Love Regulation or Hate It, the National Debt Is Not Your Friend

barbariansBy the end of the reign of Trajan, in what would later be called AD 117, the impending decline of the Roman Empire could be seen by anyone who looked closely at the coins. In the days of Nero, a half-century before, more than nine parts in ten of a denarius was silver. When Trajan died the ratio was approaching eight in ten, and by the time Septimus Severus gained power in the late second century, it was scarcely more than five in ten.

The Roman state became ever more elaborate, and it incurred ever-mounting administrative, redistributive, and military expenses. Spending less was hard, as was collecting more, so the government on the whole did neither; it just debased the currency. “The inflation that would inevitably follow would tax the future to pay for the present,” writes Joseph Tainter in The Collapse of Complex Societies; “but the future could not protest.”

The United States is $22 trillion in debt. It is set to add another $12.4 trillion over the next ten years. That amounts to a deficit of around $1 trillion a year, or $2.5 billion a day. The country now sustains, as a matter of course, an annual deficit of a size formerly seen only during an economic slump or a major war. It is the de facto policy of the federal government to borrow 20 cents of every dollar it spends. Continue reading “Love Regulation or Hate It, the National Debt Is Not Your Friend”

A Material Change: FCA Defendants Confront Altered Pleading Standard in Ninth Circuit after Rose and Campie

Featured Expert Contributor, False Claims Act

Stephen_Wood_03032014Stephen A. Wood, Chuhak & Tecson, P.C.

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In 2016 the U.S. Supreme Court handed down its decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), a watershed in False Claims Act jurisprudence.  The Petitioner asked the Court to decide whether the statute permitted liability for falsely certifying compliance with federal requirements where that certification was not expressly stated, but implied by a defendant’s conduct.  On that issue, the High Court held unanimously in the affirmative, resolving a conflict among the courts of appeals.

In response to defense arguments that the theory would dramatically expand the scope of False Claims Act liability, the Court sought to reassure government contractors that certain pleading and proof principles applicable to these cases would constrain post-Escobar expansion of False Claims Act liability.  Expansive liability “‛can be effectively addressed through strict enforcement of the Act’s materiality and scienter requirements.’ Those requirements are rigorous.”  Escobar, 136 S. Ct. at 2002 (citations omitted).  The Court’s statements regarding the element of materiality in particular have spawned significant litigation in federal courts throughout the country over what type and quantum of evidence bears on the question of whether a claimed violation is material. Continue reading “A Material Change: FCA Defendants Confront Altered Pleading Standard in Ninth Circuit after Rose and Campie

DOJ Updates Justice Manual to Formalize Guidance about Guidance

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with William E. Moschella, a Shareholder in the firm’s Washington, DC office.

Back in November 2017, then Attorney General Jeff Sessions issued a memorandum entitled “Prohibition on Improper Guidance Documents.”  This Sessions Memo included guidance concerning DOJ’s issuance of guidance that has not gone through the formal rulemaking process.  The Sessions Memo essentially provided that DOJ components may not use guidance documents to create legally binding requirements.  The point was to prohibit agencies from, in effect, creating de facto regulations outside of the formal rulemaking process.

Subsequently, in January 2018, then Associate Attorney General Rachel Brand issued a memorandum acknowledging the Sessions Memo as a “Guidance Policy,” and more specifically directing that Department litigators follow this Guidance Policy in determining the legal relevance of both DOJ and other agencies’ guidance documents in affirmative civil enforcement matters. Continue reading “DOJ Updates Justice Manual to Formalize Guidance about Guidance”

Ninth Circuit Decision Underscores Need for Clarity on ADA’s Application in Cyberspace

patchworkDebate over whether the Americans with Disabilities Act’s (ADA) applies to websites has been raging for years—mostly in the federal courts. As happens all too often, federal legislators and regulators have remained mostly mute, leaving judges to resolve this thorny question. This default appeal to the judiciary, which has produced divergent decisions, deprives website owners the consistent and transparent fair notice that the free-enterprise system needs (and that businesses deserve under our Constitution) to function.

