Category: Law

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Law that allows owners of property that lies on border between school districts to choose school does not apply to condominiums, court rules

A New York law that allows the owner of property intersected by a boundary between two school districts to choose which school to send their children to does not apply to condominiums, a state appeals court in Brooklyn has ruled.

The decision means that owners of apartments in a 28-unit building in Bronxville cannot enroll their children in schools in Tuckahoe public schools, a top system in Westchester County.

Owners of apartments in the building testified at trial that they paid school taxes to Tuckahoe for nearly three decades and relied on representations from officials in the district that the right to select their school was available to them. The jury sided with the owners but the trial judge, at the urging of the district, set the verdict aside and entered judgment in the district’s favor.

The ruling on appeal turned on interpretation of New York’s education law, which denotes two circumstances when a homeowner may choose their child’s school: when a boundary between districts divides a dwelling or when the boundary crosses property that an owner-occupied single-family home is located on.

The owners alleged that the boundary crossed property that the condo association owned in common. (The boundary did not, they acknowledged, run through their individual units.) That led the appeals court to side with the district.

“Here, the plain language [of the law] and its legislative history demonstrate that the statute is applicable only where property is improved by one single family dwelling unit, and not multiple single family dwelling units, and where the school district boundary line intersects property that the dwelling unit is located on,” wrote Justice Cheryl Chambers on behalf of the Appellate Division’s second judicial department in a decision dated July 20. “The [trial court] properly determined that the subject 28-unit condominium complex is not ‘an owner-occupied single family dwelling unit’ located on property intersected by a boundary line within the meaning of [the law].”

The court also rejected the owners’ contention that they relied to their detriment on representations of district officials, finding no basis for concluding that district officials had engaged in any “wrongful or negligent conduct” or otherwise misled the owners.

The ruling may have consequences for the value of the owners’ apartments. Tuckahoe, which sites between White Plains to the north and New York City to the south, is one of the state’s safest cities, according to a survey last year by ValuePenguin, a personal finance website, which also noted Tuckahoe’s walkability and commuter-friendliness.

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What the DNC hacking says about the need for campaign finance reform

The hacking of computers at the Democratic National Committee (DNC) and the publication of internal emails that followed may reveal as much about problems with our system of paying for political campaigns as it does about cybersecurity.

With its signs of complicity by Russia, the resignation of the DNC’s chairwoman, sounding off by Donald Trump, shades of the Watergate scandal and the widening scope of the intrusion, the incident leaves plenty to ponder. Add to that list the reality that our politics are overpowered by money.

The roughly 19,000 messages published by WikiLeaks show the lengths to which staff at the DNC went in their courting of benefactors, with offers of access, appeals to ego and flashes of desperation all intended to spur people to give. As the Times reported, the emails reveal “in rarely seen detail the elaborate, ingratiating and often bluntly transactional exchanges necessary to harvest millions of dollars from the party’s wealthy donor class.”

Republicans do it, too. Both parties chase wealthy supporters because a series of rulings by the Republican majority of the Supreme Court allow it and leave the parties with little incentive not to.

The pursuit has intensified since 2010, when the majority in Citizens United v. Federal Election Commission construed spending on political campaigns to be a form of speech entitled to protection under the First Amendment. Four years later, in McCutcheon v. Federal Election Commission, the same justices invalidated aggregate limits on contributions to candidates for federal office, political parties and political action committees.

The DNC emails show how the court’s elevating the First Amendment rights of donors over those of our democracy misconstrues the former and warps the latter. As Bert Neuborne, a professor of constitutional law at New York University Law School, asserts in his book, “Madison’s Music,” the failure (or refusal) of the majority to read the Bill of Rights as the Virginian wrote it has created the current reality by unmooring the Free Speech Clause from the rest of the First Amendment.

As Neuborne sees it, political contributions fall into a category of communication to which the the court has accorded less protection under the First Amendment than speech itself. He writes:

“The term ‘the freedom of speech’ as used in Madison’s First Amendment has no intrinsic literal meaning. Like any abstract legal concept, it must be given meaning by human judgment. That’s why threats, blackmail, extortion, false statements causing harm, obscenity, and ‘fighting words’ are treated by the Court as outside ‘the freedom of speech.’”

Because the act of spending money is communicative conduct and not pure speech, Congress can place reasonable limits on spending. The government also can recognize that “reinforcing political equality is unquestionably a substantial government interest,” according to Neuborne, and, therefore, a legal basis for limits on campaign finance.

Justice Breyer has argued as much. In his dissent in McCutcheon, Breyer explained that campaign finance laws “are rooted in the constitutional effort to create a democracy responsive to the people – a government where laws reflect the very thoughts, views, ideas, and sentiments, the expression of which the First Amendment protects.”

