Is It Transparency or Is It Censorship? Washington Post v. McManus

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Free Speech & Election Law Practice Group, was recorded on Thursday, October 31, 2019, during a live teleforum conference call held exclusively for Federalist Society members.    

 

Wesley Hodges:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is "Is It Transparency or Is It Censorship? Washington Post v. McManus." My name is Wesley Hodges, and I am the Associate Director of Practice Groups at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the experts on today's call.

 

      Today we are very fortunate to have with us Erin Chlopak, who is Director of Campaign Finance Strategy for The Campaign Legal Center, and Tyler Martinez, who is an Attorney with the Institute for Free Speech. After our speakers give their remarks, we will have time for your questions, so please keep in mind what questions you have for this case or for our speakers during the Q&A at the end of the call.

 

Thank you very much for sharing with us today. Erin, I believe the floor is yours to begin.

 

Erin Chlopak:  Thank you so much, Wes. And I just wanted to start by thanking you and Tyler for having me on this call today and to The Federalist Society for hosting it. I'm very happy to be here.

 

      So last year, Maryland's General Assembly passed legislation updating Maryland's campaign finance laws to account for the massive migration of political advertising to the digital realm. The new law updates existing disclosure requirements for political advertisers to make clear that those requirements apply to digital political ads. And it also extends certain disclosure and record keeping requirements to certain online platforms that sell and distribute paid political ads.

 

      The law serves both to update Maryland's transparency requirements for all digital political ads and to adjust specific concerns about foreign election interference through digital political advertising.

 

      The Washington Post, Baltimore Sun, and several other newspapers sued the state arguing, among other things, that the law violated their First Amendment rights. And in January of this year, the district court issued a decision finding that the law is likely unconstitutional and it preliminary enjoins the law's application against the plaintiff newspapers.

 

      Yesterday, a panel of the Fourth Circuit heard arguments in Maryland's appeal of that decision. And I should note, the audio of that argument was not available until this morning, so Tyler and I have had a limited opportunity to listen and adjust the argument, but I think we both have done that. From my perspective, there were three principal problems with the district court's decision. First, the court wrongly applied strict scrutiny and subjected Maryland's law to a narrow tailoring least restrictive means standard.

 

      In fact, the Supreme Court, by eight justice majorities, has repeatedly made clear that campaign finance disclosure requirements are distinct from other types of political regulations or content-based regulations. And while they may impose some burdens on speech, they do not prevent anyone from speaking. That is why the answer to the title of this forum is easy. Maryland's law does not censor any speech by the newspapers or anyone else.

 

      And importantly, the Supreme Court has repeatedly recognized that to the extent transparency requirements for political ads impose compliance burdens, those burdens must be considered in light of the competing First Amendment interest promoted by transparency regarding the sources and financing of political ads which helps voters make informed decisions in the political marketplace.

 

      The district court's application of strict scrutiny was wrong. It should have relied primarily on exacting scrutiny which requires a substantial relationship between a sufficiently important government interest and the disclosure requirement.

 

      Secondly, the decision below focused almost exclusively on the government's interest in preventing foreign interference to the exclusion of the government's broader goals of informing the electorate about the sources in financing of all paid election-related ads, not just those that may have been nefariously purchased by foreign actors.

 

      And finally, the district court's alternative conclusion that exacting scrutiny -- excuse me, the district court's alternative exacting scrutiny analysis was also flawed because it essentially imposed the same strict scrutiny requirements and it failed to consider the government's interest beyond preventing foreign interference.

 

      First, I'm happy to share a few big picture takeaways of the argument with the caveat that I am not here to make predictions about how the panel's going to decide the case. Three overall takeaways: first, I think all the judges seem to agree that this case presents a fairly narrow as-applied challenge to the application of Maryland's transparency law to the newspaper plaintiffs in this case.

     

      Judge Wilkinson, for example, suggested that the appellee's argument is more about whom the disclosure requirements fall on rather than the nature of the requirements themselves, which he had one point characterized as fairly innocuous but expressed concerns about a slippery slope and who else the requirements could fall on or whether the requirements could be brought in. He also suggested that the issue in this case is less about the weight of the burdens and the abstract and more about applying them to the newspaper plaintiffs in this case.

 

Along these lines, most of the concerns expressed, both by the panel and even in the arguments raised by the appellees, were about the ways in which the law imposes requirements on a third-party newspaper plaintiff rather than either the advertisers themselves or even larger social media platforms that were the targets for disseminating foreign ads in the 2016 election such as Facebook and social media entities like that.

