UNITED STATES DISTRICT COURT

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_________________

United States of America, )

) No. 2:18-cr-00422-DJH

Plaintiff, )

)

vs. ) Phoenix, Arizona

) August 18, 2023

Michael Lacey, et al. )

)

Defendants. )

_____________________________ )

BEFORE: THE HONORABLE DIANE J. HUMETEWA, JUDGE

REPORTER'S EXCERPTED TRANSCRIPT OF PROCEEDINGS

ARGUMENT ON FIRST AMENDMENT INSTRUCTION AND RULING

Official Court Reporter:

Hilda Elizabeth Lopez, RMR, FCRR

Sandra Day O'Connor U.S. Courthouse, Suite 312

401 West Washington Street, Spc 30

Phoenix, Arizona 85003-2151

(602) 322-7256

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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A P P E A R A N C E S

For the Government:

UNITED STATES ATTORNEY'S OFFICE

By: Mr. Kevin M. Rapp, Esq.

Mr. Peter S. Kozinets, Esq.

Mr. Andrew C. Stone, Esq.

Ms. Margaret Wu Perlmeter, Esq.

40 North Central Avenue, Suite 1200

Phoenix, Arizona 85004

kevin.rapp@usdoj.gov

peter.kozinets@usdoj.gov

andrew.stone@usdoj.gov

margaret.perlmeter@usdoj.gov

For the Government:

UNITED STATES DEPARTMENT OF JUSTICE

By: Mr. Austin Berry, Esq.

1301 New York Avenue, NW, 11th Floor

Washington, DC 20005

austin.berry2@usdoj.gov

For the Defendant Michael Lacey:

LIPSITZ GREEN SCIME CAMBRIA, L.L.P.

By: Mr. Paul J. Cambria, Jr., Esq.

42 Delaware Avenue, Suite 120

Buffalo, NY 14202

pcambria@lglaw.com

For the Defendant Scott Spear:

FEDER LAW OFFICE, P.A.

By: Mr. Bruce S. Feder, Esq.

2930 East Camelback Road, Suite 160

Phoenix, AZ 85016

bf@federlawpa.com

- and -

KESSLER LAW OFFICE

By: Mr. Eric Walter Kessler, Esq.

6720 N. Scottsdale Road, Suite 210

Scottsdale, AZ 85253

eric.kesslerlaw@gmail.com

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For the Defendant John Brunst:

BIRD MARELLA BOXER WOLPERT NESSIM DROOKS

LINCENBERG & RHOW, P.C.

By: Mr. Gopi K. Panchapakesan, Esq.

1875 Century Park E, Suite 2300

Los Angeles, CA 90067

gpanchapakesan@birdmarella.com

glincenberg@birdmarella.com

For the Defendant Andrew Padilla:

DAVID EISENBERG, P.L.C.

By: Mr. David S. Eisenberg, Esq.

3550 North Central Avenue, Suite 1155

Phoenix, AZ 85012

david@deisenbergplc.com

For the Defendant Joye Vaught:

JOY BERTRAND, ESQ., L.L.C.

By: Ms. Joy M. Bertrand, Esq.

P.O. Box 2734

Scottsdale, AZ 85252

joy@joybertrandlaw.com

Present Telephonically:

Andrew Padilla

Joye Vaught

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P R O C E E D I N G S

***** EXCERPTED TRANSCRIPT

THE COURT: Well, we'll have to probe that.

So we need one additional. There was a slight glitch

in the counting. 2911, and so that will complete the 110 who

will come, 2911 is included now.

Does anyone need a break? Can we move forward then?

All right.

So let me start with the Statement of the Case. I

looked over the objection again and the Court's revised

Statement of the Case removing Mr. Larkin's name. I'm going to

overrule the objection that was filed at Document 1660. Again,

this is going to be the Statement of the Case that's read at

the very outset of jury selection. What I intend to do is read

the Statement of the Case, identify those individuals who have

supplemented their questionnaire with having knowledge, include

them in those that then I would like to begin with individual

voir dire about their knowledge of the case so that they are

not verbally stating what they know. So the Statement of the

Case will be as provided to counsel.

I have looked again at the Proposed First Amendment

Instruction, and I -- and I'll have my law clerk provide that

to you. You can look at it. I've revised it and I've revised

it. I'll read it to you as she's providing it. It states:

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All speech is presumptively protected by the First Amendment to

the United States constitution. However, the First Amendment

does not protect speech relating to illegal activity.

Prostitution is illegal in 49 states and most of Nevada.

Therefore, the First Amendment does not protect advertisements

or solicitations for prostitution.

It is the government's burden to establish that each

of the ads alleged in this case is an ad for prostitution and

not for another purpose such as an ad for an escort, dating or

massage service. You may consider any direct or circumstantial

evidence in assessing whether any of the charged ads in this

case are to promote or facilitate an act of prostitution.

And so it is that First Amendment jury instruction I

intend to give, and so I admonish counsel to confine their

opening arguments in that way if they intend to raise them at

all.

Regarding the defendant's objection, which I looked

at, and the government's response to it, I agree with the

government and looked through the record, the arguments have

been previously made before, the argument goes along the lines

that the First Amendment protects the publisher of third-party

speech, but the Court under Docket No. 793 had previously

analyzed the argument, and in that order Judge Brnovich states

that "the government is pursuing a theory of vicarious

liability for merely hosting third-party content." That's the

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defense argument.

And she stated: That argument is not supported by the

superseding indictment, which goes through a long and

fact-specific description of the defendants' participation in a

conspiracy to facilitate and promote prostitution.

She goes on to say: The superseding indictment

sufficiently explains why the defendants in this case are not

just merely hosting third-party content.

