Topic: Law and Civil Liberties

Nevada Judge: Education Savings Accounts Are Constitutional

Dismissing a challenge from the ACLU, yesterday Las Vegas District Court Judge Eric Johnson ruled that Nevada’s education savings account (ESA) program is constitutional. However, the ESA program is still on hold due to a second lawsuit against the ESA program in which the judge issued an injunction against issuing the accounts. That case is currently pending before the Nevada Supreme Court, and it is possible that the two legal challenges will be merged.

The ACLU challenged the ESA law on two grounds, claiming that the ESA violated the Nevada Constitution’s “uniformity” clause and the state’s historically anti-Catholic Blaine Amendment. Siding with the state of Nevada and the Institute for Justice, the court rejected these claims. 

“Uniform” Does Not Mean “Exclusive”

Nevada’s state constitution requires that the legislature “shall provide for a uniform system of common schools.” These schools must “be established and maintained in each school district at least six months in every year” and it is forbidden for these schools to “allow instruction of a sectarian character therein.” In a separate clause, the state constitution enjoins the legislature to “encourage” education “by all suitable means.”

The ACLU argued the “suitable means” mentioned in Article XI, Section 1 are defined by uniformity clause in Section 2. The ACLU cited the infamous Bush v. Holmes decision in Florida, in which Florida’s state supreme court struck down the state’s voucher program by interpreting the state’s duty to create a “uniform” system of public schools to mean that the state had a duty to provide a system of schooling exclusively according to the means described in the state constitution, despite the state constitution empowering the legislation to create “other public education programs that the needs of the people may require.” (The Florida Education Association is now suing to halt the state’s tax-credit scholarship program on the same grounds.)

However,  the judge rejected this interpretation, holding instead that that in these two clauses, “the framers indicated that they intended to create two duties, a broad one to encourage education by ‘all suitable means,’ and a specific, but separate, one to create a uniform public school system.” The judge noted that the framers’ “use of two different sections to set out the Legislature’s responsibilities without reference in either section to the other plainly suggests the sections are separate and distinct.” By contrast, adopting the ACLU’s clever but strained interpretation would, according to the judge, “make section 1 superfluous, without any meaning or purpose.”

In other words, the Nevada constitution requires the state to establish a non-sectarian system of public schools, but it is also empowered to encourage education by other means that are not limited to non-sectarian schooling. 

Donald Trump’s Terrific List of Fabulous Judges

We’ve been waiting for months for presumptive Republican presidential nominee Donald Trump to release his list of potential Supreme Court appointees. Today he actually came through on that promise. The would-be justices, in the (alphabetical) order in which they appear in the AP story that broke the news, are:

  • Judge Steve Colloton of the U.S. Court of Appeals for the Eighth Circuit (Iowa)
  • Justice Allison Eid of the Colorado Supreme Court
  • Judge Raymond Gruender of the U.S. Court of Appeals for the Eighth Circuit (Missouri)
  • Judge Thomas Hardiman of the U.S. Court of Appeals for the Third Circuit (Pennsylvania)
  • Judge Raymond Kethledge of the U.S. Court of Appeals for the Sixth Circuit (Michigan)
  • Justice Joan Larsen of the Michigan Supreme Court
  • Justice Thomas Lee of the Utah Supreme Court
  • Judge William Pryor of the U.S. Court of Appeals for the Eleventh Circuit (Alabama)
  • Justice David Stras of the Minnesota Supreme Court
  • Judge Diane Sykes of the U.S. Court of Appeals for the Seventh Circuit (Wisconsin)
  • Justice Don Willett of the Texas Supreme Court

This is an exceptional list. I’m not intimately familiar with all 11 judges and I don’t expect to agree with all of them on everything, but those whose jurisprudence I know well are excellent and the others have sterling reputations. These are not squishes or lightweights.

Also notable and commendable is that 5 of the 11 are state supreme court justices; not all judicial talent is already on the federal bench and the U.S. Supreme Court could use that sort of different perspective. I’ll forego quibbling over this or that pick – whom to drop for a top 10 or 5, whom to add to round out to 15, whether Senator Mike Lee would be better than his brother – but want to emphasize that these are among the very best judges who are young and smart enough to be on the Court.

I’m no fan of the Donald – and who knows whether he’d follow through if elected? – but he’s listening to the right advisers here. As I’ve previously written, Trump may not know originalism from origami, but there are better reasons to vote against him than judges.

