Federal Court Deals Major Blow to Big Tech and Sets up SCOTUS to Restore Free Speech

A Texas law prohibiting social media platforms, such as Twitter and Facebook, from discriminating against users based on their speech does not violate the First Amendment, a federal appellate court held on Friday. Conservatives, whose speech represents the overwhelming target of censorship, are cheering the Fifth Circuit’s decision in NetChoice v. Paxton. A different federal court, however, struck down Florida’s law prohibiting Big Tech from censoring political speech, setting up a Supreme Court review in the near future.

In September of 2021, Texas passed House Bill 20, a state statute that regulates Big Tech companies — i.e., social media websites with more than 50 million monthly users. Before HB 20 went into effect, NetChoice and the Computer & Communications Industry Association, trade associations representing social media sites, sued Texas Attorney General Ken Paxton, arguing Section 7 and Section 2 of the law violated the First Amendment.

Section 7 of HB 20 regulates the platforms’ ability to censor users’ posts, prohibiting censorship — defined broadly to include blocking, de-boosting, reducing visibility, and other mechanisms of discrimination — based on the viewpoint of the post. This provision applies to censorship of users who reside in, do business in, or share or receive expression in Texas.

HB 20 allows for the continuing censorship of illegal speech as well as posts related to the sexual exploitation of children, harassment of survivors of sexual abuse, speech that directly incites criminal activity, or posts that consist of specific threats of violence targeting “a person or group because of their race, color, disability, religion, national origin or ancestry, age, sex, or status as a peace officer or judge.”

Under the law, illegally censored users or the Texas attorney general may sue Big Tech giants that violate Section 7, but they cannot recover monetary damages; rather, a court may only issue a ruling declaring that a violation has occurred and enter an injunction ordering the platform to comply with the law. If successful, costs and attorney’s fees are also recoverable.

The platforms also challenged certain disclosure and operational requirements established in Section 2 of HB 20, such as Texas’s statutory mandate that the tech companies disclose “how they moderate and promote content and publish an ‘acceptable use policy.’” Section 2 also requires platforms to publish a “biannual transparency report” that provides statistics detailing content-moderation decisions and the creation of a complaint-and-appeal system. Only the Texas attorney general may enforce Section 2, and again, damages are not recoverable.

In challenging HB 20, the tech companies argued that the Texas statute violates their First Amendment right to free speech, which Supreme Court precedent makes clear includes the right not to speak. The tech companies then argued that the act of hosting (or rejecting) speech is its own protected speech, and thus the First Amendment prohibits the government from interfering in that “speech.” Section 2’s disclosure requirements likewise violate the First Amendment, the tech giants argued, because the mandates are “unduly burdensome.”

A federal district court judge agreed with the tech companies’ arguments and in December entered a preliminary injunction against Texas, prohibiting enforcement of the law. Texas then sought a “stay” of the trial court’s injunction, asking the Fifth Circuit Court of Appeals to freeze the lower court’s preliminary injunction and allow HB 20 to go into effect.

While the Fifth Circuit granted the stay, the United States Supreme Court “vacated” or overturned the stay, keeping the preliminary injunction in place pending resolution of the appeal. Justices Samuel Alito, Clarence Thomas, and Neil Gorsuch dissented from the Supreme Court’s vacatur of the stay, and in doing so previewed the importance and complexity of this case. More on that later.

On Friday, the Fifth Circuit reversed the district court’s decision, holding that HB 20 did not violate the First Amendment. Trump-appointed Judge Andrew Oldham authored the 90-page lead opinion that methodically analyzed an array of complex constitutional arguments posited by the tech giants.

The main dispute in NetChoice v. Paxton concerned the application of Supreme Court precedent “that instructs that the freedom of speech includes ‘the right to refrain from speaking at all.’” So, as the Fifth Circuit held, “the State may not force a private speaker to speak someone’s else message.” Conversely, the Fifth Circuit stressed, precedent teaches that a “State can regulate conduct in a way that requires private entities to host, transmit, or otherwise facilitate speech.”

