P. ex rel. Gascon v. HomeAdvisor, Inc. ( 2020 )

Filed 5/14/20 Modified and Certified for Partial Pub. 6/5/20 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
THE PEOPLE ex rel. GEORGE
GASCON, as District Attorney, etc., A154960
Plaintiff and Respondent,
(San Francisco County
v. Super. Ct. No. CGC-18-565008)
HOMEADVISOR, INC., et al.,
Defendants and Appellants.
The appellants in this case are HomeAdvisor, Inc., and its parent
company, ANGI Homeservices, Inc. (collectively, HomeAdvisor).
HomeAdvisor appeals an order granting a preliminary injunction. The
order enjoined HomeAdvisor from broadcasting certain advertisements, but,
with the exception of advertisements HomeAdvisor discontinued, it permitted
HomeAdvisor to continue broadcasting them for specified lengths of time if
accompanied by a disclaimer. HomeAdvisor contends the order is vague,
indefinite, overbroad, and unconstitutional. We affirm.
FACTUAL AND PROCEDURAL HISTORY
In March 2018, the People of the State of California, acting by and
through the District Attorney for the City and County of San Francisco (the
People) filed a complaint against HomeAdvisor alleging it engaged in conduct
in violation of California’s False Advertising Law (FAL), Business and
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Professions Code, section 17500 et seq., and the Unfair Competition Law
(UCL), id., section 17200 et seq. The complaint alleged many of
HomeAdvisor’s advertisements “are false and misleading because they are
likely to deceive consumers into believing that all service professionals hired
through HomeAdvisor who come into their homes have passed criminal
background checks. That is not the case. The only person who undergoes a
background check is the owner/principal of an independently-owned
business.”
The People applied for a temporary restraining order (TRO) and an
order to show cause (OSC) why a preliminary injunction should not issue. In
support of the application, the People submitted fifteen television
advertisements that refer to background checks. The People also submitted
thirteen internet advertisements that, for the most part, are modified
versions of the television advertisements, but which do not refer to
background checks. HomeAdvisor opposed the application. The trial court
did not grant the TRO, but issued the OSC.
I. HomeAdvisor’s Advertisements
The evidence supporting the People’s request for injunctive relief
included the following television advertisements:
In “Carl,” a middle-aged man explains he can’t always be there when
his mother needs help: “So when her roof started to leak I went to
HomeAdvisor and found the right pro to help. They are background
checked.”
In “Happy Homeowners,” a woman standing with two young children
states: “As a single mom, I love that HomeAdvisor does background checks
on pros.” The words “background checks” appear on the screen, and then the
advertisement cuts to a man who says, “Gives me peace of mind.”
2
In “Busy Mom,” a mother talks about the difficulty of finding time to do
home projects. She states: “But, thankfully, with HomeAdvisor, it’s easy to
find a local pro that I can trust—because they’ve been background-checked.”
In “TV Ad Featuring Jason Cameron,” a television show host tells the
viewers, “With HomeAdvisor you know that you’ll get a reliable pro because
they must pass criminal and financial background checks before they’re
listed.” Then a woman says, “As a single mom I have to be careful with who I
invite to my home.”
In “HomeAdvisor Testimonials,” another television show host, Amy
Matthews, states: “HomeAdvisor pros pass criminal and financial
background checks before they’re listed.” In “Pros You Can Trust,” the same
host states HomeAdvisor “instantly connects you with top-rated pros who
have passed criminal and financial background checks.” In “HomeAdvisor
Testimonials,” a woman standing in her bathroom says, “I love the fact that
they have been background-checked—that’s a great feeling.” In the same
advertisement, another woman standing in her kitchen says, “You can feel
safe with them coming into your home.”
A number of the advertisements feature neighbors or acquaintances
discussing the benefits of the service. In “Neighbors,” two women discuss
how HomeAdvisor connected one of them “with background-checked pros who
can help.” In “HomeAdvisor Millennial,” a man states: “HomeAdvisor
matches you with background-checked pros.” In “Bar-B-Que,” “Jogger,” and
“Mailboxes,” the advertisements state the viewer can “book a background-
checked home pro for free.”
In “Grateful Dad,” a father states HomeAdvisor has “verified reviews of
the pros, and they do background checks so you know you can trust them
with your home.” In “HomeAdvisor App–Free to Use,” a homeowner says,
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“And because pros on HomeAdvisor are background-checked, I feel confident
hiring them right when I need them.”
