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07/19/2018

CFPB’S Arbitration Rule Under Scrutiny in Report from Cause of Action Institute

Washington, DC – July 19, 2018 – Cause of Action Institute (CoA Institute) today released a report on the failure of the Consumer Financial Protection Bureau (CFPB) to conduct a proper study on its arbitration rule, which banned certain corporations from using pre-dispute arbitration clauses in their consumer credit contracts. CoA Institute Case Study on the CFPB’s Arbitration Rule: How the Bureau Evaded Scientific Guidelines and Bypassed Peer Review—And How to Fix It examines the failings of the arbitration study and offers solutions to ensure future policy is informed by sound science.

The rule was overturned by Congress and President Trump in February of 2018, but lasting change is needed to CFPB’s analytical approach to prevent future rules from being based on weak science. President Trump nominated Kathy Kraninger as the new potential CFPB director and, just today, July 19, she had her nomination hearing. If confirmed, she needs to immediately take steps to ensure that the CFPB follows the law when conduct future studies and promulgating rules.

CoA Institute attorney Eric R. Bolinder said, “The CFPB not only had to adhere to the orders of Congress in Dodd-Frank to do the study, it was also required to follow the Information Quality Act and Office of Management and Budget guidelines on peer review. The Bureau ignored both. Accountability is needed to keep this too-powerful agency in check.”

As CoA Institute’s report explains:

In the Dodd-Frank Act, Congress delegated to the CFPB the power to study and regulate, if necessary, mandatory-binding arbitration clauses in consumer financial contracts. This power came with an important caveat: the CFPB must first conduct a study on the effect arbitration clauses have on consumers, and any regulation promulgated by the agency must be based on that study. The CFPB already had the goal in mind to regulate and ban these arbitration clauses, driven largely by internal bias and promoted by third-party interests. Instead of conducting an objective study backed by peer-reviewed data, the agency sought a pre-determined result, abusing junk science and methodology to get there.

See the report and more about this issue here.

For any media inquiries, contact media@causeofaction.org.

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07/19/2018

CoA Institute Joins Amicus Brief Challenging Qualified Immunity

Washington, DC – July 19, 2018 – Cause of Action Institute (“CoA Institute”) has joined a Supreme Court amicus brief in support of the petitioner seeking a writ of certiorari in Allah v. Milling. The brief argues that qualified immunity denies justice to victims of government misconduct, imposes prohibitive and unjustified costs on civil-rights litigants, and harms law enforcement officials by eroding public trust.

“Preserving the fundamental liberties afforded by our Constitution remains a critical priority in today’s policing environment. The notion of qualified immunity has grown from the bench and is not rooted in our founding charter. Some form of meaningful redress for those admittedly injured by police errors must be available,” noted John Vecchione, President and CEO of Cause of Action Institute.

From the amicus brief:

[Q]ualified immunity often bars even those plaintiffs who can prove their case from remedying a wrong: harm, but no foul. Qualified immunity thus enables public officials who violate federal law to sidestep their legal obligations to the victims of their misconduct. In so doing, the doctrine undermines the public’s trust in those officials—law enforcement in particular—making on-the-ground policing more difficult and dangerous for all officers, including that vast majority who endeavor to uphold their constitutional obligations.

The amicus brief is available here.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government free from abuse.

For more information, please contact Nichole.VanValkenburg@CauseofAction.org

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07/3/2018

Cause of Action Institute Representing TABOR Foundation in Suit Challenging Colorado Hospital Provider Tax

Washington, DC – July 3, 2018 – Cause of Action Institute today announced that it is taking on the representation of the TABOR Foundation in its ongoing lawsuit TABOR Foundation, et al. v. Colorado Department of Health Care Policy & Financing, et al.  The case argues that the state has violated Colorado’s Taxpayer’s Bill of Rights (“TABOR”) by using a hospital provider tax to artificially increase costs and then collect higher reimbursements from the federal government under Medicaid.

