AEE Legal Panel Tracks Adult Industry's Biggest Worries

LAS VEGAS—This year's Adult Entertainment Expo legal panel had the disarming name, "Perspectives on a Changing World"—but what its audience got was important updates on some of the most prominent issues facing the adult industry today.

The panelists included J. Michael Murray, the point person in the battle against 2257; Karen Tynan, one of the industry's leading experts on the "condoms in porn" battle; Marc Randazza and Clyde DeWitt, both Las Vegas-based, who discussed whether the industry should move across state lines, and what producers will need to know to do so; and Allan Gelbard, who gave updates on piracy and copyright protection for adult products. The panel was moderated by AVN Senior Legal Editor Mark Kernes.

"Gotta tell ya, the liberty bashers are still at it," Murray began. They still want to put you out of business, still want to impose their moral views and their religious views in a way that would destroy this industry."

But Murray wasn't referring specifically to the federal record-keeping and labeling law, 18 U.S.C. §2257. He went on to describe the eleven-year battle he'd been having with the city of Indianapolis over an "hours of operation" law they passed in 2003, which required adult businesses (but not, for instance, bars) to close daily between the hours of midnight and 10 a.m., as well as all day Sunday, because of alleged "adverse secondary effects."

"There's now a cottage industry; there's a couple lawyers, one in particular, who goes around the country writing these ordinances, getting city councils to pass them and when the clubs, in the case of nightclubs or bookstores or video stores, sue, then they hire that lawyer to defend these ordinances," Murray noted, probably referring to Chattanooga, Tennessee's Scott Bergthold. "They have now achieved a level or expertise that is not of the same caliber that the law departments had, which didn't have experience."

Murray's client in that case was Annex Books.

"We challenged the constitutionality of that law under the First Amendment in federal court in Indianapolis," Murray stated, "and it's been up and down to the Seventh Circuit Court of Appeals three times; we've had preliminary injunctions; we lost a summary judgment motion. Ultimately we went to trial a couple of years ago, and we put on extensive evidence. The city defended the law on the theory that these adult bookstores caused crime in the vicinity of their locations. We put on evidence at that trial that that just wasn't so. We had statistics to show that they weren't a source of crime to begin with, and we also showed that there were other areas of the city and other businesses that are far more attractive to criminals and had greater crime rates. Then what happened was, we were able to show that during about a three or four year period when the ordinance was in force and the bookstores had to close, that instead of crime going down in the neighborhood, which is what the point of the law was, crime actually went up when you closed the bookstores. They were actually a guardian rather than a source of criminal activity."

Murray noted that the city changed its tactics after that, to claim that it was the bookstores themselves that were the victims of crime, but that was shown to be bogus as well.

"The court said it's the police's job to protect customers of adult bookstores from robberies, not to try to reduce risks by making the bookstores close," he noted.

The case finally wound up at the Seventh Circuit, and it ruled in January of 2014 that the ordinance was unconstitutional, and later in 2014, the U.S. Supreme Court refused to hear the case, leaving the ordinance unenforceable.

Murray then discussed the ongoing 2257 case, which wound up in the Third Circuit Court of Appeals after Judge Michael Baylson's ruling in 2013 upheld the record-keeping and labeling requirements. Arguments regarding that ruling were held in early December of last year, which AVN covered here.

"We had a two-week trial in the summer of 2013," Murray recalled for the audience. "We put on magnificent evidence from our 13 plaintiffs, our expert witnesses, substantial documentary evidence. Nonetheless, the federal district court, except for one part of it which he struck down as unconstitutional under the Fourth Amendment, did uphold the law under the First and Fourth Amendments... The panel had some very challenging questions for our side and for the government. We think that we handled them pretty well. It's now in their hands, and we're waiting for a decision, and we should have a ruling within the next couple of months... and we'll know whether the Third Circuit is going to agree with us that the law is unconstitutional under the First and Fourth Amendments, or not, but it won't be the end of it, because whichever side loses will no doubt ask for what's known as en banc review by the entire set of judges who sit on the Third Circuit, and after that, whoever loses will probably take it up to U.S. Supreme Court."

