8 lot more than a half a dozen statements from members of
9 Congress.
10 And I think if we actually look at the allegations, really
11 what they're doing is asking questions. They're doing exactly
12 what, in Mathis, was found to be congressional inquiry into a
13 problem, not a threat.
14 But apart from all of that, even if we were to say somehow
15 that that's a threat, and even if we were to say one member of
16 the House of Representatives or half a dozen legislators had
17 the power as individuals to create government coercion, nothing
18 connects those allegations to the specific challenged conduct
19 here.
20 Nobody says, "You need to do something about CHD's posts
21 or we're going to come after you under Section 230." Nobody --
22 I mean, it's the fanciful allegation that, you know, antitrust
23 inquiries that are happening in Congress are somehow connected
24 to CHD's posts here. It doesn't hold together even if we read
25 every allegation and plausible inference in their favor.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 59 of 84 59
1 And then with respect to the takings claim, which is
2 separate, the takings claim is specific to the Donate button,
3 the CHD Donate button, which they're saying was taken down.
4 There's no allegation that the CDC or Representative
5 Schiff or any member of Congress ever said anything with
6 respect to the Donate button.
7 So even if you were to buy into the theory they've
8 articulated that somehow, you know, in trying to create
9 truthful information on the platform is state action, the
10 Donate button has never come up. And there's no suggestion
11 that anyone at the CDC or in Congress or otherwise had any
12 communications with respect to that. So the takings claim sort
13 of independently fails for lack of state action on that basis,
14 and that goes to their equitable relief.
15 The final point I want to make on the equitable relief,
16 and then I'm going to turn it over because it's a natural
17 segue, is the First Amendment implications of their equitable
18 relief that they're asking for.
19 They are suggesting that this Court should restrain
20 Facebook's free speech rights by issuing an injunction as to
21 what Facebook can and can't do on its platform. And that --
22 there is a First Amendment issue in this case, and that is the
23 issue that's raised with respect to the First Amendment.
24 This is not a Bivens issue. This is not an equitable
25 relief based on state action restraining First Amendment as to
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 60 of 84 60
1 their speech, but there is a fundamental First Amendment
2 problem with what they're asking for in that equitable cause of
3 action.
4 So I think that's a nice segue to have me turn it over to
5 my partner, Mr. Holtzblatt, who's going to address causes of
6 action two and three, unless you had any questions, Your Honor.
7 THE COURT: No. I was just going to say, you say,
8 well, they're asking you to, yourself, impair Facebook's First
9 Amendment rights by claiming equitable relief.
10 I suppose in the old days we would just have a libel
11 action. It would be a tort. It would be, well, you have
12 impaired my business and reputation by telling a lie about me
13 when you post on my Facebook page that I'm spewing
14 misinformation.
15 That'd be an approach that both First Amendment -- both
16 First Amendment interests would be protected; right? Because
17 if it's false, then there's no protection. But each -- each
18 actor is entitled to say whatever he wants. That would be a
19 way to approach it, I guess.
20 MS. MEHTA: Yeah, it's true, Your Honor, that they
21 could have, I guess, theoretically, pled some sort of claim for
22 defamation or libel or something. I don't want to presume why
23 they didn't do it other than that would raise a host of issues,
24 including, you know, Section 230 immunity. There would be the
25 combating --
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 61 of 84 61
1 THE COURT: Oh.
2 MS. MEHTA: -- First Amendment claims.
3 THE COURT: I got you there, yeah.
4 MS. MEHTA: There might be anti-SLAPP issues. I think
5 there's a lot of reasons why that claim would fail too. But
6 they obviously made the decision not to plead it.
7 And, you know, instead they've pled theories, including
8 the Bivens claim, the RICO claim, the UCL claim, that all seem
9 to really have -- to be a fundamental mismatch with the core of
10 their allegations.
11 And -- but the fact that they chose not to plead
12 defamation or libel or something that's more traditional
13 doesn't resolve the problem that confronts the Court --
14 right? -- which is why they've pled what they pled and the
15 problems with what they've pled.
16 THE COURT: Okay. So you want someone else to speak
17 now?