The Fifth Circuit then summarized the interplay of these two principles by explaining that “First Amendment doctrine permits regulating the conduct of an entity that hosts speech, but it generally forbids forcing the host itself to speak or interfering with the host’s own message.” In reaching this conclusion, the Fifth Circuit analyzed five Supreme Court decisions, beginning with Miami Herald Publishing Co. v. Tornillo.

To understand Friday’s opinion and, more importantly, the broader implications of anti-censorship laws, it is necessary to gain a basic familiarity with the Miami Herald decision and the other cases the Fifth Circuit analyzed in NetChoice v. Paxton.

In Miami Herald, the Supreme Court held that a Florida statute that required newspapers to grant political candidates the right to equal space to reply to criticism violated the First Amendment rights of the publisher. In reaching this conclusion, the Supreme Court stressed that the newspapers’ decisions concerning the size, content, and treatment of public issues and public officials involved editorial control and judgment protected from state interference by the First Amendment.

Conversely, in PruneYard Shopping Ctr. v. Robins, the Supreme Court held that the state could require privately owned shopping centers to allow individuals to distribute political literature without violating the mall owners’ First Amendment rights. In upholding California’s mandate, the high court reasoned that PruneYard did not involve the concerns present in Miami Herald, namely forced speech through the state telling a newspaper what to print.

Next up was Pacific Gas & Electric Company v. Public Utilities Commission of California. In that case, a plurality of the Supreme Court declared unconstitutional California’s mandate that the utility company let third-party groups include newsletters in the billing statements Pacific Gas sent to customers. In Pacific Gas, the Supreme Court distinguished PruneYard, by stressing that allowing the third-parties’ speech did not affect the shopping center owners’ exercise of their own right to speech, while mandating the inclusion of a third-party’s newsletter affected Pacific Gas’s ability to showcase its own speech, relative to the voice of its opponents.

The fourth case the Fifth Circuit found relevant was Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston. In Hurley, a Massachusetts state court held that the St. Patrick’s Day parade organized by the South Boston Allied War Veterans Council qualified as a public accommodation under state law, and thus the private organization could not exclude an organization of Irish-American gay, lesbian, and bisexual individuals from marching in the parade. The parade organizers challenged the state decision, arguing it violated the federal constitutional right to free speech.

The United States Supreme Court agreed, holding that the parade constituted a “form of expression” that receives First Amendment protection. “Like a composer,” the Supreme Court reasoned, the parade organizers select “expressive units of the parade from potential participants,” conveying, in total, a message of their own.

The final case found relevant by the Fifth Circuit majority was the Supreme Court’s decision in Rumsfeld v. Forum for Academic and Institutional Rights, Inc. In that case, the Supreme Court upheld the Solomon Amendment against a First Amendment challenge. Congress passed the Solomon Amendment in response to law schools banning military recruiters; the Solomon Amendment denied federal funding to schools that refused to provide military recruiters the same access to students granted to other employers.

In a unanimous decision, the court held that Congress could have required such equal access without running afoul of the First Amendment, and therefore, removing federal funding from educational institutions that violated the Solomon Amendment did not violate the First Amendment.

After detailing these five decisions, the Fifth Circuit majority concluded that precedent teaches that for a “speech host” to mount a successful First Amendment challenge, he must show that “the challenged law either (a) compels the host to speak or (b) restricts the host’s own speech.” For instance, in Miami Herald, the challenged law mandated newspapers “speak” by publishing a politician’s response, and in Hurley, the law required the parade organizers to alter the message conveyed by the parade, while in Pacific Gas, the state’s requirement that the utility company dispatch third parties’ newsletters restricted the company’s own ability to speak.

Conversely, in both PruneYard and Rumsfeld, speech was neither compelled nor restricted. According to the Supreme Court’s reasoning in PruneYard, allowing access to the mall did not affect the property owner’s speech: The owners were neither forced to communicate a message nor prevented from engaging in their own speech. Likewise, in Rumsfeld, the educational institutions required to provide equal access were not forced to speak nor deterred from speaking on their own.

