SOCIAL MEDIA is all atwitter — um, all a-X-er? — about the emoji at the heart of last week’s federal court ruling allowing a securities suit to proceed against billionaire investor Ryan Cohen. To be sure, litigation following a corporate collapse sprouts like weeds, but in this case both my law professor and wordsmith sides are fascinated by the allegation that Cohen used an image of a smiling moon to boost the stock price of Bed Bath & Beyond, after which he started selling his significant stake.
The law professor in me marvels at the way judges must now struggle with the collapse of formal language. The wordsmith despairs at … well, the collapse of formal language, the costs of which we will be some while counting.
The lawsuit arises from events in August of 2022, when Cohen still held a massive position in Bed Bath stock. CNBC tweeted a link to a negative story about Bed Bath, illustrated by an image of a shopper:
Cohen tweeted back, “At least her cart is full” — and accompanied it by an emoji of a moon with a smiley face.
Although the lawsuit includes a long list of allegations, the part that has people chattering involves the significance of that image. According to the plaintiffs, Cohen was consciously trying to pump the stock, in preparation for selling off his stake.
Now, in the first place, we should no longer be surprised to find emoji at the heart of either business communications or litigation. (According to the Unicode Consortium, the nonprofit charged with standardizing characters, emoji is the correct plural — not “emojis.”) This past spring, the Wall Street Journal reported that at the crypto exchange FTX, expenses totaling tens of millions of dollars “were submitted on Slack and were approved by emoji.”
As for the courts, last August a judge in New York ruled that under the right circumstances, a thumbs-up emoji can be sufficient to signal agreement to pay the other party some $1,475,000. In January 2023, a federal court in Kentucky had to figure out whether a “water emoji” in text messages meant sexual activity or methamphetamine. And here’s a New York federal court this past February, in the litigation over whether selling NFTs can constitute sale of an investment contract.
Each Tweet promotes a recent sale or statistics of recent sales of Moments on the Marketplace. And although the literal word “profit” is not included in any of the Tweets, the “rocket ship” emoji, “stock chart” emoji, and “money bags” emoji objectively mean one thing: a financial return on investment.
But notice the source of the difficulty. Were there no rocket ship or stock chart or money bags emoji — or, in Cohen’s case, no smiling moon — the cases would be simpler, because the parties would have used ordinary language. We could be more confident that we knew what various messages meant.
For his part, Cohen argues that emoji are inherently ambiguous, so that “a tiny lunar cartoon” has “no defined meaning.” In answer, Judge Trevor McFadden gives us Linguistics 101, that symbols possessing no inherent meaning take on significance according to context: “Emojis may be actionable if they communicate an idea that would otherwise be actionable. A fraudster may not escape liability simply because he used an emoji.”
And what was the meaning here? The court summarizes the complaint: “Cohen was telling his hundreds of thousands of followers that Bed Bath’s stock was going up and that they should buy or hold. In the meme stock ‘subculture,’ moon emojis are associated with the phrase ‘to the moon,’ which investors use to indicate ‘that a stock will rise.’”
Investors, the court tells us, could have found that statement material, and appear to have relied on it, because the stock price climbed.* (This is as good a place as any to remind the reader that the court is ruling only on the motion to dismiss, and in deciding whether to let the suit go forward must assume the truth of plaintiff’s version of the facts. There have been no factual findings, and no final judgment.)
But for all that judges are forced to interpret the meaning of emoji, in the academic literature there’s considerable debate over whether they clarify the sender’s meaning — or serve to obscure it. Certainly, courts often misunderstand them. And even in the era of Unicode, some emoji appear differently on different platforms. Consider an example every evidence teacher knows: Is it an illegal threat when what is sent as an emoji of a water gun resolves on the receiver’s device into an image of a revolver? And what about the woman who sent a coworker what she thought was a smile emoji — only to be informed by the coworker’s wife that it was, in fact, a hug emoji, leading to an accusation of flirting?
But the future probably contains more emoji-laden lawsuits, rather than fewer. Like the Pac-Men they resemble, they’re gobbling language fast. More than 3,600 emoji currently exist. By one estimate, 10 billion emoji are sent daily. A September 2022 survey by Adobe found that 91% of “frequent” users believe emoji make it easier for them to express themselves; 73% describe people who use emoji as “friendlier, funnier and cooler than those who don’t.”
Well, nobody would ever describe me as friendly, funny or cool, so I’d like to issue a partial dissent. To me, emoji often possess a jarringly soi-disant character, for they do not so much inform as proclaim. They aren’t true substitutes for guidance offered in conversation by visual or auditory cues, or in the written word by sophisticated language.
Whatever Cohen may have meant, a smiling moon can be a symbol of elaborate complexity. William Blake wrote a haunting poem on the subject. Garry Trudeau was surely right when he suggested, 40-odd years ago, that we should start to worry if Blake’s beautiful imagery can be reduced to “Oh, wow, look at the moon.”
But emoji are here to stay, and the courts will keep guessing what they mean. Maybe they’ll usually guess right. But whatever happens in the Bed, Bath & Beyond litigation, the betting here is that … oh, wait, what’s the emoji for “confusion about language will lead to confusion about law”?
BLOOMBERG OPINION
* I suspect that the allegation concerning Cohen’s Schedule 13D filing, if true, will in the long run prove the more pertinent.