Appeals Court: Salesforce Can’t Use 230, And Could Be Liable For Sex Trafficking Because Backpage Was A Customer

Legal Issues

from the not-how-any-of-this-works dept

Well this is dumb.

First off, let’s just remind everyone that in a moment of pure stupidity, Salesforce.com founder and CEO Marc Benioff called for Section 230 to be “abolished.” Specifically, he claimed that websites “must have standards and practices decided by law” and that websites “need to be held accountable” for what users do with them.

I wonder how he feels about that now? At the very time that Benioff was calling for 230 to be abolished, his company was (correctly) using Section 230 to get out of what appeared to be a very frivolous lawsuit against the company, because Backpage.com used Salesforce as its CRM. The lawsuit was filed under FOSTA, which carved out a civil law exception under Section 230 for violations of sex trafficking laws, including “knowingly benefiting’“ from “participating in a venture” that is involved in sex trafficking.

Now, you may recall that just a few weeks ago, in the DC Circuit, there was a ruling that upheld the Constitutionality of FOSTA, but at the same time said pretty clearly that it was limited to cases where the “participating in a venture” part of sex trafficking had to meet the fairly high bar of “aiding and abetting,” meaning that they knew the laws were being broken, and then actively aided in that lawbreaking. This followed a ruling in the 9th Circuit, which also said that FOSTA required specific knowledge of the underlying violation. And, then, of course, we just had the Supreme Court’s ruling in Taamneh, which avoided the related Section 230 questions, but also made it quite clear that aiding and abetting requires actual, specific knowledge of the violation of law.

Apparently the 7th Circuit has decided to go in a different direction in dealing with the nutty Salesforce suit. Specifically, it has decided that Salesforce can be held liable for sex trafficking on Backpage, even if Salesforce had nothing to do with the underlying crime, or any knowledge of it… just because Salesforce magically should have known that Backpage was engaged in sex trafficking, overturning a lower court ruling that had dismissed the case:

The district court dismissed the case on the pleadings, but we conclude that plaintiffs’ complaint states a viable claim under Section 1595. More specifically, we reject defendant’s arguments: (1) that a “venture” must be primarily a sex-trafficking venture; (2) that a participant must have had constructive knowledge of the specific victim of sex trafficking, the civil plaintiff; (3) that “participation in a venture” requires direct participation in a “common undertaking or enterprise involving risk and potential profit”; and (4) that to knowingly benefit requires that the sex trafficker provide the participant with a benefit because of the participant’s facilitation of a sex-trafficking venture and that the participant must have known that this was the reason for the benefit. All of these defense theories seek to impose restrictions on the civil remedy that are not consistent with the statute as we understand its language. We also find that Salesforce is not entitled to dismissal under Section 230 of the Communications Decency Act, 47 U.S.C. § 230. We reverse the judgment of the district court and remand for further proceedings.

Again, this directly contradicts both the 9th Circuit and the DC Circuit, and appears to also go against what the Supreme Court ruled in Taamneh though that wasn’t as directly on point, and was about anti-terrorism laws rather than sex trafficking laws (and avoided the 230 question).

But… this also means that Salesforce, run by a guy who wants to abolish 230, may need to ask the Supreme Court to settle the circuit split in a manner that might have tremendous impact on Section 230.

The ruling, by Judge David Hamilton (who recently assumed “senior status”) and signed on to by Judge Doris Pryor (who took Hamilton’s vacated seat) is… bad? I mean, really bad? Divorced from reality? Driven by nonsense and moral panic? All of those.

It starts off with Judge Hamilton reciting the well trod narrative about Backpage being a haven for sex traffickers. The only problem, as we were just discussing in our post about the death of James Larkin, the narrative was false. Backpage was described in (secret) DOJ files as being much more helpful regarding trafficking than any other site, and was “remarkably responsive to law enforcement requests” and “often takes proactive steps to assist in investigations.”

But the media and politicians needed to blame someone, so they spun a story about Backpage that Judge Hamilton takes at face value.

