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edisonashley · 4 years ago

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George Peretz QC: The Subsidy Control Bill: Part I – A new public law regime

The Subsidy Control Bill, now going through the House of Commons, creates the domestic replacement for the EU State aid regime. So it might be regarded as legislation of interest only to those who reside in the land of competition law: a distant land of which State aid law is a particularly exotic and remote peninsula. Any such view would, however, be profoundly wrong. On the contrary, the Bill sets up a new type of public litigation, covering a very wide range of public authority decisions, that should be of considerable interest to public lawyers and its application to legislation will be of interest to constitutional lawyers as well.

The structure of the Bill

Clause 12 of the Bill is the core provision: it creates a duty on public authorities, when they take a decision to grant a subsidy, to consider “subsidy control principles” and not to grant the subsidy unless it is consistent with those principles. Those subsidy control principles are set out in Schedule 1 to the Bill: they are open-textured principles that involve considerable scope for judgement and policy disagreement (for example: “Subsidies should be an appropriate policy instrument for achieving their specific policy objective and that objective cannot be achieved through other, less distortive, means”: principle E). Chapter 2 of Part 2 of the Bill also prohibits certain subsidies: in some case the prohibition is “bright line” (for example, a prohibition on unlimited guarantees in clause 15); but in other cases it is more open-textured (for example, the prohibition in clause 29 on subsidies to restructure ailing or insolvent enterprises unless, among other conditions, there is a “credible” restructuring plan).

The definition of what is a subsidy occupies clauses 2-5. As in State aid and WTO subsidy law, the definition includes a wide range of ways in which public authorities can give advantages to businesses. As well as grants, it includes: loans and guarantees; providing or purchasing goods or services; and foregoing revenue that is otherwise due. It expressly includes certain tax measures (clause 4 being particularly relevant to those). So a very wide range of public decision-making affecting business is covered.

However, the definition of a subsidy expressly excludes measures that are not capable of affecting trade or competition, as well as transactions that are not any more favourable to the recipient than would have been available on the market (for example, a public authority loan to a business that is on no better terms than those that would have been offered by a bank). Both those exclusions are open-textured and capable of providing ample basis for disagreement of fact and assessment of fact. There are also, in later parts of the Bill, bright-line exclusions, such as the exclusion for subsidies of less than £315,000, as well as exclusions for subsidies granted in relation to natural disasters, economic emergencies and maintaining financial stability.

In some cases, to be defined by secondary legislation, the granting authority will be obliged to request a report from the Competition and Markets Authority (CMA) before granting the subsidy (“subsidies of particular interest”: clause 52). In some other cases (“subsidies of interest”), again to be defined by secondary legislation, the granting authority will be able to obtain such a report from the CMA but does not have to (clause 56), or may be required by the Secretary of State to obtain one (clause 55).

The Secretary of State also has a wide power to refer a subsidy to the CMA after its grant if he considers that the Bill has not been complied with or if the subsidy carries a risk of negative effects on competition or trade: clause 60.

The CMA’s report must include an evaluation of the granting authority’s assessment of the subsidy control principles and may give advice on how the assessment could be improved or the subsidy modified (clause 59). Importantly, though, the CMA report is not binding on the granting authority: the Bill leaves the granting authority free to reject its advice if it wishes.

The duty to consider the subsidy control principles before granting a subsidy is alleviated by the possibility of “subsidy schemes” (clause 10). These are, essentially, frameworks set out by the granting authority, and are subject to the same obligations as a subsidy would be: but once the scheme decision has been taken, any subsequent subsidy fitting within the scheme can be granted without further consideration of the subsidy control principles. It is also possible for the UK and devolved governments to make subsidy schemes covering grants made by other public authorities (so that, for example, the Welsh Government could make a subsidy scheme allowing, say, grants of up to a certain amount for the purposes of promoting Welsh language and culture to be given by any Welsh local authority without the grantor having to consider the subsidy control principles before doing so). Like subsidies, subsidy schemes in some cases must be, and in some cases may be, referred to the CMA for advice before they are made.

The Secretary of State (but not the devolved governments) is given power to make a “streamlined subsidy scheme”: a streamlined subsidy scheme has to be laid before Parliament but (unlike an ordinary subsidy scheme) is not referable to the CMA (clauses 10(4)-(6) and 64(1)(a)).

Finally, and importantly, there are transparency obligations (clauses 32-34). Any subsidy granted by a public authority must be entered on a public “subsidy database” with such details as may be set out in regulations made by the Secretary of State. (Where a subsidy is made under a subsidy scheme, the duty applies only if the subsidy exceeds £500,000). The entry must be made within six months of the decision or (in the case of tax measures) within one year from the date of the relevant tax return.

Judicial review

The CMA has no powers of enforcement. So the ultimate answer to the question “why should we take any notice of the requirements of the Bill?” is the risk of judicial review.

The Bill sets up a new judicial review regime that applies to “subsidy decisions”: an “interested party” may apply to the Competition Appeal Tribunal (CAT) for judicial review of such a decision (clause 70(1)). The CAT (set up by the Enterprise Act 2002) is a UK tribunal consisting of a legal chairman (usually its President or a High Court or Court of Session judge) and two experts in competition law or economics: appeals from it lie to the Court of Appeal or Inner House. The CAT is to exercise its powers on a judicial review or supervisory jurisdiction basis.

It is important to note that “subsidy decision” covers any decision to grant a subsidy (or make a subsidy scheme): clause 70(7). Nor is there any limitation of the grounds of challenge to questions as to the application of the Bill: clause 70 covers any judicial review of a subsidy decision on any grounds, including (for example) lack of power to grant the subsidy at all, procedural unfairness, or bias.

In addition to the role of the CAT, there are four further particular features of the special judicial review regime that will apply to subsidy decisions.

First, the concept of “interested party” (who has standing to bring a challenge) is circumscribed by clause 70(7)(a): it is either (a) “a person whose interests may be affected by the giving of the subsidy or making of the subsidy scheme” or (b) the Secretary of State.

As to (a), the wording is likely to be read in the light of Article 369(6) of the Trade and Cooperation Agreement (TCA), which defines “interested party”, for the purposes of the obligation to provide a route to seek judicial review of subsidy control decisions, as being “any natural or legal person, economic actor or association of economic actors whose interest might be affected by the granting of a subsidy, in particular the beneficiary, economic actors competing with the beneficiary or relevant trade associations.” That list of examples would appear to suggest that only economic “interests” count (excluding, for example, other local authorities concerned that their areas may be adversely affected by the measure or public interest groups such as the Good Law Project). It should be noted that nothing in the TCA would have prevented the United Kingdom from operating more generous standing rules: and, indeed, in Ireland now, and in the United Kingdom itself when part of the EU, it is and was open to anyone with standing as a matter of general public law to seek judicial review of a subsidy decision on the basis that it amounted to an unlawful State aid.

As to (b), though the Secretary of State is automatically an “interested party” able to seek judicial review of a subsidy decision he dislikes (for example, a subsidy decision by the Scottish or Welsh Government), the devolved governments have no equivalent status (and, as suggested above, are unlikely to have standing under limb (a) either).

Second, a very strict time limit of only one month applies from the “transparency date” (the date on which details of the subsidy are placed on the database): clause 71 (inserting a new rule 98A into the CAT Rules). However, the wording of rule 98A(1) (“before the end of one month beginning with the relevant date” – the “relevant date” being, by default, the transparency date) would appear to permit an application before the transparency date if the subsidy is made public (or the applicant gets to hear about it) beforehand: in such a case the rule 98A limit could turn out to be more generous than the standard English time limit for judicial review (promptly and in any event within 3 months of the decision)..