Annex Books reminded DeWitt of his own long-running case, City of Los Angeles v. Alameda Books, which he said had been going on so long (since 1995) that it's "old enough to vote." The Ninth Circuit reversed what DeWitt called "the good opinion that the trial court wrote"—but that was in 2011, and though the case was remanded to district court in Los Angeles, the city has been none too eager to bring the case to trial—which is strange, because there's currently a preliminary injunction in place to prevent the city from enforcing its ordinance which outlawed two adult businesses under the same roof, which ordinance was the basis of the original lawsuit. Why?

"The object lesson of this is a little change in the political winds," DeWitt opined. "Cities are broke, and a lot of them don't have an appetite—and Los Angeles is one of them—for fighting these things."

Kernes then introduced Karen Tynan, whom he deemed "at least in California, one of the point people on condoms."

Tynan first discussed the proposed revisions to California Health Code's Title 8 Sec. 5193, which mandates condoms and barrier protections for healthcare workers exposed to blood or infectious material, and which CalOSHA has ruled applies to adult content shoots as well.

"You guys will be a little surprised; it's [new Sec. 5193.1) condoms for anal, vaginal and oral, so they have found some pornography that pirates will not replicate on the internet, as far as condoms for oral; I don't know anyone that can sell that. It would define distributors [as] producers, and lots of record-keeping and medical record requirements, and there'd be some heavy vaccination requirements for performers that would pretty much preclude any performer above the age of 26 from the industry, because of the HPV vaccine requirements [that recipients be under 26]."

She noted that the proposed revision will have a 45-day public comment period, which will probably start in early February, since the Standards Board will reportedly take up the proposal at its March meeting. She noted that Free Speech Coalition has already prepared comments on the proposal, and said that "the FSC and APAC are going to lead some efforts against that. We've got some epidemiologists lined up to talk about the industry testing protocols, and then the California OSHA Standards Board will mostly likely hear it on March 19th in Sacramento."

The proposed revision would also require producers to pay for performer testing, and would require that performers be "trained for an hour before every scene, how to have sex safely, and there's some other training requirements." Tynan was emphatic that the training would not be a one-time thing, but would be mandated before every scene.

Tynan then discussed AIDS Healthcare Foundation's proposed statewide ballot initiative, which would also mandate condoms and other barriers.

"It's a new Labor Code section, and it's even more expansive, in that it requires producers to maintain their raw footage in perpetuity; also has vaccination requirements; also anyone that edits footage is a producer," she summarized. "It does not have the oral requirement, but it's very burdensome.

"We've already had a meeting off the calendar with the Department of Public Health about this," she added. "We're going to Sacramento, meeting with the A.G.'s office, because there's some real constitutional issues with all these burdensome regulations and it's creating a particular kind of content. All these guys [fellow panelists] would love to litigate a case around that. And so part of our next step with that ballot initiative is to work with the A.G. and try to convince them that this ballot initiative is a bad idea, because the A.G. doesn't want to have to litigate this ballot initiative later, when it's unconstitutional."

Tynan also warned that if support for mandatory condoms increases in California, it might spill over into Nevada as well.

When asked if FedOSHA needs to sign off on the new Health Code section, Tynan said, "Yes, and it has to be as effective as their current regulations and so part of what we have to show is that testing protocols and other things we do on the set is as effective as what the federal standard is."

Tynan also noted that the AHF ballot initiative seems intended to duplicate the requirements of Measure B, in case that law is stricken.

Tynan's talk inspired several condom-related questions from the audience until Kernes asked the audience to hold its questions until the end.

Allan Gelbard, who described his practice as "intellectual property protection," which generally takes the form of copyright and trademark, but not patent law.

