Search Results for: IRS

Settlement in Federal Trade Commission v. D-Link Systems Includes No Finding of Liability

WASHINGTON D.C. – Today, Cause of Action Institute (CoA Institute) announced the resolution its client, D-Link Systems, Inc., has reached with the Federal Trade Commission (FTC) regarding the FTC’s allegations about the security practices D-Link Systems used for its products. D-Link Systems is an industry leader in Internet of Things (IoT) and networking solutions.

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Supreme Court Adopts the Position Urged by Cause of Action for When Fabrication-of-Evidence Lawsuits Must Be Filed

The window of time to file any lawsuit is limited. The period usually begins to run when the plaintiff first knows that something went wrong. In special circumstances, however, fair policy requires that the window to sue opens, or as lawyers say, the claim “accrues,” at a different time. Today, in McDonough v. Smith, a case in which Cause of Action Institute filed two briefs, the Supreme Court identified one of those special situations.

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Supreme Court Signals Nondelegation Doctrine Has Life

This week, the Supreme Court indicated that it may be on the verge of, for the first time in eight decades, applying the nondelegation doctrine and requiring Congress, not government bureaucrats, to make law.  This critical development could result in significant advancement of economic freedom, political accountability, and the liberty of individual citizens.

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Sensitive Review

“Sensitive review” refers to the practice of giving certain Freedom of Information Act (FOIA) requests extra scrutiny.  This often takes the form of an additional layer of review or “consultation” before records are released.  It may involve special tracking and “awareness” alerts for requests submitted by frequent requesters or representatives of the news media.  Requests may even be flagged for sensitive review simply because they implicate records that are likely to solicit media attention once disclosed.  The process may involve an agency’s public affairs team or other communications specialists, and it frequently includes political appointees, too.  Sensitive review almost always delays and sometimes prevents the disclosure of records that the public has a right to see.

Cause of Action Institute has been investigating sensitive review across the federal government since 2013.  Our work has uncovered troubling developments at more than twelve agencies.  The content below provides an overview of our work.

Sensitive review has become an entrenched agency practice regardless of which party or president is in power.  Although alerting or involving political appointees or career communications staff in FOIA administration does not violate the law per se—and may, in rare cases, be appropriate—there is never any assurance that the practice will not lead to severe delays of months and years.  At its worst, sensitive review leads to intentionally inadequate searches, politicized document review, improper record redaction, and incomplete disclosure.  When politically sensitive or potentially embarrassing records are at issue, politicians and bureaucrats will always have an incentive to err on the side of secrecy and non-disclosure.


Department of Homeland Security

Department of Defense

Environmental Protection Agency

Federal Aviation Administration

Department of Housing and Urban Development

Department of the Interior

General Services Administration

Internal Revenue Service

National Oceanic and Atmospheric Administration

Department of Treasury

Department of Veterans Affairs

White House/ Office of the White House Counsel


Related Work

Definition of a record


Sensitive Review Guidance Memos



Investigation Update: GSA Continues to Block Disclosure of White House Directive on Congressional Oversight Requests, Reveals Sensitive Review Procedure for Media Requesters

Cause of Action Institute (CoA Institute) received an interim response yesterday from the General Services Administration (GSA) on a Freedom of Information Act (FOIA) request that suggests the agency is deliberately stonewalling the release of a White House directive instructing agencies on how to respond to congressional oversight requests. Records released by the agency also suggest that the GSA has implemented a “sensitive review” FOIA process by which news media requesters are subject to an extra layer of pre-production review.

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Has your small business been negatively impacted by burdensome government regulations?

On Thursday, May 9, Cause of Action Institute will be at the Small Business Expo in Washington, D.C. Come visit us in Booth 210 to learn more about our work defending the rights and economic freedoms of small business owners. Can’t come see us? Contact us at expo@causeofaction.org, or share your story with us here.

Our Work

LabMD v. Federal Trade Commission

Cause of Action Institute represented LabMD, an Atlanta-based cancer detection laboratory, in its six-year struggle against the Federal Trade Commission’s overreaching enforcement action. LabMD was the first company to refuse a “consent order” and fight back against the FTC. After hearing the evidence and reviewing the legal arguments, the FTC’s Chief Administrative Law Judge decisively rejected the FTC’s claims, and issued a decision that will protect small businesses from future government abuses.

Reuters: “The First Defeat For An Agency That Has Successfully Brought Such Cases Against Dozens Of Companies.”

The Wall Street Journal: “The Federal Trade Commission’s Data-Security Enforcement Efforts Have Received A Setback—At The Hands Of The Commission’s Own In-House Judge.”

Goethel v. Pritzker

In November 2015, the Department of Commerce mandated that commercial sector fishermen who fish for cod, flounder, and other groundfish, must not only carry third-party contractors known as “at-sea monitors” on their vessels during fishing trips, but also pay out-of-pocket for the cost of those monitors. Cause of Action Institute represented a group of east coast fishermen, led by David Goethel, in a lawsuit against the U.S. Department of Commerce challenging the National Oceanic and Atmospheric Administration’s decision to force at-sea monitoring costs onto fishermen. Learn more about this case here.