18 MS. MEHTA: Yes. Thank you, Your Honor.
19 MR. HOLTZBLATT: Thank you, Your Honor. Ari
20 Holtzblatt. I'm going to address counts two and three. And
21 the hour is now late, and so my suggestion is that I address
22 them together --
23 THE COURT: Okay.
24 MR. HOLTZBLATT: -- because a number of our defenses
25 speak to both of them.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 62 of 84 62
1 I'm going to start with two threshold defenses, the First
2 Amendment and Section 230 defenses, because they cut across
3 both of those claims. And then I'll turn to specific defects
4 with respect to the Lanham Act and the RICO claim.
5 As my colleague, Ms. Mehta said, CHD is right that there
6 are significant First Amendment interests in this case, but
7 those significant First -- but it is wrong about the
8 consequence for this case of those significant First Amendment
9 interests.
10 By seeking to stop defendants from speaking and from
11 making their own editorial judgments on the way topics of the
12 safety and efficacy of vaccine misinformation, CHD's claims
13 intrude on defendants' own First Amendment rights.
14 Now, with respect to the First Amendment, I want to make
15 two points, Your Honor. The first is that the First Amendment
16 protects the exercise of editorial control and judgment.
17 Whether that's the decision of a newspaper, in Miami Herald
18 versus Tornillo, about whether to run a politician's op-ed; or
19 the decision to parade organizers in Hurley, about who can
20 march in their parade; or the decision of an online platform to
21 filter or moderate third-party content, as Zhang versus Baidu
22 held at 10 F.Supp.3d 433, and numerous other courts have held
23 as well.
24 Now, this principle of editorial control and judgment
25 protects most of the conduct that CHD challenges in this case,
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 63 of 84 63
1 including the decision to remove or reduce the distribution of
2 CHD's posts or to restrict CHD's access to advertising or
3 fundraising tools. Simply put, Your Honor, CHD may not invoke
4 the power of this court to compel defendants to override
5 defendants' own editorial judgments.
6 The second First Amendment principle that I want to
7 address, Your Honor, is the fact that CHD challenges fact
8 checks, all of which disclose not only the fact-checker's
9 conclusion that a post contains false information, but that
10 those fact checks also disclose the factual basis for that
11 conclusion. That is significant.
12 As the Ninth Circuit held in Partington v. Bugliosi, when
13 a speaker outlines, quote, the factual basis for his
14 conclusion, his statement is protected by the First Amendment.
15 And the reason for that, Your Honor, is because in that
16 circumstance the reader remains, quote, free to draw his own
17 conclusions about the correctness of that conclusion based on
18 the disclosed underlying facts. Now, that's at 56 F.3d at 1156
19 to 1157.
20 And to provide an example of that, Your Honor, in
21 paragraphs 129 to 138 of the complaint, CHD posted an article
22 by Dr. Brian Hooker, along with a note saying that the article
23 supports the view that, quote, unvaccinated kids are healthier.
24 This was reviewed by independent fact-checkers who
25 indicated that the post contains false information, and so
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 64 of 84 64
1 Facebook displayed a gray overlay on this particular post,
2 quote, False information checked by independent fact-checkers.
3 But, now, this is key, Your Honor. There was also a
4 button that said "See Why." And when a user might click on the
5 button "See Why," the button would lead to a page explaining a
6 number of things about how the fact-checker can reach that
7 conclusion.
8 That underlying post was, quote, unsupported because it
9 is, quote, based on a single study which used highly biased
10 methods, failed to control for confounding factors in
11 comparison to vaccinated/unvaccinated children, such as
12 healthcare-seeking behavior, and used patient data from
13 hand-picked pediatric clinics only.
14 Now, all of the fact checks -- and Mr. Teich mentioned the
15 15 fact checks that are included as an exhibit. And Your Honor
16 can look at those, and you will see that all of those fact
17 checks have a similar structure. There is a "See Why" button
18 that points to another page where the underlying facts that the
19 fact-checker was basing their ultimate conclusion on is
20 disclosed.
21 The First Amendment does not permit CHD to challenge the
22 fact-check label, just the conclusion which merely conveys how
23 the fact-checker interpreted underlying facts, which are not
24 challenged as false, that are made available to the reader.
