X Corp., California reach agreement in free speech case

SACRAMENTO, Calif. (CN) — X Corp. and the state of California reached a legal agreement Monday in an ongoing dispute, with the state conceding that one of its social media laws violated the First Amendment.

The agreement is focused on Assembly Bill 587, which imposed reporting requirements on large social media companies. Those that made over $100 million annually had to reveal their content moderation policies.

The state prevailed at a late 2023 hearing on a preliminary injunction requested by X, but the Ninth Circuit favored X’s arguments in September. It prevented the law’s implementation at that time.

“It is hereby declared that subdivisions (a)(3), (a)(4)(A), and (a)(5) of California Business and Professions Code section 22677 violate the First Amendment of the United States Constitution facially and as applied to plaintiff,” attorneys wrote in the agreement.

California also agreed to pay X almost $350,000 in attorneys’ fees.

The agreement is now before U.S. District Judge William Shubb for final judgment.

“The California Department of Justice is committed to enforcing California law, including the remaining requirements of AB 587,” a spokesperson for the Attorney General’s Office said in an email to Courthouse News.

Attorneys for X could not immediately be reached for comment.

X, formerly Twitter, pushed back against the 2022 law written by Assemblymember Jesse Gabriel, an Encino Democrat. The social media giant headed by Elon Musk, now a special government employee overseeing the Department of Government Efficiency, argued the law’s reporting requirements were unconstitutional.

That’s because the law was more than a mandated transparency measure, X attorney Joel Kurtzberg said at a November 2023 hearing. It grew into governmental interference by injecting itself into the company’s editorial process, he added.

The law changed how social media companies regulated content, giving government the power to pressure those companies, the plaintiffs argued.

Deputy Attorney General Gabrielle Boutin argued the law required companies to disclose their terms of service and give information on how they enforce content moderation policies. It didn’t tell companies how they should regulate that content.

A month later Shubb denied X the preliminary injunction it sought.

The law placed what the judge called “a substantial compliance burden” on affected companies. However, he ruled that it didn’t appear unjustified or unduly burdensome, when viewed in context of the First Amendment.

The disclosures dictated by the law themselves weren’t controversial, even though they might contain controversial issues, Shubb ruled.

Instead, the judge found that the reports were tied to a government interest — ensuring social media companies are transparent about their content moderation policies. That allowed people to make informed decisions about where to get news and information.

X appealed and in September the Ninth Circuit reversed Shubb’s ruling.

The appeals panel remanded the case, ordering Shubb to issue a preliminary injunction on the semi-annual reporting requirements. Those requirements meant social media companies had to define certain categories like hate speech and disinformation.

U.S. Circuit Judge Milan D. Smith Jr., a George W. Bush appointee, wrote that those reporting provisions likely compelled non-commercial speech. That put them on a heightened level of legal scrutiny, and ultimately meant those provisions triggered First Amendment issues.

The law made affected companies change their content moderation practices in language the state prescribed, an implicit opinion on whether and how certain controversial content topics should be moderated, Smith wrote.

Days after the appeals panel remanded the case, Shubb issued the preliminary injunction. Specifically, he ruled that the state couldn’t require X to submit semi-annual reports, provide a detailed description of its content moderation practices, or provide information on content flagged because it fell under a specific category.

Portions of the law that remain intact require affected companies to provide disclosures on how they respond to user reports of terms-of-service violations and about the languages in which the terms of service aren’t available.