Damages Award Stemming from Project Veritas Project Set Aside by D.C. Circuit

From today's long decision in Democracy Partners, LLC v. O'Keefe by D.C. Circuit Judge Karen LeCraft Henderson, joined by Judge Harry Edwards:

James O'Keefe is the Founder and former CEO of Project Veritas, a non-profit media organization that gathers news "almost exclusively [through] undercover journalism" … [including] "open and secret audiovisual recording" ….

In spring 2016, Project Veritas assigned one of its investigative reporters, Christian Hartsock, to find leads on a potential story about voter fraud schemes in the Wisconsin elections. Acting undercover, Hartsock infiltrated an election-watch party at a Milwaukee bar, where he met Scott Foval, a Democratic political consultant.

Using a fake name and backstory, Hartsock convinced Foval that he worked for a fictitious political consultant group and that one of his clients was a "progressive philanthropist [with] a deep disdain for voter ID laws." Hartsock told Foval that he was working on a "surrogate voter scheme[]," in which his client planned to open a shell company in Wisconsin, hire out-of-state voters and illegal immigrants and issue them employer-IDs that would allow them to vote fraudulently in Wisconsin's elections.

Foval thought Hartsock's scheme was "brilliant" and volunteered "all this advice" on "how to pull it off." He advised Hartsock to transport fraudulent voters to polling places with rentals or auctioned-off cars and he recommended expanding operations to Michigan and Illinois. Foval also suspected that Hartsock's unnamed client (who did not, in fact, exist) was receiving advice on the voter fraud scheme from Bob Creamer, a Democratic consultant in D.C.

Foval claimed that he "worked with Bob Creamer one-to-one all the time" and that Creamer was "somebody who hatches these ideas to people" on an "ongoing basis." "One of the things we do," Foval told Hartsock, is "stage very authentic" protests at Republican rallying events using trained locals and "get them[] into a situation on tape … that we can use later." Hartsock secretly recorded his entire conversation with Foval.

After the barroom conversation with Foval, Project Veritas turned its investigation to Creamer. Posing again as the fake consultant character, Hartsock persuaded Foval to arrange a meeting between Creamer and Hartsock's fake client, a role played by Daniel Sandini—another Project Veritas reporter. According to an internal Project Veritas memo, a main goal of the meeting was to convince Creamer to advise Sandini on the fictitious voter fraud scheme. A secondary objective was to uncover more information about the staged protests at Republican rallying events.

Sandini met with Creamer several times in summer 2016 and secretly recorded each conversation. As Hartsock had done with Foval, Sandini fed Creamer an elaborate backstory spun of whole cloth. He introduced himself to Creamer as "Charles Roth," a real-estate millionaire and son of a wealthy Hungarian immigrant who had made his fortune in America through urban development. Guilt-ridden that his father's work had displaced minorities and immigrants, Sandini told Creamer that he wanted to use his wealth to prevent Donald Trump's election to the Presidency.

Believing Sandini to be an interested donor, Creamer asked him to finance several voter outreach initiatives headed by Americans United for Change (AUFC), a political consulting group and one of Creamer's clients. To maintain appearances, Sandini made a $20,000 contribution to AUFC with funds supplied by Project Veritas. He also requested Creamer's help with the surrogate voter fraud scheme in Wisconsin. Creamer politely declined.

Undeterred, Project Veritas took steps to infiltrate Creamer's political consulting firm, Democracy Partners. Project Veritas reporter Allison Maass was assigned to the task. Building on the Charles Roth storyline, Maass assumed the role of Roth's imaginary niece, Angela Brandt, a 20-something-year-old with a budding interest in politics. Sandini, playing the Roth role, asked Creamer if he had any work for Maass and Creamer stated he was open to hiring her as an unpaid intern at Democracy Partners' D.C. office.

Creamer's subsequent vetting of Maass was perfunctory. He did not ask her to produce any legal identification, a list of references or a resume. After a "modestly-lengthy" telephone interview, Creamer offered her the position. When Democracy Partners eventually asked Maass for her resume to determine what projects to assign her, Maass submitted a fake one….

Maass abruptly left Democracy Partners in mid-October. Three days later, Project Veritas published the first of a three-part video series titled, "Rigging the Election." … In the video, O'Keefe claims to have uncovered a "dark money conspiracy" to instigate violence at Trump rallies and other Republican-sponsored events. The video implies that Foval, Creamer and Democracy Partners are implicated in the scheme…. [For more details see the full opinion. -EV] Several clips obtained from Maass's secret camera are also used in the video….

The fallout from the release of the Rigging the Election video was swift. Within days of the video's publication, it was being reported "all over the news." AUFC fired Foval immediately. One of Creamer's clients, the American Federation of State, County and Municipal Employees (AFSCME), also saw the video. That same day, AFSCME terminated its consulting and services agreements with Creamer's firm, Strategic Consulting. AFSCME was also AUFC's primary donor at the time and AFSCME's then-president, Lee Saunders, served on AUFC's board. After the video's release, Saunders withdrew from the AUFC board and AFSCME revoked AUFC's funding. With the loss of AFSCME's financial support, AUFC could no longer operate and terminated its consulting agreement with Creamer.

