(continued)

BY MS. BEESON:

QDo you know of any other reasonable measure that Salon Magazine could take to effectively restrict minors from accessing it's online material that is harmful to minors?

AWell, as I mentioned we did explore the adult -- one service is called Adult Check -- Adult Check, these adult services. And as Mr. Laurila testified this morning, those are typically associated with pornography sites, they carry a heavy stigma and on top of that there is a cost to the user, I believe, of $10 a month is what we found with Adult Check. And, you're required to get a PIN number from the service. For us to send our users to a third party, again, would send out circulation plummeting downwards and kill off our business which is so dependent on advertising. I think also the stigma to our advertisers would be considerable. Advertisers wouldn't want to be associated with a site like Salon that sent its readers through a pornography-related site like Adult Check, where they're subjected to lewd images, pornography, pornographic come-ons and that kind of thing.

QJust to go back very briefly to a topic that we discussed before, and that is your fear of prosecution under the Act, has Salon Magazine's content been considered controversial?

AYes, part of it. I mean, Salon is, as I said, a general interest publication, so there's much in Salon that people would be happy seeing in their family newspaper. Probably a majority of what's in Salon. But again, one reason -- and the staff of Salon came from a newspaper background. Most of us worked with the San Francisco Examiner so we're very aware of the constraints and the dictates of working within that kind of media organization. But one of the great promises of the Web was that you could speak more honestly and carry on conversations in a more adult and frank fashion about subjects like -- controversial subjects like sex and politics and so on. And, that's part of our key editorial mandate. And, it's part of the reason for Salon's success.

QHave national lawmakers spoken out against content in Salon Magazine?

AYes. We've been subjected to harassment from a number of quarters. Salon, for good or worse, is probably most known at this point for breaking a story about Congressman Henry Hyde and his adulteress affair. And, soon after that story was posted on our site, the Speaker of the House, Newt Gingrich and the House Whip, Tom Delay, both called formally on the FBI to investigate Salon. We were also the subject of a Wall Street Journal editorial that called on Ken Starr, Mr. Starr, to extent his investigation to Salon because of the content of our stories. We've also been the subject of harassment from a number of right-wing legal organizations, including the Landmark Legal Foundation because of our coverage, ongoing coverage of Mr. Starr's White Water investigation. The Landmark Legal Foundation attempted to subpoena us along with the New Yorker Magazine and a number of other publications. And, as a result of fighting off that subpoena, Salon incurred substantial legal costs.

QMr. Talbot, what will Salon Magazine do if this law goes into effect?

AWell, it's really a daunting prospect. I mean, we're faced with kind of, you know, impossible choice. On the one hand, if we choose to comply with the law, we'd have to spend hours -- hundreds of hours of editorial time going through our thousands of pages of archives and deleting everything that we think might be harmful to a minor under the Act. It would also have the consequence of purifying our site, so to speak, to make it more acceptable to the most conservative community in the U.S., since we publish all over. That would, I think, change the whole editorial character and personality of Salon. And, I think also drive down our circulation considerably. Or, we would be faced with the prospect of defying the law and attempting to tough it out and incur the $50,000 fines, which ultimately would bankrupt Salon. And, certainly, it's difficult to edit a publication from a jail cell so that would be a hardship as well.

As I said earlier, if we attempted to comply with the law and install the kind of system, screening system that is required under the law, that would again depress our circulation to such an extent that Salon would no longer be a viable business. Salon is struggling to make a profit at this point like most start-ups on the Web. We're in the start-up phase. This is the great part of this industry. It's an entrepreneurial industry. It's unleased so much creative and intellectual energy and -- but most sites are still struggling to make a profit. We think we're about a year away from breaking even, which is going to be a big milestone, not only for us, but I think for all publishing on the Web, because Salon is seen as kind of a bellwether for the health of publishing on the Internet. And, if we're forced to install this kind of screening system, it could send our business plan, you know, plummeting downwards.

MS. BEESON: I have no further questions, Your Honor.

THE COURT: Ms. Stewart, do you have any cross-examination?

MS. STEWART: Yes, I do. May I suggest, Your Honor, that this may be a good time for a break for lunch.

