- Judge Neil Gorsuch on securities litigation and related issues of agency deference [Paul Weiss attorneys at D & O Diary]
- New York attorney general’s office pursued Hank Greenberg for years, wound up settling for $9 million and this lousy t-shirt [WSJ editorial]
- Exit tax and FATCA: “America charges $2,350 to hand in your passport, a fee that is more than twenty times the average of other high-income countries.” [Robert Wood, Forbes]
- “Overgrown Wall Street regulation needs a trim in 2017” [Thaya Brook Knight, The Hill] Last-minute Obama regs encourage shareholder activism [Stephen Bainbridge]
- Organized push to restrict use of cash includes some idealists, some economists, quite a few tax- or rent-seekers [Lawrence White/Cato, David Henderson (did USAID push India?), Stephen Williamson via Henderson]
- U.S. regulatory environment threatens the rise of fintech [Nikolai Kuznetsov, TechCrunch]
Posts Tagged ‘Eric Schneiderman’
Environment roundup
- How regulators dismiss economists’ advice: the case of CAFE fuel economy regs [David Henderson]
- Other auto manufacturers appear to have an emissions cheating problem, raise your hand if you’re surprised [Coyote]
- “You can end up getting a platinum LEED certification and still have the highest energy consumption density in the city of Chicago, as it turns out.” [same, sequel]
- “The Disconnect Between Liberal Aspirations And Liberal Housing Policy Is Killing Coastal U.S. Cities” [Shane D. Phillips] “California Housing Crunch Prompts Push to Allow Building” [Chris Kirkham, WSJ]
- Tyler Cowen takes a look at the stream protection rule;
- Well, natch: staff of New York Attorney General Eric Schneiderman was in touch with Rockefeller Family Fund campaigners before he launched climate advocacy subpoenas [New York Post]
Podcast: Richard Epstein on New York’s Martin Act
Libertarian law professor Richard Epstein discusses New York’s Martin Act, the elastic securities fraud law whose powers have been wielded by Eric Schneiderman, Eliot Spitzer, and Andrew Cuomo, among others. [Troy Senik, Ricochet podcast] Earlier here.
George Will on settlement slush funds
George Will’s new column is on settlement slush funds, a favorite topic around here. A Wall Street Journal op-ed the other day by Andy Koenig observed that tens of millions of dollars from settlements with big banks by the Obama Department of Justice and New York Attorney General Eric Schneiderman are being directed to liberal political groups allied with Obama and Schneiderman, rather than to customers or taxpayers. Earlier here, here, here, here, here, etc.
Nanny state roundup
- No flavored milk for 5-year-olds: feds prescribe what day care centers may serve to 3 million kids [final rule via Elizabeth Harrington, Free Beacon]
- Andrew Jackson and alcohol access: “…whereas Whigs insisted that regulating morality was a proper function of government, Democrats warned that government intrusion into areas of private choice would violate republican liberties.” [John M. Murrin et al, Liberty, Equality, Power on Massachusetts “Fifteen-Gallon Law” of 1838, via historian Richard Samuelson on Twitter, and more]
- Eric Schneiderman takes his toll of fun: “Daily Fantasy Sports Stop Operations in New York” [Scott Shackford]
- Wyoming happy with results of food freedom legislation [Baylen Linnekin]
- Priors didn’t help, but yes, New Jersey’s gun control laws are such that the state will prosecute an actor over a prop gun used in filming a movie [AP/San Jose Mercury News; Carlo Goias]
- Hadn’t remembered the Great Boston Molasses Flood of 1919, one of America’s strangest industrial disasters, had a Prohibition angle [Dylan Thuras, Atlas Obscura]
More on the CEI subpoena
As we noted on Friday, New York Attorney General Eric Schneiderman, more recently joined by several other state attorneys general, has pursued an investigation of the ExxonMobil corporation and its links to “climate denial” that has now resulted in a subpoena (from the attorney general of the U. S. Virgin Islands, Claude E. Walker) demanding ten years’ worth of internal documents from the Competitive Enterprise Institute. CEI, which issued a statement last week (with the text of the subpoena) vowing to resist the legal attack, has a further statement and links here; CEI’s Myron Ebell also recorded a Cato podcast (“fishing expedition… threatens our future… designed to shut us up”) with interviewer Caleb Brown.
Megan McArdle, Bloomberg View, calls the new developments “an attempt to criminalize advocacy”:
State attorneys general including Walker held a press conference last week to talk about the investigation of ExxonMobil and explain their theory of the case. And yet, there sort of wasn’t a theory of the case. They spent a lot of time talking about global warming, and how bad it was, and how much they disliked fossil fuel companies. They threw the word “fraud” around a lot. But the more they talked about it, the more it became clear that what they meant by “fraud” was “advocating for policies that the attorneys general disagreed with.”