 

      I would note that Judge Motz recognized the government isn't limited to passing laws that addressed past problems and is permitted to take steps to anticipate future concerns. So even to the extent that the record in this case may not be filled with examples of foreign actors placing ads on the newspaper plaintiffs themselves—and there's a question about that—but Maryland certainly isn't required to wait for that problem to manifest in order to take steps to try to prevent it.

 

      And the last big picture observation I would make about the argument was that there was some indication that the judges view the part of the law that requires platforms to maintain records and provide that information to the Maryland Election Board upon request may have been less controversial to the judges than the part of the law requiring the platforms to disclose certain ad information on their websites.

 

      Judges Motz, for example, noted that that aspect of the law didn't compel any speech at all by the newspapers. And I would note that the district court similarly found the inspection requirement to be a closer call, although it ultimately applied strict scrutiny and found that requirement also to be likely unconstitutional.

 

      So I guess the last observation I would make is the three issues that I raise with the district court. I talk about them in the context of the argument yesterday. So regarding which standard of scrutiny applies, it seems like at the very least, some of the judges are skeptical about the district court's application of strict scrutiny.

 

      To be sure, Judge Wilkinson asked a number of questions and expressed some concerns about burdening political speech, which I would say I would take issue with some of his characterizations which failed to distinguish between the fact that the newspapers are providing a platform for the speech but it's not in fact their own -- the advertisements are not the newspaper's speech.

 

      But even Judge Wilkinson observed that dark money is a concern in the political process and disclosure is a disinfectant, sunshine. He also observed that disclosure enhances the electorate's ability to make an informed judgment by knowing more about the provenance of ads. And he suggested concerns about a decision applying strict scrutiny potentially interfering with legislators' ability in the future to take steps to preserve the integrity of our democracy by addressing future efforts by foreign actors to infiltrate platforms in a manner different from how that problem manifested in the past. And Judge Motz went even further and directly told counsel for the State of Maryland that the appellants were on "fair ground in saying that exacting scrutiny applies."

 

In terms of recognizing the rest of interests underlying the law, I have to say, I was rather disappointed that there wasn't more discussion about the government's broader interest in informing voters about the sources in financing of digital political ads generally. Certain foreign interference is indisputably a problem that needs to be addressed and no one is denying that that was an interest underlying the Maryland Legislature's decision to pass this legislation.

 

But it is also clear that the General Assembly was taking steps to update Maryland's outdated transparency laws. And counsel for both parties even acknowledged that informing voters about the sources of political ads generally was a broad purpose of the law.

 

      And also, Judge Wilkinson recognized the problem of dark money in our political process. And the role of disclosure requirements in addressing that problem, but to the extent that the court really dug in to the government's interest in the context of this particular law, the focus was more on foreign interference.

 

      And lastly, there really wasn't much discussion on how the court applied exacting scrutiny. It was really more of an ongoing discussion about whatever the standard may be, what are the government's interests? And what are the burdens imposed by the law? So I would have liked to have seen more of that, but, you know, I think that's always your takeaway after you sit through an oral argument that there was so much more to cover and limited time to cover it.

 

      I guess I would close at this point with one final observation and that is the fact that listening to this argument, I thought, really highlighted an essential problem with the appellee's position in this case. So central to their First Amendment claim is the idea that the plaintiffs in this case, the newspapers, are not the political actors in the context of Maryland's law but rather "neutral third-parties."

 

And I would set aside that neutral characterization which Judge Floyd raised questions about, but accepting for the moment the idea that they are neutral third-parties, their argument amounts to a claim that these neutral third-party actors have greater First Amendment protections for the political speech of advertisers whose ads are disseminated on their platforms than the actual speakers because, as we all know and as the Supreme Court has made clear, the First Amendment tolerates directly burdening those speakers by imposing disclosure requirements on them in connection with the speech.

 

And I think at that point, I will stop and turn it over to Tyler.

 

Tyler Martinez:  Thank you, Erin, for the synopsis of the case. Of course, I have a different interpretation of what's been going on with the oral argument.

 

Erin Chlopak:  No.

 

Tyler Martinez:  I know. Shocking, right? But it's important, then, and the listeners should know that Campaign Legal Center's brief is quite frankly much better than the State's brief on this matter and is much more clear on the other side of the argument than what I would be presenting right now. So if you have a chance to read the briefs, I'd read CLC's brief.

 

      From my view, this case presents a lot of interesting questions and trends in the law right now. One of the big issues, as Erin highlighted, was whether or not to apply strict scrutiny versus exacting scrutiny. And that's been a trend in the law right now is does strict scrutiny mean always that the government loses?

