Naaaom v. Charter Communications, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATIONAL ASSOCIATION OF AFRICAN No. 17-55723
AMERICAN-OWNED MEDIA, a
California Limited Liability D.C. No.
Company; ENTERTAINMENT STUDIOS 2:16-cv-00609-
NETWORKS, INC., a California GW-FFM
corporation,
Plaintiffs-Appellees,
OPINION
v.
CHARTER COMMUNICATIONS, INC., a
Delaware corporation,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted October 9, 2018
Pasadena, California
Filed November 19, 2018
Before: MARY M. SCHROEDER, MILAN D. SMITH,
JR., and JACQUELINE H. NGUYEN, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
2 NAAAOM V. CHARTER COMMUNICATIONS
SUMMARY *
Civil Rights
The panel affirmed the district court’s denial of a cable
television-distribution company’s motion to dismiss a claim
that its refusal to enter into a carriage contract with an
African American-owned operator of television networks
was racially motivated, and in violation of 42 U.S.C. § 1981.
Reconsidering the court’s approach to the causation
standard for § 1981 claims under Metoyer v. Chassman, 504
F.3d 919 (9th Cir. 2007), following the Supreme Court’s
decisions in Gross v. FBL Fin. Servs., Inc., 557 U.S. 167
(2009), and Univ. of Tex. Sw. Med. Ctr. v. Nassar, 570 U.S.
338 (2013), the panel held that a plaintiff need not plead that
racism was the but-for cause of a defendant’s conduct, but
only that racism was a factor in the decision not to contract
such that the plaintiff was denied the same right as a white
citizen. The panel concluded that Gross and Nassar
undercut Metoyer’s approach of borrowing the causation
standard of Title VII’s discrimination provision. The panel
instead looked to the text of § 1981, and it held that mixed-
motive claims are cognizable under § 1981.
The panel held that the plaintiffs’ allegations regarding
the defendant’s treatment of the African American-owned
operator, and its differing treatment of white-owned
companies, were sufficient to state a viable claim pursuant
to § 1981.
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
NAAAOM V. CHARTER COMMUNICATIONS 3
The panel also held that plaintiffs’ § 1981 claim was not
barred by the First Amendment. The panel concluded that
the fact that cable operators engage in expressive conduct
when they select which networks to carry did not
automatically require the application of strict scrutiny. The
panel concluded that at most intermediate scrutiny applied,
and § 1981 would satisfy intermediate scrutiny because it
was a content-neutral statute and was narrowly tailored to
serve a significant government interest in preventing racial
discrimination.
COUNSEL
Patrick Francis Philbin (argued), Galen B. Bascom, Devin S.
Anderson, and Jeffrey S. Powell, Kirkland & Ellis LLP,
Washington, D.C.; Mark C. Holscher, Kirkland & Ellis LLP,
Los Angeles, California; for Defendant-Appellant.
Erwin Chemerinsky (argued), Boalt Hall, University of
California, Berkeley, California; David W. Schecter, J. Mira
Hashmall, Brian A. Procel, and Louis R. Miller, Miller
Barondess LLP, Los Angeles, California; for Plaintiffs-
Appellees.
John Bergmayer, Public Knowledge, Washington, D.C., for
Amicus Curiae Public Knowledge.
4 NAAAOM V. CHARTER COMMUNICATIONS
OPINION
M. SMITH, Circuit Judge:
Plaintiff-Appellee Entertainment Studios Networks, Inc.
(Entertainment Studios), an African American-owned
operator of television networks, sought to secure a carriage
contract from Defendant-Appellant Charter Communications,
Inc. (Charter). These efforts were unsuccessful, and
Entertainment Studios, along with Plaintiff-Appellee
National Association of African American-Owned Media
(NAAAOM, and together with Entertainment Studios,
Plaintiffs), claimed that Charter’s refusal to enter into a
carriage contract was racially motivated, and in violation of
42 U.S.C. § 1981. The district court, concluding that
Plaintiffs’ complaint sufficiently pleaded a § 1981 claim and
that the First Amendment did not bar such an action, denied
Charter’s motion to dismiss. The court then certified that
order for interlocutory appeal. We have jurisdiction
pursuant to 28 U.S.C. § 1292(b), and we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual Background
Entertainment Studios is a full-service television and
motion picture company owned by Byron Allen, an African-
American actor, comedian, and entrepreneur. It serves as
both a producer of television series and an operator of
television networks, and currently operates seven channels
and distributes thousands of hours of programming.
Entertainment Studios relies on cable operators like
Charter for “carriage contracts”; these operators, which
range from local cable companies to nationwide enterprises,
carry and distribute channels and programming to their
NAAAOM V. CHARTER COMMUNICATIONS 5
television subscribers. Although Entertainment Studios
managed to secure carriage contracts with more than
50 operators—including prominent distributors like
Verizon, AT&T, and DirecTV—it was unable to reach a
similar agreement with Charter, the third-largest cable
television-distribution company in the United States, despite
efforts that began in 2011.