The trafficking and advertising of G.G. on Backpage was not an isolated or even an unusual incident. When Backpage was created in 2004, it initially served as a marketplace for a variety of goods and services. By 2008, however, plaintiffs allege, Backpage “had been publicly identified by law enforcement, United States Attorneys General, and every state Governor as the biggest and most notorious sex trafficking and pimping website in the United States.”

Backpage’s sextrafficking was not limited to adults. During the three years prior to G.G.’s trafficking, Backpage generated more than 99% of its revenue from “adult advertisements,” including those offering minors for sex. In 2010, the National Association of Attorneys General publicly described Backpage as a “hub” of human trafficking, “especially the trafficking of minors.”

This is a ridiculously credulous take. AGs (lead by then AG Kamala Harris) targeted Backpage because it got them headlines about how they were “fighting sex trafficking.” They never cared one bit whether or not it was true.

But, according to Hamilton, once the AGs tarred and feathered Backpage with that description, any company doing business with Backpage could potentially be held liable for any sex trafficking that happened on Backpage:

According to plaintiffs, Salesforce “entered into the first of several lucrative contracts with Backpage” back in 2013, years after the nature of Backpage’s business was widely known, and about three years before G.G. was trafficked. The contracts with Salesforce were designed to “facilitate and support” Backpage’s “exponential growth” and to give Backpage “the ability to keep pace with increasing customer demand and scale its platform into an international sex-trafficking hub.”

Under such a wide-reaching setup, after AGs attack any business, anyone continuing to do business with them might be held liable for actions of those companies’ users. That can’t be how it works, but apparently it’s how it works in the 7th Circuit.

Hamilton takes the fact that Salesforce employees spoke to Backpage about how it could provide better CRM services as even further evidence of Salesforce “participating” in any trafficking that might have occurred on Backpage:

Toward that end, at least five times between November 2013 and April 2017, Salesforce consulted with Backpage, including its CEO, to learn about the business and “to assess its operational needs.” With Salesforce’s help in the form of new software, marketing technology, and personalized operational support, Backpage was able to “collect detailed, indepth customer data and use the data to streamline communications and overall business practices.” When Backpage faced imminent seizure by the United States government and wanted to “establish and maintain a duplicate copy of the Backpage operations system and platform” so that it could “move and operate its business overseas,” Salesforce “facilitated this system reorganization and provided the technical infrastructure” to do so.

Literally none of that comes anywhere close to establishing that Salesforce had direct knowledge of trafficking on the website or that it participated in that trafficking. It was providing CRM tools, and sought to work with customers to help them achieve their business goals.

Getting into the weeds a bit more, while those other courts have said that a violation here has to be up to the highest knowledge standards required in aiding and abetting, the 7th Circuit just doesn’t buy it. It says that being part of “a venture” engaged in sex trafficking should be read broadly, rather than narrowly like those other courts:

Salesforce argues that plaintiffs have failed to allege that it participated in a venture that has violated Section 1591. Appellee’s Br. at 53–65. That argument challenges two distinct elements, as we understand the statute, which we have labeled as element (1), the existence of a venture that violated Section 1591, and element (3), the defendant’s participation in the venture.

Plaintiffs have sufficiently alleged the existence of a venture that violated Section 1591. The text of Section 1595 does not say “sex-trafficking venture,” but only “venture.” 18 U.S.C. § 1595(a). In other words, “venture” is not described in criminal terms. Indeed, it would make little sense if it did. The language that follows, “which … has engaged in an act in violation of this chapter,” does that work, requiring the venture’s criminality.

