Topic: Law and Civil Liberties

What Is ‘Unreasonable’ Compensation? And Who Gets to Decide?

As could be expected, the effects of the financial crisis — and people’s reaction thereto — are starting to make their way to the least political branch of government, the judiciary.  The Supreme Court this term will be hearing several cases that could have serious repercussions on our economic recovery, one of which led us to file an amicus brief.  Here’s the situation:

The Investment Company Act of 1940 places on investment advisers a fiduciary duty with respect to the compensation they receive for the services they provide their clients. In the case of Jones v. Harris Associates, shareholders in various mutual funds contend that their adviser fees were excessive and violated the ICA. The Seventh Circuit, the federal appellate court based in Chicago, affirmed the judgment of the district court that the fees were not excessive but also expressly disapproved of the  methodology for evaluating such claims used by the Second Circuit (based in New York). Judge Frank Easterbrook’s opinion explains that the ICA creates a fiduciary duty but does not act as a rate regulator, and that judicial price-setting does not accompany fiduciary duties. Judge Richard Posner, writing for five judges, dissented from the denial of an en banc rehearing. The Supreme Court agreed to review the case to settle the circuit split.

Our brief supports the investment adviser and makes three arguments:

  1. All persons have a fundamental human right to whatever compensation their contracting partners freely and honestly choose to pay them.
  2. Courts have no power to second-guess the reasonableness of any salary or compensation agreement honestly and freely signed by both contracting parties.
  3. The ICA’s fiduciary duty requires only fair dealing, not any particular outcome.

Thanks to Cato adjunct scholar Tim Sandefur for spearheading this effort, and to Cato legal associate Matthew Aichele for helping with much of the attendant busywork.

Some Good Spending For a Change

Cato analysts regularly identify areas where the government is either wasting money or spending money on unconstitutional or inappropriate matters. There are a few areas, however, where the state does not spend money where it ought to. 

A case in point is where the state has mistakenly locked up an innocent person.  Believe it or not, in some jurisdictions no compensation is offered to the victims.  Zero! 

The Associated Press has a story today about a new Texas law that will pay about $80,000 in compensation to victims for each year they were wrongly incarcerated.  Other states should follow suit.  Inaction is inexcusable. 

(H/T:  Grits for Breakfast)

How Much for a Schlub?

Over at The Corner, Rich Lowry put up a post on detainee interrogations that I responded to. Follow-up posts are available here and here.

Jay Nordlinger steps in to offer the view that, with terrorists, the difference between a “schlub” and a “monster” isn’t much. A pathetic radical can cause a lot of damage with just a little bit of luck.

This may be true, but there is a valuable ends-means calculation that must be considered (also addressed in Julian Sanchez’s post here).

How many times must we use coercive interrogation and get nothing, suffering the inevitable backlash in public opinion and enemy recruiting, for each intelligence success? If you are willing to torture a dozen/hundred/thousand men for each schlub, you will motivate a sufficient number of monsters to make a small tactical victory a pyrrhic one at best, and a strategic debacle at worst.

The big picture trends against torture, or any use of force that crosses the line between mutual combat and violating human rights, or the use of indiscriminate force. The attack on September 11, 2001 crossed that line, and we justifiably responded with military action. The use of “enhanced interrogation techniques” (EIT’s) crossed that line, and the enemy used it as propaganda fodder.

The British faced a parallel situation in Northern Ireland in 1971. After employing mass arrests that stoked the fires behind the IRA, the Brits employed “special interrogation techniques.” Former FBI Special Agent and successful terrorist group infiltrator Mike German covers this in his book, Thinking Like a Terrorist (citing Armed Struggle: The History of the IRA):

Among the methods used on the internees were the “five techniques”: placing a hood over the head; forcing the internee to stand spreadeagled against a wall for long periods; denying regular sleep patterns; providing irregular and limited food and water; and subjecting people to white noise in the form of a constant humming sound.

