Putting It In Writing: The Return of The Morality Clause In The Age of #MeToo and Time’s Up (Part II)

Part I: The Birth of Morals Clauses in Entertainment Services Contracts

Part II: Twenty-First Century Morality Clauses in Entertainment Services Contracts

Morality clauses, or morals clauses, are making a comeback in the age of the #MeToo and Time’s Up movements.  A sample morality clause in an actor talent agreement may read as follows:

Artist shall act at all times with due regard to public morals, conventions and Studio policies. If Artist shall have committed or does commit any act, or if Artist shall have conducted or does conduct himself in a manner, which shall be an offense involving moral turpitude under federal, state or local laws, or which might tend to bring Artist to public disrepute, contempt, scandal or ridicule, or which may embarrass, offend, insult or denigrate individuals or groups, or that may shock, insult or offend the community or Studio workforce or public morals or decency or prejudice Studio, or which results in or is likely to result in actual or threatened claims against Studio, or which otherwise may might tend to reflect unfavorably upon Studio, Studio shall have the right to terminate this Agreement upon notice to Artist given at any time following the date on which the commission of such act, or such conduct, shall have become known to Studio.

Studios, networks, producers, distributors, financiers, advertisers and many others make a significant investment in television and motion picture projects. That investment is put at risk if public opinion turns against a key personality or executive connected with a project.  Recent events involving actor Kevin Spacey are a case in point.  After multiple reports surfaced that Kevin Spacey engaged in sexual misconduct, studios cancelled a number of his pending film and television projects.  Imperative Entertainment, the financier of Ridley Scott’s All the Money in the World, spent $10 million to reshoot Spacey’s scenes with Christopher Plummer and save the film in time for its holiday release. Separately, Netflix immediately severed its relationship with Spacey, reportedly losing tens of millions of dollars by shutting down production on House of Cards and scrapping its Spacey-driven Gore Vidal biopic, which was already in post-production.  Because Spacey did not have a morality clause in his contracts, he was reportedly paid for the entire final season of House of Cards and for All the Money in the World.  In January 2018, Netflix announced that it took a “$39m non-cash charge in Q4 for unreleased content [it] decided not to move forward with.”  Netflix CFO, David B. Wells, confirmed in the Q4 earnings call that the “write-downs” were “related to the societal reset around sexual harassment.”

Indeed, this is the very scenario Universal sought to avoid when it first announced the use of morality clauses in September 1921:

“As contracts are drawn today, a company seems to be liable not only to continue to pay the salary of an actor or actress who forfeits the respect of the public, but has to bear the obloquy of still having them in its employ. Pictures on the market or unreleased and unreleasable are sufficient penalty to pay for an infraction of the moral law by an employee in whose good name millions may be tied up and over whose moral conduct the company has no control whatever.”  (Morality Clause For Films, N.Y. Times, Sept. 22, 1921, at 8) (PDF).

Those who oppose the use of morality clauses worry that they can be drafted too broadly and are subject to abuse.  This criticism is supported, in part, by the politicized history of morality clauses.  In the 1940’s and 1950’s, several studios used morality clauses to terminate the agreements of the so-called Hollywood Ten, a group of ten actors and screenwriters who were jailed, and blacklisted by movie studios, for publicly denouncing the activities of the House Committee on Un-American Activities during its investigation of Communist influence in Hollywood.  Even today, some representing talent fear that morality clauses, particularly those that are broad or ambiguous, may create pretext for termination of contracts based on other factors.  There is also concern that morality clauses can be unfair to talent since anyone can invent an accusation, or make a public statement that is not necessarily true.  Both the Director’s Guild of America (DGA) and the Writer’s Guild of America (WGA) have banned morals clauses in guild member agreements for decades.  The DGA Basic Agreement states that: “Employer agrees that it shall not include or enforce any so-called ‘morals clause,’ as the term is commonly understood in the motion picture and television industries, in any contract of employment or deal memo for the services of an employee.”  Similarly, the WGA Basic Agreement states that: “Company agrees that it will not include the so-called ‘morals clause’ in any writer’s employment agreement covered by this Basic Agreement.”  Though the Screen Actors Guild-American Federation of Radio and Television Artists (SAG-AFTRA) does not contain a similar prohibition, talent agents and attorneys often negotiate for the removal of a morality clause from a talent agreement, or to narrow and clarify the terms.

