With some recent, significant copyright-infringement settlements, and the specter of 2257 enforcement, it perhaps is time to re-think your vulnerability to being hauled into court. Pure and simple, if you are in this business, you always are vulnerable to being sued, or worse.
The analysis begins with the easiest part, but where you are most vulnerable: "tort" claims. You probably have had one but didn't even realize it, perhaps when you were paying too much attention to your car stereo and not enough attention to the car in front of you and — Bam! But you likely weren't hauled into court. Rather, you just gave the other guy your insurance company's information and that was the last you heard of it.
These kinds of things are part of doing business. One of your employees, for example, forgets to put out that little sign that says, "Caution — Wet Floor." You have insurance to cover the claim by the customer who is upended as a consequence, and sues you for her broken arm. Or, for another example, an employee sideswipes a little old lady while on an errand to retrieve supplies.
The above kinds of claims are covered by what is imperative, a so-called CGL (commercial general liability) policy — insurance item number one. The next is automobile insurance. There, remember to discuss with your agent the extent of your commercial use of vehicles; otherwise you could be subject to being excluded from both your CGL policy and your personal automobile policy.
The next category of vulnerability is employees, who dearly love suing their bosses ... especially after being fired. Insurance actually is available for such claims, but it is very expensive. (Outside the scope of this article is the imperative to have an employee manual. Have one — period!)
Next, and sometimes covered by insurance, is where someone suckers you into buying counterfeit DVDs, or DVDs with other legal defects, such as infringing a famous trademark or including someone's photo without his consent. Some CGL insurance policies have provisions for "advertising injury," which may or may not cover you in the above situations — and some of the policies with such coverage nevertheless have specific exclusions that the carrier can use to escape coverage, and sometimes even the duty to defend a lawsuit. The lesson to be learned by the above is the importance of having a good insurance agent.
As you may know, if a supplier sells you DVDs with a legal defect, resulting in a suit against you, the supplier should be bound to indemnify and defend you — so think twice about buying cheap DVDs out of the trunk of someone's car. Even so, what if someone sues you and is just wrong? You win the case, but are on the hook for your attorneys' fees. Thus, have insurance.
Now, things get a little tougher where there is potential criminal liability, against which insurance is not available. In the first place, no distributor in his right mind will warrant that its x-rated content is not obscene, given the impossibility of knowing in advance the community standards from one time and place to another — or even from one jury to another. If you send the wrong disk to Oklahoma, it's going to be your problem.
But 2257 is another issue, as is the issue of whether there are minors in the material. Those defects are objectively measurable, but not always known. With the ever-increasing sanctions for 2257 violations and the draconian penalties for child-pornography offenses — which include visual depictions of 17.9-year-old performers engaged in sexual conduct — the issue of degree of care is significant.
On the issue of underage performers, there is some precedent. As you may be aware, in the X-Citement Video case, the Ninth Circuit Court of Appeals held that the federal child pornography law violated the First Amendment because it failed to include any requirement of knowledge with respect to the existence of an underage performer, thus striking down the statute and setting aside the conviction. United States v. X-Citement Video, Inc., 982 F.2d 1285 (9th Cir. 1992). But the Supreme Court reversed, 513 U.S. 64 (1994), holding that Congress intended by the language of the statute to include an element of knowledge.
The statue involved contains two parts (the defendant having been convicted of both), stating an offense with respect to:
"Any person who knowingly transports or ships in interstate or foreign commerce . . . any visual depiction, if (A) the producing of such visual depiction involves the use of a minor engaging in sexually explicit conduct; and (B) such visual depiction is of such conduct." 18 U.S.C. § 2252(a)(1).
The other part is materially identical, except involving receipt or distribution of materials that have been shipped in interstate or foreign commerce.
The Ninth Circuit had held that "knowingly" modified "transports" but not subparts (A) and (B) concerning the presence of a depiction of a minor. In other words, the court construed the statute to say that anyone who "knowingly transports or ships" a visual depiction is guilty of shipping child pornography regardless of whether he knew about the child or pornography aspect of it.
