CoA Institute Urges Supreme Court to Rein In FTC’s Unconstitutional Pursuit of Money Damages

Washington, D.C. (November 13, 2019) – Today, Cause of Action Institute (“CoA Institute”) filed an amicus brief in the U.S. Supreme Court supporting cert petitions filed by AMG Capital Management and Publishers Business Services. The petitions urge the Court to review the Federal Trade Commission’s (“FTC”) claim that Section 13(b) of the FTC Act, which authorizes injunctions, also grants the agency power to obtain money damages, raid businesses, and impose asset freezes and receiverships.

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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.

McDonough was an election official in New York whom Smith prosecuted for fraud during a primary contest. Smith’s first prosecution ended in a mistrial. McDonough was acquitted the second time around. Smith’s prosecutions were abusive from the get-go and throughout because he used fabricated evidence, false testimony, and bad DNA work both to get the indictments from grand juries and to try McDonough. After he was acquitted McDonough sued Smith in a separate action for these obvious constitutional violations. The limitations period to bring such a lawsuit in New York is three years.

The dispute arose because McDonough sued within three years of his acquittal at the end of the second trial, but that was more than three years after he first learned that Smith used fabricated evidence.  The Second Circuit Court of Appeals affirmed the dismissal of McDonough’s fabrication-of-evidence claim because he had learned about Smith’s misconduct during the first trial, which was more than three years before he filed his civil rights action. The Second Circuit’s rule was different from the rule in the Third, Ninth and Tenth Circuits. Those courts all hold that a fabrication-of-evidence claim accrues, and the limitation period begins to run, only after criminal proceedings have ended which, in this case, would have been after McDonough was acquitted in the second trial. McDonough’s claim was timely under their rule.

Cause of Action Institute filed two successful friend-of-the-court, or amicus curiae, briefs in the case. Our first amicus brief urged the Supreme Court to hear the case because the split between the circuit courts meant that geography would control whether lawsuits were timely from place to place rather than their essential common allegation of flagrant prosecutorial misconduct. Then, after the Supreme Court agreed to hear the case, Cause of Action filed a second amicus brief urging the Court to overturn the Second Circuit’s rule on the merits.

The Court agreed with the position that Cause of Action urged. It reversed the Second Circuit decision, ruling that the period to bring the fabrication-of-evidence claim should not begin to run until the criminal prosecution is terminated even if the injured prosecution-defendant knew before then that the prosecutor was using fabricated evidence. Any other result, such as under the Second Circuit rule, would increase the probability of having simultaneous civil and criminal actions about the same subject matter, the results of which might conflict. Under the Second Circuit’s rule, a criminal defendant could be placed in the unenviable position of publicly accusing in court the person currently prosecuting them of the worst form of prosecutorial misconduct while that prosecutor was still seeking a conviction, a situation the Supreme Court found “untenable.” The rule chosen by the Supreme Court will also avoid unnecessary, collateral, civil-lawsuit attacks on criminal judgments.

Fabricated evidence is a more common problem than many people realize and can impact thousands of people falsely accused of crime.  Even if a defendant immediately knows a police officer had fabricated evidence, as recently happened in nearly 2,000 cases in Baltimore, it is almost impossible for that defendant to have enough evidence to successfully file a lawsuit. Imagine sitting in an interrogation room when fabricated evidence is first used against you. 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 lawsuit like McDonough’s even though your criminal prosecution for the robbery might not even begin, let alone be completed, for many months. The Second Circuit’s rule, had it not been reversed, would have sharply limited the practical ability of persons in just that situation to bring a lawsuit to remedy such abusive, unconstitutional prosecutorial conduct.

Mike Geske is counsel at Cause of Action Institute and appeared on the amicus briefs for Cause of Action Institute, along with John Vecchione and John McGlothlin.

 

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.