The solution lies with the court, which means that it lies with the next president. She or he may fill as many as four vacancies on the court as justices age or retire. In her speech on Thursday to the Democratic National Convention, Hillary Clinton pledged to appoint justices “who will get the money out of politics and expand voting rights, not restrict them.” She also has promised to pursue a constitutional amendment to overturn Citizens United.

Though he has railed against political action committees, Donald Trump has said he would nominate conservatives to the court in the mold of the late Justice Antonin Scalia, who constituted one-fifth of the majority whose rulings abrogated limits on campaign spending and touched off the free-for-all that the emails from the DNC chronicle.

Meanwhile, the status quo endures. At the Ritz-Carlton in Philadelphia on Tuesday, former Governor Charlie Crist of Florida, a onetime Republican who is now running as a Democrat for Congress, moved through the lobby amid a sea of the party’s top givers. “We must have set up five fundraisers today,” he told the Times. “This is the bank.”

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Law

Sanders supporters lose bid to block superdelegates

A dearth of superdelegates (Photo: Jeff Solari, Wikimedia Commons)
A dearth of superdelegates (Photo: Nick Solari, Wikimedia Commons)
Supporters of Senator Bernie Sanders have lost their bid to block the Democratic Party’s use of superdelegates at this week’s convention in Philadelphia.

The First Amendment does not give individual members a right to control internal processes of the party, which is expected to nominate Hillary Clinton for president, a U.S. district court in Manhattan ruled recently in a challenge filed by Jeff Kurzon, an attorney and Sanders supporter.

Kuzon charged in court paper’s that the party’s use of superdelegates dilutes the power of the popular vote and sought a court order that would bar them from voting at the convention. The Democratic Party has 713 superdelegates, who include members of Congress and party leaders, and who can vote for the candidate of their choice. Clinton leads Sanders among superdelegates, 602-48.

“An individual’s First Amendment associational rights do not empower him to compel nomination procedures that guarantee his preferred candidate a ‘fair shot’ at winning a party’s nomination,” Judge Paul Oetken wrote in a ruling dated July 18.

Oetken, who noted that the party has “countervailing First Amendment rights – which would be clearly infringed by the injunction that Kurzon seeks in this case,” also rejected a contention by Kurzon that weighting the votes of superdelegates as the Democrats do violates party members’ rights to equal protection of the law. The prohibition on valuing one person’s vote over another does not apply to party nominating conventions, Oetken said.

The court disagreed with Kuzon that use of superdelegates constitutes a breach of contract. Even if rules for selection of delegates could be construed as an enforceable contract, they “are suffused throughout with references to the role of superdelegates and clearly permit their use,” wrote Oetken.

Because of the unlikelihood that Kuzon could succeed on the merits of his challenge, the court declined to determine whether the actions of a national political party constitute state action – a “difficult question,” according to Oetken and a prerequisite for Kuzon to have prevailed on his constitutional claims.

Eighty-five percent of the Democratic Party’s delegates to the convention are pledged, which means they are required to vote for a particular candidate based on the result of their state’s primary or caucus. The remainder are superdelegates.

The party’s rules committee, at the urging of Sanders’ supporters, agreed on Saturday to narrow the pool of superdelegates to elected officials within the party in future nominating contests

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The deaths of Alton Sterling and Philando Castile remind us of the stakes of being stopped

I started writing this post before the deaths of Alton Sterling and Philando Castile, black men who were fatally shot last week by police in the name of public safety. But their deaths underscore the subject, which is the high stakes of unlawful stops by police.

Sterling appears to have been pinned to the ground by officers in Baton Rouge when one of them shot him. The circumstances of his death resembled those of Eric Garner, a black man who died two years ago in a police chokehold while being arrested on Staten Island.

Garner died at the hands of police while being arrested for selling loose cigarettes. Sterling was selling CDs outside a food mart. The store’s owner reportedly considered Sterling a friend.

As Emily Badger at Wonkblog notes, both men died while hustling. “In the days after Garner’s death,” writes Badger, “mourners kept juxtaposing the scale of that misdemeanor with what happened next: How could a few loosies justify a response so forceful it snuffed out a grown man’s life?”

The deaths of Garner, Sterling, Castile and too many others, underscores the stakes for all of us, but particularly for people of color, of being stopped by police.

Three years ago, Judge Shira Scheindin of the U.S. District Court in Manhattan invalidated a program of the city’s police department that authorized officers to stop mostly black or Latino residents of the city who happened to be leaving privately owned apartment buildings in the Bronx.

The stops lacked a legal basis, ruled Judge Scheindlin, who observed that the consequences of a conviction, which, after all, can follow from an arrest, have become more severe over the nearly 50 years since the U.S. Supreme Court held that the Fourth Amendment applies to so-called stop-and-frisk procedures. A criminal record can render you unable to obtain a job, rent an apartment, obtain government benefits or, in some states, serve on a jury or vote, she noted.

