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November 18, 2015

Backpage.com Lawsuit Against Sheriff Dart Gets 7th Circuit Boost

COOK COUNTY, Ill.—On November 16, a panel of the Seventh Circuit Federal Court of Appeals ordered Cook County Sheriff Thomas Dart and his department to stop sending letters or otherwise contacting credit card companies in an attempt to bully them into refusing to honor charges for ads placed on the online classified ad portal Backpage.com, the second largest such site in the nation. The action stems from a dispute that began last July, when Dart sent letters, on official Sheriff's Department stationery, to the CEOs of both Visa and MasterCard, claiming that the ads on Backpage's "adult services" section have "exacerbated the problem of sex trafficking of women and minors," according to an article in USA Today. As a result (though Dart's attorney disputes it), both credit card processors began refusing Backpage's charges, an action which led the company to seek a Temporary Restraining Order (TRO) against Dart on First Amendment grounds, which it later followed up with a Motion for Preliminary Injunction. District Judge John J. Tharp, Jr. granted Backpage's TRO, but at a hearing on the case on August 21, refused to approve the preliminary injunction motion. That set the stage for Backpage's appeal to the Seventh Circuit. At the hearing before a panel that included Judges Richard Posner, Diane Sykes and Kenneth Ripple, Backpage was represented by prominent First Amendment attorney Robert Corn-Revere, a veteran of several adult industry battles, while Dart and his department were represented by Hariklia Karis of the Chicago law firm of Kirkland & Ellis. According to reports, the panel asked few questions of Corn-Revere, saving most of its inquiries for Karis, who seemed to have little understanding of the concept of "prior restraint" as it relates to First Amendment activities. For example, Posner asked her, "What if Sheriff Dart wrote to Bonwit Teller, or something, and said I don’t like your selling short skirts; I think it promotes sexual improprieties. Would that be proper?" Karis replied, "That would be proper, Your Honor." Posner followed up with, "He [can use] the office of the Sheriff to express any antipathy he has to anything?" To which Karis responded, "He can speak both as a citizen and a public official to express his opinions..." Trouble is, Dart expressed his opinions on his office stationery, giving the comments the appearance of an official threat that if the card companies did not comply, other official actions might be taken. Karis tried to claim that since there were no specific threats in the letters, they weren't meant to be coercive at all, but the panel's questioning indicated that none of them bought that argument. Karis tried to claim that at least MasterCard wasn't threatened by the letter, because it had announced earlier that it would be refusing charges from the site, but Corn-Revere later made the point that, "As a matter of fact, the record doesn’t show that the credit companies had already made a decision to defund Backpage.com. The most that it shows is that one of the acquiring [that is, processing] banks for MasterCard had made a decision in mid-June that it was going to cease affiliating with Backpage.com, but that decision was not going to be implemented until the end of July. It was only after Sheriff Dart’s letter was sent that this decision for the one acquiring bank was escalated to being immediate and not a month hence. And that’s when the decision was spread not just to that one acquiring bank but to all the acquiring banks for MasterCard. As a matter of fact, [the record shows that] this escalated the concern because then it was because this was a law-enforcement referral—this was considered to be a brand-damaging activity. And because of that, Backpage was put on a match list, which prevented other banks from stepping in." In general, Posner was less than satisfied with Karis' explanations of Dart's position. "Does [the sheriff] want Backpage to close out its adult section? Is that the idea?" POsner asked. "And the credit card companies will come back? Is that the idea? ... Does he think Backpage is violating the law in not instituting all of the protective measures he wants?"... "He does not think that Backpage is violating the laws for any ads that do not involve unlawful conduct," Karis replied. Not satisfied, Posner pressed, "[P]lease try to answer the question rather than give a speech on a different subject. Does he think that Backpage is violating the law?" "Yes, with respect to adult services that elicit unlawful conduct," she finally agreed. That exchange led to Posner drawing the obvious conclusion, that if some adult services ads on Backpage were unlawful, then Visa and MasterCard, in processing the payments for those ads, were acting as accomplices to a crime—and as much as Karis tried to deny it, the appellate judges clearly saw that as an implicit accusation in Dart's letters to the companies. Therefore, although the panel will probably not be rendering its full opinion for weeks to come, the court did order Dart to stop writing letters to credit card processors in a transparent attempt to drive Backpage out of business. Trouble is, the damage has already been done, and nothing in the court's order requires Visa or MasterCard to resume processing Backpage charges—and it is unclear whether they will, given the obvious animus that such action would have for the Cook County Sheriff's Department—people that the card processors' officials would want to avoid angering at almost any cost. Pictured: Sheriff Tom Dart.

 
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