From 2011 to 2016, Charter’s senior vice president of
programming, Allan Singer, declined to meet with
Entertainment Studios representatives or consider its
channels for carriage. Plaintiffs alleged that, instead of
engaging in a meaningful discussion regarding a potential
carriage contract, Singer and Charter repeatedly refused,
rescheduled, and postponed meetings, encouraging
Entertainment Studios to exercise patience and proffering
disingenuous explanations for its refusal to contract.
Although Singer stated that Charter was not launching any
new channels and that bandwidth and operational demands
precluded carriage opportunities, Plaintiffs claimed that
Charter nonetheless negotiated with other, white-owned
networks during the same period, and also secured carriage
agreements with The Walt Disney Company and Time
Warner Cable Sports. Charter allegedly communicated that
it did not have faith in Entertainment Studios’ “tracking
model,” despite contracting with other white-owned media
companies that used the same tracking model. Plaintiffs also
asserted that Singer blocked a meeting between
Entertainment Studios and Charter CEO Tom Rutledge
because the latter “does not meet with programmers,”
despite the fact that Rutledge regularly met with the CEOs
of white-owned programmers, such as Viacom’s Philippe
Dauman. Singer was allegedly steadfast in his opposition to
Entertainment Studios, saying, “Even if you get support
6 NAAAOM V. CHARTER COMMUNICATIONS
from management in the field, I will not approve the launch
of your network.”
Plaintiffs claimed that they finally managed to secure a
meeting with Singer in July 2015. However, during the
meeting at Charter’s headquarters in Stamford, Connecticut,
Singer once again made clear that Entertainment Studios
would not receive a carriage contract, citing a series of
allegedly insincere explanations for this decision. For
example, Singer informed Entertainment Studios that he
wanted to wait and “see what AT&T does,” despite the fact
that AT&T already carried one of Entertainment Studios’
networks. Charter also mentioned its purported lack of
bandwidth, even though at that time, it expanded the
distribution of two lesser-known, white-owned channels into
major media markets: RFD-TV, a network focused on rural
and Western lifestyles, and CHILLER, a horror channel.
In addition to recounting Entertainment Studios’ failed
negotiations with Charter, Plaintiffs’ amended complaint
also included direct evidence of racial bias. In one instance,
Singer allegedly approached an African-American protest
group outside Charter’s headquarters, told them “to get off
of welfare,” and accused them of looking for a “handout.”
Plaintiffs asserted that, after informing Charter of these
allegations, it announced that Singer was leaving the
company. In another alleged instance, Entertainment
Studios’ owner, Allen, attempted to talk with Charter’s
CEO, Rutledge, at an industry event; Rutledge refused to
engage, referring to Allen as “Boy” and telling Allen that he
needed to change his behavior. Plaintiffs suggested that
these incidents were illustrative of Charter’s institutional
racism, noting also that the cable operator had historically
refused to carry African American-owned channels and,
prior to its merger with Time Warner Cable, had a board of
NAAAOM V. CHARTER COMMUNICATIONS 7
directors composed only of white men. The amended
complaint further alleged that Charter’s recently pronounced
commitments to diversity were merely illusory efforts to
placate the Federal Communications Commission (FCC).
II. Procedural Background
Plaintiffs initiated this action on January 27, 2016,
asserting both a claim against Charter under § 1981 and a
claim against the FCC under the due process clause of the
Fifth Amendment. 1 After learning of the derogatory racial
comments allegedly made by Singer and Rutledge, Plaintiffs
sought leave to file a first amended complaint (FAC), which
the district court granted. The FAC alleged one claim
against Charter for racial discrimination in contracting in
violation of § 1981.
Charter moved to dismiss the FAC, arguing that it failed
to plead that racial animus was the but-for cause of Charter’s
conduct and that the First Amendment barred a § 1981 claim
based on a cable operator’s editorial discretion. The district
court denied the motion. It determined that, under Metoyer
v. Chassman, 504 F.3d 919 (9th Cir. 2007), Plaintiffs needed
only to plead that racism was a motivating factor in Charter’s
decision, not the but-for cause—a requirement, the court
concluded, that Plaintiffs satisfied. Addressing Charter’s
contention that Metoyer was no longer good law following
two subsequent Supreme Court decisions, the district court
concluded that “if Metoyer is no longer good law on this
point, [then] the Ninth Circuit [] should announce that
conclusion.” As for Charter’s First Amendment challenge,
the district court allowed that the cable operator’s “ultimate
1
Plaintiffs voluntarily dismissed their claim against the FCC before
filing their first amended complaint.
8 NAAAOM V. CHARTER COMMUNICATIONS
carriage/programming activity is entitled to some measure
of First Amendment protection,” but declined to apply strict
scrutiny and bar the § 1981 claim.
Subsequently, Charter moved for certification of the
district court’s order under 28 U.S.C. § 1292(b), which the
district court granted. This appeal followed.
