FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALBERTO R. GONZALES,* Attorney 

General, and the UNITED STATES

DEPARTMENT OF JUSTICE,

Defendants-Appellees, No. 04-16172

v. D.C. No.  CV-97-00281-WHA FREE SPEECH COALITION, on its own

behalf and on behalf of its OPINION

members; BOLD TYPE, INC.; JIM

GINGERICH; RON RAFFAELLI,

Plaintiffs-Appellants, 

Appeal from the United States District Court

for the Northern District of California

William H. Alsup, District Judge, Presiding

Argued and Submitted

April 13, 2005—San Francisco, California

Filed May 23, 2005

Before: Donald P. Lay,** Betty B. Fletcher, and

Michael Daly Hawkins, Circuit Judges.

Opinion by Judge Hawkins

*Alberto R. Gonzales is substituted for his predecessor, John Ashcroft,

as Attorney General of the United States, pursuant to Fed. R. App. P.

43(c)(2). 

**The Honorable Donald P. Lay, Senior United States Circuit Judge for

the Eighth Circuit, sitting by designation. 

5575
COUNSEL

Charles W. Scarborough, Civil Division, United States

Department of Justice, Washington, D.C., for the defendantsappellees. 

H. Louis Sirkin, Sirkin Pinales & Schwartz, Cincinnati, Ohio,

for the plaintiffs-appellants.

OPINION

HAWKINS, Circuit Judge:

The government appeals the district court’s award of attorneys’ fees to the Free Speech Coalition under the Equal

Access to Justice Act (“EAJA”) because the court held the

government was not “substantially justified” in defending the

Child Pornography Prevention Act (“CPPA”). We reverse.

Multiple objective indicia support the reasonableness of the

government’s position, including the novelty of the issue

involved and the government’s string of successes in defending the CPPA against constitutional attack. We conclude that

reasonable minds could have differed over the CPPA’s constitutionality, especially where four sister circuits, the district

court below, one member of the Ninth Circuit panel, and three

Ninth Circuit judges dissenting from denial of rehearing en

banc all determined the CPPA to be constitutional before the

Supreme Court ultimately struck two sections as unconstitutional. 

I. BACKGROUND

Before 1996, Congress defined child pornography as a

visual depiction that “involves the use of a minor engaging in

sexually explicit conduct.” See, e.g., 18 U.S.C. § 2256(8)(A)

(1994). Congress enacted the CPPA, 18 U.S.C. § 2251 et seq.,

5578 GONZALES v. FREE SPEECH COALITION
to address the issue of virtual child pornography. The CPPA

extended the definition of child pornography to include a

visual depiction that “is, or appears to be, of a minor engaging

in sexually explicit conduct,” 18 U.S.C. § 2256(8)(B) (2000),

or “is advertised, promoted, presented, described, or distributed in such a manner that conveys the impression that the

material is or contains a visual depiction of a minor engaging

in sexually explicit conduct.” 18 U.S.C. § 2256(8)(D) (2000).

Between 1999 and 2001, four Courts of Appeals sustained

the validity of the CPPA. See United States v. Fox, 248 F.3d

394, 406 (5th Cir. 2001) (“We hold that [the CPPA] is not

unconstitutionally overbroad.”); United States v. Mento, 231

F.3d 912, 923 (4th Cir. 2000) (“We hold that the CPPA does

not impermissibly regulate protected speech and does not,

therefore, offend the First Amendment.”); United States v.

Acheson, 195 F.3d 645, 652 (11th Cir. 1999) (“Given the lack

of any substantial overbreadth in light of the statute’s legitimate sweep, the CPPA withstands this constitutional challenge.”); United States v. Hilton, 167 F.3d 61, 74 (1st Cir.),

cert. denied, 528 U.S. 844 (1999) (“We conclude, therefore,

that the CPPA is not unconstitutionally overbroad.”); see also

Ashcroft v. Free Speech Coalition, 535 U.S. 234, 244 (2002)

(“While the Ninth Circuit found the CPPA invalid on its face,

four other Courts of Appeals have sustained it.”). 

The Free Speech Coalition (“Coalition”), a California trade

association for the adult-entertainment industry, challenged

the validity of the CPPA in the United States District Court

for the Northern District of California. The Coalition contended that the CPPA was unconstitutionally overbroad and

vague under the First Amendment because it defined child

pornography as including visual depictions of adults that

appear to be minors. 

