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August Month in Review

WLF Legal Pulse - Wed, 09/04/2019 - 5:05pm

To read more about the items below, click the link above for a PDF of the newsletter.

NEW FILINGS

Because members of the board overseeing the restructuring of Puerto Rico’s debt were not appointed in accord with the Appointments Clause, the ultra vires court proceedings they filed must be dismissed. (Financial Oversight and Management Board v. Aurelius Investment, LLC)

Private landowners should not be allowed to impede EPA’s efforts to clean up Superfund sites by imposing additional demands under state law. (Atlantic Richfield Co. v. Christian)

California courts must stop state public policy to negate private agreements to arbitrate future disputes. (Tillage v. Comcast Corp.)

To prevail on a racial discrimination claim, a plaintiff must show that the alleged discrimination actually caused some injury. (Comcast Corp. v. NAAOM)

State governments that infringe copyrights should not be immune from liability to the copyright owner. (Allen v. Cooper)

The First Amendment prohibits New York City from banning advertisements in for-hire vehicle. (Vugo, Inc. v. City of New York)

CASE DECIDED

The National Labor Relations Board, agreeing with WLF, holds that an employer who mistakenly misclassifies an employee as an “independent contractor” does not commit an unfair labor practice under the National Labor Relations Act. (In re Velox Express, Inc.)

The post August Month in Review appeared first on Washington Legal Foundation.

Categories: Latest News

Wicker Statement on Automakers’ Agreement to Use Technology to Prevent Deaths in Hot Cars

U.S. Sen. Roger Wicker, R-Miss., chairman of the Senate Committee on Commerce, Science, and Transportation, issued the following statement on the Auto Alliance and Global Automakers’ commitment to install rear seat reminder systems in new vehicles.

Committee Announces Hearing on Oversight of TSA

U.S. Sen. Roger Wicker, R-Miss., chairman of the Committee on Commerce, Science, and Transportation, will convene a hearing titled, “Protecting the Nation’s Transportation Systems: Oversight of the Transportation Security Administration,” at 10:00 a.m. on Wednesday, September 11, 2019. This hearing will examine issues related to the Transportation Security Administration (TSA) and provide oversight on TSA’s efforts to enhance transportation security.

Next Stop, Supreme Court?: Seventh Circuit Goes Its Own Way on FTC’s Authority to Obtain Monetary Relief

WLF Legal Pulse - Tue, 09/03/2019 - 9:05am

M. Sean Royall is a Partner with Gibson, Dunn & Crutcher LLP and the WLF Legal Pulse’s Featured Expert Contributor, Antitrust & Competition Policy — Federal Trade Commission. Richard H. Cunningham is a Partner with the firm. Ashley Rogers and Julie Hamilton are Associates with the firm.

In an extraordinary split-panel decision issued on August 21, 2019, the Seventh Circuit in FTC v. Credit Bureau Center broke with eight other circuits and overturned its earlier precedent in holding that Section 13(b) of the FTC Act does not authorize the FTC to seek an award of restitution, and vacating a $5.26 million judgment in favor of the FTC.           

Section 13(b)

As we discussed in our January WLF Legal Pulse blog post, Section 13(b) of the FTC Act states only that “the Commission may seek, and after proper proof, the court may issue, a permanent injunction.”  The plain language does not reference monetary relief.  Nevertheless, multiple circuit courts—including the Seventh Circuit thirty years ago in FTC v. Amy Travel Service, Inc.—have held that the word “injunction” implicitly authorizes equitable remedies, including restitution, rescission, and disgorgement involving monetary payments.  In reaching this conclusion, some courts have pointed to the U.S. Supreme Court decision in Porter v. Warner Holding Co., which held that a reference to “permanent or temporary injunction, restraining order, or other order” in Section 205(a) of the Emergency Price Control Act of 1942 permitted district courts to use “all inherent equitable powers,” including monetary remedies such as restitution and disgorgement.    

