NATIONAL ASSOCIATION OF AFRICAN AMERICAN-OWNED MEDIA, a California Limited Liability Company; ENTERTAINMENT STUDIOS NETWORKS, INC., a California corporation, v. CHARTER COMMUNICATIONS, INC., a Delaware corporation
No. 17-55723
United States Court of Appeals for the Ninth Circuit
Filed November 19, 2018
Opinion by Judge Milan D. Smith, Jr.
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATIONAL ASSOCIATION OF AFRICAN AMERICAN-OWNED MEDIA, a California Limited Liability Company; ENTERTAINMENT STUDIOS NETWORKS, INC., a California corporation,
Plaintiffs-Appellees,
v.
CHARTER COMMUNICATIONS, INC., a Delaware corporation,
Defendant-Appellant.
No. 17-55723
D.C. No. 2:16-cv-00609-GW-FFM
OPINION
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted October 9, 2018
Pasadena, California
Filed November 19, 2018
Before: MARY M. SCHROEDER, MILAN D. SMITH, JR., and JACQUELINE H. NGUYEN, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY*
Civil Rights
The panel affirmed the district court’s denial of a cable television-distribution company’s motion to dismiss a claim that its refusal to enter into a carriage contract with an African American-owned operator of television networks was racially motivated, and in violation of
Reconsidering the court’s approach to the causation standard for
The panel held that 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 pursuant to
* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.
The panel also held that plaintiffs’
COUNSEL
Patrick Francis Philbin (argued), Galen B. Bascom, Devin S. Anderson, and Jeffrey S. Powell, Kirkland & Ellis LLP, Washington, D.C.; Mark C. Holscher, Kirkland & Ellis LLP, Los Angeles, California; for Defendant-Appellant.
Erwin Chemerinsky (argued), Boalt Hall, University of California, Berkeley, California; David W. Schecter, J. Mira Hashmall, Brian A. Procel, and Louis R. Miller, Miller Barondess LLP, Los Angeles, California; for Plaintiffs-Appellees.
John Bergmayer, Public Knowledge, Washington, D.C., for Amicus Curiae Public Knowledge.
OPINION
M. SMITH, Circuit Judge:
Plaintiff-Appellee Entertainment Studios Networks, Inc. (Entertainment Studios), an African American-owned operator of television networks, sought to secure a carriage contract from Defendant-Appellant Charter Communications, Inc. (Charter). These efforts were unsuccessful, and Entertainment Studios, along with Plaintiff-Appellee National Association of African American-Owned Media (NAAAOM, and together with Entertainment Studios, Plaintiffs), claimed that Charter’s refusal to enter into a carriage contract was racially motivated, and in violation of
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual Background
Entertainment Studios is a full-service television and motion picture company owned by Byron Allen, an African-American actor, comedian, and entrepreneur. It serves as both a producer of television series and an operator of television networks, and currently operates seven channels and distributes thousands of hours of programming.
Entertainment Studios relies on cable operators like Charter for “carriage contracts”; these operators, which range from local cable companies to nationwide enterprises, carry and distribute channels and programming to their
television subscribers. Although Entertainment Studios managed to secure carriage contracts with more than 50 operators—including prominent distributors like Verizon, AT&T, and DirecTV—it was unable to reach a similar agreement with Charter, the third-largest cable television-distribution company in the United States, despite efforts that began in 2011.
From 2011 to 2016, Charter’s senior vice president of programming, Allan Singer, declined to meet with Entertainment Studios representatives or consider its channels for carriage. Plaintiffs alleged that, instead of engaging in a meaningful discussion regarding a potential carriage contract, Singer and Charter repeatedly refused, rescheduled, and postponed meetings, encouraging Entertainment Studios to exercise patience and proffering disingenuous explanations for its refusal to contract. Although Singer stated that Charter was not launching any new channels and that bandwidth and operational demands precluded carriage opportunities, Plaintiffs claimed that Charter nonetheless negotiated with other, white-owned networks during the same period, and also secured carriage agreements with The Walt Disney Company and Time Warner Cable Sports. Charter allegedly communicated that it did not have faith in Entertainment Studios’ “tracking model,” despite contracting with other white-owned media companies that used the same tracking model. Plaintiffs also asserted that Singer blocked a meeting between Entertainment Studios and Charter CEO Tom Rutledge because the latter “does not meet with programmers,” despite the fact that Rutledge regularly met with the CEOs of white-owned programmers, such as Viacom’s Philippe Dauman. Singer was allegedly steadfast in his opposition to Entertainment Studios, saying, “Even if you get support
from management in the field, I will not approve the launch of your network.”
