Legal Material

WHAT THE SEC SAID ABOUT GAMESTOP

SEC

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The U.S. Securities and Exchange Commission on 18th October published a report analyzing the frenetic activity in shares of retailer GameStop Corp and other ‘meme’ stocks, in January, and suggested certain areas for additional regulatory review. 

The report will have consequences that alter where retail stock orders are processed and how that service is compensated for when brokers can limit the trading and the degree of openness surrounding short sells.  The report comes after US securities authorities investigating the unexplained rise in GameStop shares in January asked for further investigation of ‘game-like elements on certain trading platforms.

SO, WHAT HAPPENED

Shares of GameStop surged more than 1,600 percent in January as retail investors collaborated in discussion boards like Reddit’s WallStreetBets to attempt to bid up the heavily shorted stock and force hedge funds to unwind their bets against it, with the hope the short squeeze would drive the price even higher.

The fluctuation in GameStop shares, among other prominent meme stocks, led the clearinghouse that ensures transactions before they are completed to increase the collateral from brokers to clear the deals. That prompted many brokerages, notably Robinhood Markets, to temporarily suspend trading in the red-hot stocks, helping halt the surge, upsetting ordinary traders, and shaking market confidence. Others, including Charles Schwab Corp altered margin requirements and restricted sophisticated options strategies on the impacted equities

WHAT ACTUALLY PROMPTED THE SET UP OF RETAIL TRADING

In late 2019, major retail brokers like Schwab and Fidelity copied Robinhood’s lead and removed trading fees. Then, in early 2020, with COVID-19 lockdowns confining people at home, big entertainment and sports events canceled, and government stimulus payments delivered to many U.S. families, retail trade volumes surged.

While the primary story surrounding the GameStop craze was individual investors taking on large hedge funds, institutional investors were also significant participants in buying and selling.

WHAT HAPPENED TO THE MARKET BECAUSE OF THIS

To comprehend what happened in January 2021, it is essential to understand the market framework within which the incidents happened. From the viewpoint of individual traders, the lifespan of a stock transaction begins with an investor putting an order via an account they create with a broker-dealer.   

The broker-dealer then directs the order for execution to a trading center, such as a national securities exchange, an alternative trading system (‘ATS’), or an off-exchange market maker.  Once a trading center executes the order, the client receives a confirmation and the transaction is reported to a securities information processor that gathers, consolidates, and publishes the price and volume data to market data suppliers and others.

This processor will go on to publish the transaction information (that the buyer and seller both report the same security, price, shares, and dollar amount.)  The transaction information in question is also transmitted to the clearing broker, who confirms the deal by checking the trade data.

 The clearing broker must ‘settle’ an equity trade inside of a couple of days of the completion of the transaction by formally shifting the stock from the seller’s brokerage firm’s account to the buyer’s brokerage firm’s account and relocating the money from the buyer’s brokerage firm to the seller’s brokerage firm, a process made possible by clearing agencies enrolled with the Commission under the Exchange Act.

REPERCUSSIONS FOR GAMESTOP

Congress conducted numerous hearings on the GameStop episode. The SEC has sought public opinions on the impact of the ‘gamification’ of trading applications and if the public is in danger. Additionally, the major post-trade utility for U.S. equities has suggested reducing the settlement period for stock transactions to one day after the deal occurs, from two days. Various businesses and industry organizations have made suggestions on increasing transparency surrounding the execution of retail orders. 

LAWS SURROUNDING BROKER-DEALERS

Broker-dealers are usually required to register with the Commission according to the Exchange Act and are subject to federal securities laws as well as the rules and supervision of the SROs to which they belong. Generally, broker-dealers that do business with the public in securities must join FINRA.    Broker-dealers are also beholden to a multitude of regulatory standards, including those imposed by the Commission and, where applicable, FINRA and the exchanges to which they belong, such as customer account opening obligations, sales practices obligations, and net capital and other financial responsibility rules. 

Numerous such laws and regulations establish responsibilities on the way client orders are handled. Broker-dealers are subject to various conduct obligations, including the duty of ‘best execution,’ which usually requires a broker-dealer to execute client orders at the most advantageous terms reasonably available in the circumstances, which is typically the best reasonably available pricing.

Additionally, FINRA Rule 5320 (commonly referred to as the ‘Manning Rule‘) prohibits FINRA members from trading ahead of customer orders (e.g., receiving a customer order to buy and then purchasing for its own account at a price that would satisfy the customer’s order without providing the customer with that price or a better price).

SO, WHAT DID THE REPORT SAY

Investors were anticipating Securities and Exchange Commission Chair Gary Gensler’s findings and recommendations on GameStop/Robinhood/Reddit saga for well over six months. Gensler’s Report centers around Gamestop as well as the market structure of the US trading system. Investors in Reddit chatrooms and subreddits like WallStreetBets pushed up the value of GameStop shares in January, according to Robinhood/Reddit. Many of these transactions were made on Robinhood, which later ran into financial difficulties.

The ‘gamification’ of trading in the United States was a major talking point. Gensler is concerned about a number of elements of the country’s trading system (trading with game-like features such as points, rewards, leaderboards, bonuses, and competitions to increase engagement). He’s also been outspoken against the practice of brokers like Charles Schwab sending their orders to market makers in return for fees known as payment for order flow. As a result, some brokers are able to provide zero-commission services.

The  Securities and Exchange Commission report analyzing volatility in GameStop and other so-called ‘meme’ stocks, stated the dramatic market movements underlined the need for ‘possible investigation and additional consideration’ of measures to guarantee ‘fair, orderly and efficient markets.

 RECOMMENDATIONS FROM THE REPORT

SEC Chair Gary Gensler has already criticized ‘gamification’ on the online platform Robinhood, which is appealing to young investors. Robinhood has been credited with bringing a generation of new individual investors to the stock market, but the platform is also renowned for features that detractors claim may make it addictive.

Under the arrangement, termed payment for order flow, brokerage companies sell the right to execute small investors’ transactions to larger trading houses, which earn modest profits on the difference between the purchasing and selling prices. This method has allowed Robinhood and other brokers to provide free stock trading, but opponents argue this is worrisome. Retail brokers have a motivation to promote greater trading by individual investors, even if it may not be in their best interest.

The tactic was challenged in a proposed class-action lawsuit by retail investors against Robinhood, and some opponents have argued that the time had come to prohibit it. Mr. Gensler had indicated on Capitol Hill and to news outlets that he was ready to explore restrictions or an outright prohibition, but the report offered no evidence that such dramatic changes would be coming since it does not provide details as to recommendations.

WHAT THE REPORT SAID ABOUT GAMESTOP

The SEC report details GameStop‘s rapid increase of a little under USD20 a barrel at the end of 2020 to a high of USD483 on January 12. Yet the SEC said that story did not stop here alone. GameStop purchases by those covering shorts were ‘a small fraction of overall buy volume’ and the company’s share price remained high even after the direct effects of such trades should have waned, according to the regulator

The increase was viewed in the financial media as motivated at least in part by a desire of ordinary investors talking on the Reddit platform cooperating in an attempt to revenge against short sellers.

Seasoned investors saw GameStop’s moves as disconnected from basic concerns about the company’s financial performance and its future. The S.E.C.’s study was the latest effort by regulatory authorities to make sense of the meme-stock rise when a trading frenzy caused stratospheric price gains for companies such as GameStop and the struggling movie company AMC Entertainment.

The report revealed that the fast price rises had been driven in part by so-called short squeezes, as investors who bet against the company, notably hedge funds, had to rapidly reverse course and purchase the shares themselves to close out their holdings.

Momentarily, it appeared, tiny traders had upended the conventional balance of power on Wall Street. But when trading volume increased and prices climbed, many brokers prevented ordinary investors from purchasing the shares of major meme stocks, reversing their gain. The stoppage sparked anger among ordinary investors, a rush of lawsuits, and a variety of internet theories claiming that big Wall Street companies had ordered trade to cease.

WHAT DID THE REPORT SAY ABOUT THE CLEARINGHOUSE

The S.E.C.’s report alternatively highlighted that Robinhood and other platforms had stalled trading in certain shares after the industry-run clearinghouse that settles most stock trades- a technique that requires two additional business days -demanded nearly seven billion dollars from thirty-six clearinghouse members on January 27th, the peak of the frenzy.

That demand is called a margin call. This was intended to guarantee that the stock trading system would continue even if the increasing risk connected with the high trading in meme stocks caused a brokerage company to fail. To minimize the amount required, several platforms restricted trading in certain hot equities.

The clearinghouse’s demands, the S.E.C. concluded, represented a market operating properly — but it indicated that regulators might explore measures to speed up the settlement of transactions, possibly lessening the effect of similar margin calls in the future.

OVERALL THEMES OF THE REPORT

In the report, the SEC focussed on four aspects as a broad area regulation rather than providing recommendations being [A.] forces that may cause a brokerage to restrict trading; [B.]  digital engagement practices, [C.] trading in dark pools and through wholesalers and [D.]short selling and market dynamics.  

The SEC report did not draw inferences on the main reason for GameStop’s uncertainty, saying, ‘Whether driven by a desire to squeeze short-sellers and thus profit from the resultant rise in price, or by belief in the fundamentals of GameStop, it was a positive sentiment, not the buying-to-cover that sustained the weeks-long price appreciation of GameStop stock.’ 

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Sources

1. staff, Science X. ‘SEC Report Questions Trading Apps after Gamestop Frenzy.’ Tech Xplore – Technology and Engineering News, Tech Xplore, 19 Oct. 2021, https://techxplore.com/news/2021-10-sec-apps-gamestop-frenzy.html.

2. This is called ‘T+2’

3. The Securities Exchange Act of 1934 (also called the Exchange Act, ’34 Act, or 1934 Act) (Pub.L. 73–291, 48 Stat. 881, enacted June 6, 1934, codified at 15 U.S.C. § 78a)

4. Hatmaker, Taylor. ‘Lawmakers Announce Hearings on GameStop and Online Trading Platforms.’ TechCrunch, TechCrunch, 28 Jan. 2021, https://techcrunch.com/2021/01/28/gamestop-hearings-congress-waters-robinhood/. 

Rep. Maxine Waters (D-CA), chairwoman of the House Committee on Financial Services, announced plans for an investigation into the situation, pointing to a history of ‘predatory conduct’ from hedge funds.’

5. ‘Concept Release: Securities Transactions Settlement.’ Concept Release: Securities Transactions Settlement; Release No. 33-8398; 34-49405; IC-26384; File No. S7-13-04, https://www.sec.gov/rules/concept/33-8398.htm. 

6. The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD) as well as the member regulation, enforcement, and arbitration operations of the New York Stock Exchange. The US government agency which acts as the ultimate regulator of the US securities industry, including FINRA, is the US Securities and Exchange Commission (SEC).

7. The term Manning rule is the informal name for a financial industry rule in the United States: Financial Industry Regulatory Authority (FINRA) regulation, Rule 5320. It prohibits a FINRA member firm from placing the firm’s interest before/above the financial interests of a client.

8. ‘Consideration should be given to whether game-like features and celebratory animations that are likely intended to create positive feedback from trading lead investors to trade more than they would otherwise,’ stated the 45-page SEC study, which fell short of recommendations.

9. The S.E.C.’s study reiterated that concern: ‘These payments may constitute a conflict of interest for the retail broker-dealer,’ the report stated.

10. Number of clearing brokers experienced intraday margin calls from a  clearinghouse.    In reaction,  some broker-dealers decided to restrict trading in a limited number of individual stocks in a way that some investors may not have anticipated.   This episode highlights the integral role clearing plays in risk management for equity trading but raises questions about the possible effects of acute margin calls on more thinly capitalized broker-dealers and other means of reducing their risks.   One method to mitigate the systemic risk posed by such entities to the clearinghouse and other participants is to shorten the settlement cycle.

11. Consideration should be given  to whether game-like features and celebratory animations that are likely intended to create positive feedback from trading lead investors to trade more than they would otherwise.  In addition,  payment  for order flow and the incentives   it  creates may cause broker-dealers to find  novel  ways to increase customer trading,  including  through  the use of digital  engagement  practices

12. Much of the retail order flow in  GMEwas purchased by wholesalers and executed off-exchange.  Such trading interest is less visible to the wider market—and payments to broker-dealers may raise questions about the execution quality investors receive.    Further,  though wholesalers increasingly handle individual investor order flow,  they face fewer requirements concerning their operational transparency and resiliency as compared to exchanges or ATSs.

13. While short selling and calls on social media for short squeezes received a great deal of media attention,  the interplay between shorting and price dynamics is more complex than these narratives would suggest.    Improved reporting of short sales would allow regulators to better track these dynamics.

PRIVACY OF GENETIC INFORMATION IN THE UNITED STATES

Genetics

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Genetic information about oneself is often disregarded as private by individuals. The genome, or whole set of DNA, is unique to each person, but the particular variations within a person’s genome may be widely shared across biological relatives or even throughout the entire human population. The genome’s dual importance as a private and public collection of widely shared common components makes any discussion of legislation addressing genetic privacy impossible.

As an identity, DNA has been conceived as the person’s ‘book of life’ and as a way to predict the future, although this isn’t as true as many people believe. A common reaction to this way of thinking is the desire to be in control of who has access to their genetic data, which leads to demands for robust privacy protection or even personal genetic data ownership.

BACKGROUND

Contrary to popular belief, genetic data does not only apply to a single person. It may provide information about a person’s immediate and distant ancestors. A person’s genetic variations can only be understood by examining the genetic data of many other individuals.  Because of the genome’s open nature and high monetary worth, determining how much control people should have and how to offer adequate privacy safeguards is challenging.

A new form of privacy is also gaining popularity since the notion of ‘privacy’ itself has changed over the last several decades. Because of this, the conventional understanding of privacy—as the ‘right to be left alone’—has come under growing pressure in the Information Age. Due to the Internet and other ubiquitous communication technologies, a lot of personal information may be shared without the knowledge or permission of the individual.  Some argue that maintaining one’s secrecy is less important than controlling how their data is distributed and used by others, such as when seeking healthcare, making purchases, and going about their daily life. According to this ‘dominant paradigm’, privacy is defined as a personal right to choose how one’s data is used, both on and off the Internet.

CALIFORNIA’S ADVANCES IN GENETIC PRIVACY

The Genetic Information Privacy Act signed into law by California Governor Gavin Newsom on October 9tH requires direct-to-consumer genetic testing businesses to give information and seek explicit permission from customers about the collection, use, and dissemination of genetic data, provided in bill SB 41.

People now have more say in how their genetic information is utilized, owing to the Genetic Information Privacy Act. Consent may be revoked by customers if they follow specific processes. This means that companies like 23AndMe Inc. and Ancestry.com Inc. must delete a customer’s biological sample within thirty days of the customer revoking their permission if the customer cancels the order. 

WHERE GENETIC PRIVACY COMES INTO PLAY

Recent technological advancements have made it feasible to analyze DNA directly with incredible precision and cost reductions, contributing to the dramatic growth of genome-based approaches such as exome- or genome-based sequencing, which can provide significantly more information than single-gene tests. For certain infants born with developmental disabilities or severe illnesses, genetic testing has already proved useful in identifying diseases with no known cause.

It’s crucial to note that HIPAA only applies to organizations that are either ‘covered entities’ or their business associates (BAs) when dealing with genetic data or any other PHI.  Many unprotected organizations gather genetic information, such as 23andMe and genealogical websites like Ancestry.com, which provide genetic testing online. There is currently no government oversight of companies like 23andMe, despite the FDA recently notifying the company that it was marketing its over-the-the-counter saliva collection kit and Personal Genome Service (PGS) in violation of the Federal Food, Drug, and Cosmetic Act. It has been stated by the FDA that ‘a false-positive BRCA-related risk assessment for breast or ovarian cancer could lead to prophylactic surgery, chemotherapy, intensive screening or other morbidity-inducing actions, while a false negative could lead to a failure to recognize an actual risk that may be present

Existing rules governing genetic information are obviously deficient in a wide range of respects. Instead of making safeguards reliant on who possesses the data, one solution to GINA and HIPAA’s flaws—and not only in genetics—is to attach protections to the data itself. This eliminates the patchwork effect caused by so-called ‘covered entities.’.

The genetic data of customers must be protected from illegal usage by direct-to-consumer testing businesses. Consumers’ accounts and genetic data must also be accessible and erasable by the businesses.

Third-party access permission forms must also be more clear for customers. As a result of this, businesses that provide direct-to-consumer genetic testing must abide by all applicable regulations when providing customer genetic data to police enforcement without their permission. As a result of this change in legislation, ancestry websites will still be utilized as tools for law enforcement investigators, according to Umber. Unless permission has been sought directly from the court, individuals cannot sell or give away material. Most direct-to-consumer businesses’ practices are now codified under the new legislation. Civil fines will be levied on companies who break the new rule. As of January 1, 2022, the Genetic Information Privacy Act will go into effect as a result of the legislation.

WHAT IS THE COMMON RULE

A basic ethical norm known as The Common Rule governs biomedical research in the United States that involves human subjects and seeks to safeguard their privacy by removing ‘identifiers’ such as their name or address from gathered data. Policymakers have been urged to provide uniform standards and best practices for researchers’ access to and use of genetic data obtained from individuals. 

For biomedical and behavioral research involving human participants, The Common Rule was established in the United States in 1981. In July 2018, a major change went into effect. It regulated Institutional Review Boards (IRBs) to oversee human research after the Declaration of Helsinki was revised in 1975. Regardless of the financing, virtually all academic institutions in the country hold their researchers to these declarations of rights.