Third, and to some extent also in mitigation of the strict time limit, interested parties are given a right in clause 76 to pre-action disclosure of “such information as would enable, or assist in, the making of a determination as to whether the subsidy was given” in accordance with the Bill: essentially, a form of pre-action duty of candour. Such a request must be made within one month of the transparency date and must be answered within 28 days: once answered there is then a further month within which an application to the CAT must be made. However, it is also important to note that clause 76 does not give any right to pre-action disclosure in relation to common-law grounds such as bias or lack of power.

Finally, in addition to the usual powers available to the High Court or Court of Session in judicial review cases, the CAT is given, by clause 74, the power (if it grants any remedy in the usual suite of public law remedies) also to order that the granting authority recover the amount of the subsidy granted by the decision at issue from the recipient. The power is given at large (“may”): but since Article 373 of the TCA obliges the United Kingdom to “have in place an effective mechanism of recovery in respect of subsidies” and states that “the Parties recognise that recovery is an important remedial tool in any system of subsidy control”, it is likely that a recovery order would be the rule rather than an exception.

This post sets out the basic framework of the Bill. In a second post on this blog I will look at the application of the Bill to legislation, and look at various uncertainties and concerns about how the judicial review provisions will work and about enforcement of the Bill more generally.

George Peretz QC is a barrister practising in public law at Monckton Chambers.

(Suggested citation: G. Peretz, ‘The Subsidy Control Bill: Part I – A new public law regime’, U.K. Const. L. Blog (28 October 2021) (available at https://ukconstitutionallaw.org/))

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edisonashley · 4 years ago

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Trump’s Must-Carry Lawsuit Against Twitter Moved to Twitter’s Home Court–Trump v. Twitter

As you recall, in July, Trump sued Twitter, Facebook, and YouTube for “deplatforming” him. As expected (see image to the right), YouTube successfully transferred its case to the Northern District of California. Now Twitter has done the same.

(A reminder that Trump’s legal filings routinely make brain-meltingly stupid arguments. This one is no exception).

Twitter’s TOS, which Trump agreed to in 2009 when he created his account, contains a mandatory venue clause. To get around this, Trump claimed he “is exempted from the forum selection clause because he was the sitting President at the time his Twitter account was suspended and was legally unable to accept the forum selection clause.”

The court gently shreds this argument. It says that the “Court does not find, nor do the Plaintiffs cite to, any section of the code that prevents a federal actor from accepting a forum selection clause.” It also says that the Knight Institute v. Trump ruling had no bearing on venue selection (and, as usual, there’s irony in how Trump tries to turn a bad courtroom loss into something that benefits him). “For these reasons, the Court finds that Trump’s status as President of the United States does not exclude him from the requirements of the forum selection clause in Twitter’s Terms of Service.”

The court could have listed other reasons to reject Trump’s argument, like Trump signed up for the account when he wasn’t a sitting president, he filed the case when he wasn’t a sitting president, and other plaintiffs on the complaint have never been president and thus cannot benefit from these arguments. Plus, yes, Trump literally takes the position that the rule of law doesn’t apply to him–even if it applies to “ordinary” Americans. And the odious idea that a government actor can force private publishers to carry their unwanted propaganda is the kind of “rule of law” we see in banana republics.

The court goes on to explain why the venue clause is mandatory, not permissive, and why it covers Trump’s claims. This is not a hard case.

As a last-ditch effort, Trump argues that he should benefit from the “consistent content moderation” requirement of Florida’s new social media censorship bill (another ironic claim, because he literally just argued that his forum selection situation should not be treated consistently with other users due to his presidential status, but whatever). That law can’t be applied retroactively, and it’s currently enjoined as unconstitutional, but the court rejects the argument on more mechanical grounds.

Having established the enforceability of Twitter’s forum selection clause, the burden shifts to Trump to provide a public policy argument in favor of keeping the case in Florida. The court recaps Trump’s arguments:

(1) the FDUTPA claims constitute a localized controversy that will affect how the Defendants engage in business in Florida; (2) several Plaintiffs, including Trump, are residents of Florida; (3) the bargaining positions between Twitter and its users weighs against a transfer, (4) Justice Clarence Thomas’s concerns regarding Section 230 in an opinion on a petition denying a writ of certiorari; and (5) recent case law weighs against a transfer of this action.

Unsurprisingly, the court shuts these arguments down:

“this case does not present a localized controversy that warrants keeping the case in this district. ‘To the contrary, this case involves issues that are national in scope.'” (Cite to Trump v. YouTube)

“almost half of the Plaintiffs reside outside of Florida and Twitter’s inconsistent application of its rules and policies occurs nationwide.” (Trump routinely disregards his co-plaintiffs, unless they help his personal situation).

Twitter is headquartered in California.

The case involves interpretation of constitutional rights, i.e., the First Amendment.

“the Plaintiffs’ remaining arguments related to the parties’ bargaining power, Justice Clarence’s concerns, and the addictive nature of social media do not constitute the types of public interest considerations that weigh against applying a forum selection clause…These arguments do not share a nexus with Florida and instead raise general national issues related to social media platforms.”

Plaintiffs always lose must-carry lawsuits, and Trump’s arguments give no reason believe that he will become the exception to the dozens of failed cases that preceded this case. That prediction grows increasingly likely watching how easily the courts breeze through Trump’s attempts to fight the mandatory venue clauses.

Recently, Trump filed a preliminary injunction motion in this case while the venue transfer motion was pending. I’m not sure about litigation etiquette, but to me, Trump’s move seemed to be premature, ill-advised, or bad form. I didn’t blog the motion in part because I wasn’t sure if the court would ever hear it in its current form. (Of course, Mike Masnick blogged it at Techdirt). After all, with the venue switch, the Ninth Circuit caselaw will become more relevant than the 11th Circuit caselaw. Now, the plaintiffs ought to redo their preliminary injunction motion to reflect the revised precedent.

Case citation: Trump v. Twitter, Inc., 1:21-cv-22441-RNS (S.D. Fla. Oct. 26, 2021)

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edisonashley · 4 years ago

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Court Orders Unmasking Subpoena of Alleged Infringers–Baugher v. GoDaddy

In the DMCA, Congress enabled copyright owners to obtain pre-litigation discovery of alleged infringers (17 USC 512(h)). After sending a takedown notice, the copyright owner can apply for an unmasking subpoena, which the clerk of the court must issue without any discretion or review by a judge. This fast lane is a historical anachronism; it does little to balance the privacy interests of the alleged infringer. Knowing what we know now about the dangers of unmasking subpoenas, I would like to think that Congress would draft 512(h) with more privacy sensitivity today.

512(h) subpoenas rarely produce court opinions because the copyright owners get the subpoena automatically and the services usually automatically comply with the subpoena. This case is unusual because the Doe defendants attempted to quash the subpoena. The court rejects the Doe defendants’ efforts, and it gives us a little more insight about 512(h) along the way.

The copyright owner is Julia Allison Baugher, an author. For unspecified reasons, bloggers reposted some of her works, including an 81 page book proposal, which included a 54 page manuscript draft, and 22 photos. The proposal, manuscript, and 2 photos were previously unpublished and not registered; the other 20 photos were covered by a copyright registration. She sent takedown notices to the blog’s “registrar” (this is the court’s word), GoDaddy, which GoDaddy honored. The bloggers did not submit counternotices. Baugher then submitted a request for a 512(h) subpoena, which the court clerk issued. It’s not clear how the bloggers learned of the subpoena, but they moved to quash it.