Plaintiffs claimed that they finally managed to secure a meeting with Singer in July 2015. However, during the meeting at Charter’s headquarters in Stamford, Connecticut, Singer once again made clear that Entertainment Studios would not receive a carriage contract, citing a series of allegedly insincere explanations for this decision. For example, Singer informed Entertainment Studios that he wanted to wait and “see what AT&T does,” despite the fact that AT&T already carried one of Entertainment Studios’ networks. Charter also mentioned its purported lack of bandwidth, even though at that time, it expanded the distribution of two lesser-known, white-owned channels into major media markets: RFD-TV, a network focused on rural and Western lifestyles, and CHILLER, a horror channel.
In addition to recounting Entertainment Studios’ failed negotiations with Charter, Plaintiffs’ amended complaint also included direct evidence of racial bias. In one instance, Singer allegedly approached an African-American protest group outside Charter’s headquarters, told them “to get off of welfare,” and accused them of looking for a “handout.” Plaintiffs asserted that, after informing Charter of these allegations, it announced that Singer was leaving the company. In another alleged instance, Entertainment Studios’ owner, Allen, attempted to talk with Charter’s CEO, Rutledge, at an industry event; Rutledge refused to engage, referring to Allen as “Boy” and telling Allen that he needed to change his behavior. 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, prior to its merger with Time Warner Cable, had a board of
directors composed only of white men. The amended complaint further alleged that Charter’s recently pronounced commitments to diversity were merely illusory efforts to placate the Federal Communications Commission (FCC).
II. Procedural Background
Plaintiffs initiated this action on January 27, 2016, asserting both a claim against Charter under
Charter moved to dismiss the FAC, arguing that it failed to plead that racial animus was the but-for cause of Charter’s conduct and that the First Amendment barred a
carriage/programming activity is entitled to some measure of First Amendment protection,” but declined to apply strict scrutiny and bar the
Subsequently, Charter moved for certification of the district court’s order under
STANDARD OF REVIEW AND JURISDICTION
“We review de novo a district court order denying a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).” Fortyune v. City of Lomita, 766 F.3d 1098, 1101 (9th Cir. 2014). We have jurisdiction pursuant to
ANALYSIS
“Section 1981 offers relief when racial discrimination blocks the creation of a contractual relationship.” Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 476 (2006). The statute provides that “[a]ll persons . . . shall have the same right in every State and Territory to make and enforce contracts . . . as is enjoyed by white citizens . . . .”
Charter advances three primary arguments on appeal: the district court applied the wrong causation standard to Plaintiffs’
I. Causation Standard
Charter argues that the Supreme Court’s decisions in two discrimination cases require us to apply a but-for causation standard to
precedents necessitate reconsideration of our
A. Metoyer and the Motivating Factor Standard
In the past, we have held that “the same legal principles as those applicable in a Title VII disparate treatment case” govern a
Charter correctly notes that two Supreme Court decisions cast doubt on the propriety of our application of the Title VII standard to
In Gross, the Court admonished that “[w]hen conducting statutory interpretation, we ‘must be careful not to apply rules applicable under one statute to a different statute without careful and critical examination.’” Gross, 557 U.S. at 174 (quoting Fed. Express Corp. v. Holowecki, 552 U.S. 389, 393 (2008)). That examination did not center on the shared objectives of the statute at issue there and Title VII’s antidiscrimination provision—the approach that this court employed in Metoyer and its antecedents with regard to
Unlike Title VII, the ADEA’s text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor. Moreover, Congress neglected to add such a provision to the ADEA when it amended Title VII . . . .
Our inquiry therefore must focus on the text of the ADEA to decide whether it authorizes a mixed-motives age discrimination claim.