STANDARD OF REVIEW AND JURISDICTION
“We review de novo a district court order denying a
motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6).” Fortyune v. City of Lomita, 766 F.3d
1098, 1101 (9th Cir. 2014). We have jurisdiction pursuant
to 28 U.S.C. § 1292(b). 2
ANALYSIS
“Section 1981 offers relief when racial discrimination
blocks the creation of a contractual relationship.” Domino’s
Pizza, Inc. v. McDonald, 546 U.S. 470, 476 (2006). The
statute provides that “[a]ll persons . . . shall have the same
right in every State and Territory to make and enforce
contracts . . . as is enjoyed by white citizens . . . .” 42 U.S.C.
2
“A non-final order may be certified for interlocutory appeal where
it ‘involves a controlling question of law as to which there is substantial
ground for difference of opinion’ and where ‘an immediate appeal from
the order may materially advance the ultimate termination of the
litigation.’” Reese v. BP Expl. (Alaska) Inc., 643 F.3d 681, 687–88 (9th
Cir. 2011) (quoting 28 U.S.C. § 1292(b)). “Although we defer to the
ruling of the motions panel granting an order for interlocutory appeal,
‘we have an independent duty to confirm that our jurisdiction is proper.’”
Id. at 688 (quoting Kuehner v. Dickinson & Co., 84 F.3d 316, 318–19
(9th Cir. 1996)). Here, we are satisfied that the district court and the
motions panel of this court correctly concluded that certification under
§ 1292(b) was appropriate.
NAAAOM V. CHARTER COMMUNICATIONS 9
§ 1981(a). It further defines “make and enforce contracts”
as including “the making, performance, modification, and
termination of contracts, and the enjoyment of all benefits,
privileges, terms, and conditions of the contractual
relationship.” Id. § 1981(b). The Supreme Court has
emphasized that § 1981 reaches both public and “purely
private acts of racial discrimination.” Runyon v. McCrary,
427 U.S. 160, 170 (1976); see also 42 U.S.C. § 1981(c)
(“The rights protected by this section are protected against
impairment by nongovernmental discrimination and
impairment under color of State law.”). However, it
“reaches only purposeful discrimination.” Gen. Bldg.
Contractors Ass’n v. Pennsylvania, 458 U.S. 375, 389
(1982) (emphasis added). 3
Charter advances three primary arguments on appeal: the
district court applied the wrong causation standard to
Plaintiffs’ § 1981 claim; Plaintiffs’ FAC failed to plead a
plausible claim; and the First Amendment bars a § 1981
claim premised on a cable operator’s editorial decisions. We
will consider each of these arguments in turn.
I. Causation Standard
Charter argues that the Supreme Court’s decisions in two
discrimination cases require us to apply a but-for causation
standard to § 1981 claims. Although we agree that these
3
Although the Supreme Court has not squarely decided whether a
corporation may bring suit under § 1981, see Domino’s Pizza, 546 U.S.
at 473 n.1, we have held that a corporation may do so when it “has
acquired an imputed racial identity.” Thinket Ink Info. Res., Inc. v. Sun
Microsystems, Inc., 368 F.3d 1053, 1058–59 (9th Cir. 2004). Thus, as a
“100% African American-owned” company that is a “bona fide Minority
Business Enterprise,” Entertainment Studios can bring a § 1981 claim,
even though it is a corporation and not an individual.
10 NAAAOM V. CHARTER COMMUNICATIONS
precedents necessitate reconsideration of our § 1981
approach, we disagree that the but-for causation standard
should be applied.
A. Metoyer and the Motivating Factor Standard
In the past, we have held that “the same legal principles
as those applicable in a Title VII disparate treatment case”
govern a § 1981 claim. Metoyer, 504 F.3d at 930 (quoting
Fonseca v. Sysco Food Servs. of Ariz., Inc., 374 F.3d 840,
850 (9th Cir. 2004)). “In a Title VII discrimination case,
even an employer who can successfully prove a mixed-
motive defense, i.e., he would have made the same decision
regarding a particular person without taking race or gender
into account, does not escape liability.” Id. at 931; see also
42 U.S.C. § 2000e-2(m) (providing that a plaintiff can
prevail in a Title VII disparate treatment case by showing
“that race, color, religion, sex, or national origin was a
motivating factor for any employment practice, even though
other factors also motivated the practice”). Accordingly, we
previously ruled that a § 1981 defendant may be held liable
even if it had a legitimate reason for its refusal to contract,
so long as racial discrimination was a motivating factor in
that decision.
B. Gross and Nassar
Charter correctly notes that two Supreme Court
decisions cast doubt on the propriety of our application of
the Title VII standard to § 1981 claims. In these two cases,
the Supreme Court departed from application of the Title VII
motivating factor standard, and instead endorsed a but-for
causation requirement as applied to two federal statutes: the
Age Discrimination in Employment Act (ADEA), Gross v.
FBL Fin. Servs., Inc., 557 U.S. 167, 177–78 (2009), and
retaliation claims brought under Title VII, Univ. of Tex. Sw.
