Broad protection applied as California Court of Appeal rejects "commercial speech" label.

The California Court of Appeal issued its highly anticipated decision in Stewart v. Rolling Stone on Jan. 28, 2010. In a decision that will be welcome news for all who sell advertising in their pages or on their programs, the court ruled in Rolling Stone’s favor, broadly affirming the First Amendment’s protection of the editorial at the heart of the lawsuit.

The plaintiffs, two indie rock bands, had sued Rolling Stone and R.J. Reynolds claiming false endorsement misappropriation based on a “butterfly gatefold” insert that included Rolling Stone’s editorial feature, “Indie Rock Universe,” along with a Camel advertisement. The names of the plaintiffs and roughly a hundred other indie rock bands were included in “Indie Rock Universe,” although none were named in the Camel ad.

The trial court denied Rolling Stone’s Special Motion to Strike under California’s anti-SLAPP statute, and Rolling Stone appealed. In a careful analysis, the Court of Appeal reversed the trial court, finding that the editorial was not converted into commercial speech due to its adjacency to the Camel ad, and that the editorial was entitled to the full protection of the First Amendment.

The Rolling Stone editorial and the adjacent Camel advertisement

In its Nov. 15, 2007, issue, Rolling Stone included three foldout inserts, known in the industry as butterfly gatefolds. Gatefolds are inserts consisting of four continuous pages, folded inward, so that the pages must be folded out in order to reveal the editorial content at the center. Gatefolds typically include advertising interspersed with the editorial pages.

The four continuous pages of content in the center are, for Rolling Stone, usually exclusively editorial content, although they may share space with the advertisement. The gatefold at issue in this litigation contained Rolling Stone’s editorial content titled “Indie Rock Universe” and a Camel advertisement promoting Camel’s The Farm Web site, which is “committed to supporting & promoting independent record labels.”

As was its normal practice, Rolling Stone advised R.J. Reynolds (RJR) what the topic of the editorial content in the gatefold would be—here, “indie rock.” However, it provided no additional information to RJR. The editorial content and the advertisement were produced separately, without any input by the other party, and came together only in the final production of the magazine.

Rolling Stone included the typical indicia that “Indie Rock Universe” was editorial, including listing it in the table of contents and adding standard elements such as a border and credits on the introductory page. The Camel ad had the required surgeon general warning and other elements of a typical cigarette advertisement (which were not included on any of the “Indie Rock Universe” pages).

The plaintiffs sued Rolling Stone and RJR alleging common law and statutory misappropriation and unfair business practices. Rolling Stone filed a Special Motion to Strike under California’s anti-SLAPP statute, Code of Civil Procedure Section 425.16. The trial court denied the anti-SLAPP motion, concluding that a jury could find that Rolling Stone's layout decision had created “an allegedly integrated 9-page advertisement” for Camel cigarettes. Rolling Stone appealed.

Court of Appeal decision

The Court of Appeal unanimously reversed the trial court. Initially, it rejected the plaintiffs’ argument that the case was exempt from the anti-SLAPP statute under Code of Civil Procedure Section 425.17(c), which removes certain commercial speech from the anti-SLAPP statute’s protection, finding that plaintiffs had not established each of that statute’s elements. The court also rejected all of the plaintiffs’ other attempts to avoid the anti-SLAPP statute, holding that the speech at issue fell comfortably within the statute’s broad protections.

The court next turned to the merits of the plaintiffs’ claims. It first agreed with numerous other courts that First Amendment requirements as enunciated in New York Times Co. v. Sullivan, 376 U.S. 254 (1964), apply to misappropriation claims. Explaining that entertainment receives the same protection as factual news reports, the court held that “a defendant publisher may assert that the actual malice standard applies to claims for commercial misappropriation, whether the claims are brought under the common law or under Civil Code section 3344.”

In the heart of the opinion, the court held that Rolling Stone’s editorial feature is “noncommercial speech as a matter of law.” It initially held that the trial court erred in deferring the issue to the trier of fact, because the parties did not disagree as to the facts of the case. The court then turned to the California Supreme Court’s decision in Kasky v. Nike, Inc., 27 Cal.4th 939 (2002), and the elements for identifying commercial speech—“the speaker, the intended audience, and the content of the message.” Addressing the first element, the Court of Appeal found that it favored Rolling Stone, explaining:

While defendants sell advertising that markets goods and services, they have no direct financial interest in the companies that purchase this advertising or in the products these advertisers sell. Rolling Stone magazine is merely the medium through which commercial messages are delivered by the actual commercial speakers, namely, the advertisers themselves. Rolling Stone magazine is primarily a periodical commentating on events of political and cultural interests of the day. Its articles critically assess these interests. While advertising naturally assists in the financing of the magazine, the publication’s editorial purpose is the presentation of written analysis of the contemporary American scene—noncommercial speech.

