Saturday, April 17, 2021

IRS Leaves No Roger Stone Unturned—and Why His Friends Won’t Bail Him Out.

Roger Stone has a history of underpaying taxes owed to the IRS. That alone does not make him unique. Fortunately for him and many others, the Internal Revenue Code provides a detailed mechanism for making periodic payments. These are called installment agreements which include interest on unpaid amounts and may also include penalties.

Tax debts of under $10,000 qualify almost automatically for installment agreements. Liabilities above that amount usually require an agreement with the IRS that takes into account your income and other assets. When listing your assets for purposes of this kind of agreement, your statements about the property you own are done under oath. Lying about your assets or their value is sufficient to void the agreement and to make the entire amount due immediately. Where appropriate, the IRS may file a lien on your property until the tax liability is resolved.

Generally, all goes well so long as the taxpayers make the monthly payments. Miss one payment, however, and the entire agreement can be voided. That is what happened in the Roger Stone case. Complicating matters for Stone is that he was apparently not truthful about all of his assets. Through the use of what the IRS referred to as a shell company, he was able to hide some of his income and use that money bucket to support what was called a “lavish lifestyle.”

The IRS filed suit against Stone yesterday to recoup the $2 million he owes. As always, the filing of a complaint does not necessarily mean the IRS will win. But Stone has a number of serious issues here. First, the default on the installment agreement, meaning that more than $2 million is immediately due the IRS. Second, the failure to pay income tax on the amount sheltered in the sham company. Third, the fraud he committed by lying about his assets at the time he entered into the installment agreements. Fourth, the fact that this is a civil action by the IRS, meaning that the pardon he was granted by Trump does not relieve him of liability.

Stone immediately responded in the calm and measured manner with which we are all familiar. He called it: “another steaming pile of horseshit from corrupt prosecutors apoplectic about my pardon.” He may be better served by outlining a more defensible position.

Should the IRS be successful, Stone could lose everything, including real estate that he had improperly funneled into his wife’s name. Further, if the IRS fraud allegations are proven, bankruptcy will not protect him.

One possible way out is for one of Stone’s rich friends to pay the amount he owes. Even if these friends are kind and generous souls, it is extremely unlikely that they will bail him out. The reason is the rules about making a gift. Gift recipients almost never owe taxes on the amounts they receive. So far so good.

However, the maker of the gift is limited to a tax-free gift of $15,000 to any individual in any one year (subject to exceptions that include the payment of tuition). Gifts above that amount require the giver to file my favorite tax form, Form 709, the gift tax return. No actual taxes are due at the time the form is filed, but the amount of the gift reduces amount that is exempt from death taxes, currently a little more than $11.5 million per individual. This means that if I made a $2 million gift to Roger Stone to pay his taxes, I would lose a $2 million exemption on my personal estate taxes. Not. Gonna. Happen.

Perhaps Stone’s reference to horseshit is well timed. He is fairly deep in it right now.

A side note since we’re talking about taxes. Occasionally you will see a television ad about “offer and compromise,” where the IRS will settle your debt for a small percentage of what you owe. Although the ads imply that most people qualify, only a tiny percentage of cases do.

Friday, April 9, 2021

We Have Moved from “Release the Kraken” to Buzz Lightyear. Really.

There is a lot to unpack this week in the wonderful world of “release the Kraken” lawyer, Sidney Powell. The week ended with her quoting from Buzz Lightyear in a legal brief. Bear with me as we cut through the legalese while unravelling the recent developments in her cases.

Two weeks ago, Powell moved to dismiss the Dominion Voting Systems’ defamation case against her, arguing among other things that no reasonable person would accept her comments about Dominion at face value. (For more on that, see my prior article: Sidney Powell’s Defamation Defense: No Reasonable Person Would Believe My Election Rigging Claims on FOX.)

The "no reasonable person" statement did not go unnoticed by the Michigan lawyers who are attempting to get Powell sanctioned for filing frivolous post-election lawsuits there. To understand why their ears perked up, you need to know a little about writing legal briefs.

When the court allows you to file a legal brief in support of your case, two things are of utmost importance: you need to file the brief on time, and you need to include everything relevant to the case in that document.  In other words, you have one shot to do the exhaustive research necessary to make your legal case. You do not have the luxury of later saying “Oops, I missed something.” Knowing that this is a one-shot deal is what causes sleepless nights.

There is one exception to the “one shot” rule, and that is when brand new information is revealed after the brief has been filed. If you have new information, you may request that the court accept a “supplemental brief.” This is what the lawyers in the Michigan sanctions case did earlier this week.

In their supplemental brief, the Michigan lawyers said that Powell’s statements in the Dominion case effectively proved that she should be sanctioned in the Michigan case. Her “statement of facts” were, from her own admission, not facts at all. You are not entitled to file a case citing “facts” when you are actually saying “let’s see how this plays out.” In all likelihood, the judge will allow this supplemental brief to be filed. It does not portend well for Ms. Powell.

You might think that the movement in these two cases would be enough drama to last a while in the Powell world. You would be wrong. Michigan is not the only state where sanctions against Powell are being sought. She is also defending against sanctions in Wisconsin.

The argument for sanctions in Wisconsin is similar—that Powell pursued frivolous litigation. Powell’s motion to dismiss in this case is a bit different, however. She is claiming that the original Wisconsin defendants cannot claim sanctions because they waited too long to ask for them. (Technically, the court no longer has jurisdiction to hear a claim for sanctions because the case was dismissed as moot.)

What is most interesting in the Powell’s brief in support of her motion to dismiss is not the case law she cites, as questionable as that is. Rather, what has caught most commentators’ attention is her characteristic, yet extraordinary, use of hyperbole.

Most lawyers would suggest that the Wisconsin defendants simply waited too long to bring their request for sanctions. Not Powell. She argued that allowing the sanctions motion to proceed “could extend the time for filing a sanctions motion ‘to infinity and beyond’ to harass a plaintiff in what amounts to nothing more than political grandstanding.”

That’s right. Powell quoted Buzz Lightyear and even footnoted it (Buzz Lightyear, Toy Story (Pixar 1995).)

The consensus among legal analysts is that there might be more persuasive people to quote than Mr. Lightyear. If Buzz does end up being legally credible, he will probably be quoted in the reply brief as well, something along the lines of “There seems to be no sign of intelligent life anywhere.”