The Seventh Circuit’s Credit Bureau Center Decision

The case at issue arose when the FTC sued Michael Brown and his credit-monitoring company, Credit Bureau Center, LLC (collectively “Brown”), for enrolling customers who applied online for a “free” credit report in a $29.94 monthly subscription for Brown’s credit-monitoring service without consent.  FTC v. Credit Bureau Center, LLC, No. 18-2847, *1-2 (7th Cir. Aug. 21, 2019).  The FTC brought suit under Section 13(b), alleging that Brown violated several consumer-protection statutes and seeking a permanent injunction and restitution.  Id. at *2.  The United States District Court for the Northern District of Illinois entered a permanent injunction and ordered Brown to pay $5.26 million in restitution to the FTC.  Id. at *2, *6.  On appeal, Brown challenged aspects of his liability, the permanent injunction, and the restitution award.  Id. at *6.

On appeal, a three-judge panel of the Seventh Circuit, consisting of Judges Diane Sykes, Daniel Manion, and Michael Brennan, upheld the District Court’s finding of liability and issuance of the permanent injunction, but it vacated the restitution award.  Id. at *1–3.  In so doing, the panel explicitly overturned FTC v. Amy Travel Service, Inc., 875 F.2d 564 (7th Cir. 1989).  See Credit Bureau, No. 18-2847, at *3. 

The panel addressed two main arguments in support of restitution:  statutory interpretation and stare decisis.  Starting with “the obvious,” the panel first stated that “[r]estitution isn’t an injunction.”  Id. at *13.  The panel rejected the FTC’s contention, supported by Amy Travel, that Section 13(b) implicitly authorizes restitution, writing that “[a]n implied restitution remedy doesn’t sit comfortably within the text of [S]ection 13(b).”  Id. at *15.  The panel explained that unlike injunctions, which are forward-looking, restitution is a remedy for past actions.  Id. at *13–15.  It also pointed to two detailed remedial provisions in the FTC Act that expressly authorize restitution if the FTC follows certain procedures, and it found that reading Section 13(b)—which lacks similar language and procedural protections—to impliedly authorize restitution would allow the FTC to circumvent these provisions and render them “largely pointless.”  Id. at 17–21. 

Turning to Amy Travel, which “endorsed [a] starkly atextual interpretation” of Section 13(b), the panel stated that in the three decades since the decision, “the Supreme Court has clarified that courts must consider whether an implied equitable remedy is compatible with a statute’s express remedial scheme” and specifically instructed courts “not to assume that a statute with ‘elaborate enforcement provisions’ implicitly authorizes other remedies.”  Id. at *3.  The panel therefore overruled Amy Travel

To justify this upheaval of longstanding precedent, the panel relied heavily on the Supreme Court’s 1996 ruling in the environmental lawsuit Meghrig v. KFC, 516 U.S. 479 (1996).  There, the Court held that the Resource Conservation and Recovery Act, which authorizes district courts to “restrain” an individual handling potentially dangerous waste or order the individual “to take such other action as may be necessary,” does not authorize restitution.  Id. at 484–88.  Stating that its “limited analysis in Amy Travel doesn’t offer a way to distinguish Meghrig” and instead “requires [it] to ignore [S]ection 13(b)’s text and disregard the [FTC Act’s] ‘elaborate enforcement provisions,’” the Seventh Circuit panel concluded that, in light of Meghrig, its “holding in Amy Travel is no longer viable.”  Credit Bureau, No. 18-2847, at *41.  “Stare decisis alone cannot overcome Amy Travel’s clear incompatibilities with the FTCA’s text and structure, Meghrig, and the Supreme Court’s broader refinement of its implied remedies jurisprudence.”  Id. at 42.