"I know that there is a great deal of sorrow in this industry; you all think your content is protectionless," he began. "I'm here to tell you that there is a move afoot that may—and I'm going to use the word 'may' very hopefully—that may fix that... I am now working with a number of people in the music business and legitimate film industry, and we have been putting together a legislative/technical fix for the 512(c) problem. For those of you who don't speak lawyer, 512(c) is the safe harbor, which means that when your material ends up on a tube site or a file locker, you send them a letter and they take it down; the next day, it pops up again; you send them another letter; they take it down, and it's the world's biggest game of Whac-A-Mole. Imagine how great it would be if you could send someone a letter before you even release the work and said, 'This is my work, and here is its digital identifier; it shall not go up on your site, and if it does, you lose 512(c) protection'? Think about that for a second. It's no longer sending them a takedown letter; it's sending them a lawyer and a copyright infringement lawsuit with statutory penalties of up to $150,000 per misuse. That would fix this problem for everybody, I promise you."

In order for the system to work when/if implemented, Gelbard warned producers that it was important for them to register their copyrights and trademarks in order to obtain a special code from the government which specifically identifies the copyrighted/trademarked work, and which is imprinted into the work and is not removable.

Gelbard noted that under his proposed system, registration is necessary to have legal recourse against the infringer for damages, while the current system only allows for a takedown notice and no penalties.

"If you are already registered... the guy may not have $150,000 in the bank, but you can take his website and you can take his equipment and you can have customs, if they're bringing stuff into the country, seize the stuff as it's coming across the border," he said.

"I have a line that I try to tell people when they talk to me about lawyering," Gelbard added. "It's this: It is cheaper and easier for me to keep you out of trouble than to get you out of trouble. Anybody in this business... who doesn't have a lawyer on retainer is stupid. It's very important that you talk to a lawyer, that you set yourself up right going in. It's much more difficult to get you out of a bad contract than to have you come to a lawyer, spend three or four or five hundred dollars to have them review it and not make you sign something that's going to cost you your business down the road."

Gelbard also added to Tynan's Measure B analysis—based on DeWitt's Alameda Books case..

"Thanks to Clyde DeWitt's case, there is an inkling of hope in the Measure B litigation," he said. "The trial court basically found at the preliminary injunction state that the plaintiffs hadn't shown that the infringement on First Amendment rights is any more than de minimus, and that the secondary effects of potential problems of nonprotected sex in movies is sufficient to uphold the statute. Now, one of the great things that happened in the Alameda Books case is that there is an opinion... that says if there's a secondary effects decision, if the city relies on a secondary effects analysis, the person that's challenging it can come into court and bring in evidence that shows that those secondary effects don't really exist. Then if flips back to the other side to prove that they do. We're still at the preliminary injunction level. The trial court is not convinced that having condoms in porn is anything other than de minimus. There is an opportunity to present evidence that that is not the case... If we can rebut that problem, now the county has to come back and put in evidence that it's de minimus, and the county doesn't want any part of this; the county tried to make this go away a long, long time ago. The proponent of the statute, AHF, is the one that has been defending it. They clearly don't have standing. The Ninth Circuit dodged that issue in the appellate position, but I don't think Pregerson's going to let them come in and put on evidence, and the county's gonna say 'We ain't got it.'"

Next up was Randazza, who noted, in addition to Gelbard's information about copyrights, that registered intellectual property increases the net value of a company, which might be important if the company is up for sale, plus it gives a company certain international rights that wouldn't exist absent the registration. He also commented on the European Union's new personal privacy decision which allows EU residents to have information about themselves removed from the Web—and how that ability might affect American adult businesses.

"If you have data breach issues, membership issues, you're gonna have some serious regulatory problems, and the EU wants you to have, for example, data protection officers," he warned, then asked the audience, "Who has a data protection officer?" <Audience: crickets> "You don't know what the hell that is, but if you have a single Euro coming into your account, you are screwed if somebody decides that they want to troll you now, and you think our legal system has a bit of a predatory element to it? Well, it does... and it is not going to take very long for one of them [European attorneys] to figure out that this industry is completely vulnerable with a hull made of paper when it comes to privacy issues... and they're going to hit you with these kinds of suits in Europe, and when they do that... there are going to be some very large fines; they can be up to, I think the current regulations call for five percent of worldwide gross revenue, and whatever that equals net for you, you can just do the math and think about how much less nice of a car you're gonna be driving next year if that's your problem."

Kernes then asked Randazza to address the possibility that more adult productions companies may be moving to Nevada in response to California's condom laws.

