PASADENA, Calif. — The 9th Circuit Court of Appeals today heard oral arguments from the appellants and the U.S. government regarding the shutting down of the Backpage.com classifieds website and the seizure of millions of dollars in assets.
The ongoing legal saga, a case known as “USA vs. Larkin” after Jim Larkin, one of the Backpage owners with Michael Lacey, has been unraveling since the defendants’ March 28, 2018 indictment in Phoenix, Ariz.
Bob Corn-Revere, the attorney representing the former Backpage owners, argued in front of a three-judge panel. The judges were Milan Smith, Michelle Friedland and Carol Bagley Amon.
“We have asked the 9th circuit to vacate the stay that was issued by the district court preventing us from litigating the legality of the seizure of Backpage funds,” Paul Cambria, counsel for Lacey and part of the defense team, told XBIZ. “Today we asked the appellate court to vacate that, and the government conceded during oral arguments that we were correct.”
“The government was not effective at all and they conceded that the stay had to be vacated,” Cambria added.
“We’re going now to ask [the court] to expedite the proceeding so we can have our day in court and prove that the seizures were unlawful,” Cambria said. “It’s pretty clear that they’re gonna send it back to the district court, where we can make our argument that the seizures were unlawful and the government has to return the property.”
“At least something positive came out of this hearing.”
Now attorneys for both the former Backpage owners and the government have to wait for the Court of Appeals to rule.
The Real and the Hypothetical
The case, according to the defendants (in this part of the process called “apellants”), hinges on their interpretation of the rights of publishers, including websites. The First Amendment, they argue, protects “assets derived from publishing” and they are asking the government to prove “that the publishing ventures it targets are not constitutionally protected.”
Corn-Revere argued first for the appellants. He attempted to start a discussion of the First Amendment merits of the case but was cut short by the judges, who wanted to focus on the issue of their jurisdiction regarding the district court’s stay.
Instead of discussing the government seizure of Backpage assets or the nature of the “proceeds of publishing” in regards to the First Amendment, the judges led Corn-Revere into a series of arguments about a core issue. Corn-Revere insisted that the seizures were unlawful because his clients, who as publishers have special protection under the First Amendment, have not been found guilty, and the judges were trying to probe if he thought there were any extreme cases where the constitutional protection did not apply.
Judge Milan Smith, a 77-year-old former Republican Senator for Oregon, then strangely tried to steer Corn-Revere to what he called “a hypothetical case.”
“Let’s assume hypothetically you’ve been publishing the pictures of naked young women, clearly illegal, clearly illegal…,” Smith said from the bench.
Regardless of what Judge Smith thinks, it is not illegal to publish “pictures of naked young women” who are consenting adults.
“It was unfortunate that that wasn’t responded to,” Cambria told XBIZ after the hearing. “They can’t just allege that. It’s very unfortunate that that wasn’t addressed.”
Blindsided by the bizarre “hypothetical” example from Judge Smith (who, as a Mormon, is part of a community that spends vast amounts of money trying to drum up a bogus “public health crisis” around adult material) Corn-Revere once again stated that the government seized materials “pre-trial, and the whole purpose of the trial is to determine it’s illegal…”
But, argued the judges, now blurring the line between the “hypothetical” case and the actual Backpage case, “it was stipulated that it came from the sale of pictures of naked young women.”
At this point, the courtroom seemed confused as to what was being argued. One of the other judges tried to clarify Judge Smith’s “hypothetical example” by saying that the stipulation was that it was “illegal” material and “child pornography,” but the circular arguments continued.
The government’s position, presented by Peter Kosinetz and John Kucera, and argued by the former, did not seem to convince the judges, who were baffled by what seemed to be flip-flopping on the issue of their jurisdiction to hear the appeal.
“We said it should be stayed,” a nervous Kosinetz attempted to explain. “Now we agree that it shouldn’t be stayed.”
“This makes no sense,” said one of the judges, wondering what the government’s position was regarding their jurisdiction.
“There may be sufficient jurisdiction to send it back,” attempted Kosinetz.
“How would that work? We have ‘mini-jurisdiction’?” joked Judge Smith.
