An Oklahoma forfeiture story

Oklahoma is known as one of the more abusive states in the practice of civil asset forfeiture. In this astounding case, Muskogee County cops stopped a car for a broken tail light and questioned Burmese refugee Eh Wah, who was carrying $53,000 in cash following a charitable fundraising tour of 19 concerts given by the Christian rock band whose finances he managed. The county declared that it was seizing the money on suspicion that he must have been mixed up in the drug trade to have so much loose cash, even though no drugs were found, because a dog had alerted. After Dan Alban and others at the libertarian civil liberties law firm Institute For Justice raised a ruckus, with help from the Washington Post’s Christopher Ingraham, the local D.A. dropped the charges and returned the money to Mr. Wah. [Corie Stephens, Rare; Tulsa World (auto-plays)]

Did ADA serial claimant pay taxes on his loot?

“IRS and federal prosecutors have launched a criminal investigation into serial disability access plaintiff Scott Johnson, who has moved his lawsuit operation to the Bay Area in recent months, to determine whether he has paid taxes on his alleged millions of dollars in settlements, multiple sources told this newspaper.

“Unless a plaintiff suffered physical injuries as a result of a civil settlement, that individual must pay taxes on the monetary award, tax experts said. It is unclear whether Johnson paid any taxes on any of his Americans with Disabilities Act settlements with thousands of businesses in California that he alleged obstructed his access as a paralyzed customer using a wheelchair. He and his attorney did not return requests for comment.” [San Jose Mercury-News, more of its coverage on Scott Johnson, earlier on ADA filing mills generally and on Johnson in particular here, here, here, here, and here]

Banking and finance roundup

  • “Why We Could not Bail Out Mortgage Borrowers” [Arnold Kling]
  • Here come the Wall Street pay clawback rules [John Carney/WSJ MoneyBeat Blog, more, yet more] Jesse Fried on “Rationalizing the Dodd-Frank Clawback” [SSRN via Bainbridge]
  • Price controls on credit card interchange fees: “the folks who supported the Durbin amendment [to Dodd-Frank] should be ashamed of themselves” [Bill Isaac, quoted by Kevin Funnell]
  • New light on whether Treasury handling of Fannie and Freddie bailouts violated existing creditor or shareholder rights [Peter Van Doren, Cato]
  • “Dollar Value of Securities Class-Action Settlements Surges” [WSJ Law Blog on Cornerstone Research analysis, Insurance Journal]
  • Some reasons to think that actual tax evasion falls far short of what was speculated in the wake of the Panama Papers story [Tim Worstall] Legal confidentiality was breached in that episode. Should we be celebrating? [Tyler Cowen] Economist mag proposes more regulation of offshore, not so fast [Bainbridge first, second]

Class action: too much ice in Starbucks iced drinks

“A consumer class claims Starbucks’ cold drinks are almost half ice and the coffee chain misrepresents the fluid ounces of its popular, and profitable, iced coffee and tea beverages….Further, Starbucks charges more for cold drinks than for comparable hot drinks, despite giving cold-drink customers less of the product than hot-drink customers; in this way, Starbucks makes higher profits off its cold beverages, Pincus claims.” [Jack Bouboushian, Courthouse News Service] “The customer is seeking $5 million in damages. ‘Our customers understand and expect that ice is an essential component of any “iced” beverage,’ Starbucks said in a response. It added that the company will happily remake any beverage until the customer is satisfied.” [Lindsay Putnam, New York Post] Another class action a few weeks ago claimed that the coffee chain does not fill hot drinks up close enough to the top of the cup.

Labor “persuader” rule blasted at House hearing

On “Wednesday the American Bar Association joined others in asking federal lawmakers to reconsider the [Labor Department’s] revised rule [requiring more extensive disclosure of the identities of outside professionals hired to resist unionization, as well as other clients of those professionals]. Although there are a number of ways in which the rule is ‘deeply flawed,’ the overarching concern of the ABA is the negative impact it will have on attorney-client privilege, says ABA President Paulette Brown in written testimony (PDF) submitted for a Wednesday hearing by a U.S. House subcommittee.” [ABA Journal, BNA, earlier]

First Amendment roundup

  • How the courts came to extend First Amendment protection to art, music, movies, and other expression not originally classed as “press” or “speech” [new Mark Tushnet, Alan Chen, and Joseph Blocher book via Ronald Collins]
  • Cato amicus: church enterprises should be eligible for recycling program on same terms as secular businesses [Ilya Shapiro and Jayme Weber]
  • “A Political Attack On Free Speech And Privacy Thwarted — For Now” [George Leef, Forbes on AFP v. Harris, earlier] Bill filed by Rep. Peter Roskam would keep IRS from collecting names of donors to nonprofits [Center for Competitive Politics]
  • Newly enacted Tennessee conscience exemption for psychological counselors and therapists avoids some of the dangers of compelled speech [Scott Shackford, Reason]
  • Cook County Sheriff Thomas Dart, benchslapped by Judge Richard Posner after sending credit card companies letters urging them to cut off dealings with Backpage.com, now seeks Supreme Court certiorari review [Ronald Collins, earlier here, here, and here]
  • One problem with that Mississippi law: it gives extra protection to some religious beliefs about sex and marriage but not others [Popehat; my guest appearance on Mike Slater show, San Diego’s KFMB]