THE COURT: It's not a good time for usual time, because I want to do the cross-examination and finish the witness before we have a mid-day break.

MS. BEESON: Yeah. Your Honor, I apologize, but Mr. Talbot actually needs to catch a train to New York at about 2:00.

THE COURT: Well, Mr. Talbot's schedule will have to go by the boards. The Court's schedule is, and it makes sense for the in-take of evidence into this Judge, that we do it all at one time and let the cross-examination go forth.

MS. STEWART: Thank you, Your Honor. May I have a minute before beginning?

THE COURT: Sure.

(Pause)

THE COURT: Ms. Stewart, thank you. I was dreaming up a good question to ask you at the end of the cross-examination.

MS. STEWART: To ask me?

THE COURT: Keep you busy.

CROSS-EXAMINATION

BY MS. STEWART:

QMr. Talbot, does your site screen material for obscenity?

AWe use our editorial discretion when publishing stories. We won't publish anything. We have very exacting editorial standards but it's our own discretion and not that of anyone else. We don't use any software system if that's what you mean.

QBut the answer then is yes?

AYes.

QDo you sell things on your site through -- using credit cards?

AWe've begun through a third party to offer some Salon paraphernalia through our site, coffee, t-shirts, that kind of thing.

QSo you have an account with a credit card company established for thought purposes?

ANo, we have an account with a third-party vendor, so we don't have credit card capability within our company.

THE COURT: Excuse me for interrupting, but how does that work? On your home page, do you go to maybe something like products and you click on that and you can buy some things. And it's just that you don't manage the in-take from that, a third-party does that.

MR. TALBOT: A third-party does the whole thing. For instance, Your Honor, with our books department, which is sponsored by Barnes & Noble, if you want -- you read a review of a book in Salon and you're interested in buying it, you click on the Barnes & Noble button and you go to their home page and you conduct your business there.

THE COURT: Thank you.

MS. STEWART: Thank you, Your Honor. No further questions.

THE COURT: Any redirect?

MS. BEESON: Nothing, Your Honor. 

THE COURT: Made more efficient use of Mr. Talbot's time than he expected, I'm sure. Mr. Talbot, you're excused.

MR. TALBOT: I appreciate it. Thank you, Your Honor.

THE COURT: Other than argument, Ms. Beeson, do you have other evidence to offer and maybe some documents?

MS. BEESON: Your Honor, we would just like to move into evidence the declarations that were served on Ms. Stewart and delivered to your office.

THE COURT: You have to go through them seriatim please.

MS. BEESON: Yes.

THE COURT: I have to deal and it's really hard -- I get stuff in the mail but I'm not sure what's in the evidentiary record and I want to be sure.

MS. BEESON: This would be declarations A through G of --

THE COURT: What is the last letter, please?

MS. BEESON: G.

THE COURT: G. Okay. They are Christopher Finan, Adam Glickman, Professor Hoffman, Ernest Johnson, Robert Speyer -- Roberta Speyer, sorry, Barry Steinhardt and Patricia Nell Warren; correct?

MS. BEESON: That's correct, Your Honor. And, there are exhibits accompanying most of the declarations. Would you like for me to go through those or just --

THE COURT: Well, at least identify them generically and offer them to see if --

MS. BEESON: Yes. They are all printouts of content from the plaintiffs' Web sites in this case.

THE COURT: But they are the ones attached to these declarations physically --

MS. BEESON: Yes, they are, Your Honor.

THE COURT: -- in the books that you gave me?

MS. BEESON: Yes, Your Honor.

THE COURT: Let me just check an example for instance. Mr. Finan has, it looks like, two tabs; Mr. Glickman has a bunch --

MS. BEESON: Seven, I believe, Your Honor.

THE COURT: Seven?

MS. BEESON: Uh-huh.

THE COURT: Professor Hoffman doesn't have any tabs at least.

MS. BEESON: That's correct.

THE COURT: Ernest Johnson has 20?

MS. BEESON: Yes, Your Honor.

THE COURT: Roberta Speyer has it looks like ten.

MS. BEESON: That's correct.

