Sorry, your cellphone game violates Dodd-Frank

The Securities and Exchange Commission has settled an enforcement action against Forcerank, LLC, a provider of a mobile phone game that enables players to engage in fantasy stock trading for a small charge, much of which was refunded to players in the form of prizes for successful predictions. The SEC takes the position that the transactions involved, however small, fall into the class of swaps and derivatives that, under Dodd-Frank, cannot be offered to the public except under intensively regulated conditions. [Stephen Quinlivan]

October 26 roundup

  • Fuller investigation of that “reputation management” ruse of filing dummy court cases with the aim of getting critical web posts taken down [Eugene Volokh and Paul Alan Levy, Levy first and second followups, earlier here and here]
  • “When Civic Participation Means Shaming A Non-Voter’s Kid” [my Cato post about an ill-considered public service announcement]
  • Why America’s regulation problem is so intractable: Fortune magazine cover story [Brian O’Keefe]
  • El Paso benefits from immeasurable advantage over neighboring Juarez, Mexico: rule of law and related American cultural attitudes [Alfredo Corchado, City Journal]
  • Tort litigation in Pennsylvania is at its most intensive in a few counties, and residents pay the price [Peter Cameron, Scranton Times-Tribune, I’m quoted]
  • California AG Kamala Harris orders BackPage execs arrested; Section 230 be damned? [TechDirt]

Canada lawsuit: cheese-rolling competition injured child spectator

“According to cheese-rolling historians, humans may have been chasing wheels of cheese down steep slopes since pagan times. Written accounts of cheese-rolling date back nearly 200 years.” But now lawyers are catching up with the hazardous pastime. The original Gloucester cheese-rolling festival in England was officially canceled in 2010 — an unofficial version continues — and now in British Columbia, Canada, a suit claims compensation for a child spectator said to have been knocked to the ground by the impact of a rolling cheese on the other side of a safety net. [CBC]

Free speech roundup

  • Guidelines urge UK prosecutors to charge those who “egg on others” to violate social media speech laws [The Register]
  • Mississippi county’s ban on clown costumes probably violates the First Amendment [Eugene Volokh]
  • Propositions placed before voters in Washington, Oregon, Missouri, South Dakota would require nonprofits to disclose donors. Chilling effects ahead should they pass [Tracie Sharp and Darcy Olsen, WSJ]
  • Blogger critical of Houston cancer researcher put through FBI investigation (and cleared) following dubious complaint [Ken White, Popehat]
  • And they’re right. “New York law to combat Citizens United is ‘constitutionally unsound’ says NYCLU” [Ronald K.L. Collins] Would Michael Moore’s anti-Trump film have run afoul of pre-Citizens United law? [Trevor Burrus]
  • Trying to count how many journalists Donald Trump has threatened to sue “quickly turned into a fool’s errand.” [Trevor Timm, Columbia Journalism Review, earlier here, etc., etc.; related, Steve Chapman on corrections] And: Trump libel threat clock resets to zero each time the mogul threatens to sue a journalist or critic. Even more: fearful he will sue, ABA stifles report critical of Trump’s litigation [New York Times]

A federal school bathroom policy? Not so fast

The Obama administration has ambitiously asserted, as an application of Title IX, that schools nationwide must make available to transgender students the general bathroom facilities that correspond to their gender identity. To resolve a case now up for Supreme Court review, it is not necessary to reach the merits of this policy; the promulgation of the new policy by guidance letter, without advance notice, chance for public comment and other protections for regulated parties, is enough of a defect to strike it down. [Ilya Shapiro and David McDonald on Cato Institute amicus brief, with law professors Jonathan Adler, Richard Epstein, and Michael McConnell, supporting certiorari review in Gloucester County School Board v. G.G.]

[The Education Department] seeks to change federal law not through notice-and-comment rulemaking as required by the Administrative Procedure Act, but through an informal, unpublished letter written by a low-level bureaucrat. …We call on the Court to take this opportunity to overrule Auer and declare that the judiciary will no longer blindly accept self-serving agency interpretations, but make their own independent determinations based on a searching and reasoned reading of the regulations at issue. Should the Court choose not to overrule Auer, we suggest that—at minimum—it hold that only agency interpretations that have received the public scrutiny of notice-and-comment rulemaking merit judicial deference.

More on Auer deference here, etc.

Could a president “end” political correctness on campus?

Republican presidential nominee Donald Trump spoke recently of his intent if elected to “end” political correctness on university campuses, and Steve Kolowich at Chronicle of Higher Education asks a number of observers, including some who have been critical of that phenomenon, to describe what practical changes in federal higher education policy that might entail. I’m quoted on how Trump’s intent is “not something that you could easily reduce to the four corners of a policy proposal.”

