Court Says Sheriff Crossed Line By Convincing Visa, MasterCard To Sever Ties With

backpagechicagoFirst, an Illinois sheriff convinced Visa and MasterCard to stop doing business with online classifieds site, claiming the site was a storefront for sex traffickers. Then Backpage sued the sheriff, alleging his actions were tantamount to government censorship. Now a judge in the case has told the sheriff to back off of Backpage.

Last Friday, a federal judge granted an injunction [PDF] directing Sheriff Thomas Dart of Cook County, which includes Chicago, to put a stop to his campaign against revenue sources for Backpage.

Until earlier this year, people wanting to place an adult-oriented ad on the site could pay with American Express, Visa, or MasterCard. In April, AmEx was the first to cut ties with Backpage. Then at the beginning of July, within days of receiving notices from Dart urging them to stop offering their payment networks to Backpage, both Visa and MasterCard bowed out.

While Dart’s involvement in AmEx’s decision to end its relationship with the site is unclear, there is little doubt that his communications with the other two card networks directly resulted in their termination of business with Backpage.

As the court points out in the injunction, MasterCard’s official statement stated that the decision was “based on a request from the Cook County Sheriff’s office,” while Visa referenced “allegations from U.S. law enforcement that the merchant is linked to child prostitution and human trafficking.”

Without these credit card networks, Backpage has had to resort to accepting the virtual Bitcoin currency, and to not charging for ads, which is obviously not a tenable business model for a free website.

The site argued that the sheriff’s actions were a violation of Backpage’s First Amendment rights, likening Dart’s actions to government and law enforcement officers who used to pay visits to book distributors to talk to them about “objectionable” books.

In the 1963 case of Bantam Books, Inc. v. Sullivan, publishers challenged the Rhode Island Commission to Encourage Morality in Youth, an organization created by the state legislature that would alert book distributors that certain publications had been reviewed by the Commission and been declared objectionable.

Additionally, the Commission’s notices requested the distributor’s “cooperation,” and advised that local police departments had been made aware of the lists of objectionable titles — and that it was the Commission’s duty to recommend prosecution of purveyors of obscenity.

The U.S. Supreme Court upheld a lower court ruling that the effect of the Commission’s notices was to “intimidate distributors and retailers and that they had resulted in the suppression of the sale of the books listed,” in violation of the First and Fourteenth Amendments.

But Sheriff Dart contends that Backpage does not have legal standing to bring a First Amendment case as it’s not the publication’s speech that is being curtailed because the affected ads are user-generated. His second claim is that there is no First Amendment case to make because the right of free speech does not extend to exhortations to illegal conduct. Finally, the sheriff also argues that, unlike the Bantam case, there was no coercion involved.

The judge deals quickly with the issue of legal standing, pointing out that, “Backpage may stand in the shoes of its users in seeking relief from the burden placed on their freedom of speech as a result of not being able to use credit cards to access Backpage’s forum.”

As for whether the affected ads enjoy First Amendment protection, the court notes that all of the ads on Backpage are being affected by these actions but only some ads may be for illegal activities.

“Backpage cannot collect its normal fees for even the most benign advertisements, and therefore will be unable to host any when the money runs out,” reads the injunction. “Given that Dart sought to ‘defund’ Backpage, not just shut down its adult sections, based wholly on the content of some ads, Dart cannot maintain that the First Amendment is not implicated by his actions, even if he were correct that none of Backpage’s ‘escort ads’ themselves are protected.”

Assuming that all the ads are illegal and shutting down the site without a trial would be a case of prior restraint, which the Supreme Court has repeatedly come down against.

Then there’s the issue of coercion. At trial, Backpage would have to satisfy two factors to make this case: That Dart’s letters to the credit card companies constituted threats, and that the companies involuntarily withdrew their business. At this point, the court feels that the site’s chances are “more-than-negligible.”

“Dart did not directly threaten the companies with an investigation or prosecution,” explains the judge. “But by writing in his official capacity on Sheriff’s Department letterhead, requesting a ‘cease and desist,’ invoking the legal obligations of ‘financial institutions’ to cooperate with law enforcement, and requiring ongoing contact with the companies… it could reasonably be inferred that Dart brought the weight of his office to bear on his ‘request’.”

It’s debatable whether Visa and MasterCard cut ties with Backpage voluntarily, but the court found that “enough signs point in the other direction” for the purposes of an injunction.

“These companies had worked with Backpage for more than a decade, and they terminated their relationships because of Dart’s letters,” explains the order. “Whether Dart coerced the companies or simply educated them has not yet been definitively established, but given the timing of the withdrawals and the companies’ public statements, at the very least it is clear on this record that the companies did not act spontaneously.”

To close out the order, the judge takes one last dig at Dart’s arguments.

The sheriff had contended that public interest is now being served because “the public is able to use for free.”

Counters the judge: “Curious as it is for Dart to equate the public interest with more access to, the argument is specious, for the record suggests that Backpage is in jeopardy of going under as a result of Dart’s tactics.”

The injunction only prevents Dart from further interference with Backpage’s funding, but doesn’t get into the merits of its lawsuit against the sheriff.

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