The bloggers argued that the subpoena would violate their First Amendment right to speak anonymously. The court says that the First Amendment requires a balancing between the competing interests. Thus, the plaintiff has to show a prima facie case of copyright infringement before the subpoena can be upheld.

Baugher easily established the prima facie case of 106 violations. The bloggers countered with fair use. The court doesn’t see it:

Nature of use. The bloggers claimed they posted Baugher’s works for criticism and commentary, but the court says “most of Baugher’s work was posted without substantial comment or criticism by the Does….Posting a work and implicitly inviting comment or criticism is the same as simply copying the work; any work made public will almost always inspire an opinion in the reader, but the reader’s implicit opinion is not the same as comment or criticism formed and made by the blogger who copies the copyright-protected work.”

Nature of work. The reposted materials were both highly creative and unpublished.

Amount taken. The “Does reproduced the materials in their entirety” (tautology alert).

Market effect. The bloggers didn’t show any evidence of non-harm. (It’s true that the defense has the burden on fair use, but it’s also problematic to require defendants to prove the negative).

One of the reasons why unmasking subpoenas are so dangerous is that they can be used to impose extra-judicial consequences without any court oversight, such as terminating the employment or public shaming of the unmasked people. The DMCA says the subpoenaed information may be used only for copyright enforcement purposes, but there’s no practical way to enforce this, and I can’t think of anyone who has tried. Nevertheless, the court says the statutory limitation is good enough to address the bloggers’ fears of misuse, so the subpoena must be honored.

Case citation: Baugher v. GoDaddy.com LLC, 2021 WL 4942658 (D. Ariz. Oct. 22, 2021)

Some prior blog posts on 512(h):

512(h) Doesn’t Preempt Doe Unmasking Lawsuits–Strike 3 v. Doe

eBay Must Disclose User Identities In Response To 512(h) Subpoenas

Did a Court Eliminate 512(h) Subpoenas?–Maximized Living v. Google

An Unmasking Effort Gets Gutted Some More – Art of Living Foundation v. Does

Spiritual Group’s Attempt to Unmask Online Critics Goes South–Art of Living Foundation v. Does

Co-Blogger Identity Isn’t Disclosed via 512(h), but Takedown Letters Are Copyrightable

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edisonashley · 4 years ago

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Peloton Can’t Bind All Family Members To Its Arbitration Provision–SS v. Peloton

This case involves the Peloton treadmill (“Tread+”). The treadmill has caused numerous personal injuries, and Peloton has recalled it. In this case, a 3 year old boy suffered personal injuries due to a Tread+ his dad bought. The dad, mom, and child sued Peloton for negligence and misrepresentation. Peloton invoked the arbitration clause in its TOS. The court’s resolution likely satisfies no one.

The Dad

Peloton successfully argued that the dad agreed to the TOS. “Peloton states that when he signed up for the Peloton account, he necessarily (1) was presented with a conspicuous hyperlink to a full copy of the Terms of Services, including the Arbitration Provision, and (2) affirmatively clicked the button indicating that he agreed to the Terms of Service….Peloton also correctly points out that whether he read the terms or not, Mr. Stern was put on constructive notice of the Arbitration Provision…Mr. Stern cannot reasonably dispute agreeing to Peloton’s Terms of Service. The evidence indicates he did, and Mr. Stern failed to rebut that evidence by providing a declaration attesting to the fact that he did not agree or later opted out of the Arbitration Provision.”

The specific evidence Peloton introduced of its TOS formation:

Defendants rely on declarations from Daniel Feinberg, a Senior Product Manager at Peloton, to establish that Mr. Stern registered for a Peloton account and accepted Peloton’s Terms of Service….

In the Supplemental Declaration, Mr. Feinberg (1) states that he is familiar with Peloton’s internal database, which it maintains in the ordinary course of business; (2) describes the process that transpires when a customer registers and agrees to the Terms of Service, including what account information related to that process is maintained by Peloton; (3) indicates he reviewed Mr. Stern’s account information, which shows that Mr. Stern registered for a Peloton account on August 25, 2019, and again on November 29, 2019, and as part of that registration process, was required to affirmatively agree to Peloton’s Terms of Service regardless of whether he registered on the website or mobile application; and (4) when Mr. Stern created his Peloton account in 2019, the registration process still required users to affirmatively click a button acknowledging they agreed to the Terms of Service

The court overrules the plaintiffs’ objections to this evidence. It’s a reminder that you must consider how you will introduce evidence of contract formation in addition to worrying about the contract terms and formation process.

The court discusses another topic I don’t often see discussed. The Federal Arbitration Act applies only to interstate commerce. “To the extent the contract pertains to use of Peloton’s Services (e.g., its app, website, and on-demand fitness classes), because those services require use of the Internet, the Agreement would involve interstate commerce.”

The Mom and Son

Peloton tries to bind the mom and son to the TOS via “equitable estoppel.” The idea is that sometimes nonsignatories get benefits from a contract sufficient to impose the contract terms on them anyways. But not in this case. The son son is 3 years old. He lacks capacity to agree to the TOS, and he could disaffirm it even if he did. He got no benefits from the treadmill. Peloton’s TOS expressly restricted use by minors, and the 3 year old never used it. The story is the same for the wife: “Mrs. Stern never used the Tread+, nor did she benefit from it.” Thus, the nonparties cannot be swept into the contract. The court distinguishes the Nicosia v. Amazon and Tice v. Amazon rulings; but the result is consistent with the uncited BF v. Amazon case.

Consequences

Abstracting from the nuances, the court’s ruling is obvious. Peloton can’t bind parties not in privity to the terms of its contract. That’s Contracts Law 101. Still, the consequences can be pretty significant in the IoT era. Many products can affect the rights of home residents and visitors who aren’t in privity, like voice-command and surreptitious video devices. This ruling reinforces the unlikelihood that the device manufacturer can reach those parties with its TOS–in some cases, raising questions about the devices’ permissibility under existing law.

In terms of this lawsuit, the dad’s case goes to arbitration but the wife and son’s cases remain in court. The dad signaled that he plans to challenge the arbitrability of his claims, so it’s possible the arbitrator will decide that the claims are outside the arbitration scope and bounce the dad’s case back to court as well. Another possibility is that the family decides to drop the dad’s claims altogether because the bulk of the case’s value likely rests in the son’s claims.

Otherwise, the parties are in a Mexican standoff. The family can proceed with the full set of claims only by litigating in two venues, which doubles the litigation costs for both sides and creates a risk of inconsistent judgments. Both sides would benefit from merging the cases back into one, but someone has to concede, and neither party has an incentive to do so. Another possibility would be to stay one case–likely the arbitration–until the resolution of the other cases to see what happens and decide if the second case is worth pursuing. Either way, the court’s “split the baby” decision (see what I did there? or too soon?) on arbitration was potentially a bummer for both parties.

Case citation: S.S. v. Peloton Interactive, Inc., 2021 WL 4711675 (S.D. Cal. Oct. 7, 2021).

Note: my wife is a big Peloton fan, and we own some stock in the company.

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edisonashley · 4 years ago

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Social Media Is Often a Defamation-Free Zone…But Not Always–Steak N Shake v. White

I’ve blogged some recent cases showing how it’s become really, really hard to win defamation cases over social media content (e.g., Rapaport v. Barstool). Still, online defamation claims can succeed, as this case shows. But even if the plaintiff wins in court, does it truly win?

