Prager University v. Google LLC ( 2022 )

Filed 12/05/2022
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
PRAGER UNIVERSITY, H047714
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 19CV340667)
v.
GOOGLE LLC et al.,
Defendants and Respondents.
After a United States district court dismissed its federal lawsuit, Prager University
filed the present action against Google LLC and its subsidiary, YouTube, LLC, alleging
that defendants restricted access to, and third-party advertising on, Prager’s YouTube
videos due to its political and religious views. Prager’s appeal from the superior court’s
judgment of dismissal turns primarily on the scope of immunity under section 230 of the
Communications Decency Act (CDA) (47 U.S.C. § 230)1 for interactive computer service
providers acting as “publishers or speakers” of content provided by others. Although the
conduct complained of arises from defendants’ exercise of a publisher’s traditional
editorial functions, Prager variously contends that defendants are themselves information
content providers, that defendants by their terms of service and their public
pronouncements subjected themselves to liability notwithstanding section 230, and that
section 230, to the extent it immunizes defendants from Prager’s state law claims, is
unconstitutional. We affirm.
1
Undesignated statutory references are to Title 47 of the United States Code.
I. BACKGROUND2
A. YouTube
Defendants operate YouTube.com, now “the largest video-sharing website in the
world,” which “maintains a virtual monopoly over the domestic and international internet
video posting markets where users can post, view, and comment on video content.” The
vast majority of videos that internet users can post and view on defendants’ YouTube
platform are free to view. Defendants generate revenue through YouTube by selling
advertisements displayed with videos, by selling subscriptions that allow users to view
videos without advertisements and/or to access certain content, and by renting access to
videos.
Defendants place “advertising restrictions” on certain videos. When they do so, it
“demonetizes” the video, i.e., prevents the user who posted the video from realizing
advertising revenues through the video. Defendants’ stated purpose for imposing
advertising restrictions is to ensure that advertisements accompany “advertiser-friendly”
content.
Network administrators and individual subscribers can elect to limit user access to
YouTube videos using “Restricted Mode.” With Restricted Mode activated on a
particular network or account, the users of that network or account are unable to view
videos that defendants have designated for restriction. According to defendants, they use
six criteria for determining whether to restrict access to a video: “(1) Talking about drug
use or abuse, or drinking alcohol in videos; (2) Overly detailed conversations about or
depictions of sex or sexual activity; (3) Graphic descriptions of violence, violent acts,
natural disasters and tragedies, or even violence in the news; (4) Videos that cover
2
In reviewing a trial court order sustaining a demurrer, “we accept the truth of
material facts properly pleaded in the operative complaint, but not contentions,
deductions, or conclusions of fact or law. We may also consider matters subject to
judicial notice.” (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924.)
2
specific details about events related to terrorism, war, crime, and political conflicts that
resulted in death or serious injury, even if no graphic imagery is shown; (5) Inappropriate
language, including profanity; and (6) Video content that is gratuitously incendiary,
inflammatory, or demeaning towards an individual or group.”
Defendants use an “automated filtering algorithm” to decide whether a video is
“suitable” for advertising or should be unavailable to users accessing YouTube through
Restricted Mode. Videos may also be restricted pursuant to “human review.” Users
whose videos have been restricted or demonetized may request human review of
decisions made by defendants’ automated systems.
B. Prager
The “University” of its name notwithstanding, Prager states that it “is not an
academic institution.” Prager’s stated mission is to educate the public “about current and
historical issues and events of public interest[,] . . . with an emphasis on reaching
younger, academic, and student-based audiences.” Prager seeks to provide “usually (but
not always)[] conservative viewpoints” on public issues. To that end, Prager produces
and promotes videos containing “focused discussions” of such issues. Since its inception,
Prager has posted more than 250 videos on YouTube.
C. Restraints on Prager’s Ability to Monetize its Content
Defendants have prevented Prager from monetizing or obtaining sponsors for over
50 of its videos by imposing advertising restrictions or by preventing the videos from
being accessed in Restricted Mode. Even so, there have been instances in which other
YouTube users have posted “copycat” videos that are identical to Prager’s restricted
videos, and the copycat videos have not been restricted. Prager “undertook an extensive
comparative analysis of its videos which were restricted and those on similar topics by
different speakers that were not restricted” and reached the conclusion that defendants are
imposing restraints on Prager because of its political identity or viewpoints, not the
content of its videos. Prager’s efforts to informally resolve the matter pursuant to
3
defendants’ internal appeals process were unsuccessful, as defendants “admitted that”
they conducted “ ‘human reviews’ ” on some of Prager’s videos, “leaving little doubt that
the restrictions and demonetization of Prager[’s] videos were not merely the result of an
automated algorithm error.”
D. Procedural History
Prager initially filed suit in federal court. The result of the federal litigation was
dismissal of Prager’s federal claims for violation of the First Amendment and the
Lanham Act with prejudice and dismissal of Prager’s state law claims without prejudice.
(See Prager University v. Google LLC (N.D. Cal. Mar. 26, 2018, No. 17-CV-06064-
LHK) 2018 WL 1471939, at p. *14, 2018 U.S. Dist. LEXIS 51000, at p. *45; Prager
University v. Google LLC (9th Cir. 2020) 951 F.3d 991, 999-1000 (Prager University).)
Prager initiated the present action while its appeal in the federal action was pending.
Here, Prager alleges four causes of action, as follows. First, defendants violated
article I, section 2 of the California Constitution by restricting Prager’s speech in a public
forum in an arbitrary, capricious, and/or discriminatory manner pursuant to “subjective,
vague, and overbroad criteria” and by blocking viewers’ access to Prager’s videos.
Second, defendants violated the Unruh Act by censoring Prager’s speech based on its,
and its followers’, political identity, religious orientation,3 and viewpoint. Third,
defendants violated the Unfair Competition Law by violating the California Constitution,
the Unruh Act and the Lanham Act and by misleading viewers about the content of
Prager’s videos by restricting access. Fourth, defendants breached the covenant of good
faith and fair dealing implied in their contracts with Prager by restricting access to and
demonetizing its videos, thereby interfering with Prager’s right to receive the benefits of
the contracts.