Cause of Action Institute leads diverse coalition in filing Supreme Court amicus brief in FMI v. Argus Leader

Urges Court to follow the text and strike a wise balance when examining Exemption 4 within the Freedom of Information Act

Today, Cause of Action Institute, a nationally recognized government watchdog organization with a specialty in government transparency, led an ideologically diverse coalition in filing an amicus brief involving Exemption 4 of the Freedom of Information Act (FOIA), a statute the Court rarely interprets. The brief, filed before the U.S. Supreme Court, urges the Court to improve and clarify how Exemption 4 is applied. This particular exemption protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”

The case has the potential to upset the status quo and drastically expand the use of this exemption – meaning more information that was otherwise public could now be withheld from disclosure. The coalition’s amicus brief urges the Court to strike a sound balance by clarifying and improving the competitive-harm test, eliminating the Critical Mass distinction, confirming an objective test for determining confidential information, and ensuring Exemption 4 takes into account some reputational harms that could occur if confidential information is disclosed.

James Valvo, counsel and senior policy advisor for Cause of Action issued the following statement:

“It’s rare to see the Supreme Court take a FOIA case, and far more rare that the case deals with the specifics of Exemption 4. But good government is government that is transparent and open. This is perhaps why it is so critical that the Court uses this opportunity to clarify how Exemption 4 is applied, to ensure the public’s right to information is protected while not harming legitimate commercial concerns. The existing standards to determine what information falls within or out of the scope of Exemption 4 has created a confusing web that does a disservice to spirit of the FOIA.”

In addition to Cause of Action Institute, Citizens for Responsibility and Ethics in Washington, FOIA Advisor, Open the Government, and the Project on Government Oversight signed the amicus brief.

The amicus brief specifically asks the Court to:

  • Address and interpret the term “confidential,” as used under Exemption 4, to bring it into harmony with the statutory text and its historical usage in other legal contexts and confirm an objective test for determining the confidentiality of commercial or financial information;
  • Eliminate the National Parks standard that the impairment of the government’s ability to collect information is a justification for withholding information as unnecessary and duplicative;
  • Eliminate the atextual distinction created in Critical Mass between information that is obtained through voluntary or compulsory means; and
  • Ensure Exemption 4 protects against certain types of reputational harm that have a negative impact on competitive standing.

Summary:

All records subject to the FOIA should be disclosed to the public unless the federal government cites one of nine exemptions. This case specially deals with Exemption 4, which concerns, “Trade secrets or commercial or financial information that is confidential or privileged.”

FOIA Exemption 4, exempts from disclosure “confidential” commercial or financial information that the government obtains from a person. But the FOIA does not define “confidential.” The meaning of that term cannot be derived from bare dictionary definitions. “Confidential” instead must be understood in light of its historical usage in other legal contexts and in the FOIA. Persuasive canons of statutory interpretation counsel the Court to take that approach. Petitioner’s overbroad understanding of “confidential” ignores legal history, deviates from the interpretative methodology accepted for other terms in Exemption 4, and would render the whole of Exemption 4 surplusage by swallowing up the independent meanings of “trade secret” and “privileged.”

The proper meaning of “confidential” covers information that, if made public, would cause competitive harm to its source. This meaning is rooted in the common law and the nature of confidential relationships. But history is not the only basis for this understanding. In other legal contexts, construing the phrase “confidential information” frequently involves some form of harm analysis. From judicial records and the Bankruptcy Code, to the Rules of Civil Procedure and this Court’s precedents on FOIA Exemptions 5 and 7, legal context demonstrates the inadequacy of Petitioner’s dictionary-bound approach to Exemption 4.

This case also presents the Court with an opportunity to clarify other aspects of Exemption 4. Although amici ask the Court to uphold the competitive-harm justification of National Parks, they also ask the Court to eliminate the government-impairment justification, abandon the distinction between information submitted voluntarily or under compulsion, reiterate that competitive harm is analyzed under an objective test, and accept reputational harms that impact competitive standing as cognizable under Exemption 4.