The district court granted summary judgment to the government, holding that the CPPA was not overbroad. “It specifies

that only materials that do not use adults and that appear to

GONZALES v. FREE SPEECH COALITION 5579
be child pornography, even if they are digitally produced, are

prohibited.” Thus, the court found the CPPA “prohibits only

those works necessary to prevent the secondary pernicious

effects of child pornography from reaching minors.” 

The Ninth Circuit reversed. Free Speech Coalition v. Reno,

198 F.3d 1083 (9th Cir. 1999). The court held that the phrases

“appears to be” a minor, and “conveys the impression” that

the depiction portrays a minor, violated the First Amendment

for being vague and overbroad. Id. at 1086. Judge Ferguson

dissented on the grounds that (1) “Congress has provided

compelling evidence that virtual child pornography causes

real harm to real children” and “[a]s a result, virtual child pornography should join the ranks of real child pornography as

a class of speech outside the protection of the First Amendment,” and (2) the statutory terms of the CPPA were not substantially overbroad or void for vagueness. Id. at 1098

(Ferguson, J., dissenting).

The Ninth Circuit denied a petition for rehearing en banc.

Free Speech Coalition v. Reno, 220 F.3d 1113 (9th Cir.

2000). Three judges dissented from the denial of rehearing en

banc, pointing out that the panel opinion struck down provisions of the CPPA that had been upheld by the First and Eleventh Circuits. Id. at 1114 (Wardlaw, J., dissenting from the

denial of rehearing en banc). The dissent also argued that several Supreme Court cases cast doubt on the panel’s decision,

and that the Supreme Court had yet to address “virtual” as

opposed to “actual” child pornographic images. Id. at 1114-

15. Finally, the dissent made the practical argument that,

especially in the digital age, the distinction between what is

“actual” and what is “virtual,” may, as suggested by Judge

Ferguson’s dissent to the panel opinion, be difficult to discern. Id. at 1115. 

The Supreme Court granted certiorari, and held that

§§ 2256(8)(B) and 2256(8)(D) were overbroad and unconstitutional. Free Speech Coalition, 535 U.S. at 256, 258. The

5580 GONZALES v. FREE SPEECH COALITION
Court determined that the CPPA “extends to images that

appear to depict a minor engaging in sexually explicit activity

without regard” to the requirements of Miller v. California,

413 U.S. 15, 24 (1973),1 535 U.S. at 246, and that the CPPA

went “beyond” the definition of child pornography in New

York v. Ferber, 458 U.S. 747 (1982). 535 U.S. at 240. The

Court pointed out that Ferber relied on the distinction

between actual and virtual child pornography, citing virtual

images as an “alternative and permissible” means of expression. Id. at 251. Thus, the Court concluded that the CPPA “is

inconsistent with Miller and finds no support in Ferber.” Id.

The Supreme Court also rejected the government’s other

arguments to justify the prohibitions. Id. at 256.

Justice Thomas concurred in the judgment, stating that the

government’s “most persuasive asserted interest” in support

of the CPPA is the “prosecution rationale.” Id. at 259

(Thomas, J., concurring in the judgment). Justice Thomas

acknowledged that “technology may evolve to the point

where it becomes impossible to enforce actual child pornography laws . . . . In the event this occurs, the Government should

not be foreclosed from enacting a regulation of virtual child

pornography” addressing this problem. Id. 

Chief Justice Rehnquist, joined in part by Justice Scalia,

dissented, stating that “while potentially impermissible applications of the CPPA may exist, I doubt that they would be

‘substantial . . . in relation to the statute’s plainly legitimate

sweep.’ ” Id. at 273 (Rehnquist, C.J., dissenting) (omission in

original) (citation omitted). Justice O’Connor authored a concurrence in part, and dissent in part, in which the Chief Justice

and Justice Scalia joined in Part II, finding that the ban on virtual child pornography is not overbroad. Id. at 263

1Under Miller, the government must prove that the work taken as a

whole appeals to the prurient interest, is patently offensive in light of community standards, and lacks serious literary, artistic, political, or scientific

value. 413 U.S. at 24. 

GONZALES v. FREE SPEECH COALITION 5581
(O’Connor, J., concurring in the judgment in part and dissenting in part). 