Justice Sonia Sotomayor reminded us of that recently when she dissented from a ruling by a majority of the court that evidence discovered by police during an illegal stop can nevertheless be admitted in a subsequent criminal trial of the person stopped if the person happened to have an outstanding warrant for his or her arrest.

In short, you can be stopped illegally – in violation of your constitutional rights – and if there happens to be a warrant pending for your arrest, the law will overlook the unlawfulness of the stop.

The case before the court concerned an appeal by Edward Strieff, a white man from Salt Lake City, who six years ago left a house that was under surveillance by police who had received a tip that the occupants were dealing drugs. Detective Douglas Fackrell watched Strieff walk toward a convenience store nearby. In the store’s parking lot, Fackrell stopped Strieff, identified himself and asked Strieff what he was doing at the house.

As part of the arrest, Fackrell asked Strieff for identification, which Strieff produced. Fackrell relayed the information to a police dispatch, who reported that Strieff had an outstanding arrest warrant for a traffic violation. Fackrell then arrested Strieff for that violation. When the officer searched Strieff incident to the arrest – a basic precaution when arresting someone – he discovered a baggie of methamphetamine and drug paraphernalia.

The state charged Strieff with unlawful possession. Strieff sought to suppress the evidence, which he asserted was inadmissible because it was derived from an unlawful stop – that Fackrell had no legal basis for detaining Strieff in the first place. At a hearing on whether to suppress the evidence (because of the illegal stop), the prosecution conceded that the stop was unlawful, but argued that the evidence should be admitted because the existence of a valid arrest warrant lessened the connection between the unlawful stop and the discovery of the drugs.

A trial judge agreed with the state, ruling that the short time between the illegal stop and the search weighed in favor of suppressing the evidence but that the existence of a valid warrant constituted an extraordinary intervening circumstance. The judge also noted that Fackrell, who had been conducting a legitimate investigation of a suspected drug house, had not engaged in flagrant misconduct.

The Utah Supreme Court reversed, holding that the evidence was inadmissible because only a voluntary act by Fackrell – such as his confessing or consenting to the search – could have severed the connection between an illegal search and the discovery of evidence.

A majority of Justice Sotomayor’s colleagues disagreed, holding that the evidence discovered on Strieff was admissible because the unlawful stop was sufficiently weakened by the preexisting warrant. Writing for the majority, Justice Clarence Thomas explained:

“The outstanding arrest warrant for Strieff’s arrest is a critical intervening circumstance that is wholly independent of the illegal stop. The discovery of that warrant broke the causal chain between the unconstitutional stop and the discovery of evidence by compelling Officer Fackrell to arrest Strieff. And, it is especially significant that there is no evidence that Officer Fackrell’s illegal stop reflected flagrantly unlawful police misconduct.”

Reread that last sentence. There is no evidence that the officer’s illegal action was flagrantly unlawful.

Huh.

According to Justice Sotomayor, the decision raises a principle at the core of the Fourth Amendment: that two wrongs don’t make a right. The alternative – that the warrant somehow rights the wrong – she wrote, is “a remarkable proposition.”

What’s more, she noted, the reasoning by the majority threatens to give police an incentive to stop suspects illegally because outstanding warrants are common.

Citing the Justice Department’s investigation of the town of Ferguson, Missouri following the fatal shooting of Michael Brown, an 18-year-old black man, by a white police office who had stopped him (and who may or may not have had probable cause to stop Brown), Justice Sotomayor noted that Ferguson, with a population of 21,000, had 16,000 people with outstanding warrants against them. In one year in New Orleans, she observed, officers made nearly 60,000 arrests, of which about 20,000 were of people with outstanding traffic or misdemeanor warrants from neighboring parishes for such infractions as unpaid parking tickets. She cited data from Utah that shows the state lists more than 180,000 misdemeanor warrants in its database.

Unlawful stops “have severe consequences much greater than the inconvenience suggested by the name,” she wrote. “Although many Americans have been stopped for speeding or jaywalking, few may realize how degrading a stop can be when the officer is looking for more,” she added. And, she explained:

Even if you are innocent, you will now join the 65 million Americans with an arrest record and experience the ‘civil death’ of discrimination by employers, landlords, and whoever else conducts a background check… And, of course, if you fail to pay bail or appear for court, a judge will issue a warrant to render you ‘arrestable on sight’ in the future.

Think about how fortunate you are if you’ve never been arrested. Even if you’ve never so much as jaywalked, you might have stood in the wrong place at the wrong time, or been mistaken for someone else and arrested by accident. And that alone might change the trajectory of where you work or where (or whether) you live.

As Justice Sotomayor, who grew up in public housing in the Bronx, noted, the appeal by Strieff involved a stop in which the officer, by arresting Strieff without justification, set in motion a series of events that led to Strieff’s conviction.