25 So those are two initial points on the First Amendment,
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1 Your Honor.
2 I'd like to then turn to Section 230, which, like those
3 First Amendment defenses, applies to both the Lanham Act and
4 RICO claims.
5 And, Your Honor, just to pause, the reason that I want to
6 start with the First Amendment defense and the Section 230
7 defense is because, although I believe that all of the defects
8 we have pointed out in our briefs would support dismissal with
9 prejudice, we believe that is especially true with respect to
10 the First Amendment and the Section 230 defense, both of which
11 are intended to protect not only from liability but also the
12 burdens of litigation.
13 And the burdens of litigation in this case, Your Honor,
14 have been extraordinary as we are already through three
15 different complaints before Your Honor has even heard the
16 motion to dismiss, a motion to supplement the facts. And if
17 there were to be another complaint in this case, it would be
18 the fifth bite at the apple. And so that's one of the reasons
19 why it's so important, we believe, to emphasize these First
20 Amendment and Section 230 defenses.
21 Now, as to the Section 230 defense, Your Honor, as Your
22 Honor, I'm sure, knows, Section 230(c)(1) bars any claim that
23 would treat a provider of an interactive computer service as
24 the publisher of content, quote, provided by another
25 information content provider.
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1 It, therefore, protects Facebook and Mr. Zuckerberg from
2 liability for treating Facebook as the publisher of content
3 created not by Facebook but by third parties, whether that's
4 third-party content created by third-party fact-checkers or by
5 CHD itself.
6 Now, many courts in this district have recognized this
7 principle applies when the claim is that the platform has
8 removed content because removing content is a traditional
9 publisher activity. For example, the Sikhs For Justice case at
10 144 F.Supp.3d at 1088. And that principle precludes, much like
11 the First Amendment principle that I started with, any theory
12 based on restricting access to or declining to boost CHD's
13 posts.
14 Second, Your Honor, Section 230, likewise, protects
15 distributing content created by third parties. And the key
16 question for this application of Section 230 is who was, quote,
17 responsible for what makes displayed content illegal or
18 actionable? And that's from the Kimzey case, versus Yelp, at
19 836 F.3rd 1263, from the Ninth Circuit.
20 Here, what makes the content allegedly unlawful is the
21 determination that CHD's posts contain false information.
22 That's the key component of the content that CHD is trying to
23 challenge. And that determination, Your Honor, was not made by
24 Facebook or by Mr. Zuckerberg but by independent fact-checkers.
25 Facebook then translated that third-party determination
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1 into gray overlays that were superimposed on CHD's posts in
2 much the same way that Yelp translates user ratings into its
3 proprietary star-rating system.
4 As the Ninth Circuit explained in the Kimzey decision,
5 which I just pointed Your Honor to, this is a neutral tool for
6 displaying user-generated content. And when you use a neutral
7 tool to translate content generated by a third party into
8 display on the platform, it does not amount to content
9 development.
10 Now, CHD makes two points in response to the Section 230
11 defense that I want to touch very briefly on, Your Honor.
12 The first is to cite the Enigma Software Group case from
13 the Ninth Circuit, but that case involved Section 230(c)(2),
14 not Section 230(c)(1), and here Facebook invokes Section
15 230(c)(1).
16 The second point I would like to address, Your Honor, is
17 that CHD says that Facebook can be deemed vicariously
18 responsible for content created by third-party fact-checkers.
19 But the third-party fact-checkers are distinct and
20 independent corporate entities. As counsel for Poynter has
21 already emphasized very strongly, Your Honor, they have their
22 own organizational operations and identities, and those
23 identities and operations predated this particular dispute.
24 The notion that this corporate separateness can be ignored
25 conflicts with the fundamental principle of Section 230, which
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1 is that an entity can only be held liable for their own
2 content, not for the content created by another information
3 content provider.
4 And we think the Blumenthal versus Drudge case is
5 illustrative of this, Your Honor. That's at 992 F.Supp 44.
6 There the Court held that AOL could not be held liable for an
7 allegedly defamatory story published by Matt Drudge, even
8 though AOL had contracted with and paid Drudge to provide the
9 specific kind of material that was at issue: gossip and rumor.
