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11/6/2015

Weekly Rundown 11-6-2015

Cause of Action in the News:

Full Measure – Full Measure with Sharyl Attkisson

In the fight for government transparency, Cause of Action graded federal agencies on their transparency and response time to FOIA requests. Not surprisingly, many agencies earned very poor grades while two received A’s. Interestingly, the Department of Veterans Affairs scored an A, despite public exposure of the agency’s notorious wait-time scandal the same year. Cause of Action Executive Director Dan Epstein opined, “if you think about it, part of the reason the public knows about the VA scandal is because of the easy ability to get documents. That should show why transparency is actually a good thing for reforming federal agencies.”

Wall Street Journal – Franz Kafka in Footie Pajamas (My consignment company for secondhand children’s clothes has somehow run afoul of federal regulators.)

Meet Cause of Action client Rhea Lana Riner, a business woman who started a small and successful consignment business in 1997 that now has franchises in 24 states. Rhea Lana relies heavily on volunteers who are willing to help before and during the events who then get rewarded with perks such as being able to shop first. The Department of Labor decided that her volunteers must actually be considered employees and that she owes them back wages. Even though none of the volunteers have come forward demanding payment for their volunteer hours, the Dept. of Labor continues to try to obstruct Rhea Lana’s business.

In Other News:

Government Exec – Inspectors General Continue Battle With Justice Over Document Access

The Justice Department has written to Congress that there should be a change in the law that would allow federal agencies to deny access to certain information by inspectors general. They write this as congress holds hearings on a bill that would empower the inspectors general to do their job. The IGs responded saying “While the DOJ agrees with CIGIE that legislation is needed and should be passed by Congress to reverse the impact of the OLC opinion, the DOJ’s proposal only applies to the DOJ Inspector General’s access to records and fails to ensure that all other federal inspectors general have the same independent access at their respective agencies. As such, DOJ’s proposed legislative language is not acceptable.”

Politico – State Dept.: Outlook crashes delay release of Hillary Clinton schedules

The State Department has been unable to meet the deadline for turning over former Secretary of State Hillary Clinton’s emails due to multiple Microsoft Outlook crashes.  Kelly Degnan, the State Deputy Executive Secretary, wrote a declaration that stated, “[t]hroughout August and the early part of September, problems with the Microsoft Outlook software caused Outlook to crash during the indexing process (a process that is necessary in order to conduct searches of emails which have been retained as .pst files) for searches [State’s executive secretariat within the office of the secretary] was running for other requests, preventing S/ES-S from applying search terms to the records and forcing S/ES-S to restart the indexing process[.]”

Daily Caller – EPA’s Smog Regulation Will Cost 40x More Than It Predicted

A new report by the American Action Forum says the Environmental Protection Agency estimate on the cost of the new smog limits is highly inaccurate.  According to the EPA, the new limits will cost $1.4 billion per year; however, AAF has determined the American people will be losing $56.5 billion in income. The report, which looked at counties who were not compliant with the 2008 standard, explains “[o]bserved nonattainment counties experienced losses of $56.5 billion in total wage earnings, $690 in pay per worker, and 242,000 jobs between 2008 and 2013.”  With so many penalties for noncompliance with the 2008 smog standard, it makes sense that the new standards will have an even harsher impact.

SF Gate – Feinstein calls for end to controversial EB-5 immigration program

The EB-5 visa program gives out green cards to foreign nationals and their families if they invest into U.S. businesses.  Without Congressional action, the program is set to expire in December.  One of the strongest opponents is Senator Diane Feinstein, who noted “[a]t its most basic, the EB-5 program allows a foreigner to invest $500,000 in a U.S. business, in return receive a visa that puts them and their direct family on a special path toward citizenship.  At the same time, individuals unable to buy their way into the country remain trapped in seemingly endless visa backlogs that often last more than 20 years. I believe the program is deeply unfair, sends the wrong message about this country’s values and is prone to fraud and abuse.”

