• by Wendy Davis , Yesterday

A divided federal appellate panel has left in place a temporary order that prohibits the Federal Trade Commission from investigating the watchdog Media Matters and its possible role in what the agency described "potentially unlawful advertiser boycotts."

The 2-1 ruling, issued Thursday by the D.C. Circuit Court of Appeals, upheld a preliminary injunction handed down in August by U.S. District Court Judge Sparkle Sooknanan, who found that Media Matters was likely to prove that the FTC's investigation violates the First Amendment.

"At this early stage, the Commission has not shown a strong likelihood of success given the unique and (thus far) undisputed facts of this case," Circuit Judges Patricia Millett and Robert Wilkins (both Obama appointees) said in an unsigned opinion.

Circuit Judge Justin Walker (a Trump appointee) dissented.

The ruling comes in a battle dating to June, when Media Matters sued to block the FTC from pursuing its "civil investigative demand" (comparable to a subpoena) for a trove of information -- including material regarding its finances and newsgathering, and documents relating to the Interactive Advertising Bureau, World Federation of Advertisers and its now defunct Global Alliance for Responsible Media, Check My Ads, the Center for Countering Digital Hate, Double Verify and NewsGuard, among other groups.

Media Matters alleged that the FTC undertook the probe in retaliation for a November 2023 report that ads for Apple, Bravo, IBM, Oracle and other brands were being placed next to pro-Nazi posts on X, formerly Twitter. (X sued Media Matters over that report; Media Matters is fighting that lawsuit.)

The watchdog argued in its bid to block the FTC's investigation that the commission's stated campaign against "advertiser boycotts" was actually "a politically motivated response to protected speech."

Media Matters contended that even though FTC Chair Andrew Ferguson said he was targeting "advertiser boycotts," he was actually focused on content moderation advocacy and "independent economic decisions made by advertisers who do not want their ads appearing next to extremist content."

Ferguson's probe came after two state attorneys general -- Ken Paxton of Texas and Andrew Bailey of Missouri -- attempted to investigate Media Matters.

The group sued over those investigations, and U.S. District Court Judge Amit Mehta in Washington, D.C. sided with the watchdog.

Mehta blocked Paxton's investigation last year, ruling that Media Matters was likely to show that Paxton was retaliating against the group for newsgathering activity that's protected by the First Amendment. That ruling was upheld by the D.C. Circuit Court of Appeals.

Mehta also blocked Bailey's investigation last year. Bailey initially appealed, but withdrew the appeal and abandoned his probe in February.

Against that backdrop, Sooknanan ruled in August that Media Matters was likely to prove that the FTC's demand for information was issued with "retaliatory animus" and therefore unconstitutional.

"Speech on matters of public concern is the heartland of the First Amendment," Sooknanan wrote.

"It should alarm all Americans when the government retaliates against individuals or organizations for engaging in constitutionally protected public debate," she added. "And that alarm should ring even louder when the government retaliates against those engaged in newsgathering and reporting."

The FTC subsequently asked the circuit court to lift Sooknanan's order, arguing to the appellate judges that the injunction was causing "immediate and irreparable harm to the FTC’s ad boycott investigation."

Media Matters countered that the FTC failed to explain why it would believe that Media Matters has information relating to advertisers' decisions. The group also argued that its report and advocacy were protected by the First Amendment.

"Even assuming advertisers did coordinate amongst themselves (and there is no public evidence of that), Media Matters simply engaged in constitutionally protected activity -- chronicling abhorrent content on X and calling on companies to withdraw their business," the group wrote.

The organization also said the Supreme Court has held that the First Amendment "protects the right to engage in politically motivated boycotts as a means of encouraging social change -- including to discourage social media sites from tolerating extremist content on their platforms."

The appellate panel sided with Media Matters for now, though stressed that the case was still at an early stage.

"Given the seemingly unusual and unprecedented array of facts in the record at this stage, the Commission has not shown it is likely to succeed in showing that the district court erred in finding preliminarily a likelihood of retaliation," the judges in the majority wrote.

They added that Media Matters won't be entitled to a permanent ruling in its favor unless it can prove that the FTC acted with "retaliatory motive."

What's more, they wrote, even if there was a retaliatory motive, the FTC "may be able to show that it would have issued the demand on nonretaliatory grounds anyway."

Walker said in a dissent that he would lift the injunction, writing that he believes the FTC is likely to prevail on the merits.