10 They had touted Drudge to its subscribers. It had actually
11 paid him and retained the contractual right to remove or
12 require changes to any of those articles.
13 Now, CHD invokes the law of agency, but all of the cases
14 it cites involves individual people acting as moderators, not
15 separate, distinct entities as we have here. And we think that
16 to invoke the law of agency in a case like this would run
17 counter to the core principle of Section 230, which is that you
18 are only responsible for content that you, yourself, create.
19 When we're dealing with an entity, in any event, under
20 agency law there has to be evidence that Facebook has taken
21 over the day-to-day operations of the fact-checkers with
22 respect to the very fact checks at issue, and there is no
23 allegation remotely like that here. At most, there's an
24 allegation that Facebook created a fact-check infrastructure.
25 Lastly, Your Honor, I'd like to address a couple of key
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1 defects in their -- in CHD's Lanham Act and RICO claims and how
2 their allegations do not plausibly establish the elements of
3 those claims.
4 Starting with the Lanham Act, CHD asserts a false
5 advertising claim. To establish a false advertising claim
6 under the Lanham Act there must be, quote, commercial
7 advertising or promotion.
8 Courts have emphasized the important constitutional
9 constraints on liability under the Lanham Act. It was not
10 intended to and cannot constitutionally be applied to anything
11 other than commercial speech to avoid precisely the situation
12 we have here, which is using the Lanham Act to constrict fully
13 protected noncommercial speech.
14 Of course, the paradigmatic commercial speech is a paid
15 advertisement designed to promote one's own products or
16 services. And that's obviously not what the fact-check labels
17 look like. And that commonsense conclusion, Your Honor, is
18 confirmed by the formal test for commercial speech.
19 Ordinarily, commercial speech is speech that does no more
20 than propose a commercial transaction. And, of course, in
21 close cases but only close cases -- and this is emphatically,
22 Your Honor, not a close case -- the Bolger factors are looked
23 at. There are three of them.
24 And CHD emphasizes the first of those, which is that there
25 must be economic motivation. But as the Ninth Circuit held in
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1 the Dex Media case, at 696 F.3d 952, economic motive itself is
2 insufficient; the other two factors must also be satisfied.
3 They are not -- the fact-check labels do not refer to a
4 specific product and they were not made in the context of an
5 advertisement.
6 Very briefly, Your Honor, even aside from the commercial
7 speech limitation, the speech at issue here is not within the
8 zone of interest of the Lanham Act. To be within the zone of
9 interest, it is not enough to be injured as a consumer nor is
10 it enough to be competing in the marketplace of ideas. And
11 that's all we have here.
12 Finally, Your Honor, turning to RICO -- and I would start
13 by simply noting Justice Souter's admonition that it is
14 especially important not to extend civil RICO to
15 fully-protected First Amendment activity, which, again, is
16 exactly what CHD is attempting to do here.
17 There are numerous problems, including the failure to
18 allege the proximate cause or pattern requirements of RICO.
19 But let me address very briefly even the failure to allege the
20 elements of the predicate here, which is the wire fraud
21 statute.
22 Wire fraud requires an intent to obtain money or property
23 from the one who is deceived. There is no allegation that CHD
24 itself was deceived even; in fact, quite the opposite. The
25 fact checks are -- and labels -- the entire point of this
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1 litigation, Your Honor, is that CHD vehemently disagrees with
2 those fact checks, so they cannot possibly have been deceived
3 by them.
4 But, more fundamentally, CHD is not alleged to have -- no
5 defendant is alleged to have obtained or intended to obtain any
6 money or property from CHD. In fact, for example, Your Honor,
7 one of the allegations is that CHD was prevented from buying
8 ads on Facebook, which is the exact opposite of seeking to
9 obtain money or property from CHD.
10 CHD offers an alternative theory that visitors to CHD's
11 page were somehow deceived. But, as has been emphasized even
12 by CHD itself repeatedly this morning, Your Honor, the theory
13 of this case, the entire theory that cuts across all 180 pages
14 of the Second Amended Complaint, is an effort for the defendant
15 to convey information to visitors to CHD's page or allegedly to
16 divert their attention to other sources of information, such as
17 the CDC, or to the fact-checker's pages where they can explain
18 the factual basis for their conclusion.
