In recent decades, law enforcement has started focusing its attention on the common advertising venues for prostitution – escort agencies, massage parlors, etc. Some agencies have gone so far as to threaten local phone book publishers with racketeering charges for publishing ads for escort agencies in their yellow pages. Actual racketeering charges were filed against an alternative weekly newspaper in the Orlando, Florida, area based on its publication of escort ads, but the charges were later dismissed. Law enforcement continues its witch hunt-like pursuit of the escort industry under the flawed theory that forcing escorts “underground” will eventually lead to the cessation of prostitution, itself. Admittedly, law enforcement’s efforts had successfully hampered certain commercial outlets for the escort industry; that is until the advent of the Internet.

Like many things involving the so-called ‘business of sex,’ operating an adult-themed website is not exactly easy these days. Between maintaining compliance with relevant laws, less disposable income by consumers and the impact of piracy, the adult website industry has suffered its share of challenges recently. But those challenges have been magnified for the online escort directory business model, given law enforcement’s renewed interest in finding a scapegoat to blame for so-called “human trafficking.” As a result, legitimate escort websites have their work cut out for them. Substantial concern has arisen in this arena given the recent forfeiture of Escorts.com to the Department of Justice, and the resulting plea deal whereby the operating companies agreed to forfeit millions of dollars in advertising proceeds, and admit to federal money laundering offenses premised on their online escort advertising activity.

Given that some escorts have been known to cross the line into illegal activity a time or two, operators of online escort websites must be well-versed in several areas of criminal law along with the important constitutional protections afforded to commercial speech. The line between prostitution-related offenses and protected speech can often be ‘dim and uncertain’ as is the case with many other legal issues that adult industry participants are forced to confront on a daily basis. Although prostitution related offenses are the purported basis for most criminal liability surrounding the escort business model, the proliferation of the Internet has caused both law enforcement and escort site operators to consider various ‘accomplice liability’ offenses like conspiracy, solicitation and “aiding and abetting,” when evaluating the legality of a given escort advertising business model. The same laws used to prosecute the person who answers the phone at an ‘out-call’ service may be used in the attempt to impose criminal liability on Internet-based escort directory providers. In the end, much depends on whether the alleged accomplice had knowledge (whether actual or constructive) of any illegal activity by the escort(s). An online classified ad space provider would have no traditional legal obligation to second guess the legality of any advertised services, so long as the services themselves were not inherently illegal. Thus, an ad for unlicensed, automatic weapons may be problematic, however escort activity is not inherently illegal, and is, instead, often recognized and even licensed by many local governments. Online escort directories, at least in theory, should have no reason to question whether a particular advertiser was running an illegal ‘side business’ in addition to her presumptively-legal escort companionship services. However, law enforcement tends to see it differently, and often assume that minors are being exploited through the targeted online escort site, in addition to traditional adult prostitution concerns

Thus, in recent years, in yet another misguided attempt to “save the children,” law enforcement has taken to attacking tangential associates of the escort service business model; the online advertising forums. The Internet enabled countless alternative venues for escort advertising, allowing escorts to take control of their businesses – often eliminating dangerous ‘middlemen.’ But this new business model generated new legal concerns – both for the escort and the advertising service provider. The scope of escort site operation can range from ‘hands on’ services such as scheduling meetings and taking payment, to more detached services such as date reviews, or the simple sale of advertising space to escorts or agencies. It is this last category, mere advertising, where the legal issues get complex. While the sale of advertising space for legal activities should remain protected by the First Amendment under the ‘commercial speech’ doctrine, concerns can develop when the advertising venue gains some level of knowledge of illegal activity – whether actual or intended – undertaken by the escort. This knowledge could come from a variety of sources, including arrest records, anonymous complaints, escort reviews, media reports, or even the escort herself, in the form of proposed or published advertisements. The difficult legal issues generated by these distinct sources of potential knowledge will be addressed in Part II of this post.

In recent years, state and federal authorities have relentlessly pursued a select few online escort venues, namely; Craigslist.org, Escorts.com and BackPage.com. In August of 2010, dozens of state Attorneys General publicly declared a quasi-war on escort advertising starting with a demand letter to Craigslist insisting that the site’s entire adult personals category be removed. For fear of criminal prosecution, Craigslist complied and implemented a new thorough screening process for the revised “adult” section of the site. Undeterred by the site’s attempt at compliance, South Carolina’s Attorney General, Henry McMaster, continued his public threats of criminal prosecution. After several months in and out of court, Craigslist shifted gears and completely abandoned its U.S. based erotic services category and ultimately withdrew its efforts to reinvigorate its censorship claims against the government.