3
Prager does not allege what it, or its followers’, religious orientation is. In
connection with its preliminary injunction motion, Prager submitted a screenshot of its
website, where it states that its “values are Judeo-Christian at their core.”
4
The parties filed cross-motions—defendants demurred to the operative complaint
and Prager moved for a preliminary injunction. The trial court ruled that the CDA
precluded each of Prager’s claims, “with the possible exception of those based on
[defendants’] own promises and representations[.]” As to those claims, the trial court
ruled that Prager could not state a claim for breach of the implied covenant of good faith
and fair dealing because the parties’ contracts expressly permitted the challenged conduct
or a UCL claim under the “fraudulent” prong because defendants’ statements were non-
actionable puffery and/or Prager lacked standing to challenge them. The trial court
addressed the merits of Prager’s constitutional claim in the alternative, reasoning that the
claim failed for want of state action. Pursuant to those rulings, the trial court sustained
the demurrer without leave to amend and denied the motion for preliminary injunction.
This appeal followed.
II. DISCUSSION
On de novo review of the trial court’s order sustaining the demurrer (see T.H. v.
Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162), our conclusion is compelled
by section 230(c)(1) and (e)(3) of the CDA. However denominated, Prager’s state law
causes of action target providers of an interactive computer service in their capacity as
publishers restricting access to Prager’s information content—i.e., the same “Good
Samaritan” screening that Congress has elected to protect from liability under state law.
To the extent Prager has pleaded alternative theories of contractual breach and fraudulent
business practices to forestall this conclusion, it has neither identified a contractual
provision to support the former nor alleged facts establishing standing to prosecute the
latter, and it raises no reasonable possibility of curing these defects by amendment. We
further reject Prager’s argument that the CDA—foreclosing as it does Prager’s causes of
action against private actors—violates the First and Fourteenth Amendments.
5
A. CDA
“Congress enacted section 230 ‘for two basic policy reasons: to promote the free
exchange of information and ideas over the internet and to encourage voluntary
monitoring for offensive and obscene material.’ ” (Hassell v. Bird (2018) 5 Cal.5th 522,
534 (Hassell).) “The statute contains express findings and policy declarations
recognizing the rapid growth of the Internet, the beneficial effect of minimal government
regulation on its expansion, and the twin policy goals of ‘promot[ing] the continued
development of the Internet and other interactive computer services’ and ‘preserv[ing]
the vibrant and competitive free market that presently exists for the Internet and other
interactive computer services, unfettered by Federal or State regulation.’ ” (Murphy v.
Twitter, Inc. (2021) 60 Cal.App.5th 12, 24 (Murphy).) “[T]he provision establishes a
subjective standard whereby internet users and software providers decide what online
material is objectionable.” (Enigma Software Group USA, LLC v. Malwarebytes, Inc.
(9th Cir. 2019) 946 F.3d 1040, 1044 (Enigma).)
Section 230(c)(1), provides that “[n]o provider or user of an interactive computer
service shall be treated as the publisher or speaker of any information provided by
another information content provider.” More importantly for our purposes,
section 230(e)(3) expressly preempts any state law claims inconsistent with section
230(c)(1)’s unequivocal protection of “providers . . . of an interactive computer service”
(service providers) as “publishers or speakers” of content provided by another: “[N]o
cause of action may be brought and no liability may be imposed under any State or local
law that is inconsistent with this section.” Together, these two provisions of the Act
“protect from liability (1) a provider or user of an interactive computer service (2) whom
a plaintiff seeks to treat under a state law cause of action, as a publisher or speaker (3) of
information provided by another information content provider.” (Barnes v. Yahoo!, Inc.
(9th Cir. 2009) 570 F.3d 1096, 1100-1101, fns. omitted (Barnes).)
6
The California Supreme Court has twice affirmed the breadth of this statutory
grant of immunity from state law claims. (Hassell, supra, 5 Cal.5th at p. 544 [discerning
“an intent to shield Internet intermediaries from the burdens associated with defending
against state-law claims that treat them as the publisher or speaker of third party content,
and from compelled compliance with demands for relief that, when viewed in the context
of a plaintiff’s allegations, similarly assign them the legal role and responsibilities of a
publisher qua publisher”]; accord, id. at p. 558 (conc. opn. of Kruger, J.) & pp. 567-568
(dis. opn. of Cuellar, J.); Barrett v. Rosenthal (2006) 40 Cal.4th 33, 39 (Barrett) [section
230(c)(1) and section 230(e)(3), together, “have been widely and consistently interpreted
to confer broad immunity against defamation liability for those who use the Internet to
publish information that originated from another source”].)
Accordingly, section 230 protects an interactive computer service provider’s
curation of content on its platform from “ ‘ “claims that would place a computer service
provider in a publisher’s role. Thus, lawsuits seeking to hold a service provider liable for
its exercise of a publisher’s traditional editorial functions—such as deciding whether to
publish, withdraw, postpone or alter content—are barred.” ’ (Barrett, supra, 40 Cal.4th
at p. 43, quoting Zeran [v. America Online, Inc. (4th Cir. 1997) 129 F.3d 327,] 330
[(Zeran)]; Fair Housing Council of San Fernando Valley v. Roommates.com, LLC (9th
Cir. 2008) 521 F.3d 1157, 1170-1171 [‘any activity that can be boiled down to deciding
whether to exclude material that third parties seek to post online is perforce immune
under section 230’].)”4 (Murphy, supra, 60 Cal.App.5th at pp. 25-26.)
4
Following oral argument, Prager submitted notice of supplemental authority,
specifically Henderson v. The Source of Public Data (4th Cir. 2022) 53 F.4th 110(Henderson), in which the Fourth Circuit Court of Appeal reinterpreted Zeran to
conclude, “for § 230(c)(1) protection to apply, we require that liability attach to the
defendant on account of some improper content within their publication.” (Id. at p. 122;
contra, Monsarrat v. Newman (1st Cir. 2022) 28 F.4th 314, 316, 320 [following Zeran’s
inclusion of “determining whether to ‘publish’ certain information” in its list of “
‘traditional editorial functions’ ” in holding that a moderator’s decision to copy one
7
There being no dispute that defendants provide an “[i]nteractive computer service”
(§ 230(f)(2)) or that Prager is an “[i]nformation content provider” (§ 230(f)(3)) within the
meaning of the CDA, we turn to whether Prager’s claims treat defendants as a publisher
of Prager’s content.
