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The State Antitrust Enforcement Venue Act Deserves Careful Scrutiny

WLF Legal Pulse - Mon, 09/27/2021 - 12:15pm

William C. Lavery is a partner in the Washington, DC office of Baker Botts L.L.P.

With Congress back in session, antitrust reform is a political hot topic again. “Anti-monopoly” sentiment and related legislative proposals have been on the rise. Lawmakers on both sides of the aisle appear on board with the idea that they want to do something to change the status quo, but don’t necessarily agree what that is. And with widely differing motives, it’s far from clear what the end result might be, and whether the potential legislative changes would achieve any worthy policy goals.

Nonetheless, perhaps surprisingly given the polarized political environment, we might be nearing a critical turning point where Congress may come to an agreement and enact significant reform. Indeed, the proposed bills currently on the table would amount to the biggest policy shift in antitrust law that we have seen in fifty years. Even if Congress takes a more middle-of-the-road approach, the substantive changes could be drastic. This post addresses one of the somewhat less controversial proposals being considered—the State Antitrust Enforcement Venue Act—that deserves a bit more attention.

Taking a step back—many of the antitrust proposals on the table are (at least superficially) aimed at regulating large technology companies and other big businesses. And they are gaining traction. Statements by both federal and state antitrust regulators, and even a White House executive order, have made it clear that antitrust reform is one area that enjoys at least some bipartisan support. This is not unheard of—but in recent times it’s certainly rare; it’s been decades since we have had any meaningful changes in antitrust jurisprudence. While there have been plenty of merger challenges by DOJ and FTC in recent years, the last major breakup of any purported monopolist in the U.S. was nearly 40 years ago, and the last case even seeking dissolution of a major firm was over 20 years ago.

The proposals have seemingly gained some public support as well—particularly with advocates of progressive antitrust reform. Indeed, on September 2 nearly 60 public interest groups sent a letter to House Speaker Nancy Pelosi and Republican Leader Kevin McCarthy supporting the passage of, and urging a vote on, a package of six antitrust bills that cleared the House Judiciary Committee in late June. State lawmakers and attorneys general have likewise lobbied for the passage of the proposed bills.

The six bills in the package that cleared the House Judiciary Committee1—which, according to some, are aimed at “reining in” “Big Tech” and solving America’s purported “monopoly problem”—are expansive. They include proposals regarding merger filing fees for big platforms, shifts in the burden of proof, a presumption that certain mergers are anticompetitive (regardless of industry), limits to so-called “self-preferencing” on digital platforms, and avenues to make it easier for state AGs to bring cases. But make no mistake—the proposed bills are not limited to Big Tech. If passed in their current forms (or anything close), they will have significant effects on all companies across the economy, large and small. The impacts could be particularly significant for companies and even entire industries that have not typically worried about antitrust enforcement.

Among the proposals is the State Antitrust Enforcement Venue Act of 2021 (H.R. 3460), which as of September 23 advanced out of the Senate Judiciary Committee.2   Some have described this bill as an “easy” and “limited” technical change to the Judicial Panel on Multidistrict Litigation (“JPML”) process. Although at first blush it may seem to be an “easy” bill for politicians on both sides of the aisle to agree on, it is in reality not at all “limited” in its potential effects.

At a high level, the State Antitrust Enforcement Venue Act would give state attorneys general more control over where federal antitrust cases they file are litigated by allowing them to stay in the court of their choosing. Section 1407 of Title 28 of the U.S. Code (passed in 1976) created and authorized a panel of seven circuit and district judges to transfer civil actions involving one or more common questions of fact that were pending in different districts to a single district for pretrial proceedings, if it determines that transfer will be convenient for the parties and witnesses and will promote efficiency. See 28 U.S.C. § 1407(a). This is referred to as “centralization.” The actions are then remanded at the conclusion of pretrial proceedings to their original districts for trial. The proposed bill would change Section 1407 and remove the JPML’s authority to transfer “to any district” civil actions from different jurisdictions when states AGs are involved. Subsection (g) of the law already exempts the federal government (FTC and DOJ) from such transfers, and the proposal would effectively include states as well. In other words, the bill proposes a carve-out in the law that empowers the JPML to consolidate litigation and would shield antitrust enforcement actions by state attorneys general from the JPML’s authority. The bill does not limit the exception to criminal actions and actions seeking injunctive relief, unlike the existing exception for federal enforcers. Moreover, significantly, the venue bills are retroactive to June 1, 2021.

State AGs have been lobbying for this change for some time. Indeed, just last week a bipartisan group of 30 state attorneys general sent a letter to both chambers of Congress advocating for the State Antitrust Enforcement Venue Act (among others), emphasizing that they “urge Congress to include in the legislation a provision confirming that the states are sovereigns that stand on equal footing with federal enforcers under federal antitrust law, including with regard to the timing of challenging anticompetitive mergers and other practices.” The states’ concerns with being part of large MDLs are basically two-fold: (1) they don’t want to be forced to litigate outside of their home states, and (2) they are concerned that having their cases transferred as part of a large MDL will cause delay in their litigation. And they have considerable support in Congress. The bill’s bipartisan sponsors—including Ken Buck (R-CO), David Cicilline (D-RI), Dan Bishop (R-NC), Burgess Owens (R-UT), and Joseph Neguse (D-CO) in the House, and Amy Klobuchar (D-MN) and Mike Lee (R-UT) in the Senate—have all said that they agree that state AGs should be on the same footing as federal regulators when it comes to enforcing the antitrust laws.

No one disputes that the MDL process was instituted for a legitimate reason and serves legitimate goals (for all parties involved, including the courts). It has for decades. It allows the parties and the court to conserve resources, eliminates the need for the parties to retain different counsel in different jurisdictions (to a certain extent), and minimizes the risk of inconsistent outcomes regarding the same questions. And it is widely accepted that large antitrust class actions—which are common—are generally most efficient when all related actions are centralized in the same court as part of the same pretrial proceeding.

Restricting the JPML’s ability to centralize actions will have significant consequences. If enacted, the proposed bill will undoubtedly drive up the cost and duration of many class actions. We will still have MDLs (the proposed legislation does nothing to get rid of them), but we will also have proceedings pending outside of the MDLs that will create headaches for everyone involved. Discovery will no longer be streamlined. Parties will be answering discovery requests from the state(s) in one proceeding (or more), private parties in another, and maybe the federal government in another. With different schedules, different pretrial rulings and different discovery requests, coordination between the actions will be difficult if not impossible. Witnesses—plaintiffs, defendants, and third parties—will be subjected to duplicative depositions in multiple jurisdictions. The Federal Rules of Civil Procedure allow for broad discovery. It will not be easy for even non-parties to get out of their discovery obligations simply based on an argument of burden or duplication. Inconsistent rulings on dispositive motions will also result in different substantive outcomes in different jurisdictions—even though the exact same conduct is at issue. This will result in inconsistent precedent and create uncertainty for all stakeholders. Simply put, taking state AGs out of the “centralization” equation will create management issues, decrease efficiency, decrease predictability, and in all likelihood, result in even more delays.

Notably, the judiciary itself has concerns with the proposed bill. Indeed, the Director of the Administrative Office of US Courts (“AO”), US District Judge Roslynn R. Mauskopf, recently wrote House Minority Leader Kevin McCarthy to note the AO’s concern with the proposed bill. While the letter notes that its “comments are neither expressions of support for, nor opposition to the bill,” it strongly condemns the proposal. Among other things, it notes that the bill could reduce efficiencies in antitrust litigation, particularly because state AGs’ claims are typically similar to those by purchasers alleging antitrust injuries, thereby taxing the judiciary’s limited resources with duplicative claims for the same conduct. It even notes that states might end up worse off by losing their ability to influence antitrust MDLs.

It is somewhat rare for the AO to comment on proposed legislation, particularly in situations where it is not asked for an opinion, which as far as we are aware, is the case here. The AO is a US administrative agency, generally responsible for supporting the federal judicial branch on a wide range of issues. It also facilitates communications within the judiciary and with Congress and the executive branch, and at times will analyze proposed legislation from Congress that will affect the courts’ operations or personnel (but usually not without being requested to do so).

The AO’s letter drew a fairly quick and somewhat fiery response from Amy Klobuchar, Mike Lee, Ken Buck and David Cicilline. The lawmakers sent a letter to Judge Mauskopf on July 28 not only detailing their disagreement with Judge Mauskopf’s view of the proposed bill, but also stressing that it was “unusual, if not inappropriate, for the Administrative Office of the United States Courts” to send the letter in the first place. The letter effectively stressed the same arguments for the proposed bill that we note above—states have a legitimate interest in representing their citizens and centralization can at times cause delay. Both are fair points, but may not outweigh the costs.

In sum, while the State Antitrust Venue Enforcement Act States may be less extreme than some of the more neo-Brandeisian reform ideas out there (that essentially advocate for a return to structuralism and an all-out rejection of economic analysis), it will still have significant and far-reaching consequences. No doubt, states have sovereign rights and their enforcement actions serve interests beyond those served by private actions. And their concern that centralization may at times result in “substantial delay” is a legitimate one. But the State Antitrust Venue Enforcement Act proposes serious changes to a system that has worked for many years. So we should ask ourselves—is it worth it? States’ rights should be carefully balanced against concerns of judicial efficiency and logistical realties of litigation. The proposed bill risks upsetting that balance.