Despite these concerns, the ambiguities highlighted by opponents of morality clauses can be negotiated to tailor these clauses more precisely and address each parties’ position.  Moreover, the incentive to avoid deliberately destroying a project would also ensure that a talent agreement is only terminated pursuant to a morality clause when it is warranted.

The #MeToo and Time’s Up Movements are playing an important role in forcing a number of industries, including Hollywood, to recognize and be accountable for conduct.  In the meantime, film studios, networks, and producers have begun reconsidering the use of morality clauses both as a way to deter misconduct and to provide them with some means to protect their investments.

New York Defamation Suit Against Trump To Proceed: The public response to an accusation of sexual misconduct may give rise to a defamation claim

On March 20, 2018, a New York state judge held that Summer Zervos, a former contestant on the reality television show The Apprentice, can move forward with her defamation suit against President Trump in Zervos v. Trump, No. 150522/17 (N.Y. Sup. Ct. Mar. 20, 2018).  The ruling illustrates both that a sitting President is not immune to civil liability even in state court, and that a defendant’s public response to an accusation of sexual misconduct may give rise to a defamation claim.

During the 2016 presidential campaign, Zervos was one of roughly twenty women who accused Trump of sexual misconduct after the footage from the television show Access Hollywood was made public.  On October 14, 2016, Zervos and her attorney held a press conference where she alleged that Trump sexually assaulted her on several occasions in 2007.  The following day, Trump denied the allegations as “100% fabricated and made up charges” in a statement on his campaign website.  Trump continued to deny the allegations at campaign rallies and in a series of tweets.  During the October 19, 2016 presidential debate, Trump again called the allegations “lies” and “fiction.”  Finally, during a October 22, 2016 Pennsylvania campaign rally, Trump made the following public statements:

“Every Woman lied when they came forward to hurt my campaign, total fabrication.  The events never happened. Never. All of these liars will be sued after the election is over.”  (Zervos Complaint, ¶ 74).

On January 17, 2017, Zervos filed a complaint in New York state court, alleging that the President Elect made defamatory statements about her. Zervos alleges she suffered at least $2,914 in financial losses, and seeks an unspecified amount of compensatory and punitive damages.  Three days after the complaint was filed, Trump became the 45th President of the United States.  Trump moved to dismiss the complaint or continue the lawsuit until after he leaves office.  On March 20, the New York court denied his motion, finding that the President has no immunity for purely private acts, even in state court, and that Zervos stated a cause of action for defamation.  The court cited the U.S. Supreme Court’s unanimous opinion in Clinton v. Jones, 520 U.S. 681 (1997), which held that a sitting President does not have absolute immunity from civil lawsuits related to conduct prior to the presidency.

After finding that “[n]o one is above the law,” the court also held that Zervos’s complaint met the minimal standard necessary to plead a cause of action for defamation and therefore withstood a motion to dismiss.  In support, the court cited a 2014 decision by New York’s highest court in Davis v. Boeheim, 24 N.Y.3d 262 (2014), which held that an action for defamation could be maintained against a defendant who called his accusers liars.  In reviewing the alleged public statements Trump made about Zervos, the court found that Trump used “specific, easily understood language to communicate” that Zervos lied to further her interests.

The court’s decision to allow the Zervos defamation claim to proceed hinged on its determination that, as alleged by Zervos, Trump’s statements constituted actionable statements of fact, rather than nonactionable statements of opinion.  The court determined that Trump’s “repeated statements … cannot be characterized simply as opinion, heated rhetoric or hyperbole.”  Trump’s attorney filed a notice of appeal on April 1, 2018.

Following the court’s order denying Trump’s motion to dismiss the Zervos complaint, on March 26, 2018, Stephanie Clifford (a.k.a. Stormy Daniels), the woman who went public about her alleged sexual relationship with President Trump, amended her complaint against Trump, pending in the United States District Court for the Central District of California, captioned Stephanie Clifford v. Donald J. Trump et al, No. 2:18-cv-02217 (C.D. Cal. Apr 2, 2018).  Clifford added a defamation claim again the President’s longtime personal lawyer, Michael Cohen, who allegedly paid her $130,000 to keep the details of the alleged affair secret.  Clifford alleges that the public statement Cohen issued on February 13, 2018, stating that “Just because something isn’t true, doesn’t mean that it can’t cause you harm or damage,” was reasonably understood by those who read or heard it to concern Clifford and was “meant to convey that Clifford is a liar, someone who should not be trusted, and that her claims about her relationship with Mr. Trump” are not true.  Clifford Complaint, ¶¶ 66-67.  Defendants have filed a motion to compel Clifford’s lawsuit to arbitration.