Id. at 174–75. In Nassar, the Court expanded upon this textual analysis, explaining that
[i]n the usual course, [the causation] standard requires the plaintiff to show “that the harm would not have occurred” in the absence of—that is, but for—the defendant’s conduct. . . . This, then, is the background against which Congress legislated in enacting Title VII, and these are the default rules it is presumed to
have incorporated, absent an indication to the contrary in the statute itself.
In both cases, after analyzing the relevant statutory texts, the Court endorsed the use of a default, but-for causation standard in the application of the statutes being construed—a standard from which courts may depart only when the text of a statute permits. See Gross, 557 U.S. at 175 n.2 (“[T]he textual differences between Title VII and the ADEA [] prevent us from applying [the motivating factor standard] to federal age discrimination claims.”); Nassar, 570 U.S. at 352 (“Given the lack of any meaningful textual difference between the text in this statute and the one in Gross, the proper conclusion here, as in Gross, is that Title VII retaliation claims require proof that the desire to retaliate was the but-for cause of the challenged employment action.”).4
We conclude that Metoyer does not emerge from Gross and Nassar unscathed. We premised our opinion in Metoyer
on a determination that “an ‘[a]nalysis of an employment discrimination claim under
5 See, e.g., Fonseca, 374 F.3d at 850 (“Analysis of an employment discrimination claim under
6 As another circuit court has concluded, “No matter the shared goals and methods of two laws, [Gross] explains that we should not apply the substantive causation standards of one anti-discrimination statute to other anti-discrimination statutes when Congress uses distinct language to describe the two standards.” Lewis v. Humboldt Acquisition Corp., 681 F.3d 312, 318–19 (6th Cir. 2012) (en banc).
C. Departing from Metoyer
Although not addressed by the parties, a departure from Metoyer is permissible here under our opinion in Miller v. Gammie, which held that a higher court ruling is controlling when it has “undercut the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable.” 335 F.3d 889, 900 (9th Cir. 2003) (en banc). Gross and Nassar are fairly clear that our approach in Metoyer—borrowing the causation standard of Title VII’s discrimination provision and applying it to
Furthermore, in Gross, the Supreme Court determined that borrowing the Title VII causation standard was inappropriate in ADEA cases because 1) unlike Title VII’s disparate treatment provision, the text of the ADEA did not explicitly provide that “a plaintiff may establish discrimination by showing that [the protected characteristic] was simply a motivating factor,” and 2) the ADEA was not amended to include a motivating factor standard even though it was amended contemporaneously with Title VII. 557 U.S. at 174–75. Because
7 Like Title VII and the ADEA,
context, Gross alone undermines Metoyer to the point of irreconcilability.
D.
Accordingly, rather than adopting Title VII’s motivating factor standard in this case, we must instead look to the text of
If discriminatory intent plays any role in a defendant’s decision not to contract with a plaintiff, even if it is merely one factor and not the sole cause of the decision, then that plaintiff has not enjoyed the same right as a white citizen.