“TABOR requires that the state get consent from the people before raising taxes.  But for the past eight years the state of Colorado has been taxing hospitals by hundreds of millions of dollars to fleece the federal government without the required TABOR vote.  The TABOR Foundation is rightly pushing back on the sweetheart deal that leaves taxpayers stuck with the bill,” said James Valvo, Counsel and Senior Policy Advisor at Cause of Action Institute.

“The people of Colorado are confronted with actions taken by the legislature and the governor to damage their constitution.  The Hospital Provider program was built on a lie, then made much worse.   The people should get a final vote on tax increases and new government debt, but that was taken from them in a dishonest power grab by elected officials,” said Penn R. Pfiffner, Chairman of the TABOR Foundation.  “The TABOR Foundation is grateful that Cause of Action Institute has stepped in to allow this lawsuit to go forward.  Its participation supports all the citizens of Colorado to reverse the corrupt government actions and to allow the people once again to control their state government.”

TABOR Foundation v. Colorado Department of Health Care Policy & Financing is an ongoing Colorado state court lawsuit that began in 2015 challenging a hospital provider tax levied by the state and used to increase Medicaid reimbursements. Under TABOR, new taxes cannot be collected without a vote of the people. The TABOR Foundation’s challenge argues that the hospital provider charge, that is currently reimbursed under Medicaid from the federal government, is in fact a tax and violates the TABOR amendment in Colorado’s state constitution because the state did not hold the required vote.

The case also argues Senate Bill 17-267, which converted the hospital provider tax from the Department to a newly created enterprise, violated the Colorado constitution’s single-subject requirement and failed to comply with the state excess revenue cap, which limits the amount of revenue the state can keep and spend.

Cause of Action Institute will be requesting summary judgment from the Colorado state district court on behalf of the Plaintiffs.

For more information, please contact Mary Beth Gombita, mbgcomms@gmail.com.

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06/26/2018

CoA Institute Files FOIA Lawsuit for Internet Browsing Records of OMB’s Mulvaney and USDA’s Perdue

WASHINGTON, D.C. – JUNE 26, 2018– Cause of Action Institute (“CoA Institute”) sued the White House Office of Management and Budget (“OMB”) and the Department of Agriculture (“USDA”) today for failure to disclose records reflecting top officials’ Internet browsing history.  The records at issue—which were the subject of two July 2017 Freedom of Information Act (“FOIA”) requests (here and here)—include the web browsing histories of OMB Director John Mulvaney and USDA Secretary Sonny Perdue, as well as their communications directors, on any government-issued electronic devices.

Cause of Action Institute Counsel Ryan Mulvey said, “The taxpayer foots the bill for the government’s Internet usage; the taxpayer deserves to know whether bureaucrats are behaving as proper stewards of their online resources.  Agencies must be held accountable for their refusal to disclose vital information about the operations of the administrative state.  The public has a right to know what websites are being accessed in the course of official agency business.  Not only would such records reveal the sorts of resources that have influenced decision-making, but they also could expose questionable or inappropriate online activity by government employees.”

To date, OMB has failed to respond to CoA Institute’s 2017 FOIA request.  USDA has responded but refuses to release the requested records because it believes they are not under agency “control” and would entail the “creation” of a new record.  CoA Institute disputes both claims.

The operation of an Internet browser typically creates an electronic record of the user’s online activity.  This record is stored locally and is accessible through the browser’s “History” function.  In this case, the requested records were created on government computers, integrated into their file systems, and can be used by agency officials as they see fit, subject to any applicable record retention laws.  This means that such records fall under “agency” control and should be available to the public, particularly given past scandals involving the abuse and misuse of Internet-based programs.

The full complaint, filed in the U.S. District Court for the District of Columbia, can be found here.

For more information, please contact Mary Beth Gombita, mbgcomms@gmail.com.