 

      Well, most of the time but, of course, there's exceptions. Famously, Williams-Yulee v. Florida Bar. They applied strict scrutiny and guess what? The state won. They had the proper interest and they had a proper tailoring to that interest, and so they were able to win. But most of the time, the government loses.

 

      In exacting scrutiny, the issue has been and, quite frankly, the circuit courts of appeal have struggled with applying how tough to be under exacting scrutiny. It's certainly a heightened form, and it requires an interest and it requires the law to be tailored to that interest. But they don't know what to do with that.

 

And so in the case of Riddle v. Hickenlooper a few years ago, then Judge Gorsuch on the Tenth Circuit wrote a concurrence saying well, we don't know what to do with this standard. And so the Court in McCutcheon has clarified that as it applies to campaign contributions, sometimes in the lingo of the campaign finance bar called closely-drawn scrutiny instead of exacting scrutiny, but we don't know what to do with disclosure here. And this case presents a classic example of why that might matter.

 

I tend to resist the characterization that this is about something broader than Russian interference in the elections. In part because that's what the legislative record is replete with. The sponsor of the bill talked about the Russian interference in the elections via fake accounts on Facebook and Twitter and other free online social media.

 

The Brennan Center's testimony before the Assembly in Maryland likewise focused on that, so did the testimony of Mr. Sharon. The Common Cause of Maryland focused on it. And then, of course, the governor's non-signing statement, which is always interesting, also focused on that interest.

 

So it's not at a whole cloth that everyone was focusing on this whether or not this would come back to Russian interference in the election or other interference. It certainly could be other state actors. We certainly need to watch out for the Canadians.

 

What you do with that interest and is that interest an important enough for a state? And that was the Institute for Free Speech's brief in part was this is an important interest to combat foreign involvement, certainly foreign espionage involvement in our elections. But are the states the best method of that or would it be better for the federal government to handle this?

 

Certainly, beyond the campaign finance world, there is the National Security Agency and United States Cyber Command. There is diplomatic channels that you can use, all these other methods and campaign finance is the bottom rung.

 

But at the same time, if you change campaign finance law on this, it adversely effects American citizens. And so then you start wondering about the tailoring analysis of what's going on. Is there a proper nexus to that interest?

 

The District of Maryland found that there wasn't a proper nexus to the purported harm of Russian interference in the elections. And so it just stopped there, but as far as well, this is good because there's a lot more advertising on the internet, that's something that the, certainly, the Federal Election Commission has had to struggle with recently.

 

They've been trying to write a rule since, I believe, 2011 so eight years on trying to write a rule on how to handle disclaimers on internet ads. That's something that there's no good answer for because the internet is just something somewhat different than traditional print media.

 

And, in fact, the courts have been looking at this as more of a public square. You see this is the Supreme Court has been saying this in recent decisions. A senior judge in Colorado said the same thing, "It's a new soapbox. It's a new town square." The internet is where people can, for low costs to entry, be able to speak their mind.

 

Now, sometimes we regret that they speak their mind when you find out that your relative is saying crazy things on Facebook, but nonetheless, that is the American ideal. So as a result, it shouldn't matter what analysis is applied, whether it's exacting scrutiny or strict scrutiny. That shouldn't be the talisman of whether or not the state law is going to be upheld. It should be, really, a question of tailoring and whether or not it effects the thing -- the harm that is going to happen but also whether or not it's overly burdensome.

 

And in this instance, you're trying to fight free online action that's done by Russian imposters by regulating paid advertisements on the Washington Post website or the Baltimore Sun's website or whatever. And that's a mismatch. And the Court struggled with that a little bit at oral argument. They're trying to figure out what to do with this. They're trying to figure out, even under exacting scrutiny, whether or not this would apply.

 

But also, when it comes to the inspection requirement of the law, which wasn't flushed out enough, the Court questioned whether or not this is an unhealthy entanglement of the press and the government, whether or not basically the government is taking over the press entities as a way to do the record-keeping and collection that would traditionally be done by the State Board of Elections or federally by the Federal Election Commission.

 

So it's not a matter of just what the information is that's disclosed but to who and who has to bear the burden of costs of collecting that information, maintaining it. Because if a website, like, say, the Washington Post website, doesn't collect the right information, they can face civil and criminal penalties for not gathering the information that they should've from the speaker.

 

And the Washington Post also brought up the point of the burden is if there's more regulatory requirements, if there's more burden for them to run a particular type of ad, then they may not run it. And that is certainly true of political ads. And we've seen this happen, actually, not with the Washington Post but with Google in the State of Washington.

 

The State of Washington passed a similar, though less burdensome law than Maryland, and Google immediately pulled out of running political ads in the State of Washington. That's a problem because that's, like I said, one of the easiest and cheapest ways for somebody to get their message out is to run Google ads.

