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Senate Permanent Subcommittee v. Ferrer

United States District Court, District of Columbia

August 5, 2016

CARL FERRER, Respondent.



         The Senate Permanent Subcommittee on Investigations applies to this Court for an order requiring Carl Ferrer, Chief Executive Officer of, LLC, an online website for classified ads, to produce certain documents in response to three requests of a subpoena issued on October 1, 2015. The subpoena is part of the Subcommittee’s investigation into the use of the Internet for illegal sex trafficking. Mr. Ferrer refuses to comply fully with the October 1, 2015 subpoena. He has failed to conduct a full search for responsive materials and has not provided a privilege log to the Subcommittee.

         On March 29, 2016, the Subcommittee filed its Application to enforce three document requests in the subpoena. Mr. Ferrer opposes. He argues that the Court lacks subject matter jurisdiction over the Application and that the subpoena falls outside the Subcommittee’s jurisdiction. He also contends that the subpoena lacks a valid legislative purpose and is overly broad and unduly burdensome. Finally, he contends that the subpoena violates the First Amendment and the Due Process Clause of the Constitution. The Subcommittee replies that Mr. Ferrer’s objections lack merit and that he has not articulated a valid legal basis for failing to comply. The matter is fully briefed and ripe for resolution.[1] For the reasons that follow, the Court will grant the Subcommittee’s Application to Enforce Subpoena Duces Tecum.

         I. FACTS

         The Subcommittee on Permanent Investigations is the chief investigative subcommittee of the Committee on Homeland Security and Governmental Affairs, which is one of the standing committees of the Senate and was established in Rule XXV.1(k)(1) of the Standing Rules of the Senate and Senate Resolution 445, 108th Congress (2004), reprinted in S. Doc. 114-6, at 131-34 (2015). The Subcommittee, in turn, was established in Rule 7(A) of the Rules of Procedure of the Committee. See 161 Cong. Rec. S413 (daily ed. Jan. 22, 2015), reprinted in S. Doc. 114-6, at 131, 146 (2015).

         Pursuant to the Senate’s authorization, the Subcommittee is conducting an investigation into human trafficking, particularly sex trafficking, on the Internet. Sex trafficking is defined in federal law as the unlawful practice of selling the sexual services of minors or adults who have been coerced into participating in the commercial trade. See 18 U.S.C. § 1591. The Internet is an attractive medium for sex traffickers to advertise the exploited victims because it is inexpensive and easily accessible. According to the general counsel for the National Center for Missing and Exploited Children (NCMEC), “most child sex trafficking today is facilitated by online classified advertising websites.” Statement of Yiota G. Souras, Sr. V.P. and Gen. Counsel for NCMEC, S. Hrg. No. 114-79, at 39.

         The Subcommittee commenced its investigation into Internet sex trafficking in April 2015. Since then, the Subcommittee has conducted multiple interviews and briefings with various groups, particularly online commercial marketplaces, to learn more about the magnitude of the problem and the measures being taken to prevent sex trafficking. One of those interviewed as part of the investigation was Backpage. Backpage is “an online forum for classified ads” that self-identifies as “an online intermediary for speech of third-party users.” Opp’n at 1. It is the “second largest classified advertising website in the U.S.” and “users post millions of ads monthly in various categories, including real estate, buy/sell/trade, automotive, jobs, data and adult.” Id. at 5. “Backpage does not dictate or require any content, though it may block and remove content that violates its rules or that may be improper.” Id. at 5 n.2.

         Backpage contains an “adult section, ” which “is subdivided into escorts, body rubs, strippers and strip clubs, dom[ination] and fetish, ts (transsexual escorts), male escorts, phone [sex], and adult jobs (jobs related to services offered in other adult categories, whether or not the jobs are sexual -- not every employee of a brothel is a sex worker).”, LLC v. Dart, 807 F.3d 229, 230 (7th Cir. 2015), petition for cert. filed (Apr. 28, 2016) (No. 15-1321). A “majority of the advertisements [in Backpage’s adult section] are for sex - but a majority is not all, and not all advertisements for sex are advertisements for illegal sex.” Id. at 234 (internal quotation marks omitted). Moreover, “[t]here is no estimate of how many ads in Backpage’s adult section promote illegal activity.” Id.

