March 6, 2019 10:40AM

Senator Hawley’s Apostasy and the Substantive Due Process Problem

A week or so ago, the nomination of George Mason Law’s Neomi Rao to fill Justice Brett Kavanaugh’s seat on the D.C. Circuit ran into some unexpected headwinds when Missouri’s freshman Republican senator, 39-year-old Josh Hawley, raised several concerns about her views, all centered around his opposition to abortion. Fearing that the nomination might fail in committee, the Wall Street Journal’s editorial board took the extraordinary step last week of running not one but two house editorials questioning Senator Hawley’s “judgment.” In the end, the senator came around. On Thursday, Prof. Rao, since July 2017 the head of the Office of Information and Regulatory Affairs and a highly credentialed critic of the administrative state, was voted out of committee on a straight party-line vote of 12-10. 

But questions linger about the motivation and thinking behind Sen. Hawley’s opposition, not least because he himself is highly credentialed (Stanford, Yale Law, clerk for Chief Justice Roberts), and he came of age when the issues he raised were being hotly debated on the Right. He was quoted initially, for example, as saying that "I am only going to support nominees who have a strong record on life"—the “litmus test” approach to nominations more often associated with the Left. But he was also cited as concerned, more broadly, that Rao “might be comfortable with substantive due process,” the doctrine the Supreme Court employed in 1973 when it found a right to abortion. It seems, however, that he may have finally reconsidered that larger concern, for the Journal’s second editorial tells us that “Mr. Hawley now claims he doesn’t object to using this method to incorporate the Bill of Rights to states, only to progressive abuses of substantive due process.” 

Few constitutional doctrines have more vexed conservatives than substantive due process, so a word is in order on the subject, especially given that it’s likely to reemerge with future nominations. Justices Scalia and Thomas have called the doctrine an “oxymoron,” yet that hasn’t stopped the Court’s conservatives from employing it variously, as in finding that the Second Amendment binds the states pursuant to the Fourteenth Amendment’s instruction that no state shall “deprive any person of life, liberty, or property, without due process of law.” And a fortnight ago, joined this time by the Court’s liberals, they again invoked the Fourteenth Amendment’s Due Process Clause to apply the Eighth Amendment’s Excessive Fines Clause against the states, although here, as elsewhere, Justices Thomas and Gorsuch expressed their concerns that the Fourteenth Amendment’s Privileges or Immunities Clause might be the better way to go: “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” 

Thomas and Gorsuch are right, but they’re up against stare decisis. In one of its worst decisions ever, especially considering its context and implications, the Reconstruction Court in the infamous Slaughterhouse Cases of 1873 rendered the Privileges or Immunities Clause “a vain and idle enactment,” as Justice Stephen Field put it in dissent. Meant to protect “the natural and inalienable rights which belong to all citizens,” the Court majority read the clause as protecting only a few federal rights, like “the right to use the navigable waters of the United States.” There the clause has sat, all but “idle” ever since. One might think that result an embarrassment for conservative originalists, constitutional textualists as they generally are.

What then explains their refusal to override stare decisis, a principle at its weakest in constitutional adjudication. Hawley put his finger on it: progressive abuses of substantive due process. After the Slaughterhouse debacle, Fourteenth Amendment cases continued to come before the Court, of course. With the Privileges or Immunities Clause having been reduced to a nullity, however, the Court turned to the Due Process Clause, finally incorporating its protection for property rights in 1897, for contractual freedom in 1905, free speech in 1925, and so on, one right at a time. But after the New Deal constitutional revolution, the Court was largely deferential to the political branches and the states, until the mid-1950s when it got its second wind, and not a moment too soon in the case of civil rights, criminal procedure, and certain other rights. But at the same time, the Warren and Burger Courts were finding other “rights” that were nowhere to be found, even among the unenumerated rights the Ninth Amendment was written to protect. And that led to a conservative backlash and a call for “judicial restraint.” 