 

And that matters particularly when someone is challenging a strong incumbent or trying to get a message out that is maybe not the traditional mainstream. We're losing out voices that way because, in the words of the Washington Post lawyer at oral argument, "If there are many regulations attached to political speech, the Washington Post might just run ads for cars and washing machines instead. They may not take those ads at all."

 

And then by eliminating that -- so it's not censorship in the sense of the government is saying that "Thou shalt not speak," but it is placing so many burdens on the traditional avenues for people to be able to speak that it makes it very difficult. It would be the equivalent of a city saying well, we're not saying that you can't have a parade. We're just requiring so many additional burdens that it's cost-prohibitive for you to have a parade.

 

And so I think that's a better way of looking at the issues going on in this particular case right now. As a trend, there's several exacting scrutiny cases that are pending before the Supreme Court. There's a lot of cert petitions from various districts and various courts of appeals asking to please clarify the standards of scrutiny.

 

So I don't know what will happen from there, and that's why it's difficult to make a prediction. Certainly, the lawyers lucked out by having a very hot panel that kept everybody overtime and asked multiple questions. They did not flush out every issue on the act, in part because the act is an omnibus approach to a lot of online advertising.

 

But beyond that, they were certainly engaged, and it was interesting that they got to Judge Motz who, if you remember Spiro Agnew, she was on the team that went after Spiro Agnew for his corruption. So that's always interesting.

 

You certainly have judges who are engaged in thinking about how this process works to both fight real corruption in the political process and whether or not that burdens other people's First Amendment rights to speak. I think it'll be interesting to see what happens with this case over time, especially as the law may develop out of the Supreme Court in that.

 

And certainly, the judges were looking at that. Judge Wilkinson repeatedly referred to well, the Supreme Court's maybe looking at this, too. And so I think that'll be interesting to see what happens.

 

Wesley Hodges:  Thank you, Tyler, and thank you, Erin. Erin, would you like to comment on anything Tyler mentioned in his remarks?

 

Erin Chlopak:  Sure. I would make, I think, maybe, three or four points. The first is specific responses, but Tyler mentioned the record in this case being replete with references to Russian interference, and I certainly agree with that. But I would note that many of the record references that you reference, including the Brennan Center's testimony and Common Cause, it also talked about the need to update digital disclosure requirements in general to address the lack of regulation in that space.

 

      And that relates to the second point that I would make which is that I completely agree with you that the federal government would be the better place to be addressing the problem of both setting the standards for digital political ad transparency and addressing foreign interference. Both because we need uniform rules for the benefit of the public and for transparency and also for those subjected to those rules to have clarity on what the rules are so they can comply with them.

 

      But at the same time, I don't think that the states are required to stand by and do nothing when the federal government fails to act. And, as Tyler noted, the FEC has been "trying to wrestle with this problem since 2011." And now, not only are they unable to agree on anything, but they don’t even have a quorum to do something if they could theoretically agree.

 

      And so the FEC hasn't acted. We have an Honest Ads bill that the House has passed but hasn't been taken up by the Senate. And so in the absence of any action by the federal government to address this problem, Maryland and other states also, like New York and Washington and California, have taken it upon themselves to try to protect their own voters from -- to provide transparency to their own voters and to protect their own citizens from the problems that the federal government is failing to address.

 

      I think the last point that I'd make is I think it's interesting to talk about Google's actions. I think the record is not entirely clear on the reasons for Google not running ads in Maryland. I don't recall the details of what happened in Washington off the top of my head, but I know in Maryland, I think there's been some indication by the state that Google has represented that it didn't have the resources to comply or the infrastructure to comply immediately with the requirements but they were working on commenting on regulation. So I'm not really sure what Google is doing. I would note Google is not a plaintiff in this case and hasn't filed a lawsuit or taken any action like that.

 

      But I think an interesting development was just yesterday. Twitter also announced that it would not be running political ads at all and not just in Maryland but anywhere. But Twitter is not complaining about the burdens of regulation. I think, on the contrary, Twitter's CEO posted something or tweeted something yesterday complaining about the lack of transparency rules for the internet and the need for regulators to address the new issues presented by digital ads and the ways in which they are different from other types of advertisements.

 

      So I think everyone is grappling with the new realm of the internet and how to balance the need to maintain it as a forum for people to speak while also protecting people's rights to know who is trying to influence their votes. And I think as long as the federal government is not taking steps to address the problem, we're going to continue to see states and local jurisdictions trying to deal with the problem themselves.