Notes

The post The State Antitrust Enforcement Venue Act Deserves Careful Scrutiny appeared first on Washington Legal Foundation.

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WLF Urges Supreme Court To Clarify FAA § 1 Exemption In Line With Statutory Text And Context

WLF Legal Pulse - Mon, 09/27/2021 - 9:53am

“The text and history of FAA § 1 establish that it covers only workers who actively transport bulk goods across borders.”
—Cory L. Andrews, WLF General Counsel & Vice President of Litigation

Click here for WLF’s brief.

(Washington, DC)—Washington Legal Foundation (WLF) today filed an amicus curiae brief urging the U.S. Supreme Court to review, and ultimately reverse, a Seventh Circuit decision that refused to read section 1 of the Federal Arbitration Act (FAA), known as the “transportation worker exemption,” in line with its text and context.

The FAA establishes a federal policy favoring arbitration. It requires, in section 2, that most people comply with their arbitration agreements. It contains a discrete exception, in section 1, for “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The district court ruled that the plaintiff, a Ramp Agent Supervisor who does not physically transport goods interstate or even supervise others who do, does not fit within this exemption. The Seventh Circuit disagreed, holding that the plaintiff need not physically cross state lines to be “engaged in foreign or interstate commerce” under section 1.

In its brief, WLF explains that section 1 is not the product of a legislative intent to excuse transportation workers—and, for some peculiar reason, them alone—from honoring arbitration agreements. Section 1 exists, rather, because Congress expected a few discrete classes of workers to engage in arbitration or pursue remedies governed by other federal laws. And because section 1 fulfills this singular purpose, there is no principled way to stretch its application. Although some judge-made tests purport to expand the exception beyond the national and international transportation of goods, WLF argues that these contrived standards defy statutory text and context, produce inconsistent results, and serve no end set forth by Congress.

Celebrating its 44th year as America’s premier public-interest law firm and policy center, WLF advocates for free-market principles, limited government, individual liberty, and the rule of law.

The post WLF Urges Supreme Court To Clarify FAA § 1 Exemption In Line With Statutory Text And Context appeared first on Washington Legal Foundation.

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October 4, 2021 Close Date Announced for Online Public Auction for Former FAA Tower Site in Yarmouth Port, Massachusetts

GSA news releases - Mon, 09/27/2021 - 12:00am
BOSTON – The U.S. General Services Administration (GSA) has set the initially anticipated close of auction date for the public auction of a former Federal Aviation Administration (FAA) tower site in Yarmouth Port, Massachusetts, as part of its mission to deliver value and savings in real estate,...

WLF Urges High Court to Halt Montana’s End Run Around the Federal Employer’s Liability Act

WLF Legal Pulse - Fri, 09/24/2021 - 10:45am

“By overlaying a separate state-law regime on top of the one Congress created, the Montana Supreme Court’s decision—if allowed to stand—will unduly interfere with FELA’s efficient and uniform compensation scheme.”
— Cory Andrews, WLF General Counsel & Vice President of Litigation

Click here for WLF’s brief.

WASHINGTON, DC— Washington Legal Foundation (WLF) today urged the U.S. Supreme Court to review, and ultimately to reverse, a decision of the Montana Supreme Court that unfairly hamstrings railway companies in their efforts to defend against personal-injury suits by their employees. WLF’s brief was joined by the Allied Educational Foundation.

The Federal Employers’ Liability Act (FELA) provides the sole remedy by which railway employees may recover from their employer for work-related injuries. FELA’s exclusive compensation scheme differs markedly from state worker-compensation regimes, by which employees may recover for their injuries only in no-fault administrative proceedings. Recovery under FELA also tends to be more generous than that available under state worker-compensation laws. As a result, FELA occupies the entire field of railway-employer liability for railway employees’ work-related injuries.

Yet the Montana Supreme Court’s decision permits employees to supplement their FELA claims with a second suit alleging bad faith in defending against FELA claims. In its amicus brief, WLF argues that when Congress adopted FELA, it intended to preempt the entire field of railway-injury claims, thus barring under the Constitution’s Supremacy Clause the very state-law claims Montana courts routinely recognize. WLF asks the Supreme Court to grant review and clarify that FELA preempts Montana’s bad faith tort regime, which unduly interferes with Congress’s exclusive scheme for compensating railroad workers.   

The post WLF Urges High Court to Halt Montana’s End Run Around the Federal Employer’s Liability Act appeared first on Washington Legal Foundation.

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Senate Ranking Members Urge DOJ to Restore Information Access for Minority Committee Leaders

WASHINGTON – U.S. Sen. Roger Wicker, R-Miss., ranking member of the Senate Committee on Commerce, Science, and Transportation, led Senate committee ranking members in a letter to U.S. Department of Justice (DOJ) Attorney General Merrick Garland imploring the DOJ to rescind the Office of Legal Counsel’s (OLC) 2017 opinion, which advises departments and agencies that they can ignore document requests from minority leadership of congressional committees.

“The opinion creates insurmountable challenges for ranking members in conducting effective oversight. To restore the balance of information access between majority and minority leadership on committees, and as proponents of fair, transparent government, we implore the Justice Department to take action,” the ranking members wrote.

Members who joined Wicker in the letter include: Sens. Charles Grassley, R-Iowa, ranking member of the Judiciary Committee; Tim Scott, R-S.C., ranking member of the Special Committee on Aging; John Boozman, R-Ark., ranking member of the Agriculture Committee; Richard Shelby, R-Ala., vice-chair of the Appropriations Committee; James Inhofe, R-Okla., ranking member of the Armed Services Committee; Pat Toomey, R-Pa., ranking member of the Banking, Housing, and Urban Affairs Committee; Lindsey Graham, R-S.C., ranking member of the Budget Committee; John Barrasso, R-Wyo., ranking member of the Energy and Natural Resources Committee; Shelley Moore Capito, R-W.Va., ranking member of the Environment and Public Works Committee; Mike Crapo, R-Idaho, ranking member of the Finance Committee; James Risch, R-Idaho, ranking member of the Foreign Relations Committee; Richard Burr, R-N.C., ranking member of the Health, Education, Labor, and Pensions Committee; Rob Portman, R-Ohio, ranking member of the Homeland Security and Governmental Affairs Committee; Lisa Murkowski, R-Alaska, ranking member of the Indian Affairs Committee; Marco Rubio, R-Fla., vice-chair of the Intelligence Committee; Roy Blunt, R-Mo., ranking member of the Rules Committee; Rand Paul, R-Ky., ranking member of the Small Business Committee; and Jerry Moran, R-Kan., ranking member of the Veterans’ Affairs Committee.

Excerpt from the letter:

The OLC released an opinion on May 1, 2017 about the authority of individual Members of Congress to engage in oversight of the Executive Branch. It concluded that “[i]ndividual members of Congress, including ranking minority members, do not have the authority to conduct oversight in the absence of a specific delegation by a full house, committee, or subcommittee.” Not only does this opinion misinterpret the constitutional responsibilities of Congress for monitoring the activities of the Executive Branch but it fails to provide clarity on whether those same limitations apply to information requests made to Offices of Inspectors General (OIG).

The OLC opinion, which advises departments and agencies that they can ignore requests from Ranking Members, is based on grounds unsupported by the Constitution. Instead of respecting the separation of powers, the opinion ignores that our system of government vests Congress with all legislative responsibilities. Recognizing the importance of broad congressional access to information about activities in the Executive Branch, the Supreme Court acknowledged that “the power of inquiry is an essential and appropriate auxiliary to the legislative function.” Unfortunately, the opinion authored by then-Acting Assistant Attorney General Curtis E. Cannon inhibits Congress from fulfilling its duty of overseeing the programs it legislates into law, specifically by treating Ranking Members of congressional committees no differently than private citizens.

Click here to read the full letter.  

DC Court of Appeals Abandons Article III Standing for Consumer Advocacy Groups

WLF Legal Pulse - Thu, 09/23/2021 - 4:37pm

By Cary Silverman and Thomas J. Sullivan, partners in Shook, Hardy & Bacon L.L.P.’s Washington, D.C. and Philadelphia offices, respectively. Mr. Silverman co-authored the August 2, 2021 U.S. Chamber Institute for Legal Reform report The Food Court: Developments in Litigation Targeting Food and Beverage Marketing.

***

“[P]ublic interest organizations bringing suit [for the purpose of promoting interests or rights of consumers are] free from any requirement to demonstrate their own Article III standing.” With that statement in Animal Legal Defense Fund v. Hormel Foods Corp., 2021 WL 3921512 (D.C. Sept. 2, 2021), the D.C. Court of Appeals opened the courthouse doors to organizations using District of Columbia’s consumer law to sue without alleging anyone experienced an actual injury. As a result, companies that sell goods or services in the District of Columbia should brace themselves for a surge of litigation by advocacy groups, some of which have extreme agendas that do not align with consumer interests.