1. Publisher of Information by Another Information Content Provider
Irrespective of Prager’s manner of framing its various causes of action, Prager’s
complaint first and foremost targets defendants’ election to “restrict, restrain, and censor
[its] content.” In applying section 230(c)(1) and (e)(3), “what matters is not the name of
the cause of action . . . what matters is whether the cause of action inherently requires the
court to treat the defendant as the ‘publisher or speaker’ of content provided by another.
To put it another way, courts must ask whether the duty that the plaintiff alleges the
defendant violated derives from the defendant’s status or conduct as a ‘publisher or
speaker.’ If it does, section 230(c)(1) precludes liability.” (Barnes, supra, 570 F.3d
1096, 1101-1102.) Whether styled as a violation of the California Constitution’s
guarantee of free speech and association, the Unruh Act’s antidiscrimination provisions,
the UCL, or defendants’ terms of service, the conduct Prager alleges is injurious consists
of defendants’ decisions regarding the audience to which videos would be published and
whether publication of the videos would include paid advertising. (See id. at p. 1103
[duty imposed by negligent undertaking claim derived from Yahoo’s conduct as a
publisher because the steps it took to depublish offensive profiles were the source of the
duty].) Because Prager seeks to hold defendants liable under state law for these editorial
publication decisions, section 230(c)(1) and (e)(3) forecloses relief. (See Barnes, supra,forum’s discussion threads and repost them on a new online platform was a publishing
decision “about what content to publish on the new platform”].) Henderson’s narrow
interpretation of section 230(c)(1) is in tension with the California Supreme Court’s
broader view (see Murphy, supra, 60 Cal.App.5th at pp. 24-26 [applying Barrett and
Hassell]), which we follow, absent a contrary ruling by the United States Supreme Court.
(See Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450.)
8
570 F.3d at pp. 1100, 1102, 1105; Murphy, supra, 60 Cal.App.5th at pp. 30, 34; Lewis,
supra, 461 F.Supp.3d at pp. 954-955.)
Prager’s contention that defendants are themselves an information content
provider—in that they developed algorithms used in determining whether to restrict
access to Prager’s videos—does nothing to defeat section 230 immunity. Prager pleads
no facts from which defendants’ use of algorithms would render them providers of
information content. What Prager alleges is the use of “an automated filtering algorithm
that examines certain ‘signals’ like the video’s metadata, title, and the language used in
the video. The algorithm looks for certain ‘signals’ to determine if rules or criteria are
violated so as to warrant segregation in Restricted Mode.” To the extent that an
automated filtering algorithm is itself information, defendants of course created it; what
is also apparent from Prager’s pleaded facts, however, is that defendants have not
“provided [it] through the Internet or any other interactive computer service” within the
meaning of section 230(f)(3), to Prager or anyone else: Prager complains that these “A.I.
‘algorithms’ and other machine-based . . . review tools”5 are “clandestine filtering
tools, . . . embedded with discriminatory and anti-competitive animus-based code,
including code that is used to identify and restrict content based on the identity,
viewpoint, or topic of the speaker.”
Moreover, even assuming defendants’ development of algorithms could be
deemed the provision of information content, Prager “cannot plead around section 230
immunity by framing these website features as content.” (Dyroff v. Ultimate Software
Group, Inc. (2019) 934 F.3d 1093, 1098 [rejecting claim that algorithms used to analyze
5
Prager suggests in its reply brief that Defendants also “embed metadata in the
videos.” To the extent that Prager could amend its operative complaint to plead such
facts, they are immaterial. Prager’s claims involve only Defendants’ publishing decisions
with respect to Prager’s content, not the code or metadata by which those decisions are
implemented.
9
and promote user content were themselves content].) “[W]hat matters is whether the
claims ‘inherently require[] the court to treat the defendant as the “publisher or speaker”
of content provided by another.’ [Citation.] If they do, then Section 230(c)(1) provides
immunity from liability.” (Ibid., quoting Barnes, supra, 570 F.3d at p. 1102.) “Merely
arranging and displaying others’ content to users . . . through such algorithms . . . is not
enough to hold [a service provider] responsible as the ‘develop[er]’ or ‘creat[or]’ of that
content.” (Force v. Facebook, Inc. (2d Cir. 2019) 934 F.3d 53, 70 [algorithms that
directed inflammatory Hamas postings to personalized newsfeeds of other users did not
defeat section 230 immunity from suit for ensuing terrorist attacks].) Prager cites no
authority for the proposition that algorithmic restriction of user content—squarely within
the letter and spirit of section 230’s promotion of content moderation—should be subject
to liability from which the algorithmic promotion of content inciting violence has been
held immune.
Prager’s claims turn not on the creation of algorithms, but on the defendants’
curation of Prager’s information content irrespective of the means employed: it is not the
algorithm but Prager’s content which defendants publish (or depublish). To the extent
Prager’s claims principally rest on allegations that defendants violated a duty under state
law to exercise their editorial control in a particular manner, defendants are immune
under section 230 from the claims Prager brings in this suit. (See Murphy, supra, 60
Cal.App.5th at pp. 26, 31.)
We therefore turn to Prager’s alternative legal theories for limiting the
applicability of section 230 to defendants’ exercise of discretion as publisher of Prager’s
content.
