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03/11/2015

Law360: LabMD Rips 11th Circ. For Refusing FTC Data Security Suit

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The Eleventh Circuit’s refusal to weigh in on a complaint from the Federal Trade Commission accusing LabMD Inc. of failing to safeguard patient information unlawfully shifts the balance of power between agencies and courts, the company recently said in a request for an en banc rehearing…

 

Reed Rubinstein, an attorney for LabMD and senior vice president of litigation at nonprofit Cause of Action, told Law360 on Wednesday that his client shouldn’t have to wait for the FTC proceeding to play out when there’s no doubt about its outcome.

 

“If the process is going to result in an outcome that is, for all intents and purposes, predetermined, what is the justification for requiring a person or a company to have to go through that process in order to obtain judicial review?” Rubinstein asked.

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01/5/2015

Selected FDIC Communications on Operation Choke Point

Below are two selected documents from the most recent OGR report on FDIC’s involvement in Operation Choke Point.

August 2013 email between FDIC officials regarding state regulation of an industry targeted by Operation Choke Point:

ChokePointDoc1

November 2012 email from Thomas Dujenski, (FDIC Regional Director, Atlanta), to Mark Pearce, (Director, FDIC Division of Depositor and Consumer Protection), regarding Dujenski’s viewpoints on the same industry:   

ChokePointDoc2

 

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11/25/2014

Law360: Tiversa Can’t Attack Future Witness In LabMD Fight With FTC

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The order pointed out that the judge had already rejected a motion by the FTC in July for permission to develop evidence to rebut Wallace’s expected testimony because he had yet to testify, and that Tiversa’s “attempt at anticipatory rebuttal” suffered from a similar defect.

 

Cause of Action, which is representing LabMD in the administrative proceeding, praised the administrative law judge’s decision to disregard Tiversa’s notice.

 

“All along we’ve wanted the truth to come out about the FTC’s actions against LabMD,” Cause of Action said in a statement provided to Law360 on Thursday.

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11/25/2014

Dan Epstein on the Lars Larson Show 11/21/2014

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11/24/2014

Cause of Action to Challenge Unlawful Efforts by Department of Labor in D.C. Circuit

FOR IMMEDIATE RELEASE                                                     CONTACT:      

November 24, 2014                                    Mary Beth Hutchins, 202-400-2721

Cause of Action to Challenge Unlawful Efforts by Department of Labor

in D.C. Circuit

Rhea Lana, Inc. Announces Plan to Appeal Lower Court’s Deference to Agency Overreach

WASHINGTON – The U.S. District Court for the District of Columbia, though it ruled to dismiss Rhea Lana, Inc. v. U.S. Department of Labor, invited the D.C. Circuit to determine whether the Department of Labor (DOL) may lawfully destroy a small business by finding “violations” and soliciting others to sue using notice letters that evade judicial review.

In granting the Department of Labor’s (DOL) motion to dismiss the case brought by Rhea Lana’s, an Arkansas consignment company run by entrepreneur Rhea Lana Riner, the District Court stated that it “sympathizes with Rhea Lana’s predicament.” This “predicament,” as the Court described it, arose when DOL attempted to establish a rule that Americans cannot volunteer at for-profit entities. The DOL pursued this matter by sending a warning letter to Rhea Lana that, in the Court’s view, had a “coercive effect,” essentially telling the company that it could face severe fines for not classifying its consignor-volunteers as employees.

“As the District Court recognized, agencies should not be able avoid judicial review by hiding behind form letters that essentially demand the recipient comply or face stiff penalties ,” said Cause of Action’s Executive Director Dan Epstein. “That is why on behalf of Rhea Lana, Inc. Cause of Action is appealing this decision to the D.C. Circuit.”

“As a company that engages moms in the community to buy children’s clothes and toys at a deep discount and profit from selling their own children’s items, we have never faced complaints from our consignor-volunteers, and we just don’t think it’s fair for the Department of Labor to come after us like this,” said Rhea Lana Riner, founder and president of Rhea Lana, Inc. “The government is essentially telling you that you can’t have your friends help out at a garage sale without the fear that a federal agency will be looking over your shoulder waiting to fine you. That’s why we feel so strongly about fighting back: So that our freedom as entrepreneurs and neighbors can remain intact.”

About Cause of Action:

Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it.  For more information, visit www.causeofaction.org.

About Rhea Lana, Inc.:

Founded by Rhea Lana Riner in her living room 16 years ago and headquartered in Conway, Arkansas, Rhea Lana’s Children’s Consignment hosts semi-annual sales.  With Arkansas roots, Rhea Lana’s Franchise Systems, Inc. is rapidly growing with 69 locations in 23 states.  The company is the first consignment sale business in the country to offer on-line management and real time tracking of merchandise through a computerized inventory system and a convenient mobile application. For more information, visit www.rhealana.com.