The District of Columbia’s Consumer Protection Procedures Act

Like most consumer protection laws, the Consumer Protection Procedures Act (CPPA) originally authorized a private right of action by “any consumer who suffers damage as a result of . . . a trade practice.” In 2000, the D.C. Council amended this provision to permit lawsuits by “a person, whether acting for the interests of itself, its members, or the general public seeking relief from the use by any person of a trade practice.” Then, in 2012, the D.C. Council specifically authorized nonprofit organizations and public interest organizations to bring CPPA actions. D.C. Code Ann. § 28-3905(k)(1). An individual or organization may seek relief from a violation of the CPPA, including after it purchases or receives a product “in order to test or evaluate qualities pertaining to use for personal, household, or family purposes.” Organizations avoid class certification requirements and federal court jurisdiction by seeking only injunctive relief, attorney’s fees, and costs, not monetary damages.

Advocacy groups have increasingly filed CPPA actions targeting the marketing of food, beverages, and other products. One recent lawsuit alleges that a soft drink maker cannot tout itself as environmentally responsible so long as it sells single-use plastic bottles. Another claims that a meat producer did not live up to its advertised efforts to safely supply food during the pandemic. Organizations have also alleged that products marketed as “pure,” “natural,” “clean,” or just generally “safe” contain minute traces of a chemical or other substance that make their advertising false or deceptive.

Article III Standing, D.C. Courts, and the CPPA

Whether a plaintiff has standing to bring a CPPA private-attorney-general action is often contested in litigation. Article III standing reserves judicial power for cases in which a plaintiff has experienced a concrete harm caused by the defendant’s conduct, ensuring that cases are resolved in the context of an actual dispute. An organization can establish Article III standing by showing that it had to divert significant resources from its programs to respond to the practice at issue. Havens Realty Corp. v. Coleman, 455 U.S. 363, 378-79 (1982). There must be a “direct conflict” between the defendant’s conduct and the organization’s mission. D.C. Appleseed Ctr. for Law and Justice, Inc. v. D.C. Dep’t of Ins., Sec., & Banking, 54 A.3d 1188, 1206-09 (D.C. 2012). A statutory violation alone is insufficient to qualify as an injury in fact for Article III standing purposes. Spokeo, Inc. v. Robins, 578 U.S. 330 (2016). As the U.S. Supreme Court recently recognized, Article III does not grant unharmed plaintiffs “freewheeling power to hold defendants accountable for legal infractions.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2200 (2021).

While D.C. courts are not bound by Article III, until Hormel, the D.C. Court of Appeals had specifically ruled in CPPA cases that “this court has followed consistently the constitutional standing requirement embodied in Article III.” Grayson v. AT&T Corp., 15 A.3d 219, 224 (D.C. 2011). It had repeatedly reaffirmed this principle, even after the 2012 amendments. Following these decisions, some trial court judges adhered to Article III requirements in representative actions brought by organizations, while others took a more relaxed approach.

The Court of Appeals’ Decision

The D.C. Court of Appeals held in Hormel that the D.C. Council replaced Article III standing requirements with a statutory test that provides “maximum standing” to public interest organizations. That test requires an organization to “check three boxes”: (1) it must be a public interest organization (“a nonprofit organization that is organized and operating, in whole or in part, for the purpose of promoting interests or rights of consumers”); (2) it must identify a “consumer or class of consumers” that could bring the suit in their own right; and (3) it must have a “sufficient nexus” to those consumers’ interests to adequately represent them. Hormel, 2021 WL 3921512, at *6.

Applying this test, the court ruled that the Animal Legal Defense Fund (ALDF) had standing to bring an action seeking to stop Hormel’s Natural Choice marketing campaign, which it claimed led consumers to believe that the animals slaughtered to make its deli meats are treated humanely when they are not, and to require the company to engage in “corrective advertising.” Id. at *2. The Court rejected Hormel’s argument that ALDF (“the legal voice for all animals”) does not represent the interests of meat-eating consumers. Rather, the court found that promoting the interests of consumers only needs to be part of the nonprofit’s purpose. See id. at *6. While the organization’s end goal may be to have the public stop eating meat entirely, the court found that its interests in seeking truthful advertising and accurate information, as well as its concern with how animals are treated, sufficiently aligned with meat-eating consumers. See id. at *7.

Expect a Surge of Litigation

Hormel is likely to turn the District of Columbia’s local courts into a playground for national advocacy groups to promote their policy agendas, rather than serve the interests of consumers. Unlike consumer class action litigation, these claims will not need to identify a single D.C. resident who alleges that he or she purchased the product because of misleading labeling or advertising. As advocacy groups and the plaintiffs’ bar learn of the ruling, the number of these claims, which were already accelerating in recent years, is likely to surge.

D.C. courts can attempt to protect the interests of consumers and constrain misuse of the statute. Courts can add teeth to the CPPA’s requirement of a “sufficient nexus” between an organization’s mission and the consumer interests involved in the lawsuit. They can also dismiss claims when an organization’s complaint fails to assert a plausible claim that reasonable consumers would be misled by the challenged representation, which must be one that would be material to a decision to purchase the product for a significant number of consumers. D.C. Code Ann. § 28-3904(e), (f), (f-1). If litigation runs rampant, as occurred with a similar provision that California voters abandoned years ago,1 the D.C. Council may need to reverse course.

Note

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California Law Will Restrict Consumer-Product Recyclability Claims

WLF Legal Pulse - Thu, 09/23/2021 - 4:35pm

By Jean-Cyril (JC) Walker, a partner, and Alexa Pecht, an associate, with Keller and Heckman LLP in the firm’s Washington, DC office.

***

On September 9, 2021, the California legislature passed SB 343, Truth in Labeling for Recyclable Materials. The bill, if signed by Governor Newsom on or before October 10, 2021, will likely place significant restrictions on recyclability claims in the state, potentially as early as January 1, 2024.  

SB 343 would restrict recyclability claims by narrowing the universe of “consumer goods” and packaging considered “recyclable” in California. The bill declares use of the chasing arrows symbol, the chasing arrows symbol surrounding a resin identification code, or any other symbol or statement indicating recyclability, to be deceptive or misleading unless the product or packaging is considered recyclable pursuant to statewide recyclability criteria to be developed by CalRecycle. SB 343, Proposed Cal. Pub. Res. Code § 42355.51(b)(1).

In order to develop the recyclability criteria, CalRecycle must by January 1, 2024, revise regulations governing local waste and recycling facility reporting to include information on how all recycling material is collected and all material types and forms are actively recovered by each facility. Id. at § 42355.51(d)(1)(A). Based on this information, CalRecycle must by January 1, 2024, conduct and publish a characterization study of material types and forms that are collected, sorted, sold, or transferred by solid waste facilities, and must update this study every five years, beginning in 2027. Id. at § 42355.51(d)(1)(B). According to the bill:

a product or packaging is considered recyclable in the state if, based on information published by the department pursuant to subparagraph (B) of paragraph (1) [characterization study], the product or packaging is of a material type and form that meets both of the following requirements:

(A) The material type and form is collected for recycling by recycling programs for jurisdictions that collectively encompass at least 60 percent of the population of the state.

(B)(i) The material type and form is sorted into defined streams for recycling processes by large volume transfer or processing facilities, as defined in regulations adopted pursuant to Section 43020 [governing solid waste facilities], that process materials and collectively serve at least 60 percent of recycling programs statewide, with the defined streams sent to and reclaimed at a reclaiming facility consistent with the requirements of the Basel Convention.

(ii) The department may adopt regulations modifying this requirement to encompass transfer or processing facilities other than large volume transfer or processing facilities, as the department deems appropriate for achieving the purposes of this section.

Id. at § 42355.51(d)(2). In addition to the criteria set out above, consumer products and packages sold in the state must meet the following additional requirements in order to qualify as recyclable:

(3) A product or packaging shall not be considered recyclable in the state unless the product or packaging meets all of the following criteria, as applicable:

(A) For plastic packaging, the plastic packaging is designed to not include any components, inks, adhesives, or labels that prevent the recyclability of the packaging according to the APR Design® Guide published by the Association of Plastic Recyclers.

(B) For plastic products and non-plastic products and packaging, the product or packaging is designed to ensure recyclability and does not include any components, inks, adhesives, or labels that prevent the recyclability of the product or packaging.

(C) The product or packaging does not contain an intentionally added chemical identified pursuant to the regulations implementing subparagraph (4) of subdivision (g) of Section 42370.2 [concerning reusable, recyclable compostable food service containers].

(D) The product or packaging is not made from plastic or fiber that contains perfluoroalkyl or polyfluoroalkyl substances or PFAS that meets either of the following criteria:

(i) PFAS that a manufacturer has intentionally added to a product or packaging and that have a functional or technical effect in the product or packaging, including the PFAS components of intentionally added chemicals and PFAS that are intentional breakdown products of an added chemical that also have a functional or technical effect in the product.

(ii) The presence of PFAS in a product or product component or packaging or packaging component at or above 100 parts per million, as measured in total organic fluorine.

