Archives for June 2016

Court Rules in Favor of Rhea Lana’s Consignment Events in Department of Labor Dispute over Volunteers

Washington, DC – The U.S. Court of Appeals for the District of Columbia today ruled in favor of Rhea Lana Riner and her children’s clothing consignment business in her lawsuit against the U.S. Department of Labor. Cause of Action Institute (CoA Institute) represents Rhea Lana, Inc. The ruling overturns the district court’s dismissal of her complaint and allows the case to proceed.

Rhea Lana: “I am grateful that the Court of Appeals is allowing my case to go forward. The Labor Department’s crusade to classify volunteers as employees has put my business and livelihood in jeopardy. I look forward to presenting my case before the district court in the hopes of being able to run my business without the constant threat of civil penalties from the federal government.”

Rhea Lana founded her clothing consignment company in her living room more than a decade ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with 80 locations across 24 states. However, in 2013, the U.S. Department of Labor conducted an audit and sent Rhea Lana a letter claiming that her company was in violation of the Fair Labor Standards Act regarding minimum wages and overtime pay.  The government claimed that volunteers who help at the consignment events where their goods are on sale must be classified as “employees.”

Rhea Lana took the Department of Labor to court, but the complaint was dismissed for lack of a reviewable agency action.  On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana is subject to immediate judicial review. The ruling states:

“We conclude that the Department’s letter to Rhea Lana is final agency action because it is more than mere agency advice. By notifying Rhea Lana that the company was in violation of its wage-and-hour obligations, the letter rendered knowing any infraction in the face of such notice, and made Rhea Lana susceptible to willfulness penalties that would not otherwise apply. The letter thus transmitted legally operative information with a ‘legal consequence’ sufficient to render the letter final. We therefore reverse the district court’s dismissal.”

CoA Institute President & CEO, and former federal judge, Alfred J. Lechner, Jr.: “We are gratified by the decision of the Court of Appeals.  People who receive agency letters like the one the Department of Labor sent Rhea Lana should be able to go to court to protect their rights.  The outcome of this case will set an important precedent about the right to judicial review, the scope of the government’s control over U.S. commerce, and whether individuals are free to volunteer their time for their own benefit. We believe that the Department of Labor overstepped its authority in this case and look forward to Rhea Lana’s day in court.”

The case now returns to the district court, where Rhea Lana will show why volunteers should be free to use their time to ensure the success of consignment events.

The Court of Appeals decision relied on the United States Supreme Court’s decision this week in U.S. Army Corps of Engineers v. Hawkes Co., which involved a similar question of judicial review.  CoA Institute filed an amicus brief in that case in support of the parties seeking review, who prevailed in the Court.

Cause of Action Institute Sues CIA over FOIA Political Influence Records

Washington, DC – Cause of Action Institute (CoA Institute) today filed a complaint in the U.S. District Court for the District of Columbia against the Central Intelligence Agency (CIA) seeking access to records concerning the undue influence of political appointees in processing Freedom of Information Act (FOIA) requests.  The requested records were created by the CIA Office of Inspector General (OIG) but are accessible under FOIA through the CIA. The CIA is one of the few agencies that has refused to release the relevant records without sufficient explanation.

CoA Institute President & CEO, and former federal judge, Alfred J. Lechner, Jr.: “All federal agencies have the obligation to efficiently and effectively respond to FOIA requests. After three years, the CIA has demonstrated it has no intention of providing the requested documents in a timely manner. The current administration has neglected its duties under FOIA and allowed federal agencies to undermine transparency requirements. Despite numerous media reports that have criticized the Obama administration for its poor efforts to ensure transparency and openness, agencies continued to abuse the law and permit political appointees to insert themselves into the FOIA process.”

Congress requested the OIGs of several agencies to conduct audits of their FOIA programs looking into inappropriate influence of political appointees in the processing of records requests.  In two seperate FOIA requests, CoA Institute requested the CIA OIG’s final reports, but the agency has yet to produce the documents.  In one case, the CIA has stonewalled CoA Institute for three years and has twice indicated that it “will not acknowledge or respond to any additional queries regarding the status” of the CoA Institute FOIA request.

FOIA requires an agency to respond to a request within twenty business days or, in “unusual circumstances,” within thirty business days. Although President Obama came into office with promises of transparency, his administration’s actions have not matched such rhetoric.  Under a non-public 2009 White House memorandum, federal agencies were instructed to consult with Office of White House Counsel before producing any documents that involve so-called “White House equities.” The result of this memo is the unlawful expansion of White House control of agency FOIA processes and usurped agency responsibility for finalizing determinations.  Additionally, agencies have politicized FOIA processes by creating “sensitive review” procedures that permit political appointees and agency press officials to intervene in and obstruct the processing of FOIA requests.

