Eugene Volokh's Blog, page 2571
April 6, 2012
Now Here's a Bad Idea–Allowing Discharge of Student Loans in Bankruptcy
Yeah, I get the idea–if people don't have to pay their debts now it is like we are giving a big random stimulus because people can buy new stuff and don't have to pay for old stuff. So they have more money. And this is a wonderfully political gambit to give a windfall to middle-class families and over-educated and over-aggrieved OWS majors. And higher ed would be cheaper if you couldn't borrow money to finance it.
But that would be the effect–you wouldn't be able to borrow money to go to college any more. As my old friend Marcus Cole ably explained to the Senate a few weeks back when this issue was proposed. The problem, of course, is that the moral hazard and adverse selection problems here are extreme: when most people graduate from college they are massively insolvent. They have huge debts and very few assets (a used car perhaps). But they have a huge future potential income stream. Bankruptcy would allow them to shed the debts, keep their meager assets, and then protect all of that future revenue stream. In the face of those incentives it is hard to imagine that the student loan market could exist at all, really, or would do so only at such high cost and other terms (collateral, co-signers, etc.) that it would defeat the purpose, which is to allow people to borrow now to make an investment in their human capital (just like any other capital investment).
Higher ed is too expensive and there is too much student debt (I've actually been concerned about student loan debt for years, back when I would tell everyone who was concerned about student credit cards that they were looking in the wrong place). But the indirect approach of allowing discharge of student loans, and thereby unraveling the student loan market, isn't a very productive way of thinking of it.
I don't have a strong opinion on whether the current rules for discharge of student loans in bankruptcy are too stringent or not. But they at least try to aim at the right question of trying to distinguish legitimate hardship from opportunism.
The Cordray Index
As readers know, my concern about regulation of consumer credit and retail banking is that inefficient efforts to "protect" consumers by regulating prices and terms of credit can have severe unintended consequences by reducing access to higher-quality options (such as credit cards and debit cards) and push consumers to use less-preferred options involuntarily (such as payday lenders and check cashers). (And let me stress that I think there is room for those alternative lenders in the consumer credit market, I just oppose regulations that basically force consumers to use those products).
Along these lines Reuters has now constructed the "Cordray Index," which shows how the onslaught of federal regulation as well as the continued struggles of the retail banking system to work off bad debt has created a boom time for alternative lenders as consumers have been pushed into these products. Of course, the response of regulators to increased consumer use has been predictable, albeit tragic–to try to take these options away from people (which will, of course, simply push them further down the chain of products). The logic turns conventional economics on its head–so when we see increased demand for this product we are supposed to think that consumers are worse for using it instead of available alternatives? I don't get why the ordinary rules of economics don't apply in this market–it seems to me that increased demand for a product is generally evidence of consumer satisfaction relative to other available choices.
Anyway, here's the "Cordray Index" from Reuters (this is similar to a chart that I posted from the WSJ a few months back that makes the same point):
The Cross-Cutting Politics of the ATS and Universal Jurisdiction
In discussions of Kiobel v. Royal Dutch Shell and the Alien Tort Statute, many commentators suggested if the Supreme Court limits corporate liability or extraterritoriality under the ATS, it would eviscerate the statute, and be bad for human rights. More generally, limiting the ATS is thought to serve broadly conservative interests.
These points are only weakly true for the ATS, as I'll explain below. But more broadly, a limited understanding of the role of universal jurisdiction (UJ) and the Constitution's Offenses power would have a variety of cross-cutting political valences when applied to other statutes. I have been describing the sources and scope of the constitutional limits on UJ in prior posts. So if reigning in foreign-cubed suits under the ATS can be "scored" as a liberal loss, the logic for doing so would give conservatives a loss under the material support for terrorism law, and both a conservative and liberals loss under the Maritime Drug Law Enforcement Act (but a libertarian win!).
To put it differently, UJ – the exercise of judicial power in foreign-cubed suits – has no inherent political valence; this depends on the norms being universalized. The ATS is one of a few instances of such jurisdiction, and a restriction on it could have several ripples and ramifications in other important contexts.