In addition to these fifteen television advertisements, the People
submitted a declaration averring that HomeAdvisor’s radio advertisements
discussed matching homeowners with prescreened and background-checked
professionals. HomeAdvisor’s mobile application stated, “Nationwide, we
have a network of hundreds of thousands of background-checked pros
specializing in more than 500 home renovation projects.”
II. HomeAdvisor’s Background-Check Process
Despite these representations, information available on HomeAdvisor’s
website explained that HomeAdvisor performs a background check on the
“owner/principal” of the businesses that are members of its network.
Subparagraph (f) of paragraph 10 of HomeAdvisor’s “Terms and Conditions”
stated that HomeAdvisor performs no background check when the businesses
are “employees, franchisees, dealers, or independent contractors . . . of larger
national or corporate accounts.”
In opposing the People’s request for injunctive relief, HomeAdvisor
provided additional information. According to a senior vice president, “[w]ith
only minor exceptions,” HomeAdvisor background checks the owner or
principal of “every service professional business seeking to become a member
of the HomeAdvisor network.” HomeAdvisor checks the “owner/principal’s
criminal record, sex offender status, civil judgments, and bankruptcies, and
verification of the owner/principal’s identity by SSN.” HomeAdvisor confirms
these businesses “carry any required state-level trade licenses and, as
applicable, that the entities are registered in the state where they are doing
business.” HomeAdvisor discloses this process on the “ ‘Screening’ ” page of
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its website, on its “Terms and Conditions” webpage, and on its “Help and
FAQ page.”
“HomeAdvisor also screens: (1) the license holder if there is a state-
level license, and (2) anyone whom the [business] adds to the account for
administrative purposes (e.g., putting the account on hold).” However, if a
“franchisee or a dealer is a corporate account,” then they are not subject to
HomeAdvisor’s background check policy.
According to HomeAdvisor, 75 percent of the businesses listed on its
network have “four or fewer total employees.” HomeAdvisor admits that
extending background checks to “all employees” of the businesses that are
part of its network “would impose substantial financial difficulties on
HomeAdvisor and would be impossible for HomeAdvisor to administer on an
operational level. Given that HomeAdvisor could not confirm the accuracy of
employee lists coupled with high turnover and seasonal hiring in the
industry, it would be effectively impossible for HomeAdvisor to keep track of
compliance.”
III. The Hearings on the Motion for a Preliminary Injunction
At the first hearing, on April 12, 2018, the court found HomeAdvisor’s
advertisements were misleading, but it also found “the statements on the
website cure that misleading nature except that they’re not in the ads
themselves and they’re not conspicuous.” The court continued: “So if we take
the statements from the website, we make them conspicuous, I think
everybody’s objective possibly could be realized here: the objective of the
People of not having misleading ads and the objective of HomeAdvisor also
not to have misleading ads and to be able to retain a large part of the
advertising work that they already have done.” The court proposed adding a
disclaimer to the advertisements.
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The court found the advertisements “have a misleading nature in
suggesting to the viewer or the hearer that every person who comes into the
home through the HomeAdvisor protocol has been screen-checked or
background-checked.” But the court was concerned to correct the problem in
a way “that causes less financial harm to HomeAdvisor.” The court
suggested the parties work on a stipulated injunction.
At the second hearing on April 18, 2018, the parties discussed their
attempts to come to an agreement regarding disclaimer language and its
placement. The court indicated the visual disclaimers had to be prominent
and the court and the parties discussed whether oral disclaimers were
necessary.
At the third hearing, on April 25, 2018, the People proposed the
disclaimer should state: “ ‘HomeAdvisor background checks business owners
but not employees.’ ” HomeAdvisor responded that some employees are
background-checked; namely, employees “allowed access to manage the
HomeAdvisor relationship.” But HomeAdvisor acknowledged it was a
“limited” number of employees.
At the fourth hearing, on May 8, 2018, the People and HomeAdvisor
submitted evidence of proposed modified advertisements with disclaimers.
For the disclaimer, HomeAdvisor proposed: “ ‘HomeAdvisor background
checks business owners and limited employees,’ ” or “ ‘HomeAdvisor
background checks business owners and account manager employees.’ ”
The court adopted the People’s proposal, which stated: “HomeAdvisor
background checks business owners but not employees.”
With regard to disputes pertaining to the visual and audio disclaimers,
the court continued the hearing so that the parties could prepare a list of
issues in dispute and the materials the court had to view to evaluate them.
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The parties discussed when the current advertisements would cease being
broadcast, and the length of time during which “HomeAdvisor would be
allowed to show the corrected ads.” The court deferred ruling on these issues
in dispute because “the most thoughtful adjudication” required the court “to
look at the full package.”
