close X

Search Results for: IRS

Supreme Court Denies Petition to Review Job-Killing Fishery Rule

October 2, 2017 by

Washington, D.C. — The U.S. Supreme Court today denied the petition for writ of certiorari filed by Cause of Action Institute (“CoA Institute”) on behalf of its clients, groundfisherman David Goethel and Northeast Fishery Sector 13. Mr. Goethel and Sector 13 sued the U.S. Department of Commerce in December 2015 after the agency announced that it would begin shifting the costs for at-sea monitoring onto fishermen.  That transition was anticipated as early as 2010, but the government delayed its implementation for over five years.  Both the U.S. District Court for New Hampshire and the First Circuit Court of Appeals dismissed the lawsuit, ruling that the fishermen had filed their legal challenge too late. 

CoA Institute Vice President Julie Smith: “We are disappointed that the Supreme Court declined to hear the case.  Our clients deserved an opportunity for their challenge to be heard on the merits. The Department of Commerce has gone beyond the bounds of the law in putting this financial burden of more than $700 per day on small-scale fishing businesses in the Northeast. Because the New England Fishery Management Council has announced its intention to extend this unlawful requirement to other fishermen, we will continue to look for ways to challenge that and to require the Department of Commerce to follow the law. This fight is not over.”

The Supreme Court’s refusal to review the First Circuit’s opinion on pre-enforcement review and its interpretation of certain provisions in the Magnuson-Stevens Act allow a dangerous precedent to stand. As argued in the petition, the First Circuit decision “effectively eliminate[s] the doctrine of pre-enforcement review and the possibility of meaningful judicial review of delayed agency implanting actions.” Moreover, “it rewards agencies that delay implementation of regulations by making their later actions immune to challenge.”

David Goethel: “The Supreme Court was our last judicial hope to save a centuries-old New England industry. I’ve been fishing my entire adult life, and I will try to continue, but the costs associated with at-sea monitoring will be crushing. We may have lost the battle, but the war to save the fishing industry from overregulation is far from over.”

Sector 13 Manager John Haran: “This is a sad day for the New England fishing industry. The high court’s decision to allow the First Circuit’s decision to stand puts the full brunt of at-sea monitoring costs on industry. Many fishermen in my sector will likely be put out of business. It may be too late for judicial relief, but we hope the regional Councils and our legislators act quickly to remove this job-killing mandate.”

Case Background

In November 2015, the Department of Commerce finally announced a date by which 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.  CoA Institute’s clients filed suit to challenge this industry funding requirement, which will devastate the New England fishing industry.

In July 2016, the U.S. District Court for the District of New Hampshire dismissed the lawsuit.  CoA Institute appealed the decision and, in April 2017, the First Circuit Court of Appeals upheld the District Court’s ruling, but without addressing the merits of the case. The First Circuit held that the fishermen’s suit was untimely and must have been filed within thirty days of the original agency rule that mandated industry-funding, even though this requirement was never enforced for half-a-decade. Interestingly, while the First Circuit did not address the merits of the case, it emphasized the devastating economic impacts of the regulation and, in a rare move, urged congressional action to clarify the Magnuson-Stevens Act regarding the payment of monitors.

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

 

Filed Under: Media, Press Release Tagged With: , , , , , ,

Cause of Action Institute Signs Second Coalition Letter Warning of Continued Congressional Interference with the FOIA

September 28, 2017 by

Cause of Action Institute signed a letter yesterday, joining a broad coalition of government transparency advocates, warning members of the Bipartisan Legal Advisory Group of the U.S. House of Representatives about the dangers of mounting congressional interference with the Freedom of Information Act (“FOIA”) and, specifically, continued efforts to expand the definition of “congressional records” not subject to disclosure. The letter comes in the wake of the House Committee on Ways and Means’ motion to intervene in a lawsuit filed by American Oversight, a left-leaning government transparency group.

The letter reiterates much of the argument found in a May 2017 coalition letter from government transparency advocates urging Jeb Hensarling, the Chairman of the House Financial Services Committee, to rescind his directive that federal agencies treat any and all records exchanged with the Committee as exempt from the FOIA. As I have previously discussed, the mere fact that an agency possesses a record that relates to Congress, was created by Congress, or was transmitted to Congress, does not by itself render it a “congressional record.” The law instead requires that Congress manifest clear intent to maintain control over specific records to keep them out of reach of the FOIA.  Chairman Hensarling and the leadership of the Ways and Means Committee are pushing the boundaries of this legal requirement.