This, we conclude, is the most natural reading of
Accordingly, mixed-motive claims are cognizable under
II. Plausibility of Plaintiffs’
Having determined that a plaintiff in a
A. Allegations of Disparate Treatment
Plaintiffs’ FAC alleged various instances of contradictory, disingenuous, and disrespectful behavior on the part of Charter and its executives. These allegations include: a pattern of declining and delaying meetings with Entertainment Studios, combined with a refusal to contract despite presenting intimations to the contrary; the offering of “provably false” explanations for its reluctance to carry Entertainment Studios’ channels; and Singer’s repeated misleading and insulting communications with
Entertainment Studios. We acknowledge that, even when considered in the light most favorable to Plaintiffs, these claims alone would not constitute a plausible
However, Plaintiffs supplemented these claims by pleading that white-owned companies were not treated similarly. For example, the FAC stated that, although Charter informed Entertainment Studios that bandwidth and operational demands prevented carriage of the latter’s channels, Charter secured contracts with “white-owned, lesser-known” networks during the same period.8 Charter
8 Charter argues that we cannot infer disparate treatment from these allegations because “[t]he complaint fails to allege any facts whatsoever showing that [Entertainment Studios’] channels are ‘similarly situated’ to the channels Charter added (or expanded) in respects such as content, quality, popularity, viewer demand, or any objective metric relevant to a carriage decision.” It is true that, in order for us to infer discriminatory intent from these allegations of disparate treatment, we would need to conclude that the white-owned channels were similarly situated to Entertainment Studios’. See, e.g., Lindsey v. SLT L.A., LLC, 447 F.3d 1138, 1147 (9th Cir. 2006). It is also true that television networks can vary widely in terms of content, quality, and appeal. See Herring Broad., Inc. v. FCC, 515 F. App’x 655, 656–57 (9th Cir. 2013) (exploring various ways in which television networks can differ). However, such a thorough comparison of channels would require a factual inquiry that is inappropriate in reviewing a 12(b)(6) motion. See Earl v. Nielsen Media Research, Inc., 658 F.3d 1108, 1114–15 (9th Cir. 2011) (describing the fact-intensive, context-dependent analysis needed to determine whether individuals are similarly situated in the related context of employment discrimination). At this stage of the litigation, we must accept as true Plaintiffs’ assertions that other, lesser-known, white-owned networks were selected for carriage at the same time that Charter refused to carry Entertainment Studios’ offerings.
also allegedly pointed to Entertainment Studios’ tracking model as a ground for refusing to contract, while simultaneously accepting white-owned channels that used the same model. Plaintiffs further alleged that Charter’s CEO, Rutledge, refused to meet with Entertainment Studios’ African-American owner, Allen, despite meeting with the heads of white-owned programmers during the same time period. We conclude that these allegations, when accepted as true and viewed in the light most favorable to Plaintiffs, are sufficient under
B. Charter’s Race-Neutral Explanations
Charter contends that we cannot ignore the legitimate, race-neutral explanations for its conduct that are, admittedly, present on the face of the FAC. These business justifications include limited bandwidth, timing concerns, and other operational considerations. However, at this stage, we are not permitted to weigh evidence and determine whether the explanations proffered by Plaintiffs or Charter are ultimately more persuasive. Instead, we have explained that “[i]f there are two alternative explanations, one advanced by defendant
9 Furthermore, Plaintiffs’ FAC also included direct allegations of racial animus: specifically, the racially charged comments allegedly made by Singer and Rutledge, both of whom were high-ranking Charter decision-makers. Notably, neither of these incidents occurred in the context of Entertainment Studios’ attempts to secure a carriage contract with Charter, and they can therefore serve only as circumstantial evidence of discriminatory animus. See, e.g., Godwin v. Hunt Wesson, Inc., 150 F.3d 1217, 1221 (9th Cir. 1998); Nesbit v. Pepsico, Inc., 994 F.2d 703, 705 (9th Cir. 1993). However, circumstantial evidence of discrimination is still evidence, and is particularly compelling here when combined with the allegations of disparate treatment contained elsewhere in the FAC.
and the other advanced by plaintiff, both of which are plausible, plaintiff’s complaint survives a motion to dismiss under Rule 12(b)(6). Plaintiff’s complaint may be dismissed only when defendant’s plausible alternative explanation is so convincing that plaintiff’s explanation is implausible.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
Here, it is plausible that Charter’s conduct was attributable wholly to legitimate, race-neutral considerations. But we cannot conclude, based only on the allegations in the FAC, construed in the light most favorable to Plaintiffs, that those alternative explanations are so compelling as to render Plaintiffs’ allegations of discriminatory intent implausible. This is especially true given that Plaintiffs’ allegations of disparate treatment and disingenuous statements suggest that Charter’s race-neutral explanations lack credibility. See Desert Palace, Inc. v. Costa, 539 U.S. 90, 100 (2003) (“[E]vidence that a defendant’s explanation for an employment practice is ‘unworthy of credence’ is ‘one form of circumstantial evidence that is probative of intentional discrimination.’” (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 147 (2000))). In short, we can infer from the allegations in the FAC that discriminatory intent played at least some role in Charter’s refusal to contract with Entertainment Studios, thus denying the latter the same right to contract as a white-owned company. Charter’s race-neutral explanations for its conduct are not so convincing as to render Plaintiffs’ theory implausible.10
10 Charter also relies in part on In re Century Aluminum Co. Securities Litigation, in which we held that
III. First Amendment
Finally, Charter argues that Plaintiffs’
The Supreme Court has held that “[c]able programmers and cable operators engage in and transmit speech, and they are entitled to the protection of the speech and press provisions of the First Amendment.” Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 636 (1994); see also Hurley v. Irish-Am. Gay, Lesbian & Bisexual Grp. of Boston, 515 U.S.