THE COURT: Barry Steinhardt does not have any. And, Patricia Nell Warren has five; correct.

MS. BEESON: Yes, Your Honor.

THE COURT: Ms. Stewart, do you have any objection for the purposes of the TRO proceedings to the receipt of these declarations and exhibits?

MS. STEWART: Your Honor, subject to our continuing the same objection that we had with respect to the live witnesses as to the extent of their actual knowledge about the cost of the credit card -- complying with the credit card defense and the Act. Credit card or related defenses.

THE COURT: I don't know whether any of these -- I'm not going back on what I told you, I read all this material, but I don't remember what specific witness may have mentioned the cost of identifying or age cal -- identifyingusers. Is there any of that type of material in these exhibits that you just offered?

MS. BEESON: Yes, there is, Your Honor, in several of the plaintiffs' exhibits. And, similar to the live testimony it represents their best efforts to determine whether currently they can comply with the Act.

THE COURT: I think to the extent that the defendant wants to object to this material, you have to be specific as to where it is, and I would like you to find it and object to it seriatim in each of these declarations or exhibits over the lunch hour so that we can have a record of what you're objecting to. I don't mind -- I understand the basis for it, but if we don't have a record, and we don't look back on what we have, we'll be sorry we didn't do it carefully. So subject to those objections being articulated in the record, the Court will receive in the evidence -- into the evidentiary record for the purpose of the TRO hearing, the declarations and exhibits just identified, A through G and their attachments. I think we ought to, at the same time, so when we read this again we don't overlook it, if these -- unlike the general rule that evidence offered at TRO hearings is likely to fall into the rule that it will be used at the PI hearing and then used at the trial of the case, without further effort, that presumes as its foundation that the parties have the right to cross-examine that material and have their due process. 

Here the defendant is waiving that for purposes of this hearing, but I know from previous discussions that parties have reserved the right to take depositions of declarants, I assume to exercise their right of discovery and cross-examination if the deposition might be offered with the declaration. I can concede that might happen. So that the -- I need to know whether the defendant is reserving any exceptions to the declarations beyond the cost and complications of credit card or age-related barriers or checking for any of these witnesses and reserving the right to take any of their depositions in aid of either discovery or modifying, if you will, or adding to their declaration at the next proceeding. Ms. Stewart?

MS. STEWART: Your Honor, if we could answer that question after lunch as well. As the Court knows, we got this stuff yesterday.

THE COURT: I just think it's a house -- it's housekeeping now but it becomes more important later. We'll be sorry we didn't do this, be ambiguous and then we're in the suit. So it doesn't mean that this material is not received or will not be considered by the Court for the purpose of these proceedings subject to the technical objections just made that will also be put on the record after lunch or mid-day break if you don't have lunch. Ms. Beeson, do you have other documents to offer?

MS. BEESON: No, I do not. I would like to raise with the Court again the issue of the fact stipulation and whether you think that would be a worthwhile pursuit at this point over lunch or whether you think it would not be helpful.

THE COURT: I don't know precisely what the factual issues are that you have in there. Some of the work that we have to do today and I'm prepared to do is fact specific, but mostly in the field of compliance -- or I'm sorry, feasibility of compliance, which is really what we've been talking about in the last few minutes. Let me look at my list here.

MS. STEWART: Your Honor --

THE COURT: Could you just excuse me a minute, because I want to find out whether I can add anything to the notion of stipulation. Almost all of my factual voids in here have to do with the subject of feasibility, different kinds of digital verifications and so forth. If there are any stipulations on that, that would be extremely helpful. There are terms used in these materials, such as digital certificates to verify age, and that kind of thing, that I don't really have much information on in these papers and I'm not sure that that's easily stipulated to.

MS. BEESON: Yes.

THE COURT: Excuse me just a moment. Evidence regarding the ability of minors to access material from foreign sites, meaning outside the United States. Evidence regarding ability of minors to access material from non-commercial or amateur sites. Evidence regarding ability of minors to pose as adults by using a credit card, which is back in the feasibility section again. Evidence regarding alternative means that are less restrictive, such as Net Nanny as a generic concept. In the absence of that, I would refer to a declaration on the subject, but one or more there may be evidence on that. Those are factual things that I made notes on and I think they're very difficult to stipulate to over lunch hour if you don't have hard materials to show someone.