Additionally, the Genetic Information Nondiscrimination Act (GINA), safeguards genetic privacy for the general population, as well as research subjects. As a result of GINA, health insurers and employers may no longer seek or demand genetic information on a person or a member of that person’s family (and further prohibits the discriminatory use of such information). Other types of insurance, such as life insurance, are not covered by this policy. The Genetic Information Nondiscrimination Act (GINA)  was signed into law on May 21, 2008.  GINA protects individuals against discrimination based on their genetic information in health coverage and in employment.  

GINA is divided into two sections or Titles.  Title I of GINA prohibits discrimination based on genetic information in health coverage.  Title II of GINA prohibits discrimination based on genetic information in employment.

HOW DOES GINA WORK

GINA is primarily an anti-discrimination statute.  Genetic information cannot be used to discriminate against an individual when it comes to insurance by group health and Medicare supplementary plans, but not by life, disability, or long-term care policies.

Genetic information cannot be used in work decisions such as hiring, dismissing, or promotion, according to Title II of GINA. In addition, employers are forbidden from requesting or purchasing genetic information under this provision. If an employer has less than fifteen workers, however, GINA does not apply. Federal government entities are prohibited from collecting and utilizing genetic information on workers or job candidates in hiring and promotion decisions under an Executive Order that goes along with GINA. 

In the United States, GINA allegations are investigated and enforced by the Equal Employment Opportunity Commission (EEOC). As part of its post-offer, pre-employment medical examination, one company was accused by the Equal Employment Opportunity Commission of violating GINA by asking and requiring job applicants to indicate whether or not they had a family medical history for a number of diseases and disorders. The lawsuit, filed in 2013, was settled for $50,000. A week later, the EEOC sued the Founders Pavillion nursing and rehab facility in Corning, New York, in a similar manner.

WHY DOES GENETIC PRIVACY MATTER

A person’s privacy refers to how much the public has access to them. Privacy is a concept referring to the significance of limiting access to a person or to information about them.

There are also certain genetic privacy safeguards under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Genetic information is included in HIPAA’s definition of health information, and health care professionals are prohibited from disclosing it to anybody. Protected health information (PHI) now includes genetic information, according to the HIPAA Omnibus Rule of 2013. Data cannot be used for any other health insurance plans save for life, disability, or long-term care insurance, which is still allowed. Long-term care insurance excludes anybody with a hereditary tendency to Alzheimer’s, for example, from being insured. According to the definition, genetic information comprises genetic testing and a family member or their baby or embryo, as well as proof of sickness in a family member. It excludes gender and age.

It’s essential to remember that genetic privacy includes informational privacy Genetics is intimately linked to data, whether it’s in the form of family trees or the findings of genetic tests. Genetic information is often very sensitive due to the potential impact on an individual’s and their family’s present and future health. There are also significant societal and economic ramifications to this discovery.

However, the Omnibus Rule ignores one issue with GINA: GINA is built on an outdated genetics foundation dating back over two decades. Only those who have not yet been diagnosed with an illness, i.e., the condition has not yet ‘manifest,’ are protected under GINA. Numerous genetic markers may now be tested to see whether they are precursors to illness or if the individual would benefit from preventative therapy. For purposes of GINA and HIPAA, genetic markers that are present do not constitute a ‘manifestation’ of a disease.

Concerning genetic privacy and personal privacy in general, three important ideas are secrecy, security, and anonymity. As the term suggests, confidentiality denotes an instance in which information is shared inside a trusted partnership, such as between a doctor and patient with an understanding that it would not be revealed without the consent of those who originally shared it. Confidentiality, which includes not disclosing genetic information, is a cornerstone of many health professionals’ ethical standards and a cornerstone of any laws. In certain situations, such as those recognised by law or ethical standards, other interests, such as the safety and health of third parties, may take precedence over the need to preserve confidentiality entirely.

For more information on serving legal papers, contact Undisputed Legal our  Process Service department at (800) 774-6922. Representatives are available Monday-Friday 8 am – 8 pm EST.  If you found this article helpful, please consider donating.  Thank you for following our blog, A space dedicated to bringing you news on breaking legal developments, interesting articles for law professionals, and educational material for all. We hope that you enjoy your time on our blog and revisit us!  We also invite you to check out our Frequently Asked Questions About Process Servers.

Sources

1. Some have argued that individuals have a responsibility to disclose data about themselves for low-risk research since knowing the causes of health and illness is so important

2. ‘California Governor Signs into Law Bills Updating the CPRA and Bills Addressing the Privacy and Security of Genetic and Medical Data, among Others.’ The National Law Review, https://www.natlawreview.com/article/california-governor-signs-law-bills-updating-cpra-and-bills-addressing-privacy-and. 

3. ‘At-home DNA tests have provided people with the ability to seek meaningful connections to long-lost family or their own cultural and religious histories. Most people have no idea that this data can then legally be shared with third parties or potentially used against them in a variety of ways,’ said Senator Tom Umberg, who authored the bill. ‘Genetic testing companies have, to date, gone largely unregulated by either state or national governments. This has led to breaches of sensitive private biological information.’

4. The Health Insurance Portability and Accountability Act of 1996 (HIPAA Pub.L. 104–191 110 Stat. 1936 or the Kennedy–Kassebaum Act) is a United States federal statute enacted by the 104th United States Congress and signed into law by President Bill Clinton on August 21, 1996. It modernized the flow of healthcare information, stipulates how personally identifiable information maintained by the healthcare and healthcare insurance industries should be protected from fraud and theft, and addressed some limitations on healthcare insurance coverage

5. ‘FDA Orders Genetics Company 23andMe to Cease Marketing of Screening Service.’ The Guardian, Guardian News and Media, 25 Nov. 2013, https://www.theguardian.com/science/2013/nov/25/genetics-23andme-fda-marketing-pgs-screening. 

6. The Common Rule is a 1981 rule of ethics in the United States regarding biomedical and behavioral research involving human subjects. A significant revision became effective July 2018. It governed Institutional Review Boards for oversight of human research and followed the 1975 revision of the Declaration of Helsinki; it is encapsulated in the 1991 revision to the U.S. Department of Health and Human Services Title 45 CFR 46 (Public Welfare) Subparts A, B, C and D. Subpart A.

7. The World Medical Association (WMA) has developed the Declaration of Helsinki as a statement of ethical principles for medical research involving human subjects, including research on identifiable human material and data.

8. It is contained in the 1991 amendment to Title 45 CFR 46 (Public Welfare) Subparts A, B, C, and D of the U.S. Department of Health and Human Services

9. The 21st Century Cures Act is a United States law enacted by the 114th United States Congress in December 2016 and then signed into law on December 13, 2016. It authorized $6.3 billion in funding, mostly for the National Institutes of Health. The act was supported especially by large pharmaceutical manufacturers and was opposed especially by some consumer organizations.

Proponents said that it would streamline the drug and device approval process and bring treatments to market faster. Opponents said that it would allow drugs and devices to be approved on weaker evidence, bypassing randomized, controlled trials, and bring more dangerous or ineffective treatments to market]

The bill incorporated the Helping Families In Mental Health Crisis Act, first introduced by then-Congressman Tim Murphy, R-Pa., which increased the availability of psychiatric hospital beds and established a new assistant secretary for mental health and substance use disorders.

10. The Genetic Information Nondiscrimination Act of 2008 (Pub.L. 110–233), 122 Stat. 881, enacted May 21, 2008), is an Act of Congress in the United States designed to prohibit some types of genetic discrimination. The act bars the use of genetic information in health insurance and employment: it prohibits group health plans and health insurers from denying coverage to a healthy individual or charging that person higher premiums based solely on a genetic predisposition to developing a disease in the future, and it bars employers from using individuals’ genetic information when making hiring, firing, job placement, or promotion decisions.

11. ‘Fabricut to Pay $50,000 to Settle EEOC Disability and Genetic Information Discrimination Lawsuit.’ Fabricut to Pay $50,000 to Settle EEOC Disability and Genetic Information Discrimination Lawsuit | U.S. Equal Employment Opportunity Commission, https://www.eeoc.gov/newsroom/fabricut-pay-50000-settle-eeoc-disability-and-genetic-information-discrimination-lawsuit. 

12. Fabricut, Inc., one of the world’s largest distributors of decorative fabrics, will pay $50,000 and furnish other relief to settle a disability and genetic information discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC)

13. About 170 lawsuits have been filed by employees, applicants, and former employees alleging that businesses illegally requested or exploited genetic information for discrimination as of late July 2013, according to the EEOC.

14. The HIPAA Omnibus Rule was finalized by the Office for Civil Rights (OCR). The Office of Management and Budget (OMB) approved the final rule and subsequently published it in the Federal Register. The Federal Register has published the final Omnibus rules written by the U.S. Department of Health and Human Services (HHS) that will modify the HIPAA Privacy, Security, Breach Notification, and Enforcement Rules. 

WHAT’S HAPPENING WITH FACEBOOK

Facebook

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For more than five hours on October 4th, a critical part of the world’s social media landscape was down due to an error in the routers that coordinate traffic to Facebook‘s data centres. The outage re-ignited demands for federal antitrust changes that might decapitate the rapidly expanding internet behemoth.

The catastrophic, if only temporary, failure of the business left millions without access to a single communications tool. Because of its monopoly on three of the world’s social communications markets, consumers have no other choice than to utilise Facebook.

WHEN FACEBOOK FAILED

Facebook’s systems are set up to check for errors, but an audit tool that was supposed to block the command that triggered the outage had a flaw, according to the firm. Furthermore, malicious behaviour was not to blame for the outage.

Unfortunately for Facebook, the system breakdown occurred just as the corporation was coming under fire from Congress for allegedly prioritising profits above user safety, an accusation disputed by Facebook.

WhatsApp, major messaging service with over two billion users, was disabled for consumers and internal tools were also restricted for workers.  For Facebook engineers, the problem was made much worse since the outage disabled the tools they usually use to analyse and fix failures of this kind. Indeed, it was necessary to send engineers to the data centres to fix it, a task made harder since it took the business a long time to get engineers inside to work on the servers because of the tight security measures in place.

Even when the data centres’ network connection was restored, Facebook said it was concerned that a spike in traffic might cause the company’s websites and applications to go down.

According to Facebook, a mistake during regular maintenance on the company’s data centre network was to blame for the worldwide system failure on Monday that lasted over six hours and created a flood of issues that prolonged the repair process. Web monitoring company Downdetector claimed the outage was the worst it has ever seen. Billions of Facebook (FB.O), Instagram (IGS.O), and WhatsApp (WAP) users were denied access to their applications as a result, and the corporation has been under fire for weeks now.

FRANCES HAUGEN’S TESTIMONY

For years, Facebook has battled accusations that it has a monopoly on social networking. A request to dismiss the Federal Trade Commission’s (FTC) complaint accusing Facebook of squashing its competitors was also submitted by Facebook’s attorneys on Monday as its engineers raced to repair its server problems.

A former Facebook employee turned whistleblower testified before the U.S. Senate on Tuesday, accusing the corporation of prioritising profits above user safety, a charge the company rejects. Facebook owns Instagram as well as WhatsApp. Employee Frances Haugen stressed the fact that  that ‘Facebook’s closed design means it has no oversight — even from its own Oversight Board, which is as blind as the public.’

That makes it impossible for regulators to serve as a check. Haugen’s argument centred around the fact that Facebook has had incidents of rampant violence on the platform, and maintained that Facebook had done too little to prevent its platform from being used by people planning violence. This is owing to the fact that Facebook was used by people planning mass killings in Myanmar and in the Jan. 6 assault by Trump supporters who were determined to toss out the 2020 election results.

October 3rd, on ‘60 Minutes,’ Frances Haugen, in her capacity as a former Facebook data scientist, came forward not only to acknowledge that she was the whistle-blower who had leaked the documents. Additionally, she revealed they formed the basis of at least eight complaints that she and her lawyers had filed with the Securities and Exchange Commission. 

As the main product manager on the civic-integrity team, Haugen worked for Facebook for almost two years until the firm combined the two teams into a single department. The day following the Facebook outage, on October 5th, Haugen spoke before the Senate Committee on Consumer Protection, Product Safety, and Data Security for more than eight hours. In her testimony to the Senate, she said, ‘Almost no one outside of Facebook understands what occurs within Facebook.’ since ’the corporation deliberately conceals critical information from the general public, the United States government, and governments worldwide.’

WHERE THE FTC COMES INTO PLAY

There is renewed interest in the antitrust case filed by the Federal Trade Commission (FTC) against Facebook after the widespread social media outrage, which was allegedly triggered by an error on Facebook routers.

The Federal Trade Commission (FTC) is now involved in a battle to solve Facebook’s underlying issue, which shows monopolistic tendencies. This market inequity is addressed in part by the antitrust case now pending in the courts.  ‘Antitrust’ refers to laws enacted by governments to prevent companies from becoming monopolies in order to maintain healthy competition. So, for example, if a company buys out several of its best rivals, it would be in violation of antitrust rules since it would have dominance in the relevant industry.

Four months after successfully having a previous lawsuit dismissed, Facebook Inc. filed a fresh petition on October 4th  seeking the dismissal of a federal antitrust action claiming the corporation engaged in illegal monopolisation. There are allegations that Facebook illegally maintained its dominant position by acquiring potential rivals like the messaging platform WhatsApp and image-sharing app Instagram. The company’s submission to a federal court in Washington, D.C., is the newest counterattack against the Federal Trade Commission, which first sued Facebook in December. It is the commission’s goal to undo the arrangements that have been made. 

By filing a lawsuit on December 9th, 2020, the Federal Trade Commission claimed that Facebook was unlawfully preserving its social networking monopoly by engaging in anticompetitive behaviour for many years. After a thorough investigation conducted in collaboration with a group of attorneys general from forty s states, the District of Columbia, and Guam, the complaint claims that Facebook has employed a systematic strategy to eliminate competition, along with its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of mobile messaging app WhatsApp, and the encroachment of anticompetitive circumstances on third-party software developers. This behaviour hurts competition, reduces consumer choice in personal social networking, and denies marketers the advantages of competition in the marketplace.

This could include, among other things, the requirement of divestitures of assets such as Instagram and WhatsApp, the prohibition on Facebook imposing anticompetitive conditions on software developers, and the requirement for Facebook to seek prior notice and approval for any future merger or acquisition. 

According to the lawsuit filed with the FTC, Facebook has its sights set on prospective competitors who could challenge its hegemony. At a time when users of individual social networking services were moving from desktop computers to smartphones and when people were progressively adopting photo-sharing, Instagram appeared. Additionally, it was claimed Facebook officials, including CEO Mark Zuckerberg, soon realised that Instagram was a dynamic and creative personal social network that posed an existential threat to Facebook’s monopolistic power.

WHY INSTAGRAM AND WHATSAPP ARE RELEVANT

Instagram’s purchase by Facebook for a billion dollars in April 2012 reportedly neutralises Instagram’s immediate threat while also making it increasingly impossible for another personal social networking rival to acquire size.

When ‘over-the-top’ mobile messaging applications first appeared, Facebook apparently saw them as a significant challenge to its dominance. Facebook’s leadership was aware—and concerned—that a successful mobile messaging app might join the personal social networking market by adding new features or by spinning off a separate personal social networking app, according to the lawsuit, which cites internal emails and documents.

WhatsApp was the obvious worldwide ‘category leader’ in mobile messaging by 2012. Again, according to the lawsuit, Facebook decided to purchase WhatsApp for nineteen billion dollars in February 2014 rather than compete with a growing danger. With the purchase of WhatsApp, Facebook reportedly neutralises any future threats to its personal social networking monopoly, as well as making it more difficult for any new competitors to establish a foothold in mobile messaging.

This is something Facebook strongly disputes, claiming that it has earned its current position on the merits by providing users with things they want for free. Earlier this year, a federal judge dismissed the first FTC case against Facebook after finding that the agency had not made enough allegations to back up its argument that the social media giant had broken the law.

According to the court, the agency was given one more shot to prove its case. As a result of the FTC’s first complaint, Facebook claims that a deficit still exists. It argued that the FTC’s claims that the business is a monopolist are unsupported by statistics.

‘A litigation-driven fiction at odds with the business reality of strong competition with surging rivals like TikTok and scores of other attractive choices for customers,’ was a major argument during this case.

In its second complaint, the FTC provided a more in-depth explanation of why it thought Facebook was abusing its market power to stifle any competitors who could pose a danger to its dominance. While claiming Facebook used ‘strong-arm methods’ to hurt competitors by blocking third-party app developers from accessing its platform, the latest lawsuit also argues that Facebook wanted to acquire rivals rather than compete with them.

THE NEED TO UPDATE ANTI-TRUST LEGISLATION

Long-standing demands by a bipartisan coalition of U.S. legislators to modernise the country’s rules regulating monopolies in order to properly regulate—or possibly split up— the business have gained new urgency in light of the outages and Haugen’s testimony and appearance on 60 Minutes Sunday.

Since the Clayton and Sherman Acts were enacted more than a century ago, not much has changed in terms of American antitrust legislation. Republicans and Democrats, for various reasons, have increasingly criticised the growth of Big Tech in recent years. Market concentration, according to Democrats, harms consumers in the long run, while Republicans believe that big digital firms may use their market dominance to stifle some forms of free expression.

As a result of existing antitrust rules, the impact of a company’s saturation on consumer prices is given precedence. Because Facebook generates money from advertising and is free for users, regulatory agencies have a hard time enforcing conventional monopoly restrictions due to the financial effect on users. However, there are encouraging indications that things may improve in the near future.

