Tag: amicus briefs

Not Everything Can Be a Federal Crime

Cato legal associate Carl DeNigris co-authored this blogpost.

Over the last few decades, the number of federal crimes has exploded. The U.S. criminal code has grown so large and so expansive that no one is exactly sure how many federal crimes are actually on the books, with estimates ranging from 4,000 to 300,000. As Justice Scalia has noted, “It should be no surprise that as the volume increases, so do the number of imprecise laws.”

Many individuals and organizations from across the ideological spectrum have voiced concern over this growing trend, recognizing that broadly defined crimes lack the clarity traditionally required before depriving citizens of their liberty.

The expansion of 18 U.S.C § 1001, which criminalizes the knowing and willful making of materially false statements in “any matter within the jurisdiction of” the United States, exemplifies this broadening scope. Cory King was prosecuted under this statute for making a false statement to a state official wholly unconnected to any federal agency or investigation. Yet, the Ninth Circuit held that Mr. King violated § 1001 because the subject matter of his statement was one over which a federal government agency possessed regulatory authority.

King has now asked the Supreme Court to hear his case. Cato has joined the National Association of Criminal Defense Lawyers and the Texas Public Policy Foundation on a brief supporting him and arguing that the Ninth Circuit stretched § 1001 beyond its proper jurisdictional reach. Such an unbounded interpretation risks greater over criminalization and further misuse of the federal criminal code.

Moreover, since § 1001 is a “process crime” that focuses on offenses “not against the particular person or property, but against the machinery of justice itself,” an excessively broad construction would undermine the integrity of the criminal justice system. Wider application of such crimes facilitates pretextual prosecutions, in which “the operating philosophy seems to be that, if the government cannot prosecute what it wished to penalize, it will penalize what it can prosecute.”

Such an arbitrary and far-reaching application of the criminal code – the federal criminal code, at that – has no place in a free society.

The Court will decide whether to take up King v. United States sometime this spring.

Why Is Massachusetts Trying to Ban Truthful Information About Hedge Funds?

The Massachusetts Uniform Securities Act prohibits general solicitation and advertising by anyone offering unregistered securities, ostensibly for the purpose of furthering state and federal disclosure schemes. Yet this ban on public communications has been applied so broadly that it has undermined those purported disclosure goals.  For instance, the ban has prevented individuals who have no interest in investing in any security – such as journalists, academics, students, and others who are not wealthy or financially sophisticated – from receiving truthful, non-misleading information about hedge funds.

In Bulldog Investors v. Massachusetts, an investment company maintained an interactive website that provided information about its products. Because Bulldog was not registered in Massachusetts, however, the State filed an administrative action against the firm, demanding it take down its online content.

In response, Bulldog joined a group of other firms and individuals – including some who have no interest in investing but wish to read the website information – in a lawsuit claiming that the Massachusetts ban violates their First Amendment rights. The Supreme Judicial Court of Massachusetts upheld the ban, so the plaintiffs have asked the U.S. Supreme Court to take the case.

Cato, along with the Competitive Enterprise Institute and a group of journalists and academics, has now filed an amicus brief supporting that request and arguing that the Massachusetts law is an unconstitutional ban on free speech. We show that the state’s claim that the ban furthers a larger federal regulatory scheme ignores the judgment of many federal officials (from both parties) who have concluded that such bans undermine these goals.

The state’s alleged disclosure interest is just a pretext for coercing companies to register in Massachusetts, and is therefore an unconstitutional attempt at circumventing federal preemption. But even if the ban furthers a legitimate state interest, it is so broad that it is has substantially chilled both truthful, non-misleading commercial speech and noncommercial speech alike.

A law so repugnant to the First Amendment cannot stand.

Why Corporate Speech Rights But Not Corporate Liability for Violating the ‘Law of Nations’?

Yesterday the Supreme Court heard argument in Kiobel v. Royal Dutch Petroleum, the case (which I’ve discussed before and in which Cato filed a brief) that asks whether, under the Alien Tort Statute, the “law of nations” can be applied against an entity that is not a natural person: a corporation.  As the majority of the Court seemed to think, and as I wrote in the New York Times online, the answer is no because Congress never gave U.S. courts the power to entertain lawsuits alleging corporate malfeasance involving foreign actors abroad.