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06/8/2018

Court of Appeals Rebukes Federal Trade Commission’s Data Security Overreach

FOR IMMEDIATE RELEASE

JUNE 8, 2018

WASHINGTON, D.C. – In a landmark ruling on June 6, 2018, the Eleventh Circuit Court of Appeals invalidated a Federal Trade Commission (FTC) order against cancer-screening facility LabMD.  The agency had hounded LabMD for years claiming the company violated an undefined data security rule known only to the FTC.  The opinion sends a clear message that the FTC’s enforcement of data security, without publishing any standards, disregards the rule of law, violates due process, and will not be tolerated by the Courts. Cause of Action Institute represented LabMD in the proceedings at the FTC and filed an amicus curiae brief in the Eleventh Circuit on behalf of nine medical doctors harmed by the FTC’s actions.

Cause of Action Institute’s President and CEO John Vecchione commented on the decision:

“The FTC’s lawless bullying of companies and actions that drove LabMD out of business and denied our physician clients’ access to its services have suffered a stern and public rebuke. Standardless regulatory overreach in this case forced the closure of a successful small business even though the FTC has never presented any evidence of consumer harm, nor published any data security standards with which it says the company should have complied.  Notably the 11th Circuit ruled the FTC-issued injunction was so vague and unintelligible that no court could intelligently enforce it.  The Court made no finding and affirmed no decision of the FTC that LabMD had done anything wrong.

“Scores of companies have knuckled under to the FTC’s insistence on ‘consent’ orders to buy peace.  This ruling is a signal that they don’t have to.  The Court signaled that vague, standardless dictates by unelected bureaucrats would not be enforced in Courts of law.  LabMD’s experience in this case is a stark reminder of the costs required to fight a federal agency that is willing to spend millions of taxpayer dollars over more than eight years of investigation and litigation, all in the pursuit of wrong.  We congratulate Ropes & Gray for its representation of this case before the Circuit and LabMD itself for daring to fight the good fight.  We are also proud of our attorneys and Cause of Action Institute’s contribution to that fight.”

In the opinion, the court explained the absurdity of the FTC’s position– namely that the agency requires data security standards without providing any specificity on those very standards.  From the opinion:

“[T]he Commission’s cease and desist order is nonetheless unenforceable. It does not enjoin a specific act or practice. Instead, it mandates a complete overhaul of LabMD’s data-security program and says precious little about how this is to be accomplished. Moreover, it effectually charges the district court with managing the overhaul. This is a scheme Congress could not have envisioned. We therefore grant LabMD’s petition for review and vacate the Commission’s order.”

While the decision may appear to be narrowly related to the cease and desist order at issue in LabMD, in practice, it will have broad ranging implications for how the agency investigates and enforces data security. The Court also recognized the constitutional injustice of the FTC’s enforcement action in this case: “Being held in contempt and sanctioned pursuant to an insufficiently specific injunction is therefore a denial of due process.”  This abuse of due process by going after a company for allegedly violating Section 5 of the FTC Act, but never telling the company what it is actually supposed to have been doing has been a central theme of the LabMD case from the start.

The FTC lost this case before its own FTC’s chief administrative law judge (ALJ) and now before the Eleventh Circuit. The FTC’s disregard of the ALJ’s opinion, when the Commission considered the case at the administrative level, illustrates the unfairness of the FTC enforcement process where the agency acts as its own detective, prosecutor, judge, and executioner. As former FTC Commissioner Joshua Wright explained: “[I]n 100 percent of the cases in which the administrative law judge ruled found no liability, the Commission reversed. This is a strong sign of an unhealthy and biased institutional process.”

Read the full opinion here.

Read more about Cause of Action Institute’s efforts to hold the FTC accountable here and here.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government free from abuse.

For more information, please contact Mary Beth Gombita, mbgcomms@gmail.com.