[w]hen faced with two possible explanations, only one of which can be true and only one of which results in liability, plaintiffs cannot offer allegations that are “merely consistent with” their favored explanation but are also consistent with the alternative explanation. Something more is needed, such as facts tending to exclude the possibility that the alternative explanation is true, in order to render plaintiffs’ allegations plausible within the meaning of Iqbal and Twombly.
729 F.3d 1104, 1108 (9th Cir. 2013) (citations omitted) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). However, Century Aluminum is not particularly persuasive here because we are not confronted with two mutually exclusive possibilities. It is entirely possible that Charter was motivated by both race-neutral business concerns and discriminatory intent—a scenario that, given the applicable causation standard, would still give rise to a viable claim under
557, 570 (1995) (“Cable operators . . . are engaged in protected speech activities even when they only select programming originally produced by others.”). Because Plaintiffs’ claim implicates the First Amendment, we must determine the appropriate standard of review for our analysis.
Here, there is some ambiguity as to whether rational basis review or a heightened form of scrutiny ought to be applied. Normally, laws of general applicability that regulate conduct and not speech—such as
In Hurley, however, the Supreme Court explained that even generally applicable laws directed at conduct rather than speech might implicate the First Amendment “[w]hen the law is applied to expressive activity” in a way that “require[s] speakers to modify the content of their expression to whatever extent beneficiaries of the law choose to alter it with messages of their own.” 515 U.S. at 578; see also Turner Broad., 512 U.S. at 640–41 (noting that “the enforcement of a generally applicable law may or may not be subject to heightened scrutiny under the First Amendment” and contrasting Cohen, where enforcement of
a law did not directly impact expressive conduct, with Barnes v. Glen Theatre, Inc., 501 U.S. 560, 566–67 (1991), where expressive conduct was directly implicated). Here, we conclude that resolution of this issue is not required, since Plaintiffs’
Contrary to Charter’s position, the fact that cable operators engage in expressive conduct when they select which networks to carry does not automatically require the application of strict scrutiny in this case. If
A. Content Neutrality
B. Narrow Tailoring and Government Interest
Next, to satisfy intermediate scrutiny, a content-neutral statute must be “narrowly tailored to serve a significant governmental interest.” Clark, 468 U.S. at 293. The Supreme Court has regularly emphasized that the prevention of racial discrimination is a compelling government interest. See, e.g., Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2783 (2014) (“The Government has a compelling interest in providing an equal opportunity to participate in the workforce without regard to race, and prohibitions on racial discrimination are precisely tailored to achieve that critical goal.”); Bob Jones Univ. v. United States, 461 U.S. 574, 604 (1983) (“[T]he Government has a fundamental, overriding interest in eradicating racial discrimination in education.”). The Court has emphasized that this significant interest applies even when expressive activities are impacted:
[A]cts of invidious discrimination in the distribution of publicly available goods, services, and other advantages cause unique
evils that government has a compelling interest to prevent—wholly apart from the point of view such conduct may transmit. Accordingly, like violence or other types of potentially expressive activities that produce special harms distinct from their communicative impact, such practices are entitled to no constitutional protection.
Roberts, 468 U.S. at 628. Thus, there can be little doubt that
As for whether
narrowly tailored, but only if each activity within the proscription’s scope is an appropriately targeted evil.” Frisby v. Schultz, 487 U.S. 474, 485 (1988). Here, the only activity within
In summation, as with the statute analyzed in Turner Broadcasting,
CONCLUSION
We AFFIRM the district court’s order denying Charter’s motion to dismiss, and REMAND for further proceedings. We also DENY Plaintiffs’ motion to take judicial notice.