Six antitrust reform measures were advanced by the House Judiciary Committee in June, including one that would prohibit internet firms from buying up growing rivals and another that would prevent big tech from giving their own goods priority over competitors’ products. It took the committee over 20 hours to mark up this package of legislation because of disagreements over how to effectively restructure the space.

HOW FACEBOOK IS RETALIATING

US antitrust regulators want to compel Facebook to sell Instagram and WhatsApp as part of a revamped antitrust lawsuit, which the social media giant is fighting. 

The company maintained that FTC failed to establish a ‘plausible factual basis for labelling Facebook an illegal monopolist.’ This led Facebook to state that there is ‘no foundation’ to claim that Facebook has or had a monopoly. A dismissal with a prejudice request from Facebook would make it more difficult for the agency to modify its case.  Facebook said on October 4th that Judge Boasberg had erred in dismissing such arguments.

Lina Khan, the FTC’s new chairperson, was a major contender for Facebook’s request for dismissal. Because of her past criticism of big internet firms, Facebook claimed that Ms Khan was biased when she joined the FTC and had concluded that the corporation had broken the law. Facebook Inc. thus wants Federal Trade Commission Chair Lina Khan to be recused from participating in decisions about the agency’s monopoly lawsuit against the company, saying her past criticism of Facebook means she’s biased. The request stems from Facebook’s citation of Ms Khan’s barred from any involvement in the antitrust case, citing her academic writings and her work on a House committee that investigated tech companies, including Facebook.

The FTC had rejected a recusal petition submitted by Facebook prior to the current action, stating that the business enjoyed sufficient constitutional due-process protections since the FTC’s case would be handled by a federal court.

For more information on serving legal papers, contact Undisputed Legal our Process Service department at (800) 774-6922. Representatives are available Monday-Friday 8 am – 8 pm EST.  If you found this article helpful, please consider donating.  Thank you for following our blog, A space dedicated to bringing you news on breaking legal developments, interesting articles for law professionals, and educational material for all. We hope that you enjoy your time on our blog and revisit us!  We also invite you to check out our Frequently Asked Questions About Process Servers.

Sources

1. In a blog post, Facebook Vice President of engineering Santosh Janardhan explained the company’s engineers issued a command that unintentionally disconnected Facebook data centres from the rest of the world.

2. ‘Facebook Explains Error That Caused Global Outage.’ The Guardian, Guardian News and Media, 5 Oct. 2021, https://www.theguardian.com/technology/2021/oct/05/what-caused-facebook-whatsapp-instagram-outage. 

3.‘The company’s leadership knows how to make Facebook and Instagram safer but won’t make the necessary changes because they have put their astronomical profits before people. Congressional action is needed,’ Frances Haugen, the former employee, said at a U.S. Senate hearing

4. Roberts, Molly. ‘Opinion | What the Facebook Blackout Taught Us.’ The Washington Post, WP Company, 5 Oct. 2021, https://www.washingtonpost.com/opinions/2021/10/05/what-facebook-blackout-taught-us/. 

5. Mac, Ryan. ‘Who Is Frances Haugen, the Facebook Whistle-Blower?’ The New York Times, The New York Times, 5 Oct. 2021, https://www.nytimes.com/2021/10/05/technology/who-is-frances-haugen.html. 

6. ‘The company’s leadership knows ways to make Facebook and Instagram safer and won’t make the necessary changes because they have put their immense profits before people. Congressional action is needed,’ she will say. ‘As long as Facebook is operating in the dark, it is accountable to no one. And it will continue to make choices that go against the common good.’

7. ‘This inability to see into the actual systems of Facebook and confirm that Facebook’s systems work as they say is like the Department of Transportation regulating cars by watching them drive down the highway,’ her testimony says. ‘Imagine if no regulator could ride in a car, pump up its wheels, crash test a car, or even know that seat belts could exist

8. She added, ‘Facebook wants you to believe that the problems we are talking about are unsolvable. They want you to believe in false choices. They want you to believe that you must choose between a Facebook full of divisive and extreme content or losing one of the most important values our country was founded upon, free speech. . . . That to be able to share fun photos of your kids with old friends you must also be inundated with anger-driven virality. They want you to believe that this is just part of the deal. I am here today to tell you that that’s not true.’

9. New York Democratic Attorney General Letitia James announced the state’s lawsuit, which includes the District of Columbia and Guam. It was also filed in Washington, D.C.

10. ‘FTC Sues Facebook for Illegal Monopolization.’ Federal Trade Commission, 18 Mar. 2021, https://www.ftc.gov/news-events/press-releases/2020/12/ftc-sues-facebook-illegal-monopolization. 

11. The Clayton Antitrust Act of 1914 (Pub.L. 63–212, 38 Stat. 730, enacted October 15, 1914, codified at 15 U.S.C. §§ 12–27, 29 U.S.C. §§ 52–53), is a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act seeks to prevent anti-competitive practices in their incipiency.

12. The Sherman Antitrust Act of 1890 (26 Stat. 209, 15 U.S.C. §§ 1–7) is a United States antitrust law that prescribes the rule of free competition among those engaged in commerce.

13. Lerman, Rachel. ‘Analysis | the Technology 202: Congress Takes Aim at Antitrust Legislation Designed to Reel in Big Tech.’ The Washington Post, WP Company, 24 June 2021, https://www.washingtonpost.com/politics/2021/06/24/technology-202-congress-takes-aim-antitrust-legislation-designed-reel-big-tech/. 

14. ‘Takeaways from the Latest Proposed Competition Legislation.’ Law360, https://www.law360.com/consumerprotection/articles/1428001/takeaways-from-the-latest-proposed-competition-legislation.

15. Bloomberg.com, Bloomberg, https://www.bloomberg.com/news/articles/2021-07-14/facebook-wants-ftc-chair-khan-recused-from-antitrust-case.

16. Ms. Khan shouldn’t have taken part in the second case, according to the business, and it should be rejected for that reason.

EMERGENCY ARBITRATION: WHEN DOES IT COME INTO PLAY

Arbitration

Undisputed Legal | Process Service

Because of the novel coronavirus pandemic’s backlogs and budget cutbacks, parties will progressively resort to arbitration as a dispute resolution method of choice. Numerous business issues are settled via commercial arbitration.

Many of the most prestigious arbitral organizations have recently updated their rules to better meet the demands of their clients. The establishment of emergency arbitrator proceedings has been a significant advance, allowing parties to seek immediate relief before the substantive panel is constituted. Parties and arbitrators are paying close attention to these new procedures, and with good cause.

RECENT TRENDS IN ARBITRATION

Recent Trends in arbitration include expedited Arbitration. There has been an increase in the use of expedited arbitration, which has resulted in amendments to institutional rules to incorporate provisions governing expedited proceedings. This includes the recent introduction of the [A.] revised International Centre for Dispute Resolution (ICDR)/American Arbitration Association (AAA) rules wherein the parties initiated seventy-five international expedited cases at the ICDR in 2020; [B.] revised International Chamber of Commerce (ICC) rules and [C.] International Institute for Conflict Prevention and Resolution (CPR) which provided Fast Track Rules for Administered Arbitration. Many courts, tribunals, and organizations are choosing virtual hearings over delaying cases in response to COVID-19 and government health restrictions. The use of digital technologies has also grown in popularity.

Summary Adjudication has also been incorporated in arbitration increasingly. The number of petitions for summary adjudication of claims or defenses that have no basis is rising steadily. Many revised institutional norms provide explicit and implicit provisions for summary adjudication. Arbitral tribunals with the competence of summary decision are recognized by the ICC, the ICDR/AAA, the Singapore International Arbitration Centre (SIAC), and the Stockholm Chamber of Commerce (SCC).

Parties are also increasingly using emergency arbitration proceedings, under which an emergency arbitrator is appointed before the constitution of a tribunal. The ICC has administered close to a hundred and fifty emergency cases since the emergency arbitration provisions came into force in 2012.

Though arbitration has been growing in vitality across the nation, a major reason for strengthened arbitration is Court Intervention. In order to force the provision of information by third parties, parties often turn to US domestic courts. The united states code gives federal district courts the authority to compel discovery in support of an international court or body. Appellate courts in the United States are divided on whether 28 U.S.C. 1782 applies to private arbitral tribunals, and the Supreme Court of the United States has just decided to address this question. In certain cases, US courts step in to aid arbitration procedures.

Before the arbitral panel is appointed, a party may seek injunctive relief from a court to preserve the status quo (for example, to prevent the termination of a contract before the tribunal is constituted). The court looks to see whether the usual conditions for issuing injunctive relief are met. One may even request the appointment of an emergency arbiter to keep things as they are.

Pro-tem or conservatory procedures are provided to parties who cannot wait for the establishment of an Arbitral Tribunal under emergency arbitration. There is a real likelihood that the requesting party will succeed on merits if an Emergency Arbitration is invoked under the considerations of [A.] fumus boni iuris which is a reasonable possibility that the measure is granted immediately, and [B.] periculum in mora wherein the loss would not be compensated by damages if it is not granted immediately.

WHEN AN EMERGENCY ARBITRATION BE GRANTED

Interim measures or conservatory relief may only be granted for a limited time under an Emergency Arbitration. For all intents and purposes, it performs similar, if not identical, duties to an ad hoc tribunal, which is formed for a specific reason and promptly disbanded once that goal is fulfilled or the time period allotted for the resolution of such problems expires. For the most part, national arbitration rules include an ‘opt-out’ policy for emergency situations, which implies that these provisions only don’t apply in full if the parties explicitly agree to omit ‘Emergency Arbitrator Provisions.

The term ‘Emergency Arbitrator’ refers to an arbitrator appointed specifically for emergency arbitration. After the Interim Order is issued, the Emergency Arbitrator is rendered functus officio. Emergency arbitration is a mechanism that ‘allows a disputing party to apply for urgent interim relief before an arbitration tribunal has been formally constituted’.1

If an arbitral tribunal is not yet in existence or if it would take too much time to put one up because of the requirements of an arbitration agreement or institutional regulations, Emergency Arbitration may play a critical role. Many additional flaws in the system make Emergency Arbitration seem like a good idea, including a lack of trust in the national courts to provide immediate relief, leaking of private information, and exorbitant litigation costs. The following are only two of the numerous steps that must be taken as soon as a party chooses to seek the remedy of equitable adjustment:

Documentation proving service of the application on the opposing party is required. In accordance with the agreed-upon fee structure, with the implied assumption that the application of Emergency Arbitration would be restricted to signatories to the Arbitration agreement or their successors, fees will be paid.

APPLICABILITY OF EMERGENCY ARBITRATION

When a dispute occurs, many parties examine whether or not they may seek urgent interim relief in order to maintain the status quo or to prevent the other party from continuing the infringement in issue until the dispute is finally resolved. Interim relief may be obtained in arbitration via a variety of different routes.

Most countries allow courts to provide temporary relief in support of arbitration agreements. If a party must seek interim relief in open court, some of the advantages of arbitration, including confidentiality and efficiency, could be compromised. The arbitral procedure may be preferred by certain parties because of this. As with a court, a tribunal constituted once will have broad authority to provide temporary relief.  If one side is recalcitrant or raises objections to the proposed arbitrators, the selection of the substantive tribunal may take months.

Therefore, several prestigious arbitral institutions have developed processes for appointing an emergency arbitrator in order to bridge this gap by enabling parties to receive immediate arbitral relief before a formal court is constituted in times of crisis. For temporary relief petitions that absolutely can not wait for the establishment of a substantive tribunal, the arbitral institution will appoint an emergency arbitrator at an accelerated pace.

ENFORCEABILITY OF EMERGENCY ARBITRATION

As a general rule, arbitral rules governing emergency arbitrators state that their judgments are temporary in nature, meaning the substantive tribunal may subsequently modify or suspend them. Interim measures may lapse automatically after a specific length of time in certain cases.

A preliminary order, a procedural order, a directive, or an interim or partial award may be issued by an emergency arbitrator (and arbitral tribunal) based on the relevant arbitral rules and legislation. To circumvent the ICC’s ‘scrutiny’ procedure for awards, the ICC mandates that emergency arbitrator judgments take the form of an order. This avoids delaying the issuing of an emergency decision. The SCC and ICDR regulations, on the other hand, allow for a decision to be made in the form of an order or an award.

The enforceability of the temporary remedies has been questioned notwithstanding the desire and apparent need for them. Interim binding relief raises important issues, as does the fact that emergency arbitrator judgments are made by someone other than the substantive tribunal in emergency situations. Another factor to consider is whether or not arbitrator temporary relief is issued in the form of an order rather than a decision.

In spite of the fact that several arbitral institutions have adopted emergency arbitration rules in commercial arbitration, such as the ICC Rules (2017 and 2021), the LCIA Rules (2014 and 2020), and the HKIAC Rules (2018), the spread of such a mechanism to investment arbitration is still a bit of a mystery at this point. An emergency arbitrator is not provided for, for example, by either the ICSID or UNCITRAL Arbitration Rules.

[4.1] APPLICABILITY UNDER DIFFERENT RULES

The SCC Rules (2017), the SIAC Investment Rules (2017), and the CIETAC International Investment Arbitration Rules (2017) all include procedures for the appointment of an emergency arbitrator that are applicable to investment arbitration proceedings, notwithstanding this.

The procedure to be followed under these three sets of rules is broadly similar. The appointment of an emergency arbitrator follows the filing, by the requesting party, of a written request to that end to the arbitral institution. International Chamber of Commerce (ICC) allows for a party to seek the appointment of an emergency arbitrator under Article 29 of the ICC Rules of Arbitration.  Under this article, a party that needs ‘urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal may apply to the ICC Secretariat for the appointment of an emergency arbitrator under the procedures of the rules.

The ICC will terminate the emergency arbitrator procedures if a Request for Arbitration is not submitted within ten days of the emergency arbitrator request, although a party can submit before a Request for Arbitration is filed. It is anticipated that once the emergency arbitrator is chosen, they will then deliver a judgment within days or weeks at the latest. Also, the lex arbitri should be taken into account while determining the authority of an emergency arbitrator.

In assessing whether the emergency relief sought should be granted, emergency arbitrators appointed under the SCC Rules have referred to specific criteria like [A.] the prima facie jurisdiction of the tribunal; [B.] the prima facie case on the merits; [C.]  the risk of irreparable or imminent harm; [D.] urgency; [E.] the proportionality of the measures sought. In fact, some tribunals have also discussed the necessity of the measures sought

The standard for awarding interim relief is raised when the emergency arbitrator is asked to deal with the host State’s actions linked to its sovereign power, such as when taking tax measures. The decision of an emergency decision is binding on the parties. However, this decision can be amended or revoked at the request of a party by the emergency arbitrator itself, or by the arbitral tribunal once appointed.

ARBITRATION RULES THAT HAVE NOT INCORPORATED EMERGENCY ARBITRATION

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention) and the applicable domestic arbitration laws, many of which are based on the UNCITRAL Model Law on International Commercial Arbitration, are the key enforcement mechanisms in international commercial arbitrations (the Model Law).

The New York Convention is deafeningly quiet on the issue of interim awards and orders issued by arbitrators. It seems that only ‘awards’ are covered by the agreement, excluding arbitration orders of any kind, whether interim or final. Furthermore, there is no definition of ‘award,’ although in many jurisdictions finality is regarded an important feature of an award — not least because the convention stipulates that a party may oppose the execution of an award on the grounds that it is not yet ‘binding.’ In this way, the enforcement of interim-binding orders and awards is called into doubt.

Although the New York Convention does not explicitly address interim remedies, the original Model Law gives tribunals the authority to impose such measures. National courts will have exclusive discretion on whether or not to offer help in enforcing these regulations. To address issues such as arbitrator interim measures, the Model Law has been revised many times since 2006. Tribunals may now give interim remedies in both award and ‘another form,’ with such measures having the same legal force and effect as any other award under the revised Model Law. Aside from that, an order issued as a preliminary order will not be enforced by a court even if it is binding on the parties (and does not constitute an award).

Clarity has been added to the Model Law as a result of the revisions. However, not all problems are completely resolved. Because it fails to define ‘arbitral tribunal,’ it raises the issue of whether an emergency arbitrator is included. It is also essential to note that the 2006 changes were not generally embraced. The enforceability of emergency arbitrator remedy is not explicitly addressed in many domestic arbitration rules, which is unfortunate.

Because of this, domestic courts must decide whether an emergency arbitrator’s judgment, whether it’s in the form of an award or an order, is enforceable unless explicit provisions are made.

HOW COURTS ADDRESS INTERIM ARBITRATION REMEDIES

The way domestic courts have approached this issue varies from jurisdiction to jurisdiction. Some courts have determined that arbitrator interim remedies are enforceable as awards when they ultimately resolve specific problems. It has been ruled that arbitrator interim measures in the United States are enforceable as an award when the judgment that contains them resolves a self-contained problem definitively.

In certain cases, courts may enforce arbitration orders and judgments by looking at the content of the measure rather than its form. Also, whether the emergency arbitrator-granted interim remedy is enforceable in the same way as interim relief issued by the substantive tribunal is a current matter. When it comes to emergency arbitrator judgments and interim measures issued by a substantive arbitral tribunal, US courts have usually taken the equivalent stance. However, this is not the case across the board. Treating interim measures as an award, as the Swiss Federal Tribunal has, is ‘dangerous,’ according to the court.

Of course, not all temporary remedies will ‘eventually’ settle a disagreement. Even in jurisdictions that are known to be pro-enforcement, this uncertainty lingers. Worse, there are just not enough court precedents to accurately anticipate how emergency arbitrator rulings will be handled in many countries.