It seems like a discrete enough issue – does this statute contemplate corporate liability? – one that international law junkies and the “human rights” establishment are passionate about, but not one that should have much broader purchase.  Yet the blogosphere, not least the response to my Times piece, is up in arms about organizations like Cato saying that “corporations are people” when it gets them political speech rights (Citizens United) but not when it subjects them to liability for their dastardly deeds (Kiobel).

But to make this charge – whether labeled shilling for corporations or just plain hypocrisy – is to misunderstand both Citizens United and Kiobel.

Before explaining why, let me just reiterate that I agree with the keen point that corporations are not human beings.  But that brilliant observation is legally irrelevant.  Corporations are formed by individuals as a means of exercising their constitutionally protected rights.  Corporate personhood is simply a convenient legal fiction that we use to enable that rights-pooling for all sorts of purposes.  If using the word “person” in relation to an inanimate entity is confusing or offensive, you could try calling it something else (but then nobody you’re talking to would understand you, so we’re stuck with the word, for better or worse).  In any event, as I explain in my recent law review article – “So What If Corporations Aren’t People?” – none of this changes how the law treats corporations.

Now then, I’m not saying that corporate personhood is operative for purposes of political speech but not for purposes of liability for malfeasance.  Instead, I’m clarifying two areas of law as they relate to corporate actors.  First, the First Amendment guarantees that rights-bearing individuals don’t forfeit their rights (to speak about politics or anything else) when they associate in groups, whether in corporate form or otherwise.  Second, the Alien Tort Statute – a peculiar law by which Congress gave federal courts jurisdiction over ”law of nations” violations alleged by foreigners against other foreigners – doesn’t recognize corporations as a type of party that can in that manner be haled into our courts.  That is so because the “law of nations” doesn’t extend to corporate actions (for reasons explained in our brief and elsewhere that I won’t repeat here).  

Kiobel has nothing to do with corporate liability in general – e.g., liability for manufacturing defective products, dumping chemicals, etc., in violation of U.S. or even foreign law – but rather only concerns corporate liability for human rights abuses and other violations of the “law of nations” by foreign corporations in foreign countries.

The law can surely be “a ass,” but you have to understand what law you’re discussing to understand what type of ass it might be.

The Modern Voting Rights Act Is Unconstitutional

I’ve written previously about how the current Texas redistricting saga – a decennial battle in that and many states – shows how the Voting Rights Act in its moden incarnation both doesn’t work and conflicts with the Constitution.  The Supreme Court’s ruling last month telling a three-judge district court in San Antonio to go back to the map-drawing board did not begin to the address these deeper issues, which will surface again, perhaps as soon as this fall in a case out of Shelby County, Alabama.

Today I published an op-ed on the subject in the National Law Journal.  Here’s an excerpt:

Originally conceived as a check on states where discrimination was prevalent in the 1960s, Section 5 [of the VRA] requires certain jurisdictions – a bizarre list that includes some of the Old Confederacy, plus Alaska, Arizona and certain counties or townships in eight other states, including (only) three New York City boroughs – to get federal approval before changing any election laws. To obtain this preclearance, these jurisdictions may propose only changes that do not result in “retrogression,” a reduction in minority voters’ ability to elect their “preferred” candidates.

Section 5 was a valuable tool in the fight against systemic disenfranchisement, but it now facilitates the very discrimination it was designed to prevent. Indeed, the prohibition on retrogression effectively requires districting that assures that minority voters are the majority in some districts – an inherently race-conscious mandate. The law, most recently renewed in 2006 for another 25 years, is based on deeply flawed assumptions and outdated statistical triggers, and it flies in the face of the 15th Amendment’s requirement that all voters be treated equally.

Read the whole thing, as well as Cato’s brief in Perry v. Perez and Roger Clegg’s article in the Cato Supreme Court Review on which one section of our brief heavily relied.