Id. at § 42355.51(d)(3). The bill does provide an exemption from the preceding requirements for a product or packaging that “has a demonstrated recycling rate of at least 75 percent, meaning that not less than 75 percent of the product or packaging sorted and aggregated in the state is reprocessed into new products or packaging.” Id. at § 42355.51(d)(4). That said, the Senate’s legislative analysis indicates that a fairly narrow subset of goods are expected to meet the bill’s criteria. Indeed, “[b]ased on current trends, the only plastics that would likely be allowed to be labeled with a chasing arrows symbol under the considerations of this bill would be PET #1 and DPE #2 plastic bottles and jugs.” Senate Floor Analyses (Sept. 9, 2021). 

The bill does, however, generally exempt consumer goods that display a chasing arrow symbol or instruct consumers to recycle a product as directed by the California Beverage Container Recycling and Litter Reduction Act or any other federal or California law. SB 343, Proposed Bus. & Prof. Code § 17580(e). A similar exclusion is provided for goods that direct consumers, consistent with several enumerated programs (e.g., The Electronic Waste Recycling Act of 2003, Lead-Acid Battery Recycling Act of 2016), to properly dispose of or otherwise handle the good at the end of its useful life. Id. at § 17580(g).

The bill also provides a grace or sell through period for “[a]ny product or packaging that is manufactured up to 18 months after the date the department publishes the first material characterization study required pursuant to subparagraph (B) of paragraph (1) of subdivision (d), or before January 1, 2024, whichever is later.” SB 343, Proposed Cal. Pub. Res. Code § 42355.51(b)(2)(A). A similar 18-month period will be available after each material characterization study update, provided that the product or package met the recyclability requirements under the previous version of the study. Id. at § 42355.51(b)(2)(B).

Note that goods or packaging recycled via non-curbside programs would be considered “recyclable” only if the “non-curbside collection program recovers at least 60 percent of the product or packaging in the program and the material has sufficient commercial value to be marketed for recycling and be transported at the end of its useful life to a transfer, processing, or recycling facility to be sorted and aggregated into defined streams by material type and form.” Id. at § 42355.51(d)(5). After January 1, 2030, the minimum recovery threshold would increase to 75%.

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Circulating Opinion: Chamber of Commerce of the United States, et al. v. Bonta

WLF Legal Pulse - Thu, 09/23/2021 - 4:03pm

A WLF-digested dissent from The Honorable Sandra S. Ikuta

U.S. Court of Appeals for the Ninth Circuit | No. 20-15291 | Decided September 15, 2021

Opinion Topic: Federal Arbitration Act preemption of state law

Judge Ikuta had no role in WLF’s selecting or editing this opinion for our Circulating Opinion featureThe full opinion is available HERE.

Introduction: A coalition of trade associations sued to enjoin enforcement of California Assembly Bill 51, which prohibits employers from requiring employees, as a condition of employment, to agree to arbitrate any disputes with their employer. The district court held that the plaintiffs would likely succeed on their claim that the Federal Arbitration Act (FAA) preempted AB 51. The Ninth Circuit reversed in part, vacated the lower court’s injunction, and remanded the case. The court reasons that the FAA does not preempt state laws that prohibit an employee’s acceptance of arbitration as a condition of employment. “The FAA took as a given,” the court writes, that “arbitration is a matter of contract and agreements to arbitrate must be voluntary.”

In her dissent, Judge Ikuta concludes that AB 51 obstructs the purpose of the FAA and upbraids the majority for “abet[ting] California’s attempt to evade the FAA and the Supreme Court’s caselaw.” Her opinion conducts an eye-opening tour through California’s repeated legal and legislative schemes to abolish arbitration and explains why the court’s decision conflicts with decisions of the Supreme Court and two other federal circuits that have considered an identical question.

IKUTA, Circuit Judge, dissenting:

Like a classic clown bop bag, no matter how many times California is smacked down for violating the Federal Arbitration Act (FAA), the state bounces back with even more creative methods to sidestep the FAA. This time, California has enacted AB 51, which has a disproportionate impact on arbitration agreements by making it a crime for employers to require arbitration provisions in employment contracts. Cal. Lab. Code §§ 432.6(a)–(c), 433; Cal. Gov’t Code § 12953. And today the majority abets California’s attempt to evade the FAA and the Supreme Court’s caselaw by upholding this anti-arbitration law on the pretext that it bars only nonconsensual agreements. The majority’s ruling conflicts with the Supreme Court’s clear guidance in Kindred Nursing Centers Ltd. Partnership v. Clark, ––– U.S. ––––, 137 S. Ct. 1421 (2017), and creates a circuit split with the First and Fourth Circuits. Because AB 51 is a blatant attack on arbitration agreements, contrary to both the FAA and longstanding Supreme Court precedent, I dissent.|

I

By its terms, the FAA ensures that an arbitration agreement “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA preempts any state law that stands “as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52 (1941). The Supreme Court has long recognized the FAA’s broad purpose: it declares “a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary,” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), and embodies a “national policy favoring arbitration,” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346 (2011) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006)). When faced with a principle of “state law, whether of legislative or judicial origin,” that burdens arbitration and that “takes its meaning precisely from the fact that a contract to arbitrate is at issue,” we must strike it down as preempted by the FAA. Perry v. Thomas, 482 U.S. 483, 492 n. 9 (1987). And even when a state law generally applies to a range of agreements, the FAA preempts the law if it “interferes with fundamental attributes of arbitration” and obstructs the purpose of the FAA. Concepcion, 563 U.S. at 344. As the Supreme Court has explained, “[a]lthough § 2’s saving clause preserves generally applicable contract defenses, nothing in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives.” Id. at 343.

AB 51 is just such a state law that obstructs the purpose of the FAA. The history of AB 51 reveals it was the culmination of a many-year effort by the California legislature to prevent employers from requiring an arbitration provision as a condition of employment. California has long known that the FAA preempted laws that made arbitration agreements unenforceable, because the Supreme Court has so often struck down its anti-arbitration legislation or judge-made rules. ***

In light of these rulings, the California legislature took a different approach to anti-arbitration legislation. In 2015, it passed Assembly Bill 465, which banned employers from requiring arbitration agreements as a condition of employment and rendered unenforceable any offending contract. Text of AB 465, 2015–16 Cal. Leg., Reg. Sess. (2015). *** California Governor Jerry Brown vetoed this bill on the ground that such a “blanket ban” had been “consistently struck down in other states as violating the Federal Arbitration Act” and noted that the California Supreme Court and United States Supreme Court had invalidated similar legislation. Governor’s Veto Message for AB 465, 2015–16 Cal. Leg., Reg. Sess. (2015). *** That same year, the Supreme Court overruled a California court’s interpretation of an arbitration agreement, because it did not place arbitration contracts “on equal footing with all other contracts.” DIRECTV, Inc. v. Imburgia, 577 U.S. 47, 58–59 (2015) (quoting Buckeye, 546 U.S. at 443). This decision was followed by yet another defeat of state anti-arbitration legislation when a California court held that the FAA preempted another California statute, which had made agreements to arbitrate certain state civil rights claims unenforceable. See Saheli v. White Mem’l Med. Ctr., 21 Cal. App. 5th 308, 323 (2018).

Undeterred, the state legislature tried again in 2018 and passed AB 3080, which prohibited an employer from requiring an employee to waive a judicial forum as a condition of employment. Text of AB 3080, 2017–18 Cal. Leg., Reg. Sess. (2018). Governor Brown exercised his veto power again, explaining that AB 3080 “plainly violates federal law.” Governor’s Veto Message for AB 3080, 2017–18 Cal. Leg., Reg. Sess. (2018). Governor Brown cited the “clear” direction from the United States Supreme Court in Imburgia, 136 S. Ct. at 468, and Kindred Nursing, 137 S. Ct. at 1428.

Twice-vetoed but still undeterred, the California Assembly introduced AB 51 in December 2018. This bill, now before us, took the same approach as the vetoed AB 3080: instead of barring enforcement of arbitration agreements offered as a condition of employment, it instead penalized the formation or attempted formation of such agreements. Text of AB 51, 2019–20 Cal. Leg., Reg. Sess. (2019); see also Cal. Lab. Code §§ 432.6(a)–(c), 433. While it prohibited an employer from requiring an applicant for employment to enter an arbitration agreement, it provided that an executed arbitration agreement was nevertheless enforceable. See Cal. Lab. Code § 432.6(a)–(b), (f). ***

California’s new governor, Gavin Newsom, signed the bill into law, even though AB 51 was identical in many respects to vetoed AB 3080. See id. at 9.

II

A

The California legislature developed AB 51 with the focused intent of opposing arbitration and sidestepping the FAA’s preemptive sweep by penalizing the formation, or attempted formation, of disfavored arbitration agreements but not interfering with the enforcement of such agreements.

Specifically, under Section 432.6 of the California Labor Code, an employer “shall not, as a condition of employment … require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of the California Fair Employment and Housing Act [(FEHA)]” or the California Labor Code, “including the right to file and pursue a civil action or a complaint with … any court.” Cal. Lab. Code § 432.6(a). Thus, employers may not require employees to sign a standard employment contract that includes an arbitration provision, even if the contract includes a voluntary opt-out clause. See Cal. Lab. Code § 432.6(c). Moreover, an employer cannot refuse to hire a prospective employee who declines to enter into an arbitration agreement or otherwise “threaten, retaliate or discriminate against” such an employee. Cal. Lab. Code § 432.6(b). Violating Section 432.6 amounts to an “unlawful employment practice” for which aggrieved employees and the state may bring civil suits against employers. See Cal. Gov’t Code §§ 12953, 12960. Violating Section 432.6 also constitutes a criminal offense. See Cal. Lab. Code § 433. Should the employee sign such an employment contract, however, the arbitration agreement it contains is perfectly enforceable because Section 432.6(f) provides that “[n]othing in this section is intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act.” Cal. Lab. Code § 432.6(f).