“The white defendant in this case shows that anyone’s dignity can be violated in this manner,” she wrote. “But it is no secret that people of color are disproportionate victims of this type of scrutiny.”

She continued, “For generations, black and brown parents have given their children ‘the talk’ – instructing them never to run down the street; always keep your hands where they can be seen; do not even think of talking back to a stranger – all out of fear of how an officer with a gun will react to them.”

The majority’s ruling, wrote Justice Sotomayor:

“… legitimizes the conduct that produces this double consciousness” and “tells everyone, white and black, guilty and innocent, that an officer can verify your legal status at any time. It says that your body is subject to invasion while courts excuse the violation of your rights. It implies that you are not a citizen of a democracy but the subject of a carceral state, just waiting to be cataloged.”

To Justice Sotomayor, the people who are targeted routinely by police are “canaries in the coal mine whose deaths, civil, and literal, warn us that no one one can breathe in this atmosphere. They are the ones who recognize that unlawful police stops corrode all our civil liberties and threaten all our lives. Until their voices matter too, our justice system will continue to be anything but.”

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The Gawker-Hulk Hogan matchup reveals as much about paying for lawsuits as it does about winning them

The battle between Gawker Media and Hulk Hogan may say as much as about paying for lawsuits as it does about winning them.

The company filed on Friday for Chapter 11 bankruptcy as part of a move to finance its appeal of a verdict in March that awarded the former pro wrestler $140 million for Gawker’s allegedly violating his privacy when it published a sex tape of him.

Peter Thiel, a billionaire co-founder of PayPal, bankrolled the lawsuit. Nine years ago, Gawker reported that Thiel is gay before – Thiel maintains – he had declared his sexuality publicly. The report continues to rankle, based on Thiel’s funding lawsuits against Gawker. Thiel says he’s “fighting back” on behalf of himself and others whom Gawker allegedly attacked. For its part, Gawker maintains that Thiel was out to his friends already by the time of Gawker’s piece.

The bankruptcy gives Gawker a mechanism to pay its legal bills, though it may result in the company’s managing partners relinquishing their ownership. The filing begins a court-supervised auction of Gawker’s assets, which include seven websites – among them Deadspin, Gizmodo and Lifehacker – that together had 44.4 million unique visitors in April. Ziff-Davis, a media company, has started the bidding at $90 million.

Both Thiel’s backing and Gawker’s filing shed light on some of the ways to raise capital for claims, though Thiel’s paying the Hulkster’s legal bills has produced consternation among commenters who see in the sponsorship an effort to punish the press.

“It’s a terrifying development for those of us who value a free, democratic media,” wrote Caterina Fake, a co-founder of the photo-sharing site Flickr, wrote on Quartz, referring to Thiel’s backing Hogan. “The laws of capitalism allow—and encourage!—the destruction of one company by another,” wrote Politico’s Jack Shafer, “But the proper jousting grounds for this sort of battle is the marketplace, not the courts.”

Ken Doctor, who analyzes the business of media, told the Financial Times that the financial pressures that led Gawker to file for bankruptcy will “make it even harder for the news media to grow, be profitable, and hold the powerful accountable.”

Still, as a matter of law or journalism there may be little to worry about. Despite the dustup over Thiel’s backing Hogan, the practice of financing other people’s lawsuits is completely legal. Litigants have long funded their claims with other people’s money, which can help to ensure your day in court when the stakes warrant pursuing a claim that exceeds the limits of your pocketbook.

In a story last fall for the Times’ magazine, Mattathias Schwartz chronicled the litigation-finance industry. He reported:

While the amount of litigation funded by outside financiers is still relatively small, the industry — which barely existed outside personal-injury cases until the mid-2000s — is growing rapidly, driven by increasingly permissive laws, the promise of high returns and hourly billing rates that run $500 or more for the largest and most sophisticated law firms.

As Eugene Kontorovich, who teaches law at Northwestern, wrote in The Washington Post following the revelation that Thiel financed Hogan, common law doctrines that prohibited recruiting or sponsoring others for litigation have drifted away over time. “Anyone who donates to the ACLU or a Legal Aid fund is basically underwriting third-party litigation,” he noted.

The chill that some commenters worry could come over newsrooms following the brushback by Thiel seems unlikely to materialize. Kontorovich reminds readers that regardless who pays the legal bill, “a court must also find the defendant liable, award damages and have it sustained on appeal.”

In short, you still have to prevail on the merits. And this battle is far from over.

“For all… the furor over Hogan’s case, there’s nothing especially novel about courts balancing privacy and First Amendment interests,” Alison Frankel at Reuters wrote in March. “Generally, the U.S. Supreme Court has concluded that in matters of public importance, the First Amendment trumps privacy.”

The “judgment was totally out of the range of any normal judgments of the last few years,” George Freeman, executive director of the Media Law Resource Center, told the FT.