New York Attorney General Eric Schneiderman gave the game away when he explained that they would be pursuing completely different theories in different jurisdictions — some under pension laws, some consumer protection, some securities fraud. It is traditional, when a crime has actually been committed, to first establish that a crime has occurred, and then identify a perpetrator. When prosecutors start running that process backwards, it’s a pretty good sign that you’re looking at prosecutorial power run amok….
The rule of law, and our norms about free speech, represent a sort of truce between both sides. We all agree to let other people talk, because we don’t want to live in a world where we ourselves are not free to speak. Because we do not want to be silenced by an ambitious prosecutor, we should all be vigilant when ambitious prosecutors try to silence anyone else.
Hans von Spakovsky, Heritage Foundation:
This investigation is intended to silence and chill any opposition. It is disgraceful and contemptible behavior by public officials who are willing to exploit their power to achieve ideological ends….
Given the coalition that has been formed by state attorneys general to conduct a grand inquisition against climate change deniers, this subpoena from the Virgin Islands attorney general is probably just the first assault in their quasi-religious war against unbelievers. Researchers, scientists, think tanks, universities, and anyone else who works or speaks in this area should be aware that they may soon become a target of these malicious investigations.
Hans Bader of CEI, at Law and Liberty:
As the Washington state supreme court noted in Rickert v. State Pub. Disclosure Commission (2007), our forefathers “did not trust any government to separate the true from the false for us” in the realm of politics.
A sobering aspect of the state AGs’ crusade is what is taking place outside of courtrooms: they are pressuring companies to cut off donations to nonprofit groups that employ “climate-change deniers.” … New York’s and California’s attorneys general have investigated Exxon for making donations to think tanks like the American Enterprise Institute and lobbying groups like the American Legislative Exchange Council. Schneiderman complains that these two specifically are “even more aggressive climate change deniers” than the run of the mill. (Ironically, while these large organizations include a few people labeled as “climate change deniers,” they focus mostly on issues having nothing to do with climate change.)
…even if being a “climate change denier” were a crime (rather than constitutionally protected speech, as it in fact is), a donation to a nonprofit that employs such a person would not be a crime.
In February we noted Bader’s strong argument that a “prolonged investigation in response to someone’s speech can violate the First Amendment” in itself even when “eventually dropped without imposing any fine or disciplinary action.”
I’m also quoted in a piece in Vermont Watchdog by Michael Bielawski and Bruce Parker that came out just before the subpoena report, on some of the issues in the investigation.
CEI subpoenaed over climate wrongthink
The campaign to attach legal consequences to supposed “climate denial” has now crossed a fateful line:
The Competitive Enterprise Institute (CEI) today denounced a subpoena from Attorney General Claude E. Walker of the U.S. Virgin Islands that attempts to unearth a decade of the organization’s materials and work on climate change policy. This is the latest effort in an intimidation campaign to criminalize speech and research on the climate debate, led by New York Attorney General Eric Schneiderman and former Vice President Al Gore….
The subpoena requests a decade’s worth of communications, emails, statements, drafts, and other documents regarding CEI’s work on climate change and energy policy, including private donor information. It demands that CEI produce these materials from 20 years ago, from 1997-2007, by April 30, 2016.
CEI General Counsel Sam Kazman said the group “will vigorously fight to quash this subpoena. It is an affront to our First Amendment rights of free speech and association.” More coverage of the subpoena at the Washington Times and Daily Caller.
A few observations:
- If the forces behind this show-us-your-papers subpoena succeed in punishing (or simply inflicting prolonged legal harassment on) groups conducting supposedly wrongful advocacy, there’s every reason to think they will come after other advocacy groups later. Like yours.
- This article in the Observer details the current push to expand the probe of climate advocacy, which first enlisted New York AG Eric Schneiderman and then California’s Kamala Harris, into a broader coalition of AGs, with Massachusetts and the Virgin Islands just having signed on. More than a dozen others, such as Maryland Attorney General Brian Frosh, seem to be signaling support but have not formally jumped in. More: Peggy Little, Federalist Society.
- CEI people, many of them longtime friends of this site, have been active critics of the Schneiderman effort, with Hans Bader, a senior attorney there, highly critical just a week ago.
- In these working groups of attorneys general, legal efforts are commonly parceled out among the states in a deliberate and strategic way, with particular tasks being assigned to AGs who have comparative advantage in some respect (such as an unusually favorable state law to work with, or superior staff expertise or media access). Why would one of the most politically sensitive tasks of all — opening up a legal attack against CEI, a long-established nonprofit well known in Washington and in libertarian and conservative ideological circles — be assigned to the AG from a tiny and remote jurisdiction? Is it that a subpoena coming from the Virgin Islands is logistically inconvenient to fight in some way, or that local counsel capable of standing up to this AG are scarce on the ground there, or that a politician in the Caribbean is less exposed to political backlash from CEI’s friends and fans than one in a major media center? Or what?
- I recommend checking out the new Free Speech and Science Project, which intends to fight back against criminalization of advocacy by, among other things, organizing legal defense and seeking to hold officials accountable for misusing the law to attack advocacy.