* * *

The court summarizes the facts:

On the job at Steak N Shake, Melissa White thought she found worms in hamburger meat, and insisted her manager inspect the meat. And when she didn’t find her manager’s inspection up to her own standards, White, perhaps cloaking herself as a modern-day Upton Sinclair, rushed to post her accusations of Steak N Shake’s purported sale of contaminated meat sales on Facebook.

The Facebook post:

If you can’t read the text, it says:

#SHARESHARESHARE JUST GOT FIRED FROM STEAK N SHAKE ON FLORRISANT AND LINBERGH ROAD BECAUSE I FOUND LIVE WORMS WHILE COOKING A STEAKPATTY MOVING INSIDE OF IT AND REFUSED TO SELL THAT MEAT ……WELL RIGHT NOW #RIGHT NOW THEY ARE STILL SELLING SAME MEAT #NOONEEVENCHECKEDIT. I JUST DON’T WANT EVERYONE GETTING SICK. I JUST GOT FIRED FOR NOTHING I HAVE A FAMILY THIS SHIT IS NOT RIGHT I DID NOTHING WRONG #FOX2 #ELLIOT WYA

(This transcription is from the opinion. Notice how the court omitted any reference to the fire emoji.

)

The post went viral; it received over 36,000 shares and thousands of comments. Unsurprisingly, it’s offline now.

Steak N Shake wasn’t pleased with this post, and it sued White for defamation. The case went to a jury. The jury found for Steak N Shake and awarded $70,000 in compensatory damages and $10,000 in punitive damages. Last week, the court denied White’s requests for post-trial relief. The court shows little interest in overriding the jury’s determinations.

I think Steak N Shake’s decision to sue was an interesting one. Unquestionably, White’s post was very damaging to it. According to the court, “Steak N Shake presented evidence of a multitude of Facebook comments from numerous members of the public, many declaring that they will never eat at Steak N Shake again or that they thought Steak N Shake was ‘gross’ and ‘disgusting.'” (Pro-tip: you could logically reach those conclusions about Steak N Shake even if their food is 100% maggot-free). Further, Steak N Shake presented evidence it lost $755k in sales. So surely the jury ruling vindicates Steak N Shake’s position and increases consumer confidence that its meat is actually maggot-free. In particular, the punitive damages signal that the jury thought White’s mistakes weren’t innocent.

Yet, did Steak N Shake actually accomplish any of its goals? The damages award won’t affect its bottom line–and of course Steak N Shake won’t collect much, if any, of it (“Steak N Shake’s counsel even acknowledged in its closing argument that White likely did not have the financial resources to pay a large judgment”). The media coverage of this ruling will not come close to reaching the audience that White’s post did; as the old saying goes, “a lie can travel halfway around the world while the truth is still putting on its shoes.” So did Steak N Shake accomplish its goals?

Whether or not Steak N Shake’s food is in fact infested with bugs, today is another good day to choose to eat less meat and switch to plant-based options. On that front, Steak N Shake isn’t a venue of choice.

Case citation: Steak N Shake, Inc. v. White, 2021 WL 4819592 (E.D. Mo. Oct. 14, 2021)

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edisonashley · 4 years ago

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Government Jawboning Doesn’t Turn Internet Services into State Actors–Doe v. Google

The plaintiffs are “conservative content creators” (i.e., QAnon enthusiasts) who posted videos to YouTube. YouTube suspended their accounts. The plaintiffs sued for First Amendment violations (presumably a 1983 claim). The court previously denied a TRO. YouTube now gets the case dismissed with prejudice. It’s not a close call.

To show YouTube is a state actor, the plaintiffs tried four different unsuccessful arguments:

Public Function. This argument is foreclosed by Prager U. v. Google.

Compulsion. The court says:

The Court finds that the statements by federal lawmakers Plaintiffs point to are insufficient to plead that the government “commanded a particular result in, or otherwise participated in, [Plaintiffs’] specific case.” [cite to Daniels v. Alphabet] Plaintiffs point to generalized statements from lawmakers pertaining to “coronavirus-related misinformation,” “disinformation proliferating online,” “QAnon-related speech,” and “conspiracy theories.” None of the statements mention Plaintiffs’ names, their YouTube or Google accounts, their channels, or their videos. Plaintiffs argue that state actors “commanded a particular result” in their case because “Plaintiffs have alleged that Congress demanded that the unpopular speech dubbed ‘misinformation,’ and QAnon-related speech be limited and erased, which is precisely what Plaintiffs allege Defendants did.” The Court disagrees that broad lawmaker proclamations regarding “misinformation” or “QAnon-related speech,” for example, are sufficient to show that the government “commanded” the suspension of Plaintiffs’ accounts. Even if Defendants had complied with these lawmaker statements to the letter, they would still have had the ultimate discretion on what videos or accounts fit into buckets like “misinformation” or “QAnon-related speech.”

Plaintiffs claim that Defendants’ conduct is state action because it was in response to the threat of various government penalties—the repeal of CDA Section 230 protections, “show trials” in front of the U.S. Senate, and a DOJ antitrust suit against Google—allegedly linked to whether Defendants appropriately moderated certain types of content. The threats of penalties Plaintiffs point to are insufficient to convert private conduct into state action here. The Ninth Circuit has found that pleading “a private actor’s conduct is subject to penalties…is…insufficient to convert private action into that of the state.” Moreover, Plaintiffs fail to point to any penalties that necessarily or even likely would have followed if Defendants did not suspend their accounts….

Plaintiffs can point to no authority to support a compulsion theory of state action based on penalties, particularly “threats” as speculative as the ones they point to here.

To be clear, it’s offensive when our elected officials treat Section 230 like a political football, threatening to withdraw the immunity if services don’t bend to their censorial whims. When politicians do this, they are really saying they don’t care about good social policy that benefits their constituents. It’s all fun-and-games until an immunity gets broken. But the plaintiffs’ arguments–that the politicians’ jawboning make all subsequent content moderation decisions into state action–are even worse from a policy outcome. As they would say on Reddit, ESH.

Joint Action. The court says:

the Schiff-Wojnicki Twitter exchange Plaintiffs point to in support of their joint action claim clearly pertains to misinformation regarding COVID-19. As the Court discussed above, Plaintiffs have failed to allege any facts indicating that their posts pertained to COVID-19. Accordingly, it is unclear how this Twitter exchange supports a joint action theory pertaining to the suspension of Plaintiffs’ channels….Further, it is simply implausible to read a casual Twitter exchange between one member of Congress and YouTube’s CEO as joint action. Plaintiffs’ theory would effectively cause companies to cease communicating with their elected representatives for fear of liability, as Defendants compellingly argue.

Chilling companies’ abilities to petition the government is another censorial consequence of the plaintiffs’ arguments.

The court continues:

Based on Plaintiffs’ allegations, their content was removed through the following series of events: federal lawmakers publicly flagged general categories of content for Defendants to consider moderating and issued threats to compel Defendants to comply, Defendants independently chose what content fit into the lawmakers’ general categories, and Plaintiffs’ channels happened to be some of the content Defendants decided to remove. Courts have dismissed cases for lack of state action despite significantly more alleged cooperation between public and private actors compared to what Plaintiffs allege here

…far more is necessary to plead joint action than what they have alleged here…At most, Plaintiffs appear to allege that government officials identified categories of information Defendants should consider removing—there is no allegation that government officials were in the room or somehow directly involved in the decision to suspend Plaintiffs….there are no allegations that Defendants invoked state or federal procedure to bring about the suspension of Plaintiffs’ accounts. Defendants merely suspended Plaintiffs from Defendants own private platform.