MS. BEESON: Yes, Your Honor. I don't believe that any of those subject areas are part of the current negotiations over a factual stipulation.

THE COURT: Let me ask my law clerks whether their -- since we've been working together on this, whether they think the generic material about the Web and so forth is useful right now.

(Pause)

THE COURT: I've decided that we don't need generic Web type information for these proceedings as I perceive what my task is here today. So I welcome the material but you wouldn't likely see it in print very soon. My plan is, Ms. Stewart, was to ask you whether you want to offer in written materials and rest the Government's case for today and then go to argument and when you would like to do that. If you want to do it now, we can spend ten minutes doing it. If not, we can take a recess and do it after the noon recess. I assuming that Ms. Beal (sic) is finished.

MS. BEESON: Yes, I am through, Your Honor.

THE COURT: I mean, the plaintiff has rested its case in chief in the -- for the TRO proceedings.

MS. STEWART: Yes, Your Honor. I would ask to do it after the luncheon recess and to have some guidance as to what kind of parameters the Judge desires in terms of length of time for lunch.

THE COURT: Well, I don't know what everyone is going to be doing, but typically I take an hour for lunch. If you want an hour and fifteen minutes or so, we can come back at 2:00, if that will help anybody get their thoughts together, that's fine with me. That's not an excessive amount of time and -- because what I'll need from the defense, is what specific documents are you offering into evidence and to stand up to any challenges the plaintiff object to and give your offers of proof, we'll argue those if there are any. And the answers to the questions that we -- the two other tasks you have are to point in the record in the plaintiffs' exhibits to the technical material on costs and feasibility of registration of age, I'm speaking generically now, and to lodge your objections to those materials. So you have to do some searching. I don't think it's terribly complicated, but somebody has to do it. You've got the ball because you objected.

And, then the question of whether or not you reserve any right to take discovery or other responsible action with respect to declarations here today to preserve your rights to inquire further on those with respect to using them at the PI hearing. So you have three things to do then. It will be very helpful to the Court to get that done.

So we'll recess until 2:00 and we'll be back. I think I called Ms. Beeson by a popular last name but I didn't mean that.

MS. BEESON: That's okay.

(Recess)

THE COURT: Welcome back, everybody. Please be seated. I regret -- first of all, I compliment everybody for being timely. And, I know from having seen folks in the quarters of the courthouse we were all back here, but I was fine tuning some questions I may want to ask counsel this afternoon. I figured the taxpayers were getting their money's worth but maybe you guys weren't. 

Let's -- get my notes going there. The three things that the Government wanted to work on or I asked them to work on --

MS. STEWART: Yes, Your Honor, we're ready.

THE COURT: Ms. Stewart.

MS. STEWART: Yes, Your Honor, as to the exhibits we would just note that attached to our brief that we transmitted to the Court yesterday was the House Report. We don't believe that it's necessary to offer that formerly as an exhibit given that it's a document of public record. However, if the Court disagrees, we would so move its admission.

THE COURT: As long as you understand that the -- whether it's in evidence or not, I believe the Court in this kind of proceeding has the responsibility of looking at it and considering whether the references to it or the substance of the report as it responds to whatever references he made is reasonably reliable or not. If you site to a part of the report that is ephemeral, it doesn't mean that much. The touchstone of the proceeding before any Court is reliability and even if the evidentiary standards are understandably a little lowered for this type of proceeding, let me point out to both sides that I will look at that report and look at your references to it and consider it in deciding this motion. So whether it's in evidence or not, I don't think makes a lot of difference at this point unless the plaintiff insists that it be put in the record.

MS. BEESON: No, I have no objection at all.

THE COURT: All right. Thank you.

MS. STEWART: As to declarants, we certainly would reserve all of our rights to depose and otherwise obtain information through the discovery process.

THE COURT: And, your -- by doing that, as I understand it, I interpret it, if the plaintiffs want to offer those declarations at the preliminary injunction they have to either get a statement that you won't object to them or upon objection they're going to have to produce the person either for deposition by agreement or in court at the time of the hearing.

