Ninth Circuit panel gives X Corp. a win in First Amendment case

(CN) — A federal appeals panel on Wednesday pushed the pause button on a California law requiring large social media platforms to submit regular reports to the state detailing information about hate speech and misinformation.

X Corp., formerly Twitter, had appealed a December decision by U.S. District Court Judge William Shubb, who found that Assembly Bill 587 — which imposed the reporting requirements on platforms earning over $100 million annually — didn’t violate the social media giant’s First Amendment rights.

A three-judge Ninth Circuit panel disagreed. On Wednesday, it reversed Shubb’s ruling, remanding the case for him to issue a preliminary injunction on the semi-annual reporting requirements which would have asked platforms to define certain content categories, such as hate speech, disinformation, foreign political interference and others.

The panel also instructed Shubb to rule whether those content category report provisions can be severed from the rest of Assembly Bill 587, which include platforms publicly posting their terms of service. If they can, the judge must determine which of those should also face an injunction.  

“We hold that the content category report provisions likely compel non-commercial speech and are subject to strict scrutiny, under which they do not survive,” wrote U.S. Circuit Judge Milan D. Smith Jr., a George W. Bush appointee, for the panel. “We reverse the district court on that basis.”

Smith said in the ruling that every content category report must show a qualifying company’s policies and any action they took. That includes hot-button issues like the definition of hate speech, misinformation and whether those should face moderation.

Those content category report provisions trigger First Amendment issues for every affected social media platform, Smith wrote.

The panel drew a line separating commercial speech — which typically offers a commercial transaction and has a lower level of scrutiny — from non-commercial speech. It stated that the content category reports required by Assembly Bill 587 are not commercial speech.

“They require a company to recast its content moderation practices in language prescribed by the state, implicitly opining on whether and how certain controversial categories of content should be moderated,” Smith wrote.

Those reports would contain viewpoints about the content the social media platforms are detailing, stating if the companies think they should be defined and forbidden.  

The panel also said the content reports aren’t advertisements and aren’t mere vehicles for commercial speech. This is another factor that points to the reports being compelled, non-commercial speech.

Additionally, Smith wrote that a platform’s terms of service and content moderation policies could be commercial speech. However, its reasons for those policies are different. The content reports would require companies to provide their views on controversial topics like hate speech, racism and radicalization, and show how they applied policies to that speech.

“The state suggests that this requirement is subject to lower scrutiny because ‘it is only a transparency measure’ about the product,” Smith wrote. “But even if the content category report provisions concern only transparency, the relevant question here is: transparency into what?”

Shubb in his ruling stated the content reports don’t easily fit into a traditional definition of commercial speech. However, through his own analysis, he suggested himself that the compelled speech was, in fact, commercial, Smith wrote.

Instead, the Ninth Circuit panel found that the content reports compelled non-commercial speech and fell under a higher level of scrutiny.

Pivoting to regulating non-commercial speech, Smith wrote it would be rare to restrict it. A government would have to provide a compelling reason that is narrowly written to allow it. Assembly Bill 587’s requirements don’t have that narrow tailoring.

Smith suggested that, for example, social media companies could reveal that they’re moderating certain speech without showing those categories in a report.

“Because X Corp. has shown a likelihood of success on the merits of its First Amendment claim, and the remaining Winter factors weigh in favor of an injunction, we reverse the district court’s decision denying a preliminary injunction as to AB 587’s content category report provisions,” Smith wrote.

Rounding out the panel were U.S. Circuit Judges Mark J. Bennett, a Donald Trump appointee, and Anthony D. Johnstone, a Joe Biden appointee.

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