NAAAOM V. CHARTER COMMUNICATIONS 11
Med. Ctr. v. Nassar, 570 U.S. 338, 362–63 (2013). In Gross,
the Court admonished that “[w]hen conducting statutory
interpretation, we ‘must be careful not to apply rules
applicable under one statute to a different statute without
careful and critical examination.’” Gross, 557 U.S. at 174
(quoting Fed. Express Corp. v. Holowecki, 552 U.S. 389,
393 (2008)). That examination did not center on the shared
objectives of the statute at issue there and Title VII’s
antidiscrimination provision—the approach that this court
employed in Metoyer and its antecedents with regard to
§ 1981—but instead focused on the statute’s text and
history:
Unlike Title VII, the ADEA’s text does not
provide that a plaintiff may establish
discrimination by showing that age was
simply a motivating factor. Moreover,
Congress neglected to add such a provision to
the ADEA when it amended Title VII . . . .
Our inquiry therefore must focus on the text
of the ADEA to decide whether it authorizes
a mixed-motives age discrimination claim.
Id. at 174–75. In Nassar, the Court expanded upon this
textual analysis, explaining that
[i]n the usual course, [the causation] standard
requires the plaintiff to show “that the harm
would not have occurred” in the absence of—
that is, but for—the defendant’s conduct. . . .
This, then, is the background against which
Congress legislated in enacting Title VII, and
these are the default rules it is presumed to
12 NAAAOM V. CHARTER COMMUNICATIONS
have incorporated, absent an indication to the
contrary in the statute itself.
570 U.S. at 346–47.
In both cases, after analyzing the relevant statutory texts,
the Court endorsed the use of a default, but-for causation
standard in the application of the statutes being construed—
a standard from which courts may depart only when the text
of a statute permits. See Gross, 557 U.S. at 175 n.2 (“[T]he
textual differences between Title VII and the ADEA []
prevent us from applying [the motivating factor standard] to
federal age discrimination claims.”); Nassar, 570 U.S. at 352
(“Given the lack of any meaningful textual difference
between the text in this statute and the one in Gross, the
proper conclusion here, as in Gross, is that Title VII
retaliation claims require proof that the desire to retaliate
was the but-for cause of the challenged employment
action.”). 4
We conclude that Metoyer does not emerge from Gross
and Nassar unscathed. We premised our opinion in Metoyer
4
Plaintiffs argue that Gross and Nassar have no bearing here
because of the textual differences between the ADEA, the Title VII
retaliation provision, and § 1981. We disagree. Although it is true that
the use of the word “because”—which does not appear in § 1981—drove
the Court’s results in those cases, see Gross, 557 U.S. at 176–78; Nassar,
570 U.S. at 352, the decisions do not hold that the preceding inquiry only
occurs in cases where a statute features the word “because” or other
similar language. Indeed, in Nassar, the Court cautioned against reading
Gross in too narrow a manner. Nassar, 570 U.S. at 351 (“In Gross, the
Court was careful to restrict its analysis to the statute before it and
withhold judgment on the proper resolution of a case, such as this, which
arose under Title VII rather than the ADEA. But the particular confines
of Gross do not deprive it of all persuasive force.”).
NAAAOM V. CHARTER COMMUNICATIONS 13
on a determination that “an ‘[a]nalysis of an employment
discrimination claim under § 1981 follows the same legal
principles as those applicable in a Title VII disparate
treatment case.’” Metoyer, 504 F.3d at 934 (alteration in
original) (quoting Fonseca, 374 F.3d at 850). That opinion
followed a line of cases in which this court applied Title
VII’s causation standard to § 1981 cases because both
statutes sought to combat intentional discrimination. 5 This
approach is incompatible with Gross, which suggests that,
rather than borrowing the causation standard from Title
VII’s disparate treatment provision and applying it to § 1981
because both are antidiscrimination statutes, we must instead
focus on the text of § 1981 to see if it permits a mixed-motive
claim. See Gross, 557 U.S. at 174–75. 6
5
See, e.g., Fonseca, 374 F.3d at 850 (“Analysis of an employment
discrimination claim under § 1981 follows the same legal principles as
those applicable in a Title VII disparate treatment case. Both require
proof of discriminatory treatment and the same set of facts can give rise
to both claims.” (citation omitted)); Manatt v. Bank of Am., NA, 339 F.3d
792, 797–98 (9th Cir. 2003) (“We also recognize that those legal
principles guiding a court in a Title VII dispute apply with equal force in
a § 1981 action.”); EEOC v. Inland Marine Indus., 729 F.2d 1229, 1233
n.7 (9th Cir. 1984) (“A plaintiff must meet the same standards in proving
a § 1981 claim that he must meet in establishing a disparate treatment
claim under Title VII; that is, he must show discriminatory intent.”
(citing Gen. Bldg. Contractors Ass’n, 458 U.S. at 391)).
6
As another circuit court has concluded, “No matter the shared goals
and methods of two laws, [Gross] explains that we should not apply the
substantive causation standards of one anti-discrimination statute to
other anti-discrimination statutes when Congress uses distinct language
to describe the two standards.” Lewis v. Humboldt Acquisition Corp.,
681 F.3d 312, 318–19 (6th Cir. 2012) (en banc).
14 NAAAOM V. CHARTER COMMUNICATIONS
C. Departing from Metoyer
Although not addressed by the parties, a departure from
Metoyer is permissible here under our opinion in Miller v.