2. Contractual Exemption from CDA Immunity
Section 230(c)(1) and (e)(3) do not necessarily foreclose contractual claims,
however, where a computer service provider has agreed to limit its exercise of editorial
discretion according to bargained-for terms and conditions. (See Murphy, supra, 60
10
Cal.App.5th at pp. 28-30 [discussing Barnes].) From this principle, Prager asserts
various theories by which defendants’ terms of service would preclude reliance on
section 230 immunity as a defense to any of its state law causes of action. Each of
Prager’s theories is deficient as a matter of either law or pleading.
a. Waiver of Immunity
Prager’s first three causes of action are plainly not contractual claims, and its mere
assertion of a contractual theory of liability as its fourth cause of action does nothing to
alter the scope of CDA immunity as to its other claims. Prager suggests, however, that
the California choice-of-law provision in YouTube’s Terms of Service (YouTube TOS)6
implies defendants’ tacit agreement to waive CDA immunity as to all claims arising
under state law, rather than Prager’s agreement that California law would govern claims
arising under the contract. Prager’s argument “misapprehends the meaning of the choice-
of-law provision. ‘Through the Supremacy Clause, U.S. Const. Art. VI, cl. 2, the law of
any state includes federal law, and federal law is as much the law of a state “as laws
passed by the state legislature.” ’ [Citation.] ‘To the extent that a contractual choice-of-
law provision provides that the law of a specific state shall apply, this includes federal
law as well as state law.’ [Citation.]” (Divino Grp. LLC v. Google LLC (N.D. Cal. Sept.
30, 2022, No. 19-CV-04749-VKD) 2022 WL 4625076, at p. *15, 2022 U.S. Dist. LEXIS
180048, at p. *45, quoting Mudd-Lyman Sales & Serv. Corp. v. United Parcel Service
(N.D. Ill. 2002) 236 F.Supp.2d 907, 910.) “[T]he normal purpose of such choice-of-law
clauses is to determine that the law of one State rather than that of another State will be
applicable; they simply do not speak to any interaction between state and federal law.”
(Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Jr. Univ. (1989) 489 U.S. 468,
488 (dis. opn. of Brennan, J.).) Nothing in the choice-of-law provision can be read to
6
The YouTube TOS provides that it “shall be governed by the internal substantive
laws of the State of California, without respect to its conflict of laws principles.”
11
create a contractual right to subject defendants’ content moderation to state law claims
without operation of section 230(c)(1). (See George v. Automobile Club of Southern
California (2011) 201 Cal.App.4th 1112, 1128 [in the context of a demurrer, courts
consider whether a contract is reasonably susceptible to the plaintiff’s alleged
interpretation].)
We accordingly focus on Prager’s fourth cause of action—alleging defendants’
breach of the implied covenant of good faith and fair dealing—standing alone.
b. Prager’s Breach of Contract Claim
A state claim may not be barred by the CDA where “the duty the defendant
allegedly violated springs from a contract—an enforceable promise—not from any non-
contractual conduct or capacity of the defendant” as a publisher. (See Barnes, supra, 570
F.3d at p. 1107; Murphy, supra, 60 Cal.App.5th at p. 28-29.) But contract formation
requires a meeting of the minds: a promise that “ ‘is vague and hedged about with
conditions’ ” does not suffice. (Barnes, supra, 570 F.3d at pp. 1106, 1108.) Thus, the
Ninth Circuit in Barnes opined in dicta that “a general monitoring policy, or even an
attempt to help a particular person, . . . does not suffice to create contract liability. This
[would] make[] it easy for [a computer service provider] to avoid liability: it need only
disclaim any intention to be bound.” (Id. at p. 1108 [CDA did not preclude promissory
estoppel claim based on defendant’s breach of its employee’s promise to depublish
certain content]; see also Berenson v. Twitter, Inc. (N.D. Cal. Apr. 29, 2022, No. C 21-
09818 WHA) 2022 WL 1289049, at p. *2, 2022 U.S. Dist. LEXIS 78255, at p. *5
[reading Barnes to allow breach of contract and promissory estoppel “claims to go
forward despite Section 230, so long as they are properly pleaded under state law”].)
The Murphy court, and others, have held that the CDA foreclosed liability where
plaintiffs have identified no enforceable promise allegedly breached. (See Murphy, 60
Cal.App.5th at pp. 29-30.) “Murphy does not allege someone at Twitter specifically
promised her they would not remove her tweets or . . . suspend her account. Rather,
12
Twitter’s alleged actions in refusing to publish and banning Murphy’s tweets . . . ‘reflect
paradigmatic editorial decisions not to publish particular content’ that are protected by
section 230.” (Id. at p. 29; see also Cross v. Facebook, Inc. (2017) 14 Cal.App.5th 190,
195-196, 201-202, 206-207 [accord]; Enhanced Athlete Inc. v. Google LLC (N.D. Cal.
2020) 479 F.Supp.3d 824, 830, 832-833 (Enhanced Athlete) [accord].) Here, Prager’s
contractual theories are barred because they are irreconcilable with the express terms of
the integrated agreements.
i. Express Contractual Terms
What Prager argues is that its contractual claim is beyond the scope of
section 230(c)(1) because defendants are bound by a contractual promise to filter content
neutrally. What Prager alleged, however, is that the parties “entered into written
contracts” granting defendants “unfettered[] and unilateral discretion to remove, restrict,
demonetize, or de-emphasize content as defendants see fit.” Consistent with that
allegation, the written contracts governing Prager’s relationship with defendants—limited
to YouTube’s Terms of Service (YouTube TOS) and Google LLC’s AdSense Terms of
Service (AdSense TOS), which the trial court judicially noticed without objection—
contain no provision purporting to constrain defendants’ conduct as publishers.
On appeal, Prager now argues that the YouTube TOS and the AdSense TOS—by
virtue of their guidelines for users—impose binding limitations on defendants’ activities
as publishers of information via “express” “contractual promises to provide [Prager] with
identity neutral content moderation and access ‘governed by the internal substantive laws
of the State of California, without respect to its conflict of laws principles.’ ” Setting
aside the conflict between Prager’s allegations and its appellate arguments, the record
belies Prager’s revised reading of the contracts.7
7
The trial court granted Defendants’ unopposed request for judicial notice of
public webpages displaying, among other things, the YouTube TOS and AdSense TOS
and considered those documents in ruling on the demurrer. On appeal, Prager relies on
13
Defendants, according to the YouTube TOS, expressly reserved the rights to
“remove Content without prior notice” and “to decide whether Content violates these
Terms of Service for reasons other than copyright infringement” and “without prior
notice and in its sole discretion, [to] remove such Content and/or terminate a user’s
account for submitting such material in violation of these Terms of Service.” Similarly,
the AdSense TOS expressly permits defendants to “refuse or limit [users’] access to the
Services.” Prager does not identify any term in either TOS that would restrict how
defendants choose to moderate the content uploaded to YouTube.
