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10/25/2017

CoA Institute Applauds Senate Vote to Kill Harmful CFPB Arbitration Rule

Washington, DC – Cause of Action Institute (“CoA Institute”) today commended a Senate vote to kill a rule by the Consumer Financial Protection Bureau (“CFPB”) that would have banned arbitration clauses in consumer contracts for financial products. Vice President Mike Pence cast the tie-breaking vote to reject the rule under the Congressional Review Act. CoA Institute has led the charge in showing that CFPB failed to adequately justify its arbitration rule, which would increase costs on consumers.

CoA Institute Counsel Eric R. Bolinder: “The Senate last evening took a strong stand in rejecting a CFPB rule that would enrich class action attorneys at the expense of the American economy and consumers. This rule was based on a flawed scientific study that used junk data and methodology, contrary to the requirements of Dodd-Frank and the Information Quality Act. Government rules, especially those that have broad effects on consumers and business, must be based on sound science.”

In 2000, Congress passed the Information Quality Act to ensure that agencies use quality data in rulemaking, ensuring the objectivity, integrity, and utility of agency methodology. The Office of Management and Budget subsequently issued its own guidance that calls for agencies to have other experts and scientists verify their work through a rigorous peer-review process.

In March 2015, CFPB released a 728-page report, which was not peer reviewed, purporting to show how class action lawsuits benefit consumers. The report, when looked at through an objective eye, arguably demonstrated the opposite. Class action lawsuits can often result in a worse outcome for consumers than individual arbitration, which is a quicker and more efficient process for settling disputes.

In April 2016, CoA Institute filed a Freedom of Information Act request for records that would show how the agency conducted its study. Although CFPB produced some documents, it withheld 1,877 pages of responsive records. In December, 2016, CoA Institute filed a lawsuit to compel the CFPB to provide all responsive records not covered under a valid exemption.

In August 2016, CoA Institute filed a regulatory comment highlighting key problems with the arbitration rule. The comment outlines how the rule would subject numerous financial institutions to a flood of class action lawsuits, further burdening the courts and ultimately injuring consumers.  CFPB responded to CoA Institute’s comment, providing a woefully inadequate defense of its rule.  CoA Institute also submitted written testimony for the record to Congress.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

 

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10/24/2017

The IRS scandal has not disappeared – it’s gotten worse (The Hill)

The IRS scandal has not disappeared – it’s gotten worse

BY JOHN MCGLOTHLIN, OPINION CONTRIBUTOR — 10/20/17

Judging by the reaction of many elected officials and media outlets, the latest report on the IRS targeting scandal is cause for relief. But a closer look shows the opposite is true – by finding that the agency mistreated a variety of left-leaning groups, the report widens the scope of IRS misconduct and increases the urgency of further changes at the agency. Read the full op-ed at The Hill

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10/20/2017

DHS Watchdog Claims Political Appointees No Longer Politicizing FOIA

One of the earliest transparency scandals of the Obama Administration erupted in 2010 when the Associated Press discovered that officials at the Department of Homeland Security (“DHS”) had, “in a highly irregular move,” started to “filter hundreds of public records requests through political appointees, allowing them to examine what was being requested and delay releasing sensitive material.”  These appointees, along with senior officials and public affairs staff, effectively blocked or delayed the disclosure of potentially embarrassing or politically-damaging agency records under the Freedom of Information Act (“FOIA”).  Their interjection into the FOIA process—and retaliation against career staff members who objected to this “sensitive review”— resulted in a congressional inquiry and damning Oversight Committee report.  The Obama Administration politicized FOIA the same way at the Department of Housing and Urban Development, the Environmental Protection Agency, the State Department, and the Department of the Treasury.  The situation at DHS, however, has improved, according to a recently-released Inspector General report.

The July 7, 2009 memorandum establishing sensitive review procedures at DHS included extensive reporting requirements, including updates to the White House about agency disclosures.  The DHS Inspector General politely described this, in a March 2011 report, as “unprecedented.”  It “created inefficiencies that hampered full implementation” of the FOIA.  More troubling, the policy had the practical effect of targeting media organizations and critics of the Administration.  Agency officials regularly delayed requests from media outlets, for example, so that they could develop a public response to damaging records.  And other disclosure decisions were sometimes based on the political affiliation of a requester.