Gammie, which held that a higher court ruling is controlling
when it has “undercut the theory or reasoning underlying the
prior circuit precedent in such a way that the cases are clearly
irreconcilable.” 335 F.3d 889, 900 (9th Cir. 2003) (en banc).
Gross and Nassar are fairly clear that our approach in
Metoyer—borrowing the causation standard of Title VII’s
discrimination provision and applying it to § 1981 due to the
statutes’ shared objectives, without considering § 1981’s
text—is not permitted. See Nassar, 570 U.S. at 350–51;
Gross, 557 U.S. at 175–75 (“Our inquiry therefore must
focus on the text of the ADEA to decide whether it authorizes
a mixed-motives age discrimination claim.” (emphasis
added)).
Furthermore, in Gross, the Supreme Court determined
that borrowing the Title VII causation standard was
inappropriate in ADEA cases because 1) unlike Title VII’s
disparate treatment provision, the text of the ADEA did not
explicitly provide that “a plaintiff may establish
discrimination by showing that [the protected characteristic]
was simply a motivating factor,” and 2) the ADEA was not
amended to include a motivating factor standard even though
it was amended contemporaneously with Title VII. 557 U.S.
at 174–75. Because § 1981 shares these two characteristics
with the ADEA, 7 and because the Court determined that
Title VII’s standard could not be adopted in the ADEA
7
Like Title VII and the ADEA, § 1981 was amended as part of the
Civil Rights Act of 1991. See Pub. L. No. 102-166, 105 Stat. 1071,
1071–72 (1991).
NAAAOM V. CHARTER COMMUNICATIONS 15
context, Gross alone undermines Metoyer to the point of
irreconcilability.
D. Section 1981’s Text
Accordingly, rather than adopting Title VII’s motivating
factor standard in this case, we must instead look to the text
of § 1981 to determine whether it permits a departure from
the but-for causation standard.
Section 1981 guarantees “the same right” to contract “as
is enjoyed by white citizens.” 42 U.S.C. § 1981(a). This is
distinctive language, quite different from the language of the
ADEA and Title VII’s retaliation provision, both of which
use the word “because” and therefore explicitly suggest but-
for causation. Charter contends that the most natural
understanding of the “same right” language is also but-for
causation. We disagree and are persuaded by the reasoning
of the Third Circuit in Brown v. J. Kaz, Inc., 581 F.3d 175
(3d Cir. 2009). There, albeit in dicta and without formally
resolving the issue, the court reasoned that “[i]f race plays
any role in a challenged decision by a defendant, the plain
terms of the statutory text suggest the plaintiff has made out
a prima facie case that section 1981 was violated because the
plaintiff has not enjoyed ‘the same right’ as other similarly
situated persons.” Id. at 182 n.5; see also St. Ange v. ASML,
Inc., No. 3:10-cv-00079-WWE, 2015 WL 7069649, at *2
(D. Conn. Nov. 13, 2015) (“Where race discrimination is a
motivating factor in an adverse employment decision, the
subject of the discrimination has not enjoyed the same right
to the full and equal benefit of the law.”).
If discriminatory intent plays any role in a defendant’s
decision not to contract with a plaintiff, even if it is merely
one factor and not the sole cause of the decision, then that
plaintiff has not enjoyed the same right as a white citizen.
16 NAAAOM V. CHARTER COMMUNICATIONS
This, we conclude, is the most natural reading of § 1981.
Therefore, unlike the ADEA or Title VII’s retaliation
provision, § 1981’s text permits an exception to the default
but-for causation standard by virtue of “an indication to the
contrary in the statute itself.” Nassar, 570 U.S. at 347.
Accordingly, mixed-motive claims are cognizable under
§ 1981. Even if racial animus was not the but-for cause of a
defendant’s refusal to contract, a plaintiff can still prevail if
she demonstrates that discriminatory intent was a factor in
that decision such that she was denied the same right as a
white citizen.
II. Plausibility of Plaintiffs’ § 1981 Claim
Having determined that a plaintiff in a § 1981 action
need only prove that discriminatory intent was a factor in—
and not necessarily the but-for cause of—a defendant’s
refusal to contract, we must now determine whether
Plaintiffs pleaded a plausible claim for relief in their FAC.
We conclude that they did. Plaintiffs’ allegations regarding
Charter’s treatment of Entertainment Studios, and its
differing treatment of white-owned companies, are sufficient
to state a viable claim pursuant to § 1981.
A. Allegations of Disparate Treatment
Plaintiffs’ FAC alleged various instances of
contradictory, disingenuous, and disrespectful behavior on
the part of Charter and its executives. These allegations
include: a pattern of declining and delaying meetings with
Entertainment Studios, combined with a refusal to contract
despite presenting intimations to the contrary; the offering of
“provably false” explanations for its reluctance to carry
Entertainment Studios’ channels; and Singer’s repeated
misleading and insulting communications with
NAAAOM V. CHARTER COMMUNICATIONS 17
Entertainment Studios. We acknowledge that, even when
considered in the light most favorable to Plaintiffs, these
claims alone would not constitute a plausible § 1981 claim.