It is that fear that lingers today among a fair number of conservatives, although in the last few decades, the debate has shifted on the Right, with ever more conservatives, prodded often by classical liberals and libertarians, recognizing the political infirmities of judicial restraint and, more important still, its constitutional inconsistency. For if textualism is originalism’s bedrock methodological principle, then judges cannot ignore the plain text of the Ninth and Tenth Amendments—they must be read together—or the Privileges or Immunities Clause of the Fourteenth Amendment. Rather than restrained, judges must be engaged. And that means, when necessary, informing the text with the rich natural rights and common law theory that stands behind it.

So Senator Hawley was right, eventually: The problem is with progressive abuses of substantive due process—with court’s finding rights nowhere to be found (and powers nowhere granted). Thus, the Griswold Court was right. The Connecticut statute that criminalized the sale and use of contraceptives, like the Texas statute years later in Lawrence that criminalized private same-sex sodomy, was enacted under the state’s police power, the power mainly to secure our rights. But in those cases, there were no rights to be secured—no plaintiffs who might have brought a civil suit or criminal complaint against the defendants—yet there were rights the statutes did infringe, our basic natural right to liberty, a right “retained by the people.” 

Roe v. Wade, however, is a very different case, for the question there was whether the Texas statute at issue was indeed protecting rights, the rights of the unborn child. Here too the scope of the police power was at issue. Just after Samuel Alito’s 1985 Justice Department memo on abortion came to light—his 2007 Supreme Court confirmation hearings about to begin—I argued in the Wall Street Journal that because abortion at bottom is a criminal law matter concerning where to draw a line about which reasonable people can reasonably disagree, this police power question belongs with the states, which in 1973 were already drawing that line, in different ways, as they should have been left to do. That is a point that no less than then-Judge Ruth Bader Ginsburg made in her NYU Madison Lecture in 1993, two months before she was nominated for the High Court—and it almost nixed the nomination! 

Thus, contrary to what too many conservatives have too long believed, it is hardly difficult for judges to read the text of the Constitution—the whole text—in light of the document’s structure and background assumptions and theory. Griswold, Lawrence, and similar cases, especially many involving economic liberty, are straightforward rights cases, easily decided by courts. Roe was more difficult, but in the end, because the inherent line-drawing belongs properly to the people and their state legislatures, absent egregious examples like those that would sanction infanticide, it was a federalism case. 

Unfortunately, with the Slaughterhouse Cases, the Fourteenth Amendment got off to a bad start, and it’s never fully recovered. And the debate over substantive due process, a concept with roots in Magna Carta, has often only clouded matters. The Due Process of Law Clause will do the job, but it takes more work than many judges are prepared to do. As I wrote above, Justices Thomas and Gorsuch are right. The Privileges or Immunities of citizens of the United States Clause is the better route, because it takes us more directly to the Constitution’s text and, especially in light of the ample debates that produced it, to the natural rights theory that lends substance and legitimacy to our political and legal order. 

 

June 23, 2015 4:41PM

An Illustrated Guide to Civil Asset Forfeiture

This cheerfully drawn comic from the Daily Signal does an excellent job highlighting the insanity of civil asset forfeiture.  It begins with a quintessentially American premise: a young person setting out on his own, all wordly possessions in hand, to start a new life as an adult.  Far be it from me to spoil the rest:

 

Arresting your property

 

If such stories seem unbelievable (it is a cartoon after all), be sure and check out the recent all-too-real stories of Joseph Rivers and Charles Clarke, for whom this cartoon surely hits too close to home.  Even they are only the tip of the iceberg.

New Mexico has taken the initiative to end this inherently abusive practice once and for all, and there are active reform efforts underway in California, Michigan, Montana, Oklahoma, Maryland, and others. But until every other state and the federal government join in, these incredible tales of legalized theft and policing for profit will continue.

FreedomWorks recently released a handy map accompanying their report on state forfeiture laws. How does your state stack up?  