Monday, April 5, 2021

Trump Twitter Case Dismissed as Moot—But That's Not the Interesting Part

Today, the U.S. Supreme Court dismissed the case brought against Donald Trump for blocking people on Twitter with whom he disagreed. The decision was not unexpected. After all, (1) he is no longer president and (2) he had already been permanently barred from Twitter.

Although there was no written opinion accompanying the dismissal, Justice Thomas wrote a 12-page concurring opinion. Thomas agreed that the case should be dismissed as moot but used the opportunity to talk about what may become an issue in the future—to what extent a private company such a Twitter should be allowed to operate outside of First Amendment safeguards.

The main subject of the opinion is not what caught my eye. Rather, it was Thomas’s comment about how Trump had used his Twitter account during his presidency.

Mr. Trump often used the account to speak in his official capacity. And, as a governmental official, he chose to make the comment threads on his account publicly accessible, allowing any Twitter user—other than those whom he blocked—to respond to his posts. [Emphasis added]

This apparently throw-away comment by Justice Thomas is more important than it appears at first blush. We have already seen Trump’s Twitter comments referenced in other legal proceedings. If, as Justice Thomas suggests, these Twitter remarks were often used in an official capacity, it undermines an argument often made by Trump’s lawyers that his Twitter posts should not be taken at face value.

It has been noted in other contexts that Trump’s voluminous Twitter posts could later be problematic for him. When a conservative justice such as Thomas says that Twitter posts have credence as official statements, it gives even deeper meaning to “problematic.”

 

Wednesday, March 31, 2021

Trump’s Tweets Sink a Non-Disclosure Agreement

Businesses have a legitimate interest in protecting confidential and sensitive information as well as their public reputation. Requiring employees to sign non-disclosure and non-disparagement agreements (NDAs) are one method of ensuring that. These written agreements may also be used with third-party contractors and volunteers (especially to political campaigns).

NDAs may also have the effect of limiting an individual’s free expression rights under the First Amendment. Therefore, the agreements require a delicate balancing of the inherent rights of the two parties.

Jessica Denson was hired by the Trump campaign in 2016 as a Hispanic outreach director. She accused the campaign of sex discrimination. Under the terms of the NDA, an arbitrator was appointed and issued a $50,000 award against her for violating the terms of the agreement. The arbitrator based his ruling only on the terms of the NDA. It was not his role to decide whether the NDA was actually enforceable. That award was later overturned.

Denson then filed suit against Donald J. Trump For President, Inc. in Federal court, claiming that the NDA was so broad in its scope that it was not enforceable and was an unwarranted intrusion on her Constitutional right of free expression.

The Federal District Court judge examined the NDA to see if it was “reasonable in time and area, necessary to protect the employer’s legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee.” Yesterday's ruling said it was clearly not.

For example, the agreement placed NO limits on time and area. It also was incredibly broad as to the people and entities who were “protected” by the agreements.

The provision applies not only to President Trump and his family members – including unnamed spouses, children, and grandchildren – but also to any legal entity ‘that, in whole or in part, was created by or for the benefit of . . . or is controlled or owned by’ President Trump or any of his family members. President Trump himself is affiliated with more than 500 companies, and his family members may be affiliated with yet more.

Showing that the NDA was overly broad was only half of Denson’s battle. She next needed to show that her free expression would likely be infringed by it. In other words, would there be an attempt to enforce it?

In many cases, this would be difficult to prove. Here, Trump did it for her. All the court needed to do was to quote his tweets. Here is one of the many that the court quoted.

[On] August 31, 2019, President Trump tweeted, ‘...Yes, I am currently suing various people for violating their confidentiality agreements. Disgusting and foul mouthed Omarosa is one. I gave her every break, despite the fact that she was despised by everyone, and she went for some cheap money from a book. Numerous others also!”

The court concluded: 

[T]he Campaign has engaged in a pattern of enforcing or threatening to enforce the Employment Agreement’s non-disclosure and non-disparagement provisions against former Campaign employees, including Denson, Newman, Sims, and Johnson. And the primary intended beneficiary of the Employment Agreement – President Trump – has tweeted about his efforts to enforce non-disclosure agreements. Given this record, Denson has demonstrated a “well-founded fear” that the Employment Agreement will be enforced against her.

Trump’s lawyers tried one last gambit. Maybe the court could salvage the good parts of the NDA, something called “blue lining.” The judge said no, that the agreement was not salvageable without a complete rewrite.

To summarize, the NDA attempted to do much more than just protect legitimate business interests and Denson was harmed by it. 

Denson’s win only applies to her own NDA. However, it is likely that others who were required to sign similar agreements may also try to get them declared invalid.

Considering that dozens, if not hundreds, of similar NDAs exist out there, the exposure to the Trump organizations is extensive. Therefore, expect an appeal of this ruling.

Tuesday, March 30, 2021

Trump’s Greatest Vulnerability—the Deposition

Vulnerability is not the same as guilt. I need to emphasize that up front.

Today, New York’s highest state court ruled that Summer Zervos may proceed with her lawsuit against Donald Trump. Zervos claims that Trump sexually assaulted her a number of years ago. He responded by calling her a liar. She filed suit against him for defamation. The litigation was placed on hold, due to Trump’s claim of presidential immunity. In essence, the court today said that since Trump is no longer president, the immunity arguments have disappeared.

Now that the case can continue, Zervos will be entitled to take Trump’s deposition. Why is that so immportant?

Depositions are a formal pre-trial process where an individual answers questions under oath. In a criminal case, a defendant has little to fear by being deposed. The defendant has the right to refuse to answer questions (5th Amendment right to not incriminate yourself). The fact that the defendant has refused to answer questions may not be introduced into evidence at the later trial.

In civil cases (where money damages are the usual goal), you have no 5th amendment rights. There are only three ways to answer a question, and all of these answers may create later problems.

First, you can answer the question. This answer had better be truthful. If is later shown to be a lie, you can be later charged separately for lying under oath (perjury). Even if you are not charged with perjury, the jury can use the lie to help them decide your credibility.

Second, you can refuse to answer the question. That refusal can be entered into evidence at trial, affecting your credibility to the jury. Separately, the other side may go to the judge after the deposition is over and have the judge require you to answer the question.

