Overlawyered: Chronicling The High Cost Of Our Legal System

Justice Dept. case against FedEx collapses mid-trial

Big news from federal court in San Francisco: we’ve repeatedly questioned the U.S. Department of Justice’s adventurous decision to charge Federal Express with crimes for, in essence, refusing to snoop into its customers’ packages and business. From our post two years ago:

The federal government has prevailed on a grand jury to indict Federal Express for servicing what it should have known were illicit online pharmacy operations. FedEx says it repeatedly asked the government to supply a list of shippers it considered illicit so that it could cut off service, but that the government refused; the Department of Justice contends that circumstantial evidence should have been enough to alert the package shipment company. …

And last month, quoting Washington Legal Foundation’s Cory Andrews:

“Federal prosecutors have accused FedEx of knowingly shipping illegal drugs in interstate commerce and laundering money by merely doing its job: delivering packages (in this case, from online Internet pharmacies) to their intended recipients and getting paid for the service. …To avoid the very sort of ‘gotcha’ prosecution at issue here, Congress inserted exceptions for common carriers in each of the relevant statutes” authorizing shipment of prescription medications and controlled substances when done in the usual course of business….

Now, this [Associated Press/ABC News]:

A criminal trial nearly two years in the making alleging FedEx knowingly delivered illegal prescription drugs to dealers and addicts ended suddenly Friday when prosecutors moved to dismiss all charges against the shipping giant.

U.S. District Court Judge Charles Breyer, who had been highly critical of the government’s positions as the trial unfolded, granted the motion to dismiss: on Friday he called FedEx “factually innocent” and said the withdrawal of charges was “in the court’s view, entirely consistent with the government’s overarching obligation to seek justice even at the expense of some embarrassment.”

FedEx spokesman Patrick Fitzgerald said in a statement Friday that the company has always been innocent and the case should never have been brought.

“The government should take a very hard look at how they made the tremendously poor decision to file these charges,” he said. “Many companies would not have had the courage or the resources to defend themselves against false charges.”

Many in the field of white-collar legal defense have warned large corporations, particularly those with businesses built upon relationships of public trust, to cut a deal with the federal government rather than try to withstand the full force it can bring to bear in a prosecution. But FedEx, for one, has shown that it is still possible to defy the authorities and win. Mike Koehler at FCPA Professor says that might help lay to rest what has been called the “Arthur Andersen effect” in which indictment is itself seen as tantamount to corporate death.

P.S.: Our friend James Copland of the Manhattan Institute has this observation (via email):

What’s remarkable here is that UPS agreed to a $40 million non-prosecution agreement — and to hire a new corporate officer and an independent auditor looking over their shoulder and reporting to the U.S. Attorney — for the same alleged conduct.

[cross-posted at Cato at Liberty]

More from Jim Copland and Rafael Mangual at Real Clear Markets: “Judge Breyer observed that the government had failed to show any ill intent, and he pointedly noted that prosecutors have not gone after the U.S. Postal Service for the same conduct…. glad FedEx called the government’s bluff and won.” And: Eugene Volokh; George Leef, Forbes (and thanks for quote).

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Police chief: 16 is the right age to let kids outside by themselves

This is quite insane [Lenore Skenazy]:

The New Albany, OH, chief of police is advising parents not to let their kids go outside on their own until they are 16.

According to this piece on News10:

New Albany’s police chief wants parents to understand that kids younger than 16 simply cannot defend themselves against an attacker.

Chief Greg Jones says 16 is the appropriate age to allow children to be outside by themselves. “I think that’s the threshold where you see children getting a little bit more freedom,” he says.

Not a lot of freedom, mind you. Just a “little bit.”

As readers have pointed out on social media, the timing of the chief’s recommendation suggests that teens will be able to make the transition directly to driver’s license status without having to do something truly scary in the mean time like walking down the block by themselves.

New Albany is a growing suburb of Columbus, the capital of Ohio, with a low crime rate. Its Wikipedia page is here.

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Freedom of association, discrimination law, and religious exemption

On Tuesday the Cato Institute held a daylong conference on religious liberty. It was interesting throughout, but especially for its afternoon session on public accommodations, featuring Roger Pilon of Cato, Louise Melling of the American Civil Liberties Union (ACLU), and
Mark Rienzi of the Becket Fund for Religious Liberty and Catholic University. Coverage: Ramona Tausz, The Federalist.

Also notable as a cogent summary of the state of play on the federal Religious Freedom Restoration Act and its state equivalents (RFRAs), the luncheon keynote speech by University of Virginia law professor Doug Laycock, of FOIA-controversy fame:

More videos from other sessions at the conference page.