Government Nexus. “Plaintiffs have failed to point to a single case in which governmental nexus was found.”

Implications. Unsurprisingly, this case wasn’t close. #MAGA plaintiffs are routinely overclaiming state action by Internet services as a short-sighted ploy to force the services to carry garbage content that harms the services’ audiences. This opinion is a clean and decisive ruling that standard government jawboning doesn’t automatically turn the entire Internet into a giant state actor. I can’t wait for this litigation fad to die out.

The court declined supplemental jurisdiction over the state law claims, which the plaintiffs could choose to refile in state court if they want to lose again. I think it’s more likely the plaintiffs will choose to appeal the case and give the Ninth Circuit a first-hand opportunity to explain why Prager U v. Google means they lose.

In contrast to many cases in this genre, the plaintiffs were represented by counsel. That counsel is Cris Armenta. In addition to being on the losing side of the Garcia v. Google case, she also lost the Daniels case, which this court repeatedly cited against her arguments in this case.

Case Citation: Doe v. Google LLC, 2021 WL 4864418 (N.D. Cal. Oct. 19, 2021)

Selected Related Posts About State Action Claims

Anti-Zionist Loses Lawsuit Over Social Media Account Suspensions–Martillo v. Facebook

Court Nopes Another Lawsuit Over Facebook Suspensions–Orders v. Facebook

Facebook Defeats Lawsuit By Publishers of Vaccine (Mis?)information–Children’s Health Defense v. Facebook

Court Rejects Lawsuit Alleging YouTube Engaged in Racially Biased Content Moderation–Newman v. Google

Yet Another Court Says Facebook Isn’t a State Actor–Brock v. Zuckerberg

YouTube (Again) Defeats Lawsuit Over Content Removal–Lewis v. Google

When It Came to @RealDonaldTrump, Twitter Couldn’t Please Everyone–Rutenberg v. Twitter

Another Must-Carry Lawsuit Against YouTube Fails–Daniels v Alphabet

Newspaper Isn’t State Actor–Plotkin v. Astorian

An Account Suspension Case Fails Again–Perez v. LinkedIn

Are Social Media Services “State Actors” or “Common Carriers”?

Google and Twitter Defeat Lawsuit Over Account Suspensions/Terminations–DeLima v. Google

More Plaintiffs (and Lawyers) Need To Be Reminded That YouTube Isn’t a State Actor–Divino v. Google

Facebook Isn’t a Constructive Public Trust–Cameron Atkinson v. Facebook

Google and YouTube Aren’t “Censoring” Breitbart Comments–Belknap v. Alphabet

LinkedIn Isn’t a State Actor–Perez v. LinkedIn

Section 230 Preempts Another Facebook Account Termination Case–Zimmerman v. Facebook

Section 230 Ends Demonetized YouTuber’s Lawsuit–Lewis v. Google

Court Rejects Another Lawsuit Alleging that Internet Companies Suppress Conservative Views–Freedom Watch v. Google

Another Suspended Twitter User Loses in Court–Wilson v. Twitter

First Voters Reject Tulsi Gabbard, Then a Judge Does–Gabbard v. Google

YouTube Isn’t a State Actor (DUH)–PragerU v. Google

Facebook Still Isn’t Obligated to Publish Russian Troll Content–FAN v. Facebook

Vimeo Defeats Lawsuit for Terminating Account That Posted Conversion Therapy Videos–Domen v. Vimeo

Russia Fucked With American Democracy, But It Can’t Fuck With Section 230–Federal Agency of News v. Facebook

Private Publishers Aren’t State Actors–Manhattan Community Access v. Halleck

Your Periodic Reminder That Facebook Isn’t a State Actor–Williby v. Zuckerberg

Section 230 Protects Facebook’s Account and Content Restriction Decisions–Ebeid v. Facebook

Court Tosses Antitrust Claims That Internet Giants Are Biased Against Conservatives–Freedom Watch v. Google

Twitter Isn’t a Shopping Mall for First Amendment Purposes (Duh)–Johnson v. Twitter

YouTube Isn’t a Company Town (Duh)–Prager University v. Google

Facebook Defeats Lawsuit By User Suspended Over ‘Bowling Green Massacre’–Shulman v. Facebook

Yelp, Twitter and Facebook Aren’t State Actors–Quigley v. Yelp

Facebook Not Liable for Account Termination–Young v. Facebook

Online Game Network Isn’t Company Town–Estavillo v. Sony

Third Circuit Says Google Isn’t State Actor–Jayne v. Google Founders

Ask.com Not Liable for Search Results or Indexing Decisions–Murawski v. Pataki

Search Engines Defeat “Must-Carry” Lawsuit–Langdon v. Google

KinderStart Lawsuit Dismissed (With Leave to Amend)

ICANN Not a State Actor

The post Government Jawboning Doesn’t Turn Internet Services into State Actors–Doe v. Google appeared first on Technology & Marketing Law Blog.

Government Jawboning Doesn’t Turn Internet Services into State Actors–Doe v. Google published first on https://immigrationlawyerto.weebly.com/

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edisonashley · 4 years ago

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Poland’s Constitutional Tribunal on the status of EU law: The Polish government got all the answers it needed from a court it controls

On 7 October 2021, Poland’s Constitutional Tribunal declared Articles 1, 2 and 19 of the Treaty on European Union (TEU) to be partially unconstitutional. While the same Treaty provisions had previously been held compatible (see Case K 18/04) with the Polish Constitution, the composition of the Tribunal itself has since changed dramatically. Its latest decision, issued in response to an application from the Polish Prime Minister, by a panel composed of judges appointed in violation of the established procedure has twisted the wording of both the EU Treaty and the Polish Constitution to suit the government’s power struggle with the Court of Justice of the European Union (CJEU).

Background

Since the rise into power of the far-right PiS (Law and Justice) party in late 2015, Poland – alongside Hungary – has been clashing with the EU institutions on several fronts: there have been disputes on women’s rights and the rights of members of the LGBT+ community, the protection of the natural environment and, notably, the independence of the judiciary. While the Article 7 TEU procedure initiated against the two Member States has stalled due to the requirement of unanimity in the Council, the EU is currently exploring options of financial pressure, such as the so-called ‘conditionality mechanism’ or the suspension of the COVID-19 EU recovery fund. Simultaneously to these more recent developments, the most effective mechanism of guaranteeing the respect of EU values in Poland and Hungary has traditionally been the CJEU, specifically through the preliminary reference procedure.

The conflict between the CJEU and Poland escalated in March 2021 when the Grand Chamber delivered its judgment in Case C-824/18 regarding the appointment of judges to the Polish Supreme Court. The CJEU’s decision effectively set aside a ruling of Poland’s Constitutional Tribunal, reiterating that the effects of the principle of primacy of EU law were binding on all bodies of a Member State (paras 140-150). It was in response to this judgment that Poland’s Prime Minister, Mateusz Morawiecki, filed a request to the Constitutional Tribunal seeking an interpretation of Articles 1, 2 and 19 TEU. The final verdict was delivered on 7 October 2021, one day after the CJEU had dismissed Poland’s request to cancel its injunction ordering the Member State to suspend the recently established disciplinary regime for judges. This regime has already been deemed incompatible with EU law by the CJEU, notably because it exposes judges to disciplinary proceedings for filing a reference for a preliminary ruling to the Luxembourg court in accordance with Article 267 TFEU.