19 There is nothing about that, not plausibly or even
20 otherwise, Your Honor, that the intent, the purpose, or effect
21 of the fact checks here was to separate visitors to the CHD
22 page from their money, which is the requirement to assert wire
23 fraud.
24 This is emphatically, Your Honor, not a criminal wire
25 fraud scheme, which is what would be required to establish a
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 72 of 84 72
1 RICO claim.
2 So, Your Honor, we -- we have many other defects that
3 we've identified in our briefs, and we will leave you to pick
4 and choose from amongst the plethora of them that lead to
5 dismiss this case.
6 But I do want to again emphasize, Your Honor, there are
7 serious First Amendment and Section 230 stakes in this case for
8 defendants, and it is critically important to be able to
9 protect those interests. To allow yet another complaint in
10 this case would not only, we think, not be consistent with
11 judicial economy, Your Honor, but would also burden those very
12 important interests.
13 And unless Your Honor has any further questions, I'll turn
14 it over to Poynter's counsel to address anything additional on
15 these claims.
16 THE COURT: All right. Thank you.
17 Just so you know, plaintiffs have now used -- I'm sorry --
18 defendants have used almost all their time. Anyway, we have a
19 little bit left.
20 So, Mr. Holtzblatt?
21 MS. LOCICERO: It's Ms. LoCicero, Your Honor.
22 THE COURT: Oh, I'm sorry.
23 MS. LOCICERO: That's okay. For Poynter Institute.
24 And I will run at warp speed.
25 THE COURT: Well, don't talk fast.
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1 MS. LOCICERO: Okay. I'll hit the highlights. The --
2 there have been comments about 15 fact checks in Exhibit B. I
3 want to emphasize that, of the 15, Poynter did one. And that's
4 the one that we've already talked about relating to the flu
5 vaccine study.
6 That speech is most emphatically for purposes of the
7 Lanham Act, not commercial speech. There was no commercial
8 transaction proposed. The very text of the article establishes
9 that it's the kind of speech about health information, vaccine
10 information, a government report, that's the kind of core
11 speech of public concern that the First Amendment protects and
12 that the Lanham Act does not address.
13 For -- you can even go back to the landmark case of New
14 York Times versus Sullivan. That's cited for the actual malice
15 propositions in there, routinely, but that involved an ad that
16 the -- that The New York Times at the time would pay $4,800 for
17 Heed Their Rising Voices concerning the civil rights movement.
18 And the United States Supreme Court had no problem finding
19 that, even though an ad was paid for, that was not commercial
20 speech.
21 The same thing that Mr. Holtzblatt has already spoken
22 about, related to a profit motive, isn't enough. There are
23 many, many cases that stand for the proposition that just
24 because there's a profit motive involved for newspapers and TV
25 stations and books and journalistic fact-checking services,
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 74 of 84 74
1 like Poynter, that does not convert their speech into
2 commercial speech. So fundamentally, that's a problem that
3 plaintiff cannot overcome under the Lanham Act.
4 With respect to the RICO claim, a couple of points, Your
5 Honor. The -- the allegations are often lumping all the
6 defendants together. It's impossible to figure out what
7 Poynter is specifically accused of, and there are just
8 significant Rule 8 and Rule 9 pleading issues.
9 But to emphasize the point about a lack of any money or
10 property being acquired, which is fundamental for a wire fraud
11 predicate act, I would ask the Court to consider the Monterey
12 Plaza Hotel case, Ninth Circuit 215 F.3d 925. There a hotel
13 complained about, sort of, picketing and union behavior that
14 the court said that the plaintiffs might have found to be
15 vexatious and harassing, but even that kind of behavior is not,
16 quote, acquisitive.
17 CHD has not alleged, nor can it allege, that Poynter has
18 one nickel that belongs to CHD; and that's fundamental and
19 fatal to the wire fraud claim.
20 There's also a standing problem under the RICO theory of
21 plaintiffs -- of plaintiff that is illustrated by Judge Rogers'
22 recent decision in Pacific Recovery Solutions versus United
23 Behavioral Health, which there's a Westlaw cite for at the
24 moment. But there what happened was a healthcare provider
25 complained, tried to bring a RICO claim because the insurance
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 75 of 84 75
1 company would only pay that provider out-of-network benefits,
2 so they were getting less than they deemed that their services
3 were worth.