Corporate red tape, inconsistent decision-making among
network leadership, and even boorish executives are not
themselves necessarily indicative of discrimination.
However, Plaintiffs supplemented these claims by
pleading that white-owned companies were not treated
similarly. For example, the FAC stated that, although
Charter informed Entertainment Studios that bandwidth and
operational demands prevented carriage of the latter’s
channels, Charter secured contracts with “white-owned,
lesser-known” networks during the same period. 8 Charter
8
Charter argues that we cannot infer disparate treatment from these
allegations because “[t]he complaint fails to allege any facts whatsoever
showing that [Entertainment Studios’] channels are ‘similarly situated’
to the channels Charter added (or expanded) in respects such as content,
quality, popularity, viewer demand, or any objective metric relevant to a
carriage decision.” It is true that, in order for us to infer discriminatory
intent from these allegations of disparate treatment, we would need to
conclude that the white-owned channels were similarly situated to
Entertainment Studios’. See, e.g., Lindsey v. SLT L.A., LLC, 447 F.3d
1138, 1147 (9th Cir. 2006). It is also true that television networks can
vary widely in terms of content, quality, and appeal. See Herring Broad.,
Inc. v. FCC, 515 F. App’x 655, 656–57 (9th Cir. 2013) (exploring
various ways in which television networks can differ). However, such a
thorough comparison of channels would require a factual inquiry that is
inappropriate in reviewing a 12(b)(6) motion. See Earl v. Nielsen Media
Research, Inc., 658 F.3d 1108, 1114–15 (9th Cir. 2011) (describing the
fact-intensive, context-dependent analysis needed to determine whether
individuals are similarly situated in the related context of employment
discrimination). At this stage of the litigation, we must accept as true
Plaintiffs’ assertions that other, lesser-known, white-owned networks
were selected for carriage at the same time that Charter refused to carry
Entertainment Studios’ offerings.
18 NAAAOM V. CHARTER COMMUNICATIONS
also allegedly pointed to Entertainment Studios’ tracking
model as a ground for refusing to contract, while
simultaneously accepting white-owned channels that used
the same model. Plaintiffs further alleged that Charter’s
CEO, Rutledge, refused to meet with Entertainment Studios’
African-American owner, Allen, despite meeting with the
heads of white-owned programmers during the same time
period. We conclude that these allegations, when accepted
as true and viewed in the light most favorable to Plaintiffs,
are sufficient under § 1981 to plausibly claim that Charter
denied Entertainment Studios the same right to contract as
white-owned companies. 9
B. Charter’s Race-Neutral Explanations
Charter contends that we cannot ignore the legitimate,
race-neutral explanations for its conduct that are, admittedly,
present on the face of the FAC. These business justifications
include limited bandwidth, timing concerns, and other
operational considerations. However, at this stage, we are
not permitted to weigh evidence and determine whether the
explanations proffered by Plaintiffs or Charter are ultimately
more persuasive. Instead, we have explained that “[i]f there
are two alternative explanations, one advanced by defendant
9
Furthermore, Plaintiffs’ FAC also included direct allegations of
racial animus: specifically, the racially charged comments allegedly
made by Singer and Rutledge, both of whom were high-ranking Charter
decision-makers. Notably, neither of these incidents occurred in the
context of Entertainment Studios’ attempts to secure a carriage contract
with Charter, and they can therefore serve only as circumstantial
evidence of discriminatory animus. See, e.g., Godwin v. Hunt Wesson,
Inc., 150 F.3d 1217, 1221 (9th Cir. 1998); Nesbit v. Pepsico, Inc.,
994 F.2d 703, 705 (9th Cir. 1993). However, circumstantial evidence of
discrimination is still evidence, and is particularly compelling here when
combined with the allegations of disparate treatment contained
elsewhere in the FAC.
NAAAOM V. CHARTER COMMUNICATIONS 19
and the other advanced by plaintiff, both of which are
plausible, plaintiff’s complaint survives a motion to dismiss
under Rule 12(b)(6). Plaintiff’s complaint may be dismissed
only when defendant’s plausible alternative explanation is so
convincing that plaintiff’s explanation is implausible.” Starr
v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
Here, it is plausible that Charter’s conduct was
attributable wholly to legitimate, race-neutral
considerations. But we cannot conclude, based only on the
allegations in the FAC, construed in the light most favorable
to Plaintiffs, that those alternative explanations are so
compelling as to render Plaintiffs’ allegations of
discriminatory intent implausible. This is especially true
given that Plaintiffs’ allegations of disparate treatment and
disingenuous statements suggest that Charter’s race-neutral
explanations lack credibility. See Desert Palace, Inc. v.
Costa, 539 U.S. 90, 100 (2003) (“[E]vidence that a
defendant’s explanation for an employment practice is
‘unworthy of credence’ is ‘one form of circumstantial
evidence that is probative of intentional discrimination.’”