 

 

June 5, 2015 1:58PM

Governor Hogan, Civil Asset Forfeiture Is Inherently Abusive

Despite recent gains around the country, civil asset forfeiture reform suffered a setback in Maryland when Gov. Larry Hogan (R) vetoed a bill that would have placed restraints on the state’s civil forfeiture regime.

Civil asset forfeiture is a process by which the government is able to seize property (cash, vehicles, homes, hotels, and virtually any other item you can imagine) and keep the proceeds without ever charging the victim with a crime.  The bill, SB 528, would have established a $300 minimum seizure amount, shifted the burden of proof to the state when someone with an interest in the seized property asserts innocent ownership (e.g. a grandmother whose home is taken when her grandson is suspected of selling drugs out of the basement), and barred state law enforcement agencies from using lax federal seizure laws to circumvent state law.

In vetoing the measure, Gov. Hogan claimed that restraining civil asset forfeiture “would greatly inhibit” the war on drugs in the midst of a heroin epidemic and interfere with joint federal/state drug task forces. Gov. Hogan admitted that asset forfeiture laws “can be abused,” but that their utility outweighed the risk of abuse. 

Each of these assertions is misguided.

Civil forfeiture reform would certainly make it more difficult for law enforcement to seize property from citizens not charged with crimes.  Indeed, that is the entire purpose of reforming the law.  Likewise, the presumption of innocence, right to due process, and warrant requirement make it more difficult for the government to prosecute people suspected of crimes.  Those checks on hostile government action exist because governments with unfettered authority to summarily plunder and punish tend to do just that, and the litany of civil forfeiture horror stories is proof.

Therefore civil asset forfeiture is not merely susceptible to abuse; civil asset forfeiture is abuse.  Under no circumstances should someone be forced to forfeit their money, property, or even their home to the government on suspicion alone. The “inhibitions” Gov. Hogan’s statement laments are in fact the most fundamental defenses for private property and due process in a country founded to protect them.

Governor Hogan’s appeal to the efficacy drug war is similarly misguided.  We’re told that the prevalence of drugs, especially heroin, in Maryland is reason enough to keep forfeiture laws lax.  Decades of a failed drug war have proven the inefficacy of asset forfeiture as a means of stemming the flow of narcotics, and continuing that failure is no justification for abolishing the due process and private property rights of people who aren’t even charged with criminal behavior.

Remember: even an outright abolition of civil forfeiture wouldn’t mean the police couldn’t seize property from drug traffickers; it would just require the state to prove its suspicions in court before it takes someone’s property.  Criminal asset forfeiture would remain available to law enforcement inasmuch as there is any legitimate law enforcement justification for seizing property.

Lastly, Gov. Hogan’s veto statement announces the establishment of a working group, made up primarily of federal and state law enforcement and prosecutors (with a single seat going to the public defender), to decide whether any change to forfeiture law “is warranted” to prevent abuse and ensure law enforcement can still fight the war on drugs.  Tasking the very people who profit from civil forfeiture abuses with deciding whether changes are warranted casts immense doubt on the possibility of meaningful reform.

SB 528 is already a compromise bill.  It doesn’t abolish civil asset forfeiture, as New Mexico did.  It merely raises the protections due to innocent owners and requires state law enforcement to use state laws instead of excessively permissive federal forfeiture laws.  If even that is too much for Governor Hogan to tolerate, it seems unlikely that a working group of police and prosecutors is going to suggest much in the way of meaningful reform.

Civil asset forfeiture reform is not a partisan issue.  New Mexico’s abolition of the practice resulted from a bill that passed unanimously through both houses of the legislature and was signed by Republican Governor Susana Martinez.  Legislation reining in civil forfeiture in Montana was authored by Rep. Kelly McCarthy and signed by Governor Steve Bullock, both Democrats.