In January, Gawker sold a minority stake to investment firm Columbus Nova as part of a plan to capitalize itself to defend against Hogan’s lawsuit. If Gawker prevails, the company’s owners could in theory buy back all or part of the company, depending on what they negotiate with the winning bidder in bankruptcy.

“To those who have offered support, thank you,” Gawker CEO Nick Denton wrote in a post published on Wednesday. “Gawker will be just fine, both in business and in spirit.”

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How the end of campaign finance limits paved the way for Donald Trump’s presidential bid

The presidential campaign now underway is making history for at least one reason besides the prospect of the first woman or a star of reality TV becoming the nation’s chief executive.

The campaign also marks the coming online of a series of rulings by the Supreme Court, beginning with the court’s decision in Citizens United six years ago, that enable groups aligned with candidates to accept unlimited donations.

Hillary Clinton has raised a total of $296 million, of which 29% has come from super PACs allied with her, as of March 31. For all her financial fortitude, the money impairs Clinton’s inability to gain traction among Democrats (and, possibly, in a general election, among independents) who harbor antipathy toward the establishment, which all those super PAC dollars represent.

Bernie Sanders, Clinton’s Democratic rival, disavows support from super PACs, though some outside groups still support him. Donald Trump, the GOP nominee, also has criticized candidates who get support from super PACs though he has said that Republicans will need to raise $1 billion to compete against Clinton.

Writing in February in The Atlantic, Ron Brownstein noted that both Trump and Sanders address the yearnings of those who feel shut out of the political process. Among people who were likely to vote in the Republican primary, nearly 87% preferred Trump if they agreed with the statement that people like them have no say about what the government does, according to a survey in December and January by the RAND Corporation.

That brings us back to the Supreme Court, and specifically to a ruling two years ago in McCutcheon v. Federal Election Commission. The case came before the court on an appeal by Shaun McCutcheon, a businessman and electrical engineer from Alabama, who in the 2011-2012 election cycle contributed a total of $33,088 to 16 different federal candidates as permitted by law.

McCutcheon alleged on appeal that he wished to contribute $1,776 to each of a dozen additional candidates but was barred from doing so by an aggregate limit of $48,600 that he challenged as unconstitutional under the First Amendment.

He also asserted that he contributed a total of $27,328 to several political committees not associated with any particular candidate and that he wished to contribute additional amounts to the Republican National Committee and other groups but was blocked by an aggregate limit on contributions to political committees, again, McCutcheon charged, in violation of the First Amendment.

The RNC and McCutcheon filed suit in the U.S. District Court for the District of Columbia, challenging the constitutionality of the aggregate limits.

There a three-judge panel rejected the contention, characterizing the base limits and the aggregate limits “as a coherent system rather than merely a collection of individual limits stacking prophylaxis upon prophylaxis.”

Assuming that the base limits served the government’s interest in preventing corruption – an interest that could survive scrutiny under the First Amendment – the aggregate limits also survived scrutiny because they prevented an end-around of the base limits.

A majority of the Supreme Court, where McCutcheon and the RNC appealed next (federal law allows for direct appeals in such cases) disagreed. Chief Justice John Roberts, writing for the majority, reasoned that the decision by Congress to limit to $5,200 contributions to any one candidate made sense because it reflected a judgment by legislators that giving a candidate more might risk corruption, as in giving or receiving something in return for something else.

But the aggregate limit served no such purpose, according to the majority. “If there is no corruption concern in giving nine candidates up to $5,200 each, it is difficult to understand how a tenth candidate can be regarded as corruptible if given $1,801, and all others corruptible if given a dime,” asserted Roberts, who continued:

The Government has a strong interest, no less critical to our democratic system, in combatting corruption and its appearance. We have, however, held that this interest must be limited to a specific kind of corruption – quid pro quo corruption – in order to ensure that the Government’s efforts do not have the effect of restricting the First Amendment right of citizens to choose who shall govern them.

But the majority defined corruption too narrowly, argued Justice Breyer, who filed a dissenting opinion on behalf of himself and Justices Ginsburg, Sotomayor and Kagan. The First Amendment, he explained, “advances not only the individual’s right to engage in political speech, but also the public’s interest in preserving a democratic order in which collective speech matters.” (emphasis in original)

Viewed that way, corruption “breaks the constitutionally necessary ‘chain of communication’ between the people and their representatives,” Justice Breyer wrote. “Where enough money calls the tune, the general public will not be heard.”

And then the dissent anticipated the phenomenon of voters feeling shut out of their democracy that can give rise to a figure like Trump. According to Justice Breyer:

“The ‘appearance of corruption’ can make matters worse. It can lead the public to believe that its efforts to communicate with its representatives or to help sway public opinion have little purpose. And a cynical public can lose interest in political participation altogether.”