After the Supreme Court’s decision, the Coalition filed a

petition for attorneys’ fees under the EAJA in the district

court. The district court awarded attorneys’ fees to the Coalition, finding that the government was not substantially justified in defending the CPPA because “the constitutional flaw

in the CPPA was recognizable from the start.” After the parties agreed on the amount of attorneys’ fees to be awarded,

the district court entered a final judgment awarding $143,423

to the Coalition. 

II. DISCUSSION

We review the district court’s conclusion that the government’s position was not “substantially justified,” thus warranting an award of attorneys’ fees under the EAJA, for an

abuse of discretion. Pierce v. Underwood, 487 U.S. 552, 562-

63 (1988); Bay Area Peace Navy v. United States, 914 F.2d

1224, 1230 (9th Cir. 1990). “An abuse of discretion occurs if

the district court based its decision on an erroneous legal conclusion or a clearly erroneous finding of fact.” Oregon Envtl.

Council v. Kunzman, 817 F.2d 484, 496 (9th Cir. 1987). 

Abuse of discretion is “a highly deferential standard,”

under which the appellate court cannot substitute its “view of

what constitutes substantial justification for that of the district

court”; rather, the review “is limited to assuring that the district court’s determination has a basis in reason.” Bay Area

Peace Navy, 914 F.2d at 1230 (quotation marks and citations

omitted). The government bears the burden of demonstrating

substantial justification. Kali v. Bowen, 854 F.2d 329, 332

(9th Cir. 1988). 

[1] The EAJA provides that in an action against the United

States, a prevailing party, other than the United States, is entitled to recover attorneys’ fees “unless the court finds that the

5582 GONZALES v. FREE SPEECH COALITION
position of the United States was substantially justified or that

special circumstances make an award unjust.” 28 U.S.C.

§ 2412(d)(1)(A). The test for whether the government is substantially justified is one of “reasonableness.” League of

Women Voters of Cal. v. FCC, 798 F.2d 1255, 1257 (9th Cir.

1986). Substantially justified does not mean “ ‘justified to a

high degree,’ but rather ‘justified in substance or in the main’

— that is, justified to a degree that could satisfy a reasonable

person.” Pierce, 487 U.S. at 565. Put another way, substantially justified means there is a dispute over which “reasonable minds could differ.” See League of Women Voters, 798

F.2d at 1260. 

[2] “[T]he defense of a congressional statute from constitutional challenge will usually be substantially justified.” Id. at

1259. “[I]n determining the appropriateness of an award of

attorneys’ fees, both the reasonableness of the statute and the

reasonableness of the conduct of the government in this litigation attacking it” should be considered. Id. “ ‘[O]bjective indicia’ such as the terms of a settlement agreement, the stage in

the proceedings at which the merits were decided, and the

views of other courts on the merits” can be relevant, but not

necessarily dispositive. Pierce, 487 U.S. at 568. “[A] string of

losses can be indicative; and even more so a string of successes.” Id. at 569. When objective indicia do not provide a conclusive answer, the court proceeds to the merits of the

government’s litigating position. Id. 

The district court set forth several reasons why it viewed

the government’s position as not substantially justified. Each

reason is considered in turn. 

A. Discounting of the Government’s “String of Successes”

and Other Objective Indicia of Substantial Justification

[3] The district court noted that the “government counsel

behaved in an appropriate manner in constructing nonfrivolous arguments to defend the CPPA.” In Kali, the court conGONZALES v. FREE SPEECH COALITION 5583
sidered that the government had “argued forcefully and well,”

despite a loss on the merits, as one indicator of the reasonableness of the government’s position. 854 F.2d at 334-35.

Here, despite finding the government’s arguments “no more

unreasonable than the statute they had to defend,” the court

discounted the reasonableness of the government’s arguments

based on the court’s perception of a “constitutional flaw foreseeable from the outset.” This characterization relied too

heavily on hindsight, as discussed in the next Section. 

The district court conceded that the government’s “string of

successes” in upholding the CPPA’s constitutionality, before

the Ninth Circuit found the statute overbroad, “would ordinarily tempt a district judge to indulge a presumption that the

statute had plausible constitutionality and that the government’s defense had been reasonable, even if unsuccessful.”

The court was aware that four Courts of Appeals declined to

hold the statute overbroad, as did the district court below. And

the court, citing Pierce, 487 U.S. at 569, acknowledged that

“a string of successes” can be an objective indicator of reasonableness under Supreme Court law. 