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11/4/2015

What the Department of Labor Is Doing To This Woman and Her Business Is Absolutely Absurd

Rhea Lana Riner needed clothes for her three young children, but couldn’t afford anything she liked. Fed up, she decided to do something about it.

Back in 1997 – almost two decades ago – Rhea Lana invited some close friends over to her home in Conway, Arkansas. What began that day as a small gathering in her living room blossomed into a children’s clothing consignment business that would eventually grow beyond her wildest dreams.

Today, thousands of parents from throughout the U.S. participate in Rhea Lana’s consignment events, which are run by 80 franchises across 24 states. Consigners register online, bring their items to the sale location, label them with preprinted price of their choosing and sell the clothes. They keep 70%; Rhea Lana’s business keeps 30%. It’s a win-win for everyone involved; sellers are basically getting paid to clean out their closets while buyers are able to save tons of money on clothes and other goods.

Predictably, the federal government doesn’t see it that way.

In 2013, the U.S. Department of Labor wrote a letter to Rhea Lana informing her that her mom volunteers must actually be classified as employees under the Fair Labor Standards Act.

That’s nonsense, of course. Rhea Lana’s volunteers are not employees or independent contractors. They’re customers! It would be like the federal government telling eBay or Craigslist that their users are entitled to hourly wages for the time they put in online. What’s next? Will self-serving at the bulk food section of Whole Foods make you a store employee?

Amazingly, that’s not even the worst part.

After the Labor Department wrote to Rhea Lana, she sued the agency in an effort to put a stop to the harassment. However, a federal district court dismissed her complaint, saying it couldn’t weigh in until a “final agency action” had been taken.

Rhea Lana isn’t standing for that. With the help of the strategic oversight group Cause of Action, Rhea Lana is appealing the ruling. Today, the D.C. Circuit Court of Appeals will hear oral arguments in her case.

What kind of world are we living in where the American government truly believes that if someone wants to spend a weekend helping others find and sell affordable clothes and toys, they should not be allowed to?

This post originally appeared on IJ Review.

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11/2/2015

We Were In Federal Court Today on Behalf of Our Client, Rhea Lana Riner. Here’s What We Argued

Today, Cause of Action presented oral argument before the U.S. Court of Appeals for the D.C. Circuit in the case of Rhea Lana, Inc. v. Department of Labor (Case No. 15-5014).

Rhea Lana is an organizer of children’s clothing consignment events; it was founded by a stay-at-home mother in Conway, Arkansas and has since expanded into a franchise with 80 locations in 24 states. In Rhea Lana’s business model – consistent with other businesses in the consignment industry – consignors provide items to be sold, and have the option of “volunteering” at the sales event. Participating in the sale in that way helps ensure that consigned items sell, and consignors who choose to do so have the opportunity to shop early in order to get the best deals. What Rhea Lana provides is the organization, branding, and technology to help consignors make their sales.

Notwithstanding the obvious benefits of this arrangement for all concerned, the Department of Labor sent Rhea Lana a letter determining that the model violates the Fair Labor Standards Act (FLSA): specifically, that the participating consignors are actually Rhea Lana employees entitled to minimum wage and overtime. Although the agency did not initiate an enforcement action, it encouraged Rhea Lana’s consignors to sue for back wages (none did) and threatened Rhea Lana with civil monetary penalties if Rhea Lana doesn’t conform to the agency’s views. Rhea Lana filed suit under the APA seeking injunctive and declaratory relief, but to make matters worse, the district court dismissed the complaint for lack of any reviewable “final agency action.”