Prager instead contends that this contractual reservation of rights is in conflict with
defendants’ Community Guidelines, which defendants styled as “some common-sense
rules that’ll help [users who post videos to YouTube] steer clear of trouble.” Users are
expected to “take these rules seriously” and to “try to respect the spirit in which they
were created.” The Community Guidelines warn that defendants may remove YouTube
videos that run afoul of its standards as to nudity or sexual content, harmful or dangerous
content, and hateful content. The Community Guidelines also provide that users may
flag content as inappropriate, as a result of which defendants’ staff will review the
content to assess whether it violates the Community Guidelines. Though consistent with
Prager’s assertion that YouTube makes public-facing representations giving the
impression that it voluntarily filters the content on its platform using a discrete set of
neutral policies, the Community Guidelines in no way purport to bind defendants to
publish any given video, or to remove a video only for violation of those guidelines.
Prager likewise contend that defendants, by their “Advertiser-friendly content
guidelines” for users, agreed to restrict their discretion under the AdSense TOS. As with
the judicially noticed materials to argue that it has viable contractual claims.
Accordingly, we consider the contracts that were before the trial court to assess whether
Prager may possess a viable contractual claim that is not barred by the CDA,
notwithstanding its allegations regarding the meaning of the contracts.
14
the Community Guidelines, Prager conflates user guidelines with provider duties. Prager
does not explain how defendants’ illustration in the guidelines of unsuitable content that
“will result in a ‘limited or no ads’ monetization state” confers on users a contractual
right that all other user content be monetized. At most, the Advertiser-friendly content
guidelines permit users to “request human review of [monetization] decisions made by
[defendants’] automated systems.” Thus, neither the Community Guidelines nor the
Advertiser-friendly guidelines conflict with or limit defendants’ express reservation of
rights.
Alternatively, Prager contends that defendants’ express reservations of rights does
not extend to the alleged conduct at issue in this action. In Prager’s view, that reservation
of rights applies only to platform-wide decisions as to particular content—defendants
may only ban a video in all iterations or demonetize a video wherever it appears but are
prohibited from restricting “audience reach” or demonetizing a video posted by one user,
while failing to demonetize it when posted by another. Leaving aside our doubts as to the
viability of Prager’s narrow reading of defendants’ express reservation of rights, Prager’s
line of argument presents the more fundamental problem under the CDA. Consistent
with the purposes of the CDA and the reasoning of Barnes and Murphy, the CDA may
permit a state law claim concerning publishing activity based on a specific contractual
promise, section 230 notwithstanding; this does not mean that the CDA requires an
express contractual reservation of publishing discretion as condition precedent to
section 230 immunity from state law claims. (See Barnes, supra, 570 F.3d at p. 1108;
Murphy, supra, 60 Cal.App.5th at pp. 29-30.)
ii. Implied Covenant
Under California law, every contract includes an implied covenant of good faith
and fair dealing. (Carma Developers (Cal.), Inc. v. Marathon Development California,
Inc. (1992) 2 Cal.4th 342, 371.) But the covenant “exists merely to prevent one
contracting party from unfairly frustrating the other party’s right to receive the benefits of
15
the agreement actually made.” (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 349,
italics omitted (Guz).) The implied covenant cannot “ ‘impose substantive duties or
limits on the contracting parties beyond those incorporated in the specific terms of their
agreement.’ (Guz, at pp. 349-350[.]) . . . [I]t will not be read into a contract to prohibit a
party from doing that which is expressly permitted by the agreement itself.’ ” (Hewlett-
Packard Co. v. Oracle Corp. (2021) 65 Cal.App.5th 506, 554.) Here, the contracts give
defendants “unfettered[] and unilateral discretion to remove, restrict, demonetize, or de-
emphasize content as [they] see fit[,]” just as in Enhanced Athlete, supra, 479 F.Supp.3d
824. Prager contends that the implied covenant of good faith and fair dealing obligated
defendants to make publishing decisions in a manner Prager alleges good faith requires.
Prager’s contractual claim is thus not for the enforcement of any express promise, but for
imposition of a duty that would be at odds with the express reservation of defendants’
unfettered discretion in making publishing decisions. Accordingly, Prager has not
identified a viable contractual theory that falls outside the scope of the CDA.
iii. Noncontractual Representations
Going beyond the contracts, Prager looks to various “promises” it alleges that
defendants made through public-facing comments. But, as Prager variously argues or
concedes, the parties entered integrated contracts expressly providing that the written
agreements, together with the materials incorporated by reference, constitute the “entire
agreement” concerning each relevant service. Consistent with its concession that the
parties entered integrated contracts, Prager has not articulated any basis for treating
defendants’ public-facing comments as contractual. (See, generally, Grey v. American
Management Services (2012) 204 Cal.App.4th 803, 807.)
Prager would also have us rely on email exchanges between its agents and
defendants’ customer support staff, who attempted to assure Prager that defendants “aim
to apply the same standards to everyone and . . . don’t censor anyone,” while also noting
that videos unavailable in Restricted Mode “are still freely available on the platform for
16
the vast majority of users.” While Prager strenuously disputes defendants’ good-faith
application of the “same standards to everyone,” Prager has not tethered these or any of
the various public-facing statements alleged in the complaint to its contractual theories of
liability. (Compare Kajima/Ray Wilson v. Los Angeles County Metropolitan
Transportation Authority (2000) 23 Cal.4th 305, 310 [elements of promissory estoppel
claim]; Barnes, supra, 570 F.3d at p. 1106.)