This is not a case of Republicans versus Democrats.  It’s a battle between those who believe that due process and private property rights trump the revenue generation and administrative ease of the state and those who believe that those rights are acceptable collateral damage in the war on crime.  Governor Hogan has chosen the wrong side of this debate.

May 7, 2014 1:09PM

FERC’s Prosecutorial Tactics

Joseph Rago of the Wall Street Journal reports on an outrageous enforcement action by the Federal Energy Regulatory Commission against brothers, Rich and Kevin Gates.  Excerpt:

[FERC] began demanding information and taking depositions in fall 2010. At first, the Gates brothers tried to adhere to the insider playbook and hired an attorney from White & Case, a D.C.-based law firm that does frequent business in front of FERC. The insular Washington energy bar trafficks in political connections, but those aren't so useful for clients who maintain their innocence.

Things started to turn for Kevin Gates, he recalls, during his second full-day deposition with the lead FERC enforcement lawyers on the Powhatan matter, Steven Tabackman and Thomas Olson. "I would suggest that it was intimidation tactics, aggressive behavior, which I guess is natural for a federal prosecutor, maybe what you would expect," he says. "But there were also a lot of questions asked and behavior that suggested to me that we were seeing the world very differently and—I would suggest—they didn't know what they were talking about."

Mr. Gates was asked to leave the room and sat in the hallway while his lawyer conferred with the feds. The lawyer emerged to relate what the FERC enforcement team had proposed: "Kevin's a businessman, isn't he? He knows that it's cheaper to settle than it is to fight this investigation." Right then, Mr. Gates says, "I realized that we had a big problem on our hands. This was unlike anything we'd ever seen before at a regulatory agency."

The Gates brothers fired the white-shoe practice and brought on Bill McSwain of Drinker Biddle, a Philadelphia-area lawyer who "didn't interface much with FERC. He also used to be a Marine sniper, so he had a different approach to the world." Mr. McSwain introduced himself to FERC by calling their conduct contrary to "established law, as well as common sense," and that was one of his subtler letters...

[FERC's regulators] have specialized in retroactive punishments for conduct that was legal at the time. Most of these cases never go to court and end with settlements against politically disfavored defendants like J.P. Morgan (that one, like Powhatan, was led by Mr. Olson). Most companies roll over because their future business interests depend on preserving good regulatory graces and favorable FERC rulings. The Gates brothers are unusual in that their livelihoods are elsewhere, but the illogic, intimidation tactics and erosion of due process in their investigation are typical. [Emphasis added].

Read the whole thing.  As the article notes, most business people surrender to the bullying tactics of regulators.  By taking their case public and fighting back, the Gates brothers may not only win their case, but might establish some favorable legal precedents that will help others in the future.  And for that, they deserve our thanks.

For related Cato work on the erosion of due process, go here, here, here, and here.

August 6, 2013 1:57PM

NSA: Keeping Us Safe From…Dope Peddlers

The Justice Department says it is reviewing the Drug Enforcement Administration's "Special Operations Division"—the subject of an explosive report published by Reuters on Monday. The SOD works to funnel information collected by American intelligence agencies to ordinary narcotics cops—then instructs them to "phony up investigations," as one former judge quoted in the story put it, in order to conceal the true source of the information. In some instances, this apparently involves not only lying to defense attorneys, but to prosecutors and judges as well.

DEA is taking a predictable "nothing to see here" stance in its public responses to the story, but on its face this seems like a fairly brazen violation of the right to due process. As several legal experts quoted in the Reuters article point out, the accused in our criminal justice system cannot effectively defend themselves unless they know how evidence against them was obtained, and this program is clearly designed to deprive them of that knowledge. Moreover, at least some of the information channeled to police derives from FISA electronic surveillance, and 50 USC §1806 explicitly requires the government to notify persons whenever it intends to use information "derived from" such intercepts against them in any legal proceeding. Flouting that requirement is doubly troubling because, in light of the Supreme Court's recent ruling in Amnesty v. Clapper, the only way for any court to review the constitutionality of intelligence programs is for a defendant to raise a challenge after being informed that they've been subject to surveillance.

