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Backpage.Com, LLC v. Hawley

United States District Court, E.D. Missouri, Eastern Division

November 28, 2017

JOSHUA D. HAWLEY, Defendant.



         This matter is before the Court on Defendant Missouri Attorney General Joshua Hawley's motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).[1](ECF No. 21). Plaintiff opposes the motion. (ECF No. 34). The Court held a hearing on AG Hawley's motion to dismiss. For the reasons that follow, the Court grants AG Hawley's motion to dismiss.[2]

         I. Factual and Procedural Background

         In May 2017, AG Hawley issued civil investigative demands (CIDs) to Backpage, Backpage's CEO Carl Ferrer, and two other corporate officers (collectively, “Backpage Recipients”) for the purpose of investigating possible violations of the Missouri Merchandising Practices Act (MMPA), Mo. Rev. Stat. §§ 407.010, et seq. (ECF Nos. 1 at 12, 21-2). The MMPA broadly prohibits false, fraudulent, or deceptive merchandising practices and “imposes criminal penalties and civil liability on persons who engage in conduct that it deems unlawful.” Huch v. Charter Commc'ns Inc., 290 S.W.3d 721, 725 (Mo. banc 2009).

         Each CID advised: “The investigation will inquire into the activities of [Backpage Recipients] in connection with the sale or advertisement, as defined in Section 407.010, RSMo, of commercial sexual conduct, other sexually oriented services, massage services, dating services and other merchandise” to “determine whether the [Backpage Recipients] have used deception, fraud, false promise, misrepresentation, unfair practice, or the concealment, suppression, or omission of material fact in connection with the sale or advertisement of the above merchandise.” (ECF No. 21-2 at 1).

         The CID served upon Backpage demanded Backpage provide AG Hawley the information and documents described in twenty-four numbered paragraphs by June 7, 2017. (Id. at 3). Among other things, the CID demanded Backpage:

• Provide all documents concerning Backpage's reviewing, blocking, deleting, editing, or modifying advertisements that appear on its website, either by Backpage employees or agents, or by automated software processes, including but not limited to policies, manuals, memoranda, and guidelines.
• Provide all documents concerning advertising posting limitations, including but not limited to the “Banned Terms List, ” the “Grey List, ” and error messages, prompts, or other messages conveyed to users during the advertisement drafting or creation process.
• Provide all documents concerning human trafficking, sex trafficking, human smuggling, prostitution, or the facilitation or investigation thereof, including but not limited to policies, manuals, staff training materials, memoranda, and guidelines.
• Identify every posting or advertisement posted in the Adult Section of the Missouri Locations that was either (a) deleted, edited, or modified by Backpage employees or agents, or (b) blocked, deleted, edited, or modified by any automated software process.
• For each posting or advertisement identified in response [to the preceding paragraph], provide both (a) a copy of the posting or advertisement as originally submitted by the Backage user, and (b) a copy of the posting or advertisement as it was publicly posted on Backpage.

(Id at ¶¶ 4, 5, 7, 11, 12). The CID advised Backpage that “an extension of time or modification of the terms of the Investigative Demand may be sought only for good cause pursuant to the terms of Section 407.070, RSMo.” (Id at 6). In addition, the CID warned that Section 407.080 “makes certain acts done with the intent to avoid, evade, or prevent compliance in whole or in part with any Investigative Demand served hereunder a Class A Misdemeanor[.]” (Id.).

         The parties dispute whether Assistant Attorney General Mary Morris extended Backpage's deadline for responding to the CID. (ECF Nos. 21-1 at ¶ 15, 45 at ¶ 4-5). While the parties agree that attorney Jim Grant called Ms. Morris and requested an extension of time, they dispute whether he identified himself as counsel for Mr. Ferrer alone or for Mr. Ferrer and Backpage. Id According to Ms. Morris, Mr. Grant identified himself as counsel for Mr. Ferrer, and she agreed to extend the deadline for Mr. Ferrer's response from June 7, 2017 until July 7, 2017. (ECF No. 21-1 at ¶¶ 16-19). Mr. Grant avers that he informed Ms. Morris that he represented Backpage and Mr. Ferrer, as evidenced by his subsequent email to Ms. Morris thanking the AG's office for granting “my clients” an extension.[3] (ECF Nos. 14-11, 45).