At the final hearing on May 10, 2018, the court indicated it had
reviewed all items on the parties’ joint agenda and their exhibits. The parties
debated whether certain advertisements needed an audio disclaimer as well
as a visual one. The parties discussed HomeAdvisor’s exhibits 17 to 25,
which were new advertisements that HomeAdvisor sought to broadcast for an
additional six months. The parties argued regarding visual aspects of the
disclaimer and its length, and the court received input from HomeAdvisor’s
chief marketing officer. The court ruled in favor of HomeAdvisor regarding a
proposed sunset date for the advertisements with disclaimers and an
implementation date for the preliminary injunction. The court ruled in favor
of the People regarding the language and visuals of the disclaimer.
IV. The Order Granting a Preliminary Injunction
After the hearings, the court entered a preliminary injunction against
HomeAdvisor. Based on the evidence presented by the parties, the court
found it was “reasonably probable that the People will prevail” on their FAL
and UCL claims “that members of the public are likely to be deceived by the
television, radio, and Apple App Store advertisements which are the subject
of the People’s motion. Thus, a rebuttable presumption arises that the
potential harm to the public from [HomeAdvisor’s] activities outweighs the
potential harm . . . from issuance of a preliminary injunction. . . . The Court
further finds that the Defendants have not shown that they would suffer
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grave or irreparable harm from the issuance of the preliminary
injunction . . . .”
“During the pendency of this action,” the court enjoined HomeAdvisor
from “[b]roadcasting into California” television or radio advertisements “that
state or imply that all service personnel who come to consumers’ homes as a
result of consumers’ having used the HomeAdvisor service have been
background-checked.” The court listed 24 examples of enjoined
advertisements, which included the 15 advertisements presented in the
application for a TRO, and nine additional advertisements presented by
HomeAdvisor during the final hearing. The court also enjoined HomeAdvisor
from “[i]ncluding in the description of the HomeAdvisor App in the Apple App
Store and the Google Play store words that state or imply that all service
personnel who come to consumers’ homes as a result of consumers’ having
used the HomeAdvisor service have been background-checked.”
However, the order contained safe harbor provisions for advertisements
that do not state or imply that all service personnel have been background-
checked, and for advertisements with disclaimers. The court identified 14
permissible advertisements, most of which are modified versions of the
enjoined advertisements. Most importantly, with the exception of
advertisements that HomeAdvisor discontinued,1 the court permitted
HomeAdvisor to continue broadcasting eight of the enjoined advertisements
for a period of over four months, and nine of the enjoined advertisements for
a period of over seven months, even though they mention background checks,
“as long as a clear and conspicuous visual disclaimer appears in each
1Based on exhibit A to HomeAdvisor’s proposed order granting the
preliminary injunction, the discontinued advertisements include “Carl,” “TV
Ad Featuring Jason Cameron,” “HomeAdvisor Testimonials,” “Pros You Can
Trust,” “Neighbors,” and “HomeAdvisor Millennial.”
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television and Internet advertisement that states: ‘HomeAdvisor
Background-Checks Business Owners But Not Employees.’ ”
The preliminary injunction order was dated May 23, 2018, and it
became effective on June 4, 2018. HomeAdvisor appeals the order. (Code
Civ. Proc., § 904.1, subd. (a)(6).)
DISCUSSION
On appeal, HomeAdvisor makes three arguments. First, it argues the
preliminary injunction is impermissibly vague, indefinite and overbroad.
Second, it argues the order violates the California Constitution and the First
Amendment of the United States Constitution. Third, HomeAdvisor
contends the injunction’s safe harbor disclaimer is misleading and constitutes
unconstitutional compelled speech. We address each argument in turn.
I. The Preliminary Injunction Is Not Impermissibly Vague,
Indefinite, or Overbroad
“An injunction must be sufficiently definite to provide a standard of
conduct for those whose activities are to be proscribed, as well as a standard
for the court to use in ascertaining an alleged violation of the injunction.”
(People ex rel. Dept. of Transportation v. Maldonado (2001) 86 Cal.App.4th
1225, 1234.) “An injunction which forbids an act in terms so vague that men
of common intelligence must necessarily guess at its meaning and differ as to
its application exceeds the power of the court.” (Pitchess v. Superior Court
(1969) 2 Cal.App.3d 644, 651.) However, “[t]he injunction need not etch
forbidden actions with microscopic precision, but may instead draw entire
categories of proscribed conduct. Thus, an injunction may have wide scope,
yet if it is reasonably possible to determine whether a particular act is
included within its grasp, the injunction is valid.” (People v. Custom Craft
Carpets, Inc. (1984) 159 Cal.App.3d 676, 681.)