As the minority saw it, regulation of campaign finance rests on a rationale that’s broader than the majority’s concern with public officials who might be tempted to sell their votes. Such laws “are rooted in the constitutional effort to create a democracy responsive to the people – a government where laws reflect the very thoughts, views, ideas, and sentiments, the expression of which the First Amendment protects,” Justice Breyer wrote.

In short, the First Amendment protects speech but it protects democracy, too. By constraining its view of the amendment, the majority legalized the idea that democracy yields to money which, if you accept the premise, is a form of speech. From there draw a line directly to voters who feel disenfranchised. Trump is not the only candidate who speaks to such voters – Sanders does, too, from the left – but Trump got to many of them first.

Writing on Scotusblog a day after the decision in McCutcheon, Burt Neuborne, a professor of civil liberties at NYU, asserted that promotion of political equality can justify some limits on spending by the very rich.

Preventing corruption, wrote Neuborne, “means the preservation of a democracy where the governed can expect their representatives to decide issues independently, free from economic serfdom to their paymasters. The road to 2016 starts here.”

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Fairness requires sister to honor promise to brother: Court

A battle between siblings over their mother’s estate shows that you can hold someone to their promise if you rely in good faith on that person’s word to your disadvantage, a state appeals court in Manhattan has ruled.

The ruling reinstates a lawsuit by Peter Castellotti to force his sister Lisa to give him half of John’s Pizza in Midtown and other assets she inherited from their mother Madeline.

After Madeline’s death in 2005, Peter and Lisa orally agreed that Peter would pay the taxes on Madeline’s estate with his share of the proceeds from a life insurance policy held by Madeline. In exchange, Lisa promised to give Peter half the inheritance after his divorce from his then-wife Rea and half the income and proceeds generated from the estate before the divorce was final.

After she became ill, Madeline disinherited Peter to prevent Rea from obtaining any of her assets, which besides the pizzeria included a 51% stake in a real estate partnership, a house on Staten Island and funds held in various bank accounts.

Lisa allegedly also agreed to obtain a $5 million life insurance policy that named Peter as beneficiary and to maintain that policy until she transferred the assets to Peter.

After Lisa let the insurance policy lapse in May 2012, Peter sued for breach of contract, charging her with failing to transfer half of Madeline’s assets to him after his divorce became final in November 2008. Lisa countered that Peter’s claim was barred by New York’s statute of frauds, which requires that an agreement to name a beneficiary of a life insurance policy be in writing.

The trial court sided with Lisa and dismissed the case after ruling that because part of the contract was invalidated by the statute of frauds, the entire contract was void. The appeals court disagreed. Associate Justice Rosalyn Richter, writing for the panel, explained:

Here, the allegations of the complaint show an unambiguous promise by Lisa to provide Peter with half of the income generated by the assets during the pendency of Peter’s divorce, to transfer half of the assets upon the finality of the divorce, and to name Peter as sole beneficiary of a life insurance policy of at least $5 million. The complaint’s allegations also show that Peter detrimentally relied on those promises by paying a substantial amount in taxes for Madeline’s estate, and suffered resulting monetary damages.

According to Richter, the trial court properly rejected an assertion by Peter that his paying the taxes on the estate meant that the statute of frauds did not apply.

Still, fairness compelled the court to reinstate the court case. “The theory of unjust enrichment is not precluded by the statute of frauds because it is not an attempt to enforce the oral contract but instead seeks to recover the amount by which Lisa was enriched by Peter’s expense,” Richter explained.

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The last word (for now) on NSA data collection

Saturday marked the end of the National Security Agency’s gathering information about the phone calls of millions of Americans indiscriminately.

A law passed over the summer overhauled the government’s authority to collect so-called telephone metadata with a framework that provides for phone companies to hold such records subject to the government’s obtaining an order from the Foreign Intelligence Surveillance Court that authorizes their release.

The change, embodied in the USA Freedom Act, originated with revelations by Edward Snowden that the government was collecting phone records of Americans in bulk and randomly. The law gave the government 180 days, until Nov. 29, to comply.

In a ruling on Nov. 9 that held such collections likely unconstitutional, Judge Richard J. Leon of the U.S. District Court for the District of Columbia noted that the end of bulk collection would not be “the last chapter in the ongoing struggle to balance privacy rights and national security interests under our Constitution in an age of evolving technological wizardry.”

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Why New York’s attorney general has a case against DraftKings and FanDuel

New York Attorney General Eric Schneiderman made news on Tuesday when he ordered FanDuel and DraftKings to stop accepting wagers in the state.

Both of the daily fantasy sports sites allegedly run afoul of New York law, which prohibits bookmaking that profits from illegal gambling activity, according to Schneiderman.

The cease-and-desist order adds to the scrutiny faced recently by both leagues, which call their contests games of skill, citing as support a federal law passed in 2006 that excludes fantasy sports from the definition of the term “bet” or “wager.”