         The Subcommittee states that “Backpage is a dominant presence in the online market for commercial sex and that numerous instances of child sex trafficking have occurred through its website.” Mot. at 8 (citing PSI Staff Report at 6-7 (S. Hrg. No. 114-179, at 61-62)). As a result, the Subcommittee is interested in learning more about the effectiveness of Backpage’s “moderation” procedures, that is, the practices of screening and reviewing advertisements to avoid posting illegal ads, such as ads for sex trafficking.

         On April 15, 2015, the Subcommittee first contacted Backpage to request an interview. On June 19, 2015, members of the Subcommittee staff interviewed Backpage’s general counsel, Elizabeth McDougall. They reported afterwards that Ms. McDougall could not or did not answer several critical questions concerning Backpage’s moderation activities, the statistics reflecting Backpage’s reporting of suspected sex trafficking to law enforcement and NCMEC, and Backpage’s corporate structure and ownership. See Letter to Carl Ferrer, CEO of, LLC from Chairman and Ranking Member of PSI, Nov. 3, 2015 [Dkt. 1-10] (Nov. 3, 2015 Ruling on Mr. Ferrer’s Objections) at 2-3. On June 22, 2015, the Subcommittee sent Backpage follow-up questions and requests for information, which Backpage did not answer. See id.

         On July 7, 2015, the Subcommittee issued a documentary subpoena to Backpage requesting materials concerning its moderation procedures, interaction with law enforcement, terms of use, data retention policies, and basic corporate structure. July 7, 2015 Subpoena [Dkt. 1-2]. While the subpoena sought information for 41 categories of documents, it did not request any materials concerning the identity of Backpage users. See id. On July 16, 2015, Backpage counsel met with Subcommittee staff to raise First Amendment concerns regarding the scope of the July 7 subpoena, as well as concerns regarding a possible connection between the subpoena and the efforts of Cook County, Illinois Sheriff Thomas Dart to close down Backpage. Opp’n, Decl. of Steven Ross at ¶ 4 [Dkt. 8-13] (Ross Decl.). On August 6, 2015, Backpage submitted written objections to the subpoena, asserting that it was overbroad, unduly burdensome, and violated the First Amendment. See Letter to Chairman and Ranking Member of PSI from Steven R. Ross, Esq., Aug. 6, 2015 [Dkt. 1-3] (Aug. 6, 2015 Letter). Backpage asked that the subpoena be withdrawn or a response to it to be deferred until Backpage could present “a more fulsome discussion of the constitutional infirmities and concerns regarding the Subcommittee’s subpoena.” Id. at 5.

         On August 13, 2015, the Subcommittee began to issue deposition subpoenas to Backpage employees. Ross Decl. at ¶ 8. On August 26, the Subcommittee wrote to Backpage asking it to submit further legal authority in support of its First Amendment objection. See Letter to Steven R. Ross, Esq. from Chairman and Ranking Member of PSI, Aug. 26, 2015 [Dkt. 1-5] (Aug. 26, 2015 Letter to Backpage). The Subcommittee expressed its intention to minimize any resource burden and explained that “its objective is to conduct responsible fact-finding in aid of Congress’ legislative and oversight responsibilities, not to single out Backpage.” Id. Backpage counsel wrote back on the same day, reiterating his objections, opposing the subpoenas issued to two employees, and asking the Subcommittee to submit the dispute to federal court pursuant to 28 U.S.C. § 1365. See Letter to Chairman and Ranking Member of PSI from Steven R. Ross, Esq., Aug. 26, 2015 [Dkt. 8-17]. In both letters, that of August 6 and August 26, 2015, Backpage “asked that [the] subpoena be withdrawn or that, in the alternative, [they] discuss another way in which to proceed” that “fall[s] within the bounds of the Subcommittee’s constitutional authority and [does] not infringe upon’s constitutional rights.” Id. at 5.

         On August 28, 2015, the Subcommittee refused to withdraw the subpoenas issued to Backpage employees and rejected Backpage’s objections. See Letter to Steven R. Ross, Esq. from Chairman and Ranking Member of PSI, Aug. 28, 2015 [Dkt. 8-18]. The Subcommittee again denied that its subpoena was part of a larger governmental effort targeting Backpage. See id. On September 14, 2015, counsel for both sides met to discuss the constitutional objections to the July 7 subpoena. At that meeting, Backpage was clear that it objected to the entire subpoena on First Amendment grounds because of its “breadth” and the “context” in which it was received -- namely, “the fact that governmental actors have recently taken an interest in Backpage.” Nov. 3, 2015 Ruling on Mr. Ferrer’s Objections at 4-5. At the Subcommittee’s exhortation, Backpage counsel agreed to provide in writing legal authorities in support of the company’s First Amendment objection, but failed to do so. Id. at 5.