While Section 1595 does not define the term “venture,” Section 1591’s definition cuts against construing a “venture” narrowly as limited to a venture that is primarily a sex-trafficking venture. Section 1591 defines “venture” as “any group of two or more individuals associated in fact, whether or not a legal entity.” 18 U.S.C. § 1591(e)(5). While we decline to import Section 1591’s definition into Section 1595, we think it safe to assume that Congress did not intend “venture” in Section 1595, which establishes civil liability, to be any more demanding than “venture” in Section 1591, which establishes criminal liability. See Peyton v. Rowe, 391 U.S. 54, 65 (1968) (applying “canon of construction that remedial statutes should be liberally construed”). Because Congress did not define a “venture” under Section 1591 as necessarily or primarily involving criminal conduct, we will not impose such a requirement under Section 1595.

As for knowledge, the court says that general knowledge of Backpage being bad is enough.

According to the allegations in the complaint, by 2008— five years before Salesforce entered into its first contract with Backpage—“law enforcement, United States Attorneys General, and every state Governor” had “publicly identified” Backpage “as the biggest and most notorious sex trafficking and pimping website in the United States.” In 2010, 21 state attorneys general called on Backpage “to shut down its adult services section.” After a First Circuit decision in March 2016, Jane Doe No. 1 v. Backpage.com, LLC, 817 F.3d 12 (1st Cir. 2016), afforded Backpage protection under Section 230 of the Communications Decency Act, the Senate investigated Backpage. H.R. Rep. No. 115-572, pt. 1, at 3–5 (Feb. 20, 2018). Nationwide news coverage identified Backpage as “the leading platform for the facilitation of sex trafficking and other forms of human degradation.” Salesforce’s hometown newspaper, the San Francisco Chronicle, published no fewer than 400 prominent news articles about Backpage between 2009 and 2017, including several in 2012 linking Backpage to child sex-trafficking. A 2013 article revealed that the FBI was monitoring Backpage after rescuing more than 100 children from forced prostitution. These facts about its customer should have been known to Salesforce.

Why? Sincerely, why should Salesforce have known that? It seems like a big point for the court to insist that Salesforce had to (1) know about all that and (2) know that it was true. And that’s not even getting into the question of whether or not having that general knowledge counts as knowing about specific violations, including (especially) the specific violation described in this complaint by the plaintiff.

The court here says that the much lower bar of “knew or should have known” is enough knowledge:

Apart from this public information, plaintiffs are entitled to a reasonable inference at this stage of the case that, based on Salesforce’s relationship with Backpage, Salesforce either “knew or should have known” that at least a substantial part of Backpage’s business was illegal sextrafficking, including trafficking of children

Salesforce pointed out, as happened in the other cases which other courts agreed with, that the law requires specific knowledge, but this court disagrees:

Salesforce disagrees, arguing that, under “the plain text” of Sections 1591 and 1595, a participant defendant must have had constructive knowledge of the specific victim of sex-trafficking, the plaintiff suing under Section 1595. Salesforce argues that even if it knew or should have known that the venture had violated Section 1591 with respect to other victims, it is off the civil hook unless plaintiffs can allege and later prove that it should have known about the trafficking of G.G. in particular. Salesforce draws this conclusion from Section 1595’s use of the phrases “a venture” and “an act.” 18 U.S.C. § 1595(a) (2008) (“[W]hoever knowingly benefits, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter.”) (emphasis added).

We are not persuaded that “a venture” and “an act” mean “the victim.” First, as explained above, “a venture” need not be primarily a sex-trafficking venture, so it need not be, as Salesforce suggests, “a particular” sex-trafficking venture. Even if it were, it would take an additional inferential leap to conclude that Section 1595 requires knowledge of a particular victim of that particular venture.

As for “an act,” Salesforce’s reading is contrary to the statutory text and overlooks differences between the two sections. If Congress had meant in Section 1595 that the participant must have had actual or constructive knowledge of the specific victim, it could have simply said so. It did not. Facing statutory text that does not say what it prefers, Salesforce asks us to make two interpretive moves to reach that result. First, Salesforce asks us to read “an act” of sextrafficking as “the act” of victimization that allowed the plaintiff to bring suit under Section 1595. Salesforce then asks us to assume that knowledge of the act means knowledge of the specific victim. This goes two bridges too far. We see no reason to rewrite the statutory text by substituting “the” for “an.” Even if we were willing to take that first step, we would still see no reason to require knowledge of a particular act to require knowledge of the victim’s identity. Salesforce is arguing, in effect, that the larger the sex-trafficking venture and the more extensive its participation in the venture—and so the less likely it is to have known the specifics of individual victim—the harder it should be for a victim to obtain civil relief.

