Elon Musk is About To Get Anti-Slapped

The suit by the company formerly known as Twitter against a talkative outfit called the Center for Countering Digital Hate is all about nonprofits and tax exemption.  That’s right Elon is suing the CCDH because he doesn’t think its really tax exempt.  Elon’s attorney even said so in a letter when first threatening to sue:

Twitter takes its commitment to free speech, the enforcement of its rules and policies protecting users, and its strong relationships with its advertising partners all extremely seriously. Despite CCDH’s status as a tax exempt 501(c)(3) organization in the United States, we have reason to believe that your organization’s operations—and thus its campaign to drive advertisers off Twitter by smearing the company and its owner—are supported by funding from X Corp.’s commercial competitors, as well as government entities and their affiliates. To the extent that CCDH is passing off as impartial “research” material that is in fact being funded in support of an ulterior agenda, your representations are all the more misleading, while reporting of the CCDH’s true economic motives and agenda is imperative.

Catch that?  Counsel is accusing CCDH of operating for private benefit.  Elsewhere in the letter, he makes an even weaker attempt at proving that CCDH is hardly a research organization and for that reason too does not deserve tax exemption.  He certainly makes a pretty good case that the research relied upon by CCDH is weak, but as the trial lawyers at Quinn Emanuel should know, that is an argument about credibility, not admissibility.  By that I mean CCDH might be lousy researchers but they are researchers nevertheless.  You don’t have to be the best researcher, and your research doesn’t even have to be right to be a tax exempt scientific organization.

Early in our casebook, we include a writing exercise allowing students to apply the law of tax exempt charities in the public square.  The students assume the role of counsel  for PETA who must draft a response to a congressional inquiry regarding PETA’s tax exempt status and its former habit of throwing blood on models wearing fur.  It betrays our age that we still use PETA as the example.  Elon’s ironic hissy fit — having championed free speech on social media, he is now suing over CCDH’s speech about his social media, go figure! — makes for a great update.  The point is, though, that nonprofits are invariably engaged in public debate.  So we try to sensitize students to the need, sometimes, to advocate to a wider audience than just the Service. To litigate in the public square, as necessary.

CCDH takes no prisoners, by the way, in its demand that social media police hate speech.  Its published damning reports about Twitter and Tik Tok, maybe the two biggest social media platforms in the world. Apparently that is contributing to a precipitous drop in revenue for the company formerly known as Twitter and that’s why Elon is mad.  Whenever you loudly tell someone to shut up, ten other people want to know what was said that you want the speaker to shut up about.  Any fool knows that.  But I guess Elon has enough money to waste on dumb lawsuits though because that is what this is.  Here is what CCDH’s attorneys said in reply to X Corp’s letter:

We write in response to the ridiculous letter you sent our clients on behalf of X Corp., which operates the Twitter (or the new “X”) platform, dated July 20, 2023. (A copy of your July 20 letter is attached.) In that letter, you claim that CCDH has supposedly made “inflammatory, outrageous, and false or misleading assertions about Twitter” and suggest it has engaged in some sort of conspiracy “to drive advertisers off Twitter by smearing the company and its owner.” These allegations not only have no basis in fact (your letter states none), but they represent a disturbing effort to intimidate those who have the courage to advocate against incitement, hate speech and harmful content online, to conduct research and analysis regarding the drivers of such disinformation, and to publicly release the findings of that research, even when the findings may be critical of certain platforms.

You go on to state that there is “no doubt that CCDH intends to harm Twitter’s business” and warn that you are “investigating” whether CCDH has violated Section 43(a) of the Lanham Act. That threat is bogus and you know it. None of the examples cited in your letter constitutes the kind of advertisement or commercial speech that would trigger the Lanham Act. To the contrary, the statements you complain about constitute political, journalistic, and research work on matters of significant public concern, which obviously are not constrained by the Lanham Act in any way. Moreover, as a nonprofit working to stop online hate, CCDH is obviously not in competition with Twitter, which makes your allegations of a Lanham Act injury even more fanciful. Your assertion that the goal in CCDH’s research and reporting is to benefit Twitter’s competitors also ignores the fact that CCDH has published critical, highly-publicized reports about other platforms, including Instagram, Facebook, and TikTok.

“Ridiculous,” “bogus,” and “fanciful.” Man, I love legal writing.  The ensuing complaint makes no mention of tax exemption, by the way.  Its as though it was just an empty threat in the first place.  And though I am neither a litigator nor a full fledged con law scholar, even I recognize the complaint is couched in all sorts of action, rather than speech, revolving around CCDH’s alleged violation of shrink-wrapped contract clauses and other tortious duties.  That’s because the White & Case litigator who signed the complaint knows this is nothing but a “shut your damn mouth” suit; he dare not say X just doesn’t like what CCDH is saying.  It’s a SLAPP suit — strategic litigation against public participation. So here is the teachable point, one that we emphasize in our casebook.  Nonprofits are public actors engaged in pubic debate and are gonna get attacked.  One non-tax tool advisors should know about are statutes designed to protect people from getting SLAPPED for talking about issues of public concern.  California and 31 other states have Anti-SLAPP statutes.  And California’s is one of the broader statutes.  Elon’s suit is ripe for anti-slapping.  But I guess he can afford it.

darryll k. jones