         On October 1, 2015, the Subcommittee withdrew the July 7 subpoena and issued a new subpoena to Mr. Ferrer, part of which is before the Court. The new subpoena requested eight categories of documents and focused on the core of the Subcommittee’s investigation of Internet sex trafficking. In an accompanying letter, the Subcommittee reiterated its rejection of Backpage’s objections as meritless and said that, “in the hope of overcoming the current impasse, ” it was “seeking a narrower subset of documents.” Letter and Subpoena to Carl Ferrer from Chairman and Ranking Member of PSI, Oct. 1, 2015 [Ex. 1-7] at 2 (Oct. 1, 2015 Letter and Subpoena). The Subpoena instructed Mr. Ferrer to produce responsive documents, or else to appear personally, on October 23, 2015. The eight categories of documents requested by the October 1, 2015 in the Subpoena concerned: (1) Backpage’s reviewing, blocking, deleting, editing, or modifying of advertisements in Adult Sections; (2) advertising posting limitations; (3) reviewing, verifying, blocking, deleting, disabling, or flagging user accounts; (4) human and sex trafficking, human smuggling, prostitution, or its facilitation or investigation, and policies, manuals, memoranda, and guidelines; (5) policies related to hashing of images in Adult sections, data retention, and removal of metadata; (6) number of ads posted, by category, for each month in the past three years and ads reported by Backpage to law enforcement agencies; (7) number of ads, by category, for the past three years that were deleted or blocked at each stage of the reviewing process; and (8) Backpage’s annual revenue and profit for each of the past five years by category. See Id. The subpoena stated that information responsive to categories 6, 7, and 8 could be submitted with numbers and without underlying documentation.

         The subpoena did not seek any information concerning Backpage users and the Letter directed that such information be redacted. The Letter also directed Mr. Ferrer to “assert any claim of privilege or other right to withhold documents from the Subcommittee by October 23, 2015, the return date of the subpoena, along with a complete explanation of the basis of the privilege or other right to withhold documents” in a privilege log. Id. at 3.

         Thereafter, Mr. Ferrer only “produced a limited number of publicly available documents in response to requests 1, 2, and 3 in the subpoena but objected to producing any other documents.” Mot. at 12. Mr. Ferrer also indicated that “Backpage would compile certain records . . . responsive to request 4 of the subpoena, and would investigate and seek to compile statistical information responsive to requests 6 and 7 . . . .” Id. at 12-13 n.10. No production was made as to requests 5 or 8. Mr. Ferrer objected to the subpoena because it: (1) exceeded the Subcommittee’s investigative authority; (2) infringed on First Amendment rights; and (3) did not seek information pertinent to the investigation. Letter to Chairman and Ranking Member of PSI from Steven R. Ross, Esq., Oct. 23, 2015 [Dkt. 1-9] (October 23, 2015 Letter).

         On November 3, 2015, the Subcommittee issued a comprehensive ruling overruling Mr. Ferrer’s objections to the subpoena. It ordered Mr. Ferrer to produce responsive documents by November 12, 2015 and to appear personally at a hearing on November 19, 2015. On November 13, one day after the production deadline, Backpage produced over 16, 800 pages of documents, most of which were responsive to request 4; 16, 300 of those pages involved Backpage’s responses to law enforcement subpoenas, “each response containing numerous repetitive pages of advertisements and photos . . . relating to a single Backpage user.” Mot. at 14 n.11. Backpage intended to “prepar[e] millions more pages of documents” responsive to request 4, see Opp’n at 15 n.12 (citing Ross Decl. at ¶ 7), but the Subcommittee instructed Backpage to suspend the production of documents responsive to request 4 because it did not need more documents of that nature. See E-mail to Steven R. Ross, Esq. from Chief Counsel of PSI, Nov. 14, 2015 [Dkt. 8-23] (“Finally, as we discussed, please hold off on processing or producing what you described as more than five million pages of law enforcement subpoena related material.”) (emphasis added). Backpage erroneously interpreted this communication, limited in its focus, as a direction to cease submitting any documents or responses. See Id. (stating that the Subcommittee “instructed Backpage to cease producing documents”); see also Letter to Chairman and Ranking Member of PSI from Steven R. Ross, Esq., Nov. 18, 2015 [Dkt. 1-14] at 2. There is simply no support in the record for the proposition that the Subcommittee “declined to receive, []or instructed Mr. Ferrer or Backpage not to produce, any materials responsive to requests 1, 2, and 3.” Reply at 4 n.3.