To schedule an interview with Cause of Action’s Executive Director Dan Epstein, contact Mary Beth Hutchins, mary.beth.hutchins@causeofaction.org.

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10/10/2014

LIBRE Joins Litigation Regarding “Operation Choke Point”

LIBRE Joins Litigation Regarding “Operation Choke Point”
Obama Administration Abuses Regulatory Regime

(Washington, D.C.) – Today the LIBRE Initiative Institute (LIBRE) filed an amicus brief in support of the Community Financial Services Association of America v. FDIC challenge to the administration’s Operation Choke Point (Choke Point). LIBRE filed the brief – which was written by the nonprofit government oversight group Cause of Action – arguing that the government abused its power and conducted Choke Point without transparency or accountability and without accounting for the Collateral damage that it has done to Hispanic businesses, their customers, or the communities they serve.  Choke Point is an initiative quietly organized and implemented by the Federal Deposit Insurance Corporation (FDIC), the Department of Justice (DOJ), and other agencies. Banks and other financial institutions have been investigated and pressed to cut off financing to a range of businesses that the administration believes to be acting against public Interest . These include legal activities such as payday loans, tobacco, ammunition, fireworks, and many others.

This operation has received little public scrutiny, and was not publicly debated or analyzed for its impact on the targeted businesses, their customers or the broader economy. Questions have been raised regarding the administration’s decision to target a broad range of legal activities – rather than concentrating taxpayer dollars on fighting crime. Additionally, many of the businesses hurt by the operation provide access to Capital and services of particular value in the Latino community. This unilateral action has forced many enterprises to close – with a disproportionate impact on jobs and services in Latino communities nationwide. It is wrong for the administration to crack down on completely legal commercial activity – stripping consumers of market choice – through agency pressure applied to financial institutions rather than an open and transparent process.

Read the brief here.

 Jorge Lima, Policy Director of The LIBRE Initiative Institute released the following statement:

President Obama continues to use unilateral executive action to push forward on a flawed policy agenda that is hurting the Latino community more than it’s helping. Wages are down and jobs are hard to find – but we continue to see the same policy prescriptions that have failed in the past. Now the administration is using its power to undermine industries that it deems detrimental, while ignoring the fact that it is unfairly punishing business owners and infringing upon the private prerogative of banks to evaluate business according to their models – ultimately limiting the choices available to individuals.

The federal government should stop trying to arbitrarily undercut or shut down businesses it doesn’t like, and allow for an open debate, with proper opportunity for comment and analysis, rather than wielding administrative power. We have seen what happens when there is no discussion of proposed policy alternatives with the unintended consequences of Obamacare. The president and his administration shouldn’t be so eager to repeat the same mistakes.

For interviews with a LIBRE representative, please contact: Brian Faughnan, 703-650-1100 or Steven Cruz, 703-650-1100.

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07/7/2014

Cause of Action Files Amicus Brief Before Supreme Court in Yates Case

Cause of Action, joined by Southeastern Legal Foundation and Texas Public Policy Foundation, has filed an amicus brief calling on the Supreme Court to overturn the conviction of a commercial fisherman who was prosecuted under Sarbanes-Oxley’s anti-shredding provision for throwing fish overboard.  According to CoA’s Executive Director Dan Epstein, “the government’s conduct in this case is quintessential Executive Branch overreach.  Congress never imagined, much less intended, that the law it passed to deter corporate financial scandals would be used the way it was here.  If the National Oceanic and Atmospheric Administration’s actions stand, then the regulatory floodgates will open more Americans to government abuse.”  CoA and the amici are represented by Gus Coldebella of Goodwin Procter LLP.

In the brief, CoA and the amici argued that if Captain Yates’ conviction is upheld, then a person who “conceals evidence of a surfboard being used on a beach designated for swimming, throws away a bag of chips from a workplace restroom prior to an OSHA inspection, fails to declare an item on a customs form at the airport, gets rid of a bat used in a teenager’s game of ‘mailbox baseball,’ or discards an empty container of medicine purchased from a foreign pharmacy” has violated SOX and faces up to twenty years in prison.

CoA and the amici also noted that Captain Yates’ case raises troubling questions about the government’s inconsistent application of the law, given the multiple cases of document destruction by federal officials.  For example, in 2011, during the course of an Inspector General investigation into NOAA’s Office of Enforcement, then director Dale J. Jones, Jr. actually shredded documents to conceal evidence.  Jones was not prosecuted—instead, he was given a different job. Similarly, Charles Edwards, former Department of Homeland Security Inspector General, allegedly destroyed documents to impede a federal investigation. Edwards, too, was reassigned to another federal job.

According to Epstein: “This is an obvious double standard: a taxpayer subsidized employee who destroys documents to obstruct an investigation (conduct clearly covered by the statute) is reassigned, while a taxpayer who throws fish overboard is sent to prison.  No system that treats government employees differently than average citizens engenders respect for the law.”

Yates v US Amicus Brief by Cause of Action

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