Third, you can say you do not know the answer or don’t remember. Again, your lack of knowledge or memory may be considered by the jury to determine your credibility.

This is not where deposition problems end. One of the issues that plaintiffs have is that some of the information they need to prove their case may be only known to or available to the defendant.

Answers to deposition questions often reveal the names of other people with knowledge of the circumstances. They may become witnesses later. Perhaps more importantly, depositions may reveal the existence of documents that may be relevant to the case. The plaintiff may follow the deposition by requesting that these documents be produced.

Defendants such as Trump are extremely guarded about written information that they think will make them vulnerable or the names of people with individual knowledge of what happened. The deposition process has the potential to open the door to that evidence.

If there were only one case pending or threatened against Trump, the opened door might not be a big deal. However, once the evidence comes to light, other cases may find a way to make use of it as well. And that is where the true vulnerability lies.

Friday, March 26, 2021

Dominion Sues Fox News Network: Why This Case Is Different

Dominion Voting Systems has already sued a number of individuals for defamation, including attorney Sidney Powell and My Pillow’s Mike Lindell.  These lawsuits all concern post-election statements that questioned the integrity of Dominion’s products and how manipulation affected the presidential election. Today, they also sued Fox News Network (FOX) for $1.6 billion.

What makes this case different?

When you sue an individual for defamation, you are maintaining that the person knowingly made false statements about you (or that the statements were made with reckless disregard for the truth), that they were believable to the audience, and that you can trace your damages to the statements they made.

The defense that individuals offer, even assuming that their statements were wrong, often hinge on the credibility of the person offering the opinion. Remember, for example, that a prior defamation case against Tucker Carlson was thrown out because he was a pundit and not a journalist. As his attorney stated: “No reasonable person” believes his statements to be factual.

Similarly, in the current defamation case against Sidney Powell, her lawyer’s motion to dismiss argued against her own credibility, explaining that much of what she said was (and was understood to be) overstatement and hyperbole. Again, no reasonable person would take what she said at face value.

News organizations are held to a different standard. It is expected that what they report as “news” will be accurately reported. News organizations are therefore generally careful to cover themselves from making false statements by using weasel words in their reporting. That is why their reporting of ongoing investigations so often uses the words “alleged” or “allegedly.” At times it may seem ridiculous to hear news reports talk about an “alleged shooter” when there is video of him, but this is the level of care news organizations take to ensure that they are not misrepresenting facts.

In a splendid move, the Dominion lawsuit against FOX “accuses” them of being a reputable news organization. Dominion notes that FOX has millions of regular viewers and reaches them through a vast variety of media. And, as a huge for-profit company, FOX’s primary concern is its financial bottom line.

Dominion further suggests that FOX, which once touted itself as conservative news outlet that was “fair and balanced”, morphed into an organization that tied its financial well-being to the adulation of Donald Trump and his most ardent supporters.

Seeing its viewership drop precipitously after FOX called the state of Arizona for Biden, and was chided for it by Trump, Dominion alleges that FOX needed to do something to reengage the faithful. They saw Dominion as an easy target to help promote the concept of election fraud.

In painstaking detail, the complaint shows how a variety of FOX news and opinion shows promoted the allegations by Guiliani, Powell, Lindell and others that accused Dominion of wrongdoing, One result, Dominion says, is that FOX reentered the good graces of Trump, recaptured its viewership, and improved its bottom line. The victim in this scenario was Dominion Voting Systems.

FOX cannot claim ignorance of its actions, according to Dominion. Ninety people within the FOX organization regularly received factual updates from Dominion about the security of its voting systems and the fact that it has no relationship to Smartmatic or Hugo Chavez in Venezuela. Numerous requests for retractions were ignored.

All of these allegations suggest that FOX is being held to a different standard than political pundits or individuals who are engaged in self-promotion. FOX has, according to Dominion, violated a public trust to their detriment.

Reminder: the filing of a lawsuit is just the first step in litigation. As always, Dominion will need to prove their allegations and show that the standards for defamation are met.

Monday, March 22, 2021

Sidney Powell’s Defamation Defense: No Reasonable Person Would Believe My Election Rigging Claims on FOX

Dominion Voting Systems sued Attorney Sidney Powell for $1.3 billion for defamation. The suit said that she knowingly made baseless claims about Dominion, its background, and the reliability of its results. The suit said that some of her comments were “inherently Improbable” if not “impossible.”

When you are sued, the first thing you try is to get the case thrown out before it is even considered. You might suggest that there are procedural reasons to have the case dismissed: wrong party being sued, wrong place to bring the lawsuit, wrong time to bring the suit, etc.

You can also claim that the complaint, even if everything in it is assumed to be true, would not give the person suing you any right to the relief they are requesting. This is called “failure to state a claim upon which relief may be granted.”

All of these arguments are raised in a “motion to dismiss.” Sidney Powell has raised virtually all of these arguments in her motion to dismiss the Dominion complaint.

For purposes of this note, I’ll focus on just the “failure to state a claim” argument.

You may remember from a couple of years ago that Tucker Carlson was sued for defamation. The complaint against him was dismissed because, according to the court, no reasonable person would believe that Carlson’s statements were factual. To put it bluntly, if you take what Tucker Carlson says on FOX at face value, you are stupid.

This is essentially the Sidney Powell defense. She quotes from the complaint’s allegations that her comments were “wild accusations” and “outlandish claims” to prove that a reasonable person would not believe her claims, even though they were repeated both on FOX and in some of her previously filed post-election lawsuits.

Tucker Carlson actually had a decent defense—that he is a pundit and not a journalist. It remains to be seen whether the judge will agree with Powell that her comments are, in actuality, political statements “that are inherently prone to exaggeration and hyperbole.”

Remember that defense: no reasonable person would believe her.

Thursday, March 18, 2021

Defamation Allegations: Should You Retract or Double Down?

In recent weeks, we have seen many defamation lawsuits filed. The most prominent of these have concerned allegations that individuals (and media outlets) have made false and derogatory statements about the Dominion and Smartmatic voting systems. The litigation argues that the statements and actions by prominent people and media have dramatically harmed them financially.

The filing of a lawsuit is a last resort in this process.