Write an ambiguous rule — then pounce

Government agencies can get an unfair edge in disputes with the regulated public if they can write ambiguity into their rules, develop interpretations that open up further ambiguities to suit their needs, and then when a dispute arises gain deference from courts on these doubtful interpretations-piled-upon-interpretations. In Foster v. Vilsack, the issue was whether a “prairie pothole” depression on a South Dakota farm should be deemed a federally protected wetland, denying the Fosters productive use of the land; the U.S. Department of Agriculture adopted what seemed a strained interpretation enabling it to so designate the land, and the Eighth Circuit deferred to it.

The decision actually afforded the agency “second-level” Auer deference, deferring to an interpretation of a vaguely written agency circular that interprets a vague regulation that in turn interprets a vague statute–all to get to a definition of “local area” that is nothing close to a natural and reasonable interpretation of that term.

Cato has filed an amicus brief on behalf of the farm family’s request for certiorari, urging the Supreme Court to revisit the Auer doctrine in administrative law at least to prevent its irrational extension:

Second-level Auer deference also undermines the rule of lenity — a traditional rule of interpretation stating that ambiguity in criminal statutes must be resolved in favor of the defendant — even more than first-level Auer deference already does. It effectively allows agencies to create new crimes (again without notice to the public) by doing as little as reinterpreting a footnote in a memo. Cato urges the Supreme Court take the case so that it may rein in the expansion of Auer deference and make it clear to administrative agencies that they cannot avoid judicial review by refusing to promulgate clear, unambiguous regulations.

[Trevor Burrus and David McDonald; more on Auer deference]

Podcast: “Changing the rules of discovery”

From the Federalist Society podcast series, Litigation Practice Group, in August:

A “requester pays” amendment to the Federal Rules of Civil Procedure (FRCP) would require that those seeking discovery pay for its costs, moving federal civil litigation away from the current “American rule” that requires all parties to bear their own litigation expenses, including the costs of responding to discovery requests. Supporters of “requester pays” argue that discovery requests can be so broad and costs can be so high that they become a disincentive to defend. Opponents claim that the amendment would make legal proceedings even more expensive for individual litigants, who would be unable to pay for the discovery necessary to make a case against larger and more powerful defendants. Here to discuss this idea are Alex Dahl of Brownstein Hyatt Farber Schreck LLP and Professor Benjamin Spencer of UVA School of Law.

Medical roundup

  • “Judge Says He’s Had Enough Of Weeding Through Baseless Lawsuits, Threatens Sanctions” [Daniel Fisher; M. D. Georgia judge on vaginal mesh cases]
  • More on pricey regulated generics [Scott Gottlieb/WSJ, earlier on EpiPen, more on latter from Joel Zinberg/City Journal]
  • Feds ban pre-dispute arbitration agreements in nursing home care [McKnights]
  • How Ronald Reagan’s FDA responded to the AIDS crisis — and it’s probably not the story you’ve heard [Peter Huber, City Journal]
  • FDA regs likely to winnow smaller, distinctive makers from the cigar business, recalling a Somerset Maugham story [James M. Patterson] Debunking the “Helena miracle,” once more: no link between local smoking bans and short-term drops in heart attacks [Jacob Sullum, earlier here and here]
  • “Ethicists make the case for bone marrow transplantation markets” [Ilya Somin]

October 19 roundup

  • “Nobody wanted to vote ‘against’ 9/11 families in an election year.” Which led to a series of absurd consequences when Congress took up Justice Against Sponsors of Terrorism Act, or JASTA [Lowering the Bar, earlier here, here, etc.]
  • Cute: animal rights group ambushes Orthodox with legal action on eve of Yom Kippur [Scott Greenfield citing Josh Blackman account]
  • “Can U.S. Presidents Much Affect the U.S. Economy?” If so, it might be through regulatory burdens [David Henderson]
  • Suit had much publicity but nearer to zero merit: Connecticut judge dismisses suit against gun manufacturer over Sandy Hook school shooting, citing PLCAA (Protection of Lawful Commerce in Arms Act) [Hartford Courant]
  • Did spate of violation-finding against local property owner proceed from retaliatory motives? “Councilman Says California City Used Code Enforcement as Payback” [Lompoc, Calif.; Matt Powers, Institute for Justice]
  • Local man discusses third parties’ role in the national election [Frederick News-Post podcast, 37:09, I’m interviewed by reporters Danielle Gaines and Jeremy Bauer-Wolf; related article]