(quoting Reeves v. Sanderson Plumbing Prods., Inc.,
530 U.S. 133, 147 (2000))). In short, we can infer from the
allegations in the FAC that discriminatory intent played at
least some role in Charter’s refusal to contract with
Entertainment Studios, thus denying the latter the same right
to contract as a white-owned company. Charter’s race-
neutral explanations for its conduct are not so convincing as
to render Plaintiffs’ theory implausible. 10
10
Charter also relies in part on In re Century Aluminum Co.
Securities Litigation, in which we held that
20 NAAAOM V. CHARTER COMMUNICATIONS
III. First Amendment
Finally, Charter argues that Plaintiffs’ § 1981 claim is
barred by the First Amendment because laws of general
applicability cannot be used “to force cable companies to
accept channels they do not wish to carry.” We disagree and
conclude that the First Amendment does not bar Plaintiffs’
claim.
The Supreme Court has held that “[c]able programmers
and cable operators engage in and transmit speech, and they
are entitled to the protection of the speech and press
provisions of the First Amendment.” Turner Broad. Sys.,
Inc. v. FCC, 512 U.S. 622, 636 (1994); see also Hurley v.
Irish-Am. Gay, Lesbian & Bisexual Grp. of Boston, 515 U.S.
[w]hen faced with two possible explanations, only one
of which can be true and only one of which results in
liability, plaintiffs cannot offer allegations that are
“merely consistent with” their favored explanation but
are also consistent with the alternative explanation.
Something more is needed, such as facts tending to
exclude the possibility that the alternative explanation
is true, in order to render plaintiffs’ allegations
plausible within the meaning of Iqbal and Twombly.
729 F.3d 1104, 1108 (9th Cir. 2013) (citations omitted) (quoting Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009)). However, Century Aluminum is not
particularly persuasive here because we are not confronted with two
mutually exclusive possibilities. It is entirely possible that Charter was
motivated by both race-neutral business concerns and discriminatory
intent—a scenario that, given the applicable causation standard, would
still give rise to a viable claim under § 1981. Because both parties’
explanations can logically coexist, we conclude that Starr, not Century
Aluminum, provides the proper framework for our analysis. Plaintiffs
therefore do not need to provide facts “tending to exclude” Charter’s
theory of the case; it is sufficient under Starr that Plaintiffs’ explanation
is not implausible.
NAAAOM V. CHARTER COMMUNICATIONS 21
557, 570 (1995) (“Cable operators . . . are engaged in
protected speech activities even when they only select
programming originally produced by others.”). Because
Plaintiffs’ claim implicates the First Amendment, we must
determine the appropriate standard of review for our
analysis.
Here, there is some ambiguity as to whether rational
basis review or a heightened form of scrutiny ought to be
applied. Normally, laws of general applicability that
regulate conduct and not speech—such as § 1981—trigger
only rational basis review. See, e.g., Rumsfeld v. Forum for
Acad. & Institutional Rights, Inc., 547 U.S. 47, 62 (2006)
(“Congress . . . can prohibit employers from discriminating
in hiring on the basis of race. The fact that this will require
an employer to take down a sign reading ‘White Applicants
Only’ hardly means that the law should be analyzed as one
regulating the employer’s speech rather than conduct.”);
Cohen v. Cowles Media Co., 501 U.S. 663, 670–71 (1991)
(permitting application of a generally applicable law that had
an incidental effect on speech and contrasting it with laws
that “define[] the content of publications that would trigger
liability”).
In Hurley, however, the Supreme Court explained that
even generally applicable laws directed at conduct rather
than speech might implicate the First Amendment “[w]hen
the law is applied to expressive activity” in a way that
“require[s] speakers to modify the content of their
expression to whatever extent beneficiaries of the law
choose to alter it with messages of their own.” 515 U.S. at
578; see also Turner Broad., 512 U.S. at 640–41 (noting that
“the enforcement of a generally applicable law may or may
not be subject to heightened scrutiny under the First
Amendment” and contrasting Cohen, where enforcement of
22 NAAAOM V. CHARTER COMMUNICATIONS
a law did not directly impact expressive conduct, with
Barnes v. Glen Theatre, Inc., 501 U.S. 560, 566–67 (1991),
where expressive conduct was directly implicated). Here,
we conclude that resolution of this issue is not required,
since Plaintiffs’ § 1981 claim survives even a heightened
standard of review.
Contrary to Charter’s position, the fact that cable
operators engage in expressive conduct when they select
which networks to carry does not automatically require the
application of strict scrutiny in this case. If § 1981 is a
content-neutral statute, then, at most, it would be subject to
intermediate scrutiny. See Turner Broad., 512 U.S. at 642
(“[R]egulations that are unrelated to the content of speech
are subject to an intermediate level of scrutiny.”).
Accordingly, § 1981 would pass muster under the First
Amendment if it is content-neutral and if “it furthers an
important or substantial governmental interest; if the
governmental interest is unrelated to the suppression of free
expression; and if the incidental restriction on alleged First
Amendment freedoms is no greater than is essential to the
furtherance of that interest.” Id. at 662 (quoting United
States v. O’Brien, 391 U.S. 367, 377 (1968)).
