By Kelcee Griffis, Law360 Staff Writer – Monday, November 19, 2018 – The Ninth Circuit on Monday said Charter Communications Inc. can’t use its First Amendment freedom as a cable provider to escape a claim that it refused a carriage deal with an African-American-owned production firm due to racial bias.
The three-judge panel’s published opinion affirmed that Entertainment Studios Networks Inc.’s bias claim is allowed to proceed and clarified that bias claims are not precluded under the First Amendment since they pertain to business operations, not editorial decisions.
The statute under which the bias claim was made “does not seek to regulate the content of Charter’s conduct, but only the manner in which it reaches its editorial decisions — which is to say, free of discriminatory intent. It is therefore ‘justified without reference to the content of the regulated speech,'” the opinion said.
The case stems from 2016 allegations lodged by Entertainment Studios, which is owned by former David Letterman and Jay Leno associate Byron Allen, who recently acquired the Weather Channel. Allen’s TV production and distribution company sought a contract to be carried to Charter’s cable subscribers, as it already held with platforms like Verizon and DirecTV. But the suit alleges that for several years, Charter’s programming executive refused to meet with Allen’s company while “encouraging Entertainment Studios to exercise patience and proffering disingenuous explanations for its refusal to contract.”
Although Charter stonewalled Entertainment Studios, it simultaneously struck carriage agreements with Walt Disney Co. and Time Warner Cable Sports, according to the suit. When the company finally got a meeting with Charter in 2015, a key distribution executive allegedly said Charter lacked capacity to launch new channels despite its kickoff of recent lifestyle and horror offerings.
Charter’s CEO and the distribution executive were also said to have spoken degradingly and disrespectfully to a group of African-American protesters and to Allen himself, according to the suit. “Plaintiffs suggested that these incidents were illustrative of Charter’s institutional racism, noting also that the cable operator had historically refused to carry African American-owned channels” and previously had a board of directors made up entirely of white men, the complaint says.
Without commenting on the merits of the case, the district court allowed the discrimination claim to proceed because the company demonstrated discriminatory intent could have been a possible explanation for the behavior, according to the opinion. The Ninth Circuit upheld this view as well, agreeing that although Charter asserted the court “cannot ignore the legitimate, race-neutral explanations for its conduct,” it is too early in the case to parse which explanation is most plausible.
“The plaintiffs’ allegations regarding the defendant’s treatment of the African American-owned operator, and its differing treatment of white-owned companies, were sufficient to state a viable claim,” the opinion said.
In an amicus brief, advocacy group Public Knowledge urged the Ninth Circuit “to reject a reading of the First Amendment that would permit companies to avoid discrimination claims.” Ultimately, the Ninth Circuit rightly defined the distinctions between business operations and editorial decisions, John Bergmayer, the group’s senior counsel, said in a statement.
“Here, Charter put forth arguments that, if taken to their logical conclusion, would mean that the Constitution barred nearly all regulation of cable companies and broadband providers, as their services are a conduit for speech,” he said.
The parties did not respond to requests for comment Monday.
Judges Mary M. Schroeder, Milan D. Smith Jr. and Jacqueline H. Nguyen sat on the Ninth Circuit panel.
The plaintiffs are represented by Erwin Chemerinsky of the University of California, Berkeley School of Law and David W. Schecter, J. Mira Hashmall and Louis R. Miller of Miller Barondess LLP.
Charter is represented by Devin S. Anderson, Jeffrey S. Powell and Mark C. Holscher of Kirkland & Ellis LLP.
The case is NAAAOM et al. v. Charter Communications Inc., case number 17-55723, in the U.S. Court of Appeals for the Ninth Circuit.