From there, the court also reinterprets “participation in a venture” to be incredibly broad, and suggests again, that merely helping someone violate the law without knowledge of the law breaking is enough:

We read “participation” in accord with our “ordinary understanding of culpable assistance to a wrongdoer,” which requires only “a desire to promote the wrongful venture’s success,” Doe v. GTE Corp., 347 F.3d 655, 659 (7th Cir. 2003), though Section 1595 does not require actual knowledge of criminal wrongdoing

Yikes.

The fact that Salesforce had literally zero knowledge of the allegations regarding the plaintiff in this case doesn’t matter to the court at all:

Salesforce argues that “participation” requires more, that plaintiffs have alleged only that Salesforce was “somehow connected” to Backpage’s sex-trafficking enterprise. R. 26, Appellee’s Br. at 53. The argument is not persuasive. First, Salesforce argues that plaintiffs have failed to “connect Salesforce or its software” to “G.G.’s trafficking or her trafficker.” Put differently, Salesforce tries to narrow the focus of the “participation” inquiry to Backpage’s advertisements of G.G. herself, asserting that Salesforce had no specific involvement with those advertisements. That focus is simply too narrow. As a matter of law, such a direct connection between Salesforce and G.G.’s trafficking is not necessary. Under Section 1595, we focus on participation in a “venture,” not participation in “an act in violation” of Section 1591. 18 U.S.C. § 1595. In other words, participant liability does not require direct participation in sex trafficking.

Again, this is very different from what those other courts have found.

By Salesforce’s logic, there would be no “participation” where a company helped a drug kingpin expand his drugtrafficking operations writ large because the company might not have been involved in pushing drugs in a particular market. Or, for that matter, where a company helped a terrorist organization grow its terrorist network because the company could not be connected directly to a specific terrorist act.

I mean… that’s correct. That’s exactly what the Supreme Court just said in Taamneh. It would be ridiculous to hold out every service provider for liability just because a drug trafficking, sex trafficking, or terrorist organization used those tools to improve their reach.

Salesforce rightly pointed out the ridiculous logical conclusion of this argument, including citing to Taamneh, which the court just waves away, saying that the language of the Justice Against Terrorism Sponsors Act in Taamneh is different than in the sex trafficking statutes. It also waves away other citations Salesforce gave saying that “participation in a venture” means aiding and abetting, by saying that only applies to criminal cases, not civil.

Finally the court gets to Section 230, and of course says it doesn’t apply… but does so in a manner that wholly undermines Section 230. It could have just pointed to the part of 230 added by FOSTA and said that this means 230 can’t apply to these claims, but instead Judge Hamilton makes a bunch of dangerously incorrect statements about Section 230’s protections:

Here, plaintiffs’ allegations simply do not seek to treat Salesforce as a publisher or speaker. Plaintiffs’ claim does not depend on Salesforce having published or spoken anything. Rather, plaintiffs seek to hold Salesforce accountable for supporting Backpage, for expanding Backpage’s business, for providing Backpage with technology, for designing custom software for Backpage, for facilitating the trafficking of G.G., for helping Backpage with managing its customer relationships, streamlining its business practices, and improving its profitability, and for enabling Backpage “to scale its operations and increase the trafficking conducted on Backpage.” Dkt. 85, ¶¶ 1–3, 33, 29–30, & 41. In other words, plaintiffs are seeking to hold Salesforce “liable under [Section 1595] for its own … acts or practices, rather than for publishing content created by another.” See Federal Trade Comm’n v. LeadClick Media, LLC, 838 F.3d 158, 175–76 (2d Cir. 2016) (civil defendant not protected by Section 230(c)(1) where substantive statute, Section 5 of FTC Act, imposed liability for far more conduct than publishing or speaking and defendant was charged with “participating” in scheme that violated Act).

