[cross-posted and slightly adapted from Cato at Liberty]
I’ve got a guest post up at Reason on how bounty-seeking informants are bypassing the Internal Revenue Service tipster-reward program in favor of selected state False Claims Acts, such as New York’s, which enable richer recoveries for disloyal employees and others who charge defendants with underpaying taxes. Excerpt:
Will the spread of a culture of informants sow distrust and disloyalty in the workplace, while encouraging dissident executives and their lawyers to shake settlements out of risk- and publicity-averse targets by seizing on doubtful, gray-area legal theories? That’s part of the game too. Lately hedge funds and litigation finance firms have moved in to bankroll the filing of likely “whistleblower” cases. …
…by getting pro-plaintiff laws through the legislature in just a few states—New York liberalized its law four years ago—advocates can set the stage for a nationwide informant push.
In Illinois, a single Chicago lawyer was reported in 2012 to have used that state’s whistleblower law to file at least 238 lawsuits against retailers, pocketing millions in settlements, over alleged failure to charge sales tax on shipping-and-handling.
Whole thing here.
P.S. More recent coverage of the runaway False Claims Act train: “Repeat whistleblowers reap millions of dollars in false-claims suits” [ABA Journal] David Ogden testifies for the U.S. Chamber on what needs to happen with the federal FCA [House Judiciary] “UK Commission Takes A Pass On U.S.-Style Whistleblower Bounties” [Daniel Fisher, Forbes]
In a 4-2 decision, New York’s highest court agreed with two lower courts that New York City’s attempted ban on sugary drink portions over 16 ounces exceeded the powers of the city’s Department of Health. [Bloomberg News coverage]
That’s exactly in line with what I wrote at earlier stages of the case. At the time, some national commentators did not seem to have checked out the actual reasoning of Judge Milton Tingling’s decision, which rested squarely on a distinctive 1987 New York precedent called Boreali v. Axelrod which had struck down the state health department’s attempt to regulate smoking in public places as beyond its properly delegated authority. The soda case was (as they say) on all fours with Boreali, and although the Court of Appeals could have overturned Boreali, as some academics urged, or found grounds to dodge its effect, as the two dissenters did, the court instead chose to apply the precedent as it stood. That confirms that the Bloomberg-appointed Board of Health, in its eagerness to assert powers not rightly its own, had casually broken the law.
One of the two dissenters was Chief Judge Jonathan Lippman, the latest of many indications that he is inclined to pull the Court of Appeals away from many of the positions and habits that have given it a centrist reputation among state courts.
We’ve tracked (especially by way of the Westchester County, N.Y. controversy) the ambitious efforts of the federal Department of Housing and Urban Development to grab more control over local governments’ zoning and project building decisions, in part through a proposed new “AFFH” rule (Affirmatively Furthering Fair Housing). Now the House has voted an appropriations rider cutting off funds for implementation of the new rule. [sponsor Rep. Paul Gosar (R-Ariz.), Paul Mirengoff/PowerLine, Sara Rankin/Legislation Prof (opposed), National Low-Income Housing Coalition, earlier on AFFH and on housing discrimination law generally]
The proposal by New York state Sen. Ruben Diaz Sr., D-Bronx (earlier) is beginning to break out into wider coverage. I’m quoted in this report by Steven Nelson of US News:
Walter Olson, a senior fellow at the Cato Institute’s Center for Constitutional Studies, blogged about the bill earlier this month and tells U.S. News “people see this not just as bossy, but as sinister.”
“Imagine treating every parent in New York as though they are on probation,” he says.
Olson says the bill would force parents to “show up and be re-educated” and “lectured about the shortcomings of how they are raising their kids and be inoculated with whatever the fad of the year is.”
“If you thought the public reaction to the soda ban was big,” Olson says, “wait until you see the public reaction to telling people the government knows better than they do how to raise their kids.”