Sound familiar? Violence in Northern Ireland increased as a result of these practices. The Brits crossed the line again on Bloody Sunday when they fired into a crowd of peaceful protestors (possibly a response to IRA gunfire at British paratroopers). The tide shifted in favor of the IRA until they broke the unwritten rules of the game on Bloody Friday, detonating twenty-two bombs in Belfast that killed nine people. Tactically masterful, but a political disaster.

The Bush administration changed tactics in its second term in office, discarding EIT’s and moving away from physical coercion of detainees. This was a sensible decision, and there is no reason for the Obama administration to change course.

Lowry and Interrogation

Veronique de Rugy put up a post at The Corner referencing Rich Lowry’s defense of “enhanced interrogation techniques” and my response. Rich has since responded.

With regard to the apprehension of Uzair Paracha, an Al Qaeda facilitator in New York, it seems likely that the apprehension of Majid Khan in Pakistan four days after Khalid Sheikh Mohammed’s (KSM) apprehension came from material picked up with KSM and not from interrogation. The key here is that when Majid Khan was in Pakistan, Paracha was pretending to be Majid Khan in communications with immigration officials. Detective work was probably what brought this guy under the microscope.

However, I’m willing to lay that aside because, as Rich points out, there is probably more to the story that shouldn’t be declassified. As I said on Bill O’Reilly’s show, we cannot end this argument until we have declassified all of the dead ends we pursued, which has some serious strategic drawbacks. The CIA recently asserted in court that it cannot reveal any more without compromising sources and methods.

Rich also says that my preferred method of interrogation is “dangling the promise of reduced sentences.”

This is not my preferred method, but it is one that ought to be available to interrogators. Under the Army Field Manual, an interrogator cannot promise anything in the court system. As Matthew Alexander points out in his book, the Iraqi Central Criminal Court has the death penalty attached to almost all of what we consider “material support of terrorism.” I am saying that the Prisoner’s Dilemma is an effective tool if a lesser included offense is on the table so that the first to squeal gets a few years and the others get the noose.

But let’s not discount the lawful interrogation techniques. When I attended SERE, the psychological techniques were far more compelling than the physical ones. We were all young and tough, but the mind tricks that turned brothers in arms against each other were downright disturbing.

DC Gun Regulations

A Washington Post reporter describes the rigmarole Washington D.C. residents must endure to purchase a gun and keep it in one’s home for purposes of self-defense. Snippet:

It took $833.69, a total of 15 hours 50 minutes, four trips to the Metropolitan Police Department, two background checks, a set of fingerprints, a five-hour class and a 20-question multiple-choice exam.

It’s a fair-minded article–not only about the government regulations, but also the factors that play into the decision to keep a gun–risk of crime, risk of accident, the personal willingness to use deadly force (not to mention getting approval from the spouse!)

Cato Chairman Bob Levy, the prime mover of the landmark Heller ruling, discusses the next legal fight: Whether one can carry a firearm outside of the home for purposes of self-defense. Tom Palmer is suing the DC government on this. For more on the Second Amendment and gun control, check out the new Cato book, Gun Control on Trial, by Brian Doherty.

Beach v. Florida

Cato Adjunct Scholar and Pacific Legal Foundation Senior Staff Attorney Tim Sandefur published an excellent op-ed in the National Law Journal this week on the upcoming Supreme Court case Stop the Beach Renourishment v. Florida Department of Environmental Protection:

The case involves a Florida statute determining the boundaries of oceanfront property. Under a 1961 law, the state drew a brand-new line separating public and private land on certain beaches, meaning that some land that would have been privately owned would belong instead to the state. A group of property owners filed suit, arguing that the law deprived them of property without just compensation, violating the state and federal constitutions.

Last December, Florida’s highest court rejected their arguments. It held that, while the new boundary gave the state ownership of the beach land, the former owners actually had no such right to begin with. Despite more than a century of Florida law to the contrary, the court announced that the owners actually only had a right to “access” the ocean, and because the state promised to allow them to keep crossing the land to reach the water, it actually hadn’t taken anything away when it seized the land itself.