The court also held that the remaining elements favored Rolling Stone and supported the conclusion that “Indie Rock Universe” is “editorial, noncommercial speech.” It found strong support for its conclusion in 9th Circuit law, including the contrasting decisions in Hoffman v. Capital Cities/ABC, Inc., 255 F.3d 1180 (9th Cir. 2001) (where editorial speech was protected) and in Downing v. Abercrombie & Fitch, 265 F.3d 994 (9th Cir. 2001) (where speech that helped advertise the publisher’s own product was not protected).

Shifting its focus to the feature itself and the evidence in the record, the court found that no evidence supported the plaintiffs’ claim that the feature was commercial speech. Initially, the Court of Appeal rejected the trial court’s conclusion that the feature might be characterized as commercial speech based on “Indie Rock Universe’s” unique elements, including the absence of Rolling Stone’s standard typeface in the feature and the lack of a border on the interior pages:

The employment by Rolling Stone of whimsical expression in designing informational pages of its magazine should not necessarily be curbed. The union between artistic graphics and written commentary can be a welcomed change to the columnar presentation of many current publications.

Moreover, the undisputed evidence in the record supported the court’s conclusion, particularly Rolling Stone’s declarations discussing the “wall” between editorial and advertising that ensured that one group would not influence the other. The Court concluded:

Simply put, there is no legal precedent for converting noncommercial speech into commercial speech merely based on its proximity to the latter. There is also no precedent for converting a noncommercial speaker into a commercial speaker in the absence of any direct interest in the product or service being sold. We thus conclude that the Feature is noncommercial speech.

Having so concluded, the court next asked whether plaintiffs offered any evidence of actual malice to overcome Rolling Stone’s First Amendment protection. Because plaintiffs presented no evidence on this issue, Rolling Stone’s declarations were undisputed. They revealed that Rolling Stone advised RJR of the gatefold’s topic, indie rock, but “[b]eyond this limited shared knowledge, there was no evidence of any intentional collusion to misappropriate plaintiffs’ identities.”

At the most, Rolling Stone was negligent and perhaps it “could have done more ‘to ensure that [the Feature] and the Camel advertisement were sufficiently distinct.’” However, negligence cannot suffice to establish actual malice. “Accordingly, plaintiffs cannot surmount the defense raised by defendants and the misappropriation claims are subject to dismissal under section 425.16.”

Finally, the court turned to the “constitutional right guaranteeing freedom of the press,” which it found “also serves as a bar to plaintiffs’ causes of action.” The court reiterated the broad protection of editorial discretion, which “has been extended to the content and placement of advertisements.”

Discussing an 11th Circuit decision that rejected tort liability for the content of advertisements, the court reiterated that “if state tort law places too heavy a burden on publishers with respect to the advertisements they print, the fear of liability might impermissibly impose a form of self-censorship on publishers.” Magazines are replete with advertisements; as a result all editorial content “is, in a sense, ‘embedded’ with advertising. … But we see no principled legal distinction between a page of editorial content that is preceded and followed by full-page ads, and the gatefold format, in which the ads appear only on the reverse side of a feature’s pages.”

Conclusion

The court’s holding and its careful analysis are good news for publishers. Although the plaintiffs’ emotional appeal to “trust your eyes” held sway with the trial court, the Court of Appeal trusted, instead, settled law. It followed well-established California law defining commercial speech to find that editorial content cannot be converted into commercial speech by happenstance, as the plaintiffs claimed here.

It also embraced the line of California and 9th Circuit cases that require evidence of actual malice to hold a publisher liable for its noncommercial speech related to public figures, regardless of the claim alleged, and appropriately dismissed the case given the absence of any evidence that Rolling Stone intended the false endorsement alleged by plaintiffs.

As media companies become more innovative in the advertisements they publish in today’s competitive environment, they can take some solace from the California court’s faithful adherence to the First Amendment principles on which they have always relied.