In short, AB 51 criminalizes offering employees an agreement to arbitrate, even though the arbitration provision itself is lawful and enforceable once the agreement is executed. The question is, does this too-clever-by-half workaround actually escape preemption? The majority says it does, but this is clearly wrong: under Supreme Court precedent, Section 432.6 is entirely preempted by the FAA.

B

Although the Supreme Court has not addressed California’s specific legislative gimmick—criminalizing contract formation if it includes an arbitration provision—this is not surprising, given that California designed the gimmick to sidestep any existing Supreme Court precedents. But even so, the Supreme Court has made it clear that the FAA preempts this type of workaround, which is but the latest of the “great variety of devices and formulas” disfavoring arbitration. See Concepcion, 563 U.S. at 342 (cleaned up).

As a threshold matter, California’s circumvention exemplifies the exact sort of “ ‘hostility to arbitration’ that led Congress to enact the FAA.” Kindred Nursing, 137 S. Ct. at 1428 (quoting Concepcion, 563 U.S. at 339); see also Buckeye, 546 U.S. at 443. The Supreme Court has made clear that the FAA displaces not only state laws that discriminate on their face against arbitration, but also those that “covertly accomplish[ ] the same objective,” Kindred Nursing, 137 S. Ct. at 1426. Indeed, even if state laws are “generally applicable,” the FAA preempts them where “in practice they have a ‘disproportionate impact’ on arbitration.” Mortensen v. Bresnan Commc’ns, LLC, 722 F.3d 1151, 1159 (9th Cir. 2013) (quoting Concepcion, 563 U.S. at 341–342). AB 51 is the poster child for covertly discriminating against arbitration agreements and enacting a scheme that disproportionately burdens arbitration.

More specifically, Supreme Court precedent makes clear that the FAA preempts laws like AB 51 that burden the formation of arbitration agreements. Long ago, the Supreme Court held that the FAA preempted a Montana law making an arbitration clause unenforceable unless it had a specific type of notification on the first page of the contract. See Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996). In Casarotto, the state supreme court reasoned—much like California here—that this notice requirement did not “undermine the goals and policies of the FAA” because the “notice requirement did not preclude arbitration agreements altogether” but instead ensured that arbitration agreements had to be entered “knowingly.” Id. at 685 (quoting Casarotto v. Lombardi, 268 Mont. 369 (1994)). The Court rejected this reasoning. Id. at 688.

Kindred Nursing has now confirmed the rule that the FAA invalidates state laws that impede the formation of arbitration agreements. In Kindred Nursing, the Court struck down the Kentucky Supreme Court’s “clear-statement rule” which provided that a person holding a power of attorney for a family member could not enter into an arbitration agreement for that family member, unless the power of attorney gave the person express authority to do so. 137 S. Ct. at 1425–26. The Supreme Court held that this clear-statement rule—which imposed a burden only on contract formation—violated the FAA, because it “singles out arbitration agreements for disfavored treatment.” Id. at 1425. ***

Kindred Nursing’s holding that the FAA preempts rules that burden the formation of an arbitration agreement, see 137 S. Ct. at 1428–29, applies equally to AB 51, which is intentionally designed to burden and penalize an employer’s formation, or attempted formation, of an arbitration agreement with employees. See Cal. Lab. Code § 432.6(a)–(c); see also Cal. Lab. Code § 433; Cal. Gov’t Code § 12953. In upholding AB 51, which “specially impede[s] the ability of [employers] to enter into arbitration agreements” and “thus flout[s] the FAA’s command to place those agreements on an equal footing with all other contracts,” Kindred Nursing, 137 S. Ct. at 1429, the majority directly conflicts with the rule stated in Kindred Nursing.

In addition to conflicting with Kindred Nursing, the majority’s ruling today creates a split with two of our sister circuits. Long before Kindred Nursing reached its common-sense conclusion, our sister circuits prevented state efforts like California’s that attempted to sidestep the FAA while disfavoring arbitration. The First Circuit held that the FAA preempted Massachusetts regulations that prohibited securities firms from requiring clients to agree to arbitration “as a nonnegotiable condition precedent to account relationships.” Sec. Indus. Ass’n v. Connolly, 883 F.2d 1114, 1117, 1125 (1st Cir. 1989). Even if this regulation did not invalidate the arbitration agreements themselves, the First Circuit rejected as “too clever by half” the state’s attempt to regulate parties’ conduct instead of the parties’ agreements. Id. at 1122–23. *** Applying well-established preemption principles, Connolly reasoned that “[s]tate law need not clash head on with a federal enactment in order to be preempted.” Id.  Connolly explained that the threatened loss of a business license for offering clients a standard agreement including an arbitration provision was “an obstacle of greater proportions even than the chance that, in a given dispute, an arbitration agreement might be declared void.” Id. at 1124. Thus, the regulations were preempted as “at odds with the policy which infuses the FAA.” Id.

The Fourth Circuit similarly held that the FAA preempted a Virginia law that made it unlawful for automobile manufacturers and distributors to fail to include a particular clause in franchise agreements. Saturn Distrib. Corp. v. Williams, 905 F.2d 719, 724 (4th Cir. 1990). That clause would provide that any contract provision that “denies access to the procedures, forums, or remedies” provided by state law “shall be deemed to be modified to conform to such laws or regulations.” Id. (quoting Va. Code Ann. § 46.1-550.5:27). As interpreted by the court, the statute forbade “only nonnegotiable arbitration provisions and not negotiable arbitration agreements.” Id. Analogizing to Connolly, the Fourth Circuit held that the statute conflicted with the FAA because it “essentially prohibited nonnegotiable arbitration agreements.” Id.

***

In sum, AB 51’s transparent effort to sidestep the FAA in order to disfavor arbitration agreements in employment contracts is meritless. By upholding this maneuver, the majority conflicts with Kindred Nursing, which held that the FAA invalidates state laws that impede the formation of arbitration agreements. 137 S. Ct. at 1425. The majority also silently splits from our sister circuits, which have held that too-clever-by-half workarounds and covert efforts to block the formation of arbitration agreements are preempted by the FAA just as much as laws that block enforcement of such agreements. So we don’t need to wait until the next Supreme Court reversal to know that we must apply those principles here. The majority’s bifurcated, half-hearted, and circuit-splitting approach to invalidating AB 51 makes little sense, except to the extent it aims at abetting California in disfavoring arbitration. Because the appellants here have demonstrated a likelihood of success on the merits and the district court correctly determined that the remaining preliminary injunction factors supported injunctive relief, I would affirm the district court. I therefore dissent.

The post Circulating Opinion: <em>Chamber of Commerce of the United States, et al. v. Bonta</em> appeared first on Washington Legal Foundation.

Categories: Latest News

Social Media And Common Carriage: Lessons From The Litigation Over Florida’s SB 7072

WLF Legal Pulse - Thu, 09/23/2021 - 4:02pm

By Corbin K. Barthold, Internet Policy Counsel and Director of Appellate Litigation at TechFreedom. Mr. Barthold previously served as WLF’s Senior Litigation Counsel.

***

In April, Justice Clarence Thomas, writing for himself in an otherwise unrelated case, speculated about whether large social media websites should be treated as common carriers. The following month, Florida Governor Ron DeSantis signed into law SB 7072, a sweeping set of restrictions on how the companies that run such websites shall moderate what is said on them. SB 7072 forces the likes of Facebook and Twitter to host various categories of speech against their will. Florida may do this, SB 7072 says, because “social media platforms” may “be treated similarly to common carriers.”

SB 7072 was bound to get challenged in court, and that litigation, in turn, was bound to test the common carriage theory put forth by Justice Thomas. So it has come to pass. Two groups of internet companies promptly sued, a judge issued an order preliminarily enjoining most of the law, and Florida appealed. Both the judicial opinion, written by federal District Judge Robert Hinkle, and Florida’s opening brief on appeal, filed earlier this month in the U.S. Court of Appeals for the Eleventh Circuit, address whether it makes sense to treat social media as common carriage.

What can be learned from these discussions of the common carrier theory? Judge Hinkle concludes that social media websites are somewhat like common carriers, but ultimately more like traditional speakers fully protected against government-compelled speech (hence the preliminary injunction). Florida, naturally, argues the common carrier theory to the hilt, relying heavily on Justice Thomas’s work along the way. Neither the judge nor the state depicts common carriage in a way that’s at once accurate, useful, and convincing. Identifying the holes in their thinking returns us to a conclusion that would, in a less anxious time, be obvious to all. Websites—even large ones that host the speech of others—are engaged in expressive conduct protected by the First Amendment.