On appeal, Cause of Action has argued that the Department of Labor’s decision is indeed final and reviewable. First, the agency’s decision changes Rhea Lana’s legal status. In order to extract civil monetary penalties from Rhea Lana in a future enforcement action, the agency must prove that Rhea Lana either (1) is a repeat FLSA offender, or (2) violated the statute willfully.  See 29 CFR 578.3. Under the text of the agency’s regulations, notice from the agency has an important legal role in satisfying those requirements. Notice from the agency is an element of repeatedness, which the letter facially appears to satisfy.  Furthermore, notice will allow the agency to argue that Rhea Lana acted willfully not just factually, but as a matter of law. By sending Rhea Lana a letter, the agency thus created legal liabilities that wouldn’t have existed otherwise – one of the hallmarks of reviewable agency action. See, e.g., Sackett v. EPA, 132 S. Ct. 1367 (2013). Second, as the Supreme Court also recently reaffirmed in Sackett, when an agency demands a party’s compliance, the party can go to court instead of waiting for the hammer of enforcement to drop.

We await the Court of Appeals’ decision. If we are successful, the case will return to the district court for consideration on the merits of Rhea Lana’s claim that the Fair Labor Standards Act allows businesses and individuals to collaborate for their mutual benefit.

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10/30/2015

Weekly Rundown 10-30-2015

Cause of Action in the News:

Daily Caller – The Daily Caller Sues The State Department For A Variety Of Clinton Email Records

Cause of Action is representing The Daily Caller in a lawsuit over five Freedom of Information Act requests that have gone ignored by the State Department.  Our suit states “Defendant has dragged its feet, refused to provide substantive updates on the status of the requests, and, through its delay, prevented Plaintiff’s access to the requested records and effectively denied it expedited processing,”

“The material being sought here is not complicated to understand yet, for whatever reason the State Department has failed to process these FOIA requests in a timely manner, as required by law.  Whether requests have come from big news agencies or organizations like mine, this State Department has repeatedly shown an inability to produce basic information regarding the emails belonging to the former Secretary of State,” said Cause of Action Executive Director Dan Epstein.

In Other News:

Watchdog.org – Double-dose of EPA regulations will make your bank account scream

According to a white paper by the Independence Institute the Environmental Protection Agency’s Clean Power Plan will be billions higher in cost for power and gas.  The research concluded that by 2020 the cost of electricity and gas in a given household will go up an average of $680.00.  All of this cost will result in no environmental change, as admitted by Gina McCarthy, current EPA administrator.

Daily Signal – Lois Lerner Won’t Be Facing Criminal Charges. Here Are the Problems With the ‘Investigation’ That Cleared Her.

Although the Department of Justice has decided to end its investigation into Lois Lerner and her email scandal they have failed to erase all doubt.  In the letter the DOJ sent to the House of Representatives they explain the results of their investigation, but fail to determine criteria for which organizations needed closer watching, among other unresolved issues.

The Hill – Five states sue over EPA’s ozone

The Environmental Protection Agency is being sued by five states because of the newly stated ozone limits. EPA administrator Gina McCarthy has said that every state but California should be able to comply to the new ozone standards by 2025.  However, Arizona Attorney General Mark Brnovich says that “reducing the ozone standards to 70 parts per billion will be nearly impossible for Arizona to attain.” AG Brnovich is leading the charge in the lawsuits against the EPA.

Breitbart – HILLARY CLINTON CHANGES DEFINITION OF ‘WORK-RELATED EMAIL’

Statements made by former Secretary of State Hillary Clinton have led to questions of what her definition of a work related email is. Mrs. Clinton said “Well, if you are talking about Mr. Blumenthal, which I assume you are, he had some that I didn’t have, and I had some that he didn’t have. And he — I was under no obligation to make any of his emails available unless I decided they were work-related.”  This seems to contradict a previous statement from Mrs. Clinton where she said she had turned over all emails “that could possibly have been work related,” which should include any emails from an advisor personal friend or not.

Forbes – IRS Joins FBI, DEA & Other Federal Agencies With Access To Cellphone Surveillance Technology

For years now the IRS has had in its possession a Stingray, a device that can capture cell phone data such as location and identifying information without needing a warrant.  A recent Freedom of Information Act request revealed an invoice of $70,000 for the purchase of a HailStorm, a more powerful Stingray, and training for its use.  The IRS has not explained how they utilize the device and now make a list with 12 other federal agencies who own such technology.