Due to the present worldwide patchwork approach, arbitral courts’ interim remedies remain unclear and unevenly enforced. Questions about the enforceability of arbitrator interim remedies will continue until additional procedures to enforce emergency arbitrator judgments are brought before courts or until lawmakers decide to deal with the problem in domestic legislation.

Uncertainty about enforcement is a critical factor for customers to think about before turning to an emergency arbitrator or a court for help. Obtaining local legal counsel from the jurisdictions where enforcement will be sought is essential before making a decision.

For more information on serving legal papers, contact Undisputed Legal our Process Service department at (800) 774-6922. Representatives are available Monday-Friday 8 am – 8 pm EST.  If you found this article helpful, please consider donating.  Thank you for following our blog, A space dedicated to bringing you news on breaking legal developments, interesting articles for law professionals, and educational material for all. We hope that you enjoy your time on our blog and revisit us!  We also invite you to check out our Frequently Asked Questions About Process Servers.

Sources

1. These sectors have the most caseloads of any other: building and infrastructure; financial services; healthcare; life sciences; information and communications technology; insurance; aviation/aerospace; media; and real estate.

2. The American Arbitration Association (AAA) is a not-for-profit organization in the field of alternative dispute resolution, providing services to individuals and organizations who wish to resolve conflicts out of court, and one of several arbitration organizations that administers arbitration proceedings. The AAA also administers mediation through www.AAAMediation.org and other forms of alternative dispute resolution. It is headquartered in New York City, with regional offices in Atlanta, Boston, Charlotte, Chicago, Dallas, Denver, Detroit, East Providence, Rhode Island, Fresno, Houston, Los Angeles, Miami, Minneapolis, New York City, Philadelphia, Phoenix, San Antonio, San Diego, San Francisco, Seattle, Somerset, New Jersey and Washington, DC.

The International Centre for Dispute Resolution (ICDR), established in 1996 by the AAA, administers international arbitration proceedings initiated under the institution’s rules. ICDR currently (as of 2018) has offices in New York City, Mexico City, Singapore, and Bahrain.

3. Parties initiated 101 expedited arbitrations at the ICC in 2020, compared to 15 in 2017.

4. ‘Fast Track Administered Arbitration Rules.’ CPR International Institute for Conflict Prevention & Resolution, https://www.cpradr.org/resource-center/rules/arbitration/fast-track-administered-arbitration-rules.

5.  In 2020, parties brought 32 emergency arbitration proceedings at the ICC, and 23 of these proceedings had a US place of arbitration. 13 of these cases were in New York. As of 31 December 2020, parties had brought 119 emergency arbitration proceedings at the ICDR and AAA, including 85 applications under the ICDR International Rules and 32 applications under the AAA Commercial Arbitration Rules

6. 28 U.S. Code § 1782 – Assistance to foreign and international tribunals and to litigants before such tribunals

7. McCreary & Tire & Rubber Co. v. CEAT S.p.A 501 F 2d (3d Cir. 1974)).

8. The ICC, the ICDR, the SIAC, the SCC, and the LCIA are among the arbitral institutions that have implemented emergency arbitrator procedures.

9. ICC adopted its own version – Article 29 and Appendix V (together, the ‘EA Provisions’) – as part of the 2012 revision of the ICC Arbitration Rules.

10. Article 29 applies to any agreement for ICC arbitration concluded on or after January 1, 2012, unless the parties expressly ‘opt-out of Article 29.

11. As enumerated in Appendix V of the Rules, 

12. Island Creek Coal Sales Company v City of Gainesville Florida (1985), 729 F2d 1046, U.S.C.A., 6th Circuit

13. Yahoo! v Microsoft Corporation, 983 F. Supp. 2d 310 (S.D.N.Y. 2013

14. Judgment of April 13, 2010, DFT 136 III 200

THE STATE SECRETS PRIVILEGE

Undisputed Legal | Process Service 

Wikimedia Foundation, et al. v. National Security Agency, et al. is a lawsuit brought by the American Civil Liberties Union (ACLU) on behest of the Wikimedia Foundation and several other organizations against the National Security Agency (NSA), the United States Department of Justice (DOJ), and other named individuals. The argument that the complaint hinged upon was that the NSA engaged in mass surveillance of Wikipedia users.

The complaint asserts that the monitoring technology, dubbed “Upstream” by the NSA, violates the First Amendment of the United States Constitution, which safeguards free speech, and the Fourth Amendment, which forbids unreasonable searches and seizures.

BACKGROUND

The National Security Agency is headquartered at Fort Meade, Maryland. The action itself was brought in the United States District Court for the District of Maryland. The action was rejected in October 2015 by Judge T. S. Ellis III. Four months later, the Wikimedia Foundation appealed the judgment, going to the Fourth Circuit Court of Appeals. The Court of Appeals upheld the dismissal of all plaintiffs with the exception of the Foundation, whose claims were deemed “plausible” enough to warrant remanding the case to the lower court.

Edward Snowden, a former NSA analyst, disclosed upstream surveillance for the first time in May 2013.   Clapper v. Amnesty International USA, an earlier ACLU suit, was similarly dismissed for lack of standing. In light of some of Snowden’s revelations, including an above-Top Secret NSA presentation that explicitly identified Wikipedia as a target for HTTP monitoring, the Wikimedia Foundation filed a lawsuit against the NSA for breaching its users’ First and Fourth Amendment rights. 

On August 6th, 2015, the defendants filed a request to dismiss, claiming that the plaintiffs have failed to establish convincingly that they were harmed by Upstream’s data gathering and therefore lack standing to sue. The Electronic Frontier Foundation responded by filing an amicus brief on behalf of a coalition of libraries and retailers. On September 25th, 2015, both parties delivered oral arguments at a hearing.

The District Court for the District of Maryland rejected the complaint on October 23, 2015, citing a lack of standing. Judge T. S. Ellis III of the United States District Court found that the plaintiffs could not credibly establish that they were exposed to Upstream monitoring, reiterating the 2013 Clapper v. Amnesty International US ruling. The Foundation maintained that its complaint was justified and that there was no doubt that Upstream monitoring intercepted communications between its user community and the Wikimedia Foundation. The Electronic Frontier Foundation, which filed an amicus brief in support of the plaintiffs, stated that it was perverse to dismiss a suit for lack of proof (standing) when the surveillance program at issue was secret and urged federal courts to address the serious constitutional concerns raised by Upstream surveillance. On February 17th, 2016, the plaintiffs filed an appeal with the United States Court of Appeals for the Fourth Circuit.

On May 23rd, 2017, the Fourth Circuit Court of Appeals reversed a lower court’s rejection of Wikimedia’s allegations. This appeals court determined that the Foundation’s claims of Fourth Amendment breaches were realistic enough to “survive a facial challenge to standing,” noting that the damage that the NSA’s acquisition of personal data might cause was not hypothetical. After that, the case was returned back to the District Court of Maryland, where it was ordered to continue. The court reversed Ellis’ rejection of the other plaintiffs’ lawsuits, ruling that the non-Wikimedia plaintiffs had not presented a convincing argument that their activities were adversely impacted by Upstream’s breadth.

STATUS OF THE WIKIMEDIA’S CASE 

Wikimedia Foundation’s lawsuit was dismissed on December 16th, 2019 by the District Court. This case was thereinafter appealed by the Wikimedia Foundation to the Court of Appeals for the Fourth Circuit, which heard oral arguments on February 14th, 2020. The appeal was heard in March 2021 and once again dismissed in September. The appeals court in the United States upheld the rejection of a lawsuit by the Wikimedia Foundation, which operates Wikipedia and challenged the National Security Agency’s bulk surveillance and examination of foreign internet communications by American citizens.

The central argument that the government maintained was the “state secrets privilege.” Essentially, this meant that an in-depth examination of this matter in court might undermine national security, and therefore, the case was to be dismissed. The 4th Circuit Court of Appeals published this divided ruling on 20th September.

THE REASON FOR DISMISSAL: THE STATE SECRETS PRIVILEGE

United States law precedent established the state secrets privilege as an evidentiary rule. Excluding evidence from a case due to the use of privilege occurs when the government submits affidavits asserting that court proceedings may reveal sensitive information that could put national security at risk. The first case in which the privilege was formally recognized was United States v. Reynolds, a lawsuit involving purported military secrets.

The court seldom undertakes an in-camera review of the material after a claim of “state secrets privilege” to assess whether the application of this concept is warranted. As a consequence, judges issue judgments in which the assertions are unsubstantiated. Due to the protected information being fully withdrawn from the lawsuit, the court must decide whether or not its absence impacts the case.

The state secrets privilege’s intention is to maintain state secrets out of the public eye during civil litigation (in criminal cases, the Classified Information Procedures Act serves the same purpose). When the government is not a party to the lawsuit, it has the same right to intervene and urge the court to exclude evidence relating to state secrets. Even while courts have the authority to scrutinize such information, they often defer to the Executive Branch. Evidence that is protected by the state secrets privilege is not admissible in court. In many cases, the plaintiff is unable to proceed with the lawsuit without the confidential information and decides to abandon it as a result. If the lawsuit involves a state secret, judges have been more likely recently to reject it altogether.

However, it must be known that the claim does not have to be dismissed if the privilege is validly invoked. Instead of dismissing the plaintiffs’ claims, the Supreme Court in Reynolds returned the case for further consideration of whether the claims might continue without the protected evidence. 

However, there has been a great deal of debate over how a case should continue if a claim of privilege is accepted. In their readiness to accept government petitions to dismiss a claim entirely or to allow a case to continue with no repercussions except “those arising from the loss of evidence,” courts have differed significantly throughout the years. Some courts have viewed the implications of a legitimate privilege in a more limited manner, ruling that the privilege simply covers particular protected evidentiary components. Another court has adopted a broader interpretation, saying that the privilege’s constitutional foundations frequently compel deference to executive branch claims and eventually leave a party with no alternative legal recourse. Other courts disagree.

WHAT SETS THE STATE SECRETS PRIVILEGE APART

Although some other legal doctrines are associated with the state secrets privilege, the state secrets privilege is highly differentiated. However, some doctrines that are closely related to the state secrets privilege include [A.] the principle of non-justiciability in predefined situations involving state secrets as was established in the so-called “Totten Rule“; [B.] definite restrictions on the publishing of classified information as clarified in the Pentagon Papers case of New York Times Co. v. United States; and [C.] the use of classified information in criminal cases is governed by the Classified Information Procedures Act

The Wikimedia Foundation expressed its displeasure with the decision on Wednesday and said it was looking into possibilities for an appeal.

Some have argued that the executive branch has abused the privilege in recent years to hide its own embarrassing or illegal behavior, especially in the context of the “war on terror.” So, in reaction to this, the Obama Administration has released a new policy on the state secrets privilege in an effort to increase trust in the federal court system that the  “U.S. government will use the privilege only if it is essential to protect national security or international affairs.” A State Secrets Review Committee and the Attorney General must both approve any decision by an agency to use the privilege in litigation under Attorney General Eric Holder’s new policy. State secrets privileges can no longer be invoked to hide legal violations or administrative errors, avoid “embarrassment,” or “prevent the release of information… which would not reasonably be expected to cause significant harm to national security,” according to the Department of Justice’s new procedures.

The President is constitutionally charged with protecting information relating to national security. The state secrets privilege is not a mere “common law” privilege and sees some roots in the Constitution. This connection was most commonly showcased in United States v. Nixon, wherein the Supreme Court noted the claim of privilege “relates to the effective discharge of the President’s powers, it is constitutionally based.” 

If the privilege is appropriately invoked, it is absolute and the disclosure of the underlying information cannot be compelled by the court. Although a private litigant’s need for the information may be relevant to the amount of deference afforded to the government, “even the most compelling necessity cannot overcome the claim of privilege if the court is ultimately satisfied” that the privilege is appropriate.

Yet, significant controversy has arisen with respect to the question of how a case should proceed in light of the successful claim of privilege. Courts have varied greatly in their willingness to either dismiss a claim in its entirety or allow a case to proceed “with no consequences save those resulting from the loss of evidence.”  Some courts have taken a more restrained view of the consequences of a valid privilege, holding that the privilege protects only specific pieces of privileged evidence; while others have taken a more expansive view, arguing that the privilege, with its constitutional underpinnings, often requires deference to executive branch assertions and ultimate dismissal. Whether the assertion of the state secrets privilege is fatal to a particular suit or merely excludes privileged evidence from further litigation, is a question that is highly dependent upon the specific facts of the case.

Pursuant to existing state secrets privilege jurisprudence, the valid invocation of the privilege generally may result in the outright dismissal of the case in three circumstances being [A.] wherein  a plaintiff cannot establish a prima facie case without the protected evidence; [B.] where the privilege deprives a litigant of evidence necessary to establish a valid defense; and [C.] outright dismissal pursuant to the state secrets privilege which would be the “very subject matter of the case is a state secret,” and as a result, “litigating the case to a judgment on the merits would present an unacceptable risk of disclosing state secrets.”

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Sources

1. The original plaintiffs besides the Wikimedia Foundation were the National Association of Criminal Defense Lawyers, Human Rights Watch, Amnesty International USA, the PEN American Center, the Global Fund for Women, The Nation magazine,[9] the Rutherford Institute, and the Washington Office on Latin America.[5

2. Cyrus Farivar – Oct 23, 2015 10:23 pm UTC. “Judge Tosses Wikimedia’s Anti-NSA Lawsuit Because Wikipedia Isn’t Big Enough.” Ars Technica, 23 Oct. 2015, https://arstechnica.com/tech-policy/2015/10/judge-tosses-wikimedias-anti-nsa-lawsuit-because-wikipedia-isnt-big-enough/. 

3. WIKIMEDIA V. NSA – D. MD. OPINION

4. Brigham, Michelle Paulson, and Geoff. “District Court Grants Government’s Motion to Dismiss WIKIMEDIA v. NSA, Appeal Expected.” Diff, 23 Oct. 2015, https://diff.wikimedia.org/2015/10/23/wikimedia-v-nsa-lawsuit-dismissal/. 

5. See Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138,1144 (2013) (involving a facial challenge to Section 702 of the Foreign Intelligence Surveillance Act);

6. Since Clapper, the government itself has confirmed many of the key facts about NSA’s Upstream surveillance, including that it conducts suspicionless searches. ACLU attorney Patrick Toomey noted the lawsuit is particularly relevant as the plaintiffs engage in “hundreds of billions of international communications” annually. Any program of Upstream surveillance must necessarily sweep up a substantial part of these communications. 

7. NSA monitoring was determined to be “at full throttle” by a U.S. District Court judge in 2015, and the case was dismissed. It was rejected again in 2019 by the lower court, but the 4th U.S. Circuit Court of Appeals brought it back in 2017 and remanded it there.

8. According to Judge Diana Gribbon Motz, the majority decision “stands for a broad proposition: A lawsuit may be dismissed under the state secrets doctrine, after little judicial scrutiny, even if the government bases its sole defenses on far-fetched hypothetical.”

9. Although the district court erred in granting summary judgment to the government as to Wikimedia’s standing, we agree that the state secrets privilege requires the termination of this suit,” Judge Albert Diaz wrote in a majority opinion by the court

10. United States v. Reynolds, 345 U.S. 1 (1953), is a landmark legal case in 1953 that saw the formal recognition of the state secrets privilege, a judicially recognized extension of presidential power.

11. Three employees of the Radio Corporation of America, an Air Force contractor, were killed when a B-29 Superfortress crashed in 1948 in Waycross, Georgia. Their widows brought an action in tort seeking damages in federal court, under the Federal Tort Claims Act. As part of this action, they requested the production of accident reports concerning the crash but were told by the Air Force that the release of such details would threaten national security

12. The Classified Information Procedures Act or CIPA is codified as the third appendix to Title 18 of the U.S. Code, the title concerning crimes and criminal procedures. The U.S. Code citation is 18 U.S.C. App. III. Sections 1-16

13. Non-justiciability concerns whether a court can with constitutional propriety adjudicate on the matter before it or whether such an adjudication would be an infringement by the court of the role which the Constitution has conferred 

14. Totten v. United States, 92 U.S. 105 (1876), is a United States Supreme Court case in which the court ruled on judicial jurisdiction in espionage cases.

15. New York Times Co. v. United States, 403 U.S. 713 (1971), was a landmark decision of the US Supreme Court on the First Amendment. The ruling made it possible for The New York Times and The Washington Post newspapers to publish the then-classified Pentagon Papers without risk of government censorship or punishment

16. James Buatti, senior legal manager at the Wikimedia Foundation, said: “In the face of substantial public information concerning NSA monitoring, the court’s rationale puts extreme secrecy claims above Internet user rights.”

17. As the Supreme Court has stated, “[t]he authority to protect such information falls upon the President as the head of the Executive Branch and as Commander in Chief.” 

18. United States v. Nixon, 418 U.S. 683 (1974)

19. In Molerio v. Federal Bureau of Investigation, a job seeker alleged that the Federal Bureau of Investigation (FBI) had disqualified him based upon his father’s political ties to socialist organizations in violation of the applicant’s and his father’s First Amendment rights.  In response, the FBI asserted that it had a lawful reason to disqualify the plaintiff, but claimed that its reason was protected by the state secrets privilege. After reviewing the FBI’s claim in camera, the D.C. Circuit agreed that the evidence of a nondiscriminatory reason was protected and that its

WHO CAN ACCESS PERSONAL VOTER INFORMATION AFTER AN ELECTION

Voter Information

Undisputed Legal | Process Service 

Attorney General Josh Shapiro of Pennsylvania has declared that his office intends to sue Senate Republicans to prevent officials from subpoenaing voter information. The complaint essentially centers around the fact that the subpoena sought to reveal the personal information of nine million Pennsylvania residents and violate the state constitution’s right to informational privacy.