Intimidating Newspaper Owners, Past and Present

Donald Trump isn’t happy with the Washington Post, which has steadfastly opposed his presidential campaign on its editorial pages and now has assigned a reporter team to write a book about him. And he has repeatedly responded in Trump fashion: by threatening the business interests of the newspaper and its owner Jeff Bezos. Trump cited the Post by name in his February comments about how he wants to “open up” libel law so that “when The Washington Post… writes a hit piece, we can sue them and win money instead of having no chance of winning because they’re totally protected.” And he said then of Amazon, of which Bezos is CEO, “If I become president, oh do they have problems. They’re going to have such problems.” He has claimed for months that Bezos was using the newspaper as either itself a tax dodge or as a tool of influence to prevent Amazon from having to pay “fair taxes,” a theory hard to square with the institutional arrangements involved (Bezos owns the Post separately from his Amazon stake; the Post editors credibly deny that Bezos has interfered, and as it happens Amazon itself supports the idea of an internet sales tax.) More recently Trump has opened up a second front, arguing last week on the Sean Hannity show that Bezos employs the paper “as a political instrument to try and stop antitrust” and implying that he, Trump, would hit Amazon with antitrust charges. 

As you might expect, many critics are crying foul. “He’s basically giving us a preview of how he will abuse his power as president. … he is clearly trying to intimidate Bezos and in turn The Washington Post from running negative stories about him,” writes Boston Globe columnist Michael A. Cohen.  “Mr. Trump knows U.S. political culture well enough to know that gleefully, uninhibitedly threatening to use government’s law-enforcement powers to attack news reporters and political opponents just isn’t done. Maybe he thinks he can get away with it,” writes Wall Street Journal columnist Holman Jenkins. 

But as I wrote in this space four years ago, if you think blatant use of the machinery of government to punish newspaper owners or interfere in papers’ management somehow happens only in other countries, think again:

[Since-convicted Illinois Gov. Rod] Blagojevich, Harris and others are also alleged [in the federal indictment] to have withheld state assistance to the Tribune Company in connection with the sale of Wrigley Field. The statement says this was done to induce the firing of Chicago Tribune editorial board members who were critical of Blagojevich.

And in 1987, at the secret behest of the late Sen. Edward Kennedy (D-MA), Sen. Ernest Hollings (D-SC) inserted a legislative rider aimed at preventing Rupert Murdoch from simultaneously owning broadcast and newspaper properties in Boston and New York. The idea was to force him to sell the Boston Herald, the most persistent editorial voice criticizing Kennedy in his home state.

More recently, when the Tribune Company encountered financial difficulties and explored the sale of several large papers, city councils in more than one city passed resolutions opposing the sale to politically “bad” prospective owners; powerful Congressional figure Henry Waxman (D-CA) could not resist the urge to meddle as well in management issues affecting his hometown paper, the L.A. Times. 

This all goes back much farther, of course. Historian David Beito, writing about the FDR-Truman era, cites a long series of federal investigations of and retaliations against the distributors of pro-liberty books and pamphlets, including the proposal of Indiana Democratic Senator and New Dealer Sherman Minton (D-Ind.) to make it “a crime to publish anything as a fact anything known to be false,” a downright Trumpian idea that Minton let drop after an outcry.

It is thoroughly appalling – but, alas, it is not new.

 

 

Little Sisters Win as John Roberts Again Balks at Calling Balls and Strikes

The Supreme Court issued a short, unanimous opinion in the contraceptive-mandate cases known as Zubik v. Burwell. There’s plenty of punditry out there for you to read so I’ll just offer three thoughts:

1. This was the biggest punt in Supreme Court history.

The Court abdicated its duty to say what the law is in favor of wiping the slate clean and telling the lower courts to facilitate a settlement between the parties. This is a cop-out. If the justices were hopelessly deadlocked 4-4 regarding the legal issue presented in the case – whether there was a way for the government to achieve its free-contraceptives-for-all goal in a way less-burdensome on religious employers – then they should’ve held the case for reargument at such a time as there’s a ninth justice to provide the tie-breaking vote.

2. The challengers win.

Although the opinion goes out of its way to state that the Court takes no position on the questions of whether (a) the contraceptive mandate poses a “substantial burden” on religious free exercise, (b) the government’s interest was compelling, and (c) the current regulations are the least-restrictive means of achieving that interest, it’s clear that the justices think that the government and nonprofit challengers are close enough in their legal positions that they can just “work it out.” In other words, after an unusual round of supplemental briefing wherein the Court asked the parties to speculate on what kinds of regulations might avoid involving religious employers in what they consider to be sinful behavior, the justices think there may well be a workable solution: simply have the employers object and let the government handle the rest (dealing with insurers and otherwise). Even Justices Sotomayor and Ginsburg, who concurred specially to protest (too much?) that lower courts should be free to continue ruling for the government, essentially accepted the “I object” solution so long as the resulting insurance/contraceptive coverage is “seamless.” 