This analysis led the Fifth Circuit to conclude that HR 20 passed constitutional muster, with the majority finding that the law more closely resembled the situations in PruneYard and Rumsfeld. Specifically, HR 20 required the tech companies to provide equal access and nothing more. The users’ speech also does not become the tech companies’ speech, the majority stressed, and the platforms remain free to speak as they see fit, by disavowing or distancing themselves from posts. In fact, as the Fifth Circuit stressed, several platforms already do this by adding disclaimers to users’ posts.

Judge Edith Jones stressed in a separate concurrence that from PruneYard and Rumsfeld it follows “that in arbitrarily excluding from their platforms the makers of speech and preventing disfavored speech from reaching potential audiences (‘censoring,’ in the comprehensive statutory term), they are not themselves ‘speaking’ for First Amendment purposes.” The Reagan appointee added that “it is ludicrous to assert,” as the tech giants do, that by prohibiting the social media sites from censoring users’ speech based on their viewpoint, HR 20 curtails the platforms’ “own speech.”

In her concurrence, Jones added a further analysis of HR 20, viewing it through the lens of the Supreme Court’s decision in Turner Broadcasting System, Inc. v. FCC. In that case, the Supreme Court addressed the constitutionality of a federal statute that mandated cable companies “devote a specified portion of their channels to the transmission of local commercial and public broadcast stations.”

Jones noted that while the Turner court concluded “that selecting a limited repertoire of cable channels to transmit constitutes First-Amendment-protected speech,” the Supreme Court nonetheless upheld the statute. In doing so, the high court distinguished both Pacific Gas & Electric and Miami Herald, stressing that the “must-carry” cable requirements did not target specific content and did not force cable operators to modify their own speech. Further, the Turner court held that viewers were unlikely to consider the speech aired as the cable company’s speech. And finally, the court found it significant that the cable operator’s selection of channels controlled what information households had available to them.

In her concurrence, Jones noted that these same points compel the conclusion that HR 20 does not infringe the First Amendment rights of social media platforms.

The third judge on the panel, Leslie H. Southwick, a George W. Bush appointee, agreed with portions of the majority opinion, but on the central question of “whether social media platforms engage in First Amendment-protected expression when they moderate their users’ content,” Southwick dissented. In his view, the First Amendment protects the tech companies’ censorship of user content.

With the panel split 2-1 in NetChoice v. Paxton, the tech giants could seek rehearing by the full court, followed by requesting review by the Supreme Court. Or the companies could seek review of the Paxton case by the Supreme Court immediately. No matter which tack the companies take, two circumstances suggest the high court will agree to hear an appeal of the case.

First, the Fifth Circuit’s decision on Friday creates a circuit split with the 11th Circuit, which in May of 2022 in NetChoice v. Moody, concluded that similar portions of Florida’s Big Tech anti-censorship statute violated the First Amendment. That statute, Senate Bill 7072, prohibits social media companies from banning political candidates from their platforms, or manipulating with algorithms content and material posted by or about a political candidate. SB 7072 further prohibits the censorship, deplatforming, or restricting of posts by “journalistic enterprises,” as defined by statute. Additionally, the statute requires tech companies to apply any censorship, deplatforming, or banning standards in a consistent manner among its users, and defines the posting of a disclaimer to posts as “censorship.”

Florida’s SB 7072 also imposes disclosure requirements on the tech companies, requiring them to publish the standards used to make censorship decisions. The companies must also give users notice seven days prior to any censorship, with the notice providing a “thorough rationale explaining the reason for the censor[ship] and a precise and thorough explanation of how the social media platform became aware of the content that triggered its decision.” (Notice is not required for the platform to remove obscene material.)

In analyzing whether Florida’s statute violated the First Amendment, the 11th Circuit, in an opinion authored by Judge Kevin Newsom, a Trump appointee, first stressed that “the Supreme Court has repeatedly held that a private entity’s choices about whether, to what extent, and in what manner it will disseminate speech — even speech created by others — constitute ‘editorial judgments’ protected by the First Amendment.” The federal appellate court then considered the same precedent analyzed by the Fifth Circuit in the Paxton case and held that “social-media platforms’ content-moderation decisions constitute the same sort of editorial judgments” as involved in Miami Herald, Pacific Gas, Turner, and Hurley.