These cases make clear that a public response to an allegation of sexual misconduct may potentially give rise to a claim of defamation.

Strong Shield Law Protections for Journalists in California and Across the Country

There has been a series of cases in recent months involving attempts by the government to expose journalists’ confidential sources of information.  These cases tend to follow a familiar pattern: the government seeks the identity of a reporter’s source of information and the reporter (or media company) asserts a journalist’s First Amendment protection from being compelled to testify about confidential information or sources (commonly known as the “reporter’s privilege”).

In fact, a succession of reporter’s privilege cases have appeared across the country over the past two months.

In San Diego California, County lawyers sought to compel freelance journalist Kelley Davis’s notes, research, and sources along with a deposition after she published a series of articles detailing jail deaths and the high inmate suicide rate in San Diego jails.  Davis successfully argued that the reporter’s privilege applied and secured a ruling protecting her from disclosing any confidential information to the County.

San Diego County also recently lost another attempt to compel a journalist to testify in the case of Israel Morales, who was charged with three misdemeanor counts of drunk driving.  A journalist, Paul Anderegg, witnessed Morales pushing his car on the freeway, called 911, and then witnessed an accident as another car struck Morales’ vehicle.  Prosecutors argued that Anderegg could be called as a witness to testify in the County’s case against Morales because he was not acting as a journalist when he witnessed the accident.  However, the judge disagreed and ruled that because Anderegg traveled to the scene to record the events for a news story, he was protected by the reporter’s privilege and prosecutors could not subpoena him to testify.

In Des Plains Illinois, the city, police chief, and a police sergeant recently sued the Journal & Topics Media Group seeking the identity of the source of a photograph published by the Journal depicting police officers viewing pornography in the police station.  The Journal successfully asserted the reporter’s privilege and was not ordered to disclose the name of its source.

Finally, in New York, the Associated Press recently objected to an attempt by Honduran police officers to obtain the AP’s phone records in order to identify the source of a story detailing how top Honduran police officials intervened to safely deliver 1,700 pounds of cocaine to a cartel kingpin.  The AP has refused to provide the records, claiming that they are protected under the analogous reporter’s privilege embodied in the Honduran constitution.

In California there is a robust reporter’s privilege that shields journalists from having to disclose confidential (or non-confidential) sources and unpublished information in civil proceedings.  California’s reporter’s privilege is set forth in Article I, Section 2(b) of the California Constitution (known as the “Shield Law”) which states that reporters are protected from “disclos[ing] the source of any information procured while so connected or employed for news or news commentary purposes on radio or television, or for refusing to disclose any unpublished information obtained or prepared in gathering, receiving or processing of information for communication to the public.”  The same is established by statute in California Evidence Code Section 1070.  Accordingly, California courts have interpreted the Shield Law as providing absolute immunity from disclosing sources or unpublished information in civil proceedings.

No SpielBurgers for you! Steven Spielberg Shuts Down Unauthorized Use of His Name

Last week, Carl’s Jr. announced that in honor of Steven Spielberg’s new movie, Ready Player One, they would change the name of their Charbroiled Sliders to “SpielBurgers.” They tweeted: “@StevenSpielberg hasn’t signed off yet, but we’re pretty sure he’ll be down with it.”

In fact, Spielberg was not down with it. He posted a video on Twitter politely declining the honor: “It’s recently come to my attention that Carl’s Jr. wants to rename their Charbroiled Sliders ‘SpielBurgers.’ And they’re pretty good, but I’m passing. Cease and desist. You can’t do it. Sorry, guys.”

Carl’s Jr. took the rejection well, focusing on the positive: “OMG Spielberg likes our Charbroiled Sliders!” Although this was probably a successful campaign for the company, it could have easily turned out worse. As we’ve noted before, some celebrities respond to the unauthorized use of their names less politely. For example, when a clothing company played on Don Henley’s name and encouraged people to “Don a Henley,” the famous musician filed a lawsuit against them.

Some celebrities are willing to play along with these stunts. For example, Mark Hamill tweeted that he was “completely open to the idea of “HAMILLBURGERS” #NoShameNoGain.” But, if you guess wrong, gambling on whether a celebrity is going to be OK with your use of their name can be very costly.