CASE BACKGROUND

After Republicans on a state Senate committee overseeing the review issued a subpoena in the month of September to Veronica Degraffenreid, who is the acting head of Pennsylvania’s Department of State, the Attorney General filed for the suit against the involved parties. Senators Chris Dush, Jake Corman, and the Senate Intergovernmental Operations Committee spurred the subpoena process, having necessitated the name, date of birth, partial Social Security number, and driver’s license number of every Pennsylvanian who voted in the 2020 presidential election as part of a ‘forensic investigation’ of the election. Additionally, they desired to establish how each registered voter voted and whenever every registered voter cast ballots. 

The senators justified their appeal by citing worries about the election’s integrity. The Attorney General’s Office responded by filing a complaint in the Commonwealth Court of Pennsylvania on behalf of the Commonwealth of Pennsylvania, the Department of State, and Acting Secretary Veronica Degraffenreid. 

The Attorney General’s complaint hinges upon the premier basis that the committee’s worries about potential election integrity violations are founded on misleading, prejudiced claims. Additionally, the complaint asserts that disclosing the personal information of so many voters poses a significant danger, particularly given the committee’s failure to establish necessary security measures to safeguard the data from third-party businesses.

The 2020 presidential election and the state’s voting procedures and standards have been challenged in Pennsylvania. In April, the US Supreme Court threw out Pennsylvania’s last challenge to the validity of the 2020 presidential election. An argument was made in Bognet v. Degraffenreid that voting rules may only be established by states legislatures, and thus, the Pennsylvania Supreme Court’s decision to extend Pennsylvania’s deadline for accepting mail-in votes was invalid. Fourteen Republican state legislators filed a lawsuit at the beginning of September contesting Act 77, which established in Pennsylvania universal mail-in voting in October 2019 as unconstitutional. 

Shapiro’s office urged the court to reject the subpoena citing Trump’s attempts to undermine confidence in the outcomes of the 2020 presidential election are underpinning the same and it serves no valid legislative purpose.

HOW PRIVATE IS VOTER INFORMATION?

One thing is universally private: just how people voted. Ballots are also always kept private.

Most voter data is generally public. It is gathered for the public, not private, reasons, and does not really have an opt-out provision for disseminating this material. Voter records may contain facts about individuals, which could be [A.] name; [B.] street address [C.] party affiliation; [D.] previous voting history of the individual; [E.] phone number and email address

Voter data from all fifty states will inevitably be accessible for certain purposes, even if the laws vary from state to state.  Voter data may be utilized for issue politics, charity solicitation, and commercial marketing in many states since there are no limitations on how they may be used.

Voter data records, on the other hand, are really not readily available to the general public. It takes a certain amount of know-how to approach governments for data, even if it is only to make the request. The GOP Data Center and NGP VAN, both of which provide accessible data for Republican and Democratic campaigns, are examples of these types of organizations. These experts simplify the job of political campaigns. The efficient use of the voter database was crucial to the Obama Administration for America campaigns in 2008 and 2012.

Vendors of voter data do not want their databases to be released to the public. Commercial enterprises use publicly accessible government information about who is registered to vote and who has cast votes in previous elections to build these computerized databases, often referred to as ‘voter files.’ They provide not only a statewide snapshot of voter registration and turnout, but they also often incorporate data from other sources.  In order to make the data accessible to their customers rather than hackers, it is thus imperative for these businesses to make an investment in getting it structured. However, data transfer may be difficult to regulate.

STATE VOTING RECORDS AND THE INFORMATION THEY PRESERVE

All states provide political parties and candidates for public office some level of access to voter registration data. For example, voter information may be shared with local and state authorities as well as private companies as well as researchers, and the media in the event of a scandal. Depending on state laws, only some people have access to public documents. Only state residents, registered voters, non-profit organizations and researchers may have access to some information. Most states, on the other hand, let the public see certain information about who is registered to vote. This information typically includes the voter’s present address, which many survivors value for privacy and safety reasons.

Every state provides a mechanism for voters to verify their registration status in addition to sharing or selling voter data. In order to do these status checks, it would be as easy as typing in a name and zip code in the box provided. When a voter’s status is checked, the entire current address is shown. Survivors of abuse, whose safety may be jeopardized if their abuser discovers their current whereabouts and can estimate their zip code, may find this readily available status checks frightening.

Additionally, the mechanism itself does not correlate across state borders. In the first place, vendors differ in terms of how they monitor citizens when they traverse state lines. While federal law (the Help America Vote Act of 2002) mandates that each state maintain a list of its registered voters, election administration in the United States has traditionally been extremely decentralized, making it difficult to harmonize state data.

Data brokers that gather extra personal information from public records, commercial sources, social media sites, apps, and websites to make voter records, even more, identifying exacerbate the problem by compiling ‘Enhanced Voter Records,’ which are even more identifiable. Campaigns are often sold on ‘Enhanced Voter Records,’ which may contain information on a voter’s buying patterns, religious affiliation, recreational interests, and even public social media profiles.

Several states, on the other hand, permit the withholding of personal information if it has been classified as confidential. In order to prohibit the sale and accessibility of surviving addresses in voter lists, several address Confidentiality Programs (ACPs) seek to restrict voter data sharing. To be clear, this is not a guarantee of privacy for all ACPs.

WHAT INFORMATION IS PUBLICALLY AVAILABLE

The name, residence, and party allegiance are all available to the public via the state’s voting records.

Additionally, states have the freedom to collect extra data, and some of that data may be made public. Among the things on the voting record are things like [A.] identifying information, which could be information like the individual’s date of birth and place of birth, gender identity, father’s name or mother’s maiden name, Social Security number, military ID, passport number, drivers’ license, signature; [B.] information pertaining about the address that the individual currently resides at as well as past addresses or the voting district; [C.] contact information of the individual like their telephone number and email address; [D.] their voting information including party affiliation, previous voting, absentee ballot, precincts, registering agency, required assistance; [E.] miscellaneous information like the individual’s criminal record, last date of jury duty, and active or inactive status.

There are state laws that specify who is allowed to obtain a voter list, what information may be disclosed publicly, and with whom. The voting record may be sought by political parties and candidates, law enforcement, government officials, companies, academics, journalists, and even members of the general public depending on the state (and occasionally the county).

HOW TO KEEP VOTING HISTORY PRIVATE

Users may be able to keep parts of their voting history private under state programs. People who qualify for protection include [A.] domestic violence victims; [B.] individuals who have suffered crimes or are under protective orders; [C.] law enforcement officers or their spouses; [D.] California reproductive healthcare medical providers, employees, volunteers, or patients; [E.] retired state and federal judges and attorneys; [F.] Virginia foster parents; [G.] uniformed service members in Oklahoma; [H.] under-eighteen Colorado pre-registered voters; [I.] witnesses and victims in protection and [J.] any voter who requests that their record be classified as private. 

Laws differ from one state to the next. Only political parties may access certain lists, while others are open to the public. Some lists require requesters to be scholars or to work in politics, while others do not. A few may be downloaded at any time from a state website. However, a state-by-state count by the National Conference of State Legislatures shows that all fifty states and the District of Columbia have at least one method for making access simple for requesters.

THE LEGAL IMPACT OF THE CASE AGAINST THE SENATORS 

At various places, specific information demands in the subpoena have been targeted as unlawful or unconstitutional and unenforceable in the seventy-six-page complaint launched by the Attorney General. The driving force of the complaint centers around the fact that a person’s constitutional privacy rights would be violated if the subpoena requested voter information, such as names, birth dates, driver’s license numbers, and partial Social Security numbers. This is because the subpoena is not founded on the evidence of wrongdoing by itself. 

The complaint itself attempts to highlight the present danger of voter data being disclosed in a way that violates the constitutional right to vote because the subpoena is ill-founded. Additionally, it attempts to also resolve a question of precedent: it is a clear endeavor to prevent Republican requests for records of audit and review reports dating back to 2018 on the state’s voter registration system.

According to a letter from Shapiro’s office, the material was considered ‘critical infrastructure information’ by the Department of Homeland Security and cannot be disclosed to the general public under federal law. A copy of the subpoena was sent to top election officials in the office of Democratic Gov. Tom Wolf. Democrats in the state Senate filed a lawsuit to halt the Republican ‘forensic inquiry’ and prevent the subpoena.

How the argument has been structured by the Republican senators in question is that they are using legitimate legislative power in supervising executive branch operations and that what they term a probe’ has nothing to do with Trump or reversing the 2016 election results. 

As with Arizona’s highly criticized audit, the subpoena does not seek ballots or voting equipment, and much of the information sought is already public knowledge, according to Shapiro. However, it is against the law in Pennsylvania to disclose a voter’s driver’s license or social security number to the public. The main contractor in the Arizona Senate GOP’s assessment of the election results received this information on Maricopa County voters. 

For more information on serving legal papers, contact Undisputed Legal our Process Service department at (800) 774-6922. Representatives are available Monday-Friday 8 am – 8 pm EST.  If you found this article helpful, please consider donating.  Thank you for following our blog, A space dedicated to bringing you news on breaking legal developments, interesting articles for law professionals, and educational material for all. We hope that you enjoy your time on our blog and revisit us!  We also invite you to check out our Frequently Asked Questions About Process Servers.

Sources

1. Pennsylvania Statutes Title 25 Pa.C.S.A. Elections § 1207. Open records and documents

Scope.–The following documents under this part are open to public inspection except as otherwise provided in this section:

(1) Records of a registration commission and district registers.

(2) Street lists.

(3) Official voter registration applications.

(4) Petitions and appeals.

(5) Witness lists.

(6) Accounts and contracts.

(7) Reports.

(b) Use.–Open material under subsection (a) may be inspected during ordinary business hours subject to the efficient operation of a commission.  The public inspection shall only be in the presence of a commissioner or authorized commission employee and shall be subject to proper regulation for safekeeping of the material and subject to this part.  Upon request, a photocopy of the record or computer-generated data record shall be provided at cost.  The material may not be used for commercial or improper purposes.

2. According to official statistics, Democrat Joe Biden defeated Republican Donald Trump in Pennsylvania by a margin of moreover 80,000 votes.

3. Shapiro stated: ‘Giving this data away would compromise the privacy of every Pennsylvania voter—that violates Pennsylvanians’ constitutional rights. By trying to pry into everyone’s driver’s license numbers and social security numbers they have gone too far.’

4. Jim Bognet, et al., Petitioners v. Veronica Degraffenreid, Acting Secretary of Pennsylvania, et al. November 27, 2020, United States Court of Appeals for the Third Circuit  Case Numbers: (20-3214)

5.Staff, Ram Eachambadi | JURIST. ‘GOP Lawmakers File Suit CHALLENGING PENNSYLVANIA Mail-in Voting as Unconstitutional.’ Jurist, – JURIST – News – Legal News & Commentary, 4 Sept. 2021, https://www.jurist.org/news/2021/09/gop-lawmakers-file-suit-challenging-pennsylvanias-mail-in-voting-as-unconstitutional/. 

 The plaintiffs’ primary claim is that the law is unconstitutional because it allows for no-excuse voting by mail whereas the constitution requires lawmakers to provide an alternative way for people to vote only if they are unable to do so for specific reasons such as illness, physical disability, religious observance, or being out of town on business.

6. Issenberg, Sasha. ‘How Obama’s Team Used Big Data to Rally Voters.’ MIT Technology Review, MIT Technology Review, 2 Apr. 2020, https://www.technologyreview.com/2012/12/19/114510/how-obamas-team-used-big-data-to-rally-voters/. 

7. Balz, Dan. ‘How the Obama Campaign Won the Race for Voter Data.’ The Washington Post, WP Company, 28 July 2013, https://www.washingtonpost.com/politics/how-the-obama-campaign-won-the-race-for-voter-data/2013/07/28/ad32c7b4-ee4e-11e2-a1f9-ea873b7e0424_story.html. 

8. Daley, David. ‘Voters Had Their Say. PARTISANS Ignored Them.’ The New York Times, The New York Times, 29 Sept. 2021, https://www.nytimes.com/2021/09/29/opinion/redistricting-commissions-democracy.html. 

9. The Help America Vote Act of 2002 Pub.L. 107–252, or HAVA, is a United States federal law which passed in the House 357-48 and 92-2 in the Senate and was signed into law by President Bush on October 29, 2002. The bill was drafted (at least in part) in reaction to the controversy surrounding the 2000 U.S. presidential election when almost two million ballots were disqualified because they registered multiple votes or none when run through vote-counting machines.

10. Andrew, Scottie. ‘For Abuse Victims, Registering to Vote Brings a Dangerous Tradeoff.’ CNN, Cable News Network, 27 Oct. 2020, https://edition.cnn.com/2020/10/27/us/domestic-violence-voting-election-privacy-trnd/index.html. 

11. Unfounded claims that voters were registered as residing in a condemned building need specific details on each voter, according to Senate Republican Committee Chairman Cris Dush, R-Jefferson. Other than that, Dush was unable to provide any information.

12. It’s not about fixing issues from the previous election, they claim. Instead, they’re trying to increase voter trust in elections

13. Neas, — Ralph, et al. ‘How the Arizona Senate Audit in Maricopa County Is an Assault on Voting Rights.’ The Century Foundation, 27 Sept. 2021, https://tcf.org/content/report/arizona-senate-audit-maricopa-county-assault-voting-rights/?agreed=1. 

14. Pennsylvania Statutes Title 25 Pa.C.S.A. Elections § 1403. Street lists

(a) Preparation.–Commencing not later than the 15th day prior to each election, each commission shall prepare for each election district a list of the names and addresses of all registered electors as of that date resident in the district.  The list may not include the digitized or electronic signature of a registered elector.  The list shall be arranged in one of the following manners:

(1) By streets and house numbers.

(2) Alphabetically by last name of each registered elector.

(3) In a manner whereby the location of the elector’s residence can be identified.

(b) Copies.–The commission shall retain two copies of the list under subsection (a) on file at its office and forward one copy of the list under subsection (a) to the department.  These copies shall be available for public inspection during business hours, subject to reasonable safeguards and regulations.

(c) Distribution.–The department and each commission shall distribute the list under subsection (a) upon request as follows:

(1) To officials concerned with the conduct of elections.

(2) To political parties and political bodies.

(3) To candidates.

(d) Organizations.–The commission may, for a reasonable fee, distribute the list under subsection (a) to organized bodies of citizens.

GOVERNOR’S EMERGENCY POWERS

Undisputed Legal

In the COVID-19 crisis, governors were seen to evoke unprecedented authority under their posts. In 2020, all fifty governors declared a state of emergency due to the outbreak. Under such pronouncements, companies may be shut down, citizens must stay home,  mask use would be mandated and taxes and payments were to be curtailed.

The authority of democratic governors, like Pennsylvania, Louisiana, Kentucky, and North Carolina, is usually limited by republican-controlled legislatures. However, this is not true solely for opposing parties.  Republican legislatures have also tried to curtail the Republican governors in Ohio. And democratic legislatures, notably in New York, have sought to restrict democratic governors.

Pennsylvania was the first state to vote and limit government authority when a little over half of the primary electors decided on May 18th  to give legislators greater influence in disaster declarations.

THE SITUATION IN KENTUCKY

The current state of the governor’s powers in Kentucky sees its roots in the COVID-19 crisis. In May 2020, the Kentucky Supreme Court unanimously decided that a temporary injunction preventing new legislation restricting emergency powers by Kentucky Governor Andy Beshear was inappropriate and ordered the case to be dissolved. Essentially, this provided strength to the Governor’s position, insofar as the Supreme Court said KRS 39A stipulates that all emergency orders and administrative regulations issued by the governor ‘shall have the full force of law.’ A prerequisite for the governor’s powers to kick in is that a copy is filed with the Legislative Research Commission. In sum, the case law provides that Beshear proclaimed the state of emergency to be appropriate and used the power that the General Assembly legally delegates to him, ‘consistent with decades of Kentucky precedent, which we will not overturn’ The case law also pointed out that since the Kentucky legislature only meets part-time this would leave a hole in the state’s emergency powers to develop rapidly. 

Beshear, in reaction to the COVID-19 pandemic, proclaimed a state of emergency on 6th March 2020. Following legal arguments filed by the business owners, in November the Kentucky Supreme Court decided in favor of the COVID-19 limitations imposed by Beshear. This reversed a decision of the lower court for businesses that had disputed the limitations.

THE DELINEATION OF GOVERNOR’S POWER IN KENTUCKY

The situation changed in February of 2021, whereinafter the Kentucky General Assembly passed the bills HB1, SB1, and SB2, the ethos of which were to cut into the governor’s ability to take unilateral action in an emergency. 

Beshear then filed a complaint claiming that the law contravened his executive authority unconstitutionally. In March, Judge Phillip Shepherd of the Franklin County Circuit issued an order which temporarily suspended the legislation. The Kentucky Supreme Court, however, decided on Saturday that the injunction was incorrect and remitted the case upon which it instructed the lower court to rescind the order.

The court concluded that under the circumstances an interim injunction was not justified. The Court observed that the Governor did not have any implicit or inherent emergency authority beyond the legislative authorities conferred upon him. As the executive branch maintained the ultimate say on administrative rules, the court also ruled that the law does not contradict Sections 27 and 28 of the constitution of the State, which requires the strict separation of powers.