Now, in response to a June 2015 request from the U.S. Senate Homeland Security and Governmental Affairs Committee, the Inspector General has published a new report that revisits its earlier findings and suggests that the culture of FOIA politicization at DHS has improved.  Since 2011, DHS has “reduced the number of days that political appointees . . . have to review releases from 3 days to 1 day.”  The sensitive review process has been renamed the “1-Day Awareness Notification Process.”  And, in most cases, FOIA officers “no longer wait for approval before releasing responses to significant FOIA requests” because it is “not required.”  An audit of 57 “significant requests” showed that none were delayed because of political appointee intervention.

These findings are positive.  The more limited involvement of fewer political appointees—“an advisor to the DHS Secretary, an official in the Office of Public Affairs, and the Chief FOIA Officer”—as well as a shorter “notification” period, limits the potential for politicization while respecting agency leadership’s concern for being kept aware of disclosures that might ignite media attention.  The apparent removal of any sort of necessary “clearance” authorization from political staff, or the removal of a requirement to obtain such clearance before release, is also a helpful development.  Oddly, DHS’s revised procedures are only “informally documented” in a “2012 email” and “2015 draft guidance.”  According to the Inspector General’s report, the DHS Privacy Office aims to finalize them by the end of the year.  The sooner, the better.

Ryan P. Mulvey is Counsel at Cause of Action Institute.

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10/19/2017

Congress should reject flawed Back the Blue Act

On May 16, 2017, Representative Ted Poe (R-Texas) introduced the Back the Blue Act in Congress.[1]  The bill has since been referred to the House Judiciary Committee.  The Back the Blue Act of 2017 (“BBA”) creates new federal crimes for killing and assaulting police officers—conduct that is already illegal under the law in all fifty states and has been punished in state courts for years.  The proposed bill goes further, and establishes mandatory minimum sentences for such crimes even though mandatory minimums have been proven to be ineffective at curtailing criminal conduct.  The BBA, as currently written, does not require that the defendant even knew he or she was assaulting a police officer, which means it lacks any mens rea, or “guilty mind,” requirement.

Because of its duplicative nature, adoption of mandatory minimums, and lack of any mens rea requirement, Congress should reject the current version of the BBA.  The lives and working conditions of police officers are at stake.  As a 34-year veteran of the Baltimore and Maryland State Police Departments put it, “the bill would make us less safe and less effective by worsening what is already the greatest threat to policing today: the downward spiral of police-community relations.”[2]

The Back the Blue Act attaches a mandatory minimum of ten years for the attempted killing of a law enforcement officer or for “conspiring” to kill a law enforcement officer.  The BBA also turns any assault on an officer that works for a state or local police department that receives federal funding into a federal crime.  Most definitions of assault make spitting on someone an act of assault, so the potential application of the new law is vast.  Under the BBA, if any injury occurs during the assault, the mandatory minimum sentence is two years.  And if “serious bodily injury” occurs, the defendant faces a mandatory minimum of ten years in prison.  Further, a twenty-year mandatory minimum sentence applies if a deadly weapon is used during the assault.

Mandatory minimums take away sentencing discretion from judges and give it to prosecutors.[3]  This results in arbitrary and severe punishments that undermine the public’s faith in America’s criminal justice system.[4]  Further, evidence shows that mandatory minimums do not deter criminal conduct.[5]

As mentioned, the lack of any mens rea requirement means that a person could be charged by federal prosecutors without even knowing that the person allegedly assaulted was a law enforcement officer.  This risk is particularly high for the charge of conspiracy to kill a law enforcement officer, which imputes liability for actions taken to any person involved in the alleged conspiracy, even if the actual act was not performed by that defendant.  Mens rea has been a key element of American criminal law for centuries.  As the Supreme Court has stated, “we must construe [an imprisonment] statute in light of the background rules of the common law in which the requirement of some mens rea for a crime is firmly embedded.”[6]  Requiring a “guilty mind” in addition to a “guilty act” protects someone who engaged in accidental or innocent behavior from criminal prosecution and it is at the center of our criminal jurisprudence.[7]

Since the bill is duplicative of laws already on the books in all fifty states and the District of Columbia, the Back the Blue Act would waste federal resources and threaten state autonomy.  State and local jurisdictions have the expertise to deal with issues involving their own law enforcement officers.  The “federalization” of their local policing efforts will only deter from their ability to meet the ever-changing needs of local police forces.  Moreover, as laid out by the Tenth Amendment to the U.S. Constitution, “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States.”[8]  Policing power is not one specifically delegated to federal government, therefore, it is reserved to the states.