And so in that way the matter has already been

resolved. But as I indicated in the order on the motions in

limine, it is important that there be the ability to

distinguish what are permissible ads, as the defendants have

raised, and what are illegal advertisements, and that's the

burden that the government carries. So I think this

instruction is intended to get at that.

And so the objection is overruled to the original --

what I had originally proffered as the Court's Revised First

Amendment instruction. And now this is, I guess in viewing

some of the content of that and also looking at the prior order

in the motions in limine, the Court now on its own has slightly

revised it, so that is what I intend to give.

MR. CAMBRIA: Can I comment on that, please?

THE COURT: You can make a record, yes.

MR. CAMBRIA: Thank you. I think what's lacking here,

Your Honor, is the Ninth Circuit has consistently in several

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cases, which we have cited, Metro Lights, Valle del Sol, IMDb,

et cetera, said that the speech on itself must propose an

illegal activity. The speech on its face must propose an

illegal activity. That is a critical requirement. It's one

thing to say that it's presumptively protected, which it is, I

know in your original instruction you had something about

related to, and that is inconsistent with the interpretation.

I think what's lacking here is a statement that the speech

itself on its face must propose an illegal activity.

This is not something where later on down the line,

you know, there's proof that there was illegal activity. These

are publishers. And publishers, according to all these Ninth

Circuit cases that we cited, talk about looking at and focusing

on the speech itself, not other related so-called conduct, but

the speech itself.

And that's consistent with a number of Supreme Court

decisions which talk about imminent lawlessness and things like

that. Unless the speech on its face proposes a clearly illegal

activity it is presumptively protected, and that presumption is

not removed, and so that's what's lacking here.

Again, we highlighted this because the cases that I

cited basically were talking about the government's case,

Pittsburgh Press, and they said that the focus must be on the

words themselves, on the content of the speech, not associated

conduct or activity that may be associated, but on the face of

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the speech itself, and that's consistent with First Amendment

law regarding a publisher because a publisher could only be

responsible for the actual words that they publish.

Unless it specifically alleges an illegal, clearly

illegal activity, it is protected. That's the message that

needs to be carried to the jurors so that we don't get involved

in, well, maybe it's this, maybe it's that. It has to clearly

be that on its face to be unprotected. All those Ninth Circuit

cases have interpreted Pittsburgh Press that way.

THE COURT: And as I have already indicated, I have

reviewed the objection, I reviewed the cases that were cited by

the defense and the government in the proposed jury

instructions in which there were multiple iterations of a First

Amendment jury instruction.

And Mr. Cambria, I will point out, it says

specifically: It is the government's burden to establish that

each of the ads alleged in this case is an ad for prostitution,

and for no -- and not for another purpose such as an ad for an

escort, dating or massage service, which is lifted from your

Motion in Limine. And so again, I've looked at the objections.

I'm overruling the objection. This is the Court's revised

First Amendment instruction.

All right. Now, let me --

MR. PANCHAPAKESAN: Your Honor, this is

Mr. Panchapakesan. Just one quick point on the First Amendment

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instruction. I think the Court referenced Judge Brnovich's

order at Docket 793. I think our view of that is that, you

know, it was an order on a Motion to Dismiss since she was

considering the sufficiency of the indictment as opposed to

what the government would have to prove at trial.

And so for example, I think on page 18 of that order

the Court says, quote, "The SI alleges defendant's conspired

with third parties, such as P.R. and Dollar Bill, to promote

prostitution and edited other prostitution ads to 'conceal

their true nature.'" And so my reading of the order is that

Judge Brnovich was assuming the truth of that allegation, but

that's something the government would obviously have to prove.

It's almost sort of an aiding and abetting type framework, and

so I think that kind of dovetails Mr. Cambria's argument about

the question of related being sufficient.

THE COURT: But it is true at this juncture that we'll

see at the end of the case what the evidence is that unfolds.

It's possible that the Court won't give a First Amendment

instruction. There has to be some basis to give it. But at

this point, because it has been an issue that has been raised

over and over again, the Court, and because the parties want to

have some guardrails in terms of what is permissible in the

opening statements, that is why I felt that it's best to settle

the matter in terms of what the Court intends to do at this

point, but we don't know what the evidence is going to unfold

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as, and so this is the Court's preferred instruction.

And again, I've considered your arguments. I have

looked through the docket, looked through those orders, and my

ruling stands.

MR. CAMBRIA: May I just add one thing, Your Honor, so

that it's clear? Our position includes the fact that this

instruction fails to use the "on its face" language, which we

feel Ninth Circuit has indicated is critical.

And as far as whether the First Amendment applies,

these are publications. I don't think the prosecution disputes

that. They are publications. As a result, clearly First

Amendment applies.

THE COURT: That's the first line of the sentence,

isn't it, Mr. Cambria?

MR. CAMBRIA: I am just addressing your comment that

maybe the First Amendment doesn't apply. It depends on proof.

They are going to open saying these are publications, and

publications clearly are presumptively protected.

***** END OF EXCERPTED TRANSCRIPT

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C E R T I F I C A T E

I, HILDA E. LOPEZ, do hereby certify that I am duly

appointed and qualified to act as Official Court Reporter for

the United States District Court for the District of Arizona.

I FURTHER CERTIFY that the foregoing pages constitute

a full, true, and accurate transcript of all of that portion of

the proceedings contained herein, had in the above-entitled

cause on the date specified therein, and that said transcript

was prepared under my direction and control.

DATED at Phoenix, Arizona, this 3rd day of October,

2023.

s/Hilda E. Lopez_______

HILDA E. LOPEZ, RMR, FCRR

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