Moreover, it should be remembered that the ATS itself has other uses besides foreign-cubed suits against companies. Restricting such actions does not make the ATS meaningless, it only stops one particular genre of claims. ATS suits can and have been brought against individual American nationals, even as the new briefs in Kiobel are being written. Also, it should be noted that the ATS suits are not limited to liberal causes, and limiting it could obstruct some more conservative initiatives. Consider two pending ATS suits with rather opposite political valences, none of which involve corporate liability or foreign-cubed situations:
• Japanese whalers are suing Sea Shepherd Conservation Society in federal court for acts of piracy, violations of the SUA Treaty other navigational safety charters. The case raises interesting issues about the availability of injunctions under the ATS, as well as the meaning of "private ends" in the definition of piracy. (H/T: Other Eugene.)
• In recent weeks the Center for Constitutional Rights, which pioneered ATS litigation in Filartiga and many subsequent cases, filed suit against a U.S. preacher for encouraging the Ugandan government to criminalize homosexuality.
An interesting question this case raises is whether the Noerr-Pennington doctrine applies to the ATS generally, and whether it applies extraterritorially. One would think that those who argue corporate liability in ATS cases should be governed by federal common law would find Noerr-Pennington, based as it is on First Amendment considerations, fully applicable in this context. Noerr-Pennington has been extended to a variety of torts and to RICO actions, why not ATS?
One answer could be that antitrust violations are simply not violations when done by governments: indeed, much of what progressive economic policies entail is cartelizing workers and industries. Human rights violations, however, specifically are human rights violations when done by governments. But this just brings us back to the crossroads: do U.S. common law or international norms govern secondary legal issues in ATS cases?
Passover approaches, and with it the end of my rotation here. It has been a pleasure, and thanks to Eugene for having me here.
Double-G: Gunter Grass, and the Good Grace to Shut Up
Here is what, to me, is the most extraordinary thing about the recent flap over publication of Gunter Grass' poem "What Must Be Said," in which he excoriates the Israelis and depicting their undeclared nuclear program (and not Iran's) as a threat to world peace. Grass is of course entitled to have, and to publish, whatever views he holds about Mideast politics and world peace. But really — wouldn't you think that someone who was exposed, in 2006, as having been wartime member of the Waffen SS (and having lied about the matter for some 50 years) — and we're not talking about attendance at some Hitler Youth picnic as a 9 year old, we're talking about membership in the most vicious arm of the most vicious regime in human history — would have the good grace to spare us his views on this particlar matter? What kind of egomaniac would think people do (and should) give a shit about what he thinks, when they shouldn't (and, I hope, don't).
And then — really, the unmitigated chutzpah! — he asks [as if we care]:
"Why do I wait until now/aged and with my last drop of ink/to say that a nuclear-armed Israel/ puts at risk an already fragile world peace?"
[Warum sage ich jetzt erst/gealtert und mit letzter Tinte:/Die Atommacht Israel gefährdet/den ohnehin brüchigen Weltfrieden?]
His answer: because "it must be said" (Weil gesagt werden muß), and because "tomorrow might be too late" (was schon morgen zu spät sein könnte), and because he won't be deterred any more by the "familiar charge of 'anti-semitism'" [das Verdikt "Antisemitismus" ist geläufig]
It would be hilarious if it weren't so pathetic and awful. Can you imagine Grass sitting around at home and thinking: "The world needs to hear what I have to say about Israel! I must speak! I can't be held back anymore just because people might think that I, a former member of the Waffen SS, might be anti-Semitic!!" ["And perhaps I'll wait until right before Easter -- a holiday sadly connected to some of the most brutal anti-Semitic activities over the past 2000 years -- to publish the poem! That'll be a nice touch!"]
It was the great songwriter-satirist Tom Lehrer, I believe, who said: Satire was no longer possible after Henry Kissinger had been awarded the Nobel Peace Prize. I know now what he meant.
Individual Mandates for Foreigners and Indians
In my previous post, I argued that the broad interpretation of the Commerce Clause advocated by the government would have the absurd result, when applied to the parallel foreign commerce clause, of allowing Congress to impose mandates on foreigners with no prior contacts with the U.S.
Many commentators fought the hypothetical, saying such a law was stupid, unenforceable, and unlikely, so not a good proof of anything. Two responses. First, one man's idiotic and unenforceable is another man's Patient Protection and Affordable Care Act, which aside from its merits is itself unlikely (once in a few centuries), and hard to enforce (waivers). Second, arguments from absurd consequences are valid even if the hypothetical law would be ill-advised; indeed, since presumably no one wants absurd consequences, such arguments inherently assume the possibility of legislative error.
