Alerts

AD-ttorneys@law - November 13, 2017

Alerts / November 13, 2017

In This Issue

  • YouTube Restricts Content Unfairly, Says Prager U
  • Court Splits Federal, State Claims in Multiple-Call Case!
  • FTC Offers New Advice on COPPA Recording Rules
  • FTC to Victory Media: Stop Deceiving Veterans
YouTube Restricts Content Unfairly, Says Prager U

Conservative nonprofit sues for violation of free speech

Old Fake News

Internet technology has slowly grown to rival and in some cases supplant traditional broadcast news sources. In the wake of this sea change, long-established certitudes about the role played by media providers are being questioned and reshaped online.

For instance, online video has been enormously disruptive. Vast amounts of content are uploaded daily, and the audience for this material is staggering. This content is often produced by original broadcast channels, but more often than not it is produced by upstart media companies or individual users. As a result, online video forums and the companies that own and operate them are coming under increasing scrutiny for exactly how they present (or obscure) this content.

Prager for Relief

Prager University, “a 501(c)(3) educational nonprofit digital media organization founded by radio talk show host Dennis Prager,” took aim at the largest of these operators – YouTube and its parent company, Google – in a lawsuit recently filed in the Northern District of California. In the suit, Prager University (PragerU), claimed that the companies were censoring its videos because of their conservative political content.

This censorship, which the organization alleges has been in place since mid-2016, took forms unique to YouTube. PragerU claims that YouTube “demonetized” some of the videos on its channel by removing ads from the videos and keeping them from earning revenue. It also claimed that YouTube placed some of its videos under “restricted mode,” which normally is used to shield users from seeing “inappropriate” content. The complaint also alleged Google/YouTube used these arbitrary and capricious “restricted mode” and “demonetization” filters to prohibit or limit access of “inappropriate” content to prospective public viewers “based on certain viewer characteristics, including the age of the viewer.”

At the heart of PragerU’s complaint is a list of videos from other YouTube channels discussing the same subjects as PragerU’s restricted content – but which suffer no restriction at all. These other channels are owned by organizations or individuals with different political viewpoints than those of PragerU.

The Takeaway

The suit alleges free-speech violations under the California and U.S. Constitutions and violations of the California Unruh Civil Rights Act, the California Business and Professions Code, and the Lanham Act. The suit also alleges a claim of breach of implied covenant of good faith and fair dealing against Google/YouTube based on Google/YouTube’s unfettered control over “every aspect of their relationship” with PragerU.

The suit seeks a declaratory judgment that the free-speech violations occurred, and an injunction requiring YouTube to stop restricting PragerU’s content and to stop censoring its speech based on arbitrary criteria, plus damages and costs.

Two aspects of the case are especially interesting. The free-speech counts rely on U.S. Supreme Court and California Supreme Court decisions that maintain that the right to free speech can apply on private property – the property, in this case, being YouTube’s servers, which host “one of the largest internet forums for speech and expression in the history of the world … accessible to and freely used by the public in general.” Based on the importance of cyberspace in modern society, the complaint alleged users engage in “a wide array of protected First Amendment activity on any number of diverse topics” through social media, thereby bringing the complaint within the scope of the First Amendment.

The complaint’s interpretation of the Lanham Act is also interesting; the suit avers that YouTube’s policies misrepresent the site as “an open marketplace of ideas and expression,” while simultaneously costing PragerU “lost income, reduced viewership, and damage to brand, reputation, and goodwill.” Importantly, the complaint alleges YouTube took these wrongful actions with oppression, fraud and/or malice, and although PragerU repeatedly tried to remedy the situation, YouTube/Google repeatedly refused to unrestrict the videos.

Court Splits Federal, State Claims in Multiple-Call Case!

But opinion warns that remaining TCPA charges vs. Alarm.com are “weak”

Enough Already

Despite registering – and renewing – her cellphone with the National Do Not Call Registry, Taraneh Vessal claims she was bombarded with calls.

According to a lawsuit filed by Ms. Vessal in March 2017, calls from security companies hawking Alarm.com products began shortly after she renewed her Do Not Call registration. And there were a lot of them – Ms. Vessal claimed she was contacted at least 75 times by authorized dealers of Alarm.com, an interactive security and home alarm monitoring solution provider. The third-party dealers, she claimed, called under a variety of generic names, including American Home Security, American Security Services, Central Security Group, United Security, and Bayside Security. Some of these dealers provided Alarm.com as their website address.

Ms. Vessal alleged that on nine occasions she followed the callers’ automated prompts to opt out of receiving the calls, but to no avail. The calls took place beginning in March 2016 and lasted throughout the year.

The suit, filed in the Northern District of Illinois, Eastern Division, alleged violations of the Telephone Consumer Protection Act (TCPA) and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA). Ms. Vessal seeks actual and punitive damages and an injunction ending the calls for good.

State Charges Drop

Alarm.com moved to dismiss the case in June 2017.

The Illinois claims fell by the wayside in the court’s October 2017 opinion for several reasons. First, the court maintained, Ms. Vessal failed to demonstrate any deception or injuries that were substantial enough to satisfy the “the unfair or deceptive practice requirement” of the ICFA.