For a more in-depth analysis of these issues, check out Part IPart II, and Part III of a series on Right of Publicity claims on Drye Wit.

Storytellers and Artists May Continue To Rejoice – Feud: Bette and Joan Is Fully Protected By The First Amendment

On March 26, 2018, the California Court of Appeal filed its opinion in De Havilland v. FX Networks, LLC concerning FX’s docudrama Feud: Bette and Joan.  The De Havilland opinion is yet another good one for filmmakers and television producers.  The California Court of Appeal reiterated that the First Amendment provides a powerful defense for entertainment works, just as the Ninth Circuit did in the right of publicity case involving The Hurt Locker.  See Storytellers and Artists Rejoice: The Hurt Locker Is Fully Protected By The First Amendment.

For those of you who have not had time to read the Court’s opinion, here is what we consider to be the 9 major takeaways:

  1. The Court confirmed that a person does not own the facts that make up his or her own story or a portion thereof.
  2. Docudramas, which are a mixture of fact and fiction, are protected by the First Amendment. As the Court noted, the First Amendment “safeguards the storytellers and artists who take the raw materials of life – including the stories of real individuals, ordinary or extraordinary – and transform them into art, be it articles, books movies, or plays.”  Order at 19.  And authors of docudramas have literary license under the First Amendment to alter true events and give dramatic interpretations thereof.
  3. So-called “life rights” agreements are not legally necessary. While there may be a practical reason for wanting to enter into a “life rights” agreement with a person, it is not legally required. The creators of film and television programs simply are not required to purchase a person’s rights to feature that person’s name or likeness.
  4. Advertising and promotions are protected too: The Court also confirmed that the creators of television programs may use a person’s name and identity in their promotions for the program without running afoul of right of publicity laws.
  5. The Court also followed the case of Guglielmi v. Spelling-Goldberg Prods., 25 Cal. 3d 860 (1979). In that case, Chief Justice Bird noted (in a widely-followed concurring opinion) that that creators should be allowed to express themselves using figures from history as a starting point for their stories.
  6. The Court made the transformative use test easier to follow (and satisfy), at least within the context of films, plays and television programs. See Opinion at 23-27.
  7. On a false light claim, the Court decides as a matter of law whether the program conveyed (a) statements of fact that are (b) defamatory or highly offensive to a reasonable person and (c) actually false or convey a false impression of the plaintiff. And the statement must be analyzed in its broad context to determine whether it implies an assertion of actual fact. Here, Ms. De Havilland’s claims failed, and the Court noted that viewers are familiar that docudramas (even those which are “based” on fact) contain fictionalized scenes, conversations and characters, as well as dramatic interpretations of events and dialogue.
  8. A public figure bringing a false light claim must prove actual malice by clear and convincing evidence. And “[p]ublishing a fictitious work about a real person cannot mean the author, by virtue of writing fiction, has acted with actual malice.” Opinion at 35.
  9. The Court re-confirmed that unjust enrichment simply is not a cause of action.

Putting It In Writing: The Return Of The Morality Clause In The Age Of #MeToo And Time’s Up (Part I)

Part I: The Birth of Morals Clauses in Entertainment Services Contracts

The issues highlighted by the #MeToo and Time’s Up movements have refocused the spotlight on morals clauses in talent agreements.  Morals clauses (or morality clauses) are contractual provisions which give entertainment and media employers – e.g. motion picture studios, television networks, producers, news media providers, advertisers, sports leagues etc. – the right to terminate contracts if the talent behaves in a way that negatively impacts his or her public image and devalues the services to be provided under the contract.  Originally introduced by Universal Pictures in 1921, the prevalence of morality clauses in talent agreements appeared to have declined in recent years.  Today, in 2018, following a slew of cancelled film releases, film projects, television series, and comedy specials, some companies have revisited the use of morals clauses to protect their investments.