"You've got a very different political climate here in Nevada," Randazza said, adding that he thought Nevada politicians, who when the legislature is not in session—it only meets for 120 days every two years—have "real jobs" and therefore would not respond to well to threats to "drum them out of office," suggesting that the pols might actually welcome that.

Randazza also took issue with the nostrum that "it's only legal to shoot porn in California," noting that while only two states have court decisions legalizing adult filming, none of the other states have actually outlawed it, so currently, adult content can be shot anywhere in the country, thanks to the First Amendment. He also talked about how he had vocally opposed some proposed legislation in Nevada on human trafficking that might have impinged on adult content production, and that in response to his testimony, "they actually put in our legislative history of our current statute that they changed it back to recognize [People v.] Freeman [which said that content production is not prostitution] and to recognize the First Amendment protections that came from Freeman."

"California should know, you've got a sexy neighbor over here who's willing to take you in if they [California] don't like you," he stated. "So I would say you have absolute safety here, or in New Hampshire; it's even safer there, but I don't know; nobody shaves their bush there, I guess, or something; they don't want to shoot there."

Kernes then asked DeWitt to address the mechanics of legally moving an adult business to Nevada.

"Setting up a corporation in Nevada is a wonderful thing, because Nevada doesn't have California's tax structure," DeWitt stated. "The only thing you need to have in Nevada, to set up an entity, an LLC or a corporation—and when I say 'corporation," I mean both when I do—you just set it up. It can be done on a computer; it's this simple. I've never checked, but I'll bet I can set up a corporation cheaper than LegalZoom, and I know I can be a registered agent cheaper than LegalZoom because I don't charge people for it, and a registered agent is the only thing you need to have in Nevada... There are a gazillion Nevada LLCs and corporations that have nothing to do with Nevada. I've represented LLCs where all of the owners live in Europe. They have a mail drop here, an LLC here, and the reason they did that is they wanted to paint a United States face on their website."

DeWitt went on to describe how he'd set up a Nevada corporation in 15 minutes while he had his client on the phone, answering questions. The reason for Nevada's popularity as a corporate base, he added, is because of all the taxes and fees that California levies on California corporations.

"I have set up a couple of adult studios here, licensed as an adult motion picture production studio, one in the county and one in the city, and this was eight years ago, and Marc's set up I don't know how many of them—"

"And they want you here; that's the thing, too," Randazza interrupted.

Both attorneys referenced one politician they'd spoken to who was only too happy to hear about the influx of adult producers.

"What do I have to do to get more of your clients to move here?" Randazza reported the politician as saying.

DeWitt also spent a few minutes warning that with a Republican Congress, adult content was likely to be targeted.

"The process in Congress is this: If you want a bill passed that's not a big deal and isn't going to be controversial, you just tack it on as a rider to a spending bill or a defense budget or something like that," he said. "Because in the federal system, unlike most states, a bill can have 87 subjects, so if you look at 2257... 2257 was a rider on the budget, I think, in 1988, and after it got held unconstitutional, it was a rider on another budget bill in 1990." He also noted that obscenity as a predicate crime under the Racketeer Influenced and Corrupt Organizations (RICO) Act was also a rider, introduced, DeWitt said, by Jesse Helms 10 minutes before the bill was voted on.

"Now that the Republicans run Congress, look for some of that to happen," he warned, "because Obama can't veto the defense budget because it has some rider making 2257 worse attached to it; he just can't."

A question period followed, with audience members asking about such topics as what concerns Floridians should have about shooting in the Sunshine State (Answer: be careful in some counties); the recent HIV transmission on a gay porn set in Nevada (Tynan gave a brief recap of the current situation, noting that many of the news reports have been wrong); how to register multiple clips for copyright protection; whether 2257 is being enforced, either nationally or internationally (Answer: not currently, but it could easily restart—and dog help us if Republicans regain the presidency in 2016); protection of U.S. copyrights/trademarks overseas (Answer: register in the countries where your content is distributed); and whether an entry page to an adult site that asks whether the viewer wants to continue to sexual content is legally required (Answer: no, but it's good public relations).