Category: Legislation in Court

Loopholes in the System: How Student Loan Litigation May Change Going Forward

January 28th, 2016 in Federal Legislation, Legislation in Court, Legislative Oversight

In June 2014, the Department of Education greatly reduced its funding from the for-profit institution Corinthian Colleges, which had received $1.4 billion in funding annually from the federal government. But serious concerns that Corinthian had mishandled the funds, redirecting them to creditors and other avenues rather than to students, led to multiple federal and state investigations. Finally, the DOE took action – it stopped giving the institution federal loans. In April 2015, cut off from these loans, Corinthian shut down the last of its campuses’ doors. Now, many Corinthian students are looking for help with the student loans they have been saddled with, and with nothing to show for it. The DOE, in June 2015, released on its website the two ways in which it plans to help students with loans related to their education at Corinthian. For students who were attending the closed down campuses, there is the option of loan forgiveness. The DOE is expanding the class of students eligible for loan forgiveness to include those who attended the school as far back as June 2014.

More strikingly, the DOE is making an unprecedented move in extending a loan forgiveness option for dept-of-ed-sealstudents under the “defense to repayment”. Defense to repayment claims are usually brought under state UDAP laws – Unfair and Deceptive Acts and Practices laws. These state level claims provide easier relief as they do not require proof of intent and reliance may be presume. However, this rule has yet to be enforced on a federal level – whether in the Corinthian case or any other direct loan dispute. In the past 15 years, the Department received a grand total of five claims under the ‘defense to repayment’ provision of the law. This is partly because, when the rule was promulgated there was no guidance on the procedures for filing, disputing and resolving a claim under defense to repayment. In December 2014, 12 U.S. senators, led by Elizabeth Warren submitted a letter to the Department of Education asking for clarification on defense to repayment. In response, the DOE is attempting to make the process easier for thousands of Corinthian borrowers by putting in place an application procedure.

In another unprecedented move, the Consumer Financial Protection Bureau worked with a buyer of partial Corinthian campuses and the DOE to secure a settlement valued at $480 million in debt relief for private student loan borrowers who attended Corinthian at the time of closing. Students who have private loans are also reassured that strong arm tactics – such as harassing calls and lawsuits – will not be used against them to collect on loans. These students will also have negative credit history erased from their credit reports. A broader lawsuit is currently still pending against Corinthian alleging predatory techniques were used to induce students to take out private loans.

There may be sufficient reason to invoke the “defense against repayment” option in the case of Corinthian colleges. But this may open the floodgates to other claims, especially in the for-profit education industry, that could fall under the defense. As the issue of burgeoning student loans in the millennial generation becomes a larger issue for the economy, this tiny loophole could create huge impacts in the coming years. More and more disgruntled students taking action may mean this “defense to repayment” could be extended to private, non-federal loans and public universities.

Recently, Obama’s administration has considering new rules and regulations allowing for easier debt relief. Several advocate groups have written to the DOE to make suggestions and provide guidance and encouragement in creating a clearer debt relief process. But the recent downfall of multiple for-profit educational institutions like Corinthian seems more a symptom of a toxic and unsustainable system stemming from overreliance on student loans; a system that forces the students to carry the burden for access to education. Relying on a short-term, half-formed relief strategy such as a “defense to repayment,” may just be akin putting a Band-Aid on a fatal wound.

Soni picSonam Bhagat is from Lowell, Massachusetts and graduated from Boston College in 2011, concentrating in Finance and Accounting. Sonam is expected to matriculate from Boston University School of Law in 2017. Sonam will be working for a large corporate law firm in the summer of 2016 and hopes to explore various areas of law, in order to better decide her course after graduation.

The Demise of the EU-U.S. Safe Harbor Agreement

January 28th, 2016 in Federal Legislation, Legislation in Court

Maximillian Schrems, an Austrian law student, is at the center of a monumental shift in data relations between the United States and the European Union; a shift that revolves around a clash in philosophies regarding data privacy.

The EU views privacy as a fundamental human right. The U.S. does not. Americans seem willing to relinquish control of personally identifying data, as long as the data is protected and used responsibly. When a company does not protect personal data, Americans express their displeasure in the form of civil litigation rather than legislation.

In comparison, the EU codified data privacy rights in 1995 in Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data (OJ 1995 L 281, P. 31) (“Data Protection Directive”). This directive provides strong data privacy rights for EU citizens. Most notably, each EU citizen has the right to, at any time, revoke previously given consent to obtain or use personally identifying data, access their own personally identifying data, and correct that personally identifying data.

Because of these stronger data privacy rights, the transfer of personally identifying data from the EU to the U.S. concerns many EU citizens and policy makers. The primary fear, which was intensified by the Edward Snowden revelations, is that U.S. companies will not respect EU Data Privacy Laws.

European Union Court of Justice

European Union
Court of Justice

Under the Data Protection Directive, companies can legally transfer data from the EU to the U.S. by obtaining consent from the data owner, entering into data protection agreements, creating binding corporate rules, or implementing model clauses. These methods are far from ideal, however. They are expensive and subject U.S. companies to the jurisdiction of EU Data Privacy Commissions.

As e-commerce, remote work, and social media grew in popularity, the digital transfer of personal data became a regular part of daily life and existing data transfer methods proved unwieldy and burdensome. In response, the U.S.-EU Safe Harbor Agreement (“Safe Harbor”) addressed these concerns by creating a streamlined process for U.S. companies to comply with the Data Protection Directive. Companies that self-certify with the FTC under Safe Harbor agree to abide by the principles of EU data privacy laws but are under FTC jurisdiction instead of EU jurisdiction.

While Safe Harbor addresses the concerns of U.S. companies, many in the EU criticize Safe Harbor as ineffective, maintaining that the self-certification process and lack of substantive enforcement renders Safe Harbor meaningless. In addition, classified documents made public by Edward Snowden in 2013 indicate that certain U.S. intelligence services allegedly tap into the central servers of major U.S. Internet companies and access personal data. By comply with U.S. law and allowing the government access to this data, companies cannot also adhere to the data privacy principles agreed to under Safe Harbor.

This very concern prompted Maximillian Schrems to file a complaint with the Irish Data Protection Commissioner regarding his personally identifying data collected by Facebook. As a Facebook user for over seven years, Mr. Schrems contends that a portion (if not all) of his data was transferred from Facebook’s Irish subsidiary to Facebook data servers located in the U.S.