Undoubtedly witnessing the successful results of their Craigslist bullying, the AG’s then set their sights on Backpage.com, via another demand letter calling on the site to terminate its online advertising of “adult services” under the threat of criminal charges. Conceding to a degree, Backpage unveiled new security measures for its adult personal ads and subsequently called on “friends in the industry” (incidentally, directly naming over two dozen “fellow” websites involved in escort services) to form a “National Task Force” against misuse of online escort advertising. Within weeks of Backpage’s roguish actions, several of the identified sites were staring down the barrel of their own state or federal investigations; none more publicized than the unexpected FBI raid on the corporate offices of Escorts.com. After more than six months of industry speculation on the issue and virtual silence from the company, on June 21, 2011, Escorts.com quietly shut down its website. The explanation for the closure came recently with the filing of a corporate guilty plea and forfeiture of the domain name along with substantial amounts of cash.

While the campaign against Backpage.com had slowly faded from the headlines, a few months ago, in July of 2011, the case took on new life, as Seattle Mayor Mike McGinn, labeling Backpage as a “well-known accelerant of underage sex trafficking,” ordered all city departments to terminate any active advertising relationship with the Seattle Weekly (a subsidiary of Village Voice Media, the publisher of Backpage.com). Most likely a knee-jerk reaction to the letter issued by the National Organization of Women demanding his support in rallying against Village Voice Media, McGinn’s advertising boycott sent ripples through the online escort industry; the effects of which are still being felt today. Just a few weeks later, in an overly public display reminiscent of that waged against Craigslist, forty-six state AG’s, acting on behalf of the National Association of Attorneys General, sent a letter to Backpage.com accusing the site of knowingly profiting from ads related to prostitution and failing to take the security precautions it once promised to implement. Containing a myriad of demands, the letter’s inquiries into Backpage’s business practices range from “describing in detail” what the site understands to constitute “illegal activity” to requesting specific advertisement statistics and company policy documents. Responding to the letter, Village Voice Media emphatically reiterated that there is “no gap between our mutual goal of eradicating the scourge of child trafficking as quickly and effectively as possible.” Citing examples like constant cooperation with police investigators and the successful conclusion of an ad-based sting operation, Village Voice Media maintained that Backpage.com is continually doing everything in its power to prevent criminal activity on its site. Apparently, cooperating with law enforcement is no longer good enough.

The Backpage case was quickly overshadowed by the above-referenced guilty plea by the corporate operators of Escorts.com. National A-1 Advertising and R.S. Duffy, Inc., the parent companies of Escorts.com since 2007, plead guilty to money laundering and criminal forfeiture charges arising from actions that allegedly “facilitated interstate prostitution activities.” According to U.S. Attorney Peter Smith, prostitutes and escort agencies paid to advertise on the site, while customers were charged subscription fees to view such advertisements. The revenue generated by the advertisements and subscription fees constituted the alleged proceeds of “violations of federal laws prohibiting interstate travel in aid of racketeering enterprises, specifically prostitution, and aiding and abetting such travel.” Upon the U.S. District Court’s approval of the settlement agreement, the companies agreed to serve a probation term of 18 months, pay a $1.5 million in fines, and forfeit the domain name www.Escorts.com, along with $4.9 million in cash derived from the alleged unlawful activities. Notably, although the settlement bans the government from bringing additional criminal charges against the companies and their other related business ventures (e.g. – Hotmovies.com and PrimeTel Communications), the agreement does not prohibit the IRS from pursuing any tax-related criminal charges arising from the money laundering. And although prosecutors have reserved the right to criminally pursue individuals associated with both companies, there is no indication that the government intends to pursue such an option. Despite all the ambiguities surrounding the legal fate of online escort directories, one thing is for sure, the pressure from law enforcement not only remains on these online media outlets but is apparently increasing. Legal compliance has never been more important and preventative maintenance is the key. Part II of this blog post will provide an overview of the current issues facing escort websites in light of the current legal environment, and preemptive measures for escort directories that could make all the difference should future litigation arise.

*Note: This article was drafted with the purpose of addressing various political agendas affecting the adult entertainment industry and in no way was intended as a political endorsement of any candidate. It should also be noted that the author is not associated with any election campaign and is not a member of any political party.

So, is this reluctant acceptance of 2257 as a fact of life warranted? Or is there still a possibility that these burdensome obligations will be lifted – potentially in favor of a more realistic and constitutional system of performer age verification? The answer to these questions requires that we delve into the history of the challenges to Section 2257, and recap the current status of the law.

