National Association of African American-Owned Media, a California Limited Liability Company; Entertainment Studios Networks, Inc., a California corporation, Plaintiffs-Appellees,
Charter Communications, Inc., a Delaware corporation, Defendant-Appellant.
and Submitted October 9, 2018 Pasadena, California
from the United States District Court for the Central
District of California D.C. No. 2:16-cv-00609-GW-FFM George
H. Wu, District Judge, Presiding
Patrick Francis Philbin (argued), Devin S. Anderson, Jeffrey
S. Powell, and Paul D. Clement, Kirkland & Ellis LLP,
Washington, D.C.; Mark C. Holscher, Kirkland & Ellis LLP,
Los Angeles, California; for Defendant-Appellant.
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.
Bergmayer, Public Knowledge, Washington, D.C., for Amicus
Curiae Public Knowledge.
Gregory G. Garre and Charles S. Dameron, Latham & Watkins
LLP, Washington, D.C.; Daryl Joseffer and Jonathan Urick,
U.S. Chamber Litigation Center, Washington, D.C.; for Amicus
Curiae Chamber of Commerce of the United States of America.
Before: MARY M. SCHROEDER, MILAN D. SMITH, JR., and
JACQUELINE H. NGUYEN, Circuit Judges.
panel filed (1) an order withdrawing its prior opinion and
denying, on behalf of the court, a petition for rehearing en
banc, and (2) a superseding opinion affirming 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 42 U.S.C. § 1981.
superseding opinion, reconsidering the court's approach
to the causation standard for § 1981 claims under
Metoyer v. Chassman, 504 F.3d 919 (9th Cir. 2007),
following the Supreme Court's decisions in Gross v.
FBL Fin. Servs., Inc., 557 U.S. 167 (2009), and
Univ. of Tex. Sw. Med. Ctr. v. Nassar, 570 U.S. 338
(2013), the panel held that a plaintiff need not plead that
racial discrimination was the but-for cause of a
defendant's conduct, but only that racial discrimination
was a factor in the decision not to contract such that the
plaintiff was denied the same right as a white citizen. The
panel concluded that Gross and Nassar
undercut Metoyer's approach of borrowing the
causation standard of Title VII's discrimination
provision. The panel instead looked to the text of §
1981, and it held that mixed-motive claims are cognizable
under § 1981.
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 § 1981.
panel also held that plaintiffs' § 1981 claim was
not barred by the First Amendment. The panel concluded that
the fact that cable operators engage in expressive conduct
when they select which networks to carry did not
automatically require the application of strict scrutiny. The
panel concluded that at most intermediate scrutiny applied,
and § 1981 would satisfy intermediate scrutiny because
it was a content-neutral statute and was narrowly tailored to
serve a significant government interest in preventing racial
panel remanded the case for further proceedings.
petition for panel rehearing is GRANTED. The opinion filed
November 19, 2018, and reported at 908 F.3d 1190, is hereby
withdrawn. A superseding opinion will be filed concurrently
with this order.
M. Smith and Judge Nguyen vote to deny the petition for
rehearing en banc, and Judge Schroeder so recommends. The
full court has been advised of the petition for rehearing en
banc, and no judge of the court has requested a vote on it.
Fed. R. App. P. 35. The petition for rehearing en banc is
DENIED. No further petitions for panel rehearing or rehearing
en banc will be entertained.
SMITH, CIRCUIT JUDGE
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
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 42 U.S.C. §
1981. The district court, concluding that Plaintiffs'
complaint sufficiently pleaded a § 1981 claim and that
the First Amendment did not bar such an action, denied
Charter's motion to dismiss. The court then certified
that order for interlocutory appeal. We have jurisdiction
pursuant to 28 U.S.C. § 1292(b), and we affirm.
AND PROCEDURAL BACKGROUND
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.
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.
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
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.
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).
initiated this action on January 27, 2016, asserting both a
claim against Charter under § 1981 and a claim against
the FCC under the due process clause of the Fifth
Amendment. After learning of the derogatory racial
comments allegedly made by Singer and Rutledge, Plaintiffs
sought leave to file a first amended complaint (FAC), which
the district court granted. The ...