The panel expressly acknowledged that its holding “departs from the consensus view of [its] sister circuits”—relevant Ninth and Eleventh Circuit case law is pitted directly against the Seventh Circuit’s holding—but reiterated that Supreme Court precedent of Meghrig compelled the break.  Id. at 41.  The panel further noted that “[n]o circuit has examined whether reading a restitution remedy into [S]ection 13(b) comports with the [FTC Act’s] text and structure,”1 whether Section 45 “forecloses this remedy,” or the impact of Meghrig in a Section 13(b) case.  Id.  Instead, said the panel, “most circuits adopted their position by uncritically accepting [the] holding in Amy Travel.”  Id. 

A majority of Seventh Circuit judges declined to rehear this case en banc, id. at *3 n.1, but Chief Judge Diane Wood, joined by Judges Illana Rovner and David Hamilton, dissented from this decision on both procedural and substantive grounds.  The dissent objected to using a circuit rule to avoid en banc review, see id. at 44, and characterized the majority opinion as incorrectly extrapolating from cases (like Meghrig) addressing whether a private party has an implied right of action to determine whether a government agency, “which enjoys an express right of action under a statute for injunctive relief, is entitled to a restitutionary remedy that is ancillary to, or part of, the injunction.”  Id.  According to the dissent, “[n]othing in Meghrig . . . comes close to holding that a government agency acting pursuant to express authority to seek injunctive relief cannot ask for a mandatory injunction requiring turn-over of money.”  Id. at 60.  In the view of the dissenters, a court’s equitable powers are broader in nature where the public interest is concerned, and the presence of a government (rather than private) plaintiff is “especially important” to the analysis when “the government seeks remedies that (1) lie uniquely within its toolbox and (2) are aimed squarely at undoing public harms and preventing future ones through deterrence.”  Id. at 57–58.

Notably, the Seventh Circuit is not the only federal appellate court that has devoted attention to this issue in recent months.  Ninth Circuit Judge Diarmuid F. O’Scannlain issued a special concurrence to the majority opinion in FTC v. AMG Capital Management, LLC et al. on December 3, 2018, specifically calling on the Ninth Circuit to hear the case en banc to reconsider its holding in FTC v. Commerce Planet, Inc.2 that Section 13(b) authorizes monetary relief.  In June, the Ninth Circuit denied AMG’s petition for rehearing en banc after no judge requested a vote on whether to rehear the case.

Potential Implications

In response to the Seventh Circuit’s decision, an FTC spokesperson issued a statement describing its “ability to recover money for consumers” as “an essential and long-established tool in [the agency’s] arsenal,” and stating that the FTC was “disappointed by th[e] decision” and is “evaluating [its] options.” 

If the FTC elects to seek certiorari and the Supreme Court accepts the case, there are signs that at least some Justices may agree with the Seventh Circuit’s analysis.  For example, as we discussed in an article last year, Justice Gorsuch stated at oral argument in Kokesh v. SEC in April 2017 that the Court had never given its approval to fifty years of lower-court precedent allowing disgorgement based on inherent equitable authority ancillary to an injunction.  See Transcript of Oral Argument at 52:18–21.  Justice Gorsuch further noted that “there’s no statute governing” such a remedy; the Court is “just making it up.”  Id. at 52:14–16.  Chief Justice Roberts similarly expressed discomfort with the lack of a specific reference to monetary remedies in relevant provisions.  Id. at 33:12–18.  And Justice Kennedy and Justice Sotomayor both pressed the parties to identify statutory authority authorizing disgorgement (id. at 7:20–8:2; 9:5–11), with Justice Sotomayor also questioning the basis for a monetary remedy that would not be returned to the harmed individuals (id. at 9:5–11).

If the Supreme Court does grant certiorari in Credit Bureau and affirms the Seventh Circuit’s ruling, the consequences would be significant.  Barring legislative change —which, notably, one FTC Commissioner recently called for in congressional testimony—the agency in many situations would need to first pursue administrative litigation in a proceeding conducted under the Commission’s Rules of Practice, then, after all judicial review of the agency’s order is complete, seek restitution from the respondent in federal district court through the process set forth in Section 19 of the FTC Act.

