Federal Appeals Court rules in favor of AG Stein in dispute over criminal libel law

A federal Appeals Court has ruled in favor of N.C. Attorney General Josh Stein in his challenge of a state criminal libel law dating back to 1931. The unanimous panel agreed Stein is likely to win his argument that the law is unconstitutional.

The 4th U.S. Circuit Court of Appeals decision sends the case back to a trial court. There Stein had lost his bid to secure a preliminary injunction against enforcement of the challenged law.

In a separate development, the U.S. District Court in the case has approved using former N.C. Supreme Court Chief Justice Jim Exum as a mediator in the case. Exum, a Democrat, would work to resolve the ongoing legal dispute between two other Democrats, Stein and Wake County District Attorney Lorrin Freeman.

“A 90-year-old North Carolina law makes it a crime to publish a ‘derogatory report[ ]’ about candidates for public office where the speaker ‘know[s] such report to be false or’ acts ‘in reckless disregard of its truth or falsity,’” wrote Appeals Court Judge Toby Heytens. “Plaintiffs assert this statute violates the First Amendment. The district court denied a preliminary injunction because it determined plaintiffs were unlikely to succeed on the merits. We disagree. Not only have plaintiffs shown a likelihood of success, ‘it is difficult to imagine them losing.’ Accordingly, we vacate the district court’s order and remand for further proceedings.”

“We conclude the Act is likely unconstitutional for two reasons,” Heytens wrote. “First, the Act appears to criminalize at least some truthful statements — a result the First Amendment forbids. Second, even if the Act reaches only false statements, it makes impermissible
content-based distinctions in selecting which speech to forbid.”

The challenged law’s ban on “derogatory” comments is not necessarily limited to false speech, Heytens warned. “[T]he district attorney asserts the Act’s use of the term ‘derogatory’ excludes truthful statements. That argument has multiple problems,” he wrote.

“For one thing, the district attorney does not identify — nor have we located — any source suggesting ‘derogatory’ refers exclusively to factually false statements. To the contrary, dictionaries from around the time of the Act’s 1931 passage define ‘derogatory’ as ‘lessening in good repute; detracting from estimation; disparaging’ or ‘disparaging; detracting,’ with modern definitions including ‘expressive of a low opinion,’ ‘disparaging,’ or ‘detracting from the character or standing of something.’ And in common usage, there is no reason a statement cannot be both derogatory and true.”

Appellate judges rejected the notion that the challenged law could survive even if it applied to some true statements. “[T]he district attorney asserts that even if the Act reaches some truthful speech, it remains constitutional because any overbreadth is not substantial in relation to the Act’s legitimate sweep. We disagree,” Heytens wrote. “The district attorney has offered no examples of this Act’s ‘legitimate applications’ — much less applications unrelated to speech — nor has she shown any such applications should mitigate our concerns about the law’s chilling effects on truthful speech during political campaigns.”

“Under this law, prosecutors need never show — or even allege — a ‘derogatory’ statement was false so long as they contend the speaker acted with reckless disregard of its truth or falsity,” Heytens added. “The Supreme Court has emphasized ‘there is no sound principle which can make [a person] liable’ for ‘publish[ing] the truth,’ and it has announced a constitutional ‘rule’ that ‘absolutely prohibits punishment of truthful criticism’ even when such criticism is made with ‘ill will’ or ‘actual malice.’ Nothing more is needed to show this Act is likely
unconstitutional.”

Even if it survives other tests, “we would still conclude this Act fails constitutional scrutiny because it draws impermissible content-based distinctions in identifying which speech to criminalize,” Heytens wrote.

“Under this statute, speakers may lie with impunity about businesspeople, celebrities, purely private citizens, or even government officials so long as the victim is not currently a ‘candidate in any primary or election.’ That is textbook content discrimination,” Heytens wrote.