Consistent with Barnes and Murphy, we conclude that defendants’ generalized
public statements regarding their monitoring and filtering practices do not give rise to a
state law contractual obligation to regulate their publishing decisions. (See Barnes,
supra, 570 F.3d at p. 1108; Murphy, supra, 60 Cal.App.5th at pp. 29-30.)
iv. Section 230(e)(2) and Intellectual Property
Prager’s final theory in defense of its contractual claim posits that
section 230(c)(1) does not apply because section 230(e)(2) carves out intellectual
property law from the scope of the CDA. But the present dispute is not an intellectual
property dispute—Prager has not made, or sought leave to make, any claim regarding the
licensing provisions in any contract. Even if it were, the availability of such a claim may
not be material for CDA purposes. (See Enigma, supra, 946 F.3d at p. 1053 [section
230(e)(2) exception to immunity for intellectual property disputes was not intended to
cover intellectual property claims brought under state law].)
More importantly, pursuant to the YouTube TOS, Prager granted YouTube a
“non-exclusive . . . license to use, reproduce, distribute, prepare derivative works of,
display, and perform the Content in connection with the Service and [its] business”; it
further granted each YouTube user a “non-exclusive license to access [its] Content
through the Service, and to use, reproduce, distribute, display, and perform such content
as permitted through the functionality of the Service and under these Terms of Service.”
Those licenses “terminate within a commercially reasonable time after [Prager]
17
remove[s] or delete[s] [its] videos from the Service,” an event that Prager does not
suggest has occurred.
3. Fraudulent Conduct under the UCL
“The purpose of the UCL ‘is to protect both consumers and competitors by
promoting fair competition in commercial markets for goods and services.’ ” (Solus
Industrial Innovations, LLC v. Superior Court (2018) 4 Cal.5th 316, 340 (Solus).) To
that end, the UCL “ ‘provides an equitable means through which both public prosecutors
and private individuals can bring suit to prevent unfair business practices and restore
money or property to victims of these practices.’ ” (Ibid., italics omitted.) “The UCL
defines ‘unfair competition’ as ‘any unlawful, unfair or fraudulent business act or
practice and unfair, deceptive, untrue or misleading advertising.’ (Bus. & Prof. Code,
§ 17200.) By proscribing ‘any unlawful’ business act or practice (ibid.), the UCL ‘
“borrows” ’ rules set out in other laws and makes violations of those rules independently
actionable. [Citation.] However, a practice may violate the UCL even if it is not
prohibited by another statute. Unfair and fraudulent practices are alternate grounds for
relief. [Citation.]” (Zhang v. Superior Court (2013) 57 Cal.4th 364, 370 (Zhang); see
also Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143 (Korea
Supply) [UCL covers “ ‘ “ ‘ “anything that can properly be called a business practice and
that at the same time is forbidden by law” ’ ” ’ ”].)
Because each of Prager’s theories of defendants’ unlawful practices “borrows”
from the claims dispatched above that seek to regulate defendants’ publishing conduct
through a state law cause of action, these UCL theories are likewise barred by section
230. But Prager’s theory of UCL liability for fraudulent conduct is not subject to section
230 immunity, in that the act that would give rise to liability is not the exercise of
publishing discretion itself, but defendants’ misrepresentations regarding their exercise
that discretion—that is, misrepresentations about the character of defendants’ service.
(See Demetriades v. Yelp, Inc. (2014) 228 Cal.App.4th 294, 310, 313 [CDA does not
18
apply where “plaintiff seeks to hold Yelp liable for its own statements regarding the
accuracy of its filter”].) Prager has not, however, alleged facts supporting its standing to
raise this aspect of its UCL challenge.
“Standing under the UCL is . . . limited to those who have ‘suffered injury in fact
and [have] lost money or property as a result of . . . unfair competition.’ (Bus. & Prof.
Code, § 17204.) Accordingly, to bring a UCL action, a plaintiff must be able to show
economic injury caused by unfair competition. (Kwikset Corp. v. Superior Court [(2011)
51 Cal.4th 310, 326 (Kwikset).])” (Zhang, supra, 57 Cal.4th at p. 372.) The remedies
available in a UCL action are generally limited to injunctive relief and restitution, but
those remedies are cumulative of other remedies. (See De La Torre v. CashCall, Inc.
(2018) 5 Cal.5th 966, 980; Solus, supra, 4 Cal.5th at p. 341; Korea Supply, supra, 29
Cal.4th at p. 1144.)
In the operative pleading, Prager’s alleged injuries flowed not from any
misrepresentations defendants made about YouTube, but from defendants’ making
Prager’s videos unavailable in Restricted Mode and demonetizing Prager’s videos. These
allegations are insufficient. To challenge a business practice, a private plaintiff must
allege injury in fact caused by the practice in question. (See Kwikset, supra, 51 Cal.4th at
pp. 322, 326.)
Even so, we also consider the theories that have been addressed in the appellate
briefing, as they indicate how Prager might amend its complaint if it were given leave to
do so. (See Jane Doe No. 1 v. Uber Technologies, Inc. (2022) 79 Cal.App.5th 410, 429-
430 [considering proposed new allegations raised in appellate reply brief for the purpose
of assessing whether there was a reasonable possibility that a pleading defect could be
cured by amendment]; Russell City Energy Co., LLC v. City of Hayward (2017) 14
Cal.App.5th 54, 69-70 [if a defect in a complaint can reasonably be cured by amendment,
“then the judgment of dismissal must be reversed to allow the plaintiff an opportunity to
do so”].)
19
The arguments Prager made in opposition to the demurrer in the trial court and
before us on appeal confirm that Prager lacks standing to challenge misrepresentations
defendants made about YouTube. In the trial court, Prager contended that its UCL claim
was based primarily on defendants’ alleged misrepresentations regarding their operation
YouTube as an open “forum for ‘freedom of expression’ for all,” their use Restricted
Mode as a neutral content moderation tool, and the reasons that they restricted access to
Prager’s videos. In its appellate briefing, Prager stated that the injuries it alleged in its
complaint “were directly and proximately ‘caused by [defendants’] decisions to restrict
and/or demonetize [Prager’s] content.’ ” Prager says that “the harm and injuries alleged
flow directly from [defendants’] breaches of the Contracts, not ‘from [Prager’s] decision
to use YouTube.’ ” In other words, Prager alleges no harm from what the Ninth Circuit
has deemed defendants’ “lofty but vague statements” of “classic, non-actionable opinions
or puffery,” only from defendants’ exercise of publishing discretion. (See Prager
University, supra, 951 F.3d at p. 1000.)