It must be noted that Poland’s Constitutional Tribunal is a judicial body whose primary competence is to scrutinise the constitutionality of legislation. In accordance with Article 194 of Poland’s 1997 Constitution, it is composed of 15 judges elected by the Parliament for a 9-year term. Back in 2015, shortly before the general election which brought about a change of government, the Parliament elected five judges to replace those whose term was about to expire. However, the President of Poland, Andrzej Duda, refused to swear them into office and, following the victory of PiS in the general election, the newly constituted Parliament elected new judges who were then sworn into office by the President within hours.

The packing of the Constitutional Tribunal has been subject to the scrutiny of the European Court of Human Rights (ECtHR) in Xero Flor v Poland, decided in May 2021, where it held that the presence of Judge Mariusz Muszyński, one of the judges elected in 2015 by the new Parliament, constituted a violation of Article 6 of the European Convention on Human Rights (ECHR) as regards the right to a tribunal established by law (paras 289-291). It is worth pointing out that the current President of the Constitutional Tribunal, Judge Julia Przyłębska, who is widely known to be a close friend of the PiS leader, Jarosław Kaczyński, was also among the five judges appointed in violation of Article 6 ECHR (right to a fair trial). Six years after the 2015 Constitutional Tribunal crisis and with a number of other judges appointed since by the ruling party, some of whom were active PiS politicians and Members of Parliament (MPs) prior to their appointment, the Constitutional Tribunal is widely considered to have lost independence from the executive, its reputation tarnished.

The Constitutional Tribunal’s ruling

The Constitutional Tribunal in its judgment in Case K 3/21, issued on 7 October 2021, ruled that Article 1 TEU, read in conjunction with Article 4(3) TEU, as well as Article 2 TEU and Article 19(1) TEU, is incompatible with the Polish Constitution. The case essentially concerned the jurisdiction of the CJEU and the principle of primacy of EU law. The latter principle, which is not laid down in the EU Treaties, dates back to the 1964 judgment in Costa v ENEL in which the Court of Justice famously held that in case of a conflict between a provision of then-Community law and domestic law, Community law shall prevail. While from the Court of Justice’s point of view, the principle of primacy is necessary to ensure the uniformity of EU law across the Union, Member States have found it challenging to reconcile with their own constitutional traditions. Notably, the German Federal Constitutional Court has over the years scrutinised the principle of primacy and its limits, starting from the famous Solange line of cases to its last year’s decision to set aside a CJEU judgment regarding the ECB’s decision on the Public Sector Purchase Programme, to which the Polish Prime Minister repeatedly referred to in his application to the Constitutional Tribunal.

The Polish Constitutional Tribunal has never recognised the primacy of EU law over the Constitution. In its judgment in K 18/04, delivered in May 2005, shortly after Poland’s accession to the EU, the Tribunal confirmed the Constitution’s supreme legal force, explaining that a possible collision between a constitutional norm and a provision of EU law may in no circumstances be resolved by assuming the supremacy of the EU norm. In October 2021, the judge-rapporteur of the Constitutional Tribunal referred to that part of the 2005 judgment in the oral motives of the latest decision.

In its October 2021 judgment, the Tribunal held that the first and the second subparagraphs of Article 1 TEU have allowed for a new stage of the European integration, whereby the EU institutions act beyond the limits of competences enshrined in the Treaties and transferred by Poland in accordance with Article 90 of the Polish Constitution. In particular, the Tribunal challenged the second subparagraph of Article 1 in which the TEU is described as marking ‘a new stage in the process of creating an ever closer union among the peoples of Europe’ . According to the judgment, a new stage of integration, in which the CJEU’s competences go beyond those conferred on the EU and is causing the Polish State to lose its sovereignty, is incompatible with Articles 2 and 8 of the Polish Constitution according to which the Republic of Poland is a democratic state, and the Constitution is its supreme law.

The Tribunal has further decided that Articles 2 and 19(1) TEU are inconsistent with the Polish Constitution insofar as they allow lower national courts and the Polish Supreme Court to disapply the Constitution, to set aside the rulings of the Constitutional Tribunal and to examine the legality of the procedure for the appointment of judges, which, according to the Tribunal, is outside the competences of the EU. The Tribunal argues that by deriving a right to examine the organisation and structure of a Member State’s judicial system from Article 19(1) TEU, the CJEU has essentially granted itself a new competence. According to the Tribunal, this competence may by no means be derived from Article 2 TEU which is a list of values of merely ‘axiological significance’ as opposed to setting clear rules.

Commentary

Notwithstanding its political implications or the doubts regarding the Constitutional Tribunal’s legitimacy in light of the above-discussed court-packing procedure, it must be observed that in the verdict of 6 October 2021, the Tribunal has manifestly erred in the interpretation of both the Polish Constitution and the TEU. While the 2005 judgment of the Constitutional Tribunal, indeed, rejected the principle of primacy of EU law, it also ruled that the EU Treaties were compatible with the Polish Constitution. Having scrutinised a number of EU law provisions in response to a reference from a group of opposition MPs challenging Poland’s membership in the EU, including Articles 1, 2 and 19 TEU, the Tribunal had already confirmed their compliance with the Constitution back in 2005. Subsequent rulings of the Polish Tribunal, notably those delivered following the adoption of the Treaty of Lisbon (K 32/09 and SK 45/09), reiterated the status quo in this respect. As the wording of the Treaties has not changed since, and neither has that of the Polish Constitution, the 2021 application from the Prime Minister should, therefore, have been declared inadmissible as the same matter had already been dealt with by the Constitutional Tribunal.

The 2021 judgment has been heavily criticised in a joint statement issued by 26 retired judges of the Constitutional Tribunal, including four former Presidents of the Tribunal, who argued that the judgment’s real aim was not to ensure the supremacy of the Polish Constitution. This view was echoed in Judge Piotr Pszczółkowski’s dissenting opinion – one of two delivered with the judgment of 6 October 2021 – who held that the application only formally sought an interpretation of the TEU. Indeed, it appears that what Prime Minister Morawiecki was really looking for – and what he ended up receiving from the Tribunal – was the green light to set aside a number of CJEU judgments that the government does not intend to implement. This, however, is outside the competences of the Constitutional Tribunal, laid down in Article 188 of the Polish Constitution, according to which the Tribunal may control the conformity of international agreements with the Constitution, but not that of judgments issued by international courts.

Furthermore, in the 2021 judgment, the Constitutional Tribunal has not only stepped outside its own competences, but also outside the scope of the Prime Minister’s application. The alleged incompatibility with the Polish Constitution transpired, according to the Tribunal, from the fact that EU law provides a mechanism for ordinary courts to disapply the Constitution. With this statement, the Tribunal has clearly challenged the preliminary reference procedure laid down in Article 267 TFEU, which had not been questioned by the applicant. This has effectively given the Polish government a carte blanche to disregard CJEU decisions issued in response to preliminary references made by Polish courts. This puts a serious question mark over the relationship between the EU and a Member State that, while not intending to leave, is ‘cherry-picking’ the EU law commitments it wants to fulfil.

Lastly, it is worth emphasising that the alleged conflict between the EU law and the Polish Constitution was driven solely by the government and the politically-controlled Constitutional Tribunal. In reality, there is no conflict between the TEU and the Polish Constitution. According to Article 45 of the Polish Constitution, all courts shall be independent and impartial and, as discussed above, the Constitutional Tribunal is currently neither independent nor impartial. Thus, not only has the CJEU in its case law pointed out the violations of EU law by Poland, but has also (indirectly) highlighted the Member State’s violation of its own Constitution.