The Supreme Court rejected that construction of the statute, noting a history of "cases interpreting criminal statutes to include broadly applicable" knowledge requirement, even where the statute did not, on its face, include knowledge. The opinion noted that prior cases teach that "the presumption in favor of a [knowledge] requirement should apply to each of the statutory elements that criminalize otherwise innocent conduct."
All of the above (perhaps confusing) legal reasoning is critical to the question of just how careful one must be concerning both the risk of an underage performer in a DVD and the risk of a 2257 violation.
As to the age issue, several real-world factors figure into this. First, in the mainstream world of adult video, producers carefully check identification of performers, not only because §2257 requires it, but because of the misery that invariably befalls anyone who is fooled by an underage performer. Second, every time an underage performer has surfaced, the news has spread faster than the Chicago Fire, and the materials immediately taken out of circulation.
The latter, of course, establishes why §2257 is unnecessary. The idea of §2257 is ostensibly that any time an underage performer is discovered, the Department of Justice can quickly take the materials displaying a minor out of circulation. But experience teaches that the industry will take such action faster than the glacier-speed federal government ever could. With the advent of the Internet, discovery of an underage performer results in the videos coming off the shelves in literally hours. The truth is that §2257 accomplishes little more than adding a new crime for the federal government to utilize against materials that otherwise are protected by the First Amendment, but which the present administration happens to dislike.
If you are purchasing your videos from suppliers who have any level of credibility, you can feel fairly comfortable that no minors are involved. Nonetheless, do keep your "ear to the ground." If a minor surfaces, it is all over "the boards" immediately. The only caveat is the concept of "willful blindness," which is an instance where a person "(1) actually suspected that he or she might be involved in criminal activity, (2) deliberately avoided taking steps to confirm or deny those suspicions, and (3) did so in order to provide himself or herself with a defense in the event of prosecution." United States v. Baron, 94 F.3d 1312, 1318 n.3 (9th Cir.1996). If something clues you in, it is thus imperative to act on the clue immediately.
A more difficult question is raised with respect to compliance with §2257 because there is no Supreme Court case deciding what level of care is required. However, the language of the statute and the X-Citement Video case are together instructive. If you are merely a distributor of DVDs (and thus neither a primary nor secondary producer), the only potential §2257 crime is defined in relevant part as follows:
"(f) It shall be unlawful– ...
"(4) for any person knowingly to sell ... any ... video, or other matter ... which–
"(A) contains one or more visual depictions ... of actual sexually explicit conduct ...;
"which does not have affixed thereto ... a statement describing where the records required by this section may be located, but such person shall have no duty to determine the accuracy of the contents of the statement or the records required to be kept." 18 U.S.C. § 2257(f).
Like the child pornography statute, this one leads off with "knowingly" sell, followed by a list of "which" conditions. The statute is thus just like the child pornography statute as interpreted in X-Citement Video. Plus, it expressly dispenses with any requirement to go beyond the face of the statement.
So, what care must be taken? First, as noted above, you cannot just turn a blind eye to §2257 requirements. If you note DVD packaging with the kind of explicit pictures that trigger §2257 but containing no writing of any kind, your failure to look more carefully is turning a blind eye — "willful blindness." Are you required to put every DVD into a machine and check for compliance? Obviously not — unless you have some information suggesting non-compliance. If you happen to observe that a 2257 disclosure has a post office box listed, then you are on notice. If you are a large scale distributor, representation from your suppliers that they comply with 2257 should be enough, absent any other information.
Generally, a little common sense in light of the above is really all that is required. But an overall review of the risks inherent in your business by your attorney and your insurance agent certainly is warranted, given the number of mines buried in this field.
(Clyde DeWitt is a Los Angeles attorney whose practice has been focused on adult entertainment since 1980. He can be reached through AVN's offices, or at [email protected]. Readers are considered a valuable source of court decisions, legal gossip and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.)