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HomeAdvisor complains the trial court failed “to engage in
any . . . individualized examination of the advertisements or otherwise
to provide specific guidance on what it means to ‘imply’ that ‘all’ service
personnel have been background-checked.” HomeAdvisor argues the court
failed to distinguish “between advertisements that ‘state or imply that all
service personnel’ are background-checked and those that merely mention the
phrase ‘background checks.’ ” HomeAdvisor claims the order “contains no
definitions or guiding principles for HomeAdvisor to use to discern, much less
navigate, the boundary between mere mentions of the benefits of its
background-check program and prohibited implications about its scope.”
We disagree. Contrary to HomeAdvisor’s claims, the court did “get into
the weeds” by holding five hearings on the People’s request for injunctive
relief, by reviewing and comparing a plethora of advertisements and modified
versions, including versions prepared by HomeAdvisor, and by ruling on a
host of issues in dispute relating to the visual and audio aspects of
disclaimers.
The end result was a nuanced order that is not overbroad, and it does
not prohibit all mention of background checks. Instead, enjoined
advertisements and descriptions state HomeAdvisor background-checks
“pros” or that HomeAdvisor matches consumers with “background-checked
pros.” And the order did not simply ban these advertisements. With the
exception of advertisements that HomeAdvisor discontinued, the order’s safe
harbor provisions permitted HomeAdvisor to continue broadcasting
advertisements that refer to “background-checked pros” or its variants for
specified periods of time if accompanied by a disclaimer.
Nor is the order vague or indefinite. On the contrary, it is sufficiently
definite to provide a standard for HomeAdvisor to use in developing new
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advertisements, and for the court to ascertain any alleged violations of the
injunction. (People ex rel. Dept. of Transportation v. Maldonado, supra,
86 Cal.App.4th at p. 1234.) What the order enjoined is not the mere mention
of background checks, but rather advertisements that refer to “background-
checked pros,” or its variants, such as background-checked or prescreened
“ ‘home-improvement professionals’ ” or “ ‘home-improvement pros,’ ” because
these terms imply that the person who comes to the consumers’ home has
been background-checked. (Continental Baking Co. v. Katz (1968) 68 Cal.2d
512, 534 [“the language of the injunction must be interpreted in light of the
record which discloses the kind of conduct that was sought to be enjoined”].)
In arguing otherwise, HomeAdvisor relies primarily on ReadyLink
Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1026. But there the court
rejected the appellant’s contention that the preliminary injunction was vague
and ambiguous, “with the exception of certain language” that the court struck
from the order. (Id. at pp. 1011, 1026.) Here, HomeAdvisor does not identify
specific language that it contends should be stricken.
In People v. Columbia Research Corp. (1977) 71 Cal.App.3d 607, the
court found an order prohibiting the defendant from “ ‘describing any goods
or services . . . as “first class” unless such goods or services are equivalent to
the highest quality of goods or services offered within the geographic area
within which they are to be provided’ ” was not so vague and ambiguous as to
be void. (Id. at p. 613.) Similarly here, by providing a large number of
specific examples of permissible and impermissible advertising, the
preliminary injunction order is sufficiently definite for HomeAdvisor to
determine what it “may and may not do” pending a trial on the merits of the
People’s claims. (Continental Baking Co. v. Katz, supra, 68 Cal.2d at p. 534.)
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II. The Preliminary Injunction Order Is Not Unconstitutional
HomeAdvisor argues the preliminary injunction order “violates
HomeAdvisor’s rights under both the California and United States
Constitutions.” We disagree.
A. No Waiver of the Constitutional Argument
The People contend HomeAdvisor waived its First Amendment
challenge by making the argument for the first time on appeal. Whether we
should address constitutional arguments “rests within the court’s discretion.”
(Lopez v. McMahon (1988) 205 Cal.App.3d 1510, 1520–1521 [addressing
constitutional argument made for the first time on appeal].) California courts
“have several times examined constitutional issues raised for the first time
on appeal.” (Hale v. Morgan (1978) 22 Cal.3d 388, 394.)
In arguing HomeAdvisor waived the issue, the People rely on
California Assn. of Dispensing Opticians v. Pearle Vision Center, Inc. (1983)
143 Cal.App.3d 419, in which the court stated that “constitutional questions
should be raised at the trial court level or considered waived.” (Id. at p. 430.)