A. Content Neutrality
Section 1981 does not seek to regulate the content of
Charter’s conduct, but only the manner in which it reaches
its editorial decisions—which is to say, free of
discriminatory intent. It is therefore “justified without
reference to the content of the regulated speech.” Clark v.
Cmty. for Creative Non-Violence, 468 U.S. 288, 293 (1984).
Just as “[n]othing in the [statute]” at issue in Turner
Broadcasting “imposes a restriction, penalty, or burden by
reason of the views, programs, or stations the cable operator
has selected or will select,” 512 U.S. at 644, nothing in
NAAAOM V. CHARTER COMMUNICATIONS 23
§ 1981 punishes a defendant for the content of its
programming. Section 1981 prohibits Charter from
discriminating against networks on the basis of race. This
prohibition has no connection to the viewpoint or content of
any channel that Charter chooses or declines to carry. See
Alpha Delta Chi-Delta Chapter v. Reed, 648 F.3d 790, 801
(9th Cir. 2011) (“[A]ntidiscrimination laws intended to
ensure equal access to the benefits of society serve goals
‘unrelated to the suppression of expression’ and are neutral
as to both content and viewpoint.” (quoting Roberts v. U.S.
Jaycees, 468 U.S. 609, 624 (1984))). Because it does not
rely upon the content of Charter’s expressive conduct,
§ 1981 is content-neutral.
B. Narrow Tailoring and Government Interest
Next, to satisfy intermediate scrutiny, a content-neutral
statute must be “narrowly tailored to serve a significant
governmental interest.” Clark, 468 U.S. at 293. The
Supreme Court has regularly emphasized that the prevention
of racial discrimination is a compelling government interest.
See, e.g., Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct.
2751, 2783 (2014) (“The Government has a compelling
interest in providing an equal opportunity to participate in
the workforce without regard to race, and prohibitions on
racial discrimination are precisely tailored to achieve that
critical goal.”); Bob Jones Univ. v. United States, 461 U.S.
574, 604 (1983) (“[T]he Government has a fundamental,
overriding interest in eradicating racial discrimination in
education.”). The Court has emphasized that this significant
interest applies even when expressive activities are
impacted:
[A]cts of invidious discrimination in the
distribution of publicly available goods,
services, and other advantages cause unique
24 NAAAOM V. CHARTER COMMUNICATIONS
evils that government has a compelling
interest to prevent—wholly apart from the
point of view such conduct may transmit.
Accordingly, like violence or other types of
potentially expressive activities that produce
special harms distinct from their
communicative impact, such practices are
entitled to no constitutional protection.
Roberts, 468 U.S. at 628. Thus, there can be little doubt that
§ 1981, which is part of a “longstanding civil rights law, first
enacted just after the Civil War” to “guarantee the then
newly freed slaves the same legal rights that other citizens
enjoy,” CBOCS W., Inc. v. Humphries, 553 U.S. 442, 445,
448 (2008), serves a significant government interest, and one
that is “unrelated to the suppression of free expression.”
Turner Broad., 512 U.S. at 662 (quoting O’Brien, 391 U.S.
at 377).
As for whether § 1981 is narrowly tailored to that
interest—in other words, whether “the incidental restriction
on alleged First Amendment freedoms is no greater than is
essential to the furtherance of that interest,” id. at 662
(quoting O’Brien, 391 U.S. at 377)—there can be no dispute
that the statute “promotes a substantial government interest
that would be achieved less effectively absent the
regulation,” which satisfies the requirement of narrow
tailoring. Ward v. Rock Against Racism, 491 U.S. 781, 799
(1989) (quoting United States v. Albertini, 472 U.S. 675, 689
(1985)). Such regulations are not “invalid simply because
there is some imaginable alternative that might be less
burdensome on speech.” Albertini, 472 U.S. at 689. Section
1981 does not restrict more speech than necessary; it
prohibits all racial discrimination in contracting, and the
Supreme Court has noted that “[a] complete ban can be
NAAAOM V. CHARTER COMMUNICATIONS 25
narrowly tailored, but only if each activity within the
proscription’s scope is an appropriately targeted evil.”
Frisby v. Schultz, 487 U.S. 474, 485 (1988). Here, the only
activity within § 1981’s ambit is discriminatory contracting,
which is, indisputably, an appropriately targeted evil.
Therefore, § 1981 is narrowly tailored and would survive
intermediate scrutiny.
In summation, as with the statute analyzed in Turner
Broadcasting, § 1981 is a content-neutral regulation that
would satisfy even intermediate scrutiny as set forth in
O’Brien and its progeny. Therefore, the First Amendment
does not bar Plaintiffs’ § 1981 claim.
CONCLUSION
We AFFIRM the district court’s order denying Charter’s
motion to dismiss, and REMAND for further proceedings.
We also DENY Plaintiffs’ motion to take judicial notice.