The Irish Data Protection Commission originally rejected Mr. Schrems’ complaint, citing the Safe Harbor agreement as sufficient evidence that Facebook provided adequate levels of protection for the personally identifying data transferred to the U.S..

While Facebook is Safe Harbor certified, Mr. Schrems maintains that the Snowden revelations prove that U.S. law and policy are such that it is impossible for a company to simultaneously comply with Safe Harbor standards and U.S. law. As such, Mr. Schrems appealed his case to the High Court of Ireland.

On Sept 23, 2015 Advocate General Yves Bot (“AG Bot”) issued a strongly worded opinion in Maximillian Schrems v. Data Protection Commission (case C-362/14), urging the Court of Justice of the European Union to suspend the existing Safe Harbor Agreements.

Less than two weeks later, the Court of Justice of the European Union did just that. On October 6, 2015 the Court invalidated Safe Harbor, declaring that Safe Harbor compromises the fundamental right to privacy, denies the right to judicial protection, and prevents enforcement of EU laws.

Effective immediately, the Court of Justice’s ruling creates very real problems for any U.S. company that relies on Safe Harbor to transfer data from the EU to the U.S. As of October 6, both future and all past data transfers completed under Safe harbor are illegal.

Adding to the confusion is the fact that the European Commission and U.S. authorities are in the process of negotiating Safe Harbor reforms. The Court of Justice’s decision to invalidate Safe Harbor full stop creates an abrupt and unexpected obstacle for these negotiations. The ambiguity surrounding the legal and political future of personal data transfer from the EU leaves U.S. companies, operating under Safe Harbor, a choice between a limited set of less than ideal options:

  1. Immediately cease all data transfer and update current systems and processes to comply with the EU Data Protection Directive. While being extremely disruptive to business, it may also be difficult to completely shut off all forms of data transfer (such as employee information needed for hiring and payroll) between the U.S. and the EU.
  2. Continue operating as normal while concurrently developing new systems, hoping that the EU delays enforcing the Data Protection Directive and allows formerly Safe Harbor certified companies an opportunity to update systems and processes in order to comply with the Data Protection Directive outright. While the business may not suffer the full effects of a shutdown, a potentially substantial risk of legal proceedings exists.
  3. Implement an interim solution that ceases all non-essential transfers of personal data and focuses on ensuring compliance for critical data transfers, while waiting for the European Commission and U.S. authorities to continue their Safe Harbor reform negotiations. Relying on a diplomatic solution is a gamble that some companies may be willing to take. If a satisfactory solution cannot be worked out politically, then there is always Option 4.
  4. Cease all business in the EU that may result in the transfer of personal data from the EU to the U.S.. This response to the Court of Justice’s ruling may seem extreme, but for smaller businesses it may end up being the most economically rational response if the cost of compliance is greater than the benefit of doing business in the EU.

None of these options are ideal and each one presents significant challenges and uncertainty for U.S. companies. Not only will the initial expense of updating technological systems and business processes be expensive and time consuming, but the potential of increased oversight, auditing, and regulatory action imposed by EU Data Commissions will also result in a rise in the daily operating costs of any company that transfers personal data from the EU to the U.S.

The full extent of the damage caused by the demise of Safe Harbor remains unknown, but one thing is certain: this change in data relations between the U.S. and the EU signals a substantial increase in the cost of doing business in and with the EU.

 

Debbie Hinck 1 2014Deborah J. Hinck is a Colorado native who has recently adopted Boston, Massachusetts as home. She received her B.S. with a double major in Electrical Computer Engineering and Applied Mathematics from the University of Colorado and her M.A. in Communications from the University of Washington. Deborah is expected to graduate from Boston University with a Juris Doctor in Spring 2017. She is interested in technology law and policy, including intellectual property, digital privacy, and digital security. Deborah hopes to contribute in these areas in the future.

But Do They Have Standing? The House and the ACA

July 30th, 2015 in Analysis, Federal Legislation, Legislation in Court

Over the last year a considerable amount of ink and column inches have been spent on the House of Representatives of the United States’ (the House) lawsuit over President Obama’s decision do delay enforcing portions of the Affordable Care Act (ACA). At least a portion of that ink was spent on the absurdity of a lawsuit to enforce a provision of a law that the Speaker reportedly hates that the House has voted to repeal multiple times. But additional tweets, posts, and columns were dedicated to the more concrete legal question in the suit: Does the House of Representatives have standing to sue the President for failure to enforce the law? Or, is the Speaker wasting valuable taxpayers money as well as judicial and administrative resources on a political stunt.

After it appeared the suit might go away because the plaintiff lacked council, it appears that an initial

Johns Hopkins Hospital Dome Baltimore, 1889

Johns Hopkins Hospital Dome
Baltimore, 1889

resolution to the question of the House’s standing may be in the works. The Administration has filed a motion to dismiss the suit based on the plaintiffs’ lack of standing.  Both sides have summited briefs in support of their position and District Court Judge Rosemary M. Collyer held a motion hearing for May 28, 2015.  Soon we will find out at least initially if the House has standing to sue the Administration.

If you are not a law student, lawyer, or a political junkie you probably have two questions. One, what is the House suing the Administration for and two what is standing? The two questions are actually significantly intertwined. First standing is the term that federal courts used to describe who is able to bring a suit before them by determining what constitutes a case or a controversy. The constitution only permits federal courts to hear “cases and controversies.” Absent a case or controversy federal courts lack the power to decide the issues of a case.

Typically standing requires first that the plaintiff suffers a particularized injury-in-fact, not a generalized grievance suffered by everyone. Second, that the injury must be “fairly traceable to the defendant’s allegedly unlawful conduct.” Finally, the injury must be redressable by the relief requested by the plaintiff.  However, the Supreme Court has allowed members of legislatures to also assert special institutional injuries, if the challenged action amounts to the nullification of a their vote. The Court articulated the standard in Raines v. Byrd. In Raines Members of Congress filed a suit challenging the constitutionality of the recently enacted line item veto. The Court found that the injury did not amount to vote nullification, but in doing so described what would count as such nullify a law or appropriation that has been properly enacted or the enforcement of a law that has been improperly enacted. The Court also gave significant weight Members in Raines retained their legislative power and could repeal the act in question if they had the political support.