But, in the same opinion, the court addressed—and rejected—the defendant’s
First Amendment challenge to a preliminary injunction that, in part,
prohibited defendant’s advertisements. (Id. at pp. 432–433.) We exercise our
discretion to consider HomeAdvisor’s constitutional challenge.
B. The Constitutionality of Restrictions on Commercial Speech
Under the First Amendment, commercial speech is entitled to less
protection from governmental regulation than other forms of expression.
(Cent. Hudson Gas & Elec. Corp. v. Public Serv. Comm’n (1980) 447 U.S. 557,
562–563 (Central Hudson); Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 952
(Kasky).) When evaluating restrictions on commercial speech, the first
inquiry is “whether the expression is protected by the First Amendment. For
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commercial speech to come within that provision, it at least must concern
lawful activity and not be misleading. Next, we ask whether the asserted
governmental interest is substantial. If both inquiries yield positive answers,
we must determine whether the regulation directly advances the
governmental interest asserted, and whether it is not more extensive than is
necessary to serve that interest.” (Central Hudson, supra, 447 U.S. at
p. 566.)
“With regard to misleading commercial speech, the United States
Supreme Court has drawn a distinction between, on the one hand, speech
that is actually or inherently misleading, and, on the other hand, speech that
is only potentially misleading. Actually or inherently misleading commercial
speech is treated the same as false commercial speech, which the state may
prohibit entirely. [Citations.] By comparison, ‘[s]tates may not completely
ban potentially misleading speech if narrower limitations can ensure that
the information is presented in a nonmisleading manner.’ ” (Kasky, supra,
27 Cal.4th at p. 954.)
“[T]here can be no constitutional objection to the suppression of
commercial messages that do not accurately inform the public about lawful
activity. The government may ban forms of communication more likely to
deceive the public than to inform it.” (Central Hudson, supra, 447 U.S. at
p. 563.) If “advertising is inherently likely to deceive or where the record
indicates that a particular form or method of advertising has in fact been
deceptive,” the speech is unprotected. (In re R.M.J. (1982) 455 U.S. 191, 202.)
Once it is determined that commercial speech is inherently likely to deceive,
our inquiry ends because there is no First Amendment interest at stake.
(Central Hudson, at p. 566; In re R.M.J., at p. 203.)
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C. The Prohibited Advertisements Are Inherently Likely to
Mislead Reasonable Consumers
On appeal, HomeAdvisor admits that many of its advertisements refer
to “ ‘background-checked pros,’ ” or “ ‘prescreened’ pros,” or refer to “pros”
that have been background-checked. According to HomeAdvisor, these
advertisements communicate “entirely truthful information about
HomeAdvisor’s business” because HomeAdvisor “maintains a network of
approximately 200,000 service professional businesses that have been
background-checked.”
We are not persuaded. The enjoined advertisements and descriptions
are inherently likely to deceive because they exploit the ambiguity of the
term “pro.” According to HomeAdvisor, it offers a service that connects
“consumers with providers of home services such as plumbers, painters, [and]
contractors,” but, when HomeAdvisor uses the term “pros,” it means “service
professional businesses,” not the plumbers, painters, or contractors working
for these businesses.
It is reasonable to understand “pro” as an abbreviation for
“professional,” and a “professional” is commonly understood to be a person,
not a business. (Oxford English Dict. [defining a professional as a “person
who engages in a specified activity, especially a sport, as a paid occupation,”
or as a “person engaged in a profession, esp. one requiring special skill or
training”] [as of May 13, 2020].) A reasonable consumer would likely understand
“pros” to mean the persons or professionals coming to their home, not the
businesses for whom they work. Therefore, the advertisements that refer to
“background-checked pros,” or its variants, are inherently likely to deceive.
Accordingly, they are not entitled to First Amendment protection. (Central
Hudson, supra, 447 U.S. at p. 563; Kasky, supra, 27 Cal.4th at p. 952.)
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For the first time in its reply brief, HomeAdvisor argues that even if
“the phrase ‘background-checked pros’ is misleading because it does not
clearly refer to service professional businesses, the Order still must be
vacated because the phrase constitutes non-actionable puffery.” We decline
to consider the argument. (In re Groundwater Cases (2007) 154 Cal.App.4th
659, 693 [“Basic notions of fairness dictate that we decline to entertain
arguments that a party has chosen to withhold until the filing of its reply
brief, because this deprives the respondent of the opportunity to address
them on appeal.”].)
