• by Wendy Davis  @wendyndavis, November 12, 2024

Elon Musk's X Corp. is pressing a federal appeals court to revive a lawsuit against a watchdog that published critical reports about the platform, allegedly causing it to lose “tens of millions” in ad revenue.

U.S. District Court Judge Charles Breyer in the Northern District of California threw out X's claims in March, ruling that the X sued the Center for Countering Digital Hate (CCDH) to penalize it for publishing negative reports. Breyer dismissed the case under California's California's anti-SLAPP (strategic litigation against public participation) law -- a free-speech law that provides for fast dismissals of lawsuits over statements regarding matters of public interest.

But X argues that its claims deal with “data security,” as opposed to the content of the nonprofit's reports, and therefore aren't precluded by free-speech principles.

The CCDH and the Stichting European Climate Foundation “conspired in 2021 to steal, scrape, and manipulate X’s private data for use in 'reports' that CCDH would then publish attacking X and calling for advertisers to boycott the company,” X wrote in papers filed Tuesday with the 9th Circuit Court of Appeals. (The Stichting European Climate Foundation allegedly helped the Center for Countering Digital Hate obtain data about posts on X.)

“The security breach cost X thousands of dollars in reasonable investigation and response expenses, and CCDH’s use of the ill-gotten data in published reports further caused X to lose tens of millions of dollars in advertising revenue,” the company added.

X's new papers come in a legal battle dating to August 2023, soon after the group reported that the platform failed to remove racist, homophobic and antisemitic comments posted by Twitter Blue subscribers. That report cited examples such as the posts “Diversity is a codeword for White Genocide,” and “Trannies are pedophiles.”

The tech company, which has lost significant ad revneue since its 2022 acquisition by Musk, claimed in a lawsuit that the hate speech researchers violated X's terms of service, which prohibit scraping, and ran afoul of a computer hacking law.

Breyer dismissed the case soon after holding a hearing at which he expressed skepticism of X's claims. At that hearing, Breyer told X attorney Jon Hawk that the platform couldn't obtain damages for lost ad revenue, unless those damages were foreseeable when the Center for Countering Digital Hate agreed to X's terms of service.

X then asked the 9th Circuit to reverse Breyer's ruling and reinstate the claims.

The Center for Countering Digital Hate opposed that request, arguing in papers filed last month that X's suit was actually about the critical reports, regardless of the specific claims regarding the terms of service or hacking.

“X Corp. has resorted to suing its critics to try to silence them. This case is a prime example of that strategy,” the nonprofit write.

The American Civil Liberties Union, Electronic Frontier Foundation and Knight First Amenment Institute at Columbia University are backing the Center for Countering Digital Hate, arguing in a friend-of-the-court brief filed last month that the lawsuit “could set a dangerous precedent by blocking newsgathering, research, and public commentary about digital tools and platforms.”

Those groups accused X of attempting to “misuse claims under contract law” and the anti-hacking law to suppress criticism.

“Courts cannot, and should not, allow private companies like X to wield breach of contract and computer intrusion claims as weapons to punish criticism,” the civil liberties groups argued.

X countered in its new papers that free speech principles don't protect companies over the claims in its lawsuit.

“X seeks only to recover economic damages proximately caused by defendants’ violations of ...California laws that require promises to be kept,” the company contends. “The First Amendment simply does not apply.”

The 9th Circuit hasn't yet said when it will hear arguments in the case.