One way they're able to get away with this is by exploiting the fact that our justice system relies so heavily on plea bargains. Prosecutors stack up charges against defendants in hopes of effectively coercing them into waiving their constitutional right to a jury trial and accepting a plea deal, which even for the innocent may make more sense than risking a conviction that could lead to an enormously longer jail sentence. Conveniently, avoiding a trial also greatly reduces the risk that one of these "phonied up" investigations will be exposed.

The Reuters report also suggests—though without providing any detail—that the NSA's controversial phone records database is one source of leads provided to narcotics police. On face this might seem to conflict with repeated assurances from  the administration that these records can only be used for counterterrorism purposes. But there are a few important loopholes. First, as the ACLU's Patrick Toomey notes, NSA analysts may only submit "seed" queries to the database if they have a reasonable suspicion that the terms they're searching—such as a phone number—is linked to a terror group specified in the court order authorizing the metadata program. But those queries then return the phone records of everyone within three degrees of separation, or "hops," from the initial target number—which could easily sweep in thousands or tens of thousands of people—and dump them in a second database, called the "corporate store," which can subsequently be accessed without restrictions or, indeed, without even creating an audit log of how it was accessed. Thus if a terror suspect's cousin (one hop) calls a drug dealer (two hops), the phone records of that dealer's suppliers (three hops) might automatically end up in the secondary database. There doesn't appear to be anything stopping NSA analysts from then running algorithms against that database designed to detect call patterns characteristic of narcotics rings on behalf of their friends at DEA. From there, it is probably not too hard for government lawyers to justify the dissemination of the results to law enforcement: narcotics trafficking, after all, often funds the activities of foreign cartels engaged in "narco-terrorism," and so ordinary enforcement of domestic drug laws can be classified as serving a "counterterrorism purpose" to the extent it disrupts those flows of funds.

Appropriately enough, this story comes just days after a New York Times report on how many govermnent agencies are greedily eyeing the vast stores of data collected by NSA. This should serve as a crucial reminder that you can't build a massive architecture of surveillance "just for terrorism" and expect it to remain limited to that function: once the apparatus exists, there will inevitably be incredible pressure from other interests within government to expand its use. Once the data is already begin collected, after all, it seems a waste not to exploit its full potential. And indeed, we've seen again and again how—mostly because there just aren't all that many terrorists out there—powers and programs justified by the need to fight the War on Terror end up getting coopted for the War on Drugs, from the Patriot Act's "Sneak and Peek" searches (used almost exclusively in drug rather than terror investigations) to federally funded "fusion centers."

For those interested in a more extended discussion, I joined a panel on HuffPost Live on Monday evening to talk about the story in depth.

November 19, 2012 11:40AM

Statutes of Limitations Apply Especially to Government Agencies

Statutes of limitations exist for good reason: Over time, evidence can be corrupted or disappear, memories fade, and companies dispose of records. Moreover, people want to get on with their lives and not have legal battles from their past come up unexpectedly. Plaintiffs thus have a responsibility to bring charges within a reasonable time of injury so that the justice system can operate efficiently and effectively -- and that's doubly so when the would-be plaintiff is the government, with all its tools for investigation and enforcement.

There's a general federal statute of limitations, therefore, 28 U.S.C. § 2462, which protects liberty by prohibiting government actions "for the enforcement of any civil fine, penalty, or forfeiture . . . unless commenced within five years from the date when the claim first accrued." In April 2008, however, the Securities & Exchange Commission sued the managers of Gabelli Funds LLC, a mutual fund, for civil penalties relating to conduct that ceased in August 2002, more than five years earlier. The SEC alleged that Gabelli Funds defrauded investors by failing to disclose that the fund was allowing a favored investor to engage in "market timing" -- buying and selling mutual fund shares in a manner designed to exploit short-term price swings.