We are not saying that “the name of the cause of action”— defamation versus participation and so on—determines whether a defendant can be treated as a publisher or speaker. See Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1101–02 (9th Cir. 2009). We agree with the Ninth Circuit that we must focus on “whether the duty that the plaintiff alleges the defendant violated derives from the defendant’s status or conduct as a ‘publisher or speaker.’” Id. at 1102.

But that’s hiding the ball. The issue is very much about speech (not on Salesforce, but on Backpage) that is provided by a third party. The only way in which Backpage is liable is by holding it liable for 3rd party speech, and in this weird way the court is basically undermining the entirety of Section 230 by saying that even if you can’t go after the initial platform for hosting speech, you can simply go after every company that works with them since they’re not the ones hosting the speech.

That can’t be how the law works. But this language is going to get quoted over and over and over again to undermine 230.

There is, at least, a dissent penned by Judge Thomas Kirsch. Judge Kirsch rightly recognizes just how expansive the interpretation here is regarding knowledge:

The majority and I agree that Salesforce lacked constructive knowledge that G.G. had been trafficked on Backpage.com in violation of 18 U.S.C. § 1591. The majority nevertheless concludes that the plaintiffs may hold Salesforce civilly liable under 18 U.S.C. § 1595 as a participant in sex trafficking because Salesforce sold customized software to Backpage when it should have known that Backpage violated § 1591 as to some individual at some point in time, but not necessarily G.G. That broad reading of § 1595 would extend civil liability to nearly every company and individual who did regular and personalized business with Backpage after it faced public allegations of sex trafficking. It also renders meaningless § 1595’s requirement that the defendant have constructive knowledge of a § 1591 violation. Because the plaintiffs have not alleged that Salesforce should have known of G.G.’s particular trafficking, they have failed to allege a § 1595 violation. I respectfully dissent.

Section 1595 authorizes victims of sex trafficking to bring damages suits against “the perpetrator [ ]or whoever knowingly benefits … from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter.” § 1595(a). The “act in violation” here is § 1591, which makes it a crime to knowingly advertise “a person” or to benefit from participation in a venture that does so, “knowing … that means of force, threats of force, fraud, coercion …, or any combination of such means will be used to cause the person to engage in a commercial sex act, or … that [a minor] … will be caused to engage in a commercial sex act.” The majority and I agree that to be civilly liable as a participant in a venture that violated § 1591, by the plain language of § 1595, Salesforce must have had constructive knowledge of a § 1591 violation. But to the majority, a defendant can violate § 1595 so as long as it had “constructive knowledge that a venture generally has violated Section 1591.” Ante, at 22. But there is no such thing as a general violation of § 1591. A violation depends on whether the elements of § 1591 are satisfied (or in this case, whether they are pled).

Judge Kirsch, though, says he won’t even get to the Section 230 question, because he thinks the lack of knowledge means they don’t even have to go through that analysis:

Without constructive knowledge of G.G.’s identity and the trafficking offense committed against her (in other words, a § 1591 violation), the plaintiffs cannot bring a civil § 1595 claim against Salesforce. Because they have not alleged that Salesforce should have had such knowledge (or that Salesforce avoided learning of it), I would hold that the plaintiffs failed to state a claim for relief under § 1595. Thus, I would not reach the issue of whether Salesforce is entitled to dismissal under 47 U.S.C. § 230. I respectfully dissent.

Anyway, this ruling is a mess on multiple levels and will be used to do real damage. Who knows what Salesforce will do (especially given Benioff still runs the place), but it would be nice if the Supreme Court told the 7th Circuit to knock it off.

Filed Under: 1591, 1595, 7th circuit, fosta, general knowledge, knowledge, marc benioff, participation in a venture, section 230, sex trafficking, specific knowledge
Companies: backpage, salesforce