In the suit pending before the Judge Collyer the House asserts that the Administration’s decision to delay enforcing the employer mandate portion of the ACA, and the manner in which the Administration provided for cost sharing reductions under the ACA has injured the House itself. The House’s complaint alleges  “[t]he actions of the defendants… injure the House by, among other things, usurping its Article I legislative authority.” This very deftly is an attempt to avoid normal standing requirement by asserting the special type of institutional injury the Court recognized in Raines. However, like the plaintiffs in Raines the House’s alleged injury falls short of the threshold of vote nullification.

Administration has done nothing to nullify a congressional vote under the standard articulated in Raines.  As the Court described in vote nullification is a very specific institutional injury. The House seeks to extend this narrow injury to any administration of the law with which it disagrees. This would not only be a massive expansion of what constitutes and injury for standing, but would ultimately endanger the Presidents authority to administer the law under the Article II take care clause.

The House also maintains the same type of legislative remedies that the plaintiffs in Raines had at their disposal. In fact, because in this action the House itself is the plaintiff rather than a small collection of members in Raines it maintains functionally more substantial legislative remedies. Article I provides Congress with the ability to enact legislation, the power to control appropriations, and in the most extreme cases to bring official charges of impeachment. Any and all of these powers provide an avenue for redress that is more appropriate than involving the court system. In fact the House has utilized its legislative power to try to repeal the ACA and restrict funding for the administration of the law. The only legislative power the Speaker Boherner is unwilling to pursue is impeachment, not because the House has cannot do so, but because of the political consequences.

The Houses argument for standing also seems to rely on an assumption that if it is not granted standing then the constitutional dispute “must be resolved by the fortunes of politics.”  The relative merits of political or judicial resolution of constitutional issues notwithstanding (that would take another blog post to tackle… or an entire book), this argument relies on two incorrect assumptions; that private parties lack standing to challenge the action and that the requirements of standing can be waived by courts in the interest of public policy. Neither of these assumptions is true.

It is easy to imagine how another party having standing to challenge the Administrations actions. Any person whose employer has chosen not to provide health insurance to her would have standing.  This uninsured individual would have to show that their employer’s decision not to offer health insurance was caused by the Administration’s failure to enforce the penalty. While this may be a difficult case to prove, it is completely conceptually possible and perhaps even likely to happen in the future.

The second assumption is that the standing requirement is a policy choice and not a constitutional constraint on federal courts ability to hear cases. While my personal beliefs are to the contrary, a strong argument could be made the allowing the House to have standing to bring actions such as this would be a beneficial public policy.  But the federal courts are not able to make that choice. The Supreme Court has repeatedly emphasized that the standing requirements are based on the constitution not public policy. Granting an exception in this case on a public policy rational would overturn a century of case law concerning the standing requirement.

It is extremely difficult for Congress to ever meet standing requirements, and the House has almost certainly not met them in this lawsuit.  The entire endeavor has been a phenomenal waste of taxpayer money, judicial resources, and all of the time and ink that we have spent covering it. But maybe that was the House’s intention all along; grabbing favorable newspaper headlines not judicial decisions.
1436458956 Timothy Murphy anticipates graduating from Boston University School of Law in May 2016 with a concentration in Health Law.

Analyzing Indiana’s Religious Freedom Restoration Act

July 24th, 2015 in Legislation in Court, State Legislation

Within the past few months, Indiana’s Religious Freedom Restoration Act (RFRA), Senate Bill 101, has generated a lot of controversy. Governor Mike Pence signed the contentious bill into law on March 26th. This move was met with simultaneous outrage and praise. According to Time, the supporters characterize the bill as a measure to “make sure the government doesn’t impinge on the religious liberty of Hoosiers.” However, critics claim it is a thinly veiled attempt to make discrimination against the LGBTQ population based on religious belief a legal practice. Acknowledging the controversy a week later, Governor Pence signed a revision to the Religious Freedom Restoration Act, Senate Enrolled Act 50, which made it explicit that the law did not allow for discrimination based on traditionally protected classes. This post will analyze the criticisms aimed at the bill as originally signed by Governor Pence, consider whether the fix passed by the legislature addresses the critics concerns, and explore any issues that remaining in the updated legislation.

The Problem

Indiana passed the RFRA with intentions to protect the citizens of Indiana from the government

Indiana Statehouse Indianapolis, 1888

Indiana Statehouse
Indianapolis, 1888

infringing on their religious beliefs. The RFRA provides that “a governmental entity may not substantially burden a person’s exercise of religion . . . .” unless government shows that the burden is “in furtherance of a compelling governmental interest” and “is the least restrictive means of furthering that compelling governmental interest.” Not so bad, right? Indiana isn’t the only state to have a RFRA. And in fact, it appears to be almost identical with the federal RFRA. However, there are several important differences between the acts, and therein lies the problem. While the substantial burden test in the two laws (furtherance of a compelling governmental interest by the least restrictive means) is identical, Indiana’s law allows “[a] person whose exercise of religion has been substantially burdened, or is likely to be substantially burdened . . . may assert the violation . . . as a claim or defense . . . regardless of whether the state or any other governmental entity is a party to the proceeding.” (Emphasis added to show a departure from the federal RFRA). Furthermore, the federal RFRA provides that a “person” may use the RFRA as a claim or defense, however, the Indiana RFRA expands that definition to include individuals, churches and religious groups, and even corporations. As Garrett Epps at The Atlantic correctly points out, this difference in language is quite significant and is at the heart of the situation that critics of the bill fear: discrimination from a store owner against… anyone.

Epps points out two cases worth mentioning: Elane Photography v. Willock and Burwell v. Hobby Lobby Stores, Inc. First, in Elane Photography, a same sex couple sued a photography company because the company only photographed traditional weddings due to the owner’s religious convictions. The photography company argued that New Mexico had enacted a RFRA which allowed them to invoke the RFRA as a defense against the claim. However, the Supreme Court of New Mexico disagreed. In what appears to be a straight forward issue in the case (the issue was treated in about one page in the majority opinion), the court held that the RFRA “was not meant to apply in suits between private litigants,” only suits where the government was a party. Indiana’s law purposefully contains language (“regardless of whether the state or any other governmental entity is a party to the proceeding”) explicitly designed to prevent the courts in Indiana from reaching a conclusion like the one reached in Elane Photography. Second, in Hobby Lobby, the Supreme Court held that for-profit closely held corporations can make use of the federal RFRA. In Indiana’s RFRA language, it is made clear that any corporation, not just a closely held one, can utilize the state’s RFRA.