Accordingly, the standing allegations in the complaint relate to a theory of liability
that is foreclosed by the CDA, and Prager has not alleged a basis for standing as to the
lone theory it has identified that is beyond the CDA’s reach.
4. First and Fourteenth Amendments
Anticipating our application of section 230 immunity, Prager argues that if
section 230 shields discriminatory publishing decisions from liability under state law,
then the CDA is perforce unconstitutional as applied.8 The thrust of Prager’s argument
appears to be that a court’s application of section 230 to bar state law claims targeting a
private actor’s discriminatory publishing decisions is itself a discriminatory state action
because it permits discrimination. As Prager would have it, (1) private discrimination
8
Prager makes no facial challenge to the immunity provisions in the CDA. (See
generally Tobe v. City of Santa Ana (1995) 9 Cal.4th 1069, 1084 [distinguishing facial
and as-applied challenges].)
20
based on content or identity discrimination violates state law, so (2) if section 230
immunizes that private content- or identity-based discrimination from state law claims,
then (3) section 230 violates the First and Fourteenth Amendments. We decline to
endorse this attempt to federalize state law claims and to relitigate First Amendment
claims already rejected by the Ninth Circuit in Prager University, supra, 951 F.3d 991).
To be clear: unlike Prager University, the instant case involves only state law
claims, which section 230(c)(1) and (e)(3) expressly preempt where inconsistent with the
purposes of the CDA. (See Murphy, supra, 60 Cal.App.5th at p. 24.) Prager’s invocation
of Title 42, United States Code section 1981 in its appellate briefing does nothing to alter
that fact (or our jurisdiction). Congressional authority to preempt state law is well settled
under the Supremacy Clause of the United States Constitution. (See Viva! Internat.
Voice for Animals v. Adidas Promotional Retail Operations, Inc. (2007) 41 Cal.4th 929,
935 (Viva!).) Section 230(c)(1) and (e)(3) reflect the unambiguous exercise of
Congress’s constitutional power to preempt state laws.9 (See Viva!, supra, 41 Cal.4th at
pp. 935-936 [discussing “species” of federal preemption].) We have no authority to
subvert the Supremacy Clause by claiming an amorphous constitutional imperative to
regulate, through the application of state law causes of action, conduct that the federal
government has claimed for its exclusive control. (See Murphy, supra, 60 Cal.App.5th at
p. 24 [describing preemptive effect of section 230(c)(1) and (e)(3)].)
Moreover, YouTube is not a state actor: the dismissal of Prager’s federal case
against defendants has already established that. (See Prager University, supra, 951 F.3d
at pp. 997-998.) Nor is section 230(c)(1) a “ban or restrict[ion on] any speech.” (Lewis
v. Google LLC (N.D. Cal. 2020) 461 F.Supp.3d 938, 953; see id. at p. 952.)
9
We have no occasion to pass upon the constitutionality of section 230(c)(2)
because that provision is unnecessary to our resolution of the present dispute. Nor do we
reach any other arguments regarding the application of section 230(c)(2) to this case.
21
Relying on Denver Area Educational Telecommunications Consortium, Inc. v.
F.C.C. (1996) 518 U.S. 727 (Denver Area), Prager contends that the CDA is
unconstitutional where a private party relies on the statute as a defense against a charge
of discriminatory conduct. Prager reads Denver Area too broadly. “ ‘[T]he epitome of a
splintered opinion,’ ” Denver Area comprises “a majority opinion as to only one issue,
plurality opinions as to others, and separate concurring and dissenting opinions,” none of
which garnered five votes on the issue of state action. (Roberts v. AT&T Mobility LLC
(9th Cir. 2017) 877 F.3d 833, 840.) Accordingly, “ ‘the holding of the Court may be
viewed as that position taken by those Members who concurred in the judgments on the
narrowest grounds’ ”—that “state action exists when ‘Congress singles out one sort of
speech for vulnerability to private censorship in a context where content-based
discrimination is not otherwise permitted.’ ” (Id. at pp. 840-841 [applying the
“common[-]denominator rule” of Marks v. United States (1977) 430 U.S. 188, 193].)
Consistent with the narrow holding properly attributable to Denver Area, the
United States Supreme Court later reaffirmed that whether a private actor’s allegedly
unconstitutional conduct “is fairly attributable to the State” requires “careful attention to
the gravamen of the plaintiff’s complaint.” (American Manufacturers’ Mutual Ins. Co. v.
Sullivan (1999) 526 U.S. 40, 51 (American Manufacturers).) Even for private businesses
that, like the cable system operators in Denver Area, are subject to government
regulation, “ ‘the mere fact that a business is subject to state regulation does not by itself
convert its action into that of the State for purposes of the Fourteenth Amendment.’ ” (Id.
at p. 52.) Rather, there must be “ ‘a sufficiently close nexus between the State and the
challenged action of the regulated entity so that the latter may be fairly treated as that of
the State itself.’ [Citation.] Whether such a ‘close nexus’ exists . . . depends on whether
the State ‘has exercised coercive power or has provided such significant encouragement,
either overt or covert, that the choice must in law be deemed to be that of the State.’
[Citation.]” (Ibid.)
22
The existence of such a close nexus eludes Prager. State action is absent here,
because social media platforms are generally permitted to decide for themselves what
content to publish. (See NetChoice, LLC v. Attorney General, Florida (11th Cir. 2022)
34 F.4th 1196, 1210, 1221 (NetChoice) [social media platforms “like . . . YouTube”
regularly make judgments about whether and to what extent they will publish information
to their users, and their ability to disseminate some messages but not others is recognized
and protected by federal law].) “Unlike the cable systems operators in Denver Area,
YouTube is not a government-regulated entity charged with providing public
broadcasting services. And unlike the statute at issue in Denver Area, which permitted
cable system operators to ban specific content, Section 230 of the CDA does not single
out particular types of speech as suitable for private censorship.” (Divino Group LLC v.