Thus, by simply reinterpreting state property law, the court allowed the state to take property without compensation with a mere stroke of a pen. Yet the U.S. Constitution forbids states from confiscating property - even through legal legerdemain - without payment.

[.]

[T]he U.S. Constitution also guarantees every American’s right to due process of law and to protection of private property. If state judges can arbitrarily rewrite a state’s property laws, those guarantees would be meaningless. More than four decades ago, Justice Potter Stewart warned that, without a constitutional limit on the states’ power to determine the nature of property, states could “defeat the constitutional prohibition against taking property without due process of law by the simple device of asserting retroactively that the property it has taken never existed at all.”

It is well-worth a full read here.

Despite the dreadful decision in the Kelo case several years ago, the fight to maintain the fundamental right to private property continues in our courts and legislatures. Tim and PLF have been doing yeoman’s work in the fight for property rights, and I am proud to team Cato up with them and the NFIB Legal Center in filing an amicus brief on behalf of the rightful property owners in this case. You can download the PDF of the brief here.

Turning Our Back on Torture

NRO’s Rich Lowry just weighed in on the torture debate with some false assumptions and already-debunked assertions. He says that the Obama administration turned its back on “life-saving intelligence-gathering” techniques.

In point of fact, the United States turned its back on “Enhanced Interrogation Techniques” (EIT’s) a long time ago. American soldiers used waterboarding to gain intelligence in the Philippines occupation immediately after the Spanish-American War. The response? President Roosevelt, who led the Rough Riders up San Juan Hill, demanded that the soldiers employing the “water cure” be prosecuted. American soldiers who employed waterboarding in Vietnam were likewise court-martialed. A previous post at NRO’s The Corner makes this clear.

The bottom line? The Geneva Conventions apply to the modern battlefield, asymmetric or not. The Supreme Court said so in 2006, so a new memorandum from the OLC finding that the Geneva Conventions do not apply is out of the question. Re-authorizing EIT’s is a legal impossibility. While the Right tries to argue their efficacy in a partisan fight to prevent prosecution, this is an argument limited to a political rehabilitation, not a legal one.

Lowry also exaggerates the importance of corroborating information that Khalid Shaykh Mohammed (KSM) gave under EIT duress:

According to the IG report, KSM’s cooperation led to the arrest of a truck driver in the U.S. named Iyman Faris who was plotting attacks on New York landmarks; of a sleeper operative in New York named Saleh Almari; of an operative named Majid Khan who had easy entree into the U.S.; and of two Pakistani businessmen whom KSM “planned to use to smuggle explosives into the United States.”

“Saleh Almari” appears to be Ali Saleh Kahlah al-Marri. I’ve written extensively about al-Marri, who was apprehended in December, 2001, long before KSM was in custody. Here is the indictment.

As Peter Bergen points out, Iyman Faris won’t make the terrorist all-star list any time soon. “In 2002 he researched the feasibility of bringing down the Brooklyn Bridge by using a blowtorch, an enterprise akin to demolishing the Empire State Building with a firecracker.”

Bergen also sheds some light on the collars of Majid Khan and the Parachas (the “two Pakistani businessmen”):

The Parachas are a father-and-son team; the former, arrested in Thailand in the summer of 2003, is being held at Guantánamo and has yet to face trial, while his son was convicted in 2005 of providing “material support” to al Qaeda.

Majid Khan was arrested in Pakistan only four days after KSM was captured, suggesting that this lead came not from interrogations but from KSM’s computers and cell phones that were picked up when he was captured.

The only valid criticism that Lowry levels is with regard to the limitation of the new High-Value Detainee Interrogation Task Force, but not in the way you might think. While limiting interrogations to the techniques in the Army Field Manual keeps brutality off the table, certain law enforcement techniques such as the Prisoner’s Dilemma are valid and ought to be used. Terrorist networks are more like crime syndicates than an infantry battalion in organization; if promises of reduced sentences can get terrorists to talk about their comrades then by all means use them.