Topic: Law and Civil Liberties

The Government Has to Pay for the Raisins It Confiscates

The near-unanimous Supreme Court decided today in favor of the farmers whose raisins the federal government wanted to take as part of a cockamamie New Deal-era regulatory scheme. The Court ruled 8-1 in support of Cato’s position that taking personal property is a compensable action, regardless of whether the government purports to act on the property owner’s behalf, and 5-4 on the question of compensation for that taking. (This is two years after the Court ruled 9-0 that the Marvin and Laura Horne could have their day in court and raise their constitutional challenge, rather than being stuck in some byzantine administrative purgatory.)

Of course, it should be rather obvious that when the government takes your property, its actions are subject to the Fifth Amendment’s Takings Clause, which requires that such taking be (a) for a “public use” and (b) subject to the owner receiving “just compensation.” And it should be equally obvious that the Constitution doesn’t distinguish between real property (your house) and personal property (your car). Yet the government insisted here that, at least in the context of agricultural-marketing/price-setting programs, it can take your crops and do whatever it likes with them so long as it’s all hypothetically for your own benefit.

Chief Justice Roberts swatted away that contention. Here are the key paragraphs (pages 4-5 of the slip opinion):

There is no dispute that the “classic taking [is one] in which the government directly appropriates private prop­erty for its own use.” Nor is there any dispute that, in the case of real property, such an appropriation is a per se taking that requires just compensation.

Nothing in the text or history of the Takings Clause, or our precedents, suggests that the rule is any different when it comes to appropriation of personal property. The Government has a categorical duty to pay just compensa­tion when it takes your car, just as when it takes your home. (citations omitted)

There are some other nuggets in the opinion, including a riff on the government’s contention that raisin farmers, to avoid the Raisin Administrative Committee’s attentions, could simply sell wine: “ ‘Let them sell wine’ is probably not much more comfortable to the raisin growers than similar retorts have been to others throughout history.” Moreover, “[r]aisins are not like oysters: they are private property – the fruit of the growers’ labor – not “public things subject to the absolute control of the state.”

In any event, thus the Hornes’ multi-year fight against the U.S. Department of Agriculture ends in a definitive ruling that the USDA cannot assess them nearly half a million dollars for the value of the raisins they refused to relinquish (nor a $200,000 civil penalty that added insult to injury). Let’s not forget that this epochal battle involved two trips to the Supreme Court, where the government only got one of a possible 18 votes.

For more background on the case, see Trevor Burrus’s commentary when we filed our brief. For early reaction to the ruling, see Ilya Somin’s post at the Volokh Conspiracy.

The Patent & Trademark Office Has a Slanted View of the First Amendment

Yesterday’s Supreme Court ruling regarding Confederate-flag license plates isn’t the last word on First Amendment protection for “offensive” speech. Indeed, it doesn’t even resolve all the issues related to government-insinuated expression. One case working its way through the lower courts regarding a controversial trademark – but not this one! – illustrates some of the pitfalls inherent in allowing the government to act as censor, for whatever reason.

A musician named Simon Tam wanted to “take back” and “own” what had previously been used as an ethnic slur by calling his Asian-American rock band “The Slants.” The Patent and Trademark Office found that this trademark was disparaging to Asians, however, so refused to register it under § 2(a) of the Lanham Act. This provision says, among other things, that the PTO may refuse to register a trademark that “[c]onsists of … matter which may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.”

This refusal to register the trademark was affirmed by a three-judge panel of the U.S. Court of Appeals for the Federal Circuit. But then the entire Federal Circuit—without being asked!—decided to erase that decision and consider whether § 2(a), or at least its application here, violates the First Amendment.

Supreme Court Allows Texas to Offend the First Amendment

Today a narrow and unusual Supreme Court majority ruled that the DMV – of all government agencies! – is allowed to censor speech it considers to be “offensive.” To wit, the four “liberal” justices and Justice Clarence Thomas somehow found that the specialty license plates Texas drivers can choose to have on their vehicles actually constitute state speech – and of course the state can control its own messages, including rejecting a plate proposed by the Texas branch of the Sons of Confederate Veterans. This is so even though the specialty-license-plate program encourages Texans to come up with their own designs and slogans, which has resulted in around 400 plates that express support for a plethora of nonprofit organizations, commercial entities, affinity groups, and myriad other causes.

By this logic, Texas has long been endorsing Dr. Pepper, ReMax, and an assortment of burger and taco joints. Indeed, both Longhorns (UT-Austin) and Aggies (Texas A&M) will be dismayed to learn that the Lone Star State cheers for the Sooners (University of Oklahoma) and Cowboys (Oklahoma State). Surely at least one person is “offended” by each of the above examples, yet the DMV has refused to act in the face of such (macro)aggression. As the dissenting justices point out, it’s even more bizarre that, under the majority’s reading, “rather be golfing” is official state policy. It’s a wonder that the state has become America’s engine of economic growth!

To add hypocrisy to insult, the author of today’s decision, Justice Stephen Breyer, contradicted his own writing in the key recent precedent, a case regarding monuments in a city park. In the 2009 case of Pleasant Grove City v. Summum, Breyer concurred in the Court’s opinion “on the understanding that the ‘government speech’ doctrine is a rule of thumb, not a rigid category. Were the City to discriminate in the selection of permanent monuments on grounds unrelated to the display’s theme, say solely on political grounds, its action might well violate the First Amendment.”

Indeed. The ruling in Walker v. Texas Division represents a fundamental misunderstanding of what’s going on here. Texas doesn’t have to have specialty license plates, but if it creates this money-making program, it can’t then censor speech it simply doesn’t like.