Yet the court declined to accord any presumption of reasonableness from these successes, reframing them as near

losses. The district court proposed that circuit courts upholding the CPPA’s constitutionality “recognized the important

First Amendment problem raised by the statute,” and that “the

constitutional flaw in the CPPA was recognizable from the

start, the only issue left for debate being how to remedy the

flaw.” But the Supreme Court, to which the district court

pointed for guidance on the merits, did not view the circuit

opinions in this way, simply observing that four circuits had

“sustained” the constitutionality of the CPPA. Free Speech

Coalition, 535 U.S. at 244. 

[4] The district court also understood that the Ninth Circuit

panel opinion was split, two-to-one. By noting the lack of

unanimity in the Ninth Circuit panel decision, the court

5584 GONZALES v. FREE SPEECH COALITION
implicitly acknowledged the significance of a split decision as

an indicator of the reasonableness of the government’s position. See Bay Area Peace Navy, 914 F.2d at 1231 (disagreement within a panel regarding the merits of the government’s

appeal suggests a finding of substantial justification). The

court did not appear to factor in this indication of reasonableness. 

[5] Finally, the district court seemed to overlook two other

objective indicia of reasonableness. First, the issue of virtual

child pornography and the constitutionality of the CPPA was

novel. See Edwards v. McMahon, 834 F.2d 796, 802-03 (9th

Cir. 1987) (abuse of discretion in granting attorneys’ fees in

“matter of first impression”); Hoang Ha v. Schweiker, 707

F.2d 1104, 1106 (9th Cir. 1983) (abuse of discretion in fee

grant where government advanced “a novel but credible

extension or interpretation of the law” (quotation marks and

citation omitted)). The government argued for a credible

extension of Ferber based on policy arguments and supporting statements from a subsequent Supreme Court case,

Osborne v. Ohio, 495 U.S. 103 (1990). The Hilton court

stated precisely that:

The legal issues presented in this case, including

Congress’s justifications offered for extending child

pornography statutes to stem the flow of virtual child

pornography, have not been analyzed by this, or any

other, court of appeals. 

We think that it is a logical and permissible extension of the rationales in Ferber and Osborne to allow

the regulation of sexual materials that appear to be

of children but did not, in fact, involve the use of

live children in their production.

167 F.3d at 73 (footnote omitted). At the very least, “reasonable minds could differ” over the credibility of this novel

argument — Judge Ferguson’s dissent and the dissent from

GONZALES v. FREE SPEECH COALITION 5585
the denial of the rehearing en banc prove this, along with the

four circuit court opinions sustaining the constitutionality of

the CPPA. 

Of no small moment, two circuits upheld the CPPA after

the Ninth Circuit found it unconstitutional. United States v.

Marolf, 277 F.3d 1156, 1162-63 (9th Cir. 2002), weighed, as

“an additional indication of reasonableness,” that one circuit

adopted the government’s position after a Ninth Circuit panel

went the other way. Id. at 1163. Here, after the Ninth Circuit

panel decided against the government in 1999, two circuits

went the other way: the Fourth Circuit in 2000, and the Fifth

Circuit in 2001.2

[6] Despite these objective indicia of substantial justification, the district court dismissed them as inconclusive. Given

the government’s appropriate arguments in defense of the

CPPA, the “string of successes” in four circuit courts and the

district court below, a split panel decision, and numerous

other objective indicia of reasonableness, the district court’s

conclusion that the government’s position was not substantially justified was not supported by the record.

B. Hindsight

[7] The district court examined the underlying merits of the

case, using the clear holdings of the Supreme Court as a

guide: “[I]t is best to start with the final word by the Supreme

Court. That Court’s opinion (and the separate opinions) illuminated the merits and the boundaries of reasonableness more

definitely and dispositively than the earlier circuit orders.” To

be sure, the Supreme Court soundly rejected the government’s

arguments. But relying on the Supreme Court opinion and the

“clarity of the holding” puts too much weight on the government’s ultimate loss. As the district court correctly recited the

law, that the government lost “does not raise a presumption

2

See Mento, 231 F.3d 912, and Fox, 248 F.3d 394. 

5586 GONZALES v. FREE SPEECH COALITION
that its position was not substantially justified.” Kali, 854

F.2d at 334. 