The U.S. Court of Appeals for the Second Circuit ruled that the SEC's claim was nevertheless valid because courts should read into § 2462 an implicit "discovery rule" -- a common exception to statutes of limitations that prevents fraud-based claims from accruing ("stops the clock" on the limitations period) until the plaintiff discovers, or with reasonable diligence should have discovered, the basis for the claim. Because of the allegedly fraudulent nature of the defendants' actions, the court found that the government's claim accrued not when their conduct ceased but a year later, when the violation was actually discovered.

The Supreme Court decided to review the case, and Cato filed an amicus brief supporting the defendants. We make three points:

First, Congress could not have intended a discovery rule to be implicit here because at the time the operative language in § 2462 was enacted, case law explicitly rejected a discovery rule -- and since then Congress enacted numerous statutes with explicit discovery rules that would be superfluous if a discovery rule had already existed implicitly.

Second, reading a discovery rule into § 2462 violates the principle of separation of powers by judicially changing the statute's meaning: When judges rewrite laws, those laws fail to meet the constitutional requirement of bicameralism and presentment ("how a bill becomes a law").

Third, even if courts could alter rather than merely interpret the meaning of statutes, there's no basis for creating a discovery rule for government enforcement actions. Government agencies with broad investigatory powers -- indeed, whose purpose is to monitor regulatory compliance -- don't face the same difficulty as private plaintiffs in identifying causes of action which give rise to the discovery rule. Adding a discovery rule to § 2462 would create an indefinite threat of government lawsuits and invite agencies to review decades of past conduct of selectively disfavored companies and individuals -- inevitably chilling innocent and valuable economic activity.

To preserve individual liberty in the face of an ever-burgeoning regulatory state and ensure constitutional separation of powers, we urge the Court to reverse the Second Circuit's decision and hold that no discovery rule applies in Gabelli v. SEC.  The case will be argued at the Supreme Court on January 8.

October 31, 2012 12:30PM

Lawyers Can’t Game the Class‐​Action System at the Expense of Would‐​Be Plaintiffs

To discourage plaintiffs' lawyers from trying to keep class-action lawsuits in state courts that have a reputation for trial awards and settlements that benefit those same lawyers, Congress passed the Class Action Fairness Act of 2005.

In relevant part, CAFA provides defendants with the right to move class actions to federal court where the claim for damages against them exceeds $5 million.  But can clever lawyers keep these cases out of federal court by simply "stipulating" that potential damages are less than $5 million — and before the named plaintiff is even authorized to represent the alleged class?

In The Standard Fire Insurance Co. v. Knowles, the named plaintiff in a putative insurance-recovery class action in Arkansas state court tried to avoid that removal to federal court by stipulating that his not-yet-certified class would not seek more than $5 million in damages at trial.  Notably, the stipulation is worded in such a way that it will not apply if the class definition is later altered.  Treating this stipulation as "binding," however, implicates the Fifth Amendment due process rights of the would-be class members who are thus far absent from and unaware of the lawsuit.

After the lower federal courts denied removal, the Supreme Court took the case to determine whether a plaintiff in a class action may indeed defeat a defendant's statutory right to federal removal under CAFA simply by stipulating to a limit on the amount in controversy.  On Monday, Cato filed an amicus brief arguing that the plaintiff and his attorneys are violating the due process rights of absent class members who would be bound by the judgment in a lawsuit that, if allowed to proceed, would end their right to sue over the same claims while simultaneously limiting their compensation under those claims.

CAFA was enacted specifically to discourage attorneys from "forum shopping" (seeking friendlier courts) and attempting to keep cases out of federal court. Lawyers who game the system by agreeing to cap damages in an effort to keep cases in more favorable state courts violate the federal due process rights of absent would-be class members, thereby flouting CAFA.

The Supreme Court will hear the case in early 2013.