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Payday lending crackdown continues

“The U.S. Department of Justice (DOJ) has filed a series of criminal charges against short-term lending companies, accusing the unrelated firms of violating the Racketeer Influenced Corrupt Organization (RICO) Act, a federal law passed with the intention of combating organized crime.” It says lenders have falsely claimed affiliation with American Indian tribal governments so as to evade regulation. [Ben Johnson, Heartland]

The forces of consumer financial regulation led by Sen. Elizabeth Warren have made it clear that they would like to ban “payday” lending (short-term, at high interest rates or fees). Yet history teaches that such lending — like gambling, late-night alcohol, and many other disapproved activities — is in such steady demand that short of government supervision of a population more intense than anything in living memory, the real choice is whether to tolerate an aboveboard legal market or to drive it into informal and sometimes illegal channels. In the latter circumstance, consumer remedies against bad actors may be non-existent, and extra-legal status and the absence of advertising may make it hard for borrowers to compare possible sources of loans. As for enforcement methods following non-payment of debt: “Driving [businesses] underground will very often make it worse,” Olson said. “It will mean outright violence, at worst, or extralegal sanctions for those who aren’t paying their debt. You might find you like extralegal sanctions less than you like things they can currently do, like ruining your credit rating.” More: Eric Boehm.

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Schools and childhood roundup

  • In the mail: “No Child Left Alone: Getting the Government Out of Parenting,” forthcoming book by Abby Wisse Schachter [more: Pittsburgh Tribune Eric Heyl interview]
  • Neighbor reports Winnipeg mom to child services for letting kids play in fenced-in back yard [Canadian Press/National Post via Amy Alkon]
  • “Public space in Germany is not held hostage by liability lawsuits; Berlin playgrounds are not designed by lawyers.” And they’re awesome [Anna Winger, New York Times]
  • Controversy intensifies further on Scotland’s Named Person scheme [Scottish Mail on Sunday (“complete stranger” will be assigned as Named Person to each child over school holidays), Gerald Warner/CapX, earlier here and here]
  • Omar Mateen’s road to becoming a security guard: “He had issues. All the records were discarded by the school system, per statute. Clearly, if his employer had access to his juvenile record, he would be the last person to own a weapon.” [Yahoo]
  • Kansas Supreme Court orders state legislature to increase funding for poor districts [ABA Journal, earlier here, here, etc.]
  • Left-right cooperation on school reform begins to break down amid demands to toe social justice line [Robert Pondiscio]

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Massachusetts AG to Exxon: hand over your communications with think tanks

Appalling: Massachusetts Attorney General Maura Healey has demanded papers of “major associations and think tanks involved in climate skepticism” that may be in the files of the ExxonMobil Corp. including groups to which Exxon has never given a dollar [The Hill; Mike Bastasch, Daily Caller] One of her targets, Alex Epstein, author of The Moral Case for Fossil Fuels, responded with extremely rude language entirely unprintable in this space [same] Meanwhile, 19 Democratic members of Congress from California including Reps. Ted Lieu and Zoe Lofgren have written a letter to California Attorney General Kamala Harris urging her to continue full speed ahead with her probe into wrongful climate opinion and to pay no attention to critics’ cries that the First Amendment might somehow be relevant [same] Attorney general Claude Walker of the Virgin Islands is fighting a sanctions motion by the Competitive Enterprise Institute over his overreaching subpoena [WSJ editorial] As for “the claim by activist groups and liberal politicians that they are doing to Exxon Mobil what they did to tobacco,” does that mean they’re planning on cartelizing the oil industry and bolstering its profits while making sure billions in contingent fees get siphoned off to the lawyers among their political donors? [Holman Jenkins, Wall Street Journal] Earlier here, here, etc., etc.

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Fear of Thiel and the case for litigation reform

“Angry about Peter Thiel’s pursuit of Gawker? Tort reform is the best solution.” Sonny Bunch of the Free Beacon is kind enough to quote me at length (and quote my debut book, The Litigation Explosion, at length too) in this Washington Post opinion piece.

…members of the media are finally starting to realize something that conservatives have been arguing for quite some time with regard to our litigious culture, namely that the process itself is the punishment….

One of the causes that Olson argued most strenuously for in his book [The Litigation Explosion] was a more aggressive regime of fee shifting — that is, crafting and enforcing “loser-pays” laws common in other countries. Given that he literally wrote the book on the topic, I emailed him and asked how news outlets could work to avoid ruin at the hands of the vengeful wealthy….

If you wonder how loser-pays might have helped Gawker even though Hulk Hogan’s case was a winner, you need to read the link. More: Andrew Kloster and Jessica Higa, Daily Signal.

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