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10/27/2015

White House’s “Open Government National Action Plan” Misses The Mark

The Obama administration on Tuesday published its Third Open Government National Action Plan to increase transparency and provide citizens with “unprecedented access” to government information. While this plan contains laudable sections to improve access to information through the Freedom of Information Act and to increase federal spending transparency, it neglects to identify and address two fundamental issues clouding this administration’s record on transparency.

This administration has demanded government agencies seek counsel from the White House on any matter that could be considered a “White House equity.” This policy threatens both the improvement of FOIA request transparency, and the public’s First Amendment rights.

The definition of “White House equities” is nebulous at best; most agencies are unsure exactly what the term means, although some have understood it to be anything of possible interest to the White House. This vague definition has caused confusion — and therefore delays — from many government agencies in processing FOIA requests, leaving the public waiting on information. Additionally, adding the White House onto the review process not only increases delays, but it actually provides the White House Counsel’s Office with documents it would not ordinarily have access to under FOIA.

White House equities are in clear conflict with government transparency, and should have been addressed in the National Action Plan.

In addition, the administration’s plan fails to address Executive Branch Earmarks.

In 2008, President Bush issued Executive Order 13457, aimed at ensuring that funds provided by Congress are transparent and merit-based, with all information made publicly available on the internet. However, the Executive Branch is currently ignoring Executive Order 13457 and still handing out its own earmarks behind closed doors.

Taxpayer dollars continue to be wasted in the absence of government transparency. A Cause of Action examination of federal discretionary spending through FOIA records and federal databases has revealed that efforts to ensure that discretionary grant decision-making is transparent and merit-based are ineffective. As a result, political appointees and others continue to use federal monies to reward political allies and appease powerful interests.

While the administration may have a plan to make government more transparent, there is a great deal that it has neglected. If the administration really wants to increase transparency, then it must address White House equities and Executive Branch Earmarks.

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10/26/2015

The Real Cause Of The IRS Targeting Scandal, And Why It Could Happen Again

The Department of Justice (“DOJ”) announced on Friday that it would not prosecute Lois Lerner after its two year investigation into the Internal Revenue Service (“IRS”) revealed no evidence that the IRS’s targeting of conservative group constituted criminal conduct. “Our investigation uncovered substantial evidence of mismanagement, poor judgment, and institutional inertia…[b]ut poor management is not a crime,” the DOJ wrote in a letter to Congress.   

The DOJ investigation echoes congressional reports, which broadly attributed “poor judgment” as the reason that so many Tea Party groups experienced delay and unequal treatment by the IRS. Even the President, after initially expressing outrage, ultimately blamed “bonehead decisions out of a local office,” stating that the IRS employees were just implementing the law “poorly and stupidly.”   

The DOJ’s decision not to prosecute comes as no surprise to Cause of Action, which has been investigating the IRS and its operating procedures for more than two years. Our investigation, which was documented earlier this year in National Review, shows that the targeting of conservative groups was not caused by IRS employees making “bonehead decisions,” but, rather, was the direct result of employees actually following IRS procedures perfectly- not “poorly.”  And certainly not “stupidly.”   

The Internal Revenue Manual (“IRM”), the employee handbook that sets all IRS processes, required agents to apply extra scrutiny to Tea Party applications. The IRM requires that an application from an organization that is “newsworthy” be elevated up to management for review. It also requires that IRS employees create a Sensitive Case Report for an application that is of interest to the media. These processes subject applications to extra levels of review, delays in processing, and allow high-ranking IRS officials to make the final say in whether to approve or deny the application for tax-exempt status.   

This is exactly what happened to Tea Party applications. In 2010, all major media outlets covered the Tea Party movement. When an IRS employee in Cincinnati received the first Tea Party application, he immediately elevated the issue to his supervisor due to “recent media attention.”  