Cause of Action Institute continues to investigate Chairman Hensarling’s controversial, and legally dubious, attempt to frustrate public access to records of the Executive Branch’s dealings with Congress, as well as similar efforts undertaken at the Internal Revenue Service. The transparency community and the general public must remain united in protecting the spirit of disclosure and open government promised by the FOIA.

Ryan Mulvey is Counsel at Cause of Action Institute.

Filed Under: Media, Blog Tagged With: , , , , ,

Family Business Fights Back Against FTC, Files Appeal After Lower Court Wrongly Granted Injunctive Order

September 25, 2017 by

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed its opening brief in the 11th Circuit Court of Appeals on behalf of a family-run tech support company, Vylah Tec, LLC (“V-Tec”), after the Federal Trade Commission (“FTC”) used misleading evidence to convince the lower court to grant a damaging injunctive order against the company. V-Tec is a small start-up, owned by Robert Cupo, that provides tech support to customers who have purchased electronic devices from the Home Shopping Network and other shopping channels. V-Tec also generates revenue from selling third-party antivirus and other data security software.

In May, the FTC, in conjunction with the Florida Attorney General’s office, raided the company’s headquarters on suspicion of “deceptive” sales practices, but were unable to uncover any concrete evidence of wrongdoing. In court, the FTC cited two examples of recorded calls that were both mischaracterized. A Florida federal judge granted the government’s request for a preliminary injunctive order (“PI”) that turned the company’s operation over to a third-party receiver and froze the assets of Mr. Cupo and several of his family members. In August, CoA Institute filed a motion to stay the district court’s order. While that decision is still pending, today’s brief is the first in CoA Institute’s appeal of the district court’s decision.

The brief states:

“The PI was granted without benefit of an evidentiary hearing, without application of the proper legal standard for issuing a preliminary injunction, and without application of the proper legal standard for analyzing the likelihood of success on the merits. It was based on untested and facially inadequate factual allegations.

“The Government has conceded that it submitted false evidence and mischaracterized other evidence it offered to the trial court, but it has done nothing to correct the record. To the contrary, the Government insists that the lower court and this Court condone its false evidence to crush a small business and to personally destroy its managers… The Government is seeking to bulldoze V-Tec before this Court can even rule on this appeal. That is not due process, and it certainly is not justice.”

CoA Institute Senior Counsel Cynthia Crawford: “The FTC’s facts in this case are either incomplete or patently false. Without evidence, it was wrong for the district court to grant an order that is draining V-Tec’s finances and destroying its reputation. We urge the 11th Circuit Court of Appeals to reexamine the flawed evidence and allow the Cupo family the due process they deserve, before their company is destroyed.”

The full brief can be found here

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

Filed Under: Media, Press Release Tagged With: , , ,

Judge Orders Government to Reveal Evidence in FBI Clinton Email Investigation

August 31, 2017 by

Washington D.C. – The Honorable James Boasberg, a federal judge for the U.S. District Court for the District of Columbia, today ordered the government to produce an unredacted declaration filed in secret early this summer containing new, undisclosed details about the scope of the FBI’s investigation into Hillary Clinton’s email practices as Secretary of State.

The government had previously disclosed the evidence to the court ex parte and in camera, meaning only the judge was able to review it, but characterized the declaration as including, “additional details about the grand jury process . . . as well as about other sealed proceedings” and was submitted to provide “further details of the subpoenas to establish to the Court’s satisfaction the thoroughness of the inquiries made in this regard.”

Cause of Action Institute filed a motion in June to produce the declaration and the judge today granted that request.

Cause of Action Institute President and CEO John J. Vecchione: “I applaud the court’s opinion. The government attempted to end a case with evidence no one could review. This order makes public details submitted by the government about the FBI’s efforts to recover then-Secretary Clinton’s unlawfully removed emails. Americans deserve to know the full scope of that investigation, and we, as Plaintiffs, should have an opportunity to contest the relevance of the government’s facts.”

In his order, Judge Boasberg writes:

“The 2016 presidential election may have come and gone, but Plaintiffs Judicial Watch and Cause of Action Institute’s quest for Hillary Clinton’s emails lives on. As most readers will remember, Clinton used private email accounts during her tenure as Secretary of State, embroiling the government in myriad Freedom of Information Act suits. In this case, however, Plaintiffs have taken a different tack, alleging a violation of the Federal Records Act. That is, they claim Defendants State Department and the National Archives and Records Administration failed to maintain records of Clinton’s emails and must now seek the Department of Justice’s Case assistance in their recovery. Most broadly characterized, Plaintiffs’ suit pertains to tens of thousands of communications. At this stage, however, the parties have largely zeroed in on a sliver of that trove — to wit, emails sent by Clinton on two Blackberry accounts during her first weeks in office.