Conclusion

The President of the European Commission, Ursula von der Leyen, responded to the Polish ruling with a statement vowing to use all Treaty powers available to ensure the principle of primacy. The Polish judgment has been widely criticised by many Member States and considered by some as a nuclear option that may ultimately lead to ‘Polexit’. Indeed, as was held by the Constitutional Tribunal in the above-mentioned 2005 ruling, a potential conflict between the Polish Constitution and EU law may only be resolved in three ways: by changing the provision of EU law at issue, by amending the Constitution, or by withdrawing from the EU. The first two solutions are not an option in the current circumstances. The Polish government would need to bring about a change of the fundamental provisions of the TEU (Articles 1, 2, 19) on which the EU legal system is built, which clearly is not in the interest of the other Member States.

Mr Morawiecki’s government also does not intend to amend the Polish Constitution and, quite frankly, there is no need to do it. As this post argues, there is in fact no conflict between the EU Treaties and the Polish Constitution. The third option – withdrawing from the EU – is also not a solution. According to a recent opinion poll, 8 out of every 10 Poles want the country to remain within the EU, and the October judgment of the Constitutional Tribunal sparked a mass protest across Poland with a crowd of 100,000 protesters gathering in Warsaw alone. This shows that there is currently no public support for the government to initiate a withdrawal procedure. Prime Minister Morawiecki, whose party’s ratings now stand at around 30-35%, has since categorically denied any intention to withdraw from the EU and appears not to realise the implications of the judgment.

By insisting on the incompatibility of the Polish Constitution with EU law, and having received confirmation of this from the Constitutional Tribunal, Mr. Morawiecki’s government appears to be boxing itself into a corner of having to choose between these three impossible options.

Poland’s Constitutional Tribunal on the status of EU law: The Polish government got all the answers it needed from a court it controls published first on https://immigrationlawyerto.weebly.com/

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edisonashley · 4 years ago

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Justice should not be blind to something that is obvious to everyone else – An Analysis of Advocate General Bobek’s Opinion in Nord Stream 2

The Nord Stream 2 pipeline is an offshore import pipeline designed to transmit significant volumes of natural gas from Russia to a landing point in Germany. Over the last years, the European Commission has made various attempts to complicate the realization of the Nord Stream 2 project. There were various reasons for the Commission to try to complicate the project, but primarily this was driven by Eastern European and Baltic States to herd off perceived overreliance of the EU on Russian energy imports. First, the Commission argued that the Gas Market Directive applied to offshore pipelines like Nord Stream 2. This would have meant that new regulatory constraints would be imposed on the pipeline with significant impact on the project financing as well as ownership and operation of the pipeline. When the Commission legal service confirmed the academic consensus that this was not the case, the Commission changed its strategy. It suggested that an intergovernmental agreement between the EU and Russia that would extend the application of the ‘principles of EU energy law’ to the pipeline was necessary. When the Council legal service found the key factual claims to be wrong and the legal positions by the Commission untenable, the Commission then suggested that an amendment to the Gas Market Directive was needed. Ultimately, this culminated in the suggested amendment to the Gas Market Directive. By the time the Commission first proposed this amendment, the final investment decision for around EUR 8 billion had been taken and significant investments into North Stream 2 had already been made.

The proposed amendment specifically intended to modify the definition of an ‘interconnector’ under Article 2 of the Gas Market Directive in order to extend the scope of the Gas Market Directive, and all the other instruments of EU energy law that follow, to the border of the territorial sea of the Member State. Prior to this, all gas volumes transported through import pipelines bringing gas to the EU were subject to EU gas market regulation at their landing terminal at the coast. While the physical structures of the pipelines remain unchanged, the legal, operational and economic impacts on affected operators are considerable. However, in practice the number of affected pipeline operators is limited to a single pipeline, Nord Stream 2, due to the derogation regime ushered in the amending Directive.

Nord Stream 2 challenged this amendment before the General Court and asked the Court to annul the amendment in its entirety due to its alleged discriminatory effect. On 20 May 2020, the General Court made an order dismissing the claim. In essence, the General Court did not hear the case on substance as it held that the applicant did not meet the criteria for standing under Article 263 TFEU because the EU act challenged is a directive that requires national implementation (paras. 106 – 108). This in turn, according to the General Court, implies that there is no ‘direct concern’. The applicant brought an appeal against this order. The case in front of the Court of Justice of the European Union (CJEU) hence concerns the standing of an individual applicant to bring a direct action for annulment of a legislative act under EU law. Natural and legal persons have to meet the requirements under Article 263 TFEU in order to establish standing to take direct action before the CJEU. The case at hand concerns a legislative act. For this category of acts, a private person needs to show either that the act is addressed to him or her, or that the act is (otherwise) of (1) direct, and (2) individual concern. In his recently published Opinion in case C-348/20 P, Nord Stream 2 AG v European Parliament and Council of the European Union, Advocate General Bobek stood with the applicant and suggested for the ECJ to accept the applicant’s legal standing. This case note wishes to shed light on Advocate General Bobek’s opinion and consider its broader implications.

The Opinion

The Opinion of the Advocate General focuses on two important and distinct issues of a procedural nature: (1) Can an individual be directly concerned, within the meaning of Article 263 TFEU, by a directive? (2) What considerations should guide the assessment of the admissibility of written evidence produced by the parties in proceedings before the EU Courts, in particular the admissibility of internal documents of the EU institutions?

Direct concern

Advocate General Bobek commences his Opinion by strongly criticising the basic premise of the General Court’s decision: the contested measure cannot be of direct concern to the appellant because it is a directive. This premise, according to the Advocate General, is not only contrary to the established case-law of the CJEU but also excludes the standing of individual applicants in all cases concerning a directive (paras. 35-58). Instead, Advocate General Bobek argues that the amendment to the directive is capable of producing legal effects by extending the scope of application of the latter to situations and addressees not previously caught by this Directive. In light of the fact that the applicant henceforth falls inside the new scope of application its legal position is clearly altered – it became subject to a detailed body of rules, which governs its activities. The question that follows is whether this impact stems from the Directive or the national implementation measures (para. 42).

The General Court excluded direct concern on the ground that the provisions of the amendment required implementing measures at national level (para. 116). The Court’s arguments revolved around the theoretical possibility of applying an exemption under Article 36 of the Gas Market Directive for major new infrastructure or taking advantage of the possibility of a derogation under its Article 49a for pipelines completed before 23 May 2019 (paras. 114-115). These can allow certain qualified infrastructure projects to escape the requirements of EU energy law (including unbundling, third-party access and tariff regulation).

Advocate General Bobek emphasizes that genuine discretion on the part of the national authorities is required in order for these options to have any bearing on the question of direct concern (para. 72). The fact that a directive provides for exemption- or derogation possibilities that an individual undertaking may take advantage of in certain situations does not mean that direct concern is excluded. Whereas these possibilities do give some leeway to national authorities to grant an exemption or a derogation to certain operators, that is not the case in respect of the appellant (para. 75). In that regard, the (in)applicability of those provisions is entirely pre-determined by the EU rules. In this case, the EU legislature decided that (1) the derogation is only applicable to gas transmission lines between a Member State and a third country ‘completed before 23 May 2019’, and (2) the exemption is only available to major infrastructure projects in respect of which no final investment decision has been taken. At the time of the adoption of the amendment (17 April 2019), the Nord Stream 2 pipeline had passed the pre-investment stage, but was not going to be completed, let alone operational, before 23 May 2019 (para. 74). Therefore, the Advocate General finds that these derogations could in any case not be applied to North Stream 2 and accordingly the national implementing authority did effectively not have discretion to apply the derogations.