A student of mine emailed me to raise a variant hypothetical much closer to home: Can Congress mandate Indians to purchase insurance? They "inevitably" leave their territory at some point in their lives (at least as "inevitably" as the healthy uninsured getting sick), so the arguments would be exactly the same as for the mandate under the Interstate Clause. So why have an Indian Commerce Clause at all? Factual query: does the ACA apply to Indians living on tribal land? (I invite the student to self-identify in the comments.)
Some suggested that Interstate Commerce is regulated "among" the states, whereas foreign and Indian commerce is only "with" other countries or tribes. This could suggest the interstate power is broader: commerce just "among" other nations seems explicitly excluded. But if "among" the states means not actually among but affecting things that are "among," wouldn't the same be true of "with"? Again, I think the best reading of the commerce clause is that the interstate power is broader. But the ACA makes this distinction hard to sustain, and that is a criticism of the mandate not the commerce clause text.
Dearborn May Not Require That Demonstrators Waive All Legal Claims
So holds Stand Up For America Now v. City of Dearborn (E.D. Mich. Apr. 5, 2012). Plaintiffs (including Terry Jones, the Koran-burning pastor) asked for a permit to "speak[] to the public from the grassy across from the Dearborn Islamic Center on Saturday, April 7, 2012 [the day before Easter] regarding the dangers of Sharia law and how it threatens American freedoms," and "to distribute a flyer which includes Stand Up America Now's contact information and a quotation from the Holy Bible: 'Jesus answered, 'I am the way and the truth and the life. No one comes to the Father except through me.' John 14:6.'" They "estimate approximately 20-25 people will attend the event" (I take it they refer to attendance by their sympathizers, and don't include any possible critics or counterdemonstrators).
A Dearborn ordinance "requires the sponsor of an event to sign an indemnification agreement with terms established by the legal department," and "leaves unfettered discretion with the legal department" as to the terms. In this instance, the legal department said it would grant a demonstration permit, but only if the group signed a release that said,
In consideration for the right to utilize City of Dearborn property, Standup America! and Wayne Sapp, their employees, representatives, agents, and participants agree to RELEASE AND FOREVER DISCHARGE the City of Dearborn, a municipal corporation, and its officers, employees, and agents, from any and all claims, liabilities, or lawsuits, including legal costs and reasonable attorney fees, resulting from their activities on the City of Dearborn property.
The opinion did not say whether this was the standard agreement used for all demonstration permits, or whether other groups were given permits without having to sign such a broad waiver. In any case, the court said requiring the waiver was unconstitutional:
The clause encompasses not only liability for physical harm to the permittees, but also for deprivation of permittees' constitutional rights. "We think it obvious that permittees cannot be required to waive their right to hold the City liable for its otherwise actionable conduct as a condition of exercising their right to free speech." Long Beach Area Peace Network, 574 F.3d at 1040. The clause also requires permittees to assume legal and financial responsibility even for those activities at the event that are outside of the permittee's control, including activities of the City. Id. The ordinance requiring the indemnity agreement and the "Hold and Harmless" presented to Plaintiffs are unconditional [likely a typo for "unconstitutional" -EV] and violate the First Amendment to the United States Constitution as to Plaintiffs and others who wish to exercise their rights to speak and assemble in the public fora.
The court thus granted a temporary restraining order allowing the demonstration without plaintiffs' having to sign the release. Seems correct to me. Thanks to Prof. Howard Friedman (Religion Clause) for the pointer.
Viacom v Youtube Decision – Not as Bad as All That
The Second Circuit has finally released its long-awaited decision in the appeal of the Viacom v. Youtube lawsuit, about which I've blogged a great deal [starting here, here, here, and here] over the past couple of years. Viacom "won" — in that they got the reversal of the district court's comprehensive judgment in YouTube's favor — but notwithstanding the considerable hand-wringing already underway about how terrible a result this is, I'm here to tell you: It ain't so bad. In fact, I think it's a pretty sensible opinion that clarifies the law surrounding service provider immunity in some very helpful ways and, most importantly, does no significant damage at all to the underlying immunity principles that have been so profoundly important for the development of the Net over the past decade.