Kentucky’s Supreme Court urged a lower court to approve a spate of legislation to limit executive powers for Gov. Andy Beshear, which may have large, immediate implications for individuals and businesses.. Because the legislation was lawfully passed, the governor’s complaint did not present a substantial legal question that required an injunction. The court concluded that the lower court abused its discretion in finding otherwise.

THE NATURE OF A GOVERNOR’S POSITION

The governors of the fifty states and five commonwealth and territories serve as top executive officials, all democratically elected. Governors act as state managers and are in charge of executing state legislation and supervising the functioning of the state executive branch. As the leaders of states, governors seek and explore continuously updated policies and programs using various instruments, including executive orders, management budgets, and legislative bills and vetoes.

Governors carry out their duties and leadership goals with the help of departmental and agency heads, many of whom they are authorized to choose. In most instances, the majority of Governors are entitled to nominate judges to the State Court, based on a list of candidates provided by a Nomination Committee.

THE GOVERNOR’S DUTIES AND RESPONSIBILITIES

Although governors share many duties and responsibilities, the extent of governorship varies from State to State in line with state constitutions, laws, and traditions, and the number and magnitude of government officials are frequently rated by political historians and other observers of state politics. Majorly, this may involve ranking considerations like [A.] qualifications and tenure [B.] legislative concerns including budget and veto power and [C.] appointment sovereignty

Although not necessarily a ranking factor, the power to issue executive orders and take emergency actions is a significant gubernatorial responsibility that varies from state to state. The criteria for gubernatorial candidates and officeholders range from State, commonwealth, and area to minimum eligible age, U.S. citizenship, and state residency. The Governors’ minimum age requirements vary from no explicit provision to thirty-five years old. The U.S. citizenship requirement for government candidates varies from a formal twenty-year period to nothing either. Further, the criteria for state residence vary from no formal provision to seven years. 

In the United States, a governor acts as Chief Executive Officer and Commander-in-Chief, serving as Head of Government within each of the fifty states and in the five permanently inhabited territories. Governors are thus accountable for implementing State legislation and supervising the functioning of the executive arm of the state. As state leaders, governors are advancing and pursuing new and updated policies and legislation using various instruments such as executive regulations, executive budgets, and legislative bills and vetoes. Governors carry out their management duties and leadership goals with the help and support of department and agency executives, many of whom have the authority to appoint. Most of the governors are also authorized to select state judges from a list of candidates provided by a nominating committee in most instances.

There is a lieutenant governor in all but five states (Arizona, Maine, New Hampshire, Oregon, and Wyoming). The Lieutenant Governor shall take over the position of the governor (in Massachusetts and Western Virginia, the powers and responsibilities but not the office) by vacating the preceding Governor’s prosecution, death, or resignation. In case the current governors are unable to perform their responsibilities and frequently function as presiding officers of the top chambers of the state legislatures, lieutenant governors are also formal governors of the state. However, they cannot engage in political discussions in such circumstances, and they have no voting when these chambers are not split evenly.

THE GOVERNOR’S TERM

In every state, community, and territory, except New Hampshire and Vermont, four years are gubernatorial terms with two years. All governors may replace themselves barring Virginia, but they may be restricted to a certain number of consecutive or total terms. Virginia has uniquely forbidden its Governors from sitting in succession, but previous Governors are eligible after a certain (now four) times of service as Governors again. Many others formerly had the ‘no succession’ provision (which was part of the original Constitution of Virginia in 1776), but they all removed the ban by 2000 except for Virginia (including Mississippi, which repealed it in 1986, and Kentucky, which repealed it in 1992).

When the position is vacant, the Lieutenant-Governor is the appointed officer who succeeds the governor in forty-nine states and territories. The other five states and the Commonwealth of Puerto Rico include Secretary of State and Senate leader, individuals selected to replace the Governor. 

IMPEACHMENT

All Jurisdictions other than Oregon are responsible for the impeachment of governors. As with the federal government, the prosecution procedure begins with the lower parliamentary group and the trial takes place in any state except Alaska, where the process is over, and in Nebraska, which has a unicameral legislature tasked with the whole prosecutorial process. In most instances, a majority of members is required, while conviction usually needs a two-thirds majority.

With respect to state legislatures, governors perform two main responsibilities. First, they may be allowed to convene extraordinary legislative sessions, assuming that the aim and the schedule for the sessions have been laid out in advance as in most instances. Governors also integrate and interact more aptly with state legislators in a closer situation [A.] approval of state budgets and appropriations; [B.] enactment of state legislation; [C.] confirmation of executive and judicial appointments; and [D.] legislative oversight of executive branch functions.

THE GOVERNOR’S POWERS OF APPROVAL:  STATE BUDGETS AND APPROPRIATIONS

Governors must complete and deliver yearly or biannual plans for legislative examination and approval. The Governors also have in some States, the Commonwealths and Territories a ‘reduction’ authority – most often called a ‘line-item – which may be used to remove the appropriations they disagree to. These instruments enable governors and their budgetary personnel to have a significant role in setting policies for the utilization of state resources.

Governors frequently use State of the State messages to describe their legislative positions and several develop particular legislative proposals for their sake. The State of the State Address is a discourse that the governors of each of the United States usually deliver once annually. The speech is usually given before both chambers of the State legislature in a joint meeting, with the exception of a unicameral body, the Nebraska Legislature. This speech is intended to fulfill a constitutional requirement that a Governor must report on the state or status of a U.S. state yearly or ‘from time to time’ under earlier constitutions.

 State departments and agencies may also seek legislation with the consent of the governor. Executive officials are frequently called upon to provide witness to legislative proposals and governors and other leaders of the executive branch are mobilized in support of, or against, particular legislative initiatives by government and interest organizations. Governors will utilize their position as authorities in foster the endorsement of legislative proposals and, via frequent meetings with lawmakers and legislative officials, together with department heads and staff, may attempt to influence legislation’s development.

VETO POWER

All fifty Governors of State have the authority to veto entire legislative initiatives. A measure will become law in a vast majority of countries unless it is vetoed by the governor within a certain number of days that varies across States. In smaller states, legislation will expire, unless the governor signs them officially, also within a certain number of days (pocket veto). 

The ‘line-item (this may be used to strike a general item out of a piece of legislation), ‘reduction’ (by which a governor might remove a budget item), and ‘amendatory’ are other kinds of Vetoes available to certain states’ governors (by which a governor can revise legislation). Legislatures may overturn vetoes, typically by voting for a supermajority.) Many gubernatorial appointments require legislative confirmation

LEGISLATIVE OVERSIGHT

The governors converse with their legislatures to guarantee that their aims, objectives, and achievements are appropriately introduced and favorably received all through oversight hearings and other legislative activities that deal with and facilitate the performance of legislative programs and services dictated by the executive branch.

EXECUTIVE BRANCH POSITIONS INDEPENDENTLY SELECTED

A significant number of States choose some executive branches independently. The Lieutenant Governor, Secretary of State, attorney general, and treasurer are the most notable of these posts. 

Lieutenant Governor’s post occurs in the vast majority of states, where the position most frequently comes through democratic state elections and the governor, but in a few instances, the function of lieutenant governor is given by state law to another position in the executive or legislative branches (e.g., secretary of state or leader of the senate). All the posts of the State Secretary, Attorney General, and treasurer are subject to national popular elections in the majority of states and, in most of the other states, at least one of the three is chosen.

State cabinets, which act as advisory councils of the governors of the country, consist usually of individuals chosen by the governor of the head of state departments and agencies, and in certain instances of senior employees in the direct office of the governor. In most states, the cabinet [A.] advises the governor on the development of policy, and [B.] serves as a vehicle for the governor or senior staff to convey priorities to gubernatorial appointees and address cross-agency issues or concerns.

Governors are expected to issue executive orders under State constitutions and laws and in jurisprudence or are subject to the authorities given to the heads of state. Governors use executive orders that may or may not fall under legislative review and would trigger emergency powers during natural disasters, energy crises, and other situations requiring immediate attention. They may also create an advisory, coordinating, study, or investigative committees or commissions; and address management and administrative issues such as regulatory reform, environmental impact, hiring freezes, discrimination, and intergovernmental coordination.

As Chief Executive, Governors must ensure that their state is prepared for all kinds and dimensions of crises and catastrophes. Over the course of the coronavirus’ trajectory on the united states, this power has become highly relevant. In the event of an emergency, the Governor also plays an important role in giving guidance and instruction and in keeping calm and public order.

State emergency management laws generally specify how the governor may declare a state of emergency and terminate it. In certain instances, the required catastrophe response is beyond the ability of central and local governments. The President may be asked by a State to proclaim a disaster statement. A significant disaster statement activates a number of government programs, depending on the extent of the catastrophe and the kind of damage.

For more information on serving legal papers, contact Undisputed Legal our Process Service department at (800) 774-6922. Representatives are available Monday-Friday 8 am – 8 pm EST.  If you found this article helpful, please consider donating.  Thank you for following our blog, A space dedicated to bringing you news on breaking legal developments, interesting articles for law professionals, and educational material for all. We hope that you enjoy your time on our blog and revisit us!  We also invite you to check out our Frequently Asked Questions About Process Servers.

Sources

1. The vote limited the Pennsylvania governor’s disaster declaration to 21 days. Beyond that, legislative approval is required. Pennsylvanians also voted to empower state lawmakers to remove the governor’s disaster declarations with a majority vote.

2. Cassie Maas | U. Pittsburgh School of Law, US. ‘Kentucky Supreme Court Backs Laws Limiting Governor’s Emergency Powers.’ Jurist, – JURIST – News – Legal News & Commentary, 24 Aug. 2021, www.jurist.org/news/2021/08/kentucky-supreme-court-backs-laws-limiting-governors-emergency-powers/

3. The COVID-19 pandemic arose this year during the latter part of the regular session, after the deadline for introducing a new bill, the high court noted. But five amendments eventually passed, most notably a measure that acknowledged the governor’s declared emergency, it said ‘generally leaves our General Assembly without the ability to legislate quickly in the event of emergency unless the emergency arises during a regular legislative session.’

4. The Boone County Circuit Court in July 2020 issued an injunction citing ‘irreparable harm’ to businesses by the executive orders.

In its 103-page opinion, the Kentucky Supreme Court concluded that the governor properly invoked his emergency powers and that no violation of the separation of powers had occurred. The Court found that ‘because the law and equities favor the Governor … it was an abuse of discretion of the trial court to issue the temporary injunction.’ The court, in weighing the interests of the plaintiffs and the public health of Kentuckians as a whole, upheld Beshear’s orders.

5. 21 RS HB 1/VO5

AN ACT relating to reopening the economy in the Commonwealth of Kentucky in response to the state of emergency declared by the  Governor of  Kentucky beginning in March 2020 and continuing throughout the year of 2021 and declaring an emergency.

Be it enacted by the General Assembly of the Commonwealth of Kentucky…

6. Krauth, Olivia. ‘How Will the Kentucky Supreme Court Ruling on Gov. Beshear’s Authority IMPACT SCHOOLS?’ Journal, Louisville Courier-Journal, 22 Aug. 2021, www.courier-journal.com/story/news/education/2021/08/21/kentucky-supreme-court-how-beshear-ruling-could-impact-schools/8212331002/. 

7. ON TRANSFER FROM COURT OF APPEALSV.NO. 2021-CA-0328FRANKLIN CIRCUIT COURT NO. 2021-CI-00089

8. In a unanimous opinion issued Saturday, Kentucky’s top court didn’t weigh in on the constitutionality of the laws themselves. The Franklin Circuit Court may ultimately find them unconstitutional as the larger lawsuit continues.

9. The longest-serving governor of all time was Terry Branstad of Iowa, who was elected to his sixth (non-consecutive) term in 2014. Governor Branstad resigned on May 24, 2017, to become the United States Ambassador to China. He held the title of Governor of Iowa for 22 years. On December 14, 2015, he became the longest-serving governor in US history, breaking the record held by George Clinton of New York, who served 21 years from 1777 to 1795 and from 1801 to 1804.

10. Phillip O’Neill, ‘Virginia’s ‘No Succession’ Rule: Democratic Pillar or Constitutional Relic?, 23 Richmond Public Interest Law Review 1 

11. in two of which the president/speaker, Tennessee, and West Virginia is one and one

12. although the terminology for this speech differs for some states: in Iowa, the speech is called the Condition of the State Address; in Kentucky, Massachusetts, Pennsylvania, and Virginia it is called the State of the Commonwealth Address.

13. Snell, Ron. Gubernatorial Veto Authority with Respect to Major Budget Bill(s), www.ncsl.org/research/fiscal-policy/gubernatorial-veto-authority-with-respect-to-major.aspx. 

14. Governors are usually authorized to designate State comptrollers and heads of pre-and post-audit departments. The appointment authority of governors for heads of state education and higher education agencies is similarly restricted.

15. Greenberg, Pam. Legislative Oversight of Emergency Executive Powers, www.ncsl.org/research/about-state-legislatures/legislative-oversight-of-executive-orders.aspx. 

 

CAN NON-LAWYERS OWN LAW FIRMS

Undisputed Legal | Process Service

Most jurisdictions are preparing for major legal reforms, particularly rules about who may and cannot have an interest in law firms. Ownership of law firms by non-lawyers saw its first foothold in Arizona in 2020 when the state allowed non-attorneys to acquire a financial interest in law businesses. Following suit, Utah authorized a “regulatory sandbox” for a two-year trial program in which non-lawyer investors or owners may dabble in the uncharted legal territory.

On the heels of recent initiatives by nations to make civil legal services more accessible and cheaper for low-income people and families, a push for more access and affordability has been clamored for. In order to increase access to legal services, advocates say opening up ownership of law firms to non-lawyers would provide more options and make services more affordable because tech companies like Legal Zoom and Rocket Lawyer are permitted to market affordable legal services in contrast to traditional law firms. 

However, as the price of operations, personnel, and administrative expenses continue to decline with the assistance of newer technology, coupled with continuing trends in the reduction of office space and work-from-home rules, costs continue on their forced decrease. Will preparation, leasing agreements and family law are examples of legal requirements that combine in a drive for state governments to cut costs throughout the sector.

BACKGROUND

The current status of the legal scenario stems from American Bar Association Rule 5.4. Though unofficial,  the majority of states have based ownership rules as per the documentation under the rule, seemingly done so in an effort to vouchsafe the “Professional Independence of a Lawyer.” Rule 5.4(b) states that: “A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.”

Right now, New York is actively considering changes to the ownership rules. It should be noted that a major reason why the rules may be changed would be to accommodate the ubiquity of internet businesses and Big Four accountancy firms as well as to provide easier access to the legal sector. It is accepted as truth that the regulation changes would help the Big Four, which in turn will generate a return on the fees that so-called “white shoe companies” demand. 

To note the stand of the ABA, the staunch refusal to accommodate non-legal ownership by the entity should be referred to. Previous to the bubbling changes, the ABA had been very against any such reforms. However,  in an apparent change of heart,  the ABA recently approved the alterations, urging “US jurisdictions to go outside the box on the issue of justice access.”

STATUS OF COMPETING NON-LAWYER FIRMS

As alternative legal service providers have entered the market, competition has grown in the legal sector. More and more law firms and businesses are using these alternative legal service providers to reduce expenses, increase efficiency, and utilize new technologies. In other words, not only are legal firms losing income to alternative legal service providers, but they are also suffering more expenses as a result. For instance, if ownership regulations change, it may be possible to make use of those services (and related income) that are now outside of the firm, and more effectively compete with alternative legal service providers.

Changes in ownership regulations have been proposed as a way to break down an obstacle to innovation that has existed for decades. At the present, firms are unable to offer partnership stakes to exceptional individuals with non-legal backgrounds in order to get them to work in IT or on the business side. For the purposes of this discussion, only licensed attorneys may be ownership stakeholders in law firms. If the laws change, the incentives will also shift, which implies that companies in the legal and software industries could become appealing to bright MBAs and computer programmers. A long-standing method of recruiting high-quality personnel has been the attraction of equity pay, which helps to unlock the hidden potential of law firms.

To be able to explore creative methods to acquire and manage money from other sources, such as hedge funds, adjustments to regulations seem to be the most favorable option. As a business gains more money, this may result in investment in technology, which helps companies adjust to different pricing arrangements, and concurrently increases firm attractiveness. The end result is the drawing of top personnel that views the company as a secure long-term career home.

The second advantage of linking attorneys with other professions is that companies may harness convergence between them to offer more comprehensive services. Trust and estate management, as well as appraisals and tax services, are just a few of the many services offered. More “product lines” may allow law firms to serve customers that have varied requirements who are interested in extra services. This is possible since all these additional services may be provided from the same location.

REQUIREMENT FOR OWNERSHIP RULES

Nevertheless, American jurisprudence maintains ownership rules serve an essential function. The prevailing ideology is that a legal practitioner should be responsible to make legal choices; and if a law company opens up its decision-making process to non-lawyers, then its counsel may be compromised. When there is a possibility that other factors may compromise the interests of the client, this becomes all the more important.

The recent growth in alternative legal service providers has provided more competition for legal firms. Enabling non-lawyer ownership may offer new market possibilities for law firms, such as technology and consulting companies, as well as opening the door to the competition including information technology and consulting organizations and the four largest Big Four accountancy companies. Additionally, legal companies have expressed concerns that law would become a commodity, resulting in a “Walmart” phenomenon. In many instances, fundamental legal requirements may be supplied by a larger and more diverse business, pushing out smaller companies and enabling them to operate at cheaper rates. Because of this, small businesses will be forced to specialize and provide services they may not be able to provide to a generalist company.