Google LLC (N.D. Cal. Jan. 6, 2021, No. 19-cv-04749-VKD) 2021 WL 51715, at p. *7,
2021 U.S. Dist. LEXIS 3245, at p. *21 (Divino I).) Rather, “Section 230 reflects a
deliberate absence of government involvement in regulating online speech[.] . . . Section
230 does not require private entities to do anything, nor does it give the government a
right to supervise or obtain information about private activity.” (Id., 2021 WL 51715, at
p. *6, 2021 U.S. Dist. LEXIS 3245, at p. *17.) Indeed, state incursions into defendants’
discretion to restrict content on its platform may pose a more significant First
Amendment concern than defendants’ restrictions. (See, e.g., NetChoice, supra, 34 F.4th
at pp. 1209-1210 [content-moderation restrictions applicable to social media platforms in
Florida statute were substantially likely to violate the First Amendment].)
Alternatively, Prager analogizes Shelley v. Kraemer (1948) 334 U.S. 1—in which
the Supreme Court held that judicial enforcement of racially restrictive covenants
constituted state action in violation of the Equal Protection clause—and argues that
defendants are likewise seeking to enforce a discriminatory contract. Even assuming
Prager were capable of amending its complaint to narrow its generic claims of “Protected
Identity” to a classification the Fourteenth Amendment treats as suspect, it is Prager that
23
claims a right to enforce what it would prefer to be the terms of the operative contract.
This alone divests Prager of any legitimate means of styling itself as the victim of Jim
Crow contract enforcement vis-à-vis defendants’ limited incursion on Prager’s ability to
realize ad revenue from YouTube views.
More to the point, the thrust of Prager’s argument is that the government has a
constitutional mandate to prevent private entities from discriminating on the basis of any
protected classification and the failure to do so—that is, the trial court’s dismissal of a
claim for relief from discrimination—is a state action in violation of that mandate. But
the logical corollary of the requirement of state action is the existence and persistence of
private discrimination that is beyond the reach of a self-executing constitutional right.
Put differently, while Congress can surely enact legislation to prevent and remedy
invidious discrimination (see, e.g., 42 U.S.C. § 2000e, et seq.), if it could be said that the
Constitution requires Congress to enact antidiscrimination legislation in all private
contexts, the state action requirement would be a nullity—the Constitution would
effectively ban all discrimination by both public and private actors because state action
would always be present. That is not the law. (See, e.g., Prager University, supra, 951
F.3d at pp. 997-999; Moose Lodge No. 107 v. Irvis (1972) 407 U.S. 163, 172-173; see
also Divino I, supra, 2021 WL 51715, at pp. *6-*7, 2021 U.S. Dist. LEXIS 3245, at
pp. *16-*22.)10
B. Leave to Amend
When a demurrer is sustained without leave to amend, “we decide whether there is
a reasonable possibility that the defect can be cured by amendment . . . .” (Blank v.
Kirwan (1985) 39 Cal.3d 311, 318 (Blank).) If a reasonable possibility is shown, the trial
10
Consistent with the foregoing, we need not and do not decide whether and to
what extent section 230(c)(1) precludes federal claims or to what extent federal law may
provide a remedy for the conduct alleged. (See, generally, Barnes, 570 F.3d at p. 1100,
fn. 4.)
24
court has abused its discretion. (Ibid.) However, “[t]he burden of proving such
reasonable possibility is squarely on the plaintiff.” (Ibid.) Prager asserts that “new
evidence, admissions, and accusations” about defendants “digital[] profil[ing]” and
discrimination have emerged since Prager filed its operative complaint. Although Prager
does not otherwise propose specific amendments to its complaint, Prager argues in its
reply brief that it can add allegations that defendants are “content creators” because they
embedded metadata and other information in Prager’s videos. Going further, we infer
that Prager would amend its complaint to conform with its theories of liability as
articulated in its appellate briefing. Nevertheless, consistent with the foregoing
substantive discussion, we discern no reasonable possibility that Prager can cure the
essential defects in its complaint. As Prager has not carried its burden, we conclude that
the trial court did not abuse its discretion in denying Prager leave to amend. (See ibid.)
First, Prager has not shown a reasonable possibility that its claims under the
California Constitution or the Unruh Act can evade the preemptive effect of the CDA.
Second, consistent with the judicially noticed contract documents, Prager has not shown a
reasonable possibility that it can assert viable contractual claims that are outside the
scope of the CDA. Third, Prager has not shown a reasonable possibility that it can allege
facts supporting its standing to pursue a UCL claim that is outside the scope of the CDA.
The trial court issued a written ruling that clearly articulated why Prager failed, in its
operative complaint, to allege facts supporting its standing to pursue a UCL claim based
on defendants’ alleged fraudulent misrepresentations. In its appellate briefing, Prager did
not articulate facts that it would allege, if given leave, to support standing. Rather,
Prager, in substance, confirmed that the trial court properly understood its allegations of
injury to flow not from the fraudulent misrepresentations, but from defendants’
publishing decisions. Accordingly, Prager has not shown a reasonable possibility that the
defects in its complaint can be cured by amendment.
25
III. DISPOSITION
We affirm the trial court’s entry of judgment pursuant to its order sustaining
defendants’ demurrer without leave to amend.
26
LIE, J.
WE CONCUR:
GREENWOOD, P.J.
WILSON, J.
Prager University v. Google LLC et al.
H047714
Trial Court: Santa Clara County
Superior Court No.: 19CV340667
Trial Judge: The Honorable Brian C. Walsh
Attorney for Plaintiff and Appellant Browne George Ross O’Brien
Prager University: Annaguey & Ellis LLP
Peter Obstler
Eric M. George
Debi A. Ramos
Ryan Q. Keech
Attorneys for Defendants and Respondents Wilson Sonsini Goodrich & Rosati
Google LLC et al.:
Fred A. Rowley, Jr.
David H. Kramer
Lauren Gallo White
Amit Q. Gressel
Attorneys for Amicus Curiae Electronic Frontier Foundation
Electronic Frontier Foundation:
Mukund Rathi
David A. Greene
Prager University v. Google LLC et al.
H047714