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05/4/2018

CoA Institute Files Reply in Support of Motion to Order Enforcement Action in Colin Powell Email Case

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed a reply in support of its motion for summary judgment in a lawsuit that seeks to compel Acting Secretary of State John Sullivan and U.S. Archivist David Ferriero to fulfill their non-discretionary obligations under the Federal Records Act (“FRA”).  Specifically, CoA Institute has asked the Court to order Sullivan and Ferriero to initiate action through the Attorney General for the recovery of former Secretary of State Colin Powell’s work-related email records, which were hosted on a personal AOL account.  The brief also argues in opposition to Defendants’ recent motion to dismiss on grounds that Secretary Powell’s email has been “fatally lost.”

“Defendants have failed to undermine any element of CoA Institute’s motion for summary judgment,” the brief reads.  “The evidence they offer in support of their mootness claim does not establish fatal loss.  The record before the Court instead highlights Defendants’ complete refusal to turn to the law enforcement authority of the federal government or to investigate the possibility of forensically recovering the records at issue.”

CoA Institute President John Vecchione: “The Federal Records Act leaves Executive Branch officials no room for discretion in choosing when to recover unlawfully removed federal records. When an agency attempts to recover such records on its own, and those efforts prove ineffectual, the agency must go to the Attorney General.  The government bears a heavy burden in trying to avoid this obligation by establishing the ‘fatal loss’ of the records.  That burden has not been met here.”

Background

CoA Institute filed its lawsuit in October 2016. In January 2018, the court rejected the government’s motion to dismiss the lawsuit because of the State Department’s weak efforts at recovery of the emails in question. “The Defendants’ refusal to turn to the law enforcement authority of the Attorney General is particularly striking in the context of a statute with explicitly mandatory language,” U.S. District Court Judge Trevor McFadden opined.  “[T]here is a substantial likelihood that [CoA Institute’s] requested relief would yield access to at least some of the emails at issue.”

In September 2016, the House Oversight & Government Reform Committee held a hearing at which then-Under Secretary of State Patrick Kennedy testified that the State Department had undertaken minimal efforts to retrieve Powell’s work-related email.  After learning that Powell no longer had access to his AOL account or its contents, the State Department merely asked Powell to contact AOL to see if anything could be retrieved.  Despite a request from the National Archives and Records Administration (“NARA”) to contact AOL directly, the State Department never did so.  Ultimately, the agency relied on unreliable hearsay—namely, the reported representations of Secretary Powell’s personal secretary about an apparent phone conversation between someone at AOL and a staff member of the House Oversight Committee—to conclude that no records could be recovered.

—-  CoA Institute’s memorandum in support of its motion can be read here.

—-  CoA Institute’s reply brief can be read here.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government free from abuse.

For more information, please contact Mary Beth Gombita, mbgcomms@gmail.com.

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04/30/2018

CoA Institute Encourages Supreme Court to Provide Check on Federal Agencies in Latest Amicus Brief

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed an amicus curiae brief in the Supreme Court case Weyerhaeuser v. U.S. Fish and Wildlife Service, arguing that United States Fish and Wildlife Service’s (FWS) authority to exclude an area of land from critical habitat designation under the Endangered Species Act is not discretionary, but rather is subject to judicial review.

“Previous Supreme Court precedent as well as the Endangered Species Act make it clear that the Fish and Wildlife Service is subject to judicial review when it comes to determining what is and isn’t a critical habitat,” said John Vecchione, CoA Institute President and CEO. “We look forward to the Court upholding its previous standard and providing a check for the administrative state.”

CoA Institute’s brief encourages the Supreme Court to reverse the Fifth Circuit ruling in this case because it failed to conduct the sort of “careful examination” required by law to determine if FWS is excluded from judicial review.

The Supreme Court will hear argument in Weyerhaeuser during the fall 2018 term.

The amicus brief is available here.

About Cause of Action Institute
Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government free from abuse.

For more information, please contact Mary Beth Gombita, mbgcomms@gmail.com.

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