We have all made comments or done things, unaware that they were wrong or harmful. Usually, when we are informed of what we did, we apologize. There may be residual hard feelings, but the apology at least gives a starting point for healing.

This process works for innocent mistakes. Defamation cases arise when the individual knows, or should have known, that what they are saying or doing was wrong.  

The first step in the defamation process is to give individuals the benefit of the doubt. A lawyer sends a letter to the individual stating three things: what was said (or done), why it was wrong or harmful, and what corrective action is requested. The “corrective action” may be nothing more than “don’t do this again” or may rise to the level of “retract your statement publicly and pay us for the damage you caused.”

If the mistake was innocent, the party receiving the letter will generally apologize and take appropriate action to make things right.

Even if the mistake was not innocent, the party receiving the letter may stop what they were doing anyway in order to not further compound the problem. Legally, this is called mitigation of damages. In other words, things may be bad, but we can at least keep things from getting worse. Under these circumstances, the parties may come to an agreement about how best to resolve the matter, possibly including some financial compensation.

If the offending party refuses to acknowledge what they did (allegedly), the only recourse is to file a suit for defamation. This complaint will list the elements that were included in the letter (what was said/done and why it was harmful). The complaint ends with a “prayer for relief”—what is requested—that may include a demand for a retraction and money damages.

Not all defamation lawsuits end up in a trial. Often, after the full extent of the wrongdoing has been revealed (through depositions of individuals with personal knowledge and expertise or the production of documents), the case is settled.

Throughout this process, the lawyer regularly sits down with the defendant client and goes through a risk/reward analysis—is the risk of an adverse (and perhaps costly) judgment greater than the benefit of continuing to contest the action. The willingness to carefully evaluate the actual risks and rewards varies, of course, from client to client. To put it bluntly, some clients refuse to admit mistakes and will double down, continuing to do the things that gave rise to the defamation action.

As you watch the Dominion and Smartmatic lawsuits progress, focus on the actions and responses of the defendants. Even subtle changes in their behavior may tell you a lot about the strength of the case. For other defendants, expect the doubling down to continue, regardless of the risk.

Tuesday, March 16, 2021

Arizona Republican Party Undermined Election’s Integrity; Is Assessed Attorney’s Fees

Conducting litigation is not inexpensive. Parties understand that, win or lose, they will likely be responsible for the attorney’s fees they incurred. One exception is where the other party acted in bad faith. In those cases, the court may require the other party to pay your fees. That is what happed late Monday in the case of Arizona Republican Party v. Adrian Fontes, et al.

The Maricopa County judge undertook a ten-page analysis of how the Arizona Republican Party used the courts to purposely undermine public confidence in the electoral process.  From the Court’s conclusion:

“Arizona law gives political parties a privileged position in the electoral process on which our self-government depends. The public has a right to expect the Arizona Republican Party to conduct itself respectfully when it participates in that process. It has failed to do so in this case.” (This and all other quotations are from the court’s opinion.)

As background, the lawsuit itself was previously dismissed for being “groundless because the relief sought was not legally available from the parties that were sued at the time the suit was filed.”

The mere fact of a suit is “groundless” is not enough for a court to assess attorney’s fees. The rules for assessing fees are set out in state law. “A.R.S. section 12-349 requires the court to assess reasonable attorney's fees and expenses against an attorney or party that brings or defends a claim without substantial justification or solely or primarily for delay or harassment.”

The judge began his analysis by noting that the Republican Party’s legal position was “flat wrong as a matter of law.” He noted that “[a]n election challenge based on a procedural statute states a cause of action only if the plaintiff alleges that fraud has occurred or that the result would have been different had proper procedures been followed.” Plaintiff’s statement that “that fraud was ‘not germane to the case’ is to say that there was no colorable cause of action in the first place.”

The Republican Party, even after conceding that there was no fraud, refused to admit that they had sued the wrong party. “When a litigant resorts to that kind of sophistry, instead of simply admitting it made a mistake, it invites inquiry into its motives. The Court now turns to that inquiry.”

After reciting what plaintiffs claimed they were trying to accomplish, the judge found absolutely no merit in it. “These were flimsy excuses for a lawsuit.” 

The judge continued: “The plaintiff is effectively admitting that the suit was brought primarily for an improper purpose. It is conceding that the method of sampling ballots for the hand count audit is a minor procedural requirement, not a necessary step toward a fair election. It is saying that it filed this lawsuit for political reasons. ‘Public mistrust’ is a political issue, not a legal or factual basis for litigation.”

The judge was just getting warmed up. Next, he questioned the plaintiff’s basic integrity. “The plaintiff is not characterizing either its litigation posture or the Court’s inquiry honestly. The Court’s questions addressed the plaintiff’s own arguments. For the plaintiff to suggest otherwise is gaslighting. It evinces a lack of good faith. By their own admission, the responsible individuals here made no serious pre-filing effort to determine the validity of the claims. …

“Perhaps the most telling fact of all is what the plaintiff did after the other parties disclosed, in response to the complaint, that the Maricopa County hand count was complete and that it showed the electronic tabulation was flawless. At that point the plaintiff could have quietly walked away from the lawsuit and publicized the audit results to reassure the public. Instead it filed its petition to enjoin the election canvass.”

It was because of statements made by the plaintiffs themselves that “the Court raised the question whether the plaintiff brought suit in order to 'cast false shadows on the election’s legitimacy.' Undercutting the election’s legitimacy by raising 'questions' is exactly what the plaintiff did. It is what the plaintiff does again when it suggests that an adverse ruling on the secretary of state’s fee application will cause the public to question the Court’s impartiality and undermine respect for the courts. … It is a threat to the rule of law posing as an expression of concern. It is direct evidence of bad faith.”

The court concluded that the Arizona Republic Party owed the Arizona Secretary of State $18,237.59, an amount it found to be “reasonable and appropriate.”

So when you hear people claiming that Americans are losing faith in the integrity of the election process, this case illustrates at least one reason.

Wednesday, March 10, 2021

Changing Your Mind At the Supreme Court

Fair warning: the conclusion of this article may not be what you expect.

Presidents are free to establish their own priorities and policies, often through administrative rulemaking or executive order. Predictably, It is not unusual for the more dramatic of these orders or rulemaking to be challenged in court. With the exception of emergency matters, it takes a lot of time for cases to run their course.