 

Welsey Hodges:  Very good. Thank you, Erin. And Tyler, do you have any remarks that you'd like to go through or anything on anything Erin said before we go to questions from the audience?

 

Tyler Martinez:  I would just have two quick points. I think, certainly, the FEC has struggled to find consensus on what to do, but part of that is not just differing views of the law, which is a fundamental issue perennially at the FEC and by design, I believe so. But beyond that, technology and the way technology works moves so much faster than the regulatory state can ever actually operate.

 

      During the pendency of these comments before the FEC, while they were trying to decide what to do, literally, new social media has come and gone. Vine, short videos that campaigns were using, didn't exist in 2011 and no longer exists now because Vine has closed up shop, for example. And so that's been a challenge to figure out what to do with that. But beyond that, I also think that it's important to remember that the First Amendment's default is that more speech is better.

 

      And putting in burdens, whether regulatory or statutory or otherwise, to where it makes it more expensive—and the Washington Post does have its own record on this saying that this would make it more expensive to set up the compliance side of this just for political ads—that means that people's messages aren't getting out.

 

And whether or not the Washington Post is a neutral third-party, it certainly is a gateway for a lot of people to get engaged voters. So taking that out is a real detriment to the fund of information to the voters as they're thinking about things, particularly as it applies not only to the Washington Post but also to Google, which did cite that it wasn't able to do so. And the fact that Google, which is one of the biggest companies in the world, is literally having a hard time coming up with a compliance solution on the software side, that indicates of how burdensome these laws actually end up being in real life.

 

Wesley Hodges:  Thank you, Tyler. Looks like we do have one audience member with a question. Caller, you are up.

 

Gary Gen (sp):  I don't know if this is a question or illegal, but this is Gary Gen in New Hampshire. So today's decision by Twitter to not have political ads, the attack on Citizens United, isn't this just another means where the left is trying to control the message? I mean, we know they -- well, opinion, they have most of the mainstream media locked down so now it's let's go after the internet, let's go after other sources of information.

 

So I agree with one of the people, the more, the better. It's very easy for us to distinguish between fake and real. Anybody can do a quick Google search on anything that's out there. So, again, I guess my question is to make the argument that this is not just another grab by the left to control the sources.

 

Erin Chlopak:  I'm not sure if I can respond to all of that, but I'd be happy to take a stab. I would take issue with the idea that it's easy to distinguish between fake and real. I think the special counsel's report illustrates why that's not the case and why we have sophisticated foreign actors and others that can convincingly dupe the American public into believing that what they think is real is not.

 

      In terms of Twitter's decision, that was an internal -- as far as -- I mean, I know as much as anybody else about it, but my understanding is that is a decision by Twitter itself and they're not targeting any political perspective. They have indicated that they're not going to run any political ads, but my understanding is that that's a policy that would apply across the board, not focusing on one party or ideology or another.

 

Tyler Martinez:  I would say in responding to that is well, I don't think this law will stop the fake accounts of Russian spies. I think that's the fundamental disagreement of whether or not we'd be able to sus out whether a spy who -- if you read the special counsel's report or the indictments of the various Russian agencies, they've literally stole American identities. They took people's identities to pretend to be Americans here, so I don’t think this will work for that. I think it's a real problem but I don't think this is the solution for it.

 

      As far as whether or not this is all controlled by one political viewpoint or another doesn't really matter. The Washington Post wants to run ads only in support of the Green Party. That's fine. The issue is is whether or not the state adds regulatory burdens based on the content of speech, whether it's political or not, and whether that makes it much more difficult for any political actor to get access. Whether or not they choose to take an ad is up to them, but if the state law artificially makes it more difficult, then that's the real problem.

 

Wesley Hodges:  I'm going to turn the mic now back to Erin and Tyler to see if they have any closing remarks for us today before we wrap up.

 

Tyler Martinez:  I would like to thank The Federalist Society. I'd like to thank Erin for joining this call and this podcast to discuss this. I think these are really important matters, again, not only to the heart of the speech side of the First Amendment but to how our democracy works. And so the opportunity to discuss these issues in light of a real live, hotly contested case is a key and important part of understanding public policy and the debate of what's going on and how to move forward in the new internet age, as they like to say. So thank you for having me.

 

Erin Chlopak:  I'm not sure that I could say it better, so I agree with all of that. And I thank you also very much for extending the offer to participate in this interesting discussion.

 

Wesley Hodges:  Absolutely. Well, it is our privilege. On behalf of The Federalist Society, I would like to thank you both for the benefit of your valuable time and expertise today. We welcome all listener feedback by email at [email protected]. Thank you all for joining us for the call. We are now adjourned.

 

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