Other aspects of the enjoined advertisements make it even more likely
that reasonable consumers would be deceived or misled by them. Many of
the television advertisements display a graphic of search results, which
include images of individuals above the names of businesses, but the profile
pictures are of individuals, not businesses.2 “Pros You Can Trust” refers to
pros “who” have passed background checks, not pros “that” have done so.
Furthermore, a number of the advertisements, including “HomeAdvisor
Testimonials,” imply that consumers can feel more comfortable regarding the
persons who come to their homes because HomeAdvisor background-checks
“pros.”
HomeAdvisor states that “Pros You Can Trust,” is one of a number of
advertisements that HomeAdvisor voluntarily discontinued before the order
was issued, and that it was “improper to base injunctive relief” on
discontinued advertisements. But the order expressly took into account that
HomeAdvisor discontinued some of the advertisements. Except for
2Remarkably, HomeAdvisor argues this graphic would indicate to a
reasonable consumer that the term “background-checked pros” refers to
business entities, even though the profile pictures are of individuals.
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advertisements HomeAdvisor discontinued—as identified by HomeAdvisor in
exhibit A to its proposed order granting the injunction—the order’s safe
harbor provisions permitted HomeAdvisor to continue broadcasting existing
advertisements for periods ranging from approximately four to seven months
if accompanied by a disclaimer. The court included the safe harbor provisions
to allow HomeAdvisor to continue broadcasting advertisements during the
time needed to produce new advertisements, and to lessen the financial harm
to HomeAdvisor.
D. To Enter a Preliminary Injunction, the Court Was Not Required to
Review Evidence of Actual Consumer Harm
In arguing the order is unconstitutional, HomeAdvisor contends there
was no evidence its advertisements caused actual harm. But “[w]hether the
inherent character of a statement places it beyond the protection of the First
Amendment is a question of law which we must determine after
independently reviewing the record.” (People v. Morse (1993) 21 Cal.App.4th
259, 265.) Having independently reviewed the record, we conclude
HomeAdvisor’s references to “background-checked pros” or its variants are
inherently likely to deceive reasonable consumers. Therefore the
advertisements that include these statements are not entitled to protection
under the First Amendment or California’s Constitution.3 (Central Hudson,
supra, 447 U.S. at p. 563; Kasky, supra, 27 Cal.4th at p. 959.)
By faulting the court for entering a preliminary injunction order
without evidence of actual consumer harm, HomeAdvisor ignores the posture
of this case. “ ‘ “ ‘The granting or denial of a preliminary injunction does not
3Although California’s free speech provision may be broader than the
First Amendment, HomeAdvisor makes no specific argument to this effect,
and “we see no reason why . . . misleading advertisements would be protected
commercial speech under the California Constitution.” (In re Morse (1995)
11 Cal.4th 184, 200, fn. 4.)
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amount to an adjudication of the ultimate rights in controversy.’ ” ’ ” (Law
School Admission Council, Inc. v. State of California (2014) 222 Cal.App.4th
1265, 1280.) The court’s interlocutory decision on the likelihood that the
plaintiff will prevail at trial reflects nothing more than the court’s evaluation
of the controversy based on the record before it at the time of its ruling.
(People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 1109.)
In addition, this case concerns a preliminary injunction order sought by
a governmental entity alleging HomeAdvisor violated statutes—the FAL and
the UCL—that specifically provide for injunctive relief. (IT Corp. v. County of
Imperial (1983) 35 Cal.3d 63, 72.) “ ‘Where a governmental entity seeking to
enjoin the alleged violation of an ordinance which specifically provides for
injunctive relief establishes that it is reasonably probable it will prevail on
the merits, a rebuttable presumption arises that the potential harm to the
public outweighs the potential harm to the defendant. If the defendant
shows that it would suffer grave or irreparable harm from the issuance of the
preliminary injunction, the court must then examine the relative actual
harms to the parties.’ [Citations.]” (People ex rel. Feuer v. FXS Management,
Inc. (2016) 2 Cal.App.5th 1154, 1158–1159.)
Here, the court found HomeAdvisor failed to rebut the presumption
“that the potential harm to the public . . . outweighs the potential harm to
[HomeAdvisor] from issuance of a preliminary injunction.” During the fifth
hearing, HomeAdvisor acknowledged that “the harm that is at issue
here . . . is one that is based on a presumption, not an actual presentation of
harm.” The court was not required to consider evidence of actual consumer
harm.4
4 Because the advertisements are inherently likely to deceive, many of
the cases relied upon by HomeAdvisor are inapposite. (U.D. Registry, Inc. v.