Rhea Lana, Inc. v. U.S. Department of Labor

Cause of Action Institute filed a lawsuit against the Department of Labor (DOL) on behalf of Rhea Lana, Inc. and Rhea Lana’s Franchise Systems, Inc. (jointly, “Rhea Lana’s”), a national children’s consignment event company, over the DOL’s attempt to ban volunteers at for-profit enterprises.  Should the DOL’s actions stand it could cripple not only Rhea Lana’s but also the entire consignment industry on which millions of Americans rely. Rhea Lana’s hosts semi-annual consignment sales where families can buy and sell gently used clothes, toys, and furniture. Participants in the sales may volunteer as consignors, but the Department of Labor is attempting to define these consignors as “employees” under the Fair Labor Standards Act (FLSA). DOL determined there were FLSA violations for failing to pay minimum wage and overtime pay and threatened civil money penalties if Rhea Lana’s did not comply. Cause of Action Institute is committed to fighting erroneous actions, like the DOL’s, that discourage entrepreneurship and threaten small businesses. Learn more about the case here.

McDonough v. Smith: Why SCOTUS Should Revisit the Statute of Limitations for Fabrication of Evidence

By the time Annie Dookhan was finally caught in 2012, she had been falsifying drug test results at a state crime laboratory in Massachusetts for several years. The rogue chemist had managed a productivity rate 500% higher than her peers by not actually running tests at all, and her misconduct would ultimately impact over 36,000 criminal cases.

Dookhan is not alone – fabricated evidence is far more common than it may seem, and it can impact thousands of people falsely accused of crimes. The legal remedy for this misconduct is known as a Section 1983 lawsuit, but a significant decision by the Second Circuit in McDonough v. Smith would sharply limit when those lawsuits could be filed. This case was appealed to the Supreme Court, which recently agreed to hear the case. On March 4, 2019, Cause of Action Institute filed an amicus curiae brief urging the court to overturn the Second Circuit.

The question in front of the Supreme Court is when the countdown begins on the limited amount of time available for filing a claim that fabricated evidence was used (i.e. when the statute of limitations begins to run, also known as when the claims “accrue”). In this case, petitioner Edward McDonough endured two criminal trials for election-related crimes that he was ultimately acquitted of. McDonough now argues that Youel Smith, the prosecutor in his criminal case, fabricated evidence in an attempt to falsely convict him. In response, Smith filed a motion arguing claims related to fabricating evidence accrue when the defendant first becomes aware of the tainted evidence and its improper use.

Several other appellate courts had previously decided that the claim accrued when the criminal proceeding ended in the defendant’s favor. That could mean an acquittal, winning on appeal and having the charges dropped, or other, less-common means of victory. Only after the possibility of criminal charges was gone were courts ready to hear a claim that evidence used to support those charges had been fabricated.

In McDonough’s case, however, the Second Circuit took a different view. Instead of waiting for criminal proceedings to end, they decided that defendants were ready to file lawsuits the moment they became aware that fabricated evidence was being used against them.  The Second Circuit thus granted Smith’s motion to dismiss, leaving McDonough with no legal redress. It was the first appellate court in the country to use this rule, and the decision will result in unfair treatment of defendants and unnecessary complications for prosecutors and judges as well. This is especially true given the level of factual support needed to successfully file a lawsuit under the current Supreme Court precedent.

For someone sitting in an interrogation room, it is impossible to know exactly what is happening when fabricated evidence is first used. Imagine the police just said you were seen leaving the house after a robbery occurred. You know you weren’t there, so why is someone saying that? Are they mistaken? Lying for their own benefit? Or did the police induce them to lie so the case would be closed? Only the last explanation justifies a Section 1983 lawsuit, and asking a defendant in this position to walk directly from the police station to the courthouse (if they are even free to do so) is both unrealistic and against the “complete and present” standard the Second Circuit used to determine if a claim had accrued.

Even if a defendant immediately knew a police officer had fabricated evidence, as recently happened in nearly 2,000 cases in Baltimore, it is almost impossible for a defendant to have enough evidence to successfully file a lawsuit. In two cases decided approximately ten years ago, the Supreme Court raised the bar for what must be included in the initial filing of lawsuits. Mere “conclusions” were not enough; factual support was needed. This is understandable in theory, but someone accused of having drugs in their pocket when they know that pocket was empty has almost nothing to offer but the conclusion that police or prosecutors must be responsible.

There are other problems with the Second Circuit decision, including the possibility that prosecutors being sued will be tempted to punish those filing the lawsuits. At the very least, those prosecutors will have to defend themselves while simultaneously trying to perform their official duties. There are many reasons why having the statute of limitations begin to run earlier is an unwise decision that will prevent government agents from being held accountable for these abuses of power, and we hope the Supreme Court chooses to endorse the rule used by other appellate courts instead of the new approach used by the Second Circuit.

John McGlothlin is Counsel at Cause of Action Institute. Libby Rudolf is a litigation support analyst at Cause of Action Institute.