Judge Hinkle’s Good (But Flawed) Opinion

Judge Hinkle reached the right conclusion—SB 7072 violates the First Amendment. Moreover, his opinion makes a number of astute, laudable, and impeccably correct points. Here are a few:

  • “The State has asserted it is on the side of the First Amendment; the [internet companies] are not. It is perhaps a nice sound bite. But the assertion is wholly at odds with accepted constitutional principles.”
  • “The internet provides a greater opportunity for individuals to publish their views … than existed before the internet arrived.”
  • “The [internet companies] assert, … with substantial factual support, that the actual motivation for this legislation was hostility to [the largest social media websites’] perceived liberal viewpoint.”
  • “Leveling the playing field—promoting speech on one side of an issue or restricting speech on the other—is not a legitimate state interest.”
  • SB 7072 “comes nowhere close” to passing First Amendment scrutiny.

When it came to common carriage, however, Judge Hinkle hedged. The parties had presented him five Supreme Court decisions to guide his analysis. Three of those decisions came from the internet companies:

  1. Miami Herald v. Tornillo, 418 U.S. 241 (1974), strikes down a Florida law that required a newspaper to print a political candidate’s reply to the newspaper’s unfavorable coverage.
  2. Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston, 515 U.S. 557 (1995), holds that a private parade has a First Amendment right to exclude some groups from participating.
  3. Pacific Gas & Electric Co. v. Public Utilities Commission of California, 475 U.S. 1 (1986), blocks a state from compelling a public utility to include certain disclosures in its billing envelopes.

The upshot of these decisions is that (as Hurley puts it) “a speaker has the autonomy,” under the First Amendment, “to choose the content of his own message.” This is, at bottom, a right (in Miami Herald’s words) to “editorial control and judgment” over the speech one hosts.

The two decisions Florida raised are:

  1. Rumsfeld v. FAIR, 547 U.S. 47 (2006), which upholds a law requiring law schools, on pain of losing federal funding, to host military recruiters.
  2. PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980), which requires a shopping center, in obedience to the California Constitution, to let students protest on its private property.

These cases show that one speaker can sometimes be required to host another speaker, if (in Rumsfeld’s words) doing so does not “interfer[e]” with the host speaker’s “desired message.”

After comparing, on the one side, Miami Herald, Hurley, and PG&E, and, on the other, Rumsfeld and PruneYard, Judge Hinkle concluded that social media websites fall “in the middle” between being “like any other speaker” and “like common carriers.” In reaching this conclusion, however, Judge Hinkle focused on whether such websites “use editorial judgment” in “the same way” as the entities at issue in those cases. That’s not the right question.

Similarity to the precise kind of curation or editing done by the entities addressed in Miami Herald, Hurley, and PG&E does not inform whether social media has a First Amendment right to editorial control. We already know that social media has that right. We know it because Reno v. ACLU, 521 U.S. 844 (1997), tells us so. “[O]ur cases,” Reno says, “provide no basis for qualifying the level of First Amendment scrutiny that should be applied” to the internet. As far as the First Amendment (and binding Supreme Court precedent) is concerned, edge providers on the internet are, in fact, “like any other speaker.”

Judge Hinkle concluded that, because social media websites at least act more like the entities in Miami Herald, Hurley, and PG&E than like the entities in Rumsfeld and PruneYard, SB 7072 is “subject to First Amendment scrutiny.” He then proceeded to enjoin most of SB 7072 for being blatantly content- and viewpoint-based and failing to overcome strict scrutiny. Judge Hinkle was right that SB 7072 is egregiously discriminatory, and he was right to enjoin the government from enforcing it. Even so, he missed an entire other avenue by which SB 7072 violates the First Amendment. What Miami Herald, Hurley, and PG&E establish is not simply that a law compelling social media companies to host certain speech is “subject to First Amendment scrutiny,” but that such a law presumptively violates the First Amendment by forcing those companies to “alter the expressive content” (as Hurley says) of their websites.

Judge Hinkle thought it important that much of the content on a social media website is supposedly “invisible to the provider.” Given that his entire exercise in comparing “editing” by social media with “editing” under Miami Herald, etc., was unnecessary, however, it should come as no surprise that his “visibility” distinction, raised as part of that unnecessary exercise, is irrelevant and illusory. Indeed, Judge Hinkle cut from whole cloth the proposition that content “visibility” affects an entity’s right to editorial control.

What’s more, the proposition is perverse. The more material a website blocks, it suggests, the stronger the site’s First Amendment protection becomes. The First Amendment contains no such “use it or lose it” trapdoor. “In spite of excluding some applicants,” the parade in Hurley was “rather lenient in admitting participants.” But it did not “forfeit constitutional protection simply by combining multifarious voices.”

Finally, the proposition is simply wrong. A large social media website’s first round of editorial control might be wielded via algorithm; the content at issue is no less “visible” to the website (nor the website’s editorial choices less deserving of First Amendment protection) for that. And content is certainly not “invisible” after it’s been posted. Material that, once published, is reported, and found to be objectionable, is regularly labeled, answered, de-amplified, downgraded, hidden, blocked, or deleted. Judge Hinkle never explained why, under the First Amendment, the timing of these varied displays of editorial control—their being ex post as opposed to ex ante—should matter. As anyone will understand after listening to a few hours of talk radio—in which the station lightly “screens” calls in advance, yet retains the (much needed) right to cut off callers at will—it does not.

Florida’s Bad Brief

If Judge Hinkle’s intellectual flirtation with common carriage is a flaw in an otherwise shining opinion, Florida’s treatment of the topic is a rotten egg in a nest of fallacies. For example:

  • Florida asserts that social media websites must present a “unified speech product” to enjoy First Amendment protection, a claim made in naked defiance of Hurley and its “multifarious” parade.
  • Florida seems to believe that advertisers, civil rights groups, the (old school) media, and the public at large will stop holding social media websites responsible for the speech they host if the sites simply “speak on their own behalf”—presumably more than they already do—and “make clear their own views.” This claim is naïve at best.
  • Florida says that “systematic examinations” reveal instances in which websites “apply their content standards differently” to “similarly situated,” but politically distinct, users. Note that it’s the “examination,” rather than the supposed bias, that claims to be “systematic.” In any event, one can only marvel at Florida’s sangfroid, as it announces that it has surmounted the numberless fine distinctions and shades of context that bedevil even basic content moderation.

This much can be said for Florida: whereas before the trial court, it pressed Judge Hinkle to consider common carriage through a lens of strained analogies—law schools (FAIR) and shopping malls (PruneYard), after all, are not literally common carriers—on appeal it turns to factors that are (for better or worse) widely considered traditional indicia of common carriage. There is no straightforward and widely accepted definition, in the courts or elsewhere, of what common carriage is. Regardless, tacking the discussion toward these tokens of common carriage brings social media websites no closer to qualifying as common carriers.

Common carriers tend, Florida correctly notes, to hold themselves out as “serv[ing] the public indiscriminately.” “The businesses regulated” by SB 7072, the state then adds—now going astray—“hold themselves out as platforms that all the world may join.” Although it might indeed be said that the websites welcome “all the world” to join, whether one gets to stay is contingent on one’s complying with the sites’ terms of service. Gov. DeSantis has claimed that social media websites “evade accountability” by “claiming they’re just neutral platforms.” Actually, these websites are by no means “neutral” about violence, harassment, and hate speech, all of which are widely banned.

Even if the websites did hold themselves out as serving the public indiscriminately (they don’t), the “holding out” theory of common carriage is conspicuously hollow. As Professor Christopher Yoo observes, a “holding out” standard is easy to evade. Say SB 7072 went into effect, and the websites responded by tightening their terms of service further, thereby making clear(er) that they do not serve the public at large. What then? Rather than admit how badly its law had backfired in its attempt to force the websites to host unwanted speech, Florida would probably declare that the websites are common carriers because the state has ordered them to serve the public at large. Such a declaration would confirm that the “holding out” theory is empty at best, and circular at worst.

Florida suggests that social media websites may be treated as common carriers because they are “clothed” with “a jus publicum.” Unsurprisingly, it doesn’t press the point. The Supreme Court has said that whether a business serves a “public interest” is “an unsatisfactory test of the constitutionality of legislation directed at [the business’s] practices or prices.” Even Justice Thomas concedes that a “public interest” test for common carriage “is hardly helpful,” given that “most things can be described as ‘of public interest.’”

More heavily does Florida lean on a claim that social media websites can be treated as common carriers because of their (purported) market power and (supposed) ability to control others’ speech. The first problem on this front is the brute legal fact that an entity does not forfeit its constitutional rights by succeeding in the market. The Supreme Court accepted that the Miami Herald enjoyed near-monopoly control over local news; yet the newspaper retained its First Amendment right to exercise editorial control and judgment as it saw fit.

This is not to say that media firms, social or otherwise, are above the antitrust laws. A newspaper that uses its market power to inflict economic pain on a rival—one that, say, convinces advertisers to boycott, and thereby bankrupt, a local radio station—is inviting antitrust liability for its business practices. It is to say, however, that the right to reject speech for expressive reasons travels with a company, like a shell on a turtle, wherever the company goes—even if the company, like Yertle, is king of the pond.