Additionally, the question of privilege must be considered. Non-attorneys have now entered the mix, but the status quo concerning attorney-client privilege remains unanswered. In occupations other than creative ones, there is a degree of secrecy, but legal privileged speak is not one of them.

HOW DOES RULE 5.4 MAINTAIN ATTORNEY AUTONOMY

ABA Model Rule 5.4 bars lawyers from sharing legal fees with nonlawyers and forbids law firms from having nonlawyer owners or officers. ABA Model Rule 5.4 also provides for exceptions within this ambit. The regulation is instituted to protect attorneys’ autonomy by shielding them from non-lawyer oversight, which may place profitability above their obligation to their clients. For this rule to have any practical impact, law firms do not offer any non-legal services since any non-attorneys who supply such services will never get to a partnership or be put in charge of managing the lawyers in a company. Nonlawyer ownership is also prohibited, as well as other things, such as law firms using stock as a lure for nonlawyer personnel and funding expansions and developments with outside financing.

HOW HAVE STATES ADOPTED RULE 5.4

Limitations on growth have the effect of making it difficult for law firms to innovate and develop, especially to cater to a bigger part of the market. Alternatively, supporters of Multidisciplinary Practices have proposed that the introduction of Multidisciplinary Practices would further improve the quality and affordability of legal advice to customers by offering integrated services alongside legal assistance. In the professional services sector, specifically in the field of law, limits on nonlawyer ownership have had the effect of holding legal companies smaller than those in the other professional services sectors, such as accountancy and consulting.

For the longest time, all fifty states have adhered to Rule 5.4, with the exception of D.C. While D.C.’s rules allow non-lawyer ownership since 1991, and a small minority of D.C. firms have one or more partners who are lobbyists or public relations professionals, these types of firms (those with lobbying or public relations professionals rather than lawyers) comprise a much smaller minority of D.C. businesses. Although ABA Formal Opinion 360 prohibits these companies from growing into jurisdictions that follow Model Rule 5.4, they are permitted to expand into places that do not follow this rule.

The concept of modifying Rule 5.4 has been previously discussed. Before the Model Rules were created, the Kutak Commission was developing its proposal for the rules in the early 1980s. In that proposal, Rule 5.4 suggested that fees may be shared with nonlawyers. While following the recommendation, the Model Rules instead adopted the restrictions on fee-splitting that had been in place for years. Attempts to modify the regulation after the first proposal failed to gather sufficient support.

International changes have happened in the last fifteen years, particularly. The first publicly traded law company was founded in Australia in 2007, while the UK granted the first permits for law firms to become “Alternative Business Structures” in 2012.

Access to justice seems to be a driving factor in current lighter regulations initiatives in certain U.S. jurisdictions. The more liberal policies that have been implemented or are currently being considered have generally been seen as attempts to spark legal innovation in the form of new legal models and technology that would result in the reduction of the expensive barrier to legal counsel. It’s also true that some authorities also appear to accept that Rule 5.4 alterations may result in big companies gaining control of and investing in law firms.

CASE STUDIES UTAH AND ARIZONA

Utah launched a time-limited trial program in August 2020 that allows businesses, as well as those controlled by nonlawyers, to apply for authorization to offer legal services via the newly established Office of Legal Services Innovation. Originally scheduled to continue for two years, the program was subsequently increased until seven. 

Arizona’s Supreme Court’s task force on the procurement of legal services issued a sweeping decision on January 1, 2021, completely voiding Arizona’s Rule 5.4, ever since Utah’s program had begun in August of 2020. In order to apply for a license to operate as an Alternative Business Structure (ABS), companies and their nonlawyer owners may now do so.

Although the changes that have occurred in Arizona are substantial, only three licensed ABSs have been discovered so far. Despite the application’s initial sluggishness, additional applications are now under development, notably Rocket Lawyer’s. These new rules make it obvious that multinational companies will gravitate to the ABS licensing system since the most costly option in the ABS license price schedule is designed especially for these types of businesses.

STATES IN TRANSIT

The goal of California’s Bar’s Justice Gap Working Group as setting up in May of 2020 is to create a regulatory sandbox program like Utah’s current pilot. The plan that excluded relaxation of the prohibition on nonlawyer ownership was expressly rejected by the Bar’s Board of Trustees, which instead selected a more comprehensive one that was widely accepted. Pilot programs are controversial, however, since they have raised questions about whether participation should be restricted to groups focused on making justice more accessible. There’s a good chance significant changes may occur in the state’s judicial system over the next several years, as the committee expects to present its findings to the board of trustees in September of 2022.

In July of this year, the Florida Bar’s Special Committee was to submit a report to the Florida Supreme Court. The committee is highly likely to propose that companies be allowed to have nonlawyer owners, pending certain oversight (but not passive investors). According to recent meeting minutes, the committee is considering Utah’s pilot program as a potential model.

The North Carolina state bar has likewise formed a committee on the subject. According to the videotaped meeting uploaded on the bar’s YouTube account, the Subcommittee to Study Regulatory Change seems to be in the information-gathering stage. However, the committee has shown interest in Utah’s program.

The ABA is one area where modifications to Rule 5.4 are still fiercely resisted. In February 2020, the benefits of deregulation aimed at improving access to justice were extensively discussed, and the resulting decision explicitly abstained from proposing changes to Rule 5.4. Additionally, the report accompanying the resolution was substantially altered, with an entire section omitted and all references to Rule 5.4 eliminated to expedite the resolution’s approval.

Countries such as Australia and the United Kingdom have already adopted an “alternative business structure” (ABS), which allows partnership with non-legal ownership. In June 2020, litigation funding powerhouse, Burford Capital took a 32% equity interest in a London-based litigation firm. While there are clear challenges, the amendment of Rule 5.4 may allow law firms to broaden horizons and gain exposure to other markets. In the United States, there has traditionally only been one location to get legal advice: a law firm that is owned and operated by one or more attorneys. However, change is clearly possible. In a few states, regulations that attempt to enforce this standard have been removed, and other states are exploring this. This move is scarcely a tectonic shift, since at least some jurisdictions will be following the same course, and if other bigger jurisdictions make the same adjustments, these legal market reforms may transform the nationwide environment.

According to its most recent quarterly report, the committee is very likely to recommend that, subject to some regulation, firms should be permitted to have nonlawyer owners (but not passive investors).  

The report accompanying the resolution was also significantly revised, with an entire section being deleted and all references to Rule 5.4 being removed to facilitate the resolution’s passage. 

For more information on serving legal papers, contact Undisputed Legal our Process Service department at (800) 774-6922. Representatives are available Monday-Friday 8 am – 8 pm EST.  If you found this article helpful, please consider donating.  Thank you for following our blog, A space dedicated to bringing you news on breaking legal developments, interesting articles for law professionals, and educational material for all. We hope that you enjoy your time on our blog and revisit us!  We also invite you to check out our Frequently Asked Questions About Process Servers.

Sources

1. Rule 5.4(d) then goes on to disallow a lawyer to practice law…

…with or in the form of a professional corporation or association authorized to practice law for a profit, if:

(1) a nonlawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;

(2) a nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation; or

(3) a nonlawyer has the right to direct or control the professional judgment of a lawyer

2. New York Chief Judge Janet DiFiore has convened the Commission to Reimagine the Future of New York’s Courts which will consider such changes.

3. The ABA Commission on the Independence of the Profession made the following assertion in 2016: “The core value of the independence of the profession would be severely challenged by the dual allegiances owed to clients and demanded by investors, shareholders, and managers. No man (or) woman can serve two masters.”  

4. As the technologist and lawyer Jon Tobin recently observed, “Innovation is not slow in the legal sector because of some inbuilt characteristic of lawyers to reject technology. Nor because of some cultural bias against innovation.” No: In Tobin’s view, the rules on ownership are the main barrier.

5. American Bar Association, www.americanbar.org/products/ecd/chapter/219925/.

PROHIBITION OF PARTNERSHIPS WITH NONLAWYERS: EXTRAJURISDICTIONAL EFFECT (July 11, 1991) A lawyer who is licensed both in a jurisdiction that prohibits partnerships with nonlawyers, as in Model Rule 5.4(b), and in a jurisdiction that permits lawyers to form partnerships with nonlawyers, but who practices only in the latter jurisdiction, should not be subject to the prohibition of the jurisdiction where the lawyer does not practice. On the other hand, if a lawyer licensed in two such jurisdictions is engaged in practice in the jurisdiction that prohibits such partnerships, the lawyer must adhere to the restrictions of that jurisdiction.

6. “Special Committee to Improve the Delivery of Legal Services.” The Florida Bar, www.floridabar.org/about/cmtes/cmtes-me/special-committee-to-improve-the-delivery-of-legal-services/#reports. 

7. Ambrogi, Bob. “Revised ABA Report on Innovation Stripped out All Mention of Rule 5.4.” LawSites, 18 Feb. 2020, www.lawsitesblog.com/2020/02/revised-aba-report-on-innovation-stripped-out-all-mention-of-rule-5-4.html. 

THE KU KLUX KLAN ACT OF 1871

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Undisputed Legal 

The Enforcement Act of 1871, known as the Ku Klux Klan Act, is an Act of the United States Congress that motivated the President to suspend the writ of habeas corpus to counter the Ku Klux Klan (KKK) as well as other white supremacy associations. The legislation was passed by the 42nd United States Congress and was ratified by the 18th United States President Ulysses S. Grant. The Compliance act was the second of three enforcement acts enacted by the United States Congress from 1870 to 1871 to tackle attacks on African Americans’ suffrage rights and protections during the American Civil War. Since then, the law has only been changed marginally but has been subject to wide interpretation by the courts after initiation.

This Act was ordered by President Grant and was approved soon after he released the request for its passage. Based on the news he was getting of systematic racist threats in the Deep South, Grant tried to preserve African-Americans’ rights. However, he believed that he was required to acquire more control before instilling impact sufficiently to eliminate overt discrimination. For the first time, the president was free to eliminate state disorders on his own initiative and temporarily stop the right of habeas corpus. Grant did not falter in utilizing this power on several occasions during his administration. Consequently, the KKK was entirely disbanded (ending the “first Klan” era) and did not resurface in any significant way until the beginning of the 20th century.

Several of the act’s guidelines continue even as public policy. The most significant of these protections is 42 U.S.C. § 1983, the statute banning human rights deprivation.

[1.0] BACKGROUND IN THE FIRST ENFORCEMENT ACT

The Enforcement Act of 1870, also known as the Civil Rights Act of 1870, allowed the President to implement the Fifteenth Amendment’s first part across the United States. The Act was the first of three Enforcement Acts created by Congress in 1870 and 1871 to confront challenges to African Americans’ voting rights from state officials or rampant groups like the Ku Klux Klan.

The Enforcement Act of 1870 banned voter registration discrimination on ethnicity, color, and prior servitude. The law created sanctions against individuals restricting elections and granted federal courts the authority to implement the law.

The Act also allowed the President to deploy and sanction the army’s use to guarantee the Act’s compliance and the use of federal marshals to bring proceedings against criminals for electoral abuse, the bribery or coercion of electors, and conspiracies to discourage people from practicing their constitutional rights.

The bill was enacted to secure people’s ability to vote depending on their race.

[2.0] OBJECTIVE OF THE ENFORCEMENT ACT

The Ku Klux Klan Act was the third in the set of Enforcement Acts intended to secure the civil and political rights of four million former slaves then freed. The 14th Amendment, passed in 1868, granted citizenship and fair rights under the law to everyone. However, racial vigilantes like the Ku Klux Klan disrupted the South’s Restoration and even undermined the Republican Party. 

Thus, the President was authorized to intervene in the former rebel states that wanted to deprive ‘every individual or any class of people of the laws’ fair treatment.’

 By penalizing the newly identified federal offense, the President could revoke habeas corpus, impose martial action, or use military force. Opponents to the bill rallied outcry against the law, citing the grounds that it encroached on states’ privileges and breached private freedoms. All the federal government’s control has one individual also emerged as a major concern.

 However, support for the doctrine was also widespread.    Supporters quoted the maintenance of fair treatment promise under the law by fostering equality in the law as ensured by the 14th Amendment. After both the Senate and the House approved the measure, President Ulysses S. Grant signed it into law. Six months later, in October 1871, Grant exercised these forces in many South Carolina counties showing the Republican-led federal government’s ability to use drastic measures to secure the civil and political rights of the freed citizens.

[2.1] HISTORY OF THE THIRD KLAN ACT 

Many states disapproved of the KKK to practice through other channels. Laws were set into motion to outlaw the KKK completely. Numerous members of the KKK were convicted and charged in federal court. The Klan was militant in its public stance after the federal charges report and later somewhat withdrew from the public eye.

In January 1871, a legislative hearing was convened in Congress for KKK witnesses to provide their testimonies. In February, a bill was proposed by Republican Congress Representative Benjamin Franklin Butler of Massachusetts aimed to uphold both the Fourteenth Amendment and the Civil Rights Act of 1866 in a novel anti-Klan bill. 

However, Butler’s bill was narrowly thwarted in the Senate, whereupon a replacement bill was proposed that marginally modified the scope to be not as comprehensive as Butler’s bill. This bill forced a few holdout Republicans into line, and the bill’s passage in the House, Senate, and the signing off by President Grant signified its popularity.

[2.2] HOW THE LEGISLATION WORKED

A. SECTION 1 OF THE ENFORCEMENT ACT

Section 1 of the Act, which has since been amended and codified at 42 U.S.C. § 1983 and is now known as ‘Section 1983’, authorized monetary and injunctive relief against anyone acting under the authority of state law, deprived a person of their constitutional rights. Section 1983 is the most prominent and commonly litigated civil rights statute. 

Under Section 1983, monetary damages could be awarded to those individuals for whom a State actor had violated the constitutional rights. Ordinarily, violations of constitutional protections are rectified through injunctions by court orders.  

Owing to this precedence, if a person’s right to due process was violated by a correctional officer acting under the state’s authority, this person could sue the guard in civil court for monetary damages. Without the basis in § 1983, such an individual would need to seek a civil suit for the constitutional violation. The major issue with such an operation by the tribunal would be that injunctions, which instruct a party on penalty of contempt if a party does not perform or refrain from performing some action, cannot be used to alter events from the past, only wrongs in the future. Thus, it leaves the individual in a position where the plaintiff has brought an actionable claim with no adequate remedy.  A lawsuit may be brought by anyone seeking the legal cause of action right.

Circumstances changed in 1961 when the Supreme Court articulated the statute’s three important purposes were [A. ]to over-rule particular kinds of state laws  [B.] to provide a remedy where state law was inadequate; and [C.] to provide a federal remedy where the state remedy, though adequate in theory, was not available in practice.

Section 1983 enables citizens to file suit to remedy some of their federally protected rights, like the First Amendment and the Due Process Clause, and the Equal Protection Clause of the Fourteenth Amendment. Section 1983 can be used to enforce violated constitutional rights, such as to protect against discrimination based on race, color, national origin, sex, and religion.

B. SECTION 2 OF THE ENFORCEMENT ACT

Interestingly, this Section of the Act was so long that it was addressed separately, and it received more attention from Congress during the debates. The law prohibited conspiracies against the U.S. government, actions that would put the nation at war, and various other violations. 

Section 2 originally provided for both criminal and civil liability. However, the criminal aspect of the provision was found to be unconstitutional, and therefore, was eventually overturned by the Supreme Court.

The federal civil liability portion of the law was codified at Title 42, United States Code (U.S.C.) § 1985. Section 1985 allows for lawsuits against people who conspire to interfere with the government, obstruct justice, or deprive someone of equal protection under the law.

Section 1985(1) encompasses conspiracies to expel a public official or a legislator from office violently or even prevent them from taking office in the first place or “molest, interrupt, hinder, or impede” officials’ duties.

Section 1985(2) addresses conspiracies to harm and/or threaten witnesses and jurors in federal courts or to interfere with court proceedings “with intent to deny equal protection of the laws.”

In response to the Klan’s practice of wearing masks and hoods that cover their faces, the legislation prohibits two or more people from wearing disguises or otherwise conspiring to deprive a person or class of people of equal protection of the law or legal rights. Furthermore, Section 1985(3) contains the “support-or-advocacy clauses,” which cover conspiracies to prevent citizens from expressing their beliefs and their support for candidates.

C. SECTION 6 OF THE ENFORCEMENT ACT

Section 6 of the Act imposes civil liability upon persons who know of a violation of Section 1985 or a planned violation of Section 1985 and who are in a position to prevent it but who fail to prevent it. Section 1986 deals with conspirators who deny people their rights, but Section 1983 deals with people who allow such conspiracies to exist. Legislators recognized that the Klan’s political violence could not continue without the tacit approval from local community leaders, who, in turn, were held financially responsible for failure to prevent such acts. This segment of the law is used to prevent terrorism in contemporary days by providing a disincentive for those who would protect or foster a conspiratorial terrorist act.

[3.] ERAS OF USE OF THE KU KLUX KLAN ACT

  1. RESTORATION ERA

During Restoration, federal soldiers were used to imposing the nation’s rule rather than individual state militias, and Klan members were tried in federal court, where the juries were predominantly African-American.   Hundreds of Klansmen were convicted, and habeas corpus was suspended in South Carolina. These actions were so successful that the Klan was defeated in South Carolina and decimated in the majority of the former Confederacy, where it had already been in decline for many years. 