Here are some of the key points. [my emphasis throughout] [My apologies if you're unfamiliar with the basic layout of the case -- see the above links for the basic background]
1. "[A] finding of safe harbor application necessarily protects a defendant from all affirmative claims for monetary relief."
That's good — Viacom and allies had argued that the 512 immunities don't cover any claims for contributory infringement, vicarious infringement, or inducement of infringement. It was an odd theory, and the court shoots it down, correctly, in no uncertain terms.
2. "[T]he 'right and ability to control' infringing activity under § 512(c)(1)(B) requires something more than the ability to remove or block access to materials posted on a service provider's website."
That's good, too. The statute says a service provider is not immune from claims if it has the "right and ability to control" the infringing conduct (and derives a "financial benefit" from the infringements). Viacom advanced a plausible argument that, because YouTube (and virtually all content-hosting sites, including the Volokh conspiracy) can throw people off the site if they violate the terms of service, or because they have the technical capability to delete individual postings, that that constitutes a "right and ability to control" the infringements. This interpretation would have gutted the 512 protections and, again, the court strikes it down.
3. The court makes it clear that "the basic operation of § 512(c) requires knowledge or awareness of specific infringing activity."
This is a really important holding, and a really good one. The battle over service provider copyright infringement liability (including this lawsuit) has always been focused on one central question: Given that everyone with a brain in his/her head knows that there's infringing material out there, who has the duty to uncover it? And when does that duty arise?
Ever since the Napster decision back in 2001 (another decision that most people, incorrectly, viewed as a big win for the content providers), courts have consistently held: the burden is squarely on the copyright holders, not the service providers. If copyright holders identify specific infringing files (and give the service provider notice of where those files are located), the service provider "retains safe-harbor protection if it 'acts expeditiously to remove, or disable access to, the material.' " But the service provider – even if it has "generalized knowledge" that there's infringing content on its site — need not take any affirmative steps to find that material and remove it without notice from the copyright holders.
The court reaffims this in no uncertain terms.
"[A service] provider that gains knowledge or awareness of infringing activity retains safe-harbor protection if it 'acts expeditiously to remove, or disable access to, the material.' Thus, the nature of the removal obligation itself contemplates knowledge or awareness of specific infringing material, because expeditious removal is possible only if the service provider knows with particularity which items to remove."
This is a strong affirmation of what I regard as the key component to the whole 512 safe-harbor: the "knowledge" that disqualifies a service provider from the safe-harbor is knowledge that file X, residing on the service at specific location Y, is infringing; and the service provider has no duty to monitor to find those files. (" DMCA safe harbor protection
cannot be conditioned on affirmative monitoring by a service provider.")
So what did Viacom get out of all this? The court reverses and remands for the district court to consider 2 things: First, taking Viacom's factual allegations as true (because the district court had granted summary judgment for YouTube), there's evidence in the record that YouTube had, at least with respect to some specifically identified postings, "actual knowledge" that those were infringing. And second, the court articulates a "willful blindness" exception to the safe-harbor: if YouTube's lack of "actual knowledge" of "specific infringing files" was due to their own acts of "willful blindness" — a "deliberate effort to avoid [obtaining] guilty knowledge" — they can't assert the immunity.
We'll see how that last one plays out. The devil, as always, is in the details. An overly-expansive definition of what constitutes "willful blindness" could lead to trouble – but I am pretty optimistic that courts will be able to define it in such a way that it disqualifies only truly egregious conduct (and that service providers will, as a consequence, be less likely to engage in egregious conduct) while placing a high enough bar in the way of those trying to prove the egregiousness of the conduct that it only gets the really bad actors and leaves the vast majority of service providers unaffected.
April 5, 2012
"Opinion on Void Seizure"
Scott Johnson (PowerLine) reports on this very interesting case (United States v. $35,131.00 in United States Currency (S.D. Tex. Apr. 2, 2012)). I'm not sure whether the opinion is legally sound — this is far from my area of expertise — but I thought I'd pass it along, and I'd love to hear what others who know this area of the law have to say:
1. Introduction.
At the airport, federal officers confiscated $35,131 from a family flying to Ethiopia. They said that the couple intentionally attempted to evade the reporting requirements for taking money outside of the United States. The citizens clearly had no intention to violate the rules, and the government must return their money and pay for their attorney's fees and costs of court.