If that’s correct, then the Court has essentially conceded that the challengers should have won their claim under the Religious Freedom Restoration Act – wherein, as the Hobby Lobby case showed two years ago, the government loses if there’s a way it can achieve its goal in a way that imposes less of a burden on the religious rights of the objecting parties. So really, the end result, assuming the lower courts don’t engage in a bout of judicial disobedience (not a slam-dunk assumption given how some courts have treated the Second Amendment in the wake of Supreme Court rulings in that regard) should be the same as if the Court, with Justice Scalia, had ruled 5-4 for the Little Sisters et al.

3. The legal precedent doesn’t matter.

RFRA is an unusual statute in that it’s meant to be applied case-by-case, so a ruling in favor of peyote-smokers says nothing about how judges should rule regarding prison beards – or objectors to contraceptive mandates. Contra the progressive alarmists in the wake of Hobby Lobby, a successful RFRA claim regarding one aspect of Obamacare implementation doesn’t mean that left-handed lesbians now have to sit in the back of the bus (or however the tired parade of horribles went). So even though the Court declined to adopt my argument (or any other) in the case, it doesn’t mean that our liberties are diminished in future or that the government can exceed its lawful powers in some future case.

In sum, the wily chief justice persuaded his colleagues to go in for a non-judicial non-decision. I may like the practical result here, but this isn’t law.

Insider Trading: The Unknowable Crime

Under our criminal justice system, ignorance of the law is no defense.  But what if the law is undefined?  Or what if it seems to change with every new case that’s brought?  What if unelected judges (with life tenure) started to invent crimes, piece by piece, case by case?  Holding people accountable for knowing the law is just only if the law is knowable, and only if those creating the law are accountable to the people. 

On Friday, Cato filed an amicus brief in Salman v. U.S. that is aimed at limiting the reach of just such an ill-defined, judicially created law. “Insider trading” is a crime that can put a person away for more than a decade, and yet this crime is judge-made and, as such, is ever-changing. Although individuals may know generally what is prohibited, the exact contours of the crime have remained shrouded, creating traps for the unwary.

The courts, in creating this crime, have relied on a section of the securities laws that prohibits the use of “any manipulative or deceptive device or contrivance” in connection with the purchase or sale of a security. The courts’ rationale has been that by trading on information belonging to the company, and in violation of a position of trust, the trader has committed a fraud.  The law, however, does not mention “insiders” or “insider trading.”  And yet, in 2015 alone, the Securities and Exchange Commission (SEC) charged 87 individuals with insider trading violations.  

Broadly speaking, insider trading occurs when someone uses a position of trust to gain information about a company and later trades on that company, without permission, to receive a personal benefit.  But what constitutes a “benefit”?  The law doesn’t say.

Left to their own devices, the SEC has pushed the boundaries of what constitutes a “benefit,” making it more and more difficult for people to know when they are breaking the law.  In the case currently before the Court, Bassam Salman was charged with trading on information he received from his future brother-in-law, Mounir Kara, who had, in turn, received the information from his own brother, Maher.  The government has never alleged that Maher Kara received anything at all from either his brother or Salman in exchange for the information.  The government has instead claimed that the simple familial affection the men feel for each other is the “benefit.”  Salman’s trade was illegal because he happens to love the brothers-in-law who gave him the inside information.

Under this rationale, a person who trades on information received while making idle talk in a grocery line would be safe from prosecution while the same person trading on the same information heard at a family meal would be guilty of a felony.  Or maybe not.  After all, if we construe “benefit” this broadly, why not say that whiling away time chit-chatting in line is a “benefit”?    

No one should stumble blindly into a felony.  We hope the Court will take this opportunity to clarify the law and return it to its legislative foundation.  Anything else courts tyranny. 

A New Legal Blow Against Obamacare

The federal district court sitting in D.C. yesterday handed a victory to those who believe in following statutory text, potentially halting the payment of billions of dollars to insurers under the Affordable Care Act’s entitlement “cost-sharing” provisions.

Since January 14, 2014, the Treasury Department has been authorizing payments of reimbursements to insurers providing Obamacare coverage. The problem is that Congress never appropriated the funds for those expenditures, so the transfers constitute yet another executive overreach.

Article I of the Constitution provides quite clearly that “No Money shall be drawn from the Treasury but in Consequence of Appropriations made by Law.” The “power of the purse” resides in Congress, a principle that implements the overall constitutional structure of the separation of powers and that was noted as an important bulwark against tyranny by Alexander Hamilton in the Federalist 78.