The Klan would not reappear until its recreation in 1915. At their height, though, the ‘first age’ Klan did accomplish much of its targets, such as disenfranchising Southern African-Americans.  In its creation, the Grant Administration saw the legislation being utilized with the Force Act to provide justice against those abusing the Civil Liberties of newly freed African Americans. At the Grant Administration’s conclusion in 1877, regulation of the Act dropped into disuse, and few prosecutions were brought under the law for nearly a century.

  1. USE IN MODERN TIMES: PRESIDENCY OF DONALD TRUMP

Rep. Bennie Thompson, D-Miss, and the NAACP initiated prosecution against former President Trump and former Secretary of State and former New York City Mayor Rudy Giuliani for purportedly collaborating with white nationalist organizations and hate groups to occupy the Capitol and keep electoral votes from being counted in the Electoral College. The plaintiffs used the 150-year-old Enforcement Act statute to justify their assertion.

Thompson and the NAACP allege in the case that Trump, Giuliani, the Proud Boys, and the Oath Keepers used “intimidation, harassment, and threats” to halt the vote count and that the Jan. 6 Capitol riot was the result he was the basis for the breach that triggered the 1871 Ku Klux Klan Act.

In December 2020, the NAACP and Michigan Welfare Rights Association, along with a coalition of Detroit residents, sued President Donald Trump and the Republican National Committee under the Voting Rights Act.

The complaint claims that President Trump and the Republican Party orchestrated a concerted plot to manipulate the 2020 presidential election in Michigan, Georgia, and Pennsylvania by threatening election officials and volunteers.

In February 2021, the NAACP and the law firm  Cohen Milstein Sellers & Toll lodged another case listing Congressman Bennie Thompson as the defendant. Other congresspersons who were already victims joined up to suit.    The lawsuit charges breaches of the State Election Campaign Act relating to the 2021 polls. It further alleges a plot to incite unrest contributing to the 2021 storming of the U.S. Capitol.

[3.2] HOW DOES THE ENFORCEMENT ACT HOLD UP TODAY

While some clauses were deemed unconstitutional in 1883, the 1870 Force Act and the 1871 Civil Rights Act have indeed been invoked in subsequent civil rights confrontations.

The 1871 Civil Rights Act can protect individuals from state action whenever a federal right is violated. Today’s most common use is to demand that the Fourth Amendment be upheld in unreasonable search and seizure.  

The Enforcement Act was intended to give African Americans and those who supported the freedom efforts a federal cause of action, a right to a lawsuit for the deprivation of rights protected by the statute. Consequently, African-American rights activists and jurists have asserted the Enforcement Act’s applicability in the context of current issues, particularly after the insurrection at the Capitol. While the statute itself is rarely used, it is a powerful sanction against white supremacist groups.

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Sources

1. Third Ku Klux Klan Act, Civil Rights Act of 1871, or Force Act of 1871,

2. First Ku Klux Klan Act, or Ku Klux Klan Act (41st Congress, Sess. 2, ch. 114, 16 Stat. 140

3. The act developed from separate legislative actions in the House and Senate. H.R. 1293 was introduced by House Republican John Bingham from Ohio on February 21, 1870, and discussed on May 16, 1870.[5] S. 810 grew from several bills from several Senators. United States Senator George F. Edmunds from Vermont submitted the first bill, followed by United States Senator Oliver P. Morton from Indiana, United States Senator Charles Sumner from Massachusetts, and United States Senator William Stewart Nevada. After three months of debate in the Committee on the Judiciary, the final Senate version of the bill was introduced to the Senate on April 19, 1870. The act was passed by Congress in May 1870 and signed into law by United States President Ulysses S. Grant on May 31, 1870.

4. Administration supporter William E. Lansing of New York dismissed the “mischievous doctrine of State sovereignty” and cited the occurrence of “acts of outrage and violence . . . where the States where they arise have either no capacity or will to prevent.”

5. “Let all groups, divisions, and races of our societies feel that the wellbeing of the one is the welfare of the other.”.

6. Called by  Republican Senator John Scott of Pennsylvania

7. This replacement bill was signed in by Republican Representative Samuel Shellabarger from Ohio

8. 42 U.S.C. § 1983 now reads:

Every person who under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in action at law, suit in equity, or another proper proceeding for redress, except that in any action brought against a judicial officer for an act or omission taken in such officer’s judicial capacity, injunctive relief shall not be granted unless a declaratory decree was violated or declaratory relief was unavailable. For this section’s purposes, any Act of Congress applicable exclusively to the District of Columbia shall be considered a statute of the District of Columbia.

9. The overturning of Section 2 was done in the 1883 case United States v. Harris

10. now codified at 42 U.S.C. § 1986

11. Famously seen in the 1964 murders of Chaney, Goodman, and Schwerner; the 1965 murder of Viola Liuzzo; and in Bray v. Alexandria Women’s Health Clinic, 506 U.S. 263 (1993), wherein the court ruled that “The first clause of 1985(3) does not provide a federal cause of action against persons obstructing access to abortion clinics.”

DECONSTRUCTING THE FILIBUSTER

Capitol Hill

Undisputed Legal

A filibuster is a parliamentary procedure that essentially blocks a measure from being brought to a vote, most commonly being used in an attempt to delay a bill or even stop it altogether by prolonging debate on it. The filibuster method is used in the U.S. Senate to keep an account from having a vote. The Senate filibuster is a traditional legislative pause method where one or more senators try to block a bill from voting by extending the proposal’s discussion. The Senate rules authorize a senator, or a sequence of senators, to talk for as long as required or desired, on just about any issue they prefer, until ‘three-fifths of the Senators duly chosen and sworn’ (currently sixty out of 100) agree to end the debate by triggering cloture under Senate Rule XXII(22).

The Senate cloture rule, which needs sixty votes to approve most bills, is a  formidable challenge for any new president’s legislative agenda. Opinions from both sides have lobbied for changes in the midst of partisan gridlock, and the filibuster has often been central in this battle. 

[1.0] BACKGROUND

The opportunity to discuss a bill indefinitely and thereby stop a measure from progress was a by-product of a rule reform in 1806 and was seldom used until the 20th century. In 1970, the Senate modified the previous ‘two-track method to prevent indiscriminate use of the filibuster from impeding Senate business. The minority felt safer threatening filibusters more often, and as a result, sixty votes rather than forty-one became the standard needed to avoid discourse on virtually any contentious topic. As a result, the contemporary Senate has been a sixty-vote legislature, a surprising extant standard for authorizing legislation or matters.

Efforts to restrict the tradition include legislation that renders it disallowed to discuss the Senate for more than a given amount of time, such as the Congressional Budget and Impoundment Control Act of 1974. In 2013 and 2017, the Senate reduced the threshold of achievement for triggering cloture to a simple majority, but most legislature requires sixty votes.

One or more senators may occasionally hold the floor for an extended period, sometimes without the Senate leadership’s advance knowledge. However, these ‘filibusters’ usually result only in brief delays. They do not determine outcomes since the Senate’s ability to act ultimately depends upon whether there are sufficient votes to invoke cloture and proceed to a final vote on passage. However, such brief delays can be politically relevant when exercised shortly before a major deadline (such as avoiding a government shutdown) or before a Senate recess. 

[1.2] HISTORY

Using the filibuster to delay or block legislative action has a long history. The term filibuster originated from a Dutch word for pirate. The name rose to popularity in the 1850s when applied to efforts to hold the Senate floor to prevent a vote on a bill.

It was only recently that the filibuster became an option for Senators alone. In the formative days of the Congress, both delegates and senators could become involved in a filibuster. However, when the House of Representatives included more members, the revision of the House’s laws contributed to the restricting of debate. The Senate continued discussing whether the tiny Senate should allow unrestricted discussion on any topic and whether any senator should also have the freedom to talk as long as possible on every issue.

By 1917, the Senate introduced legislation (Rule 22) relying upon President Woodrow Wilson’s support to bring an end to the debate with a two-thirds majority vote. Thus, this legislation birthed the cloture rule, the use of which was at its most historically significant when the Senate called for cloture to end the filibuster against the Treaty of Versailles. Even with the revised cloture law, filibusters remained an important way of blocking bills, as it is arduous to achieve a two-thirds majority in Senate voting.  For the next five decades, the Senate has periodically attempted to use cloture but has typically struggled to win the requisite two-thirds of the vote. Filibusters became especially beneficial to Southern senators who tried to block equal rights measures, including anti-lynching legislation, until, after a sixty-day filibuster against the Civil Rights Act of 1964, the closure was invoked. In 1975, the Senate lowered the number of votes needed to be closed from two-thirds to three-fifths, or sixty of the existing hundred senators. In 1979 and 1986, the Senate further limited debate once the Senate had imposed cloture on the pending business.

Consequentially, the discussion will only be suspended on specific Senate topics if at least sixty senators accept it. This rule is not uniformly accurate, however. Although the Senate laws now need only a simple majority to enact the law ultimately, some procedural measures along the way require a supermajority of sixty votes to conclude the discussion on the legislation. 

[2.0] PROCEDURE FOR THE FILIBUSTER

Senators possess two alternatives when the time comes to cast a vote on a measure or resolution. Quite commonly, the majority leader (or another senator) requests ‘unanimous consent,’ addressing a hundred senators to identify if any one of the objects to the debate’s conclusion and a vote. If no objection has been raised, the Senate shall proceed to an option. When the majority leader cannot gain all hundred senators’ consent, the Senator who brought forth the motion for conclusion typically considers a cloture motion, which then allows Sixty votes to be taken. If less than sixty senators, the chamber’s supermajority, favor cloture, that’s when the filibuster is said to have occurred.

The extended debate is only one technique for delaying legislative action. A filibuster could also allow for [A.]anonymous holds that would allow senators to block bills or nominations that require unanimous consent of senators to be voted on [B.] continual introduction of amendments with filibustering senators reading each amendment in full, rather than waiving the right to do so, as is customary to take up time, [C. ]  lengthy roll-call votes on each amendment and other issues, using up time, [D.] quorum calls, which ascertain the number of senators present, used to delays and forced senators to return to chamber and [E.] delay of the bill’s final passage for up to two weeks even after cloture is passed. 

[2.1] EXCEPTIONS TO THE FILIBUSTER

The function of the Senate currently entails the submission of cloture motions; there are few significant exceptions. The most notable among these include promotions to executive offices and federal judgeships. Due to two constitutional amendments introduced in 2013 2017, only a simple majority is needed to complete the discussion. The second covers specific policy categories on which Congress has hitherto adopted special procedures penned in the statute itself that restrict the time for discussion. There is no real reason to invoke cloture to circumvent the debate as there is a set period of time for discussion in these situations. Special budget laws, known as the budget reconciliation process,  are most commonly thought of when considering this self-timed legislation debated. These budget processes mandate a clear majority to pass such bills concerning entitlement expenditure and revenue requirements, thus preventing the filibuster from occurring in the first instance. 

Additionally, Congress has periodically provided a  supposed ‘fast track authority for the President to negotiate international trade agreements. After the President submits a deal, Congress can then approve or deny the agreement but cannot amend it nor filibuster.

[3.0] CONSEQUENCES AND PROCEDURE IN THE EVENT OF ELIMINATING THE FILIBUSTER

Indeed, the most direct approach to abolishing the filibuster would be to officially modify the text of Rule 22 of the Senate since it exists as the sanctioning cloture rule responsible for the mandate of sixty votes to conclude the parliamentary debate. However, a major issue with amending Rule 22 is that shelving the debate on a motion to amend the Senate’s standing rules cannot move forward without the approval of two-thirds of the Senate members in their full legislature capacity ( being present and voting). In the absence of a broad, bipartisan Senate majority favoring a restriction in the right to debate, a formal amendment to Rule 22 is exceedingly dubious, although the most comfortable way forward on paper.

The development of a new Senate precedent to ban the filibuster will likely be a more grueling journey. In addition to its formal guidelines, the Chamber’s precedents give further insight into how and why the rules have been implemented in different ways. Crucially, in certain cases, that solution to eliminating the filibuster- colloquially recognized as the ‘nuclear option’ but more formally classified as the ‘reform by the ruling’- can only be deployed by using the help of a simple majority of senators.

The nuclear choice integrates the premise that a new precedent may be set by a senator introducing a point of order or arguing that a Senate law is being abrogated in its effect. Upon approval by the president officer (usually a member of the Senate), the vote sets a new precedent. If the president officer disagrees, their decision may also be d challenged. If the majority of the Senate votes to revoke the Chair’s decision, the reverse of the Chair’s decision will become a new precedent.

In a procedural twist, the Senate used this approach in 2013 and 2017 to reduce the number of votes needed to debate nominations.  Through an ingenious use of the point of order system, the majority leader put forth the nominations via non-debatable motions. However, they thereinafter vocalized the point of order, citing that the cloture vote needed the majority vote that violated the principle of the non-debatable movements. The presiding officer ruled against the end of the charge, but the ruling was overturned on appeal. Interestingly, the request that overturned the ruling also required only a majority in support. The parliamentary procedure can thereinafter be used in a manner to phase out the filibuster procedure. 

[3.1] REDUCING THE EFFECTIVENESS OF THE FILIBUSTER

The Senate could still try to undermine the filibuster before wholly banning it. A Senate majority may trigger a less-radical version of the nuclear plan that prohibits filibusters on individual motions but otherwise retains the sixty-voting law unaffected. A majority in the Senate might prohibit senators from filibustering a motion responsible for a  bill to commence (known as the motion to proceed).  Hence, senators’ ability to filibuster the new account or amendment will be retained while essentially shutting out the supermajority hurdle for beginning a vote on a statutory proposal.

The principle of supermajority has made it extremely difficult, frequently inconceivable, for Congress to implement anything but the least contentious bills in recent years. The quantum of bills approved by the Senate has significantly plummeted. Meanwhile, voter acceptance of Congress as an entity has nosedived, with major components of the community viewing the institution as ineffective. Changing majorities of both parties and their supporters have also been unsuccessful in achieving core legislative goals expressed in electoral campaigns since these goals cannot be realized after the election. An example that most clearly highlights the situation was when the Democratic Party, despite their substantial majority in the 111th Congress, still had to withdraw the Affordable Care Act’s ‘public option’ clause because senator-Joe Lieberman of Connecticut had threatened to filibuster the bill if it stayed.

There is also no objective formula to quantify the extent to which the filibuster is still employed through the years. Senators are not allowed to officially register their opposition to the conclusion of the debate until a cloture resolution is finally put to the ballot. If Senate leaders recognize that at least 41 senators expect to reject a cloture vote on a particular bill or motion, they frequently opt not to schedule it for debate on the floor. But the number of cloture movements filed is a convenient metric for the calculation of filibusters. The number of such activities has risen dramatically in the 20th and 21st centuries after the popularisation of the filibuster’s second life.

For information on serving legal papers, contact our process service department at (800) 774-6922. Representatives are available Monday-Friday 8 am – 8 pm EST.  If you found this article helpful, please consider donating.  Thank you for following our blog, A space dedicated to bringing you news on breaking legal developments, interesting articles for law professionals, and educational material for all. We hope that you enjoy your time on our blog and revisit us!  We also invite you to check out our Frequently Asked Questions About Process Servers by clicking here.

Sources

1. At times, the ‘nuclear option’ has been proposed to eliminate the sixty vote threshold for certain matters before the Senate. The nuclear option is a parliamentary procedure that allows the Senate to override one of its standing rules, including the sixty-vote rule to close debate, by a simple majority (51 votes if all 100 senators are present) than the two-thirds supermajority typically required to amend the controls.

2. On November 21, 2013, by overturning a ruling of the chair on appeal, the Senate set a precedent that lowered the vote threshold required by Senate Standing Rule XXII for invoking cloture on most presidential nominations. The precedent did not change the text of Rule XXII of the Standing Rules; instead, the Senate established a precedent reinterpreting the provisions of Rule XXII to require only a simple majority of those voting, rather than three-fifths of the full Senate, to invoke cloture on all presidential nominations except those to the U.S. Supreme Court.

3. “Vote on S. Con. Res. 3, 115th Congress”. U.S. Senate.

The Senate passed the FY17 budget resolution that included reconciliation instructions for health care reform by a 51–48 vote on January 12, 2017, and by the House on a 227–198 option the following day. The House later passed the American Health Care Act of 2017 as the FY17 budget reconciliation bill by a vote of 217–213 on May 4, 2017

4. Budget reconciliation is a procedure created in 1974 as part of the congressional budget process. In brief, the annual budget process begins with adopting a budget resolution (passed by a simple majority in each house, not signed by the President, does not carry the force of law) that sets overall funding levels for the government. The Senate may then consider a budget reconciliation bill, not subject to filibuster, that reconciles funding amounts in any annual appropriations bills with the amounts specified in the budget resolution. However, under the Byrd rule, no non-budgetary ‘extraneous matter’ may be considered in a reconciliation bill. The presiding officer, always relying (as of 2017) on the Senate parliamentarian’s opinion, determines whether an item is extraneous, and a sixty-vote majority is required to include such material in a reconciliation bill.

5. Beginning in 1975 with the Trade Act of 1974, and later through the Trade Act of 2002 and the Trade Preferences Extension Act of 2015,

6. The Senate’s Standing Rules are the parliamentary procedures adopted by the United States Senate that govern its operation. The Senate’s power to establish rules derives from Article One, Section 5 of the United States Constitution: ‘Each House may determine the management of its proceedings…

7. At the 85th Congress in 1957-59, more than 25 percent of all bills proposed by the Senate were eventually enacted; by 2005, the number had fallen to 12.5 percent, and by 2010, only 2.8 percent of the bills introduced became law—a 90 percent decline from the previous 50 years