MS. BEESON: Yes, that's understood, Your Honor.

THE COURT: And, that's as to A through G of that list of declarants, correct?

MS. STEWART: Correct.

THE COURT: It's just a group of folks that we're talking about.

MS. STEWART: That's the declarations in the book.

MR. HIRT: Right.

MS. STEWART: As to the third item, --

THE COURT: Yes.

MS. STEWART: -- we would object, Your Honor, to -- and if I just identify the paragraphs by the declaration a Tab A consecutively will that --

THE COURT: Go ahead.

MS. STEWART: The declaration FinAof Finan at Tab A, our objections with respect to the credit card issue, Your 

Honor, --

THE COURT: Let me be sure I'm identifying --

MS. STEWART: -- or I should say affirmative defenses to be more inclusive.

THE COURT: Okay. It's Christopher Finan?

MS. STEWART: Finan.

THE COURT: And, what parts of his declaration do you object to?

MS. STEWART: Your Honor, it will be paragraphs 23, 24, 25, 29, 30 and --

MS. BEESON: I'm sorry, I --

MS. STEWART: You're going too quickly.

MS. BEESON: Yeah.

THE COURT: 23, 24, 25, 29.

MS. STEWART: 30 and 33, the basis for the objection would be --

THE COURT: I can't hear you when you speak.

MS. STEWART: I'm sorry. The basis for the objection would be foundation and/or hearsay, Your Honor. And, let me say, Your Honor, that that's the basis for the objections throughout and as to all declarations.

THE COURT: All right. Lack of foundation and hearsay. Let me just get a sense of what this looks like. I think -- I'm just looking at 24 as an example. With respect to that paragraph, I would rule that the Court would receive the information for the purpose of the plaintiffs' proving that this witness and his principal organization had these feelings. Whether they're justified in science or otherwise is objected to and so they're not proved. The other purpose for receiving it would be that the Glad Day Web site folks had a concern and this is the concern they expressed and these are their views. I agree with the unstated argument of the defense that it's kind of hard to prove whether those views are based in science or some technically supportable position and so I really can't do that. That's exactly what we're saying.

But I think the -- under the First Amendment challenge that we have before the Court, how people view the statute and what they do to concern themselves with it is relevant information to the proceeding, so I'll consider it and also it gives weight to your objections. This is, as you stated, sort of an overview of how I would treat these objections. And, I don't know that the plaintiffs would really try to correct anything -- they couldn't today anyway without the declarant being here. Ms. Beeson.

MS. BEESON: Yes, that's correct, Your Honor. It is offered for the purpose of explaining their current understanding and fear under the law and what they believe they would be able to do to comply.

THE COURT: But I think we should articulate the objection so you protect the record. We have 22 through 33, so to speak, with intervening numbers. Is that all for that declarant or are there other paragraphs?

MS. STEWART: Not for Finan, Your Honor.

THE COURT: Okay.

MS. STEWART: On Mr. Glickman, who's at --

THE COURT: Which number is he, B?

MS. STEWART: -- Tab B, Your Honor, paragraphs 43 through 48 and 51 through 53.

THE COURT: Let's move to the next one, please.

MS. STEWART: Nothing at Tab C, Your Honor. The next is at Tab D, Johnson. 

THE COURT: Ernest Johnson, okay.

MS. STEWART: Paragraph numbers 56 --

THE COURT: 5-6.

MS. STEWART: 5-6.

THE COURT: Thank you.

MS. STEWART: 60, 61, 62, 64 and 65.

THE COURT: Okay.

MS. STEWART: Next Tab is at E.

THE COURT: Who is the declarant there?

MS. STEWART: Speyer. Paragraph 38, 39, 42 and 43. At Tab F, Your Honor, the Steinhardt declaration, paragraph number 16 through 23. And, at Tab G, Your Honor, the Warren declaration, paragraphs 21, 25, 26, 27 and 29.

THE COURT: All right. The end of the list. Okay.

MS. STEWART: That concludes the three questions, Your Honor. 

THE COURT: Thank you. The objections are noted. I'm not g