4 And what the Court recognized in that recent decision is
5 that, look, the damage, if there's any, is really to the
6 patients who are not being fully reimbursed for the services
7 that they are receiving. And even though the healthcare
8 provider in Pacific Recovery claimed that they were not
9 receiving payments from some of the patients, the Court had no
10 problem finding that Pacific Recovery did not have standing to
11 bring a RICO claim.
12 So to the extent that CHD's claims here turn on some kind
13 of theory of donor fraud, that you can click through 500
14 screens and finally maybe make a donation to a fact-checker,
15 that donor fraud theory would not provide CHD standing. It
16 would be -- provide standing, if to anyone, to the donors who
17 are allegedly defrauded.
18 And, again, CHD does not claim that it was defrauded in
19 any form or fashion because it doesn't believe any of the
20 things that the defendants are saying.
21 The last thing I will say is that in many ways CHD's
22 theories simply defy common sense. This is not racketeering
23 behavior, organized crime behavior, drug cartel, the kinds of
24 things that RICO is designed to attack.
25 What is at issue here, as we've said in multiple times and
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 76 of 84 76
1 is particularly important to Poynter is its speech, its
2 journalistic right to criticize things that it believes are
3 inaccurate and being spread on social media, in accordance with
4 its journalistic practices and like what you will see in
5 Exhibit B to the Second Amended Complaint.
6 So, Your Honor, we would ask that you dismiss with
7 prejudice all the claims against Poynter and let us go home and
8 practice journalism. Thank you.
9 THE COURT: You're welcome.
10 The plaintiffs.
11 MR. TEICH: Thank you, Your Honor. I'm going to
12 address Section 230, the RICO fraud, Mark Zuckerberg's personal
13 liability quickly, and then turn it over to my colleague, Jed,
14 for a final word on Lanham Act.
15 This is, to my knowledge, the first --
16 THE COURT: Okay. Just a second. I'm looking at the
17 clock, and I think you've got about 15 minutes total. That's
18 actually generous. So you can go ahead.
19 MR. TEICH: Thank you.
20 First case to come to court on Facebook's responsibilities
21 for its fact-checkers. Important case, Your Honor. First of
22 all, though, what's not at issue? Constitutional claims,
23 Section 230 offers no defense, just to be clear.
24 And what's not at issue is the -- on Section 230 are the
25 warning label, the go to the CDC for reliable info, what you
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 77 of 84 77
1 see below not reliable.
2 Facebook published that. No fact-checker wrote that. The
3 gray overlays that say "False information checked by
4 independent fact-checkers," Facebook wrote that. No third
5 party wrote that. And that's hardly neutral.
6 They're turning Kimzey and Marshall's Locksmith, the
7 Garland case from the D.C. Circuit, on their head. Those cases
8 involve simple, you know, transforming data points like a
9 where's a locksmith located into a map with no representation
10 by Google that that locksmith is actually there; or Yelp
11 ratings into stars, no representation that, you know, it's an
12 accurate rating.
13 Facebook's making the determination that this stuff is
14 false and it's sticking that gray overlay on CHD's page.
15 Facebook's the author of that.
16 The other thing that's not at issue -- excuse me, Your
17 Honor -- on 230 is defunding the button. That's not material
18 under Section 230 that they took down.
19 So what is at issue, though -- and it's vitally
20 important -- is Facebook's pay no attention to the man behind
21 the curtain defense here. It should not fly at 12(b)(6), with
22 all due respect, Your Honor.
23 We've made these allegations about content development.
24 The definition of an information content provider in Section
25 230(f)(3) is an entity or person responsible in whole or in
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1 part for the creation or development of the information.
2 Involved in part in the development is the -- is the standard
3 you're going to hold us to.
4 Here's what we've alleged: That Facebook or, in fact, the
5 CDC with Facebook, direct content to the fact-checkers
6 prejudged as false by their algorithms. Essentially, that they
7 tell the fact-checker this is false, you tell us why or, you
8 know, you come up with a strawman argument why. That's our
9 allegation.