As Cato wrote in our amicus brief, one man’s offensive speech is another’s exercise of social commentary or personal expression. And unlike, say, child pornography and “fighting words,” “offensive” speech is protected by the First Amendment.

It’s the Supreme Court that has offended the freedom of speech today. And now we know that the First Amendment is one thing that’s smaller in Texas.

Airport Pirates Find Bounty in a College Student’s Life Savings

Today, our friends at the Institute for Justice launched a new challenge to yet another instance of egregious civil asset forfeiture abuse.

Charles Clarke is a 24-year-old college student who found out the hard way that government officials can confiscate property on the mere suspicion that it has a “substantial connection” to a crime or is the proceeds of a crime. No underlying conviction is required. Functionally, this means that officers can claim that “something was a little off” about your behavior, or that “something smells a little like drugs” and then have carte blanche to take whatever cash you have on you. After that, your cash is presumptively guilty, and it is up to you to prove its innocence.

In the winter of 2013, Charles was stopped at the Cincinnati/Northern Kentucky airport based on the officers’ assertion that his bag smelled like marijuana. Actually, it was based off of a drug dog’s “signal” that his bag smelled like marijuana. By claiming that a dog “alerted” an officer can obtain probable cause, but in reality the dogs are about as reliable as Clever Hans.

After searching his bag, the officers found no drugs or other illegal substances. They then asked him if he was carrying any cash. Charles volunteered that he was carrying $11,000–clearly thinking, not unreasonably, that in a just world there is no way the officers could just take his money. Charles’s mistake, however, was thinking that he lives in a just world, and the officers walked away with his life savings.

Charles had saved the $11,000 over the previous five years, from work, financial aid, educational benefits, and gifts from family. Now he must overcome the officers’ hunches by proving that his money came from legal sources.

House Leadership Blocks Key Intelligence Reforms

The House GOP leadership’s hostility to reforming the U.S. Intelligence Community is on full display this week. The House Rules Committee (which is controlled by House Speaker John Boehner) blocked several key reform amendments to the annual Intelligence Authorization bill from even reaching the House floor for consideration.

Furious over an op-ed by Privacy and Civil Liberties Board chairman David Medine that called for an independent review of the executive branch’s “assassination-by-drone” policy, House Intelligence Committee chairman Devin Nunes (R-CA) included language in the annual Intelligence Authorization bill banning the PCLOB from examining the “covert” drone program. A bipartisan amendment (led by Rep. Jim Himes of Connecticut) that would have struck that language was barred from consideration.

Last week, the House passed a bipartisan amendment to the annual Defense Department spending bill baring the federal government from using taxpayer dollars to search the stored communications of Americans collected by NSA. That same amendment would also prevent the federal government from mandating that American tech companies build encryption-defeating “back doors” into their products. The authors of that amendment, Democrat Zoe Lofgren of California and Republican Thomas Massie of Kentucky, wanted to make those provisions permanent, but their amendment was also blocked.

Court Finds Government Actions in AIG Bailout Were Illegal

Ask any first year law student “what did you learn in school today” and you’ll probably get some version of the answer: “duty-breach-causation-harm.”  While this applies specifically to tort claims, it seems axiomatic, even for non-lawyers, that you can’t sue someone who hasn’t hurt you.  Or can you?

Former AIG CEO Hank Greenberg caused a ripple of shock in late 2011 when he filed suit against the U.S. government, alleging that the government’s 2008 bailout and subsequent take-over of AIG was unlawful, and claiming $40 billion in damages.  Despite skepticism throughout the legal community, the case not only survived dismissal, but went on to a full trial, during which such heavyweights as Tim Geithner, Hank Paulson, and Ben Bernanke took the stand. 

Throughout the trial, Judge Thomas Wheeler seemed sympathetic to the claims that Greenberg brought on behalf of Starr International Company, an AIG shareholder.  Few believed that AIG had any alternative to the government’s money, except bankruptcy.  In bankruptcy, shareholders (like Starr) are paid last out of whatever remains after all the company’s debts are paid.  Which typically (and most likely in AIG’s case) means not paid at all.  Would the judge really grant Starr a $40 billion judgment – against the U.S. government – when the alternative was bankruptcy?

No.  But that doesn’t mean the government got off scot free either.  Judge Wheeler found that the federal government committed an illegal exaction.  That is, it took something it had no right to take.  (This, the judge carefully notes, is not the same as a “takings” under the Fifth Amendment.  When there is a takings, the government lawfully uses its authority to take private property for public use and then must pay the owner “just compensation” for that property.  An illegal exaction means the government took properly unlawfully.) 

ALJs in Limbo

A number of cases have been filed recently against the Securities and Exchange Commission (SEC), challenging its use of in-house administrative law judges (ALJs).  As I discussed in my earlier post on this topic, the SEC’s use of ALJs has come under close scrutiny lately because of concerns that, in the wake of a provision in Dodd-Frank expanding ALJs’ power, the SEC has elected to use its in-house procedures more frequently and that this use may have increased the SEC’s ability to prevail in enforcement actions.  Of particular concern is the fact that administrative proceedings lack many of the protections for defendants that litigation in federal courts provide, including: the option of having the case decided by a jury; access to the government’s evidence; and the ability to exclude certain evidence traditionally believed to be unreliable (such as hearsay).    

While a number of these cases have been dismissed, Monday finally garnered a win: Charles Hill succeeded in getting a federal court to issue an injunction that prohibits the SEC from continuing its case against him using its in-house ALJ.  Having been charged with insider trading and brought before an SEC ALJ, Hill filed suit against the SEC in federal court claiming the administrative proceeding was unconstitutional on three different grounds.  Although the court disagreed with two of his arguments, it found in his favor on the third – that the ALJs’ appointment violates the appointments clause because ALJs are “inferior officers.”