In addition, the court maintained that the “damages that Vessal claims to have suffered including increased usage of her telephone services, loss of cell phone capacity, and battery life, are not the kind of injuries that qualify as actual damage under the ICFA.”

The Takeaway

The court allowed the case to continue under the TCPA count – with one caveat.

Ms. Vessal alleged that Alarm.com was directly liable for the calls. But the opinion states that direct liability could not be attributed to Alarm.com, because liability only adheres to parties that physically initiate the call. The court declined to dismiss the TCPA claim, observing the possibility of vicarious liability because under the TCPA, “a principal may be held vicariously liable for the acts of its agent.” Nonetheless, the court called the allegations “quite slim” because the only allegations that established a connection between Alarm.com and the third-party telemarketers were made on “information and belief” and certain statements made by the telemarketers.

“The saving grace for Vessal,” concludes the opinion, “is that the existence of an agency relationship is usually a factual question and any evidence of an agency relationship between Alarm.com and the identified third-party dealers is entirely within Alarm.com’s control.”

FTC Offers New Advice on COPPA Recording Rules

Audio recordings now require parental consent

Upgrade

Back in 2013, the Federal Trade Commission (FTC) gave the Children’s Online Privacy Protection Rule (COPPA) a digital update.

COPPA requires consent from parents before personal information is gathered about children under the age of 13. In this first update, the FTC folded photo, video or audio files featuring a child’s image or voice into information previously covered under the Rule – “analog” information like a child’s name or address.

But this change raised a question – how should businesses apply the new requirements for audio recordings?

Drop the Mic

In October 2017, the FTC announced a clarification. COPPA, it noted, requires websites and other online services to secure parental consent before gathering an audio sample of a child’s voice.

However, the Commission signaled that it would not pursue action against a company that gathers an audio recording used to replace the function of written (or typed) words. For example, consider the voice search function on your phone – the recording is used once for a specific purpose so you do not have to type the words. If the company that is gathering such a recording from a child discards it shortly thereafter, such a use would not provoke action from the FTC.

The Takeaway

There are limitations to this exception. If the information gathered on the recording is personal information that is protected under COPPA – for instance, if the service asks a child to speak his or her name, address or Social Security number – then the exception does not apply and compliance with COPPA will be required.

Audio recorded under the exception must also be used only for its original purpose – a search or a verbal instruction to a phone app, for instance – and the recording must be discarded afterward.

Finally, the exceptions do not exempt a business from providing “clear notice of its collection and use of audio files and its deletion policy in its privacy policy.”

FTC to Victory Media: Stop Deceiving Veterans

Commission alleges that well-known Victory titles fail to disclose paid advertisements

Under Siege

It’s hard coming home.

Fully 27 percent of military veterans report that they have had a difficult time returning to civilian life. Injuries, traumatic experiences, combat duty and strained marriages are just some of the factors that undermine a return to “normal” living.

Programs sponsored by the military, including Transitional Assistance Programs (TAP), provide help and guidance for veterans returning home. Nonetheless, half of returning veterans are not working in their desired career and/or they are finding no meaning in their current work environment – an indication that the skills and experiences of veterans are not always leveraged well in their new societal roles. More serious are statistics on rates of depression and post-traumatic stress disorder, a condition that is experienced by one in five recent veterans.

Re-Entry

Victory Media, Inc. (Victory) is a company that steps into this problematic gap and helps returning veterans reintegrate into civilian life. Victory owns several media outlets, including print magazines G.I. Jobs, the Guide to Military Friendly Schools, and Military Spouse. These publications, and the online tools that accompany them, offer “specific, ‘how-to-advice’ on everything from choosing a college to writing a resume to interviewing to industry and career highlights.” These magazines are distributed in military bases, hospitals and TAP centers.

Central to Victory’s business is its online Matchmaker search tool, which helps veterans find postsecondary schools that are “military friendly” – a tag that Victory developed based on its own school surveys and other data. Advertisements for the tool promise to match the applicant with these postsecondary schools.

Fog of War

The Federal Trade Commission (FTC), however, has taken a skeptical stance on Victory’s claims. In an October 2017 complaint, the FTC alleged that Victory has received payment from various colleges and other educational institutions to appear as “military friendly” schools in its search engine. Specifically, the FTC claims that since mid-2015, Victory has included schools in its Matchmaker tool only if the institutions paid to be featured there, including schools that did not score high enough on the company’s survey to qualify as military friendly.

The Commission also alleges that Victory received payment to endorse individual institutions in a variety of online articles, emails and other communications. The FTC claims that disclaimers, when available, were hidden at the bottom of many screens of text and even then, the disclaimers did not clearly disclose the arrangement between Victory and its advertisers.

The Takeaway

The FTC complaint accused Victory of misrepresenting its Matchmaker tool, misrepresenting the independence of its endorsements and failing to disclose material connections between itself and its advertisers. As the FTC continues to focus its enforcement efforts on compliance with the Guides Concerning the Use of Endorsement and Testimonials in Advertising, compliance with the Guides has become increasingly important.

Shortly after the complaint was filed, Victory and the Commission entered into a proposed settlement that prohibited misleading representations regarding paid promotional content and required disclosure of paid endorsements by advertisers. Additional compliance, record keeping and monitoring requirements were included.

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

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