Corporate Finance Law Blog : Corporate Finance Lawyer & Attorney : Davis Wright Tremaine Law Firm

The Corey decision arose from the 2004 termination of Pierce County deputy prosecutor Barbara Corey. She claimed that the county wrongfully fired her and that the elected prosecuting attorney, Gerald Horne, defamed her in statements to the press about a criminal investigation into Corey's handling of office funds. At trial, Corey presented evidence that Horne had publicly accused her of criminal conduct, even though he knew, at the time he spoke, that the allegations were false and that the investigation had found no improper conduct.

A jury awarded Corey nearly $3 million at trial. The Court of Appeals affirmed the verdict, including the findings that defendants acted with actual malice and had defamed her. But the court soundly rejected one of Corey’s theories—that her privacy had been invaded by “negligent dissemination of unsubstantiated allegations.”

Corey’s invasion of privacy claim was based on the argument that Horne had a duty to prevent dissemination of the existence of the criminal investigation so long as the charges were unsubstantiated. The theory was based on Bellevue John Does 1-11 v. Bellevue School District No. 405, 164 Wn.2d 199, 189 P.3d (2008), in which the Washington Supreme Court held that the identity of public school teachers accused of sexual misconduct was exempt from disclosure under the Public Records Act, if the wrongdoing was found to be “unsubstantiated.” Corey argued that the First Amendment did not bar a tort claim based on dissemination of harmful information, even if that information was true.

The trial court agreed, but the Court of Appeals reversed on this point, finding that Washington law does not support this type of privacy claim. The court explained that although the Public Records Act in some instances exempts public records from disclosure based on an employee’s privacy, “[n]othing in the case law establishes a tort cause of action” for disseminating such information in other contexts. (The court nevertheless let the jury award stand, finding that the verdict would have been the same even without the erroneous “negligent dissemination” instruction.)

Corey is the second recent opinion to reject the theory that Bellevue John Does supports a privacy tort claim for dissemination of unsubstantiated information. In Cawley-Herrmann v. Meredith Corp., 654 F. Supp. 2d 1264 (W.D. Wash. Sept. 8, 2009), a television station accurately reported that police were investigating claims that a teacher allegedly had assaulted a student in school. The allegation was later found to be unsubstantiated. The teacher sued the station for invasion of privacy (but not defamation), claiming the news report was tortious under Bellevue John Does. A Washington federal district court rejected the argument, finding that Bellevue John Does was limited to public records cases and did not set the standard for privacy in other contexts.

Under the “negligent dissemination” theory, reporting about criminal investigations—even where accurate, and even where based on official sources—would be actionable if the charges at issue were not substantiated. The effect of such a rule would be to bar a great deal of standard news reporting on police and criminal justice matters. Thanks to the Corey and Cawley-Hermann decisions, such reporting can continue in Washington, consistent with traditional principles of defamation law.

 Although the rules implementing adult-entertainment recordkeeping laws historically had been limited to “hard core” material, the new regulations for the first time applied to media that depict only “simulated” sex and/or, in some cases, nudity. The DOJ scaled down its approach significantly from original proposals, which could have imposed cumbersome new burdens on broad categories of “mainstream” content. As now adopted, the rules do not impose recordkeeping or certification requirements on the vast majority of broadcast or cable programming. Where the rules do apply, the final regulations streamline compliance in a number of important ways.

Also, in revising its preexisting rules governing “actual” sexually explicit conduct, i.e., adult entertainment, the DOJ relaxed existing recordkeeping and labeling obligations somewhat to afford new flexibility on regulations the adult industry has long found unduly burdensome. However, commentary accompanying the rules raises questions as to whether there will be new burdens for entities with “back catalogs” that they may wish to exploit in the future.

Specifically, in adopting the new rules the DOJ has:

• Effectively exempted mainstream love/sex scenes, so that fewer producers will be required to go through certification (or to keep records and label products), by adopting a far narrower definition of “simulated sex.” 
   
• Clarified that new regulations that apply to certain depictions of nudity will be applied prospectively only, and will become effective 90 days following adoption. 
   
• Streamlined the certification procedure for producers of material involving only simulated sex and/or nudity by eliminating the proposal to require biannual certification and to submit lists of titles covered by the rules. 
   
• Clarified that the exemption from the statute and rules for those who only “distribute” covered works applies to any dissemination of the material that does not entail creating or altering its content.

In addition, the DOJ:

• Agreed to allow third-party custodians of records required for depictions of sexually explicit conduct.
   
• Streamlined the information that must appear on the labels that must be affixed to depictions of sexually explicit conduct.

The DOJ declined to adopt an exemption to the rules for news and documentaries. On balance, however, the reduced scope of the rules should come as a relief to many media industry players who faced the prospect of having to grapple with a new regulatory regime.

Section 2257 requires producers of images depicting “actual sexually explicit conduct” to keep records identifying and verifying the ages of performers and to label the resulting visual works. The purpose of the law is to deter child pornography by ensuring that the performers used for such materials are adults. The new rules implement the Adam Walsh Child Protection and Safety Act of 2006. Among other things, the Act broadened the scope of Section 2257, which traditionally governed only adult entertainment. It also added the new Section 2257A to extend the law to depictions involving only simulated sex and in some cases, nudity.

To ensure “mainstream” materials were not subject to the more burdensome recordkeeping and labeling requirements, the Act established a process by which producers could certify to the attorney general that they keep identifiable records for employees that show their names, addresses and dates of birth. Unfortunately, the rules the DOJ initially proposed to implement the certification requirement were so detailed as to nearly approximate full-blown recordkeeping.

However, the final rules are substantially narrower. In addition to the modifications outlined above, highlights of the new DOJ rules include:

• The DOJ will allow one-time certification by any executive officer rather than only CEOs, declined to impose proposed extra burdens on “secondary” producers, and substantially reduced the extra steps that had been proposed for foreign-produced material. 
   
• The DOJ declined to adopt a proposed rule change that would have required 2257 records to be kept in hard copy, and instead left intact existing rules allowing electronic retention. 

• The DOJ dropped requirements for 2257 labels to list the “date of original production” of depictions, eliminated and/or simplified the other information that must appear in the label, and clarified how the label must appear on DVDs. 
   
• The DOJ clarified that Web site operators who are “producers” must affix 2257 statements, but not if their conduct is only “distribution” as that term was newly clarified. 
   
• The DOJ also clarified how the rules apply to social networking sites, confirming that operators of such sites would not be subject to the rules if they do not select or alter the content posted.

The new rules will be effective Jan. 17, 2009. The compliance date for depictions of lascivious exhibition and/or simulated sex (i.e., the creation date for covered depictions) will be March 18, 2009, and the deadline for certifications will be June 16, 2009. Davis Wright Tremaine filed extensive comments throughout this rulemaking and has a wealth of experience with the rules generally.