As the Court considers this case, it should do so consistent with its precedent for interpreting the FOIA. The Court has recognized that the FOIA is essential to “ensure an informed citizenry, vital to the functioning of a democratic society,” and that it contains a “strong presumption in favor of disclosure. To ensure that citizens have access to information and to honor the strong presumption of disclosure, FOIA exemptions “must be ‘narrowly construed.”

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Media ContactMatt Frendewey, matt.frendewey@causeofaction.org | 202-699-2018

 

D.C. Court of Appeals Puts Free Speech, Media at Risk

Court refuses to rehear anti-SLAPP decision, exposing media outlets and nonprofits to defamation lawsuits

After a lengthy two-year delay, today the D.C. Court of Appeals denied the Competitive Enterprise Institute’s (“CEI”) motion for rehearing en banc asking the full court to review a decision that will expose media and nonprofit organizations throughout D.C. to lawsuits claiming their stories and commentary are defamatory.

The original decision arose from a lawsuit filed by Michael Mann, a climate scientist embroiled in the scandal to “hide the decline” in the Earth’s temperature record, against CEI and others who criticized his work.  CEI moved to dismiss the case under D.C.’s Anti-SLAPP statute, a law designed to prevent frivolous lawsuits that are used to harass people exercising their free-speech rights; in this case, their First Amendment right to debate important issues of public policy.  The D.C. trial court refused to dismiss the lawsuit, and CEI appealed.  The appellate court upheld the initial ruling and refused to dismiss the case.

CEI then moved for rehearing en banc and dozens of amici from across the ideological spectrum urged the D.C. Court of Appeals to rehear the case because of the significant impact on First Amendment rights and the huge amount of public policy debate that occurs in the District.  Cause of Action Institute filed one of those amicus briefs on behalf of Dr. Judith Curry, a climate scientist who Michael Mann has consistently harassed using methods similar to those he complains CEI used against him.  Today, the court refused to rehear the case, without a single judge asking for rehearing.  The court’s decision in effect declares open season on media and nonprofit organizations located in the District of Columbia.

It would appear the two options available to CEI now are either to ask the U.S. Supreme Court to hear the case or to go back to the trial court and fight the case on the merits.

James Valvo is counsel and senior policy advisor at Cause of Action Institute.

Supreme Court Rules Economic Impact of Fish and Wildlife Decision Subject to Judicial Review

In an ongoing battle between landowners and the federal government, the U.S. Supreme Court unanimously ruled against the U.S. Fish and Wildlife Service, in Weyerhaeuser Co. vs. U.S Fish and Wildlife Service, when it designated private land in Louisiana as “unoccupied critical habitat.”  In a significant portion of the Court’s opinion, it also ruled against the government’s effort to block judicial review of that designation.  Had the Supreme Court upheld the Fifth Circuit’s determination and denied judicial review, agencies throughout the government would be permitted to make unconstrained decisions, potentially depriving individuals and businesses affected by the regulatory powers of the administrative state of their right to challenge agency abuse and discretion in court.

Today’s decision marks an important victory in our ongoing effort to reign in the government’s abuse of power and ensure citizens can seek recourse in the courts when the government infringes on our freedoms.  We filed an amicus brief in this case because it was clear that the government had abused its discretion by designating inhabited and inhabitable land as “unoccupied critical habitat,” and then blocked the rights of citizens subject to these decisions to seek review and recourse from the courts.

The designation of private land in Louisiana as “unoccupied critical habitat” at issue in this case is not only questionable on its face, as the species it’s intended to conserve cannot survive on the land as it is now, but it also significantly threatens the economic freedom and property rights of the landowners, potentially costing them $34 million in lost development opportunities.  Lower courts previously determined that the agency action in this case, though “odd,”[1] is not subject to judicial review and subsequently deferred to the agency’s decision.