         On June 15, 2017, AG Hawley filed in the Circuit Court of St. Charles County a “Petition for Order to Enforce Civil Investigative Demand” against Backpage pursuant to Mo. Rev. Stat. § 407.090.[4] (ECF Nos. 1 at ¶ 43, 21-5). In the petition, AG Hawley stated that he initiated the investigation into possible violations of the MMPA and issued the CID based upon a report by the United States Senate's Permanent Subcommittee on Investigations, which revealed Backpage's role in facilitating and concealing illegal activity, such as human trafficking and commercial sexual exploitation. (ECF No. 21-5 at ¶ 1). AG Hawley alleged that Backpage had neither “produced any requested documentation or information, nor . . . filed a petition to extend the return date for, or to modify or set aside the [CID]” pursuant to Mo. Rev. Stat. § 407.070, and therefore requested an order enforcing the CID. (Id. at ¶¶ 18, 22, 23).

         On July 11, 2017, Backpage filed in this Court a “complaint for injunctive and declaratory relief, ” asking the Court to “enjoin and declare unlawful” AG Hawley's efforts to investigate and prosecute it under the MMPA. (ECF No. 1). In the complaint, Backpage argues that Section 230 of the Communications Decency Act (CDA), 47 U.S.C. § 230, bars state law claims against internet websites and publishers arising from content created by a third party. (Id. at 17-18). Backpage also claims that AG Hawley's investigation and the CID violated: the rights of Backpage and its users under the First and Fourteenth Amendments; Backpage's rights under the Fourth, Fifth, and Fourteenth Amendments; and the MMPA. (Id. at 18-21). Approximately two weeks later, Backpage filed a motion for preliminary injunction based on its purported immunity under the CDA and its constitutional rights under the First, Fourth, and Fifth Amendments. (ECF No. 11).

         AG Hawley moved to dismiss Backpage's complaint pursuant to Rules 12(b)(1) and 12(b)(6). (ECF No. 21). In his motion, AG Hawley argues that the Court should dismiss the case pursuant to Younger v. Harris, 401 U.S. 37 (1971) and that Backpage failed to state a claim upon which relief can be granted. (ECF No. 21 at 10-11). Backpage responded (ECF No. 34), and the Court heard arguments regarding the application of the Younger doctrine. Backpage has since filed a “Second Motion for Preliminary Injunction to Prevent Enforcement of 15 CSR 60-16.040” (ECF No. 48). In that motion, Backpage contends that the state regulation, entitled “Conducting Sex Trafficking Under False Pretenses” and effective October 30, 2017, directly conflicts with the Section 230 of the CDA and unconstitutionally restricts free speech. (Id.).

         II. Legal Standard

         Federal courts have a “virtually unflagging obligation ... to exercise the jurisdiction given them.” Barzilay v. Barzilay, 536 F.3d 844, 849 (8th Cir. 2008) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). However, the United States Supreme Court has articulated several abstention doctrines as exceptions to the rule, including the Younger doctrine. Id. Under Younger, the district court has discretion to decline jurisdiction when federal action would needlessly interfere with an ongoing state proceeding. Geier v. Missouri Ethics Comm'n, 715 F.3d 674, 678 (8th Cir. 2013).