 

IRS Pic 1

In turn, this manager notified Cindy Thomas, head of the entire Cincinnati office, to elevate it to the national office to “let Washington know about this potentially politically embarrassing case involving ‘Tea Party’ organization.”

IRS pic 2

On April 5, 2010, IRS employee Steve Grodnitzky directed subordinates to prepare a Sensitive Case Report for the Tea Party cases due to this media attention.

IRS Pic 3

Ultimately, Lois Lerner first learned about the Tea Party applications when she received a Sensitive Case Report summary listing these applications.

In the end, while the investigation into Lois Lerner was well intentioned, her prosecution would not have prevented political targeting from happening again in the future. In order to truly solve the problem, the IRS must reform its internal policies. The fact that an organization receives media coverage should never result in delays or unequal scrutiny.

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10/23/2015

Weekly Rundown 10-23-2015

Cause of Action in the News:

Wall Street Journal – The Latest Progressive Attack on Speech (Still infuriated by the Citizens United ruling, the left keeps trying to undo that blow for freedom.)

Cause of Action Executive Director Dan Epstein wrote about Van Hollen v. FEC which is currently being heard by the D.C. Court of Appeals.  Maryland Representative Chris Van Hollen is arguing that nonprofit organizations should be required to reveal all donors, not just those that donating for an election.  Mr. Epstein writes “If the court forces nonprofits to disclose the identity of their supporters, it will lead to the “threats, harassment, or reprisal” that chill free speech and limit free association, just as the Supreme Court has warned.”

Delaware Online – Bloom rival settles with state over fuel cells

A settlement was reached that will now allow out-of-state fuel cell manufacturers to compete in Delaware.  Dan Epstein, Cause of Action Executive Director, had this to say about the ruling: “This settlement should send a message to government officials that fair interstate competition is a cornerstone of the U.S. Constitution.  Today is a great day, not only for clean energy manufacturers, but for innovators and entrepreneurs everywhere who wish to compete on an even playing field.”

Politico – Lawyer: Clinton ‘unable to obtain’ emails from first weeks as secretary

Former Secretary of State Hillary Clinton’s lawyer David Kendall says that while she has turned over all of her federal emails, but is “unable to obtain” emails from the beginning of her time in the State Department.  Mr. Kendall said the following in his letter: “She does not have custody of e-mails sent or received during the first few weeks of her tenure.” Kendall’s letter comes amidst ongoing lawsuits regarding Mrs. Clinton’s use of a private server, including the case brought by Cause of Action.

In Other News:

Breitbart – DEM REP ON FBI INVESTIGATION OF CLINTON EMAILS: ‘ABSOLUTELY, I THINK IT’S LEGITIMATE’

Democrat Rep. Adam Schiff was asked if he thought the FBI should be investigating Hillary Clinton’s emails and private server.  He first insisted that the investigation wasn’t into Mrs. Clinton herself, but rather to find out when the classified emails on her server were originally marked as classified.  Eventually he did say “Absolutely, I think it’s legitimate for the Justice Department to look into the proper classification of the information and whether any steps need to be taken to protect it. If it’s out in the ethosphere because of this investigation, that’s perfectly appropriate.”

Washington Examiner – States can sue EPA over climate rules starting Friday

Today the timer begins for states who want to sue the Environmental Protection Agency over the Clean Power Plan.  There are already 16 states who are ready to sue the EPA and the GOP plans to fight the rules in Congress.  As of today, states must either come up with alternative plans or provide a plan that will explain their compliance with the Clean Power Plan by September 2016.

NY Post – Revolt of the watchdogs: Federal inspectors general vs. the Obama stonewall

Federal inspector generals have continued time and again to be blocked by the current administration.  Last year over 60 percent of the federal inspectors general wrote a letter stating “serious limitations on access to records that have recently impeded the work” and have reduced their “ability to conduct our work thoroughly, independently, and in a timely manner.”

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