Notes

The post Next Stop, Supreme Court?: Seventh Circuit Goes Its Own Way on FTC’s Authority to Obtain Monetary Relief appeared first on Washington Legal Foundation.

Categories: Latest News

In WLF Victory, NLRB Decides that Misclassifying Employees Is Not an Unfair Labor Practice

WLF Legal Pulse - Fri, 08/30/2019 - 10:57am

“As the NLRB now concedes, there is nothing remotely ‘coercive’ about identifying a worker, even mistakenly, as an independent contractor rather than an employee.”
—Cory Andrews, WLF Vice President of Litigation

WASHINGTON, DC—The National Labor Relations Board (NLRB) yesterday reversed an Administrative Law Judge’s (ALJ) decision that, if allowed to stand, would have automatically converted a company’s honest but mistaken classification of an employee as an independent contractor into a federal unfair labor practice. The decision was a victory for WLF, which filed an amicus curiae brief in In re Velox Express, Inc. contending that such a rule would impose novel, unprecedented liability on vast numbers of American businesses to the detriment of the nation’s economy.

For more than 70 years, federal court precedent and the NLRB’s own decisions have consistently treated a worker’s employment status as a threshold, jurisdictional question rather than a standalone basis for a violation of the National Labor Relations Act (NLRA). Today’s decision retains that traditional approach to classification determinations and wisely declines to expand NLRA liability any further.

The Board’s decision agrees with WLF that worker classification is inherently fact-intensive and often fraught with difficulty. Reasonable minds can differ in applying the ten common-law agency factors, and they often do. Indeed, federal appeals courts have reversed the NLRB itself many times by for the agency’s initial, erroneous classification decisions. Given how easily good-faith worker misclassifications occur, mere misclassification is no basis for federal liability.

Washington Legal Foundation preserves and defends America’s free-enterprise system by litigating, educating, and advocating for free-market principles, a limited and accountable government, individual and business civil liberties, and the rule of law.

The post In WLF Victory, NLRB Decides that Misclassifying Employees Is Not an Unfair Labor Practice appeared first on Washington Legal Foundation.

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WLF Urges Supreme Court to Enforce Constitutional Limits on the Appointment of Federal Officers

WLF Legal Pulse - Thu, 08/29/2019 - 1:45pm

“When appointments to senior government posts do not comply with procedures set forth in the Constitution, important separation-of-powers principles are threatened. The courts can ensure compliance by providing meaningful relief to those who successfully challenge improper appointments.”—Richard Samp, WLF Chief Counsel

Click HERE for WLF brief

WASHINGTON, DC—Washington Legal Foundation (WLF) today urged the U.S. Supreme Court to take steps to ensure that “principal officers” of the United States are appointed in the manner prescribed by the Constitution—appointment by the President with the advice and consent of the U.S. Senate.  WLF’s amicus curiae brief asks the Court to overturn an appeals court decision that upheld the actions of an unconstitutionally appointed federal board that is overseeing the restructuring of Puerto Rico’s debt. 

In 2016, Congress adopted PROMESA, a statute designed to help ease Puerto Rico’s crushing debt burden.  PROMESA established an unusual method for appointing members of the oversight Board: most of the members were selected by congressional leaders.  The improperly appointed Board members initiated several debt-restructuring proceedings (akin to proceedings under federal bankruptcy law) in federal court.  Several creditors objected to those proceedings, asserting that the Board lacked authority to act because its members had not been properly appointed.

The appeals court agreed that the appointments were made in violation of the Appointments Clause. But the court declined to provide the creditors with the relief they requested: dismissal of the debt-restructuring proceedings.  It held that although Board members were never officially authorized to represent the United States, they were “de facto officers” whose actions could be upheld on that basis.