In May, Cause of Action Institute filed a lawsuit against 11 federal agencies and the White House to end the Obama administration’s practice of delaying government responses to FOIA requests that the administration considers politically sensitive or embarrassing. Read more HERE.

To access the complaint filed today against the CIA click HERE.

#TBT – Prescient CoA Institute Report Anticipated Clinton Email Scandal

In July 2012, CoA Institute published “ When Politics Gets Personal, Does the Public Have a Right to Know?” in the Federalist Society legal journal Engage.[1]  More than two years before Secretary Clinton’s decision to use a personal email address and private server to conduct official government business first came to light, CoA Institute warned:

“The practical reality is that … federal agency employees have and will continue to conduct agency business using personal e-mail accounts and personal communications devices.  Until Congress or the courts definitively clarify whether these work-related communications are subject to FOIA’s disclosure provisions, a dangerous loophole enabling unscrupulous agency employees to intentionally evade the light of public scrutiny may exist.”

CoA Institute noted the practical and technical problems associated with obtaining “agency-business-related communications that are never captured on government computers or servers,” which are nonetheless agency records subject to the Freedom of Information Act (FOIA)—a federal transparency statute.  But as CoA Institute said in 2012, “federal executive branch agency personnel should not be able to use personal communications devices, such as home computers and personal e-mail accounts, to intentionally circumvent the FOIA’s disclosure provisions and evade public scrutiny of their professional conduct.”

A May 2016 State Department Inspector General report examining Secretary Clinton’s use of a private email account and server to conduct government business has now confirmed CoA Institute’s suspicions, illustrating the need for action. The IG Report reveals email correspondence suggesting that the private Clinton server and were used, at least in part, to intentionally shield Clinton’s work-related communications from public disclosure under FOIA:

“In August 2011, … [t]he then-Executive Secretary informed staff of his intent to provide two devices for the Secretary to use: ‘one with an operating State Department email account (which would mask her identity, but which would also be subject to FOIA requests)….’ In another email exchange, the Director of S/ES-IRM noted that an email account and address had already been set up for the Secretary and also stated that ‘you should be aware that any email would go through the Department’s infrastructure and subject to FOIA searches.’ However, the Secretary’s Deputy Chief of Staff rejected the proposal to use two devices, stating that it ‘doesn’t make a whole lot of sense.’ OIG found no evidence that the Secretary obtained a Department address or device after this discussion.”

The IG report indicates that Clinton’s email practices were driven, at least in part, by a sophisticated understanding of FOIA and a deliberate effort to frustrate the public’s right to know what the government is up to, as CoA Institute warned in 2012.

[1] Cause of Action Institute, When Politics Gets Personal, Does the PublicHave a Right to Know?, Engage, Vol. 13, Issue 2 (July 2012), available at (last visited June 1, 2016).

Cause of Action Institute Petitions OMB to Update FOIA Fee Guide

Today, Cause of Action Institute filed a petition for rulemaking with the White House Office of Management and Budget (“OMB”), urging it to update its obsolete guidance document that federal agencies rely on when making FOIA fee determinations.  The petition seeks to implement Cause of Action Institute’s landmark legal win in Cause of Action v. Federal Trade Commission where the D.C. Circuit ruled OMB’s guidance conflicts with the FOIA statute.


In 1986, Congress passed, and President Reagan signed into law, the Freedom of Information Reform Act of 1986.  Section 1803 of the Act directed OMB to provide a uniform schedule of fees for all federal agencies and guidelines for how to apply that schedule.  On March 28, 1987, OMB finalized those guidelines.  Although Congress has amended the FOIA several times since 1986, OMB has never updated the guidance.

The failure by OMB to update its guidelines has resulted in costly, time-consuming litigation between agencies and requestors.  For example, in 2011 and 2012, CoA Institute sent a series of FOIA requests to the Federal Trade Commission (“FTC”) requesting access to records, to be classified as a representative of the news media, and for a public interest fee waiver.  The FTC refused the CoA Institute requests for fee classification and waiver by relying on its outdated FOIA fee regulations, which in turn relied on the outdated OMB guidance.  After the district court refused to apply the statutory standard, CoA Institute appealed the case to the D.C. Circuit, which ruled that many of the regulatory and judicial standards that had built up over time were in conflict with the statute as amended by the Open Government Act of 2007.