Is the privately-owned YouTube site really a “state actor” subject to judicial scrutiny under the First Amendment? That’s the claim made in a lawsuit by Prager University, which is not really a university. The Ninth Circuit was recently called upon to address PragerU’s claim that the widely popular internet site operated by a private entity should be treated as a “state actor” subject to the First Amendment.  Unsurprisingly, the Ninth Circuit reaffirmed well-established case authority to hold that the First Amendment’s protections apply only as to protect against governmental action, not to private companies such as YouTube.

PragerU claims that its mission is purportedly “to ‘provide conservative view points and perspective on public issues that it believes are often overlooked.’”  PragerU creates videos that target younger audiences and has posted hundreds of videos on YouTube.James Kachmar

Unless you’ve been living in a cave, you likely have visited YouTube, which is owned by Google LLC. YouTube allows users to post user-generated videos and has approximately 1.3 billion users.  More than 400 hours of video are uploaded to the site every hour of every day and more than 500 million hours of those videos are watched by YouTubers each day.  YouTube invites the public to post video to its platform and states that it is “committed to fostering a community where everyone’s voice can be heard.”  However, the posting of content by users is subject to YouTube’s terms of service and community guidelines, which include the right of YouTube to remove or restrict content that is posted to its platform.

One way that YouTube does this is through its “restricted mode” which allows users to activate this tool to make certain age-inappropriate content unavailable for that user.  Only about 2% of the users of YouTube utilize the restricted mode.  The restricted mode is intended to identify potentially mature content, which is tagged either by an automated algorithm or manually by a user.  Once a particular video is tagged, YouTube will inform the content creator who can then appeal the classification, which is reviewed by a YouTube representative.

YouTube tagged a number of PragerU’s videos for restricted mode and “demonetized” some of their videos, which meant that third parties could no longer advertise on those videos.  PragerU appealed these designations but certain of the videos remained restricted and/or demonetized.  As a result, PragerU sued YouTube (and its parent company, Google) alleging violation of the First Amendment and false advertising under the Lanham Act.  PragerU moved for preliminary injunction, which was denied. The district court then granted YouTube’s motion to dismiss with leave to amend.  Rather than amend its complaint, PragerU appealed the dismissal to the Ninth Circuit.

The Ninth Circuit first analyzed PragerU’s First Amendment claim by noting that it faced “a formidable threshold hurdle: YouTube is a private entity.”  The Ninth Circuit noted that the First Amendment’s Free Speech Clause only prohibits the government – and not a private party such as YouTube – from abridging speech.  Even PragerU admitted that YouTube was a private entity that was able to operate its platform without any state involvement.

PragerU tried to argue, however, that a private entity becomes a state actor when it operates its private property in a manner that it becomes “a public forum for speech.”  The Ninth Circuit noted that this position had long been rejected.  For instance, nearly 50 years ago in the case, Lloyd Corporation v. Tanner, the U.S. Supreme Court held that “private property does not `lose its private character merely because the public is generally invited to use it for designated purposes’.”  That is, although YouTube is practically a “public square on the internet,” that does not mean that it is transformed into a state actor as a result.

Likewise, in 2000 the Ninth Circuit in Howard v. America Online, and a number of other circuit court decisions since then, have uniformly held that “digital internet platforms that open their property to user generated content do not become state actors” for purposes of the First Amendment.  Faced with this wealth of authority, PragerU tried to argue that YouTube was a state actor “because it performs a public function.”  The Ninth Circuit noted, however, that a private entity could only be deemed a state actor “when it conducts a public function” that “must be both traditionally and exclusively governmental.”  This is a difficult standard to meet.  The Ninth Circuit continued that YouTube hosted speech on a private platform and this was hardly “an activity that only government entities have traditionally performed.”  The Court noted that historically, private parties such as grocery stores and comedy clubs have opened up their private property for speech without transforming themselves into state actors.  The Court noted that to adopt PragerU’s position would subject “every retail and service establishment in the country” to constitutional norms.

PragerU then argued that because YouTube was so popular, it should be bound by the First Amendment like a governmental agency. The Court rejected this claim, too.  PragerU argued that the 1946 U.S. Supreme Court case, Marsh v. Alabama, supported its position but ignored that in Marsh, the defendant was a private entity that operate a “company town” and performed “the full spectrum of municipal powers.”  The Ninth Circuit recognized that YouTube was not the same as the operator of that company town and concluded that YouTube “operates a platform for user generated content.  It does not `perform all the necessary municipal functions’.”

Seeking to salvage its claim, PragerU argued that a private entity could be converted into a public form “if its property is opened up for public discourse.”  The Ninth Circuit recognized that there was no legal authority to support this claim, noting that YouTube was not owned, leased or otherwise controlled by the government.

Finally, PragerU argued that because one of YouTube’s representatives stated for a congressional committee that she considers YouTube “to be a neutral public forum,” this was should convert YouTube into a state actor. The Ninth Circuit disagreed and concluded “whether a property is a public forum is not a matter of election by a private entity.”  In sum, the Ninth Circuit held that the district court properly dismissed PragerU’s First Amendment claim.

The Ninth Circuit then turned to PragerU’s Lanham Act false advertising claim.  The Court concluded that because none of the alleged statements made by YouTube are actionable under the Lanham Act, it would affirm the district court’s dismissal of the claim.

First, the Ninth Circuit held that the statements that YouTube makes concerning its moderation policies do not constitute “commercial advertising or promotion,” which is one of the elements of a Lanham Act violation.  Rather, YouTube’s statements about its restricted mode “were made to explain a user tool, not for a promotional purposes to `penetrate the relevant market’ of the viewing public.” The Court continued that not all commercial speech is promotional and that PragerU failed to overcome the commonsense conclusion that the restricted mode guidelines are not advertisements or part of any promotional campaign.

Likewise, the Court rejected PragerU’s argument that the designation of certain of its videos for restricted mode amounted to a misrepresentation about those videos.  The Court concluded that the fact that they were tagged “does not imply any specific representation about those videos.”  Given that a false advertising claim could be based on implied statements, it was required that the “statement must be both specific and communicated as to `deceive a significant portion of the recipients’.”  The Court concluded that the statement that a particular video is “unavailable with restricted mode enabled” did not have any tendency “to mislead, confuse or deceive” the public.  Thus, the Ninth Circuit held that the district court properly dismissed PragerU’s Lanham Act claim.

The Ninth Circuit’s decision in the PragerU cases reaffirms the long-held principle that private entities, unlike government agencies, are not subject to judicial scrutiny under the First Amendment.  Legal challenges seeking to force internet companies to supposedly allow for more voices are likely to face similar outcomes as the PragerU claims.