If that were all there is to say about social media, monopoly, and free speech, SB 7072’s supporters could be forgiven for some griping about the demise of their unconstitutional law (though fall it still would). But the reality is that the social media market is as lively as ever. It continues to offer a wide array of useful, differentiated, and rapidly evolving avenues of expression and communication. If you’re convinced that “Big Tech” is “out to get” Republicans, you can do your blogging on Substack, your posting on Parler or Gab, your messaging on Telegram or Discord, and your video watching and sharing on Rumble. And anyone who claims, as Florida does, that network effects will ultimately thwart this competition must grapple with the astonishing rise of TikTok.

As for the major players’ alleged “control” over speech, Facebook and Twitter are not, as Florida would have it, “like telegraph and telephone lines of the past.” The internet, Reno v. ACLU explains, is not “a ‘scarce’ expressive commodity. It provides relatively unlimited, low-cost capacity for communication of all kinds.” Even the largest social media websites are just a piece of that “relatively unlimited” world of “communication.” As a (conservative) commentator, Charles C.W. Cooke, recently put it, social media websites are “equivalent not to the telegraph line,” but to a few “of the telegraph line’s many customers.” They are just a handful of “website[s] among billions.”

The receipt of special privileges from the government can nudge a business toward common carrier status. Florida claims that Section 230 is such a privilege, but it is not. “Section 230 helped clear the path for the development of [social media],” Florida reasons, “as the government did generations ago when it used eminent domain to help establish railroads and telegraphs.” True enough, businesses that employed property acquired through eminent domain sometimes had to operate as common carriers. It does not follow that Section 230, which broadly protects all websites for hosting speech that originates with others, creates a similar quid pro quo obligation. There are several problems with the comparison:

  • Section 230 was not a gift to “Big Tech” (or any other select group). It applies to every internet website and service. If Section 230 doesn’t turn a blog (or Yelp, or the Wall Street Journal’s comments sections, or an individual social media account) into a common carrier, it’s unclear why it should turn Twitter or Facebook into one.
  • Section 230 simply ensures that the initial speaker is the one liable for speech that causes legally actionable harm. It is not a “privilege” akin to when the government hands a business real property for exclusive use as a railroad or a telegraph line.
  • Far from being a sign that the government wants social media websites to act as common carriers, Section 230 is a sign that it wants them to act as discerning editors. Section 230 ensures that a website can curate and edit content without (in most cases) worrying that doing so will trigger liability.

If the federally enacted Section 230 is the quid, by the way, why should a state government get to impose the quo? The history of common carriage in the United States, going back to the Interstate Commerce Act of 1887, is one of aiding interstate commerce by setting and enforcing national standards. Precisely because they were regulated as common carriers, telegraph companies were not subject to regulation by the states. Even if Section 230 could serve as the basis for common carriage rules, it couldn’t serve as the basis for common carriage rules imposed by Florida.

***

So what have we learned? We’ve seen that various arguments in favor of the common carrier theory don’t work. We’ve seen that the orthodox view, under which social media websites enjoy a First Amendment right of editorial control, remains sturdy and sound.

At the outset of his opinion, Judge Hinkle noted that SB 7072 “compels [social media] providers to host speech that violates their standards—speech they otherwise would not host.” We can be confident that this is, and will remain, a violation of the First Amendment.

The post Social Media And Common Carriage: Lessons From The Litigation Over Florida’s SB 7072 appeared first on Washington Legal Foundation.

Categories: Latest News

Georgia Supreme Court Parts with Nationwide Trend of Narrowing Corporate General Jurisdiction

WLF Legal Pulse - Thu, 09/23/2021 - 10:35am

By Josh Becker and Caroline Gieser, a partner and an associate, respectively, in the Atlanta, GA office of Shook, Hardy & Bacon L.L.P.

***

On September 21, 2021, the Georgia Supreme Court parted with the nationwide trend narrowing corporate general jurisdiction, instead holding that mere registration to do business in the state of Georgia subjects an out-of-state corporation to general personal jurisdiction.  See Cooper Tire & Rubber Company v. McCall, S20G1368.

The Court’s analysis in McCall turned on the notion that a 30-year-old case, Allstate Ins. Co. v. Klein, 422 S.E.2d 863, 865 (Ga. 1992), put out-of-state corporations on notice “that their corporate registration will be treated as consent to general personal jurisdiction in Georgia.”  In Klein, the Court held that “a corporation which is authorized to do or transact business in this state at the time a claim arises is a resident for purposes of personal jurisdiction over that corporation in an action filed in the courts of this state.  As a resident, such a foreign corporation may sue or be sued to the same extent as a domestic corporation.”  Klein, 262 Ga. at 601. 

The Georgia Supreme Court’s decisions in McCall and Klein, however, are inconsistent with the nationwide trend following Daimler AG v. Bauman, 571 U.S. 117 (2014), that registration to do business in a state is insufficient to constitute consent to general jurisdiction in the state.  Decisions that have held contrary to McCall on jurisdiction-by-consent include:

  • Chen v. Dunkin’ Brands, Inc., 954 F.3d 492, 499 (2d Cir. 2020) (“a foreign corporation does not consent to general personal jurisdiction in New York by merely registering to do business in the state and designating an in-state agent for service of process.”);
  • Fidrych v. Marriott Int’l, Inc., 952 F.3d 124, 137 (4th Cir. 2020) (“Marriott did not consent to general jurisdiction by complying with South Carolina’s domestication statute.”);
  • Waite v. All Acquisition Corp., 901 F.3d 1307, 1320 (11th Cir. 2018) (“Nothing in these provisions’ plain language indicates that a foreign corporation that has appointed an agent to receive service of process consents to general jurisdiction in Florida.”);
  • Gulf Coast Bank & Tr. Co. v. Designed Conveyor Sys., L.L.C., 717 F. App’x 394, 397 (5th Cir. 2017) (“Gulf Coast does not identify any statute or agreement that requires foreign entities to expressly consent to any suit in Louisiana.”);
  • Lanham v. BNSF Ry Co., 939 N.W.2d 363, 371 (Neb. 2020) (“we join the majority of jurisdictions and hold that a corporation’s registration under [Nebraska’s foreign corporation registration statute] does not provide an independent basis for the exercise of general jurisdiction.”); and
  • Genuine Parts Co. v. Cepec, 137 A.3d 123, 126 (Del. 2015) (“[W]e hold that Delaware’s registration statutes must be read as a requirement that a foreign corporation must appoint a registered agent to accept service of process, but not as a broad consent to personal jurisdiction in any cause of action.”). 

Indeed, McCall expands the limits of general jurisdiction set forth by the United States Supreme Court in Daimler, 571 at 119, as that decision recognized only three bases for general jurisdiction: (i) principal place of business in the forum State, (ii) the forum State is the business’s state of incorporation, and (iii) “affiliations with the [forum State that] are so continuous and systematic as to render the business essentially at home in the forum State.”  Id.  None of these bases include mere registration to do business.  Though McCall repeatedly stated that Klein (and by extension McCall) cannot be overruled on federal constitutional grounds, the McCall concurrence recognized “a meaningful chance” that McCall’s holding that merely registering to do business subjects an out-of-state corporation to general personal jurisdiction may be overturned as inconsistent with the limits of due process. 

Until such time, McCall may have the practical, unintended consequence of discouraging out-of-state corporations from registering to do business in Georgia.  

The post Georgia Supreme Court Parts with Nationwide Trend of Narrowing Corporate General Jurisdiction appeared first on Washington Legal Foundation.

Categories: Latest News

Alongside the EPA, DOD, and DHS, GSA Announces New Actions to Reduce Emissions of Super-Polluting Hydrofluorocarbons 

GSA news releases - Thu, 09/23/2021 - 12:00am
These Efforts Aim to Bolster Competitiveness of Domestic Industries and Reduce Climate Pollution   WASHINGTON — Today, the Biden Administration announced a historic set of actions across the federal government to phase down super-polluting hydrofluorocarbons (HFCs), which are man-made climate...

Committee Approves Biden Nominations for CPSC, DOC

WASHINGTON, D.C. – The U.S. Senate Committee on Commerce, Science, and Transportation approved the following three nominations, all of whom are now subject to approval by the full Senate.

  1. Nomination of Alexander Hoehn-Saric, to be a Commissioner and Chair of the Consumer Product Safety Commission

 

  1. Nomination of Grant Harris, to be Assistant Secretary for Industry and Analysis, Department of Commerce

 

  1. Nomination of Richard Trumka Jr. to be a Commissioner of the Consumer Product Safety Commission 

Executive Session

WASHINGTON, D.C. — U.S. Senator Maria Cantwell (D-WA), Chair of the Senate Committee on Commerce, Science, and Transportation, will convene an executive session at 10:00 a.m. on Wednesday, September 22, 2021 to consider the presidential nominations of Alexander Hoehn-Saric to be a Commissioner and Chair of the Consumer Product Safety Commission (CPSC); Mary T. Boyle to be a Commissioner of the CPSC; Richard Trumka, Jr. to be a Commissioner of the CPSC; and Grant Harris to be Assistant Secretary for Industry and Analysis at the Department of Commerce.