Initially, the Free Speech Coalition should be congratulated for continuing to fight the good fight against Section 2257. They’ve litigated hard in several courts in the attempt to beat back these sweeping regulations. J. Michael Murray, Esq., whose firm was hired to mount the most recent
challenge, which is currently pending in the Third Circuit Court of Appeals – is one of the best First Amendment lawyers in the biz. But given the history of previous legal challenges to the statute and the way the wind is blowing in the current case, adult webmasters and content producers may need to come to grips with the fact that 2257 will be upheld, therefore, enforcement by the FBI may resume at any time.

The previous attempts to invalidate 2257 have spanned over two decades since its inception in 1988. The original law was struck down as unconstitutional on First Amendment grounds shortly after its passage. American Library Ass’n. v. Thornburgh, 713 F. Supp. 469 (D.D.C. 1989). After the Thornburgh challenge, Congress amended the statute to no longer utilize a rebuttable presumption that the performer in question was a minor, but to directly impose criminal sanctions for noncompliance. The ALA challenged 2257 again challenged, but this time the First Amendment didn’t come out on top. In American Library Ass’n. v. Reno, 33 F.3d 78 (D.C. Cir. 1994), the amended version of 2257 was upheld, as the court rejected the ALA’s argument that the record-keeping provisions were content-based restrictions. In doing so, the Reno court agreed with the feds that record-keeping requirements are necessary to prevent the exploitation of children and a commercial market for child pornography. Further, the district court tailored the scope of the record-keeping provisions by narrowing the definition of “secondary producers” and eliminating the indefinite temporal requirement for maintaining records.

All was calm on the 2257-front for a few years until Sundance Assoc., Inc. v. Reno, 139 F.3d 804 (10th Cir. 1998), when the Tenth Circuit decided to shake things up a bit and take the DOJ down a peg. The Sundance court invalidated the regulations that imposed records keeping obligations on “secondary producers;” a broad category of ‘producers’ that was created purely by agency regulation and not referenced in the actual 2257 statute. The industry as a whole generally relied on the Sundance decision as the correct interpretation of the law. In the real world that meant that only original producers of adult content kept records, and webmasters that were uninvolved with content production maintained no records of their own, but simply identified the ‘primary producer’s’ records custodian on their website, in order to discharge their perceived obligations under the statute. The DOJ disagreed with the Sundance interpretation of the law, but the statute went unenforced for several years after the Sundance case, so the industry became complacent with the status quo.

That all changed in 2005, when the DOJ passed new regulations which re-ignited the “secondary producer” debate, by imposing records-keeping requirements on all producers including webmasters that published material on a website. The Code of Federal Regulations issued in June of 2005 defined a secondary producer as one who “inserts on a computer site or service a digital image of, or otherwise manages the sexually explicit content of a computer site or service that contains a visual depiction of, an actual human being engaged in actual or simulated sexually explicit conduct.” Overnight, hundreds of thousands of websites became illegal given the lack of 2257 records to back up the content appearing on those sites.

In response to these amended regulations, and the tremendous panic in the industry, the FSC filed suit in Colorado, which happens to be within the realm of the Tenth Circuit, and was therefore bound to follow the Sundance case as precedent. wordFree Speech Coalition v. Gonzales, 406 F. Supp. 2d 1196 (D. Colo. 2005). On December 28, 2005, the FSC received a late Christmas present when the district court, following Sundance, preliminarily enjoined enforcement of the new requirements for all secondary producers who were members of the FSC at the time. As the Attorney General commenced the appeals process in Gonzales, Congress was taking matters into its own hands by passing the Adam Walsh Child Protection & Safety Act, which officially amended 2257 by adding “secondary producers” to the list of those responsible for the record keeping obligations. This essentially ‘fixed’ the main problem identified in the Gonzales case. In the wake of the Adam Walsh Act passage, the Gonzalez court granted a partial summary judgment against the FSC in the case, finding that the Sundance decision no longer applied to 2257 as amended. Free Speech Coalition v. Gonzales, 483 F. Supp. 2d 1069 (D. Colo. 2007). On May 1, 2007, based on an agreement by both the DOJ and the FSC, the Gonzales court dismissed the case, likely as a result of the legislative resolution of the main legal challenge raised in the litigation.