While the legal process is unfolding, a new president may take office with priorities of his own. When that happens, the new administration must decide whether to continue to defend the legal position taken in those existing cases. 

That situation unfolded in the case of State of New York v. U.S. Department of Homeland Security. Here, the prior administration attempted to severely limit the ability of immigrants to enter the country and obtain legal status by obtaining a “green card.”

The prior rule (that had been in effect for nearly 150 years) prohibited legal status if people were likely to become a “public charge.” Congress described these as people who were likely to become long-term residents of “poor-houses and alms-houses.” The common day equivalent would be people who were institutionalized and wholly dependent on the government for their care. The same law recognized that new immigrants might need public assistance early on and even established an “immigrant fund” to provide temporary relief. This rule, then, allowed immigrants who were currently poor to enter the country and make a new life for themselves—a definition that included a great number of our ancestors.

The proposed rule from the Trump administration attempted to change the definition of “public charge” to allow rejection of applicants if, in the opinion of DHS personnel, they are “likely at any time to become a public charge.” It also stated that accepting ANY form of temporary government assistance could be disqualifying, again leaving this to the discretion of DHS officials. The legal challenge to this proposed rule suggested that the new definition was arbitrary and would allow the targeting of immigrants coming from particular locales.

This case had just arrived at the U.S. Supreme Court when President Biden was elected. Biden had made it clear that he would be returning “public charge” to the definition that had been in place for 150 years.

The Supreme Court knew that the position of the administration might change but it was understandably not going to second guess what the incoming administration might do. The parties were allowed to file their legal briefs in December.

The Trump administration in its reply brief acknowledged that the new administration had the right to change policy (and probably would) but that the Court should still rule that their new public charge rule was legitimate.

As expected, the Biden administration revoked the new public charge rule and advised the Supreme Court that, due to the administration’s different position on the matter, all parties to the litigation now believed that the appeal should be dismissed. The Supreme Court agreed and dismissed the suit yesterday. (Parenthetically, this is the third immigration-related appeal that has been dismissed in this manner.)

This is where it gets interesting. If the Trump administration knew that their public charge rule was going to be reversed, why press the Supreme Court to issue a ruling anyway? The answer is all about advancing the narrative. Had the Supreme Court ruled in favor of the public charge change, Trump would have proclaimed that his position was vindicated. Had it been defeated, he could continue his well-documented attacks on the Court as being cowardly. By dismissing the case without opinion, The Court silenced both sets of talking points.

Monday, March 8, 2021

Green Eggs and Sham


I am a bit of a photographer. It is not unusual for me to take my camera and sit for an hour, searching for the best shot. 

When I return home, I sort through those pictures carefully. Nobody tells me what to keep and what to delete. It is also my choice alone to give away or publish the ones I find most pleasing.

The legal term for what I have created is intellectual property.

Pictures of birds or landscapes are generally not controversial, and what people tend to like or not like is just a matter of personal preference. Photographs that show people can be more challenging. Let’s face it, some people are not particularly photogenic. 

I will not publish shots that show people in a bad light. Furthermore, I respect individuals’ rights not to be photographed at all or to remove shots of them that they find displeasing. There have been times when I have pulled photos for that reason.

In other words, there are two components to my publishing guidelines: my personal intellectual property rights as a photographer and my sensitivity to others who may be affected or offended.

Nobody has ever accused me of being part of a cancel culture for making decisions about my own creations. That would be ludicrous; it is not how intellectual property works.

Last week, Dr. Seuss Enterprises, the copyright holder of the Theodor Geisel’s literary catalogue announced that they would no longer be publishing six of his books. They issued this statement. 

Today, on Dr. Seuss’s Birthday, Dr. Seuss Enterprises celebrates reading and also our mission of supporting all children and families with messages of hope, inspiration, inclusion, and friendship.

We are committed to action.  To that end, Dr. Seuss Enterprises, working with a panel of experts, including educators, reviewed our catalog of titles and made the decision last year to cease publication and licensing of the following titles:  And to Think That I Saw It on Mulberry StreetIf I Ran the Zoo, McElligot’s Pool, On Beyond Zebra!, Scrambled Eggs Super!, and The Cat’s Quizzer.  These books portray people in ways that are hurtful and wrong.

Ceasing sales of these books is only part of our commitment and our broader plan to ensure Dr. Seuss Enterprises’s catalog represents and supports all communities and families.

Similar to my photography decisions, Seuss Enterprises did not owe anybody an explanation about the publication of their intellectual property. They did so as a matter of courtesy and sensitivity.

Their decision was not, however, universally embraced. For example, Brian Kilmeade on Fox & Friends opined “The cancel culture is canceling Dr. Seuss.”

Discontinuing publication by the owner of intellectual property is not cancelling, and the owner of a copyright is not a cancel culture. Disagreeing with a copyright holder’s decision is one thing. Grossly misstating the law for your own purposes is quite another. Reasonable people understand the difference and respond accordingly.

“You have brains in your head. You have feet in your shoes. You can steer yourself any direction you choose.” – Oh, the Places You’ll Go! (1990)

Friday, March 5, 2021

Parler: “Well THAT didn’t work. Time to try a different court.”

Parler is a self-described “conservative microblogging alternative and competitor to Twitter.” At its height of popularity, it took a notably lax attitude toward the messages that were posted, stating “we prefer that removing community members or member-provided content be kept to the absolute minimum.” 

Beginning around the November election and through the lead up to the January 6 Capital invasion, Amazon Web Services (AWS), the provider of Parler’s cloud computing services, “claims that it received reports that Parler was failing to moderate posts that encouraged and incited violence, in violation of the terms” of its ”acceptable use policy.” After “Parler failed to respond to those concerns in a timely or adequate manner,” AWS suspended Parler’s services on January 10, 2021.

Parler sued AWS on January 11th in the Western Washington U.S. District Court, asserting a variety of federal and breach of contract claims. Parler also asked for a preliminary injunction to force AWS to resume hosting services while the matter was being litigated.

It took only ten days for the District Court to deny Parler’s injunction request, finding that Parler had met none of the requirements for issuing an injunction. Although the court did not rule specifically on the underlying claims made by Parler, it does not take much reading between the lines to figure out which way the court was leaning.