The Solution

            After Governor Pence signed Indiana’s RFRA into law, there was a huge public backlash against the legislature and the state of Indiana. After much public pressure, the legislature passed a “fix” to the RFRA which the governor signed into law. This fix does two things. First, it makes it explicit that the RFRA is not to be used by a “provider” as a basis or as defense to “refus[ing] to offer or provide services, facilities, use of public accommodations, goods, employment, or housing to any member . . . of the general public on the basis of race, color, religion, ancestry, age, national origin, disability, sex, sexual orientation, gender identity, or United States military service. . . .” It accomplishes this feat by adding the preceding language as a section of the bill. Second, it clarifies that that “provider” includes individuals and businesses but not churches, religious organizations, or religious officials acting on in a religious function. The definition is significant because it essentially allows religious institutions to refuse to offer services based on one of the protected classes named earlier in the legislation fix. Governor Pence claims that by signing this fix, he makes it clear that he has Indiana’s best interest in mind while passing this bill and that he hopes “every person feels welcome and respected [in Indiana] . . . .” Some, like Angie’s List CEO, think that the fix “is insufficient,” while others argue that the fix goes too far and “amounts to wholesale repeal of the [RFRA].” The reality is somewhere in the middle.

Governor Pence and the Indiana’s legislature’s “fix” does address the civil rights concerns, but probably does not do enough to carry out the intended purpose of the law and is very unclear. First, if the Indiana legislature really wanted to fix the law in a way that avoids these problems, they have not only a federal model, but statutes in 19 other states (save Texas and Arkansas which suffer from similar defects as Indiana’s law) to borrow from without wading into territory that could allow; or even encourage, discrimination. Rather than amending the engrossed bill with a clause that prevents the RFRA from being used as an affirmative defense to discrimination, the state legislature should have owned up to its mistake, started from scratch, and used clearer, more moderate language.

Second, the fix still doesn’t address a fundamental logical flaw with the RFRA. While the fix does outlaw RFRA fueled discrimination per se, a private party can still use this law when sued by another private party. Removing this clause would still achieve the religious freedom that Indiana is looking to give by protecting citizens from governmental interference with their exercise of religion while also not unfairly infringing on the rights of others in the name of personal belief.

1436370540Michael Whittington is from Arlington, Texas and received his philosophy degree from the University of Texas at Arlington. He is set to graduate from Boston University School of Law with a Juris Doctor in Spring of 2016. Michael hopes to work with legislation in some capacity regardless of the path his career takes after law school.

Take Two: Texas’s Voting ID Act is Challenged Again

July 24th, 2015 in Federal Legislation, Legislation in Court, State Legislation

A Texas voter identification law is back in the spotlight after the Fifth Circuit Court of Appeals recently  heard arguments on whether the law is unconstitutional and violates the Voting Rights Act by discriminating against low income and minority voters.

The 2011 law requires voters to show photo identification (there are a few, limited exceptions) when voting in person. The law requires a voter to present one of the seven forms of approved photo ID when voting and the ID must be current or expired for no more than 60 days.  Further, the name on the ID must be exactly the same or “substantially similar” to the registered voter name; otherwise the voter can only cast a provisional ballot and must return within six days of the election to further verify his/her identity. Voters without an acceptable photo ID can apply for an election identification certificate, but to obtain the certificate they must verify their identity with additional documents, which cost money. The current law affects more than 600,000 Texan voters who lack an approved ID.

Texas’s voter ID law is now one of the strictest in the country and part of a growing trend by states,

Texas State Capitol Austin 1888

Texas State Capitol
Austin 1888

which proponents argue is necessary to prevent voter fraud. Currently, 32 states have voter identification laws in force. These include both photo ID (16 states) and non-photo ID (16 states), with a variety of requirements and limitations. Opponents, often Democratic leaning groups, argue that the laws target the poor, minorities, college students, and other groups who tend to vote for Democratic candidates.

In March 2012, the Department of Justice (DoJ) prevented the law from taking effect under the Voting Rights Act. Sections 4(b) and 5 of this 1965 law require “covered jurisdictions,” which includes Texas, to preclear any changes to their voting laws before they can go into effect. A covered state must prove the voting change does not have the purpose or effect of denying the right to vote based on race, color, or membership in a language minority group. The DoJ determined that Texas failed to show that the law would not have a discriminatory effect on Hispanics and other minorities or that there is a significant voter impersonation problem which the law seeks to correct. A unanimous three-judge panel of the D.C. Circuit Court confirmed the department’s conclusions that Texas law violated the Voting Rights Act because it would impose “strict, unforgiving burdens on the poor, and racial minorities.” In June 2013, however, the U.S. Supreme Court struck down  the Voting Rights Act’s coverage formula (Section 4(b)), which made the preclearance requirement (Section 5) moot.  As a result of Shelby County, the Supreme Court vacated  the district court’s ruling, allowing the law to go into effect.

In August 2013, the DoJ sued Texas again, but this time argued that the Texas law violates Section 2 of the Voting Rights Act, which applies to non-preclearance states and prevents the same discrimination as Section 5. On October 9, 2014, a district court judge agreed and found the law unconstitutional. The 147-page opinion states that the law “has an impermissible discriminatory effect against Hispanics and African-Americans, and was imposed with an unconstitutional discriminatory purpose.” The court further held that the law creates “an unconstitutional poll tax.”  The Fifth Circuit, however, permitted the law to remain in effect, which the Supreme Court affirmed, due to the timing of an upcoming election.

The fate of the law is now with the Fifth Circuit, which will determine whether the law is discriminatory. Despite being among the most conservative circuits in the nation, it is likely the Fifth Circuit will uphold the lower court’s decision invalidating the law because the state presented little evidence showing the need for the law or disproving that the law was enacted for discriminatory reasons. In-person voter fraud is rare and there was little evidence showing requiring a photo ID would prevent this. In the ten years preceding the Texas law, during which 20 million votes were cast, only two people were convicted of in-person voter fraud. The state claimed the law would help prevent people from voting under deceased voters’ names, but failed to present any evidence showing this actually occurs. Further, mail-in voter fraud is more prevalent and the law allows individuals without a photo ID to vote this way.