Speaking of helicopter governance, if you’re near Washington, D.C. be sure to mark your calendar for next week’s (Mar. 6) talk at Cato by Lenore Skenazy of Free-Range Kids. Details and registration here.
A bill introduced by three members of the New York Senate would require parents of schoolchildren to attend four workshops aimed at sharpening their “parenting skills,” as a condition for their kids’ advancing to the seventh grade. I’ve got details in a new post at Cato at Liberty (& Patheos’s Terry Firma).
Jack Shafer has a few thoughts:
Schneiderman mustn’t neglect the product endorsement industry. Do those celebrity endorsers really love the product or service as much as they say they do? … Fake reviews on Yelp, properly considered, are Yelp’s problem, not the state of New York’s. Let the Yelp people clean up the sewer. And the attorney general? Aren’t there any genuine crimes in the state for him to investigate?
With enough enforcement linkage between different branches of government, do we even need a Panopticon? “Beginning this year, [New York] drivers who owe more than $10,000 in state taxes face losing their license until the debt is paid.” Does this mean persons who have fallen behind on taxes won’t be able to get to their jobs to pay off the arrears? Well, it seems “there is a ‘restricted’ license that you can apply for in the event that your license is suspended” which “would allow you to commute to and from work only.” How this is to be enforced — whether the hapless motorist will be nailed for stopping off for a loaf of bread on the way home, or venturing out for a job interview — is your guess as well as mine. [Kelly Phillips Erb, Forbes]
When local governments lack a properly compliant attitude:
The federal monitor overseeing Westchester’s much-debated court settlement with the U.S. Department of Housing and Urban Development over affordable housing asked County Executive Rob Astorino on Wednesday to remove a news release from the county’s website, saying it contains falsehoods….
[Manhattan-based attorney James] Johnson cast doubt on whether Astorino can say whatever he wants about the controversial 2009 settlement.
During a conference call with journalists shortly before Astorino’s news conference, Johnson said the settlement calls for the county to educate the public about the benefits of integration. Astorino, on the contrary, has been antagonistic toward much of the agreement, Johnson said.
Johnson says Astorino wrongly suggests that HUD is pressing for construction of more than the 750 units of “affordable” housing specified in the settlement; Astorino responds that HUD officials keep citing a study under which a much larger number of units would be required to bring the towns into compliance. Westchester voters elected Astorino in part because of his criticism of the much-disliked deal. [Newsday, paywall; earlier here, here, here, etc.]
In the New York legislature, bowling alleys are hoping to win a law protecting them from slip-fall liability arising after their customers wear store-rented shoes outside the building and either slip there or track snow or other slippery matter back inside. Weather hazards have been tripping up more customers of the ordinarily indoor sport, it seems, since the state enforced a complete indoor smoking ban. The trial lawyer association is dead set against the bill; its president claims that the bill “undercuts the constitutional right to a trial by a jury” — presumably on the theory that it somehow undercuts trial by jury for a legislature to roll back any instance of liability for anyone anywhere. That’s sheer nonsense, of course — otherwise, it’d have been unconstitutional for legislatures around most of the country to have abolished the old heartbalm torts of breach of promise to marry and alienation of affection. [Albany Times-Union via Future of Capitalism] More: Lowering the Bar.
A lawyer who’d been widely and scathingly criticized over his handling of a case — unfairly he thought — proceeded to sue bloggers and journalists for defamation, so many that the total of defendants reached 74. It’s over now, but a New York state judge declined to award sanctions, which may possibly say something about the difficulty of obtaining sanctions under today’s prevailing legal standards, especially in New York. [Tom Crane, San Antonio Employment Law Blog; Popehat ("Our legal system is so broken that it can take years to resolve even the most patently vexatious, harassing, and incompetently prosecuted lawsuits like this one.")]
P.S. “Loser pays would have been valuable here. Costs to each defendant would teach a memorable lesson.” [@erikmagraken]