The assault provision requires the federal prosecutor to “certify” that either the state lacks jurisdiction, has requested the federal government assume jurisdiction, the verdict obtained by the state left an “unvindicated” federal interest, or that prosecution by the federal government “is in the public interest and necessary to secure substantial justice.”  However, these certification requirements are vague and do not meaningfully limit federal intervention into state interests.

States like Virginia and Wisconsin, for example, have laws nearly identical to the Back the Blue Act except that they also include a mens rea element.  Virginia’s statute states: “if any person commits an assault…against another knowing or having reason to know that such other person is… a law-enforcement officer… such person is guilty of a Class 6 felony, and… the sentence of such person shall include a mandatory minimum term of confinement of six months.”[9]  Wisconsin’s statute uses similar language to also acknowledge the importance of mens rea.[10]

If signed into law, the Back the Blue Act would create waste in the judiciary and in society, deteriorate working conditions for law enforcement officers, and impose costly mandatory minimums unrelated to the severity of the crime.  It would also impede state and local efforts to protect police officers and fail to honor the punishment that a state has assigned for identical crimes on its own law enforcement officers.  For these reasons, Congress should reject the Back the Blue Act in its current form.

Katie Parr is a law clerk and Erica L. Marshall is counsel at Cause of Action Institute.

 

[1] Back the Blue Act of 2017, H.R. 2437, 115th Cong. (1st Sess. 2017).

[2] Neill Franklin, For the sake of police, don’t back the Back the Blue Act, The Hill (Aug. 30, 2017), available at http://thehill.com/blogs/congress-blog/politics/335815-dont-back-the-back-the-blue-act

[3] Paul Larkin, Evan Bernick, Reconsidering Mandatory Minimum Sentences: The Arguments for and Against Potential Reforms, The Heritage Foundation (Feb. 10, 2014), available at http://www.heritage.org/crime-and-justice/report/reconsidering-mandatory-minimum-sentences-the-arguments-and-against.

[4] Id.

[5] See Barbara S. Vincent & Paul J. Hofer, The Consequences of Mandatory Minimum Prison Terms: A Summary of Recent Findings, Federal Judicial Center (1994), available at http://www.fjc.gov/public/pdf.nsf/lookup/conmanmin.pdf/$file/conmanmin.pdf.

[6] Staples v. United States, 511 U.S. 600, 605 (U.S. 1994).

[7] John Malcolm, Michael B. Mukasey, The Importance of Meaningful Mens Rea Reform, The Heritage Foundation (Feb. 17, 2016), available at http://www.heritage.org/crime-and-justice/commentary/the-importance-meaningful-mens-rea-reform.

[8] U.S. Const. amend. X

[9] Va. Code Ann. § 18.2-57(C) (2017).

[10] Wis. Stat. § 940.203(2)(a) (2017).

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10/17/2017

Examiner: Company battles Labor Department for right to keep ‘volunteer’ workers

Company battles Labor Department for right to keep ‘volunteer’ workers

by Sean Higgins | 

Consignment store Rhea Lana said Tuesday it would appeal a federal court ruling that sided with the Labor Department and ruled that the company is run by employees who must be paid, and are not volunteers as the company insists.

Rhea Lana will appeal a D.C. District Court ruling from last month that the company says would undermine its entire business model if it were upheld… Read the full article at Washington Examiner

 

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10/17/2017

Civil asset forfeiture policies shrug off due process

In 2014, American police seized more assets from American citizens through civil asset forfeiture policies than burglars stole.

Federal, state and local officers have broad scope to seize assets from Americans without trial or criminal charge, let alone proof that they committed any offense. While property owners can challenge a seizure in court, the burden of proof is on them and costly attorney fees and arcane procedures often discourage them. The value of the property is often less than cost to hire an attorney.

Only a handful of states require that, in some or all cases, police clearly and convincingly prove seized assets are linked to a violation. More than half of states only ask police to show that at the time of the seizure they had probable cause to believe that the property was tied to a violation. Probable cause is usually defined as more than a mere suspicion but less than a prima facie case. This is a much lower burden of proof than “clear and convincing evidence” or “beyond a reasonable doubt”. Anything less than having to show beyond a reasonable doubt that the property was connected to a crime lets the state take property from citizens without a conviction or even charge.