[8] By putting undue weight on the Supreme Court’s holding on the merits, the district court seemed to rely on hindsight, rather than an assessment of the reasonableness of the

government’s position at the time of the litigation. Cf. Taucher v. Brown-Hruska, 396 F.3d 1168, 1175 (D.C. Cir. 2005)

(“In considering substantial justification under EAJA, however, it is not enough to repeat the analysis of the merits decision, and add adjectives.”) “Here as in other areas courts need

to guard against being subtly influenced by the familiar shortcomings of hindsight judgment.” Id. at 1173 (quotation marks

and citation omitted). 

The district court relied on hindsight when it concluded that

“the CPPA, as written, flatly outlawed a specific scenario that

Ferber had said would enjoy at least the protection afforded

by the Miller standards.” The district court apparently

believed that because of Ferber, the government was doomed

to fail in defending the CPPA. 

However, the government argued to extend the reasoning in

Ferber and could not have known how the Supreme Court

might rule in that regard. The Court ended up ruling that the

CPPA went “beyond” the definition of child pornography in

Ferber, and even found “no support in Ferber.” Free Speech

Coalition, 535 U.S. at 240, 251. 

But before the Supreme Court ruled, reasonable jurists had

found that Ferber supported, rather than rejected, the government’s defense of the statute. For example, Judge Ferguson’s

dissent cited to Ferber for the proposition that legislators

should be given “greater leeway” when acting to protect the

well-being of children, and that child pornography has minimal social value, which supports that virtual child pornography similarly has “little or no social value.” Free Speech

Coalition, 198 F.3d at 1100 (Ferguson, J., dissenting). 

GONZALES v. FREE SPEECH COALITION 5587
In a similar vein, the three judges dissenting from the

denial of rehearing en banc asserted that the panel opinion

disregarded the Supreme Court’s “analysis of the compelling

governmental interest in ‘safeguarding the physical and psychological well-being of a minor,’ ” including the prevention

of sexual exploitation and abuse of children. Free Speech

Coalition, 220 F.3d at 1114 (citing Ferber, 458 U.S. at 756-

63) (Wardlaw, J., dissenting from the denial of rehearing en

banc). In another analogy to Ferber, the dissent reasoned that

“[j]ust as the inability to distinguish domestic from foreign

materials justifies a ban on both, the impossibility of determining whether an image is ‘actual’ or ‘virtual’ warrants a

prohibition of both.” Id. at 1115. 

All four circuits upholding the constitutionality of the

CPPA found Ferber helpful, rather than harmful, to the government’s position. In Hilton, the court noted that Ferber

carved out an entire category of speech as unprotected by the

First Amendment — i.e., child pornography. 167 F.3d at 69.

“The Ferber Court did not establish a single one-size-fits-all

constitutional definition of child pornography . . . but provided general guiding principles.” Id. The First Circuit further

noted that Ferber did give “greater leeway” to legislatures to

regulate sexual depictions of children. Id. at 70; see also Acheson, 195 F.3d at 650 (citing same quote). Thus, the Hilton

court found: “Relying on Ferber’s discussion of the importance of protecting children from sexual exploitation, [Hilton

and amici] argue that the Supreme Court has strictly limited

regulation of child pornography to images manufactured with

the use of live children. But we find no firm basis for this

overly restrictive reading of precedent.” 167 F.3d at 72. 

The Fourth and Eleventh Circuits focused on the evolution

of child pornography since the Ferber decision. In Mento, the

court found:

Ferber necessarily dealt only with depictions of

actual children, long before virtual pornography

5588 GONZALES v. FREE SPEECH COALITION
became an issue. Viewed in the proper context, Ferber in no way stands for the proposition that permissible governmental interests in the realm of child

pornography would be forever restricted to the harm

suffered by identifiable children participating in its

production. 

231 F.3d at 919. Similarly, the Fox court concluded that “Ferber and Osborne, decided long before the specter of ‘virtual’

child pornography appeared, in no way limit the government’s interests in the area of child pornography to the prevention of only the harm suffered by the actual children who

participate in the production of pornography.” 248 F.3d at

402. 

Thus, “reasonable minds” could and did differ about the

impact of Ferber on the CPPA before the Supreme Court

deemed it unconstitutional. Only hindsight can support the

district court’s assessment that Ferber inevitably sounded the

death knell of the CPPA.

III. CONCLUSION

[9] The district court’s finding that the government’s

defense of the CPPA was not substantially justified is

REVERSED, and the award of attorneys’ fees under the

EAJA is VACATED. 

GONZALES v. FREE SPEECH COALITION 5589