Whereas the General Court had found a second source of implementation discretion in Article 9 of the Directive, Advocate General Bobek does again not agree with this finding. The amendment had extended the unbundling obligations under Article 9. According to the General Court however the extension did not follow from the amendment, since Member States were allowed to provide two alternatives to full ownership unbundling: the ‘independent system operator’ (ISO) model or the ‘independent transmission operator’ (ITO) model provided for in the Gas Market Directive (para. 91). However, the Opinion correctly notes that the fact that three options are available for unbundling is irrelevant (para. 78). The point is that regardless of the option ultimately chosen by the national authorities, the appellant’s legal position will inevitably be altered, and regardless of the differences between those three models, each requires a transfer of ownership and/or of the operation of the pipeline or part thereof, thus obliging the appellant to alter its corporate structure (para. 80).

Furthermore, the Advocate General specifically notes that the General Court failed to discuss the rules regarding third-party access and tariff regulation as creating a further change to the legal position of Nord Stream 2. By virtue of those provisions, the appellant will, to the extent envisaged by them, be legally precluded from acting as a normal market operator that is free to choose its customers and pricing policy. The appellant will thus face a number of new regulatory constraints that limit its right to property and the freedom to conduct a business (para. 96). Throughout its submissions before the General Court, the appellant consistently referred to the effects from the application of these other rules (para. 87). The General Court acknowledged this but nonetheless rejected the requirement of direct concern by looking only at provisions on unbundling. Had the Court properly assessed the provisions on third-party access and tariff regulation, it would have come to the conclusion that those provisions also directly affect the appellant (para. 92).

Individual concern

Advocate General Bobek then continues to find that not only is the amendment of direct concern to the applicant, it is also of individual concern. The leading case in this area to date is Plaumann, in which the Court explained:

‘[P]ersons other than those to whom a decision is addressed may only claim to be individually concerned if that decision affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed.’

The Advocate General applied this test to the case and supported the existence of an individual concern through four central arguments. (1) The appellant is the only company belonging to that (purely theoretical) group of individuals affected by the contested measure (para 194). (2) In light of its factual situation, the appellant was in a unique position vis-à-vis the amendment. In fact, the Opinion notes that it can hardly be disputed that only the appellant was in that position when the measure was adopted. No other company will ever be in that position in the future (para. 196). (3) Not only were the EU institutions aware that, by virtue of the amendment, the appellant was going to be subject to the newly established legal regime, but they acted with the very intention of subjecting the appellant to that new regime (para. 197). (4) Given the advanced stage in the construction of the project and the investment already made at the time of adoption of the amendment, it is evident that the adoption of amendment requires the appellant to introduce profound changes to its corporate and financial structure and to its business model (para. 199).

According to Advocate General Bobek, it follows from this analysis, and from the fact that the conditions for standing under Article 263 TFEU are therefore fulfilled, that the ECJ should set aside the General Court’s Order and declare the action for annulment admissible.

Admissibility of evidence

Interestingly, Advocate General Bobek further criticized that in terms of admissibility of evidence in the case, the General Court blindly relied on the provisions of Regulation No 1049/2001 and refused to consider evidence relating to the objective of the amendment, which eventually led that court to err in law (para. 153). However, more importantly for this case, the Advocate General also suggested that the refused documents are not relevant in showing the true intent of the EU institutions in targeting the appellant as the same information can be found in the public domain (paras. 175 and 178).

It is clear, as the Advocate General Bobek finds, that the extension of the EU Gas Market Directive to the activities of the appellant was the reason that prompted the EU institutions to adopt the amendment. Information to this effect is widely available. The Order from the General Court completely ignores this reality. In the words of Advocate General Bobek: ‘Justice is often depicted as being blind. However, at least in my recollection, that allegory is not meant to be interpreted as Justice being unable to see something that is blindingly obvious to everyone else’ (paras. 197-198).

It is a peculiar suggestion that a Court should ignore what is common knowledge and readily available information. If the Court was restricted to documents permissible under Regulation 1049/2001, the institutions would have it in their hands to only release the documents that suit them (para. 140). Should the only court entitled to fully monitor the EU institutions really be left with the same level of access to information when performing that task as any other Tom, Dick, and Harry? (para.140).

Comment

The Court has consistently held that it is possible for an individual to bring an action for annulment against a directive. Despite this recognition, it has been hesitant to accept this in practice. Clearly, what is required in order to meet the high threshold set by the CJEU is that the facts of a case must be highly unusual. Nord Stream 2 AG v European Parliament and Council of the European Union offers just that: a highly unusual case. The actions of EU institutions in this case have been extraordinary.

The strength of the Opinion lies in its practical approach to the case simply and convincingly applying the existing criteria for direct and individual concern based on the facts of the case. Its approach is in stark contrast to the order made by the General Court. The arguments put forward by Advocate General Bobek in favour of admissibility are convincing and it will likely be difficult for the Court to ignore them.

As to the question of admissibility of evidence, one relevant question is whether the Court should ignore the reality and limit itself to reviewing only officially released documents, even when it is clear that the picture painted in those documents does not reflect the reality? Would the Court not just become an enabler to those with political power?

Justice should not be blind to something that is obvious to everyone else – An Analysis of Advocate General Bobek’s Opinion in Nord Stream 2 published first on https://immigrationlawyerto.weebly.com/

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edisonashley · 4 years ago

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Anti-Zionist Loses Lawsuit Over Social Media Account Suspensions–Martillo v. Facebook

Martillo claims that six social media services suspended his accounts because he is an anti-Zionist. He sued for Title II discrimination. The court responds: “the defendants’ social media platforms are not places of ‘public accommodation.’ The statutory definition of a ‘public accommodation’ cannot be interpreted to include a virtual meeting place.” Cites to Lewis v. Google and Noah v. AOL (from nearly 20 years ago! Plus ça change, plus c’est la même chose).

Martillo also sued for violations of Massachusetts’ common carrier law. The court responds simply: “The defendants are not common carriers of ‘merchandise or other property’ for purposes of this 1869 law.”

The court adds that both the Title II and common carrier claims, if otherwise meritorious, would be preempted by Section 230. The court says simply: “The defendants’ alleged blocking of content posted by Martillo and disabling of his account are editorial decisions protected by the CDA.” Cites to Sikhs for Justice v. Facebook and Langdon v. Google. However, as the court made clear, this case would have failed even without relying on Section 230.

Reminder: dozens of online account termination and content removal lawsuits have failed. Add this one (and the bonus below) to the list.

Case citation: Martillo v. Twitter, Inc., 1:21-cv-11119-RGS (D. Mass. Oct. 15, 2021)

BONUS: Bethune v. Facebook Inc., 0:21-cv-02118-NEB-HB (D. Minn. Oct. 15, 2021): Bethune wants $222 billion in damages because Facebook shut down his page. He sued for violations of 18 U.S.C. § 249, 18 U.S.C. § 242, and 18 U.S.C. § 371, none of which have a private right of action. He also brought a 1983 claim. The court says simply: “Neither Facebook nor Zuckerberg is alleged, or can plausibly be alleged, to be a ‘state actor’ within the meaning of § 1983.” Cite to Prager U. v. Google.