This is a slap in the face to due process. The Fourth Amendment demands:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Before the American revolution, the English Crown would permit customs officials to seize homes and vessels for alleged contraband or for on- or off-loading cargo without proof of having paid import and export duties and taxes.  Legal scholars have suggested this was “among the key grievances that triggered the American Revolution.”

To combat this practice, the founders guaranteed in the Fifth Amendment that “No person shall … be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

According to the New Yorker, asset forfeiture became a serious problem in the U.S. in the 1970s.  The forfeiture was aimed at fighting crime bosses and drug lords and these federal statutes permitted the seizure of assets tied to illegal drug production. When Congress passed the Comprehensive Crime Control Act in 1984, which permitted police departments to keep the proceeds from the forfeitures, the practice expanded, especially in poor areas.

If there is no due process, there is no rule of law. Proper order is impossible when institutions do not maintain fair and constitutional laws. Rather, the government fortifies institutional violations of law and decreases trust in police and government overall.

Apart from its intrinsic problems, civil asset forfeiture policies are also rife with corruption.

In more than 40 states, police departments keep at least 50 percent of the seized assets for themselves. In about half of those states, police are able to keep 100 percent of the seized assets. This provides police with an incentive to seize assets.

As the Washington Post reported, police use hundreds of millions of dollars they received from asset forfeiture to fund “guns, armored cars and electronic surveillance gear,” as well as “luxury vehicles, travel and a clown named Sparkles.”

Chicago alone seized $72 million over seven years, and used the money to purchase items, which include cell-phone tracking devices. As Reason reported, some seized assets in Illinois include “Xbox controllers, televisions, nunchucks, 12 cans of peas, a pair of rhinestone cufflinks, and a bayonet” supposedly linked to crimes. Police hit low-income areas the hardest.

“These forfeiture operations frequently target the poor and other groups least able to defend their interests in forfeiture proceedings,” Supreme Court Justice Clarence Thomas, said on the issue. “Perversely, these same groups are often the most burdened by forfeiture. They are more likely to use cash than alternative forms of payment, like credit cards, which may be less susceptible to forfeiture. And they are more likely to suffer in their daily lives while they litigate for the return of a critical item of property, such as a car or a home.”

Advocates of civil asset forfeiture policies argue the procedure deters crime and helps fund the police. In truth, Constitutional rights are surrendered for a false sense of security. This legal theft traduces due process and law and order. Crime deterrents only work if criminals are being targeted. If everyone is harmed by these policies, it doesn’t deter crime; it just diminishes Americans’ trust in law enforcement.

Tyler Arnold is a communications associate at Cause of Action Institute

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10/17/2017

CoA Institute to Appeal Ruling that Children’s Clothing Consignment Volunteers Must be Considered Employees

Washington, DC – Cause of Action Institute (“CoA Institute”) today announced it will appeal a ruling by the district court that wrongly found that volunteers at Rhea Lana’s children’s clothing consignment events must be considered employees under the Fair Labor Standards Act.

Cause of Action Institute Vice President Julie Smith: “The district court reached the wrong conclusion in taking an outdated view of a decades-old law intended to protect vulnerable individuals and groups from exploitation. The court freely conceded that Rhea Lana’s labor practices are not designed to exploit anybody. We continue to believe that the Department of Labor has overstepped its authority. The federal government should not attack a business model that provides hardworking families with affordable children’s clothing.”

Rhea Lana Riner: “Individuals should be free to volunteer their time for their own benefit. The Labor Department’s crusade to classify volunteers as employees has put my business and livelihood in jeopardy. If everyone is satisfied, why would the federal government need to intervene?”

Case background:
Rhea Lana founded her clothing consignment business 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.

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 must be classified as “employees.”

Rhea Lana’s complaint was initially dismissed in 2014 for lack of a reviewable agency action.  On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review.  Last month, the district court ruled in favor of the government. CoA Institute will represent Rhea Lana in her appeal of the district court’s decision.

Rhea Lana Inc., et al. v. Department of Labor, No, 14-0017, U.S. District Court for the District of Columbia

Watch a short video about Rhea Lana’s story here

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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