Parler had a decision to make. It could either let the lawsuit run its course and run the risk of losing, or it could voluntarily dismiss the case. Parler took the latter option on Tuesday. With the District Court case finished, Parler immediately filed suit against AWS in Washington STATE court. This suit repeats a couple of arguments from the Federal suit and adds in others that are specifically related to Washington state law.

There is nothing improper about this maneuver. In fact, there is a term for it—forum shopping. When there is a choice of courts in which to file suit, it makes sense to pick the court where you think you have a greater chance of success. Timing, of course, can be critical. Therefore, dismissing the first case before it was decided on the merits was the correct move. It remains to be seen whether the Washington state court takes a more favorable view of Parler’s arguments.

As an aside, courts understand the reasons for forum shopping and will generally not hold it against a party who chooses a different path in good faith. However, some litigants misuse the process and file meritless litigation in as many places as they can. Courts take a dim view of burdening the legal system and may punish litigants accordingly. This is why Sidney Powell and Lin Wood are facing possible court sanctions for their post-election litigation.

Wednesday, March 3, 2021

When the Supreme Court is not impressed

There were two instances in the last week when the U.S. Supreme Court gave none too subtle indications what they thought.

The first concerned yet another California case that challenged the indoor church ban. Even after the Supreme Court had issued an injunction against the ban earlier in the month, the Ninth Circuit in a different case allowed the ban to continue. Within less than two weeks of the Ninth Circuit ruling, the Supreme Court overturned them. The slap down on the Ninth Circuit decision made it clear that the technical distinctions between the cases were not enough to reach a different decision. As one pundit put it, these were distinctions without a difference.

As an aside, the lawyer for Santa Clara County took a head scratching approach. One day after filing their reply brief with the court, the attorneys announced that the ban would be lifted within a week. As a practice pointer, if you’re going to basically concede the issue, don’t waste the Court’s time by making them start working on reading your brief. To state the obvious: justices don’t appreciate that.

The second time in a week where the Court showed they were not impressed concerned the two remaining “release the Kraken” suits by Sidney Powell questioning the election results. Here, the Court didn’t even bother with a smackdown. The order simply said, without further explanation, that the petitions were denied.

This action by the Court is analogous to how you deal with a fly. You can either give it your attention and swat it or you can decide that it isn’t even worth bothering with it and simply wave your hand to make it go away.

Monday, March 1, 2021

Indoor Church Services, COVID, and the Supreme Court

We often look to the U.S. Supreme Court to provide legal clarity. It does not always work that way. A prime example is a recent ruling concerning the church opening restrictions in California during COVID.

The ruling is not as clear cut as some reports are making it sound. To make sense of the complexities, we need to first discuss something called a concurring opinion.

The cleanest Supreme Court cases are those where you have a decision where all justices taking a particular position agree on the rationale. So, for example, in a 5-4 case, you might find a written decision that is “joined by” four other justices. That majority opinion not only settles the case but also agrees on the reasoning. The decision then becomes binding (precedent) on the cases that follow, both in the lower courts and the Supreme Court itself.

Complications arise when a majority of the justices agree with the outcome of the case but disagree about the reasoning in the decision. These are expressed in concurring opinions. Concurring opinions take three basic forms.

A general concurrence usually involves a justice who think that some part of the reasoning for the decision needs greater explanation. This discussion may be nothing more than a tweak in the reasoning or may question one of the component parts.

A justice who “concurs in the result” agrees with the conclusion but disagrees with the reasoning used to reach the result.

Sometimes a justice will issue an opinion “concurring in part and dissenting in part.” This is the most problematic because some of the outcomes of the majority are accepted but other parts are rejected outright.

The impact of concurring opinions is more than an academic exercise. If you have a 5-4 decision where four justices in the majority agree with the reasoning but the fifth justice only agrees with the result, the final impact of the decision only applies to the present case. The failure of a majority to agree on legal reasoning means that the case can generally not be cited as conclusive authority in later matters.

With that as background, we come back to the California cases where church closing requirements due to COVID were challenged. In South Bay United Pentecostal Church v. Newsom, the church asked for an injunction against the prohibition against indoor services.

The Supreme Court ruled 6-3 to immediately enjoin the ban on indoor worship. Clear enough, right? Not so fast. After deciding that an outright ban should be stopped (so far so good), the Court next considered whether restrictions on indoor services should similarly be blocked. Here’s where the concurring opinions came into play.

Two justices (Thomas and Gorsuch) would have also immediately stopped the ban on singing and percentage caps on attendees.

Three justices (Roberts, Barrett and Kavanaugh) said that it was the CHURCH’s responsibility to show that these limitations should not apply.

Justice Alito said that the singing ban should go but that the STATE needed to provide proof to defend the percentage occupancy rule.

So, among the six justices who overturned the ban, there were three different opinions about the singing and percentage occupancy rules.

Once the decision is fully parsed, then, it is inaccurate to say that this case shows that freedom of religion trumps government regulations about COVID. The number of justices who took this precise position was … two.

Furthermore, the action of the Supreme Court was only on the request for an injunction. The case was sent back to the lower court for further evidence.

As should be apparent from the above, this discussion was not designed to be about the merits of the case or the various positions held. It was merely to show (through no small amount of oversimplification of the issues) that decisions of the Supreme Court can be quite complex animals.

Friday, February 26, 2021

What the new rioter charges may mean

Shortly after January 6, the first charges were brought against the Capitol rioters. Those charges tended to be of the minor, misdemeanor variety. At the time, I blogged the following:

“I’ve read many comments decrying the fact that some of the most egregious offenders have only been charged with minor infractions. At this stage in the investigation, prosecutors are simply assembling the group of people who are involved in illegal activity. As more facts are received and evaluated, more charges will follow, especially for those engaged in the most abhorrent activity. Complicating their work is the fact that there is a host of charges that may come into play, ranging from murder, sedition, criminal conspiracy and RICO to the more mundane illegal entry.”

Within the last couple of weeks, additional charges have now been levied against many of these people and additional defendants are regularly being identified. If you are following developments on a regular basis, some charging decisions do not appear to make sense. Why, for example, are two people who seem to have acted in a similar manner facing different charges?