- This is happening at a time of multiple, vigorous, sustained legal attacks on what had been accepted freedoms of advocacy and association. As I note in a new piece at Cato, Sen. Elizabeth Warren has just demanded that the Securities and Exchange Commission investigate several large corporations that have criticized her pet plan to impose fiduciary legal duties on retirement advisors, supposedly on the ground that it is a securities law violation for them to be conveying to investors a less alarmed view of the regulations’ effect than they do in making their case to the Labor Department. This is not particularly compelling as securities law, but it’s great as a way to chill speech by publicly held businesses.
[cross-posted at Cato at Liberty and reprinted at FEE; see also new Cato podcast with CEI’s Myron Ebell (“fishing expedition… threatens our future… designed to shut us up.”)]
Are the climate-speech subpoenas constitutional?
New York Attorney General Eric Schneiderman is pursuing an investigation of the Exxon Corporation in part for making donations to think tanks and associations like the American Enterprise Institute and American Legislative Exchange Council, which mostly work on issues unrelated to the environment but have also published some views flayed by opponents as “climate change denial.” Assuming the First Amendment protects a right to engage in scholarship, advocacy, and other forms of supposed denial, it is by no means clear that information about such donations would yield a viable prosecution. Which means, notes Hans Bader of the Competitive Enterprise Institute, that the New York probe raises an issue of constitutional dimensions not just at some point down the road, but right now:
A prolonged investigation in response to someone’s speech can violate the First Amendment even when it never leads to a fine. For example, a federal appeals court ruled in White v. Lee, 227 F.3d 1214 (9th Cir. 2000) that lengthy, speech-chilling civil rights investigations by government officials can violate the First Amendment even when they are eventually dropped without imposing any fine or disciplinary action. It found this principle was so plain and obvious that it denied individual civil rights officials qualified immunity for investigating citizens for speaking out against a housing project for people protected by the Fair Housing Act.
In another case, in which a company had been sued seeking damages over its participation in trade-association-related speech, a federal appeals court found that the pendency of the lawsuit all by itself caused enough of a burden on the firm’s speech rights that the court used its mandamus power to order the trial judge to dismiss the claims, a remarkable step.
Moreover, Bader writes, a string of federal precedents indicate that the constitutional rights Schneiderman is trampling here are not just Exxon’s but those of the organizations it gave to, which have a right to challenge his action whether or not the oil company chooses to do so:
These groups themselves can sue Schneiderman under the First Amendment, if Schneiderman’s pressure causes them to lose donations they would otherwise receive. Government officials cannot pressure a private party to take adverse action against a speaker.
Meanwhile, writing at Liberty and Law, Prof. Philip Hamburger of Columbia Law School takes a different tack: the subpoenas imperil due process and separation of powers because they issue at the whim of Schneiderman’s office. Earlier ideas of constitutional government “traditionally left government no power to demand testimony, papers, or other information, except under the authority of a judge or a legislative committee.” In more recent years executive subpoena power has proliferated; so has the parallel power of lawyers in private litigation to demand discovery, but the latter at least in theory goes on under judicial supervision that can check some of its abuse and invasiveness. Extrajudicial subpoenas by AG offices are particularly dangerous, Hamburger argues, because of their crossover civil/criminal potential: the targets do not enjoy a high level of procedural protection when “attorneys general claim to be acting merely in a civil rather than a criminal capacity,” yet the same offices can and do threaten criminal charges. Especially dangerous is New York’s Martin Act, a charter for general invasion of the private papers of anyone and anything with a connection to New York financial transactions.
An attorney general’s concern about fraud or the “public interest” is no justification for allowing him to rifle through private papers. When he thereby extracts the basis for a criminal prosecution, he evades the grand jury process. When he thereby lays the groundwork for a civil enforcement proceeding, he evades the due process of law, for there ordinarily is no discovery for a plaintiff until he commences a civil action. Even worse, when a prosecutor uses a subpoena to get a remunerative settlement, it is akin to extortion — this being the most complete end run around the courts.
Previously on the probe here and here (and earlier here and here), and on the New York attorney general’s office here and here.
[cross-posted from Cato at Liberty]
“The most dangerous law for New York businesses”
Jim Copland in Crain’s New York: the notorious Martin Act, wielded by New York’s attorney general, “creates a risky climate for companies by putting too much power in the hands of a single politician.”
Schneiderman to fantasy sports companies: get out of New York
“After a month-long investigation, New York State Attorney General Eric Schneiderman is sending cease-and-desist letters to DraftKings and FanDuel — essentially banning the two sites from operating in New York. Schneiderman feels that they are illegal gambling sites, rather than offering games of skill as both companies argue.” [Neal Ungerleider/Fast Company, David Marcus/Federalist, earlier]
More: “I challenge you to a fantasy football duel, Eric Schneiderman” [Paul McPolin, New York Post]