         In a November 16, 2015 letter responding to various follow-up inquiries, Backpage counsel told the Subcommittee that “the company’s submissions of information and documents to date [did not] constitute either the fruits of a complete search of every bit of data possessed by or by all of its employees over the full (nearly six year) time period covered by the Subpoena.” Letter to Chairman and Ranking Member of PSI from Steven R. Ross, Esq., Nov. 16, 2015 [Dkt. 1-13] (Nov. 16, 2015 Letter) at 2. Backpage asserted that such a full and complete search would be by itself unconstitutional due to the Subpoena’s “overbreadth and First Amendment infirmities.” Id. Backpage never explained the extent or nature of its limited search, did not provide a privilege log, did not object to the production of specified documents, and did not identify any documents being withheld.

         Backpage counsel asked that Mr. Ferrer’s personal appearance at the November 19 hearing be waived because Mr. Ferrer would not answer any questions as he intended to assert his Fifth Amended privilege against self-incrimination and invoke his First Amendment rights. See id.; Letter to Chairman and Ranking Member of PSI from Steven R. Ross, Esq., Nov. 16, 2015 [Dkt. 1-14] at 1-2. Counsel added that Mr. Ferrer was on international business travel. The Subcommittee rejected Backpage’s last minute effort to excuse Mr. Ferrer’s appearance. Nonetheless, Mr. Ferrer did not appear before the Subcommittee on November 19, 2015. During that hearing, the Subcommittee received the testimony on Internet sex trafficking from four witnesses, three law enforcement officials, and NCMEC’s general counsel. On the same day, the Subcommittee also issued a Staff Report, which was titled, “Recommendation to Enforce Subpoena Issued to the CEO of, LLC, Staff Report to the Permanent Subcommittee on Investigations” (PSI Staff Report).

         On February 29, 2016, the Subcommittee presented a resolution to the Senate Committee on Homeland Security and Governmental Affairs authorizing and directing the Senate Legal Counsel to bring a civil action under 28 U.S.C. § 1365 to enforce the first three requests of the October 1, 2015 subpoena. See S. Rep. No. 114-214 (2016). On March 17, 2016, the Senate adopted said resolution by a vote of 96-0. See 162 Cong. Rec. S1561 (daily ed. Mar. 17, 2016). The Subcommittee asks the Court to enforce the following parts of the subpoena:

1. Any documents concerning Backpage’s reviewing, blocking, deleting, editing, or modifying advertisements in Adult Sections, either by Backpage personnel or by automated software processes, including but not limited to policies, manuals, memoranda, and guidelines.
2. Any documents concerning advertising posting limitations, including but not limited to the “Banned Terms List, ” the “Grey List, ” and error messages, prompts, or other messages conveyed to users during the advertisement drafting or creation process.
3. Any documents concerning reviewing, verifying, blocking, deleting, disabling, or flagging user accounts or user account information, including but not limited to the verification of name, age, phone number, payment information, email address, photo, and IP address. This request does not include the personally identifying information of any Backpage user or account holder.

Oct. 1, 2015 Letter and Subpoena (emphasis in original). The Subcommittee points out that Backpage has only produced a total of 65 pages of documents responsive to these requests -- “21 pages of which were publicly available documents: the website’s Terms of Use, Posting Rules, and User Agreement, and testimony by Backpage’s general counsel before the New York City Council in 2012.” Mot. at 14 n.12 (citing October 23, 2015 Letter at 6-7; PSI Staff Report at 30-31 (S. Hrg. No. 114-179, at 85-86)). As a result, the Subcommittee filed the instant Application under 28 U.S.C. § 1365 to enforce its subpoena.

         II. ANALYSIS

         The Subcommittee moves to enforce the first three requests of its October 1, 2015 subpoena. Mr. Ferrer opposes the Subcommittee’s Application on four different grounds: (1) lack of subject matter jurisdiction; (2) lack of a valid legislative purpose that falls within the scope of the Subcommittee’s authority; (3) violation of the First Amendment because the subpoena intrudes into protected speech, seeks to single out and punish Backpage, and is overbroad and unduly burdensome; and (4) violation of the Due Process ...

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