Movie studios first introduced morality clauses after the public outcry following the arrest and widely publicized trials of silent film actor Roscoe ‘Fatty’ Arbuckle in 1921. Arbuckle was among the most popular, and most highly compensated, silent film stars of the 1910s.  In the summer of 1921, Arbuckle signed a three-year contract with Paramount Pictures for $1 million (estimated by some to be approximately $14 million today).  Arbuckle had just completed his starring role in a comedy called Leap Year, which was set to be released.  Over Labor Day weekend, Arbuckle traveled to San Francisco, checking into a suite at the St. Francis Hotel.  During the gin party that ensued (this was during Prohibition), an actress named Virginia Rappé was found severely injured in Arbuckle’s suite.  After Rappé died from a ruptured bladder, Arbuckle was arrested on rape and murder charges.  His arrest caused a media frenzy.  Even though Arbuckle was acquitted after three trials and was even issued an unprecedented statement of apology from the jury, the scandal marked the end of Arbuckle’s career.  Public opinion had turned against the once beloved actor.  The newly formed Motion Picture Producers and Distributors of America–the organization that later became the Motion Picture Association of America–banned Arbuckle from appearing in films.  Though the Association lifted the ban eight months later, Arbuckle’s career was over. Leap Year was never released, and Paramount presumably lost a substantial investment.

In response to the public disenchantment with Arbuckle and a growing concern about Hollywood scandals, the Universal Film Company announced that it would include clauses in all its talent agreements “permitting the company to discontinue their salaries if they forfeit the respect of the public.”  (Morality Clause For Films, N.Y. Times, Sept. 22, 1921, at 8) (PDF).  The announcement noted that though “[i]t may have a restraining influence on some thoughtless or willful actors; it will reassure the public, who for the moment may be inclined to fear that all their screen idols have feet of clay, and it will protect the company in an investment, often of hundreds of thousands of dollars.” Id.  Other studios followed suit, and morality clauses became a standard term in talent agreements.

During the 1940’s and 1950’s, several studios used morality clauses to terminate talent contracts based on politics.  Morality clauses were used to dismiss the so-called Hollywood Ten, a group of ten actors and screenwriters who were jailed and blacklisted by movie studios for publicly denouncing the activities of the House Committee on Un-American Activities (HUAC) during its investigation of Communist influence in Hollywood.  In a series of high profile cases, the Ninth Circuit Court of Appeals upheld the dismissals under the morality clauses.  In one case, the Court held that “because, even in 1947, a large segment of the public did look upon Communism and Communists as things of evil,” by failing to assist the HUAC, the screenwriter breached his agreement “not do or commit any act or thing that will tend to degrade him in society or bring him into public hatred, contempt, scorn or ridicule, or that will tend to shock, insult or offend the community or ridicule public morals or decency, or prejudice the producer or the motion picture, theatrical or radio industry in general.” Loew’s, Inc. v. Cole, 185 F.2d 641, 644-645 (9th Cir. 1950).  The court reached similar conclusions in Twentieth Century-Fox Film Corp. v. Lardner, 216 F.2d 844 (9th Cir. 1954) and Scott v. RKO Radio Pictures, Inc., 240 F.2d 87, 88 (9th Cir. 1957).

In the decades that followed, the prevalence of morality clauses in film and television contracts started to decline. While such clauses remained prominent in celebrity endorsement agreements, morals clauses were criticized by some for their vagueness and fell out of favor.

Both the Director’s Guild of America (DGA) and the Writer’s Guild of America (WGA) have banned morals clauses in guild member agreements for decades.  The DGA Basic Agreement states that,  “Employer agrees that it shall not include or enforce any so-called ‘morals clause,’ as the term is commonly understood in the motion picture and television industries, in any contract of employment or deal memo for the services of an employee.”  Similarly, the WGA Basic Agreement states that, “Company agrees that it will not include the so-called ‘morals clause’ in any writer’s employment agreement covered by this Basic Agreement.”  The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) does not impose a similar prohibition.

Embedding Tweets May Be Copyright Infringement

Most companies understand they should obtain a license before using a photograph in an advertising campaign or on printed materials.  And yet companies may not think twice about embedding images from a tweet or social media post into the company’s own social media feed or website. But embedder beware.  A federal judge in the U.S. District Court for the Southern District of New York recently rejected and limited the application of the so-called “Server Test”.

In jurisdictions that have adopted the Server Test, a website publisher can only be liable for direct infringement when a copyrighted image is hosted on its own server as opposed to being embedded or linked from a third-party server. On February 15, 2018, the court in Goldman v. Breitbart News Network, LLC, et al., U.S. District Court for the Southern District of New York, No. 17-cv-3144, found that embedding a tweet of a copyrighted image can be considered copyright infringement, regardless of where the image is hosted.

