Court Opinion

ID: 3031879
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:46:46.333906+00
Date Added: 2024-06-11T11:48:14.661004
License: Public Domain

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
5578          GONZALES v. FREE SPEECH COALITION
                         COUNSEL

Charles W. Scarborough, Civil Division, United States
Department of Justice, Washington, D.C., for the defendants-
appellees.

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 attor-
neys’ 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 defend-
ing the CPPA against constitutional attack. We conclude that
reasonable minds could have differed over the CPPA’s consti-
tutionality, 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 unconstitu-
tional.

                    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.,
              GONZALES v. FREE SPEECH COALITION            5579
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 distrib-
uted 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 legiti-
mate sweep, the CPPA withstands this constitutional chal-
lenge.”); 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 con-
tended 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 govern-
ment, holding that the CPPA was not overbroad. “It specifies
that only materials that do not use adults and that appear to
5580           GONZALES v. FREE SPEECH COALITION
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 por-
nography should join the ranks of real child pornography as
a class of speech outside the protection of the First Amend-
ment,” and (2) the statutory terms of the CPPA were not sub-
stantially 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 provi-
sions of the CPPA that had been upheld by the First and Elev-
enth Circuits. Id. at 1114 (Wardlaw, J., dissenting from the
denial of rehearing en banc). The dissent also argued that sev-
eral 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 dis-
cern. Id. at 1115.

   The Supreme Court granted certiorari, and held that
§§ 2256(8)(B) and 2256(8)(D) were overbroad and unconsti-
tutional. Free Speech Coalition, 535 U.S. at 256, 258. The
                  GONZALES v. FREE SPEECH COALITION                       5581
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 expres-
sion. 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 pornogra-
phy 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 appli-
cations 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 con-
currence in part, and dissent in part, in which the Chief Justice
and Justice Scalia joined in Part II, finding that the ban on vir-
tual child pornography is not overbroad. Id. at 263
  1
   Under Miller, the government must prove that the work taken as a
whole appeals to the prurient interest, is patently offensive in light of com-
munity standards, and lacks serious literary, artistic, political, or scientific
value. 413 U.S. at 24.
5582           GONZALES v. FREE SPEECH COALITION
(O’Connor, J., concurring in the judgment in part and dissent-
ing 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 Coali-
tion, finding that the government was not substantially justi-
fied in defending the CPPA because “the constitutional flaw
in the CPPA was recognizable from the start.” After the par-
ties 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 govern-
ment’s position was not “substantially justified,” thus war-
ranting 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 con-
clusion 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 dis-
trict 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 enti-
tled to recover attorneys’ fees “unless the court finds that the
              GONZALES v. FREE SPEECH COALITION             5583
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 sub-
stantially 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, substan-
tially justified means there is a dispute over which “reason-
able minds could differ.” See League of Women Voters, 798
F.2d at 1260.

   [2] “[T]he defense of a congressional statute from constitu-
tional 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 litiga-
tion attacking it” should be considered. Id. “ ‘[O]bjective indi-
cia’ 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 success-
es.” Id. at 569. When objective indicia do not provide a con-
clusive 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 nonfrivo-
lous arguments to defend the CPPA.” In Kali, the court con-
5584          GONZALES v. FREE SPEECH COALITION
sidered that the government had “argued forcefully and well,”
despite a loss on the merits, as one indicator of the reason-
ableness 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 fore-
seeable 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 ordinar-
ily tempt a district judge to indulge a presumption that the
statute had plausible constitutionality and that the govern-
ment’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 rea-
sonableness under Supreme Court law.

   Yet the court declined to accord any presumption of rea-
sonableness from these successes, reframing them as near
losses. The district court proposed that circuit courts uphold-
ing 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
              GONZALES v. FREE SPEECH COALITION               5585
implicitly acknowledged the significance of a split decision as
an indicator of the reasonableness of the government’s posi-
tion. See Bay Area Peace Navy, 914 F.2d at 1231 (disagree-
ment 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 reasonable-
ness.

   [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 support-
ing 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 exten-
    sion 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, “reason-
able minds could differ” over the credibility of this novel
argument — Judge Ferguson’s dissent and the dissent from
5586             GONZALES v. FREE SPEECH COALITION
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 justifica-
tion, 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 substan-
tially 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) illu-
minated 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 govern-
ment’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.
              GONZALES v. FREE SPEECH COALITION             5587
that its position was not substantially justified.” Kali, 854
F.2d at 334.

   [8] By putting undue weight on the Supreme Court’s hold-
ing on the merits, the district court seemed to rely on hind-
sight, rather than an assessment of the reasonableness of the
government’s position at the time of the litigation. Cf. Tau-
cher v. Brown-Hruska, 396 F.3d 1168, 1175 (D.C. Cir. 2005)
(“In considering substantial justification under EAJA, how-
ever, it is not enough to repeat the analysis of the merits deci-
sion, and add adjectives.”) “Here as in other areas courts need
to guard against being subtly influenced by the familiar short-
comings 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 govern-
ment’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 mini-
mal social value, which supports that virtual child pornogra-
phy similarly has “little or no social value.” Free Speech
Coalition, 198 F.3d at 1100 (Ferguson, J., dissenting).
5588          GONZALES v. FREE SPEECH COALITION
   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 psy-
chological 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 deter-
mining 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 gov-
ernment’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 pro-
vided 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 Ach-
eson, 195 F.3d at 650 (citing same quote). Thus, the Hilton
court found: “Relying on Ferber’s discussion of the impor-
tance 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
              GONZALES v. FREE SPEECH COALITION              5589
    became an issue. Viewed in the proper context, Fer-
    ber in no way stands for the proposition that permis-
    sible 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 “Fer-
ber and Osborne, decided long before the specter of ‘virtual’
child pornography appeared, in no way limit the govern-
ment’s interests in the area of child pornography to the pre-
vention 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.