2. Background.
On June 2, 2011, Kyle Jones and his wife Berekti Jones were at George Bush Intercontinental Airport with their daughter Soliyana. They were flying to Ethiopia through Dubai and planned to stay in Addis Ababa for two, months while visiting family and celebrating Soliyana's second birthday.
The law requires that an international traveler declare on a form(a) that he has no more than $10,000 or (b) report the amount. When the couple reached the first check, officer Agustin Hernandez from the Customs and Border Protection of the Department of Homeland Security asked Kyle how much currency and monetary instruments he had on him. Kyle responded that he did not know. Hernandez then asked how many dollars he was carrying; Kyle replied that he would guess around $20,200. Hernandez wrote $20,200 on the form. He told Kyle to sign it, and Kyle did.
Hernandez then took the family to another table where officer Charlesworth Clarke told them to put all of their currency on it. At that point, Kyle asked what counted as currency because he had traveler's checks. From his six carry-on bags and jacket he retrieved everything -– $20,000 in traveler's checks and $11,131 in cash. Berekti, who had been tending to their daughter during the conversations, handed the officer her wallet. It had $4,ooo in cash. The officers then frisked the Joneses and searched their bags, and found no additional money -– however described.
The officers seized the entire $31,131 that the Joneses had voluntarily given them and released them from custody. Having missed their flight, the Joneses spent $1,500 to replace the tickets plus having had to rent a hotel room.
3. Intent.
Six officers appeared at the trial, four of whom testified. A "case agent" sat with the government's counsel. He knew nothing. His sole contribution had been to enter data into a computer; he could not have assisted the United States attorney. In addition to overreaching the people whom they are to serve, three officers wasted oneehalf day watching four others embarrass themselves.
The government presented no evidence — none — that the Joneses intended to evade the reporting requirements. Kyle told Hernandez that he did not know the amount of money he was carrying. Saying "I do not know" is not a deliberate failure to report. After Hernandez insisted on an answer, Kyle said that he would have to guess. [Footnote: Reports on Exporting and Importing Monetary Instruments, 31 U.S.C. §§ 5316 (1986).] Guessing is not a material omission or a misstatement of fact — certainly not one the government can use to steal the money. [Id. §§ 5317(c)(2), 5324(c).]
The agency's official publications say that its officers can help travelers complete the form if they require assistance. Instead of ensuring that the Joneses understood the scope of "monetary instruments" and other reporting requirements, the officers took advantage of their guess. Hernandez instructed Kyle to complete the form before allowing him to count his money, and the others never let them correct it once their guess was shown to have been low.
These public servants sought to earn credit with their agency by collecting money. Some of it is returned to the agency –- like justices of the peace whose pay is derived directly from the fines they impose. They focused on bureaucratic imperatives — not their duties to the public and law. [Footnote: Leonard W. Levy, A License to Steal: The Forfeiture of Property (1996).]
The agencies that manage law officers create profiles of suspicious people. Ignoring for a moment that they include contradictions — like he rushed or he was very early, he looked the officer in the eye or he evaded loohng him in the eye — the Joneses displayed no suspicious behavior. At every step they were candid if imprecise. They were traveling as a family, in normal dress, and remained polite and calm.
They were taking money for a two month stay in Addis Ababa, Berekti's city of birth — a city that operates almost entirely in cash. It was reasonable that they would have cash and traveler's checks, and it was a precaution to split it among their bags and each other. Nothing was hidden.
Hernandez never should have asked Kyle to sign the form on a guess; rather, he should have had him count it at the second station and report the exact amount. Hernandez, with the connivance of his fellows, showed the only deceit. It appears that the officer's entire approach was to target the Joneses. They should have taken the family to the side and allowed them to count their money. They should have explained what constituted currency and given them adequate time to complete the form. Instead, they manipulated the Joneses' confusion into a deliberate failure to report. The officers accepted a guess from Kyle. When it was wrong, they took all of their money — for no harm and no deceit. They had no interest in ensuring that the couple adhered to the law. They wanted a statistic for their supervisor, and they cudgeled the Joneses to get one.