Schneiderman’s office thinks otherwise. In a letter to FanDuel (a nearly identical version went to DraftKings), Kathleen McGee, chief of the attorney general’s Internet bureau, wrote:

“Our review concludes that FanDuel’s operations constitute illegal gambling under New York law, according to which, ‘a person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence.’

FanDuel’s customers are clearly placing bets on events outside of their control or influence, specifically on the real-game performance of professional athletes. Further, each FanDuel wager represents a wager on a ‘contest of chance’ where winning or losing depends on numerous elements of chance to a ‘material degree.’”

The Empire State classifies as gambling games that involve a significant amount of chance. As David Apfel and Andrew Kim of the law firm Goodwin Proctor noted in a column last April, most fantasy contests involve some element of chance. The degree matters.

The federal law that excepts fantasy leagues from the definition of Internet gambling does nothing to upend state laws that prohibit, allow, or regulate gambling, leaving the leagues to navigate the variations in laws governing gambling in each state.

Currently DraftKings, FanDuel, and other fantasy sites operate in 45 states that allow games with some element of chance so long as skill predominates.

But elements of daily fantasy sports—significantly both the dailiness and fact that prizes vary with the number of participants—suggest that chance may outweigh skill in the outcome. According to Apfel and Kim:

“Many states distinguish between entry fees and bets, and have a clear law stating that paying to play in a game or contest for a prize is perfectly lawful, provided the prize has nothing to do with the number of entrants. Where a game’s prize is set in advance and does not turn on how many individuals enter the game, these states permit the game to proceed. But where prizes consist of a percentage of the entrance fees or are otherwise dependent in whole or in part on the number of participants, the laws in these states treat the otherwise benign entry fees as illegal bets or wagers.”

The frequency of the contests suggests that playing daily fantasy is less about drafting well—a skill that tests entrants’ ability to size up the skills of players they draft for their fantasy teams, an activity akin to what professional sports teams do as part of their business—than about luck.

Dustin Gouker, who covers the daily fantasy industry for Legal Sports Report, put it this way recently:

“There are thousands of contests that you can choose to enter on a variety of sites, with entry fees from 25 cents to thousands of dollars. Those buy-ins are how daily fantasy sites make money; they take a percentage of each entry fee. The biggest contests routinely pay out millions of dollars.

Does it sound like gambling, on its face? Gambling can be defined as wagering money on an uncertain outcome — like, say, a last-minute fumble that wins a player more than a million dollars. Sure sounds like daily fantasy fits the bill.”

A lot of money rides on the distinction. FanDuel and DraftKings each are valued at more than $1 billion and count among their investors the NBA, NBC Sports, Google, and Time Warner/Turner Sports (FanDuel), and Major League Baseball; Robert Kraft, who owns the New England Patriots; Jerry Jones, owner of the Dallas Cowboys, and Fox Sports (DraftKings).

Together the companies have 1.1 million active players in the Empire State, which houses 12.8% of the fantasy sports market, according to the Times. Being shut out of New York would cost the leagues a combined $35 million in revenue per year.

Then there’s the ad spending. FanDuel and DraftKings have spent more than $220 million since August, as anyone who has watched sports on TV or the Internet during that time knows. Fox Sports’ investment in DraftKings came with a promise by the fantasy site to spend $250 million on ads with the network over the next three years.

Judging by their investments, the investors thus far have concluded that benefits of backing the companies outweigh the risks. For the leagues, daily fantasy sports translate to viewers for games. Nearly two-thirds of daily fantasy players say they watch more live sports as a result of fantasy play, according to the Fantasy Sports Trade Association, an industry group.

Both DraftKings and FanDuel are pushing back against the charges by Schneiderman. DraftKings said in a statement it “will examine and vigorously pursue all legal options available” to continue operations in the Empire State, and accused the attorney general of failing to “understand our business or why daily fantasy sports are clearly a game of skill.”

“Fantasy sports is a game of skill and legal under New York State law,” echoed FanDuel.

Of course, a larger threat to the companies may come less from what happens in New York and more from what happens if other states follow Schneiderman’s lead. Last month, regulators in Nevada ordered daily fantasy sites to stop accepting wagers until they obtain a gambling license. The Department of Justice reportedly is investigating the sites, too.

Both DraftKings and FanDuel say they welcome government regulation. Officials in some states seem inclined to agree. Massachusetts Attorney General Maura Healey said on Wednesday that daily fantasy sites constitute “a form of gambling” but added that “it’s important to get beyond that.”

“Let’s focus on the issues, let’s focus on protecting consumers, and let’s set out some really robust standards for how this industry should operate, if it’s going to operate here in this state,” Healey told MassLive.

Healey’s suggestion may represent a lifeline. For those in the business of daily fantasy sports, a rule book soon may seem like the safest bet of all.