Cato’s Final Obamacare Brief — on the Individual Mandate — Joined by 16 Other Groups and 333 State Legislators

With the scheduled three days of oral argument six weeks away, Cato filed its fourth and final Supreme Court amicus brief in the Obamacare saga, this time on the most critical issue: the constitutionality of the individual mandate. Alongside Pacific Legal Foundation, Competitive Enterprise Institute, 14 other organizations, and a bipartisan group of 333 state legislators, we urge the Court to affirm the Eleventh Circuit’s ruling that the mandate exceeds Congress’s power to regulate interstate commerce.

Under modern doctrine, regulating intrastate economic activity can be a “necessary” means of carrying out Congress’s regulatory authority (as that term is understood under the Necessary and Proper Clause) if, in the aggregate, it has a substantial effect on interstate commerce. But the obvious corollary is that regulating non-economic activity cannot be “necessary,” regardless of its economic effects. And a power to regulate inactivity – to compel activity – is even more remote from Congress’s commerce power.

The government characterizes not being insured as the activity of making an “economic decision” of how to finance health care services, but the notion that probable future participation in the marketplace constitutes economic activity now pushes far beyond existing precedent. Further, that definition of “activity” leaves people with no way of avoiding federal regulation; at any moment, we are all not engaged in an infinite set of activities. Retaining the categorical distinction between economic and non-economic activity limits Congress to regulating intrastate activities closely connected to interstate commerce – thus preserving the proper role of states and preventing Congress from using the Commerce Clause as a federal police power.  The categorical distinction also provides a judicially administrable standard that obviates fact-based inquiries into the purported economic effects and the relative necessity of any one regulation, an exercise for which courts are ill-suited.

Finally, the mandate violates the “proper” prong of the Necessary and Proper Clause in that it unconstitutionally commandeers the people – and in doing so, circumvents the Constitution’s preference for political accountability. The Constitution permits Congress to intrude on state and popular sovereignty only in certain limited circumstances: when doing so is textually based or when it relates to the duties of citizenship. For example, Congress may require people to respond to the census or serve on juries. In forcing people to engage in transactions with private companies, the individual mandate allows Congress and the president to evade being held accountable for what would otherwise be a tax increase. In improperly commandeering citizens to engage in economic activity, the mandate obscures Obamacare’s true costs and thus avoids the political accountability and transparent budgeting that the Constitution demands.

The mandate is thus neither a necessary nor proper means for carrying into execution Congress’s power to regulate interstate commerce. Upholding it would fundamentally alter the relationship of the federal government to the states and the people; nobody would ever again be able to claim plausibly that the Constitution limits federal power.

Obamacare Challenge Not Barred By a Weird Technicality

Cato’s third Supreme Court brief in the Obamacare litigation concerns the issue of whether the federal tax Anti-Injunction Act prevents federal courts from timely reviewing Congress’s most egregious attempt to exceed its power to regulate interstate commerce. The AIA bars courts from enjoining “any tax” before that tax is assessed or collected.

One would think that such a law would have no application to the penalty that enforces the individual health insurance mandate, which is not a tax but rather a punishment for not complying with the mandate. Accordingly, most of the courts to consider the issue have found the AIA to be inapplicable to individual mandate challenges. Moreover, the government itself has long conceded that the AIA does not bar these suits.

A Fourth Circuit majority and the dissenting Judge Brett Kavanaugh in the D.C. Circuit, however, reached a contrary conclusion, reasoning that the AIA applies to all exactions assessed under the Internal Revenue Code, including “penalties.” Out of an abundance of caution, and because the AIA may be a jurisdictional bar, the Supreme Court appointed an amicus curiae to argue for the position that the AIA bars these suits.

The plaintiffs here — the 26 states, the National Federation of Independent Business, and several individuals — have advanced several strong arguments for why the AIA doesn’t apply. Cato’s brief expands on one of those arguments: that the words “any tax” in the AIA do not include “penalties” simply because they may be codified in the Code.