A lack of leadership at the agency allowed this. Its mission statement — which none of the officers could recall at the trial — is to serve the American public with vigilance, integrity, and professionalism. They displayed none of these. The agency says that integrity is its cornerstone; that its officers are guided by the highest ethical and moral principles. A gang of armed security officers bullied this family — a family who cooperated with the officers to their detriment. Our homeland will not be secure by these rascals. They played agency games, abused the people they are to serve, and violated their oaths to support the Constitution.
In the initial conference, the United States demanded to seize the full amount even though, as the defense counsel mentioned, the recommended forfeiture for a conviction of criminal evasion would have been $500 to $5,000. The United States must pay the $35,131 to Kyle Jones and Berekti Jones and their attorney's fees and costs of court.
A Right to Bring Your Guinea Pig to School?
My daughter has been insisting for months that she should be allowed to take her guinea pigs to school. Looks like I might have to start preparing a new reason why she can't….
Update
As usual, the brilliant VC readers come through with Plan B for fending off my daughter's request.
Canada abolishes long gun registry
Yesterday the Canadian Senate voted 50-27 to abolish the long gun registry. Bill C-19 received unanimous support from Conservative Senators, and some support from Liberals. The bill had previously passed the House of Commons. It became the law of the land today, with the Royal Assent of Canada's Governor-General.
The bill does not change Canada's registration system for handguns, which has been in effect since the 1930s. Nor does it change the registration system for certain long guns which have been classified as "prohibited" or "restricted" weapons. Likewise unchanged is Canada's complicated and burdensome system for licensing gun owners, which was created by a Liberal government in the 1990s.
The registration changes, however, are monumental. Registration records for seven million ordinary long guns are to be destroyed. The government of Quebec has announced that it while file suit to attempt to obtain custody of the 1.5 million registration records pertaining to citizens of Quebec.
Ever since the regime of Prime Minister Pierre Trudeau in the 1970s, gun control in Canada has been primarily a culture war campaign against the "masculine" values of rural Canada, and as a means of demonstrating the dominance of Canada's urban New Class.
To this day, the foremost public justification for all forms of gun control is Gamil Rodrigue Gharbi (who changed his name Marc Lépine). Gharbi/Lépine was the son of an alcoholic, wife-beating, child abuser who had immigrated to Canada from Algeria. In 1989, he murdered 14 women (13 by gunshot, one by stabbing), and wounded 8 women and 4 men in the engineering building of a school affiliated with the University of Montreal. An incompetent response by police dispatchers to the 911 calls gave Gharbi/Lépine the opportunity to murder at leisure.
In The Montreal Massacre (gynergy books, 1991), Quebec feminists describe their outrage, and demanded the rehabilitation of masculinity, whose (allegedly) misogynist pro-death culture is based on aggressive sports, violent entertainment, and the penetration of women during sexual intercourse.
Canada's leading public proponent of gun control, Prof. Wendy Cukier, had previously proclaimed that in Canada, gun control is a one-way street; once restrictions are imposed, they are never lifted. This was never entirely accurate; popular demand forced the removal of some long gun restrictions that had been imposed during the World Wars. But the removal of a major peacetime anti-gun law truly does signal a new era in Canadian right to arms politics.
Efforts to repeal the long gun registry lasted 17 years, and they finally succeeded in part because the majority of Canadians have concluded that the registry was a colossal waste of money, of no value in crime control, and a pointless invasion of privacy.
Globally speaking, the repeal of the registry is the most important gun policy event of the last year. As the United Nations works towards a final draft of an Arms Trade Treaty this year, the Canadian public's rejection of registry adds to the challenges of the global gun control organizations which want the Treaty to include gun registration requirements.
An article in Forbes profiles Saskatchewan MP Garry Breitkreuz, whose tireless work was essential to the repeal. Breitkreuz, incidentally, had started out as a supporter of registration, and changed his mind after studying the evidence about whether it would help reduce crime. Kudos also to the Canadian Sport Shooting Association, to Canada's National Firearms Association, and especially to the late David Tomlinson, who passed away in 2007, and who for over three decades was the Founding Father and leader of Canada's right to arms movement.
Canadian gun owners know that much more needs to be done to undo the damage caused the kulturkampf which Trudeau began, and which has burdened Canadians with laws that do nothing to enhance public safety, but whose purpose and effect is to harass and persecute law-abiding gun owners. Bill C-19 is a good first step, and a monumental one.
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