 

 

 

 

Categories
Law

Why the clerk in Kentucky who refuses to license same-sex marriages doesn’t have the law on her side

A county clerk in Kentucky who is slated to appear in a federal courtroom Thursday after refusing to license same-sex marriages may have sincerely held beliefs but she doesn’t have the law on her side.

Kim Davis, a self-described Apostolic Christian who in January was elected clerk of Rowan County, a precinct that lies about 135 miles east of Louisville, has been directed by U.S. District Judge David Bunning to explain her actions, which place her at risk of fines or jail time.

In addition to its consequences for same-sex couples who would assert their legal right to marry in Rowan Country, the standoff represents two decades of advocacy that aims to advance a conservative agenda under the pretext of religious freedom.

In Kentucky the dustup began anew Tuesday after Davis declined to issue licenses to two same-sex couples a day after the U.S. Supreme Court let stand a ruling by Bunning that directs Davis to authorize legal marriages presented to her. Davis stopped licensing all marriages following a ruling by the Supreme Court in June that upheld the constitutional right of same-sex couples to marry. Bluegrass State law requires marriage licenses to be signed by a county clerk.

Davis, who also has refused to step down, issued a statement Tuesday in which she described her actions as compelled by faith. “To issue a marriage license which conflicts with God’s definition of marriage, with my name affixed to the certificate, would violate my conscience,” Davis wrote. “It is not a light issue for me. It is a Heaven or Hell decision. For me it is a decision of obedience. I have no animosity toward anyone and harbor no ill will.”

Of course, as an elected official, Davis can resign if her beliefs prevent her from discharging duties she swore an oath to uphold. There’s no evidence the state is requiring Davis to hold a particular belief as a condition of public employment.

“The Court must again point out that the act of issuing a marriage license to a same-sex couple merely signifies that the couple has met the legal requirements to marry,” Bunning ruled Aug. 12 when he directed Davis to comply with a directive by Governor Steve Beshear that clerks throughout the state license all legal marriages presented to them. “It is not a sign of moral or religious approval.”

Nor is this a case of the government’s compelling speech in violation of the First Amendment. As Bunning noted, the only speech the state seeks to compel is speech by Davis in the performance of her official duties, which the state can do. Remember, too, that Davis embodies the state when she acts in her capacity as clerk.

A similar problem arises for Davis’ claims to being a conscientious objector. As Jonathan Adler, a professor of constitutional law at Case Western Reserve University explained Wednesday in The Washington Post, referring to Davis:

“Someone who objects to war due to his religious conscience has a right to be a conscientious objector and not serve in the military, even were there to be a draft. But he does not have the right to serve as a military officer, draw a paycheck from the military and then substitute his own personal views of when war is justified for that of the government. The same applies here.”

Finally, Davis seeks the protection of Kentucky’s version of the Religious Freedom Restoration Act, a federal law enacted in 1993 that provides an exemption from legal requirements for religious objectors unless the government can show it has a compelling interest that requires the person to comply with the law.

Despite its co-optation by conservatives, the law represented a bipartisan rejoinder to a ruling by the Supreme Court three years earlier that upheld the authority of the State of Oregon to criminalize possession of peyote without providing an exemption for Native Americans who use the drug for religious purposes.

Since then, as Professor Wendy Brown of UC Berkeley observed in a lecture last July at the London School of Economics, states have adopted their versions of the religious freedom law so that businesses can discriminate against those whom they think are engaged in acts of sin. Think of a bakery whose owners refuse to bake a wedding cake for a same-sex couple.

In a more radical turn, the Supreme Court extended that religious freedom exemption to corporations, when it ruled last year in Burwell v. Hobby Lobby Stores that a for-profit corporation need not comply with a legal mandate that employer-sponsored health plans cover the cost of contraceptives if the corporation’s—yes, the corporation’s—religious beliefs dictate otherwise.

The ruling, which Davis cited at least nine times in her application to the Supreme Court for a stay of Bunning’s order, represents a line of advocacy based on what Brown terms “a jurisprudence of aggrieved power [in which] the assertion of conscience is central in… producing the claimant as a beleaguered minority, requiring protection from the state and from a popular majority.”

Davis has yet to show how her actions, which, after all, represent state action, qualify her for an exemption under Kentucky’s religious freedom law. Bakers who decline to bake wedding cakes for same-sex couples have not taken an oath to uphold the law of the land.

That’s not to suggest Davis is not free to argue that the religious freedom law allows her to avoid issuing licenses to same-sex couples. She can do that on appeal while discharging her duties in the meantime.

No matter what transpires, the incident shows the reach of the jurisprudence of religious freedom. “Somehow the separation of church and state has come to mean blocking the state from protecting the civil rights of citizens and forcing it to support—and pay for—sectarianism, bigotry, superstition and bullying,” Katha Pollitt wrote last year in The Nation. “I really doubt this is what Thomas Jefferson had in mind.”