The unsatisfying answer is that the charging process is not going to make sense, at least in the short term. From the outside, we view criminal matters linearly. We see it as an orderly process, beginning with the criminal act and ending with the conviction or acquittal. Prosecutors, especially in a complex case, approach it, well, backwards. Let me illustrate.

The Capitol invasion is a highly complex case involving hundreds of individuals and affiliated groups. Some of those involved were simply caught up in the moment. Others had distinctly nefarious motives. The goal of the prosecution, when all is said and done, is to see to it that appropriate justice is meted out to everybody. In order to accomplish this goal, prosecutors need to work backwards from the goal to see how various charges, plea agreements, agreements to testify against others, and trials will accomplish those ends. Each individual defendant plays a part in this matrix.

Back to the initial question: why are similar people not charged the same? A lot of the answer often comes down to an individual’s value to the prosecution in related cases. Take two people who have done similar things and have a similar criminal background (if any). One of them is willing to provide information or testify about what he observed or knows. The other person is not. The cooperator will be charged with misdemeanors so that his plea agreement will result in a more lenient sentence. The non-cooperator will be charged with a felony and suffer greater consequences.

My example is, of course, a tremendous oversimplification, and other factors come into play as well. It does, however, give you a little insight into the variables that prosecutors weigh.

Wednesday, February 24, 2021

The “it’s Trump’s fault” defense to January 6

One of the most iconic pictures of the Capitol assault is of the “shaman” in full regalia, the visual equivalent of the running of the bulls on steroids. Facing a number of criminal charges, Jacob Chansley has been held in custody. His lawyer has now filed an extensive pleading, asking for pre-trial release. A part of the argument is what you would expect: this is really a nice, peaceful guy (who even does “catch and release” of flies) who is truly sorry for what he did.

The main focus of the pleading, though, is that the reason Chansley acted in a way that was completely out of character was the agitation and a call to action by then president Trump. Chansley’s defense, then, is a blame-shifting strategy. His legal premise is a principle called “estoppel by entrapment.” Translated, the term means that you are barred (estopped) from charging me because I got sucked in.

Since many other defendants are also blaming Trump for their actions on January 6, let’s look at what they will need to prove to escape liability for their actions.

In Raley v. Ohio (1959), the U.S. Supreme Court outlined what you need to substantiate in order for this defense to work. You must prove that a “government agent” announced that the action was legal, that the defendant relied on the announcement, that the reliance was reasonable, and that prosecution would be unfair, given the defendant’s reliance.

In the minds of these defendants, the first two components are a given: an announcement that their actions would be legal and that they relied on those representations. They claim that they were following a call to action, to “stop the steal.”

If that is true, the crux of the defense becomes whether the reliance was reasonable. Reasonableness is, at best, a difficult standard to define. What it generally boils down to is whether someone who is thinking clearly would consider an action to be a rational response.

The prosecutor will argue against “reasonableness” in a sequential way.

Is it reasonable to believe that the election was stolen, after more than 60 contrary court opinions and the statement by the Justice Department that this was “the most secure election in history?”

If so, is it a reasonable response to attempt to stop the administrative act of counting electoral votes?

If so, is it a reasonable response to storm the Capitol, resulting in massive property damage and death?

If so, is it reasonable to believe (as other defendants have alleged) that the president would pardon you for felonious actions?

Taken as a whole, “the reliance was reasonable” will be a difficult defense to prove.

Whether the former president is independently liable for his role in the storming of the Capitol is a completely separate question. We already know Chansley’s opinion on that issue.

Monday, February 22, 2021

The Supreme Court and tax returns. You may proceed.

The headline of the day from the U.S. Supreme Court is the New York state prosecutors may obtain ex-president Trump’s tax returns. The opinion took the form of a simple, unsigned order. Sometimes what is unsaid is as illuminating as what is said.

When the case was before the Court last year, a 7-2 decision held that presidents do not have special rights to prevent state criminal procedures and subpoenas. The court also said, however, that the defendant (Trump) retained the same rights to object to subpoenas as other individuals would. When the case went back down the first time, Trump raised some of those “normal” objections. When those objections were rejected, the case came back up to the Supreme Court.

This is a long way of saying that the Supreme Court was not interested in overturning the lower court’s decision that Trump’s “normal” objections had no merit. Therefore, the subpoenas for tax records may be enforced.

Again, as I say frequently here, the opportunity to obtain financial records does not prove anything. It is only after the information is evaluated that possible criminal charges might be brought.

Some pundits have questioned why it took so long for the Supreme Court to make what appears to be a fairly simple order. One reason is that the High Court typically tries to avoid making decisions that have immediate political overtones. That also may explain why, in other orders today, the Court finally put an end to the meritless post-election litigation.

As expected, Mr. Trump’s response to the order was vociferous, maintaining that this order will make it easier for the Democrats to continue their incessant personal attacks against him. His comments are, to use a distinctly non-legal term, garbage. Read again, what I wrote a few paragraphs earlier. All that this order does is to allow subpoenas to obtain financial records, exactly the same way they would if they were issued to you or me.

If criminal actions follow, they will be due to the evidence uncovered.

Friday, February 19, 2021

Why file a lawsuit you know you are going to lose?

Some lawsuits are so deficient on their face that no reasonable lawyer would think they’d have a chance at victory. So why are they filed? One answer, especially for public figures, may be to take advantage of the news cycle. The filing of litigation can be accompanied by great fanfare. The case’s disposition frequently gets only nominal notice.

Applying this premise to specific cases is not scientific, but some suits do seem to walk like a duck and quack like a duck.

Rather than picking an easy target like Sidney Powell’s “release the Kraken” litigation, consider the actions taken by Congressman Devin Nunes. To date he has filed libel or defamation suits in four different federal courts related to his involvement in Ukrainian matters. All of the suits were announced with great fanfare on his preferred media sites. Receiving less publicity, if any, is the fact that he has already lost two of these cases on motions to dismiss. In the other two cases, motions to dismiss are pending.

What brought these cases to mind is this week’s resolution of a defamation action filed by Nunes senior advisor Derek Harvey. In this lawsuit (brought by the same lawyers who represent Nunes and covering similar Ukraine activity), Harvey relied on 20 statements he attributed to CNN. 