“The present controversy is narrower still. To establish its good-faith recovery efforts, the Government has submitted a declaration describing grand-jury subpoenas issued to Clinton’s service providers. The catch? It offers the full version for in camera and ex parte review only. Plaintiffs have responded with a Motion to Produce, arguing that to the extent this Court might rely on the declaration, they must have unfiltered access. After reviewing the document in camera, the Court concludes that it largely rehashes information already made public, thus obviating any need for secrecy. The Court will therefore grant Plaintiffs’ Motion in large part and, subject to a very limited exception, order that Defendants resubmit an unredacted version of the declaration.”

Judge Boasberg’s full order is available here.
The Plaintiffs’ motion to produce the declaration is available here.

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

 

Filed Under: Media, Press Release Tagged With: , , ,

Group Tied to Progressive PAC Solicits Donations in Misleading Call for Hurricane Harvey Relief

August 30, 2017 by

On Wednesday, Linda Sarsour, a controversial political activist, tweeted an appeal to her followers asking that they donate to an ostensibly noble cause—the Hurricane Harvey Community Relief Fund. Unfortunately, this seemingly benevolent appeal is anything but.  Ms. Sarsour actually linked to a page that accepts donations for a fund called the Texas Organizing Project Education Fund (“TOP ED”).  TOP ED is a 501(c)(3) non-profit group that is wholly affiliated with a self-described progressive Political Action Committee, the Texas Organizing Project (“TOP”). Cause of Action Institute previously looked into TOP and TOP ED for their affiliation with the now-defunct ACORN group.

Ms. Sarsour’s disingenuous call to action through the Hurricane Harvey Community Relief Fund is in fact a call for donations to TOP which received roughly 93% (or $1.5 million) of TOP ED’s gross receipts in 2015 through its cost-sharing agreement. In its Form 990 IRS filings, TOP ED notes that it shares “employees, facilities, and goods and services” with TOP, and does not pay its employees any salary.

At a time when Americans are pulling together to assist the victims of Hurricane Harvey, it is appalling to see opportunists taking advantage of their generosity.  At this time of national tragedy, it is unconscionable that groups like TOP and activists like Ms. Sarsour would mislead Americans into thinking they are donating money to save hurricane victims when in fact the funds would go to an organization that promotes a political agenda.

Travis Millsaps is Counsel at Cause of Action Institute.

Filed Under: Media, Blog Tagged With: , , ,

Appeals Court Rebuffs EPA Attempt to Expand Its Regulatory Power

August 9, 2017 by

In a clear win for separation of powers and limited agency discretion, the D.C. Court of Appeals today ruled in favor of a company that challenged an EPA regulatory action issued in 2015 to require industry to replace its use of hydrofluorocarbons (“HFCs”). The Court found that “the fundamental problem for EPA is that HFCs are not ozone-depleting substances, and thus Section 612 would not seem to grant EPA authority to require replacement of HFCs.” This logic was supported by the EPA itself prior to 2015 when the agency openly deemed hydrofluorocarbons acceptable. But EPA reversed course in 2015 and concluded that some HFCs “could no longer be used by manufacturers in certain products, even if the manufacturers had long since replaced ozone-depleting substances with HFCs in accordance with the law.” EPA attempted to justify its position by classifying hydrofluorocarbons as a contributor to climate change.

The Majority opinion stated:

“Supreme Court cases that have dealt with EPA’s efforts to address climate change have taught us two lessons that are worth repeating here. First, EPA’s well-intentioned policy objectives with respect to climate change do not on their own authorize the agency to regulate. The agency must have statutory authority for the regulations it wants to issue. Second, Congress’s failure to enact general climate change legislation does not authorize EPA to act. Under the Constitution, congressional inaction does not license an agency to take matters into its own hands, even to solve a pressing policy issue such as climate change.”

The Court found that EPA’s legal interpretation to be “inconsistent with the statute as written,” and therefore vacated the 2015 Rule. The Court’s opinion speaks to the need for federal agencies to respect the separation of powers required by the U.S. Constitution and highlights the Judiciary’s important role to intervene when an agency oversteps its statutory authority.