WLF argues that because Board Members have not been properly authorized to represent the federal government, they lack standing to maintain a court proceeding.  WLF adds that by denying any relief to those who challenged the unconstitutional behavior, the appeals court improperly removed all incentives for challenging similar lawless behavior in the future.

Celebrating its 42nd year as America’s premier public-interest law firm and policy center, WLF’s mission is to preserve and defend America’s free-enterprise system by litigating, educating, and advocating for free-market principles, a limited and accountable government, individual and business civil liberties, and the rule of law.

The post WLF Urges Supreme Court to Enforce Constitutional Limits on the Appointment of Federal Officers appeared first on Washington Legal Foundation.

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South Dakota Field Hearing on Broadband Services in Rural America

WASHINGTON – U.S. Sen. John Thune, R-S.D., chairman of the Subcommittee on Communications, Technology, Innovation, and the Internet, will convene a hearing titled, “Transforming Rural America: A New Era of Innovation,” at 1:30 p.m. CST on Thursday, September 5, 2019. This hearing will examine the innovations high-speed broadband services bring to rural America in a variety of sectors such as agriculture, education, health care, and small business. The hearing will also explore the need to bring additional reliable broadband connectivity to rural America.

 Witnesses:

  • The Honorable Brendan Carr, Commissioner, Federal Communications Commission
  • Dr. José-Marie Griffiths, President, Dakota State University
  • Ms. Deanna Larson, President, Avera eCARE
  • Mr. Mark Shlanta, Chief Executive Officer, SDN Communications
  • Mr. Craig Snyder, Chief Executive Officer, VIKOR Teleconstruction
  • Dr. Michael Adelaine, Vice President for Technology and Security, South Dakota State University

*Witness list subject to change

Hearing Details:

Thursday, September 5, 2019
1:30 p.m. CST
Field Hearing
Southeast Technical Institute
2320 North Career Avenue
Sioux Falls, South Dakota 57107

Witness testimony, opening statements, and a live video of the hearing will be available on www.commerce.senate.gov.

WLF Asks Supreme Court to Overturn Montana State Court Decision Undermining CERCLA

WLF Legal Pulse - Wed, 08/28/2019 - 1:33pm

“The best environmental outcomes will arise only if the EPA, and the EPA alone, makes the final call about what measures are needed to restore a Superfund site. Fortunately, that’s exactly how CERCLA actually works.”
—Corbin K. Barthold, WLF Senior Litigation Counsel

Click HERE for WLF’s brief.

(Washington, DC)—Washington Legal Foundation today filed an amicus curiae brief urging the U.S. Supreme Court to reverse a Montana Supreme Court ruling that allows private landowners to impede the EPA’s efforts to clean one of the nation’s largest Superfund sites.

The Comprehensive Environmental Response, Compensation, and Liability Act—known as CERCLA—empowers the EPA to orchestrate the restoration of sites containing hazardous waste. To ensure that the EPA can clean a site effectively, CERCLA contains various provisions that block states or private parties from interfering with an EPA-directed site cleanup plan. The Montana Supreme Court nonetheless affirmed an order allowing landowners to seek money for a cleanup plan that conflicts with the EPA-directed cleanup of Montana’s Anaconda Smelter Superfund site.

WLF’s brief argues that the Montana high court should have treated the case as a classic instance of conflict preemption. Instead, in allowing the case to proceed, the state court gutted at least five discrete parts of CERCLA, including a provision that bars legal challenges to an EPA cleanup plan and a provision that bars cleanups conducted without EPA approval.

The Montana Supreme Court rested its decision on two “saving” clauses in CERCLA. But to reach this result, WLF explains, the court had to bypass a line of U.S. Supreme Court decisions holding that saving clauses like the ones in CERCLA authorize only state-law claims that complement federal law. The landowners’ claim overtly conflicts with federal law, and is therefore preempted.

Celebrating its 42nd 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 Asks Supreme Court to Overturn Montana State Court Decision Undermining CERCLA appeared first on Washington Legal Foundation.