10 And the answer they provided is this blurb they created
11 about their apparatus, that these are independent third parties
12 and that they select material which may be false. But you'd
13 have to believe that that's all they're doing, giving them a
14 great deal of material to sift through.
15 What we're alleging is, if CHD's content runs afoul of
16 this circular definition of misinformation because it runs
17 counter to CDC pronouncements or uses terms like
18 "unvaccinated," that it is prejudged as false by Facebook
19 itself.
20 Facebook pays, trains, supervises, and excludes opinion.
21 And that's important because other stuff gets a free pass from
22 Facebook. Like, climate change scepticism is not fact-checked
23 because it's opinion.
24 We allege Facebook is telling the fact-checkers, "Whatever
25 you do, don't let this go, because it's opinion. You're going
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 79 of 84 79
1 to find it false fact." And if that is the case, as is
2 alleged, Facebook does not have Section 230 immunity.
3 Facebook tells the users that its fact-checkers are
4 trustworthy. So Facebook is vouching for its agents.
5 And, of course, Facebook retains the right of control.
6 That's the point of agency. Whether or not it's exercised,
7 Facebook has the right of control. And there's no surer
8 evidence of that, Your Honor, than the bottom line here.
9 Facebook is posting the fact-checker content not on
10 fact-checker websites but on CHD's page. So it's Facebook
11 who's pressing, you know, submit or send on that, not a
12 fact-checker.
13 So, you know, I think in all those ways we've alleged
14 agency, which makes Facebook at least responsible in part for
15 the creation or development of this content.
16 I want to turn briefly to Mark Zuckerberg. Of course,
17 he's the founder, CEO, chairman of the board, majority
18 shareholder. But that's true in all the cases, and that's not
19 the basis of these specific allegations.
20 What we're saying here is, he's the public face of
21 Facebook on this issue of vaccine misinformation. He's
22 testified to Congress multiple times on that issue. In answer
23 to Congressman Posey's question, he testified under oath: "The
24 science is clear. Vaccines are safe for everyone, and all
25 vaccines." So he's taken a stand on this issue.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 80 of 84 80
1 There's a reason why Representative Schiff communicated
2 with him personally as the control person responsible for this
3 issue, and we allege that they met to discuss this issue.
4 He -- it's undisputed that Mark Zuckerberg has been personally
5 involved in other Facebook censorship decisions, like letting
6 climate change skeptics get a pass for opinion.
7 This one involves prominent public figures; Mr. Kennedy,
8 Representative Schiff, and others. It involves scientific
9 issues like vaccines and 5G, about which Zuckerman --
10 Zuckerberg has, you know, taken a deep personal interest.
11 And it's inconceivable to us that Zuckerberg, having been
12 directly involved in those other categories of content
13 regulation, is not personally involved here.
14 And then there is a panoply of personal motives that point
15 toward his involvement, including his own heavy investment in
16 vaccine development. I mean, we're talking, like, billions of
17 dollars in his related for-profit entities, et cetera.
18 On the RICO fraud, it is true that the RICO fraud requires
19 the intent to deceive and to cheat. Doesn't require that it be
20 successful, but it does require that intent. And we do allege
21 that there is that intent to divert viewers and users to rival
22 nonprofits.
23 Nonprofits -- the law is clear, nonprofits do play in a
24 commercial game in that they compete for donations. And to
25 that extent, CHD has suffered real losses. They had 60,000 in
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 81 of 84 81
1 donations on the Donate button in the year 2019, until it was
2 terminated.
3 And so like Resolute Forest out of this district, if
4 plaintiff's customers relied on defendants' statements in a way
5 that caused plaintiff to lose money, there's RICO standing. So
6 that's the standing issue.
7 And the intent wraps up the sort of congruence of the
8 deception and the cheating. And we say that's met by deceiving
9 viewers to click elsewhere.
10 I think that I will leave it at that and turn it over to
11 my colleague, Jed, for comments on the Lanham Act, unless Your
12 Honor has questions.
13 THE COURT: Thank you, no.
14 MR. TEICH: Thank you.
15 THE COURT: You're welcome.
16 MR. RUBENFELD: Thank you, Your Honor.
17 Briefly, defendants, once again before Your Honor,
18 emphasized over and over that we were not alleging specific
19 governmental intervention with respect to the specific action
20 of, you know, restricting plaintiff's content.