State of California (2006) 144 Cal.App.4th 405, 412, 423 [undisputed that
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E. The Order Is Not an Invalid Prior Restraint
HomeAdvisor contends the preliminary injunction order is an
unconstitutional prior restraint on expression. We disagree.
“ ‘The term prior restraint is used “to describe administrative and
judicial orders forbidding certain communications when issued in advance of
the time that such communications are to occur.” [Citation.] Temporary
restraining orders and permanent injunctions—i.e., court orders that actually
forbid speech activities—are classic examples of prior restraints.’ [Citation.]
Nonetheless, the United States Supreme Court ‘has never held that all
injunctions are impermissible.’ [Citation.] ‘The special vice of a prior
restraint is that communication will be suppressed, either directly or by
inducing excessive caution in the speaker, before an adequate determination
that it is unprotected by the First Amendment.’ ” (DVD Copy Control Assn.,
Inc. v. Bunner (2003) 31 Cal.4th 864, 886.)
“ ‘Once specific expressional acts are properly determined to be
unprotected by the [F]irst [A]mendment, there can be no objection to their
subsequent suppression . . . .’ ” (Balboa Island Village Inn, Inc. v. Lemen
(2007) 40 Cal.4th 1141, 1156.) Thus, “an injunction issued following a
trial that determined that the defendant defamed the plaintiff that does no
more than prohibit the defendant from repeating the defamation, is not a
prior restraint and does not offend the First Amendment.” (Id. at p. 1148.)
In In re Marriage of Evilsizor & Sweeney (2015) 237 Cal.App.4th 1416, the
plaintiff’s consumer credit reports were not misleading]; Gerawan Farming,
Inc. v. Kawamura (2004) 33 Cal.4th 1, 22 [the right plaintiff “seeks to
exercise has nothing to do with . . . misleading speech”]; Baba v. Board of
Supervisors (2004) 124 Cal.App.4th 504, 509, 517 [affirming finding that rent
ordinance provisions were unconstitutional, and disagreeing with appellant
that provisions regulated only unlawful or misleading speech]; Larson v. City
& County of San Francisco (2011) 192 Cal.App.4th 1263, 1292 [“the speech in
question is neither misleading nor unlawful”].)
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court determined a restraining order was not an invalid prior restraint
because it prohibited conduct determined after a hearing to constitute abuse
under the Domestic Violence Prevention Act. (Id. at p. 1419.)
Here, after holding five hearings, the court found the People were
reasonably likely to prevail on their claims that members of the public are
likely to be deceived by advertisements that refer to “background-checked
pros” or its variants. “The government may ban forms of communication
more likely to deceive the public than to inform it.” (Central Hudson, supra,
447 U.S. at p. 563.) The First Amendment does not protect advertising that
is “likely to deceive.” (In re R.M.J., supra, 455 U.S. at p. 202.) Therefore, the
preliminary injunction order is not an invalid prior restraint because it does
not restrain “the type of ‘speech’ afforded constitutional protection.” (In re
Marriage of Evilsizor & Sweeney, supra, 237 Cal.App.4th at p. 1427.)
We recognize that “a court must tread lightly and carefully when
issuing an order that prohibits speech.” (Balboa Island Village Inn, Inc. v.
Lemen, supra, 40 Cal.4th at p. 1159.) “ ‘An order issued in the area of First
Amendment rights must be couched in the narrowest terms . . . . [It] must be
tailored as precisely as possible to the exact needs of the case.’ [Citations.]”
(Id.) An injunction may not be “broader than necessary to provide relief to
plaintiff while minimizing the restriction of expression.” (Id. at p. 1160.)
Here, these requirements are satisfied. As explained ante, the order
was not overbroad because, with the exception of advertisements
HomeAdvisor discontinued, its safe harbor provisions allowed HomeAdvisor
to continue broadcasting advertisements that refer to “background-checked
pros” or its variants for specified periods of time if accompanied by a
disclaimer. And the order expressly permitted HomeAdvisor to broadcast
advertisements that do not state that HomeAdvisor background-checks
19
“pros.” This narrowly-tailored injunction is not an unconstitutional prior
restraint.
Finally, we note the language prohibiting HomeAdvisor from
broadcasting advertisements “that state or imply that all service personnel
who come to consumers’ homes as a result of consumers’ having used the
HomeAdvisor service have been background-checked” was included in
HomeAdvisor’s proposed order granting a preliminary injunction. Thus, even
if this language could be construed as an invalid prior restraint on
expression, we presume HomeAdvisor invited the error. (Transport Ins. Co.
v. TIG Ins. Co. (2012) 202 Cal.App.4th 984, 1000 [“ ‘Under the doctrine of
invited error, when a party by its own conduct induces the commission of
error, it may not claim on appeal that the judgment should be reversed
because of that error.’ ”].)