The Copyright Act grants copyright owners several exclusive rights to control the distribution and use of copyrighted works, including the right to make copies of the work, the right to distribute those copies to the public, and the right to publicly display the copyrighted work. In the Goldman case, the Court held that embedding a tweet of a copyrighted image can violate the copyright owner’s exclusive display right.

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Saved By Punctuation: James Woods Escapes Liability With A Question Mark

A federal judge in the Southern District of Ohio recently dismissed a case against actor James Woods over a tweet he posted during the 2016 presidential campaign.  Woods, the outspoken conservative actor best known for his roles in Casino, Once Upon A Time In America, and Ghosts of Mississippi (for which he received an Oscar nomination), was sued by Plaintiff Portia Boulger, a self-described “active volunteer and pledged convention delegate for Senator Bernie Sanders.”

The lawsuit arose from inaccurate news shared on social media during the 2016 presidential campaign.  On March 11, 2016, Donald Trump held a Republican primary campaign rally in Chicago, Illinois.  That evening, the Chicago Tribune posted a photograph on its Twitter account of a woman at the Trump rally giving a Nazi salute with her right hand raised straight up.  The next day, an anonymous Twitter user posted the photograph, together with a photograph of Boulger and a caption identifying Boulger as an organizer for Bernie Sanders.  The Twitter user alleged (falsely) that “the ‘trump Nazi’ is Portia Boulger, who runs the Women for Bernie Sanders twitter account.  It’s another media plant.”

Within minutes of this tweet, Woods tweeted the same two photographs along with the comment “So-called #Trump ‘Nazi’ is a #BernieSanders agitator/operative?”  Woods’s Twitter account has more than 350,000 followers and the post was re-tweeted more than 5,000 times.  Later that day, various newspapers correctly identified the woman who gave the salute at the Trump rally as Brigitt Peterson of Yorkville, Illinois, not Boulger.  Woods later tweeted a clarification that Boulger was not the woman giving the salute and eventually deleted the tweet on March 22, 2016.

Nonetheless, Boulger alleged that during the period from March 12 – March 22, 2016, while Woods’s tweet remained posted on his account, she received hundreds of obscene and threatening messages, including death threats, and anonymous phone calls at her home from callers who up when she answered the phone.

Boulger filed suit against Woods over the tweet, alleging claims for defamation and false light invasion of privacy.  Woods moved for judgment on the pleadings under Rule 12(c), arguing that his tweet was not a false statement of fact, but rather a question inviting readers to reach their own conclusions.  Ohio District Judge George C. Smith agreed and dismissed both claims, albeit noting that, “were it not for the question mark at the end of the text, this would be an easy case.”

Indeed, the decision turned entirely on Woods’s use of punctuation at the end of his statement – namely whether a question could be construed as a false statement of fact sufficient to assert claims for defamation and invasion of privacy.  The court noted that if the question mark were deleted, “the reader is left with an unambiguous [false] statement of fact.”  However, in light of the question mark, the court noted that the overwhelming majority of courts to consider questions as defamatory statements have found them not to be assertions of fact because a question tends to indicate a defendant’s “lack of definitive knowledge about the issue” and “invites the reader to consider” various possibilities.  In fact, the court was “unable to locate any cases in which a question was determined to be a defamatory statement of fact.”

The court also relied on Ohio’s “innocent construction rule” with regard to defamation, i.e. that if allegedly defamatory words are susceptible of two meanings, one defamatory and one innocent, the defamatory meaning should be rejected, and the innocent meaning adopted.  The court analyzed Woods’s statement under this rule and found that although a reasonable reader could interpret Woods’s tweet as an assertion of fact that Boulger was the woman giving the Nazi salute, it was also possible that other reasonable readers could interpret the tweet as a mere “inquiry signaling Woods’s lack of certainty and inviting his followers to reach their own conclusions.”

As Boulger was thus unable to show that a false statement of fact had been made about her (a prerequisite to both her defamation and false light invasion of privacy claims), the Court granted Woods’s motion for judgment on the pleadings and terminated the case.

This decision reflects an interesting development refining the law surrounding statements made on social media.  The case is Boulger v. Woods, Case No. 2:17-cv-186 (S.D. Ohio, January 24, 2018).