This left 2257 in a state of presumed validity until a breathtaking win followed quickly by a heartbreaking loss in the case of Connection Distributing Co. v. Holder, 557 F.3d 321 (6th Cir. 2009) (en banc), cert. denied 2009 U.S. LEXIS 6926 (Oct. 5, 2009). In fall 2007, a panel of three judges on the Sixth Circuit Court of Appeals found the record-keeping requirements set forth in 2257 imposed an overbroad burden on protected speech. Shortly after the opinion was issued, the government successfully petitioned the entire Sixth Circuit for “en banc” review of the panel decision. Ultimately, the en banc court rendered a devastating blow to the adult industry by vacating the well-reasoned panel decision, and upholding 2257 in the face of numerous constitutional challenges.

In 2008, the DOJ passed another set of regulations, clarifying its position on records keeping compliance by both primary and secondary producers (along with many other issues). Those regulations became effective in March, 2009, and are what the industry lives by today.

Ultimately, the FSC mounted its most recent challenge the statute and related regulations by filing FSC v. Holder, 2010. U.S. Dist. LEXIS 75471 (E.D. PA July 27, 2010), in Pennsylvania. However, the district court rejected the FSC’s challenges last summer, and dismissed the case (alternatively) on the grounds of collateral estoppel/res judicata, which means that the prior losses suffered by the FSC in the Gonzalez case prevented the organization from re-litigating those issues in the Holder case. Id; see Memorandum Opinion dated July 27, 2010, at p. 45. This doctrine of ‘claims preclusion’ essentially means that the same party can’t keep suing over and over again, asking different courts (or the same court) for the same relief. The FSC has appealed the dismissal of its most recent case to the Third Circuit, in the hopes of reviving the legal challenge and obtaining some relief on behalf of the industry.

While the author wishes the FSC all the success in the world in its pending appeal, the chances of success in striking down 2257 are looking somewhat slim. As is evident from the above, the majority of court decisions have rejected challenges to 2257, and the FSC has been a party to a couple of these cases already, which negatively impacts its chances of prevailing, given the issues of claims preclusion referenced above. While all the previous court decisions may be wrong, from an academic perspective, a brief gaze into the crystal ball provides a pretty good idea what will happen with the current challenge in the Third Circuit. As a general rule of thumb recognized in the legal community, the chances of prevailing in any appeal are less than 25%. When you factor in things like the fact that the case is being backed by the adult industry, the previous losses by the FSC, and the government’s claim that the challenged regulations are designed to “protect the children” from exposure to sexual activity, the chances of a win on appeal tend to grow even slimmer. Anyone who’s been involved in litigation before will tell you to expect the unexpected, but truth be told; the FSC is fighting an uphill battle.

Certainly this information will be tough to swallow for those closely involved with the case, who undoubtedly remain hopeful for a positive outcome. But as a practical matter, any producers who are counting on invalidation of 2257 as their records-keeping strategy need to wake up and read the tea leaves – to mix a metaphor. All producers of 2257-triggering content should be in full compliance by now, in preparation for another potential loss on appeal, and eventual enforcement of the statute. Moreover, given Congress’s track record lately and waning public approval of the current Administration, a rigorous enforcement plan could be very likely if there is a Republican to answer to in 2013.

At this point in the game, the only realistic hope for invalidating 2257 is for a party with substantial funding and completely separated from the FSC, to initiate a new challenge using a different legal strategy than that which has been employed thus far. Unfortunately for the FSC, as a party plaintiff in the previous cases, it is burdened with these ‘res judicata’ and ‘collateral estoppel’ defenses based on its previous losses in court. Any new 2257 challenge would need to come from a new entity, which may need to carefully avoid association with the FSC or its members, given how courts determine (based on “privity”) which parties are barred by claims preclusion defense. Additionally, for any realistic shot at a successful claim, any new challenge would need to be based on different legal arguments and theories. Admittedly, the arguments made in the litigation thus far have been viable and should have carried the day with any intellectually-honest judge. But that’s not always the reality when one steps into court – particularly when the adult industry is behind the challenge. Other potential claims remain available to be litigated, but it is uncertain whether they will ever be raised, and who would raise them. Naturally, funding is always an issue, and constitutional litigation against the federal government is nothing if not costly.

For the foreseeable future, the industry needs to take a second look at its records keeping and labeling compliance status. This includes so-called user generated content sites which have taken liberal advantage of the 2257 exemptions, even in some cases where the content is not truly user-generated, or does not fall into the recognized exemptions. It’s time to dot the I’s and cross the T’s with your 2257 records, because the writing may be on the wall, for those who choose to see. But for the time being, the only true constant for 2257 is the phrase, ‘to be continued…’

But as much as we’d like to pretend that this is yet another divine alliance between the consistently overlapping groups of Republicans and religious conservatives, it is most definitely not. Several democrats, including the unexpected addition of Dianne Feinstein of California, signed on in support of Hatch’s demands. Feinstein’s backing of the letter comes as a surprise given the fact that the adult industry companies the letter is targeting are the very same businesses comprising her southern California constituency. When asked to comment on Feinstein’s involvement in this new resurgence against obscenity, a spokesperson for the Senator pointed to her support of “several measures targeting child pornography in recent years” – which of course provides a crystal clear explanation for jumping on the witch-hunt bandwagon targeting completely lawful speech engaged in by adults.