During oral argument, the court criticized the state for relying on the fact that no smoking gun exists to prove the law was enacted with a discriminatory purpose. Judge Haynes, a Republican appointee, noted that requiring the plaintiff to provide a written or oral statement that says the law was enacted with the purpose to discriminate is unlikely and unrealistic. Rather, plaintiffs can prove discrimination with strong circumstantial evidence. The state argued that because there is no evidence minorities were unable to vote, the law was not discriminatory. However, if the law was enacted with a discriminatory purpose the number of people affected by it does not matter. It is still unconstitutional.

Finally, the underlying documents required to obtain the “free” election identification certificate have a cost and this creates a plausible argument that the state is establishing a poll tax, which is unconstitutional. The court did also discussed remanding the case back to the lower court for further consideration to look at the law in light of newly filed bills that would expand the acceptable forms of photo ID or to look at the last election, which was conducted under the law, to get an idea of the law's impact.

Even though the current law’s future is uncertain, the Texas Legislature recently considered additional voting ID requirements. The proposed legislation, House Bill 1096 introduced by Rep. Jim Murphy (R-Houston), would require the address on a voter’s ID to match their voter registration address. Rep. Murphy claims the measure will ensure that voters will reside and vote in the same precinct. Opponents of the law argue this is another measure to target and suppress poor, minority, elderly and disabled voters. The bill was approved by the House on May 8 and sent to the Senate for consideration. The Senate Committee on State Affairs held a public hearing on May 18, which included supporting testimony from the Harris County Republican Party Ballot Security Committee and opposing testimony from the Texas NAACP and the Texas Democratic Party. The committee reported the bill favorably (voting 7-2) to the Senate. The bill was scheduled for a full Senate vote before the legislative session ended, but was ultimately never voted on and died.

When the Fifth Circuit rules on this matter, the decision should serve as a road map for the many other states who have changed or are planning to change their voting laws on the grounds of preventing fraud.

 

1436458928Amanda Hesse is from Princeton, New Jersey and graduated from American University with a dual major in Law & Society and Public Communication. She anticipates graduating from Boston University School of Law with a Juris Doctor in Spring 2016. During Summer 2015, Amanda will intern at the Southern Poverty Law Center in Jackson, Mississippi, where she will focus on juvenile justice and prison conditions reform.

Unconstitutional Budget Cuts – the Illinois Pension Controversy

July 10th, 2015 in Analysis, Budget & Appropriations, Legislation in Court, State Legislation

Across the country, state governments are facing financial crises and seeking to devise effective ways of saving costs. In Illinois, lawmakers have recently found themselves in conflict with the Illinois Supreme Court over a 2013 budget-related pension reform law. On May 8, 2015, the Court found the law unconstitutional, compelling legislators to go back to the drawing board and find alternative means of balancing the budget.

Illinois State Capitol Springfield 1868

Illinois State Capitol
Springfield 1868

With the aim to reduce expenditures, the 2012-2013 Legislature passed  “An act concerning public employee benefits,” meant to address “atypically large debts and structural budgetary imbalances” and an extremely low—and potentially falling— credit rating.  Also, the state’s public pension system was considered the most underfunded of any in the United States. The General Assembly expressed hope that the Act would “lead to fiscal stability for the State and its pension systems.”  The key provisions of the Act were:

1) terminate automatic, compounded annual cost-of-living increases for retired persons;

2) increase the retirement age for current public employees; and

3) reduce the salary amount that can be used for the calculation of pension benefits.

The Illinois State Constitution, however, includes specific pension provisions for public employees; Article 13, Section 5 describes the pensions in Illinois as a binding contract "which shall not be diminished or impaired.”

Various employee groups, retirees, and unions challenged the Act by asserting their constitutional rights. The Illinois Retired Teachers Association sued first in December, 2013, with a labor coalition named We Are One joining in the litigation a month later. The labor coalition boasted over 621,000 members, including: the Service Employees International Union (SEIU) Local 73, the Illinois AFL-CIO, the Illinois Federation of Teachers, the Illinois Nurses Association, the Illinois Police Benevolent and Protective Association, the Associated Fire Fighters of Illinois, and others. The We Are One complaint asserted that the Act violated the Illinois Constitution’s Pensions Clause and resulted in "an unconstitutional diminishment and impairment of the pension amount a member receives,” as well as violations of the Constitution’s Contracts Clause and Takings Clause.

After the Illinois Circuit Court found the pension law to be unconstitutional, the State appealed to the Illinois Supreme Court. Several amicus curae, including those submitted by professors specializing in constitutional and contract law, social service providers and the City of Chicago, supported the law and argued in favor of its legitimacy. Like the state, they argued the state’s sovereign police power enabled it to reduce the pension benefits as a way of addressing the current budget emergency.

The Illinois Supreme Court, however, unanimously voted to strike down the pension reform law. The court found that the Act violated the Pension Clause despite the financial difficulty placed upon the state with the public pension program:

“For as long as there have been public pension systems in Illinois, there has been tension between the government’s responsibility for funding those systems, on the one hand, and the costs of supporting governmental programs and providing governmental services, on the other.” Nevertheless, the court firmly concluded that the law was unconstitutional, writing that “there is simply no way that the annuity reduction provisions in Public Act 98-599 can be reconciled with the rights and protections established by the people of Illinois when they ratified the Illinois Constitution of 1970 and its pension protection clause.”

The court was also unconvinced by the State’s primary affirmative defense – that the pension reform law was a valid exercise of the State’s police power in a state of emergency.  Citing the cyclical nature of the economy, the Court asserted that the State has faced fiscal struggle before and cannot lower or terminate expenditures that the Illinois Constitution protects. As one potential alternative, lawmakers have submitted legislation to confront the state debt by amending the Illinois Municipal Code. This law would allow cities in Illinois to file Chapter 9 bankruptcy petitions under the national Bankruptcy Code.

The Illinois pension reform controversy may hold an important lesson for other legislatures struggling to balance the budget, especially since six other states have constitutional protections for public pensions. If the Illinois Supreme Court’s decision is any indication of how other state courts might react, legislators would be advised to keep state constitutionality in mind when developing budget-related bills; the judiciary will likely not be receptive to economic arguments when used as justification for violating an unambiguous constitutional clause. Facing such provisions, lawmakers may ultimately be drawn to amending the state constitution as a strategy, which Illinois Governor Rauner reportedly plans to pursue in the next year.