         III. Discussion[5]

         AG Hawley argues that the Younger doctrine bars this Court's consideration of Backpage's complaint because the state-court action: (1) is ongoing; (2) implicates important state interests, namely, enforcement of Missouri's consumer-protection laws; and (3) provides Backpage ample opportunity to raise its federal-law arguments in opposition to enforcement of the CID. (ECF No. 21 at 11-13). In response, Backpage contends that AG Hawley based his motion to dismiss on “outdated authority” and that “this case presents no basis for abstention under the limited exceptions of Younger and Sprint Communications v. Jacobs, [134 S.Ct. 584 (2013) (“Sprint”)].” (ECF No. 34 at 26).

         The Younger abstention doctrine provides that, in “exceptional circumstances, ” a federal court must “refus[e] to decide a case in deference to the States.” Sprint, 134 S.Ct. at 591 (quoting New Orleans Pub. Serv., Inc. v. Council of the City of New Orleans, 491 U.S. 350, 368 (1989) (“NOPSI”)). This doctrine originates from the underlying principles of: equity, which provides that “courts of equity should not act…when the moving party has an adequate remedy at law and will not suffer irreparable injury if denied equitable relief”; and “‘comity, ' that is, a proper respect for state functions.” Younger, 401 U.S. at 43-44. See also Ohio Bureau of Emp't Servs. v. Hodory, 431 U.S. 471, 479 (1977) (Younger abstention “allow[s] the State an opportunity to ‘set its own house in order' when the federal issue is already before a state tribunal.”).

         While the Younger doctrine originally applied only to state criminal proceedings, the Supreme Court has enlarged the doctrine to include certain civil actions. See, e.g., Juidice v. Vail, 430 U.S. 327 (1977); Huffman v. Pursue, Ltd., 420 U.S. 592 (1975). Nevertheless, as the Supreme Court recently clarified, Younger does not apply to “all parallel state and federal proceedings.” Sprint, 134 S.Ct. at 593. In Sprint, the Court reaffirmed its holding in NOPSI that Younger abstention only limits federal-court intervention in the following three categories of state proceedings: (1) ongoing state criminal prosecutions; (2) “certain ‘civil enforcement proceedings'”; and (3) “pending civil proceedings involving certain orders . . . uniquely in furtherance of the state courts' ability to perform their judicial functions.” Id. at 591 (citing NOPSI, 491 U.S. at 368).

         The Sprint Court employed a three-step approach to Younger abstention. First, a court determines whether a particular state proceeding falls within one of the Sprint categories. Sprint, 134 S.Ct. at 591. If so, a court must consider whether the three factors articulated in Middlesex Cty. Ethics Comm'n v. Garden State Bar Ass'n, 457 U.S. 423, 432 (1982) support abstention. Id. at 593. In Middlesex, the Supreme Court identified three factors a court must consider before invoking Younger: (1) the existence of an “an ongoing state judicial proceeding, ” which (2) “implicate[s] important state interests, ” and (3) provides “an adequate opportunity to raise the constitutional claims.” Middlesex, 457 U.S. at 432. See also Sprint, 134 S.Ct. at 593 (the Middlesex factors are “not dispositive; they [are] instead, additional factors appropriately considered by the federal court[.]”).

         If the case satisfies the requirements of Sprint and Middlesex, a court considers whether any of the exceptions to the Younger doctrine apply. Middlesex, 457 U.S. at 435. The Supreme Court has held that, even where all of the above factors are satisfied, a court should decline to invoke Younger if there is a “showing of bad faith, harassment, or some other extraordinary circumstance that would make abstention inappropriate.” Id.

         A. Sprint categories

         Backpage argues that Younger abstention is improper because the state-court action does not fit any of the state proceeding categories set forth in Sprint. (ECF No. 34 at 28-29). More specifically, Backpage contends that the state-court action: (1) is not a criminal proceeding;[6] (2) is not a “civil enforcement proceeding” because the State has not brought any civil claims or criminal charges against Backpage; and (3) does not concern an order “uniquely in furtherance of the state court['s] ability to perform [its] judicial functions.” Id. at 28-29 (quoting Sprint, 134 S.Ct. at 591). In his reply brief, AG Hawley asserts that the state-court action ...

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