Immediately following the executive session, the Committee will hold a hearing to consider the presidential nominations of Victoria Marie Baecher Wassmer, to be Chief Financial Officer for the Department of Transportation (DOT); Mohsin Raza Syed, to be Assistant Secretary of Government Affairs at DOT; Amitabha Bose, to be Administrator of the Federal Railroad Administration; and Meera Joshi, to be Administrator of the Federal Motor Carrier Safety Administration.

DETAILS

 

Commerce Committee Executive Session

10:00 a.m.

Wednesday, September 22, 2021

Committee Hearing Room, Russell 253

 

Executive Session Agenda: 

  • Nomination of Alexander Hoehn-Saric, to be a Commissioner and Chair of the Consumer Product Safety Commission
  • Nomination of Mary T. Boyle, to be a Commissioner of the Consumer Product Safety Commission
  • Richard Trumka Jr., to be a Commissioner of the Consumer Product Safety Commission  
  • Grant Harris, to be Assistant Secretary for Industry and Analysis, Department of Commerce

At the conclusion of the markup, the Committee will go directly into the nomination hearing.

Nominees: 

  • Victoria Marie Baecher Wassmer,?to be Chief Financial Officer, DOT
  • Mohsin Raza Syed, to be Assistant Secretary of Government Affairs, DOT
  • Amitabha Bose, to be Administrator of the Federal Railroad Administration, DOT
  • Meera Joshi, to be Administrator of the Federal Motor Carrier Safety Administration 

 

WATCH LIVESTREAM:  www.commerce.senate.gov

 

Due to current limited access to the Capitol complex, the general public is encouraged to view this hearing via the live stream. Social distancing is now lifted for vaccinated members of the press who wish to attend. The Office of the Attending Physician recommends that all individuals wear masks while in interior spaces and other individuals are present.

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Legislative Solutions to Revive Travel and Tourism and Create Jobs

WASHINGTON, D.C. — U.S. Senator Jacky Rosen (D-NV), Chair of the Subcommittee on Tourism, Trade, and Export Promotion will convene a hearing titled “Legislative Solutions to Revive Travel and Tourism and Create Jobs” at 3:00 p.m. on Tuesday, September 21, 2021. This hearing will examine a staff discussion draft of bipartisan legislation, the Omnibus Travel and Tourism Act of 2021, that would support the recovery of the travel and tourism economy in the wake of the COVID-19 pandemic. The draft Omnibus Travel and Tourism Act includes provisions to study the impacts of COVD-19 on the travel and tourism industry, elevate travel and tourism matters at the US Department of Commerce, promote travel to the United States, and set visitation goals for international travelers to the United States.

  

Witnesses: 

 

  • Ms. Tori Emerson Barnes, Executive Vice President of Public Affairs and Policy, U.S. Travel Association
  • Mr. Christopher Bidwell, Senior Vice President of Security, Airports Council International – North America
  • Mr. Chirag Shah, Senior Vice President of Federal Affairs, American Hotel and Lodging Association
  • Ms. Suzanne Neufang, CEO, Global Business Travel Association

 

*Witness List is Subject to Change 

Hearing Details: 

 

Tuesday, September 21, 2021

3:00 P.M. EDT 

Subcommittee on Tourism, Trade, and Export Promotion

Senate Commerce Committee Hearing Room

Russell 253

 

Livestream available at www.commerce.senate.gov

 

Due to current limited access to the Capitol complex, the general public is encouraged to view this hearing via the live stream. Social distancing is now lifted for vaccinated members of the press who wish to attend. The Office of the Attending Physician recommends that all individuals wear masks while in interior spaces and other individuals are present. 

 

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Commerce Committee Announces Tourism, Trade, and Export Promotion Subcommittee Hearing on September 21, 2021

WASHINGTON, D.C. — U.S. Senator Jacky Rosen (D-NV), Chair of the Subcommittee on Tourism, Trade, and Export Promotion will convene a hearing titled “Legislative Solutions to Revive Travel and Tourism and Create Jobs” at 3:00 p.m. on Tuesday, September 21, 2021. This hearing will examine a staff discussion draft of bipartisan legislation, the Omnibus Travel and Tourism Act of 2021, that would support the recovery of the travel and tourism economy in the wake of the COVID-19 pandemic. The draft Omnibus Travel and Tourism Act includes provisions to study the impacts of COVD-19 on the travel and tourism industry, elevate travel and tourism matters at the US Department of Commerce, promote travel to the United States, and set visitation goals for international travelers to the United States.

  

Witnesses: 

 

  • Tori Emerson Barnes, Executive Vice President of Public Affairs and Policy, U.S. Travel Association
  • Christopher Bidwell, Senior Vice President of Security, Airports Council International – North America
  • Chirag Shah, Senior Vice President of Federal Affairs, American Hotel and Lodging Association
  • Suzanne Neufang, CEO, Global Business Travel Association

 

*Witness List is Subject to Change 

Hearing Details: 

 

Tuesday, September 21, 2021

3:00 P.M. EDT 

Subcommittee on Tourism, Trade, and Export Promotion

Senate Commerce Committee Hearing Room

Russell 253

 

Livestream available at www.commerce.senate.gov

 

Due to current limited access to the Capitol complex, the general public is encouraged to view this hearing via the live stream. Social distancing is now lifted for vaccinated members of the press who wish to attend. The Office of the Attending Physician recommends that all individuals wear masks while in interior spaces and other individuals are present. 

 

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WLF Reminds California the First Amendment Precludes Punishing Scientific Speech

WLF Legal Pulse - Tue, 09/21/2021 - 10:18am

“If the trial court’s ruling is upheld, California will be empowered to pick winners and losers in legitimate scientific debates. The First Amendment forbids that result.”
— Cory Andrews, WLF General Counsel & Vice President of Litigation

Click here for WLF’s brief.

WASHINGTON, DC—Late yesterday Washington Legal Foundation (WLF) urged the California Court of Appeal to reverse a trial-court decision imposing $344 million in civil penalties on a medical-device manufacturer for disseminating fully protected scientific speech.

Imposing a penalty larger than all other reported California awards combined, the trial court found that every communication the defendants made about Ethicon’s pelvic-mesh products—whether to doctors or patients, written or verbal—violated California law. Yet as the State conceded on the first day of trial, the “scientific propositions” about pelvic mesh are “very much in dispute” here.

Even so, as the basis for thousands of individual violations (penalized at $1,250 apiece), the trial judge indiscriminately relied on materials in which Ethicon’s allegedly “deceptive” statements did no more than accurately describe the results of scientific studies on matters of genuine scientific debate. In other words, without even considering the First Amendment implications of doing so, the trial court imposed liability based on protected scientific speech.

In its amicus brief supporting reversal or vacatur, WLF argues that the trial court erred by imposing liability without considering the First Amendment, which shields reasonably debatable scientific claims from liability. WLF’s brief also contends that allowing the trial-court’s judgment to stand would irreparably chill scientific speech on vital matters of public health.

WLF’s brief was filed with pro bono the assistance of Peter Choate and Mollie Benedict of Tucker Ellis LLP in Los Angeles.

The post WLF Reminds California the First Amendment Precludes Punishing Scientific Speech appeared first on Washington Legal Foundation.

Categories: Latest News

During Climate Week NYC, GSA Administrator Robin Carnahan and CEQ Chair Brenda Mallory Discuss the Transition to a Zero-Emission Federal Fleet

GSA news releases - Tue, 09/21/2021 - 12:00am
WASHINGTON — Today, as a part of Climate Week NYC, General Services Administration (GSA) Administrator Robin Carnahan and White House Council on Environmental Quality (CEQ) Chair Brenda Mallory discussed moving to a zero-emission federal fleet in a fireside chat hosted by RouteZero and The...

Wicker, Cardin Introduce Bill to Support Maritime Workforce

WASHINGTON – U.S. Sens. Roger Wicker, R-Miss., ranking member of the Senate Committee on Commerce, Science, and Transportation, and Ben Cardin, D-Md., today introduced the Maritime Technological Advancement Act. The legislation would establish a grant program to develop, offer, or improve educational or career training programs for American workers in the maritime workforce. 

“A qualified maritime workforce is essential for our national security and economic prosperity,” said Wicker. “However, there is currently a shortage of licensed workers with the appropriate training and technical skills to meet the needs of this growing industry. Our proposal would support community and technical colleges in developing a capable workforce to address operations at sea and ashore, as well as in shipbuilding, port operations, and cybersecurity.”

“From the dedicated public servants at the Coast Guard Yard in Baltimore that repair and rehabilitate our Coast Guard fleet, to the longshoremen and logistic personnel who transport billions of dollars of international cargo, Maryland’s maritime industries surrounding the Port of Baltimore are key components of the economic growth of our state,” said Cardin. “This legislation provides funding to strengthen our local institutions that have track records of success in developing the skilled maritime workforce necessary to maintain and strengthen this critical industry.”

The Maritime Technological Advancement Act would: 

  • Authorize the U.S. Department of Transportation Maritime Administration to provide funding for two-year public institutions of higher education to develop, offer, or improve educational or career training programs for workers related to the maritime workforce along the nation’s coasts, Mississippi River System, the Great Lakes, and other inland waterways; 
  • Support initiatives to expand an institution’s capacity to train the maritime workforce; and
  • Authorize appropriations of $40 million annually for fiscal year 2022 through 2026.

Click here to read the bill.

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