1436458928-3Chloe Noonan is from Monterey, California and graduated from Sarah Lawrence College with concentrations in Modern Languages and International Studies. She anticipates graduating from Boston University School of Law with a Juris Doctor in Spring 2016. During Summer 2015, Chloe will intern at the Lawyers’ Committee for Better Housing in Chicago, Illinois, where she plans to focus on affordable housing preservation and eviction defense for low-income tenants.

Déjà Vu for a Computer Programmer: A New York Statute’s Language Saves Him Again

July 10th, 2015 in Federal Legislation, Legislation in Court, News, State Legislation

A former Goldman Sachs computer programmer who had a federal jury conviction for illegally taking proprietary computer code from his employer overturned in 2012 was found guilty again—only to have the conviction reversed again by a judge. The verdict came in a New York state prosecution, People v. Aleynikov. This high profile case not only inspired a character in Michael Lewis’s book Flash Boys, but it also provides an interesting example of how a statute’s text can play a pivotal role in a case’s outcome.

According to the facts in his federal appeal, Sergey Aleynikov worked as a computer programmer for

New York State Capitol Albany 1899

New York State Capitol
Albany 1899

Goldman Sachs from 2007-2009 where he developed complicated code for the company’s high frequency trading (HFT) system. He left the company in June 2009 to go work for a start-up trading company. However, on his last day, he uploaded more than 500,000 lines of code from Goldman Sachs’ HFT system to a server in Germany. When he arrived home, he downloaded the code to this personal computer and copied some of the files to other devices. On July 2, 2009, he traveled to attend meetings at his new company and took a flash drive with him containing some of the source code. The next day he was arrested. He was charged with violating the federal Economic Espionage Act (EEA) and the National Stolen Property Act (NSPA). After only a few hours of deliberation, a jury found Aleynikov guilty of violating both acts. However, on appeal, the Second Circuit reversed both verdicts and held that Aleynikov’s behavior did not violate either the EEA or the NSPA.

What caused the reversal despite a seemingly confident jury? The language of both statutes. Aleynikov argued that the computer code was not a “product” that was “produced for or placed in interstate commerce” as required by the EEA and that the computer code was not a “good” or “ware” under the NSPA because it was a purely intangible product. The Second Circuit agreed and adopted these fairly narrow readings of both statutes when it determined that Aleynikov’s behavior did not violate either act.

Starting with the EEA charge, the court did not resolve the question of whether intangible computer code is a “product” because it determined that Goldman’s HFT system was not “produced for” or “placed in” interstate commerce (discussion at U.S. v. Aleynikov, 676 F.3d 71 at 82). The court read these words as requirements for a person to be found guilty of violating the EEA after relying on both the act’s plain language and legislative history (discussion at pages 79-80). The court ultimately held that an internally used computer program that a company has no intention of selling was not “produced for” or “placed in” interstate commerce (discussion at page 82).

The court did address whether computer code qualified as a “good” when it looked at the NSPA because the term is undefined in the statute (discussion at page 76). The court heavily relied on precedent, including the Supreme Court’s decision in Dowling v. United States, to determine that a “good” must be a tangible piece of property taken over state lines and because code is purely intangible it does not fall under the NSPA (discussion at page 77). In Dowling, the Supreme Court held that the NSPA “clearly...contemplate[s] a physical identity between the items unlawfully obtained and those eventually transported.” (discussion at Dowling v. U.S., 473 U.S. 207 page 216). The Second Circuit also relied on similar decisions by the Tenth, Seventh, and First Circuits to conclude the NSPA does not cover the theft of intangible things and therefore, Aleynikov is not guilty of violating the act. (discussion at U.S. v. Aleynikov, 676 F.3d 71 pages 77-78).

However, the story does not end there. After his federal charges were overturned, the Manhattan District Attorney’s office decided to prosecute Aleynikov under state law. Aleynikov was charged with two counts of unlawful use of secret scientific material and one count of unlawful duplication of computer related material. The jury recently issued a split verdict and found Aleynikov guilty on one of the secret scientific material charges. The jury could not reach a decision on the second scientific material charge, and acquitted him on the duplication charge (which is a bit odd since both charges require a finding that the protected material was reproduced). For the purposes of a potential appeal, it is important to focus on the secret scientific material statute to determine whether it is likely an appeals court will overturn Aleynikov’s guilty verdict.

The statute states a “person is guilty of unlawful use of secret scientific material when...he makes a tangible reproduction or representation of such secret scientific material by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material.” (emphasis added). Similar to the federal case, because the New York statute fails to define “tangible” or whether computer code qualifies as a tangible item, the jury was required to make this decision to determine whether Aleynikov’s transferring of source code to a flash drive violated the law. The jury spent over a week deliberating and had to have the jury instructions re-read several times before the instructions were eventually provided in writing. The jury also sent the presiding justice over a dozen notes asking for clarity on the meaning of the law, which suggested the statute is unclear.  As the New York Times reported, even the justice who presided over the case expressed concern about whether Aleynikov’s actions fell within the statute. Despite the long deliberation and some odd twists and turns (including avocadogate), the jury ultimately decided Aleynikov violated the law. In July, 2015, however,  the conviction was overturned by the New York State Supreme Court. Justice Daniel Conviser said prosecutors “did not prove [Aleynikov] committed this particular obscure crime.”

This case is interesting because it highlights the difficulty jurors and judges face when interpreting statutes—especially in light of advancing technology. The federal and state statutes were drafted prior to the creation of much of the technology involved in this case. After the Second Circuit’s ruling on the EEA, Congress actually amended the statute’s language.

Given the judge’s disagreement with the jury in this case, the New York statute’s language is ambiguous and clearly a barrier to prosecutors bringing future criminal charges.  Like Congress, the New York Legislature will have to make amendments to the current statutes, or create a new statute that reflects current technology—and hope the language remains relevant for more than a few months.

 

1436458928  Amanda Hesse is from Princeton, New Jersey and graduated from American University with a dual major in Law & Society and Public Communication. She anticipates graduating from Boston University School of Law with a Juris Doctor in Spring 2016. During Summer 2015, Amanda will intern at the Southern Poverty Law Center in Jackson, Mississippi, where she will focus on juvenile justice and prison conditions reform.