21 But defendants simply are not coming to grips with the
22 Mathis case out of the Ninth Circuit that rejected that
23 requirement and said it's a matter of standards of decision
24 regardless of whether there is particular involvement with the
25 particular plaintiff.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 82 of 84 82
1 Second, I mentioned the Pelosi statement as satisfying the
2 Hammerhead test. You'll notice that defendants just simply
3 didn't come to grips with that; a statement that surely can be
4 reasonably interpreted as insinuating a threat of governmental
5 action.
6 Finally, with respect to the Lanham Act, Your Honor,
7 defendants are just making two arguments, so I'll briefly just
8 mention both.
9 First, they say we lack standing. And what they argued in
10 their brief was, we weren't -- CHD is not a direct competitor
11 with Facebook and, therefore, we don't satisfy the direct
12 business competition requirement. They cited a 2013 case from
13 this district saying so.
14 Unfortunately, they neglected to mention to Your Honor
15 that in 2014 the United States Supreme Court decided Lexmark,
16 expressly rejecting that standing requirement.
17 All Lexmark requires is zone of interests. And there are
18 a dozen cases holding that nonprofit organizations, when
19 defendant promotes the services of a rival nonprofit and
20 plaintiff loses money, which is just what happened here, that's
21 within the zone of interests of the Lanham Act, and the
22 nonprofit can state a claim.
23 THE COURT: And who's the competing nonprofit?
24 MR. RUBENFELD: So Facebook's fact-checkers are
25 nonprofit organizations, as we allege. Facebook promoted them.
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 83 of 84 83
1 And, by the way, they offer competing services; that is,
2 they purport to offer accurate health information on the very
3 topics that CHD does. Facebook promoted their services. They
4 called them accurate, reliable. They directed users to their
5 sites where users will see prominently displayed a Donate
6 button.
7 So they promoted their services, and there are a dozen
8 cases holding, Your Honor, that, you know, even if it seems
9 counterintuitive with respect to the Lanham Act and commercial
10 transactions, that that -- promoting a rival nonprofit's
11 services is the proposal of a commercial transaction for Lanham
12 Act purposes. That's the Valley Forge case, 24 F.Supp.3d 451.
13 With respect to the commercial speech, defendants just
14 don't come to grips with Arrix, decided just two months ago by
15 the Ninth Circuit, the Ninth Circuit's most thorough, most
16 recent decision on the commercial speech requirement.
17 The Ninth Circuit says, on the contrary, commercial speech
18 does not have to solely propose a commercial transaction. It's
19 fact based. And the most important single ingredient is
20 economic motivation.
21 We have alleged in detail Facebook and Zuckerberg's
22 massive financial interest in the vaccine industry, and we have
23 alleged that they were economically motivated. And the other
24 factors, contrary to defendants' representations, are satisfied
25 here too. But the most important is economic motivation. And
Case 3:20-cv-05787-SI Document 101 Filed 05/23/21 Page 84 of 84 84
1 the Ninth Circuit's very clear this is a jury question, and
2 it's a totality of the facts question.
3 Thank you, Your Honor.
4 THE COURT: Thank you.
5 Well done, all of you. We've come full circle on this.
6 Thank you for the arguments. They're helpful. You also have,
7 of course, provided me with substantial pleadings and
8 attachments and exhibits to go over. So all of those things
9 will be incorporated.
10 And the matter is submitted. You'll hear from me shortly.
11 Thank you very much.
12 MR. HOLTZBLATT: Thank you, Your Honor.
13 MS. MEHTA: Thank you, Your Honor.
14 THE COURT: Thank you.
15 (At 12:37 p.m. the proceedings were adjourned.)
16
17 CERTIFICATE OF REPORTER
18 I certify that the foregoing is a correct transcript
19 from the record of proceedings in the above-entitled matter.
20 DATE: Sunday, May 23, 2021
21
22
23
24 ______________________________________________
25 Katherine Powell Sullivan, CSR #5812, RMR, CRR
U.S. Court Reporter
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