The court dismissed the entire case, much of it on jurisdictional grounds. But the court continued:

“The Plaintiff Harvey has alleged twenty defamatory statements. He has failed to plausibly claim how any of these statements are legally defamatory, and twelve of them were apparently not published by defendant CNN. The remaining eight statements are privileged as a matter of law. Nevertheless, if plaintiff possesses facts to cure such manifest deficiencies addressed in this Memorandum Opinion, he may file an amended complaint within fifteen days. Such an amended complaint may be subject to dismissal by reason of repeated failure to cure deficiencies or futility in the amendment.”

Manifest deficiencies.

Wednesday, February 17, 2021

“Trailer for sale or rent” – the Sex Shop Case

The drive down I-65 from the Midwest to Florida is not known for being a particularly interesting one. Following a seemingly interminable stretch down the length of Indiana, you finally pass Louisville, Kentucky. But then you see something different – a large sign painted on the side of a parked semi-trailer that reads: “Lion’s Den Adult Superstore Exit Now.”

Some people got their you-know-whats in a bunch about that, so the town of Upton passed an ordinance to get rid of it. The ordinance prohibited off-premises signs on non-permanent structures. That’s the ticket. The Lion’s Den filed suit against the town, claiming that their right of free speech had been violated. They won on the District Court Level and the town appealed to the 6th Circuit.

The Court began by describing the Lion’s Den business in a marvelously understated way. “Located just off Exit 251 on Interstate 65, the store sells ‘books,’ ‘magazines,’ and other items not worth belaboring.”

The Court also noted that “Over half of its business comes from interstate drivers.” Good business model. People who wouldn’t dream of entering such a place in their hometown could rationalize that “nobody knows us in Kentucky.” (As a personal note, I think the Court missed an excellent opportunity to reference “trailer for sale or rent” from the Johnny Rivers song.)

The unanimous three-judge opinion took only six pages to affirm the lower court decision that shut down the ordinance. Opining that limiting free speech is greatly discouraged (and citing prior case law), the court held that an ordinance making a distinction between signs located on premises and those that were off-premises was arbitrary. Vague arguments about “public safety” were simply not enough to prohibit this sign and limit the plaintiff’s right to free speech.

So the sign remains. Remember to park in the back.

An interesting aside: the District Court judge and two of the three appellate court judges were appointed by Donald Trump.

Monday, February 15, 2021

The My Pillow Guy's Video and Disclaimers - Sleep Tight

 Disclaimers are everywhere and cover everything from the ridiculous to the sublime.

 “Do not use sheet as a parachute.”

“Items removed from the oven are hot and may cause burning.”

“The following program is a paid advertisement for Willie’s Widgets.  We are not responsible for its content.”

The legal effectiveness of disclaimers is widely debated but the purpose is clear – to avoid being sued.

This brings us to the My Pillow guy’s two-hour long video called “Absolute Proof” that has run repeatedly on right-leaning cable network OAN. OAN’s disclaimer before the video is notable both for its extraordinary length and specific distancing from the allegations that Lindell was promulgating.

You can almost hear Queen Gertrude in the background mouthing her classic “The lady doth protest too muchmethinks.” 

Whether OAN’s disclaimer would be sufficient to protect it from liability for defamation (suit has not yet been filed) is unclear from a legal standpoint. If the video had provided the absolute proof it promised, there would not be an issue. The better question is why OAN would potentially expose itself in the first place.

--Daniel Hoebeke

Sunday, February 14, 2021

Professional Responsibility Has Teeth

 You will remember that Dominion Voting Systems filed a billion dollar defamation suit against “release the Kraken” lawyer, Sidney Powell. She promised a vigorous defense that will show evidence of massive fraud (evidence she has promised but never delivered since the beginning of December). Powell has hired Lin Wood to defend her.

Lin Wood also has a history of filing post-election lawsuits claiming massive fraud, election rigging and other misdeeds. You may recall that all of his lawsuits were dismissed due to a lack of evidence, wrong jurisdiction and wrong parties.
Here’s where it gets interesting. Lawyers are held to professional standards that include a prohibition against filing frivolous or unsubstantiated lawsuits. Wood has his primary licensure in the State of Georgia. The State Bar of Georgia, on its own motion, has just instituted disciplinary proceedings against Wood. It alleges the violation of, if I’m counting correctly, eight different sections of the Code of Professional Responsibility. The complaint goes beyond Wood’s misuse of the courts and itemizes his conduct in demeaning a variety of public officials and private individuals.
To say that their complaint is exhaustive would be a massive understatement. The extraordinary recitation of Wood’s misdeeds runs, get this, 1,600 pages. Think of it as more than three reams of paper.
I know I’ve said it before, but it bears repeating. You can publicly make all the unsubstantiated claims of fraud and a stolen election you want on television and social media. But courts do not find frivolous claims remotely amusing. And neither does the State Bar. [Written February 14, 2021]

Does Anyone Like Facts These Days?

 Let’s say I own a restaurant. A local news program, over a three-day period, interviews a self-proclaimed expert on restaurants. He contends that I am actually an alien from the planet Rimlom and that all of my employees are also Rimlomians. He alleges that we are tainting our food in a way that will eventually transform our patrons into Rimlomians as well. The station does nothing to discourage that view. I sue the news station and the journalist for defamation. What do you think my chances of success are?

Quite slim, I suppose. In court, I would need to prove that not only has my business deteriorated, but it is because viewers of the program believed the allegations to be true. The court’s thoughts would be “almost nobody is gullible enough to believe that.” Underlying that conclusion is that even if people desperately wanted to believe that I was doing something wrong, this argument is too ludicrous to be taken seriously.
Successful defamation cases often rely on the gullibility of substantial members of the viewing public. These viewers are well-meaning people who, after hearing the allegations, can somehow rationalize how the argument supports their position. Their conclusions do not need to be based on facts. Due to a strong predisposition, facts are only minor irritations that get in the way of the conclusion that the individuals want to believe.
The news station and journalist in my restaurant example will simply continue with business as usual. However, in cases where they see they see potential merit in the defamation case, defendants may take action to minimize damages, possibly through some corrective action.
Fox News took Lou Dobbs off the air one day after the Smartmatic suit named them as defendants in a defamation suit. It is, of course, too early to draw conclusions, but the timing is interesting. [Written on February 13, 2021]