Would a private business be liable for false warrant canary?

Question

Suppose there is a private business whose business model is based on the trust of its customers that it has not been served with a secret government subpoena. That is, if the customers knew (or could infer) that such a subpoena has been served, they will likely be customers no longer.

The business regularly updates its warrant canary to maintain the customers' trust.

Now, suppose the business has actually been served with a secret government subpoena, but elects to falsely maintain the warrant canary anyway. Or, rather, continuing to maintain the canary is actually part of the government order.

Should the breach of trust be unveiled by the customers and the damage be quantifiable, would the customers have a case, possibly class action?

My doubt is that the business could possibly have this defense that it was acting at the orders of the government (which cannot be liable). Will that defense shield the business from any liability?

Essentially, what the question drives at is whether there is any sense in a warrant canary in principle. If a business is never liable for lying in its warrant canary, then how can one possibly trust a warrant canary at all?

Related: What is the legal status of "warrant canaries"?

Answer 1

A warrant canary has always been a somewhat legally questionable technique. Australia, for one, has made them illegal in certain kinds of cases, passing laws that forbid disclosing the "existence or non-existence" of certain types of warrants issued to a subject. (See the Wikipedia article.)

However, in the US, an order to falsely update an existing canary would probably fall afoul of the prohibition on compelled speech stated in West Virginia State Board of Education v. Barnette (the 2nd flag salute case) and Wooley v. Maynard (state cannot mandate a motto on a license plate that some find offensive). The case of New York Times Co. v. United States (the Pentagon papers case) might also be relevant.

However, before asking if a government order would shield a business from liability for falsely updating a canary, one must fist ask if they would have any liability in any case. It is generally not a crime, or even a tort, to make a false statement unless it is under circumstances where the statement constitutes fraud.

To prevail, a plaintiff A would need to show that it reasonably relied on the statement from B, and suffered measurable damage from that reliance. It would also need to show that the person or firm B falsely updating the canary knew or should have known that the statement was likely to be relied on, and possibly that B intended A to rely on the false statement to A's detriment.

It is hard to see what actionable damage to A this might include, as being discovered in unlawful acts is not actionable.

If a court did rule that A was damaged by B's false statement, then the question of a government order might be raised. In general it is a defense against a civil lawsuit that one was complying with a valid law or government regulation or order. Of course, this could raise the further question of whether such an order was valid, which might have different results in different jurisdictions.

Conclusion

In short, this is a situation untested in any actual court case that I know of, and not highly likely to be tested any tiem soon. It involves several debatable issues, and any firm answer at this point must be speculation.