As CoA Institute pointed out to the court in our amicus brief, and as the Supreme Court stated in its opinion, there is a “strong presumption favoring judicial review of administrative action.”[2]  Further, the narrow exception to judicial review of agency action under Section 701(a)(2) of the Administrative Procedure Act only applies when the action falls within one of the traditional categories committed to agency discretion or is one of the “rare circumstances where the relevant statute is drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.”[3]  These exceptions are intended to reduce and specify the circumstances in which agency action is exempt from judicial review, not broaden them.  The Supreme Court notes that not only does the Service’s decision in this case fail to apply to one of the exceptions, but it “involves the sort of routine dispute that federal courts regularly review.”[4]

In addition to addressing whether the agency’s action was subject to judicial review, the Supreme Court was asked to address whether the ESA prohibits designation of private land as unoccupied critical habitat that is neither habitat nor essential to species conservation. In its opinion, the Supreme Court asked the Fifth Circuit to consider the meaning of the word “habitat” in its decision, for the land at issue must first and foremost be “habitat” if it is to be designated as “critical habitat.” Additionally, they asked the Fifth Circuit to consider whether the Service’s cost and benefits analysis of the designation was flawed and thus made the Service’s decision not to exclude the land at issue “arbitrary, capricious, or an abuse of discretion.”[5]

Read more about this case in our previous blog post here.

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

 

 

[1] Markle Interests, LLC v. U.S. Fish & Wildlife Serv., 40 F. Supp. 3d. 744, 758–59 (E.D. La. 2014).

[2] Mach Mining, LLC v. Equal Emp’t Opportunity Comm’n, 135 S. Ct. 1651 (2015).

[3] Lincoln v. Vigil, 508 U.S. 182, 191 (1993).

[4] Weyerhaeuser Co. v. U.S. Fish & Wildlife Serv., No. 17-71, slip op. at 12 (U.S. Nov. 27, 2018).

[5] Id. at 15.

CoA Institute Files Brief in Support of Effort to Make Georgia Legislature Comply with Open Records Act

Files 50-state survey with Georgia Appeals Court

Cause of Action Institute (CoA Institute) filed an amicus brief today in support of a lawsuit requiring Georgia’s legislature to comply with the state’s open records act. The brief includes a 50-state survey on whether other state legislatures are subject to open records laws. The results of the survey show that 38 states provide the public with access to legislative records, while only a small minority, 11 states, exclude their legislatures from public-disclosure laws. Of those that exclude their legislature, eight states do so in express statutory terms.

The brief is in support of a lawsuit brought by the Institute for Justice (IJ) after they sent a series of public records requests to offices of the Georgia legislature seeking access to information about the state’s licensure requirement for music therapists. Yes, you read that correctly, licensure requirements for music therapists. The legislature claimed it was categorically exempt from Georgia’s open records law, and the superior court agreed. The case is now before the Georgia Court of Appeals.

CoA Institute’s survey reveals three important trends that should inform the Court’s decision:

  • When a state’s open records law does not cover the legislature, it’s usually explicitly statutorily exempt. Georgia law does not explicitly exempt the legislature;
  • In the absence of an express exclusion, broad terms are commonly interpreted to include the legislature, either in whole or in part; and
  • When there is any remaining ambiguity, the presence of statutory exemptions concerning specific legislative offices or records implies that the legislature must be covered; Georgia has these exemptions.

When IJ filed its requests, and the court below issued its order, the Georgia Open Records Act included two exemptions for legislative records. The first of these provisions exempted records from a series of legislative offices: the Legislative and Congressional Reapportionment Office, the Senate Research Office, and the House Budget and Research Office. The second provision, which is still in force, exempts certain records from the Office of Legislative Counsel. These offices are all contained within the legislative branch. Neither exemption would make any sense if the General Assembly were not, by default, covered by the Open Records Act.

To accept Georgia’s position, as adopted by the court, would render the Act’s explicit, narrow exemptions mere surplusage, violating a core canon of statutory construction. Therefore, the Court of Appeals should recognize that the presence of the exemptions for certain legislative offices as means that the broader legislature must be covered. This interpretation would conform Georgia’s approach to the broad trends that Cause of Action Institute identified in the 50-state survey.

The full amicus brief is available here.

James Valvo is Counsel & Senior Policy Advisor at Cause of Action Institute. You can follow him on Twitter @JamesValvo.