The court concluded that Project Veritas' actions were partly tortious and thus unprotected by the First Amendment:

No matter how newsworthy the story, published information must always "have been lawfully acquired." And this rule does not bend for the press. Although the First Amendment does not require a journalist "to wear kid gloves," a press badge is not a license to break the law. Thus, members of the media "may not with impunity break and enter an office or dwelling to gather news." They can be held liable for breaching a promise not to publish a source's name, for recording and broadcasting copyrighted material without permission, and for intercepting and disclosing a private conversation. When generally applicable laws operate in this manner to restrict the publication of truthful, newsworthy information, they "do not offend the First Amendment simply because their enforcement against the press has incidental effects on its ability to gather and report the news."

Applying this principle, we agree with Creamer that the First Amendment does not protect the video segments that O'Keefe procured through Maass's fraud—namely, the portions of the video that show Maass inside Democracy Partners, speaking with Creamer and his staff. Maass obtained that footage by subterfuge and the jury found that her conduct amounted to fraud. In addition, this is not a case in which the "publisher of information has obtained [it] in a [lawful] manner … but from a source who has obtained it unlawfully." Maass infiltrated Democracy Partners on assignment from O'Keefe; just as she had no First Amendment right to gather this footage, he had no First Amendment right to publish it.

But the court concluded that the damages award was likely impermissibly based in large part on Project Veritas' nontortious, constitutionally protected activity:

Nonetheless, as Creamer concedes, "[m]ost of the contents of the [Rigging the Election] video did not even include or rely on any of Maass's recordings." The crux of the video's story came through the footage of secretly recorded conversations between Foval and undercover Project Veritas reporters.

And as far as we know, "no established rights [were] invaded in the process of creating" those segments. "There was no eavesdropping on a private conversation; the [Project Veritas reporters] recorded their own conversations with [Foval]." There was no trespass—all of the Foval conversations were held in public locations. There was no theft of confidential business information—everything that Foval said in these conversations, he said willingly. And although the defendants lured Foval into these meetings based on an elaborate web of lies, Creamer does not claim that conduct amounted to fraud.

Where does this leave us? Most of the contents of the Rigging the Election video, we conclude, were protected under the First Amendment given the nature of this suit and how Creamer chose to pursue it. Creamer concedes he is a limited public figure who sued for damages that, all agree, stemmed directly from O'Keefe's publication of the video. Because the vast share of the video's contents was lawfully obtained—and any injury caused by this content was to Creamer's reputation—the First Amendment prohibited Creamer from recovering damages "caused by [its] publication," unless he proved the contents were false and published with actual malice. Because Creamer has done neither, the First Amendment shields most of the video from liability and any harm its content caused falls "beyond the reach of a damages award."

The same is not true for the few portions of the video depicting Maass's secretly recorded conversations from within Democracy Partners. Because Maass's infiltration footage is unprotected under the First Amendment, and because O'Keefe had no constitutional right to publish it, any damages Creamer sustained because of Maass's footage were recoverable….

And because of this, the damages award had to be set aside:

Because the damages were for the full value of Creamer's lost contracts with AFSCME and AUFC, the constitutional validity of the award turns on what parts of the Rigging the Election video caused AFSCME and AUFC to cancel their contracts with Creamer. All agree that a contributing factor in AFSCME's and AUFC's decisions was the video's scandalizing news story, as told through the constitutionally protected segments of the video. Nor do the parties dispute that a separate factor costing Creamer his contracts was the video's publication of the footage that revealed Maass's infiltration….

If it is uncontested that protected speech contributed to a damages award, the First Amendment imposes a heightened standard of proof on the plaintiff to show the defendant's unprotected conduct was the proximate cause of his losses. The standard is "not satisfied by evidence that [unprotected conduct] occurred or even that [it] contributed to" the plaintiff's damages. The plaintiff must demonstrate it was the "sole[]," "pervasive," or "dominant force" behind the harm. NAACP v. Claiborne Hardware Co. (1982).

[T]he damages award cannot stand. We are unable to say that any unlawful conduct on the defendants' part was the proximate cause of Creamer's damages. In fact, the evidence showed the Rigging the Election video, not Maass's infiltration, was the "critical factor[]" motivating AFSCME's decision to sever its contracts with Creamer. Crucially, Scott Frey, AFSCME's government affairs director, stated a "major factor" behind the termination decision, was "the video in itself." As he put it, "the optics of the video [and] the time that it came out"—just "a few weeks before a major presidential election"—had created "a sense of scandal that [AFSCME] did not want to be associated with." And the cleanest way for AFSCME "to separate [itself] from the story unfolding around the video," Frey explained, was to fire Creamer.

By contrast, Frey testified that Maass's infiltration of Democracy Partners—as it was revealed in certain segments of the Rigging the Election video—was merely a contributing "factor" in AFSCME's decision to cut ties with Creamer. After watching the video's excerpts that showed Maass inside Democracy Partners, AFSCME was "concern[ed]" that Creamer had failed to conduct "appropriate vetting of [his] staff." But the "broader concern," Frey confirmed, was "the video in itself and … the timing" of its release.

Finally, a brief excerpt from Judge Robert Wilkins' partial dissent:

I agree with the Majority that Claiborne Hardware imposes restraints on liability for damages when the defendant's conduct involves activity protected by the First Amendment. Based on the holding of Claiborne Hardware, I believe that the damages award on the fraudulent misrepresentation claim must be set aside. I write separately because I believe the appropriate disposition is not to grant a judgment for the Defendants, but rather to affirm the jury's finding of liability for fraudulent misrepresentation and remit the damages award to a nominal amount. In my view, to do otherwise unnecessarily impinges on District of Columbia tort law….

See this post for another facet to this case.

Benjamin Barr and Stephen R. Klein represent O'Keefe and Maass.