Cause of Action Institute (“CoA Institute”) has repeatedly stressed this point in matters involving other rogue federal agencies.  For example, in a recent amicus curiae brief filed in support of a business facing a lawsuit filed by the Federal Trade Commission (“FTC”) that we do not believe the FTC has statutory authority to bring, we argued:

“CoA is concerned that this case is part of an emerging pattern of ultra vires, unconstitutional FTC enforcement actions grounded in a fundamental error of statutory interpretation—specifically, the FTC’s apparent belief that it need not wait for Congress to pass legislation giving it permission to regulate broad swaths of the economy, so long as the FTC’s actions reflect its subjective vision of enlightened public policy—that not only flips basic administrative law on its head, but threatens the separation of powers vital to liberty.”

No agency can arrogate to itself legislative powers Article I of the Constitution reserves for Congress, no matter how important an agency thinks its policy aims might be.

Patrick Massari is Assistant Vice President at Cause of Action Institute

Filed Under: Media, Blog Tagged With: , , , ,

FTC Destroying Family-Run Tech Support Business Without Evidence of Wrongdoing or Due Process

August 9, 2017 by

Washington, D.C. – Cause of Action Institute (“CoA Institute”) is stepping in to defend a small family-run tech support company, Vylah Tec, LLC (“V-Tec”), after the Federal Trade Commission (“FTC”) targeted the company and conducted an hours-long raid of the company’s headquarters on suspicion of “deceptive” sales practices. The raid was initiated as part of a politically-hyped campaign known as Operation Tech Trap headed by the FTC in conjunction with the Florida Attorney General’s office.

V-Tec is a small start-up owned by Robert Cupo that operates out of a single office in Fort Myers, Florida, and provides tech support to customers who buy electronic devices from the Home Shopping Network and other shopping channels. Individuals who purchase electronic devices such as laptops, printers and tablets are provided pre-paid tech support with their purchase. On top of its tech support operation, V-Tec also generates revenue from selling third-party antivirus and other data security software to customers who want additional security on their devices.

The FTC’s sting-like raid, assisted by local police, included hands-in-the air orders, the temporary confiscation of employee cell phones, and police-escorted bathroom breaks. One mother was told she could not leave to pick up her kids from daycare and police officers would use her phone to call and tell them she had been detained for questioning. Despite the hostile raid, FTC investigators were apparently unable to uncover any concrete evidence of wrongdoing by the company.

Nevertheless, a Florida District Court judge was sufficiently convinced by FTC lawyers to grant the government a preliminary injunctive order against V-Tec. This punitive process includes turning the company’s operation over to a third-party receiver and freezing the assets of the Cupo family members. CoA Institute has filed a motion to stay the District Court’s order.

CoA Institute Senior Counsel Cynthia Crawford: “When the government puts a company in its crosshairs, the process becomes the penalty. In this case, the court’s decision to allow an injunctive order is akin to using a sledgehammer to swat a fly. Freezing assets and turning the business over to a receiver is steadily draining V-Tec’s finances and destroying its reputation. Meanwhile the court’s action is harming the thousands of customers who are not receiving the support they paid for. We urge the court to reevaluate the flawed evidence FTC presented and stay this destructive order so that the Cupo family can have their day in court before the company is destroyed.”

In court, the FTC argued that V-Tec’s sales pitches for the software are deceptive, citing two examples of recorded calls. However, the FTC clearly mischaracterized its evidence and failed to support accusations fundamental to FTC’s case. Much of the evidence presented is either incomplete or incorrect. For example, the government in open court, played a portion of a tech support call that they wrongly alleged as deceptive “upselling.” What the government omitted, however, was that the technical support representative stayed on the phone after the customer declined to purchase additional software and addressed the caller’s problem.

A second transcript the FTC submitted in court mislabeled the so-called guilty party as a V-Tec employee, when in fact the person trying to harm the consumer did not actually work for V-Tec. A brief investigation of the call and the surrounding context would have made that clear. A V-Tec support representative actually protected the consumer in that instance, disconnecting the other individual from the call and disabling his remote access to the caller’s computer.

Instead of protecting consumers, the court’s injunction order is causing the most significant consumer harm. Since May 3, 2017, V-Tec has failed to answer over 100,000 customer calls. Many of these are likely customers with lifetime service contracts who, instead of receiving the product they paid for, are stuck in a never-ending hold loop. The order also froze assets of individuals with no actual stake in V-Tec. These individuals cannot access their savings and are struggling to pay for basic life expenses, or in one case, access funds of a wholly unrelated business.

The full motion for stay is available here.

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

 

 

Filed Under: Media, Press Release Tagged With: , , , ,