Split Federal Appeals Court blocks NC from stopping PETA’s ‘newsgathering’ actions

A federal Appeals Court has struck down part of a North Carolina law that blocked the animal-rights activist group PETA from conducting undercover “news” operations. The split 2-1 ruling leaves intact other portions of the 2015 Property Protection Act.

A 2020 trial court decision from U.S. District Judge Thomas Schroeder had gone further in striking down sections of the act, known to critics as the “Ag-Gag Law.”

“Seeking to follow in the well-trodden footsteps of Upton Sinclair, People for the Ethical Treatment of Animals (PETA) wishes to conduct undercover animal-cruelty investigations and publicize what they uncover,” wrote 4th Circuit Senior Judge Henry Floyd. “But it faces a formidable obstacle: North Carolina’s Property Protection Act (the Act), passed to punish ‘[a]ny person who intentionally gains access to the nonpublic areas of another’s premises and engages in an act that exceeds the person’s authority to enter.’”

“Some provisions cover wide swaths of activities, such as ‘substantially interfer[ing] with the ownership or possession of real property,’” Floyd added. “Others appear more narrowly focused, prohibiting capturing, removing, or photographing employer data — but only when the employee uses the data ‘to breach the person’s duty of loyalty to the employer.’ Even these more specific provisions, however, potentially reach anything from stealing sensitive client information to ferreting out trade secrets in hopes of starting a competing business.”

Floyd notes that competing parties in the case “spill much ink” about potential repercussions. “PETA contends the Act is nothing more than a discriminatory speech restriction dressed up in property-protection garb. It urges us to put aside any legitimate protections the Act may offer and concentrate on what it believes the North Carolina General Assembly really meant to accomplish: end all undercover and whistleblowing investigations.”

“North Carolina casts the Act as generally applicable,” Floyd added. “Any incidental restrictions on speech, it counters, come only as unavoidable side effects of the Act’s strong remedies against trespass and disloyalty.”

The 4th Circuit decided not to tackle the law as a whole. “[W]e decide no more than we must,” Floyd wrote. “We enjoin the Act insofar as it applies to bar protected newsgathering activities PETA wishes to conduct. But we leave for another day all other applications of the Act.”

The 42-page majority opinion raises major questions about all aspects of the law, but Floyd explained that the court decided not to reject it completely.

“[W]e decline to enjoin any potential applications of the Act outside the newsgathering context,” he wrote. “We thus reverse the district court’s invalidation of subsections (b)(2) and (3) in their entirety.”

The 4th Circuit disagreed with the breadth of Schroeder’s ruling.

“Our main point of disagreement centers around the court’s belief that all ‘recording is protected speech,’” Floyd explained. “We do not think it wise to go that far where the case itself does not call for a categorical pronouncement and where the briefing is, understandably, agnostic on the potential implications of such an absolute decision.”

“Should posting a hidden camera in a CEO’s office — or her home — per se constitute protected expression? How about photographing proprietary documents to tap into trade secrets, with no intent of creating a work of art? Recording private telephone conversations?” Floyd asked.

Other Appeals Courts have wrestled with similar issues. “Similarly circumscribed decisions by our sister circuits further convince us that a narrow decision is most appropriate today,” Floyd wrote.

“Whatever the Act’s real applications beyond newsgathering, the material point today is that these questions remain unanswered, lurking in the background and warning us away from prejudging the entire Act in a pre-enforcement challenge,” he added.

Judge Albert Diaz joined Floyd’s opinion. Judge Allison Jones Rushing dissented. “I must dissent because our precedent forecloses the conclusion that it offends the First Amendment to apply generally applicable tort law prohibiting trespass and breach of duty to PETA’s proposed conduct,” Rushing wrote.

“North Carolina courts have not yet interpreted the Act in any pertinent respect,” she added. “Given the absence of interpretation or application of the Act by state courts, we should be cautious in construing its terms in the first instance and opining about the constitutionality of hypothetical future applications of it.”

 Rushing focused on PETA’s goal. “PETA wants to conduct undercover investigations by sending its employees to gain secondary employment at places like animal laboratories, where they will secretly record, including by placing unattended cameras, and then publicize their findings to the detriment of the duped employers and for the benefit of their primary employer, PETA,” she wrote.

“PETA contends that the Act prohibits this conduct and therefore violates the First Amendment.,” Rushing added. “Our Court has already considered this exact mode of operation and held that North Carolina tort law may enforce a damages remedy without running afoul of the First Amendment.”

“PETA has not carried its burden,” Rushing concluded. “Its facial challenge rests entirely on speculation and hypotheticals that ignore the Act’s textual limits and whistleblower protections laws. And when it comes to assessing the Act’s scope, PETA refuses to acknowledge the possibility of even a single constitutional application of the Act.”

‘Because PETA denies the Act’s vast legitimate sweep — including preventing and compensating misappropriation, sabotage, espionage, extortion, unfair competition, and theft of trade secrets, to name a few — it fails to explain how unconstitutional applications of the Act could be substantial by comparison, a requirement we must apply ‘vigorously.’”