It’s a basic rule that bears repeating: the executive branch cannot disburse funds that Congress has not appropriated.

Accordingly, in a win for constitutional governance, Judge Rosemary Collyer held in House of Representatives v. Burwell that the cost-sharing reimbursements authorized under the ACA’s section 1402 must be appropriated by Congress annually, and are not assumed to be appropriated.

Judge Collyer gave a biting review of the federal government’s argument in the case: “It is a most curious and convoluted argument whose mother was undoubtedly necessity.” The Department of Health and Human Services claimed that another part of the ACA that is a permanent appropriation—section 1401, which provides tax credits—also somehow included a permanent appropriation for Section 1402. Hearkening to the late Justice Scalia’s lyrical prose, Collyer explained that the government was trying to “squeeze the elephant of Section 1402 reimbursements into the mousehole of Section 1401(d)(1).”

Indeed, this ruling is a bit of a feather in Cato’s cap as well. The legal argument that prevailed here—that the section 1402 funds cannot be disbursed without congressional appropriation—first was discussed publicly at a 2014 Cato policy forum. The lawyer who came up with the idea, David Rivkin of BakerHostetler, refined it in conjunction with his colleague Andrew Grossman, also a Cato adjunct scholar who spoke at the forum. After BakerHostetler had to withdraw from the case due to a conflict, George Washington University law professor Jonathan Turley (who also spoke at the forum) took over the case.

Judge Collyer stayed her injunction against the Treasury Department pending appeal before the U.S. Court of Appeals for the D.C. Circuit. Regardless of how that court decides – as in King v. Burwell, even if there’s a favorable panel, President Obama has stacked the overall deck – the case is likely to end up before the Supreme Court. If Chief Justice Roberts sees this as a technical case (like Hobby Lobby or Zubik/Little Sisters) rather an existential one (like NFIB v. Sebelius or King), the challengers have a shot. But because Democrat-appointed justices simply will not interpret clear law in a way that hurts Obamacare, this case, like so much else, turns on the presidential election and the nominee who fills the current high-court-vacancy.

Whatever happens down that line, Judge Collyer’s succinct ruling makes a powerful statement in favor of constitutional separation of powers as a bulwark for liberty and the rule of law.

Update (June 2, 2016): It has come to my attention that this suit was conceived in a different manner than described above. As seen here, here, here, and here, it was Florida International University law professor Elizabeth Price Foley who conceived of the lawsuit and developed it with David Rivkin, both in terms of legal doctrine and amassing political support in the House. We’re proud to have Foley on the editorial board of the Cato Supreme Court Review.

Presidential Arrogance on Steroids

“Obama said ‘so sue me.’ The House did, and Obama just lost.” That’s how the Wall Street Journal sub-heads its lead editorial this morning discussing the president’s latest court loss, nailing this most arrogant of presidents who believes he can rule “by pen and phone,” ignoring Congress in the process. With an unmatched record of losses before the Supreme Court, this onetime constitutional law instructor persists in ignoring the Constitution, even when the language is crystal clear.

Article I, section 9, clause 7 of the Constitution provides that “No Money shall be drawn from the Treasury but in Consequence of Appropriations made by Law.” Not much wiggle room there. So what did the president do? He committed billions of dollars from the Treasury without the approval of Congress. In her opinion yesterday Judge Rosemary Collyer noted, the Journal reports, “that Congress had expressly not appropriated money to reimburse health insurers under Section 1402 of the Affordable Care Act. The Administration spent money on those reimbursements anyway.”

George Washington Law’s Jonathan Turley, lead counsel for the House in this case, House v. Burwell, called yesterday’s decision “a resounding victory not just for Congress but for our constitutional system as a whole. We remain a system based on the principle of the separation of powers and the guarantee that no branch or person can govern alone.”

But don’t expect the president to be any more chastened by this decision than by his many previous losses in the courts. Indeed, as he was smarting from yesterday’s loss he was preparing, the Washington Post reports, to release a letter this morning “directing schools across the nation to provide transgender students with access to suitable facilities—including bathrooms and locker rooms—that match their chosen gender identity.” And where did he get his authority for that? Not from Congress. It’s based on his reading of Title IX of the Civil Rights Act of 1964 that for over half a century no one else has seen, doubtless because Title IX prohibits discrimination on the basis of sex, not chosen sex. Reading Title IX as we want it to be is of a piece with reading the Constitution that way too. Thus do objectivity and the rule of law fade into the rule of man.