Even more disturbing might be Hatch’s extremist allegations that “experts warn” pornography is related to sexual harassment, violence against women and sex trafficking. As if the Orwellian undertones of the letter aren’t enough, Hatch is channeling us back to the 80s with over-broad, feminist far-left propaganda, reminiscent of the Dworkin-MacKinnon Era anti-porn crusade. Note: unsuccessful anti-porn crusade.

An Assistant Attorney General has responded to the allegations of being “soft on porn” with a letter of reply, stating that the DOJ has made the realistic decision to focus its “limited investigative and prosecutorial resources on the most egregious cases, particularly those that facilitate child exploitation…” Given the DOJ’s unsuccessful attempt at its last high profile obscenity trial against Evil Angel owner, John Stagliano, it’s really no wonder that the DOJ decided to turn its attention to prosecuting media involving children as opposed to consenting adults. Stagliano’s obscenity trial last July, which resulted in a judgment of acquittal on all counts, was likely the final nail in the coffin for the now-defunct Obscenity Prosecution Task Force. The Task Force was a special Justice Department unit set up during the first Bush administration as a result of conservatives reacting to the abundance of allegedly obscene material available on the Internet. This recent disbanding of the DOJ’s ‘Porn Police’ may have been exactly what Orrin Hatch was waiting for to drop his bomb on Capitol Hill. Between Hatch’s demands for action on the DOJ and the fact that the 2012 presidential bids are being tossed around; is it possible the next year or so could provide the perfect storm for a resurgence of the Obscenity Prosecution Task Force?

Given the vagueness of the Obama Administration’s stance on obscenity prosecution, the possibility of a Republican taking over in 2012 leads to thoughts of a Reagan-era anti-pornography agenda renaissance. How likely is it that the incumbent will be able to stave off the Republicans for another four years; obviously everyone in every industry has their own prediction, but we all know it’s too soon to tell. However, with Obama’s approval rating plummeting daily and the GOP’s recent accusations that the democrats aren’t taking the budget crisis seriously enough, it’s not so far-fetched to see Obama throwing the conservatives a bone by entertaining Hatch’s demands in the near future. What would Trump do?

Notably, as this blog post goes to print, reports of adult filmmaker, Ira Isaacs, having been indicted on five new obscenity charges are hitting the newswire. These latest indictments join Isaacs’s three previous obscenity charges originating in 2006. Originally slated to go to trial in 2008, the case was postponed due to the controversial recusal of Judge Alex Kozinski. The trial, now set for May of this year, could commence within days of Isaacs’s arraignment on the new obscenity counts, unless his defense attorney can push off the trial again, in light of the new charges. Is this latest news pure coincidence or a knee-jerk reaction by Obama’s DOJ to the news of the day? Let’s sincerely hope that it’s the former because it’s a little disconcerting that the Attorney General might find it more damaging to be considered “soft on porn” than proceeding with a baseless fishing expedition against an easy target for the sole purpose of flexing his judicial muscles in some inter-branch, alpha-politician contest with Orrin Hatch.

So how does all this ambiguity ultimately affect the adult industry? This industry has traditionally been used as a tool in political agendas, unfortunately resulting in the First Amendment as the inevitable loser all too often. As referenced earlier in this post, Republican administrations going as far back as Reagan, have displayed blatant aggressiveness against the adult industry, citing the same ‘moral decay of society’-type rationale currently demonstrated by Senator Hatch and his supporters. On the other hand, the Democratic Party has traditionally been more receptive to the adult industry in general, but if recent years have shown anything, it’s that ‘liberal’ does not necessarily mean ‘libertarian.’ And now, especially with Capitol Hill reeling from some of the most volatile bipartisan infighting this country has seen in decades, one can’t help but wonder if adult entertainment is going to be a scapegoat yet again. So batten down the “Hatch’s” and get ready for another round.

*Note: This article was drafted with the purpose of addressing all political agendas affecting the adult entertainment industry and in no way was intended to act as a political endorsement of any candidate. It should also be noted that the author is not associated with any election campaigns or a member of any political party.