First, we demonstrate that the Supreme Court has always held that “taxes” and “penalties” are not interchangeable for AIA purposes. Second, we show that, with one exception, all of the cases cited in the amicus briefs filed by two former IRS commissioners, Mortimer Caplin and Sheldon Cohen — which appear to have heavily influenced the Fourth Circuit and Judge Kavanaugh — concerned penalties that were statutorily defined as taxes. This refutes the commissioners’ erroneous claim that those cases concerned penalties that were not defined as taxes. As we say in our brief, “the influence of Amici Caplin & Cohen’s [D.C. Circuit] brief is surpassed only by its misdirection.” The one exception is the Mobile Republican case (Eleventh Circuit 2003), which we explain is properly understood as applying the AIA to penalties that enforce substantive tax provisions.

In short, the AIA cannot bar suits to enjoin the individual mandate penalty because that penalty neither is defined as a tax nor enforces a substantive tax provision.

Thanks very much to Cato legal associate Chaim Gordon for taking the lead in drafting this brief and helping me with this blogpost.

The ‘Law of Nations’ Is What It Was in 1789

One of our oldest laws, the Alien Tort Statute (1789), grants federal courts jurisdiction over lawsuits brought by aliens for actions “in violation of the law of nations.” Courts have differed in their method of interpreting this “law of nations” – an old way of saying “international law” – and thus in their decisions on what behavior violates it and the types of defendants who may be liable. Recent ATS litigation has thus ignited a debate over the role of judges in applying international law.

Kiobel v. Royal Dutch Petroleum presents the question of whether, under the ATS, the law of nations can be applied against an entity that is not a natural person: a corporation. In this case, 12 Nigerians sued Royal Dutch and its Shell subsidiaries, alleging that Nigerian soldiers committed human rights abuses on the companies’ behalf between 1992 and 1995, purportedly in response to demonstrations against oil exploration.

The district court dismissed most of the claims but let certain others proceed. The Second Circuit dismissed the case entirely, holding that the ATS’s jurisdictional grant does not extend to cases against corporations, which are not liable for crimes under the law of nations. The Supreme Court agreed to review the case.

Cato has now filed a brief arguing that the ATS must be interpreted in a manner consistent with Congress’s original jurisdictional grant. This interpretation, supporting the Second Circuit’s ruling, maintains the Constitution’s separation of powers – which gives Congress the power to determine the scope of federal courts’ jurisdiction. Allowing courts to expand their jurisdiction without Congress’s consent would create a “democracy gap” that would be particularly serious here, where the case involves issues of foreign affairs that are appropriately the province of the political branches.

The Supreme Court made clear in Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc. (1999) that evolving methods of interpreting international law do not inform the ATS’s jurisdictional reach, which has not changed since 1789. Nonetheless, lower courts are split on whether corporations may be liable for the sorts of violations at issue here, largely due to their varied interpretive methods.

In our brief, we urge the Court to clarify the proper method of interpreting the law of nations under the ATS. We argue that Judge José Cabranes, a leading international law jurist (and Justice Sonia Sotomayor’s mentor) who authored the Second Circuit’s Kiobel decision, set out the correct interpretive method in an earlier case, Flores v. Southern Peru Copper Corp. (2003). Judge Cabranes’s reasoning in Flores embodied both the guidance that the Supreme Court would give in Sosa v. Alvarez-Machain (2004) and the teachings of classical theorists like Grotius, by defining customary international law as “composed only of those rules that States [countries] universally abide by, or accede to, out of a sense of legal obligation and mutual concern.”

Judge Cabranes used as relevant evidence the States’ formal lawmaking actions, such as international conventions that “establish[] rules expressly recognized by the contesting states” and international custom where the States adhere “out of a sense of legal obligation.” He further acknowledged that the method used in 1789 to interpret what comprised the law of nations defined both the claims and the parties cognizable under international law. By looking to the proper sources, Judge Cabranes correctly concluded that corporations cannot be held liable for violations of international law for ATS purposes, and in so doing recognized the constitutional checks that prevent courts from expanding their own jurisdiction.

The Supreme Court will hear oral argument in Kiobel v. Royal Dutch Petroleum on February 28.

Thanks to legal associate Anastasia Killian for her help with this blogpost.