The Ninth Circuit is the latest court to stitch a new block onto the patchwork quilt of website-related ADA rulings. On January 15, the court held in Robles v. Domino’s Pizza, LLC that the company’s website was a service of a “place of public accommodation” (Domino’s physical stores) and thus must be accessible under the ADA. The court also rejected Domino’s argument that the Justice Department’s failure to offer formal guidance on the websites’ ADA status violated their Fifth Amendment right to due process. The Robles decision was highly anticipated and will have a broad impact, evidenced by the amicus brief filed by a coalition of business associations. Continue reading “Ninth Circuit Decision Underscores Need for Clarity on ADA’s Application in Cyberspace”

The Judiciary Can Corral the Administrative State, but Only the People Themselves Can Tame It

madison
James Madison

The executive power of this nation would, James Madison wrote in Federalist 48, be “restrained” within a “narrow compass.” The judicial power could, in his view, be “described by landmarks still less uncertain.” It was against “the enterprising ambition” of the legislature, he believed, that “the people ought to indulge all their jealousy and exhaust all their precautions.” Unless the other departments and the people remained vigilant, Madison warned, the legislature would draw “all power into its impetuous vortex.”

This outlook was informed by the excesses of the ancient Athenian mob, which, as Madison put it in Federalist 63, decreed “to the same citizens the hemlock on one day and statues on the next.” But although he still talks, on occasion, like a fanatic, the modern congressman pushes much of his power away with both hands. That power is gladly accepted by the modern bureaucrat, an upstart bent on steering the ship of state off the course set by the Founders. Continue reading “The Judiciary Can Corral the Administrative State, but Only the People Themselves Can Tame It”

Quality Control at a Sustainable Cost: Blockchain Solutions for Bank Secrecy and Anti-Money-Laundering Compliance

Featured Expert Contributor, Legal & Regulatory Challenges for Digital Assets

Alter_Daniel_web2_8784879218361By Daniel S. Alter, a Shareholder in the New York, NY office of Murphy & McGonigle P.C.

I’ve banged on this drum before in American Banker but—given recent and exciting developments in blockchain technology—it’s time to beat on it again.  The costs of Bank Secrecy Act and Anti-Money Laundering (BSA-AML) compliance are an enormous regulatory burden on financial institutions, particularly for small and middle market firms.  And considering the global security implications posed by terrorist financing and other criminal money-laundering operations, there are no corners to cut in meeting these requirements.

Yet, as one major vendor of compliance systems has observed, criminals are “increasingly laundering money through smaller regional banks, believing that these institutions do not have the millions to invest in the processes and technology needed” to combat the problem.  I say again, there is a private-market solution to this public-safety challenge. Continue reading “Quality Control at a Sustainable Cost: Blockchain Solutions for Bank Secrecy and Anti-Money-Laundering Compliance”

Ninth Circuit Judges Call for En Banc Review of FTC’s Authority to Obtain Monetary Relief

Featured Expert Contributor, Antitrust & Competition Policy — Federal Trade Commission

By M. Sean Royall, a Partner with Gibson, Dunn & Crutcher LLP, with Blaine H. Evanson, and Richard H. Cunningham, Partners, and Brandon J. Stoker, an Associate, with the firm.

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Less than two years ago, David Vladeck, a Professor at Georgetown University Law Center who served as the Director of the FTC’s Bureau of Consumer Protection from 2009 to 2012, described the argument that the FTC Act does not permit the agency to obtain equitable monetary relief as “repeatedly and uniformly rejected by every court to address it.”  Two Ninth Circuit judges, however, recently signaled that the landscape in this area may be changing in the wake of the Supreme Court’s 2017 Kokesh v. SEC decision.

In an extraordinary procedural move, on December 3, 2018, Ninth Circuit Judge Diarmuid F. O’Scannlain, joined by Judge Carlos T. Bea, wrote a special concurrence to his majority opinion in FTC v. AMG Capital Management, LLC et al., in which he described permitting the FTC to obtain monetary relief under Section 13(b) of the FTC Act as “an impermissible exercise of judicial creativity” that “contravenes the basic separation-of-powers principle that leaves to Congress the power to authorize (or to withhold) rights and remedies.”  Slip Op. at 36.  The concurrence called on the Ninth Circuit to hear the case en banc to reconsider its 2016 decision in in FTC v. Commerce Planet, Inc.,* which held that  the FTC may obtain monetary relief pursuant to Section 13(b), and walked through how the Kokesh decision calls the reasoning of Commerce Planet into question. Continue reading “Ninth Circuit Judges Call for En Banc Review of FTC’s Authority to Obtain Monetary Relief”