AGs redefine climate dissent as “fraud”

I joined guest host Steve Simpson on Blog Talk Radio’s Yaron Brook Show, along with guests Sam Kazman (CEI) and Alex Epstein (“The Moral Case for Fossil Fuels”) to discuss the free speech threat of attorney general climate denial investigations (“AGs United for Clean Power”). Related, and recent: “Is Eric Schneiderman colluding with other AGs in an illicit war on Exxon?” [New York Post editorial) Investigation “a flatly unconstitutional assault on speech the state dislikes. I find something terrifying in the notion” [Stephen Carter, Bloomberg View] “While I think that climate change is both human-caused to a significant extent and likely to be a problem, I would warn my environmentalist friends about the dangerous precedent the attack on CEI sets.” [Eli Lehrer, Washington Examiner] “The Climate Police Escalate” [WSJ editorial]

Court strikes down Seattle snoop-in-residents’-garbage law

“A judge has ruled that snooping trash collectors in Seattle cannot simply go through garbage bins without any sort of warrant to determine whether its citizens are putting food in the wrong place. It’s a win for the property-rights-focused lawyers of the Pacific Legal Foundation (PLF).” [Scott Shackford, earlier] While the U.S. Supreme Court has ruled in California v. Greenwood that an expectation of privacy does not apply to garbage, the Supreme Court of Washington has ruled that a provision in its own state’s constitution provides privacy protection that extends beyond the federal guarantee. [Eugene Volokh]

D.C. Circuit: Don’t second-guess DPAs

Deferred prosecution agreements and their close relatives non-prosecution agreements (DPAs/NPAs) have become a major tool of white-collar prosecution in recent years. Typically, a business defendant in exchange for escape from the costs and perils of trial agrees to some combination of cash payment, non-monetary steps such as a shakeup of its board or manager training, and submission to future oversight by DoJ or other monitors. Not unlike plea bargains in more conventional criminal prosecution, these deals dispense with the high cost of a trial; they also dispense with the need for the government to prove its allegations in the first place. DPAs may also pledge a defendant to future behavior that a court would never have ordered, or conversely fail to include remedies that a court would probably have ordered. And they may be drawn up with the aim of shielding from harm — or, in some other cases, undermining — the interests of third parties, such as customers, employees, or business associates of the targeted defendant, or foreign governments.

So there was a flurry of interest last year when federal district judge Richard Leon in Washington, D.C., declined to approve a waiver, necessary under the Speedy Trial Act, for a DPA settling charges that Fokker Services, a Dutch aerospace company, sold U.S.-origin aircraft systems to foreign governments on the U.S. sanctions list, including Iran, Sudan, and Burma. While acknowledging that under principles of prosecutorial discretion the Department of Justice did not have to charge Fokker at all, Judge Leon said given that it had, the judiciary could appropriately scrutinize whether the penalties were too low.

Now a three-judge panel of the D.C. Circuit has unanimously overruled Judge Leon. It pointed out that under well settled law, charging decisions are entrusted to the DoJ or other executive branch prosecutors, not the judiciary, and that judges may not intervene to insist that additional or more stringent charges be filed – and that is what the pattern in this case amounted to, in the appeals panel’s view.

So far so good, you might think. But the language of the appellate ruling in places might be read to suggest that courts should simply defer to the Justice Department’s judgment and green-light the DPAs it may negotiate, period. And that would be disturbing, since over-lenience is only one of the possible problems with these devices. Noting the rule-of-law concerns that scholars have voiced about DPAs, Michael Greve writes that the new Fokker Services decision “in sharp contrast, oozes with ‘trust your friendly prosecutor’ language” and speaks of dispensing with “seeking a conviction that the prosecution may believe would be difficult to obtain or would have undesirable collateral consequences.” Greve adds: “Inquiring minds might want to know whether the conviction would be ‘difficult to obtain’ for practical reasons — or because the charges are preposterous and brought for reasons bordering on extortion. …No judicial scrutiny means more than boundless prosecutorial discretion. It means mobilizing the courts to create a due process façade for highly suspect bargains.” Let’s hope the ruling isn’t read that way.

[cross-posted from Cato at Liberty]