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EPA Finally Flexes Some Preemption Muscle

WLF Legal Pulse - Mon, 08/26/2019 - 10:50am

Lawrence S. Ebner is founder of Capital Appellate Advocacy PLLC, a boutique law firm in Washington, DC that provides independent appellate advocacy for businesses and industries throughout the United States.

The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the federal pesticide statute, gives the U.S. Environmental Protection Agency (EPA) exclusive authority to regulate the content of pesticide labeling, including health & safety warnings. Section 24(b) unequivocally declares that a “State shall not impose . . . any requirements for labeling . . . in addition to or different from those imposed under [FIFRA].” Despite this express preemption provision, EPA for decades has looked the other way while California, as a practical matter, imposes its own pesticide labeling requirements. For example, the California Department of Pesticide Regulation often withholds state registration of FIFRA-registered pesticide products unless and until manufacturers obtain EPA approval for including California-required use directions or restrictions on their products’ labels.

But now—at last—EPA has admonished California for attempting to regulate the warnings on pesticide labeling. On August 8, EPA issued a news release announcing that “EPA will no longer approve product labels claiming glyphosate is known to cause cancer – a false claim that does not meet the labeling requirements of [FIFRA].” The news release explains that “California’s much criticized Proposition 65 has led to misleading labeling requirements for products, like glyphosate [a widely used herbicide], because it misinforms the public about the risks they are facing. This action will ensure consumers have correct information, and is based on EPA’s comprehensive evaluation of glyphosate.”

California’s Safe Drinking Water and Toxic Enforcement Act of 1986, popularly known Proposition 65, provides that “[n]o person in the course of doing business shall knowingly and intentionally expose any individual known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual.” Anyone who resides in, or has visited, California knows that this seemingly laudable right-to-know requirement has produced a ludicrous multitude of warning notices about numerous substances that ordinary people encounter in daily life.

According to EPA Administrator Andrew Wheeler, who is quoted in the Agency’s news release, “[i]t is irresponsible to require labels on products that are inaccurate when EPA knows the product does not pose a cancer risk. We will not allow California’s flawed program to dictate federal policy.” As a result, EPA is requiring companies that hold FIFRA registrations for glyphosate products to remove Proposition 65 cancer warning language.

In its own news release, OEHHA—the laughable acronym for the California agency that administers Proposition 65 —“objects to US EPA’s characterization of any warning concerning glyphosate’s carcinogenicity as ‘a false claim.’” But EPA, not OEHHA, gets to call the shots on what is a false claim on pesticide labeling.

The U.S. Supreme Court made this clear in Bates v. Dow AgroSciences LLC, 544 U.S. 431 (2005). The Court explained that FIFRA’s requirement that pesticides not be distributed with “misbranded” labeling—such as labeling  containing false or misleading statements—sets the standard for pesticide labeling. EPA has determined that a Proposition 65 cancer warning on glyphosate labeling is a “false claim” for misbranding purposes, and thus violates FIFRA’s standard for labeling. Under Bates, FIFRA § 24(b) preempts California from requiring pesticide manufacturers to label their products in a way that FIFRA prohibits, such as by including a Proposition 65 cancer warning that EPA has determined is false and misleading. Thus, § 24(b) plays an “important role” in the federal/state pesticide regulatory scheme: “imagine 50 different labeling regimes prescribing the . . . wording of warnings.” Bates, 544 U.S. at 452.

OEHHA disingenuously asserts that it does not “dictate federal policy” for pesticide label warnings. In reality, it does. EPA finally has recognized, however, that California’s de facto regulation of pesticide labeling is barred by federal law and should not be tolerated, at least when California law requires false and misleading label warnings about a pesticide’s alleged toxic effects or risks.

*Originally published as an Insight on Capital Appellate Advocacy’s website. Reprinted with permission.

The post EPA Finally Flexes Some Preemption Muscle appeared first on Washington Legal Foundation.

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