Once it was established that the government no longer contested the appeals court’s jurisdiction, the judges pointed out that the most likely course of action would be to return it to the district court.
“If we dismiss the appeal,” one of the judges said, “it would have the same effect as if we required more proceedings on the stay, because either way there would be more proceedings on the stay.”
Corn-Revere returned briefly after Kosinetz’s unconvincing presentation and the judges confronted him with the government’s allegation that since the prosecution had gotten “guilty pleas” from Backpage (the company), four related corporate entities and former CEO Carl Ferro (who cut a plea deal and appears to have turned against Lacey and Larkin), the asset seizure could be lawful.
Calling it “a fundamental First Amendment question,” Corn-Revere asked the court whether the government can simply justify the seizure of assets based on the allegation.
But what if Ferro and the corporate lawyers had pled that they “were publishing child pornography?” a judge asked.
“Those admissions,” repeated Corn-Revere, “have not been subjected to any kind of adversary process. Those admissions are inherently unreliable, and those pleas have not even been accepted.”
Calling the case “a very challenging, interesting area of the law,” Judge Smith adjourned the hearing.
A Drawn-Out Trial With Political Overtones
The actual origins of the “Backpage Case,” however, predate this trial and go back to the 2016 electoral cycle, when Kamala Harris expanded her national political profile by targeting the classifieds website via highly publicized accusations.
As XBIZ reported earlier this year (“Can Sex Workers Ever Trust Kamala Harris?”) in October 2016, while serving as California Attorney General, the allegedly liberal Democrat Harris teamed up with Tea Party Republican Ken Paxton, her Texan counterpart, to announce, with much fanfare, a raid of the Dallas headquarters of Backpage and the arrest of company CEO Carl Ferrer in Houston.
Harris charged Ferrer with facilitating a connection between sex workers and clients (i.e., “pimping”), conspiracy and a separate charge of pimping minors. Harris also charged Lacey and Larkin with conspiracy.
Many sex workers, realizing that Harris was intending to shut down all of Backpage's adult classifieds, organized protests against the arrests. They eloquently argued that shutting down Backpage would harm their lives and livelihoods, but Harris ignored her critics.
Harris' crusade was not new. Between 2011 and 2016, a number of legal challenges had been presented against Backpage, aiming to shut down the entire website on the grounds that it was used to advertise sex work in general.
Backpage managed to fend them off by invoking Section 230 of the Communications Decency Act of 1996, which was designed to target the people posting illegal ads (for non-consensual offers of sex work) but not the internet service providers.
A month later, a judge of the Superior Court of California granted Backpage’s request for dismissal. In December 2016, the charges were dismissed on the grounds that Section 230 was pretty clear and that Congress was responsible for changing it before Backpage could be prosecuted.
In December 2016 and January 2017, Harris filed new charges against Lacy, Larkin and Ferrer related to pimping and money laundering, including charging Ferrer with knowingly “pimping” six “minors.”
The new charges coincided with the publication of a congressional report called “Backpage.com Known Facilitation of Online Sex Trafficking.” Following the committee’s January 2017 report, released to much publicity in the chaotic period between the 2016 election and the inauguration, Backpage was pressured into voluntarily removing all of its “adult” sections, which had been used to offer all manner of arrangements between consenting adults.
Congress was, in fact, considering changes to Section 230. Ann Wagner, an extremely conservative Missouri Republican in the House, had introduced a bill she called the Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA).
FOSTA was combined with a similar project in the Senate, the Stop Enabling Sex Traffickers Act (SESTA), and the combined FOSTA-SESTA package passed the Senate in March 2018 and was signed into law by Donald Trump in April 2018.
The FBI immediately seized Backpage and raided Lacey’s home, charging him with money laundering. Ferrer cut a deal to plead guilty to conspiracy to facilitate prostitution and money laundering, in exchange for testifying against his former partners.
Sex workers condemned the shuttering of Backpage, arguing that it offered them a safer alternative to other places and platforms to offer their services.
For a complete video of today’s Backpage hearing, visit the U.S. Court for the 9th Circuit website (starts at 2:04:00).