III. The Safe Harbor Disclaimer
HomeAdvisor contends the safe harbor disclaimer is misleading and
constitutes unconstitutional compelled speech. We decline to address these
arguments because they are moot.
“[A]ppellate courts as a rule will not render opinions on moot
questions.” (Ebensteiner Co., Inc. v. Chadmar Group (2006) 143 Cal.App.4th
1174, 1178.) “The policy behind this rule is that courts decide justiciable
controversies and will normally not render advisory opinions.” (Id. at
p. 1179.) “If relief granted by the trial court is temporal, and if the relief
granted expires before an appeal can be heard, then an appeal by the adverse
party is moot.” (Environmental Charter High School v. Centinela Valley
Union High School Dist. (2004) 122 Cal.App.4th 139, 144.)
Here, HomeAdvisor’s ability to broadcast existing advertisements with
disclaimers expired on January 12, 2019, which was over a month before
20
HomeAdvisor filed its opening brief in this appeal. Therefore its objections to
the disclaimer are moot. HomeAdvisor does not offer any rebuttal in reply.
Therefore HomeAdvisor effectively concedes that its arguments regarding the
safe harbor disclaimer are moot, and we will not address them. (Campbell v.
Ingram (1918) 37 Cal.App. 728, 732 [“Since appellant has not deigned
to reply to the argument of respondent, we have a right to assume that the
former deems the argument of the latter unanswerable . . . .”].)
DISPOSITION
We affirm. The People are entitled to costs on appeal. (Cal. Rules of
Court, rule 8.278(a).)
21
_________________________
Jones, P. J.
WE CONCUR:
_________________________
Needham, J.
_________________________
Burns, J.
A154960
22
Filed 6/5/20
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
THE PEOPLE ex rel. GEORGE
GASCON, as District Attorney, etc.,
Plaintiff and Respondent, A154960
v. (San Francisco County
HOMEADVISOR, INC., et al., Super. Ct. No. CGC-18-565008)
Defendants and Appellants.
ORDER CERTIFYING OPINION FOR PARTIAL PUBLICATION
AND MODIFYING OPINION
[NO CHANGE IN JUDGMENT]
THE COURT:
The opinion in appeal No. A154960, filed on May 14, 2020, was not
certified for publication in the Official Reports. For good cause appearing,
pursuant to California Rules of Court, rules 8.1105(b), (c), and 8.1110, the
opinion is certified for partial publication. Accordingly, respondent’s request
for publication is GRANTED IN PART.
The nonpublished opinion, filed on May 14, 2020, is ordered modified.
On page 1, the introduction is deleted and replaced with the following new
introduction:
Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this
*
opinion is certified for publication with the exception of Discussion part III.
1
“We consider an order preliminarily enjoining a company from
broadcasting television or radio advertisements, or describing itself online,
using words and images that were alleged to be “false and misleading” in
violation of California’s False Advertising Law (FAL), Business and
Professions Code, section 17500 et seq., and the Unfair Competition Law
(UCL), id., section 17200 et seq. After holding five hearings, the trial court
enjoined HomeAdvisor, Inc., and its parent company, ANGI Homeservices,
Inc. (collectively, HomeAdvisor) from broadcasting certain advertisements,
but, with the exception of advertisements HomeAdvisor discontinued, it
permitted HomeAdvisor to continue broadcasting them for specified lengths
of time if accompanied by a disclaimer. HomeAdvisor contends the order is
vague, indefinite, overbroad, and unconstitutional. We disagree and affirm.”
On pages 1 to 2, the first sentence of the Factual and Procedural
History is deleted and replaced with the following new sentence:
“In March 2018, the People of the State of California, acting by and
through the District Attorney for the City and County of San Francisco (the
People) filed a complaint against HomeAdvisor alleging it engaged in conduct
in violation of the FAL and the UCL.”
These modifications effect no change in the judgment.
Dated: ______________ _________________________________, P. J.
2
Superior Court of the City and County of San Francisco, Hon. Harold E.
Kahn
Morgan, Lewis & Bockius, Collie Fitch James, IV, Adam D. Teitcher, Meghan
Lynn Phillips and Mark A. Feller, for Defendants and Appellants.
George Gascon, District Attorney, Evan H. Ackiron, Alethea Murray Sargent
and Ernst Andrew Halperin, Assistant District Attorneys, for Plaintiff and
Respondent.
3