The Appeals Court decision returns the case to a trial court. “The district court denied plaintiffs’ motion for a preliminary injunction based solely on its conclusion that plaintiffs were unlikely to succeed on the merits of their First Amendment claim,” Heytens wrote. Since appellate judges disagreed, “We thus vacate the district court’s order and remand for further proceedings consistent with this opinion.”

Heytens is a Biden administration appointee to the 4th Circuit. Judges Albert Diaz, an Obama appointee, and Allison Jones Rushing, a Trump appointee, joined his opinion.

Rushing added a one-paragraph concurrence. “I agree that the plaintiffs are likely to succeed on the merits of their First Amendment claim,” she wrote. “I therefore join the Court’s opinion, which does not address the other preliminary injunction factors — likely irreparable harm, the balance of the equities, and the public interest — instead leaving them for the district court to resolve on remand.”

An order filed Tuesday in U.S. District Court confirms Exum as a mediator for the case moving forward. “[T]he mediator shall confer with the parties regarding scheduling of the mediated settlement conference, determine the place and time of the conference, and give notice to the parties,” according to the order signed by District Court Clerk John Brubaker.

Previous court filings have suggested that the case could extend into the summer.

Stein wants federal courts to declare N.C. Gen. Stat. § 163-274(a)(9) unconstitutional. The state law declares it unlawful, as a Class 2 misdemeanor, “For any person to publish or cause to be circulated derogatory reports with reference to any candidate in any primary or election, knowing such report to be false or in reckless disregard of its truth or falsity, when such report is calculated or intended to affect the chances of such candidate for nomination or election.”

A 2-1 ruling from the 4th Circuit on Aug. 23 gave Stein an injunction against the law. The injunction blocked Freeman’s office from pursuing criminal charges against Stein and two colleagues.

The 4th Circuit injunction arrived one day after the Wake grand jury asked the D.A.’s office to present indictments against Stein, chief of staff Seth Dearmin, and 2020 campaign manager Eric Stern.

The statute of limitations in the case was scheduled to run out in October. But an Oct. 11 filing from Freeman’s office states that 4th Circuit judges issued their injunction “upon Plaintiffs’ consent to enter a tolling agreement as to enforcement of the Statute against them.” A tolling agreement would stop the clock on the statute of limitations until the case is resolved.

The controversy stems from Stein’s 2020 re-election campaign. Stein, a Democrat, defeated Republican challenger Jim O’Neill, the Forsyth County district attorney. Stein’s winning margin was just 13,622 votes out of 5.4 million ballots cast.

Stein and O’Neill criticized each other during the campaign over the issue of untested rape kits. After O’Neill accused Stein of allowing thousands of rape kits to remain untested and “sitting on a shelf,” Stein responded with a TV ad titled “Survivor.”

The ad featured Juliette Grimmett, a sexual assault survivor who worked for Stein in the N.C. Justice Department. At one point in the ad, Grimmett said, “When I learned that Jim O’Neill left 1,500 rape kits on a shelf leaving rapists on the streets, I had to speak out.”

O’Neill filed a complaint with the State Board of Elections, calling the ad false and defamatory. O’Neill cited the now-disputed state law. A state elections board investigator looked into the case and turned over findings to the Wake D.A. in 2021.

Freeman had recused herself from the case, turning it over to prosecutor David Saacks. Saacks sought a more thorough investigation from the SBI. Based on that work, the Wake D.A.’s office proceeded to the grand jury last summer with possible charges connected to the ad.

Stein initially won a temporary restraining order in the case from U.S. District Judge Catherine Eagles on July 25. But Eagles later reassessed her ruling and refused to grant Stein an injunction.

The ”Survivor” ad aired from August through October 2020. Misdemeanor charges in North Carolina come with a two-year statute of limitations. That means that Freeman’s office faced a pending deadline to proceed with charges stemming from that ad.

Thanks to the tolling agreement, though, the statute of limitations could extend beyond the resolution of the legal dispute.