Insurance Coverage for Social Engineering Scams

Ken Kronstadt authored the Westlaw Journal Insurance Coverage article “Insurance Coverage for Social Engineering Fraud,” discussing recent court decisions regarding insurance coverage for social engineering fraud and what policyholders can do to increase the likelihood of getting coverage for losses resulting from social engineering fraud and other computer related scams. Ken notes that while a few courts have found coverage under crime/fidelity policies, other courts have denied coverage, finding that the loss was not the direct result of the fraudulent scheme.  Companies looking to ensure coverage on social engineering fraud should not assume that their policy – whether a crime/fidelity policy or even a cyberliability policy – provides coverage.

Religion, Kombucha, and the First Amendment: California Court of Appeal Affirms Dismissal of Defamation Claim Against Web Publisher

The California Court of Appeal issued a recent ruling with interesting ramifications for media, entertainment, and First Amendment practitioners.  The decision by the Second District Court of Appeal, though unpublished, has further shown how California courts will determine media companies’ liability for defamation, specifically in situations where web publishers host articles written by independent contractors.

The decision arose from a remarkable set of facts.  Plaintiff Andrew Keegan Heying, better known as Andrew Keegan, an actor famous for his roles in the television series Party of Five and in the movies 10 Things I Hate About You and Independence Day, co-founded his own religion called the Full Circle Church in Venice, California.  In May, 2015, the California Department of Alcoholic Beverage Control conducted a raid at the Full Circle Church and issued a citation for selling alcohol without a license due to the sale of kombucha – a fermented tea with a very low level of alcohol– at an event being held at the church.  Mr. Heying was not present at the time of the raid and was not arrested.

On May 15, 2015, Fox News posted an article online about the incident with the headline “Andrew Keegan busted for selling kombucha at his New Age temple.”  The same day, a four paragraph article was published on Examiner.com with the headline “Andrew Keegan arrested for selling illegal kombucha at a New Age Temple.”  The Examiner article quoted from and linked to the Fox News report.  Examiner.com was a website that hosted articles written by “examiners” – independent contractors from across the country who were eligible to receive payment based upon the number of views their articles received.  The publication in question was written by Mandy Robinson, an “examiner” from Oklahoma City.

Mr. Heying sued Examiner.com and related companies for defamation, invasion of privacy, negligence and misappropriation under California common law and Civil Code § 3344.  Notably, Ms. Robinson, the article’s author, was not named as a defendant in the lawsuit.  The defendants filed a motion to strike the complaint as a strategic lawsuit against public participation under California’s anti-SLAPP statute.  The Los Angeles county trial court granted defendants’ anti-SLAPP motion on the grounds that Mr. Heying, a public figure, could not produce clear and convincing evidence that the Examiner.com article was published with actual malice, as required by the First Amendment.  Mr. Heying appealed.

The Court of Appeal held that the anti-SLAPP statute applied because the Examiner.com post, made on a public website, appeared on a “public forum” for purposes of the statute and because Mr. Heying and the Full Circle Church were in the “public eye” due both to Heying’s celebrity status and the fact that numerous articles had been written about Heying and his church in New York magazine and the Los Angeles times.  Accordingly, the Court held that the Examiner.com article concerned a matter of public interest for purposes of the anti-SLAPP statute.

The Court further held that Mr. Heying could not establish a probability of prevailing on the merits of his claims and affirmed the dismissal of all defendants.  The Court found that Ms. Robinson, the independent contractor who authored the post, did not act with actual malice because she reasonably relied on the Fox News report and understood the word “busted” in that report to mean “arrested.”

Mr. Heying argued that, notwithstanding the author’s intent, the Examiner.com business model allowed an inference of actual malice on behalf of defendants because independent contractors were allowed to publish articles directly on the website without any review or approval by the site’s owners.  The Court of Appeal disagreed.  The Court relied on the precedent set in Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal. App. 4th 688 (2007) and held that Mr. Heying was unable to produce “specific evidence” that defendants “routinely relied on biased sources, falsely represented they had done more investigation than they had, or, as a business practice, made statements with defamatory implication to achieve a preconceived result” as was required to find actual malice on behalf of a website owner.  Notably, the Court further held that defendants’ failure to review the article before posting it did “not create an inference that defendants entertained serious doubts as to the truth of the publication or a high degree of awareness of probable falsity.”

Although unpublished, this decision reflects an interesting development in the law concerning publisher liability for hosting content provided by independent contractors.  The case is Heying v. Anschutz Entertainment Group, et al., CA2/8, Case No. B276375.

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