While Florida argued that SB 7072 does not implicate the tech companies’ First Amendment rights because those companies are merely “hosts” of speech, like the mall in PruneYard and the higher ed institutions in Rumsfeld, the 11th Circuit rejected that argument. “The State’s reliance on PruneYard and [Rumsfeld] and its attempts to distinguish the editorial-judgment line of cases are unavailing,” the federal appellate court concluded in upholding the preliminary injunction entered by the lower court that barred enforcement of SB 7072.

The 11th Circuit further concluded that the disclosure mandates of SB 7072 “indirectly burden platforms’ editorial judgment by compelling them to disclose certain information.” Such laws, to be constitutional, the federal appellate court explained, must not be “unduly burdensome,” such that they would “chill protected speech.” Mandating that tech companies provide seven-days’ notice with detailed specificity would be practically impossible, the companies argued, and the court agreed the burden imposed by the law was “undue.” Accordingly, the 11th Circuit upheld the preliminary injunction’s ban on enforcing those portions of Florida’s law as well.

While Florida has yet to seek review by the United States Supreme Court, in August it requested permission to extend the time to file its petition for review. Justice Thomas granted that request, giving Florida until September 21, 2022, to file its request for review by the Supreme Court, called a petition for a writ of certiorari. With the Fifth Circuit’s decision last week upholding Texas’s law, the split in the circuits makes Florida’s forthcoming argument for review by the high court even stronger.

Likewise, the eventual petition for review of the Fifth Circuit’s decision in Paxton by the tech companies will prove enticing for the Supreme Court because it presents the opportunity for the justices to consider the differences between the statutes. And, here, a second fact suggests the high court is ready to explore these issues now, namely the three-justice dissent to the Supreme Court’s decision to vacate the Fifth Circuit’s stay in the Paxton case.

As noted above, Justice Alito authored that dissent, which Justices Thomas and Gorsuch joined. While on the surface the only question before the court was whether the Texas law should be allowed to go into effect pending the appeal to the Fifth Circuit, the dissent indicates at least three members of the Supreme Court are ready to hear the case.

“This application concerns issues of great importance that will plainly merit this Court’s review,” the dissent began. “Social media platforms have transformed the way people communicate with each other and obtain news. At issue is a ground-breaking Texas law that addresses the power of dominant social media corporations to shape public discussion of the important issues of the day,” Alito continued.

Then, after summarizing the Texas law and highlighting the Supreme Court’s prior decisions in Hurley, Miami Herald, PruneYard, and Turner, Alito noted that “the law before us is novel,” as are Big Tech’s business models, and “it is not at all obvious how our existing precedents, which predate the age of the internet, should apply to large social media companies.”

With this dissent, then, we have three justices on the record saying the underlying issues merit review by the Supreme Court. And given the conflicting positions of the Fifth and 11th Circuits, it seems likely that at least one more justice will vote to accept at least one appeal, but more likely both, reaching the required four votes necessary for the Supreme Court to accept an appeal.

Conservatives should champion review by the Supreme Court, but not because of any particular outcome. On the contrary, while clamping down on Big Tech’s censorship may prove attractive to conservatives, Hurley, Miami Herald, PruneYard, Turner, Pacific Gas, and Rumsfeld all illustrate that the government interjecting itself into the operations of private operations proves risky. We may not mind when it is Texas and Florida passing laws that seem beneficial to the right, but the same principles will apply when it is leftists in California or New York enacting the statutes.

Supreme Court review of these laws will nonetheless prove a victory for conservatism, no matter the outcome, because it will provide an opportunity for the originalist majority to cast aside the evolving standards and confusing analyses adopted over the years and return to the roots of the First Amendment. What that will mean for the Texas and Florida statutes remains to be seen.

Reporting from The Federalist.