A Win for Common Sense, A Loss for Agency Deference: ACLU v. Clapper

July 8th, 2015 in Analysis, Federal Legislation, Legislation in Court

Edward Snowden shocked the world when he leaked highly classified and confidential information in June 2013 regarding government authorized surveillance of telephone calls in the United States. The American Civil Liberties Union then filed suit against James Clapper, the Director of National Intelligence. The district court returned a verdict in favor of the government concluding that “the NSA’s bulk telephony

Texas State Capitol Austin 1888

Texas State Capitol
Austin 1888

metadata collection program is lawful.” Of course, the ACLU appealed. On May 7th 2015, the 2nd Circuit Court of Appeals reversed the district court’s decision and concluded that “the program exceeds the scope of what Congress has authorized. . . .” Among the many administrative law issues that the court considered, the court debated and discussed the scope of the term “relevant” as used in § 215 of the PATRIOT Act in relation to the breadth of the metadata collection program.

The Metadata Program and § 215

            According to the appellate court opinion, the metadata program was a sprawling endeavor by the government to require telephone companies to provide “‘on an ongoing daily basis’” information to the NSA regarding calls where at least one party was located in the United States. Section 215 authorizes the government to request “an order requiring the production of any tangible things . . .” to investigate terrorism. Further, the law (50 U.S.C § 1861) stipulates that the request should “include a statement of facts . . . that the tangible things are relevant to the authorized investigation . . . .” (emphasis added). One question before the court was whether the data gathered from NSA’s very broad metadata collection program constituted something that was relevant to an authorized investigation.

The Arguments on Authorization

            One of the cruxes of the opinion is whether Congress authorized the NSA to act in such a broad fashion. If the court determined that “relevant” included the NSA’s broad data gathering program, then the NSA would be acting within the bounds that Congress laid out for them in § 215. The government contended that relevance “is an extremely generous standard.” The court noted that the government compares the standard of relevance meant to be used in this context to the standard of relevance used in grand jury investigations. That is to say the government could require dissemination of records in order to search for the information that would help prevent future terrorist attacks. The court observed that this analogy is even supported by the legislative history behind § 215. On the other side, the ACLU argued that “relevance is not an unlimited concept, and that the government’s own use (or non-use) of the records obtained demonstrates that most of the records sought are not relevant to any particular investigation.” They asserted that the government is not seeking the records “to review them in search of evidence bearing on a particular subject . . .” but instead wants create a “vast data bank, to be kept in reserve and queried if and when some particular set of records might be relevant to a particular investigation.” Ultimately, the court concluded that “relevant” had a more narrow definition than the government argued, therefore the NSA’s metadata collection program is unlawful.

The Courts Careful Balancing Act

Despite compelling arguments from the government, the court reached the right conclusion. The court recognized that the government used legislative history effectively in its argument and references discussion from the 2006 PATRIOT Act reauthorization debate where Senator Kyl likened the scope of the § 215 relevance standard to the standard that has been effective during a grand jury investigation while prosecuting other crimes. However, the court ultimately used this legislative history and testimony against the government. The judge notes that according to Morissette v. United States, when Congress acts to enact a term of art into law that has a commonly recognized legal meaning, like relevance in this case, then it also adopts all of the ideas that have developed and defined that law over the years. The case holds that there is an important distinction between a specific act investigated by the grand jury and the broad demands of the government in requesting telephone metadata. Further, the court pointed out that this metadata bank isn’t even useful until the government has a reason to search through it, which is fundamentally different from the traditional use of document gathering in a grand jury setting. This is a good use of legislative history by the court because, while the government did have clear intentions of adopting this standard, their use of this floor debate in construing the term “relevant” cuts against them under the Morissette standard.

Additionally, the court utilized the dictionary definition to interpret the statute. The court reasoned that the government reads the term “authorized investigation” out of § 215 by gathering the information and then using it when a need arises. The Oxford English Dictionary defines “investigate” as: “[t]o search or inquire into; to examine (a matter) systematically or in detail; to make an inquiry or examination into.” The court found the definition of “investigate” contemplates the specificity of a particular investigation. This is a good use of textualism as a cannon of statutory interpretation. It is the words in the statute that were enacted, not the overarching policy goals that the public did not even know about until they were controversially leaked. Based on this court’s reasoning, the text of the statute does not support an overbroad metadata collection program and, therefore, the NSA’s metadata program exceeded the scope of relevant as used in § 215.

A Win for Common Sense, A Loss for Agency Deference

While the term “relevant” was construed correctly, and the construction is likely to sit well with the general public, there is an argument to be made that the court should not have interfered with what the NSA clearly thought was a proper construction of the term. The NSA was tasked with implementing measures to combat terrorism. It then designed a program and followed the proper procedures to obtain authorization to carry out the plan. Now the program is getting all kinds of negative backlash. This seems to run counter to the theory of agency deference due to its place in the Constitutional order (Chevron) and agency expertise (Mead). However, the court walked a tight rope and made good use of the traditional tools of statutory interpretation in deciding that the government’s program was over broad given the statute use of the term “relevant.” As such, the Second Circuit reached the correct conclusion: the NSA was not authorized to conduct this broad metadata collection because the information was not relevant to an investigation.

Now that Congress has reformed the collection of metadata through the USA FREEDOM Act, the statutory interpretation in ACLU v. Clapper may be §215’s lasting legacy.

1436370540Michael Whittington is from Arlington, Texas and received his philosophy degree from the University of Texas at Arlington. He is set to graduate from Boston University School of Law with a Juris Doctor in Spring of 2016. Michael hopes to work with legislation in some capacity regardless of the path his career takes after law school.

How Halbig v. Burwell Ruined Obamacare

March 2nd, 2015 in Federal Legislation, Legislation in Court, Opinion

South Carolina State House Columbia, 1855-1875

South Carolina State House
Columbia, 1855-1875

The Affordable Care Act should have been a win. It is an important bill with a pressing human rights agenda: to make healthcare available to all despite economic status. It was a bill full of promise and hope. It could advance our country and our political landscape. It could free our healthcare system from the tyranny of insurance companies. It could display to the rest of the world that we are progressive human beings and not merely capitalists bent on increasing our economic superiority at the cost of our own citizens. It was Obama’s signature bill, and a rare realization of lofty campaign promises. Then came Halbig v. Burwell, and all that optimism pretty much went down the drain. Instead of fulfilling its constitutionally prescribed role as objective arbiter, the D.C. Circuit Court displayed a galling about of political acumen, jumping headfirst into the ideological warfare of the capital.

Under the Affordable Care Act (the "ACA"), the health care system in America was restructured and transformed. All Americans were, for the first time, promised health care coverage despite socio-economic status or other restrictions, such as pre-existing conditions. Insurance companies no longer had unbridled power to determine who had access to coverage and, therefore, who could receive affordable medical assistance. Instead, individual citizens could secure medical insurance through government-established insurance exchanges. By offering subsidized insurance to those beneath a certain economic threshold, these exchanges attempted to deliver on the ACA's promise to provide insurance to those who previously could not afford to purchase it.

Such subsidies are essential to the overall success of the ACA, as they form one of the three foundational pegs upon which the ACA was built. These three core aspects of the ACA are: (1) a requirement that insurance companies stop denying coverage to those with pre-existing conditions; (2) the individual mandate, which requires all Americans to receive health insurance through either a private company or a government exchange; and (3) subsidies to make insurance affordable to those who otherwise could not afford it. Without any one of these parts, the ACA would crumble. The system works like this: in order to insure that insurance companies give insurance to those with pre-existing conditions without charging them more than their healthy counterparts, those healthy individuals must be induced to purchase coverage through the individual mandate, and a subsidy must be granted to assist lower-income individuals upon whom the individual mandate could be a hardship. The ACA will, therefore, collapse upon itself if subsidies are not granted to low income individuals.

Of course, the ACA was destined to be politicized. The current DC climate is hyperbolically divided. The difficult reality is that there is no room on the Hill for idealist legislation. All that currently matters in Washington is the civil war between republicans and democrats. The real problem arose when republicans decided to strike against the ACA through the judicial system, thereby highlighting how much our supposedly objective system of justice truly acts as a political arm of the other, stronger branches of government. Halbig v. Burwell perfectly represents the depressing state of the modern court: big-name cases aren't decided on the strength of the issues but are predestined for a particular verdict based on the current political landscape and the personal beliefs of the judges hearing the case. Was anyone really surprised when a three-judge panel comprised of two conservatives and one liberal released a 2-1 decision practically crippling the ACA? How could they be?

To be fair, the legislative interpretation held forth by Judges Griffith and Randolph isn't entirely ridiculous. The plain text of the ACA does seem to draw a distinction between insurance exchanges established by the state and those created instead by the federal government, and the provision concerning subsidies could therefore only refer to those insurances established by the states themselves. My difficulty with this reading of the ACA lies with the very foundation of textualism (a pretty purely conservative form of statutory interpretation) and the ways in which it contradicts the responsibilities I feel courts have when examining a piece of legislation.

First, here are some things judges shouldn't do: interpret a statute based on their own political beliefs; cherry-pick whatever method of statutory interpretation that gives them the result they want; read a statute in a way that blatantly contradicts the legislature's purpose for passing it.

And some things judges should do: interpret a statute in a truly objective manner; consistently use one form of statutory interpretation, preferably not strict textualism; read a statute in the way that is most consistent with the legislative intent while also carefully considering whether the statute violates the Constitution (a side issue which deserves a blog post of its own: the absurd inanity of the doctrine of constitutional avoidance).

Looked at with these standards in mind, Halbig v. Burwell is almost a complete disaster. Through Halbig, the D.C. Circuit managed not only to condone but also embrace the idea that courts are political weapons. They aren't fooling anybody with their textualist jargon because textualism itself is little more than a smokescreen for the conservative agenda. If the judicial system operated as a truly objective body, Halbig would read as a very different opinion (indeed, it would read instead as the much preferable King v. Burwell, decided mere hours after Halbig). I reiterate: courts should serve as impartial bodies that ensure statutes are executed in accordance with legislative purpose without violating the Constitution. Halbig, therefore, is a slam-dunk for the government. The entirety of the ACA crumbles if federally established exchanges cannot grant subsidies. Congress knew this when it drafted the statute. The D.C. Circuit judges knew this when they heard the case. It is indisputable that finding against the government is effectively vetoing the ACA, and it is unacceptable for a court to possess this sort of power, particularly a court that feigns objectivity and political insulation.

My proposed solution is simple. Cases such as Halbig should be decided by examining the history around the statute as well as the purpose of the bill. There is a lot of commentary on the slippery nature of legislative history and the theoretical problems identifying legislative purpose, but all of this criticism misses the point. Even with its complications, purposivism is the best method of statutory interpretation because it leaves the political act of legislating with Congress and away from the judicial branch, which has no business making policy decisions masked as adjudicative ones. Particularly in Halbig, there can be no doubt as to the legislative purpose, so why are we allowing our judges to pretend otherwise and violate their duties and responsibilities with thinly veiled acts of partisanship? Why do we insist on having faith in our highest courts to objectively reach fair decisions when they continuously prove unable to separate their political minds from their professional responsibilities?

Thanks to Halbig v. Burwell and analogous cases, the ACA is no longer a piece of legislation aimed at solving a social problem. It is a victim of the war between conservatives and liberals, and a symbol of just how degraded and deranged our entire national political system has become. The courts, which have the unique power to elevate legal discussion in this country above mere ideological rabble, have abandoned us to the politicians. Worse still, our most powerful and trusted judges have shown themselves to be nothing but politicians themselves. Wrongfully decided decisions like Halbig are found in all levels of the federal judicial system, all the way up to the Supreme Court (you need only look at a Scalia opinion to see how easy it is to forward the conservative agenda through textualism). We need to stop kidding ourselves that the judicial branch is anything more than a useful tool of the legislative and executive branches, a tool they use to re-fight battles they already lost on the floor of Congress.

When the D.C. Circuit rehears Halbig en banc, it has an opportunity to remedy its earlier mistake and uphold the ACA. I hope it does. This isn't because I'm a liberal who supports the ideals behind the ACA but because I recognize the importance of letting our legislative body legislate without interference by the judicial branch. Judges promise to uphold the law, not to destroy it, and it's about time they lived up to their promise.

Alex Forney Alex Forney is from Myrtle Beach, South Carolina and graduated from Brown University with a major in English literature.  He anticipates graduating from Boston University School of Law with a Juris Doctor in Spring 2016.  During Summer 2015, Alex will work for Ropes & Gray where he plans to focus on representing businesses in general commercial litigation.