Thanks to the New Civil Liberties Alliance for hosting a great event this week, during which their staff attorneys recounted the status of some of the biggest cases in which they’re currently involved. By a happy coincidence, the legal advocacy group is also celebrating its second birthday this month. See the summaries and links below for information on four important and timely cases that could re-draw the boundaries of federal authority in the United States.
Cochran v. SEC: Related to the previous case of Lucia v. SEC, this action challenges the constitutional status of administrative law judges, which the plaintiff and NCLA contend have been, and continue to be, appointed in violation of the Appointments Clause of Article II.
James Madison once said that the concentration of all government powers in one branch is “the very definition of tyranny.” Yet, today, administrative agencies regularly exercise all three of those powers. They issue rules with the force of law. They enforce laws. And they prosecute people through a system of administrative proceedings before administrative law judges or ALJs, who are hired by the agency prosecuting you.
NCLA client Michelle Cochran fell prey to this system in 2016, when the U.S. Securities and Exchange Commission (SEC) accused her violating federal accounting standards. Ms. Cochran, a Texas CPA, had worked as an auditor with a small accounting firm until 2013. A single mother, Ms. Cochran started as a part-time employee to make ends meet. Three years after she left the firm, the SEC brought an enforcement action against the firm and named her as a defendant, claiming that she aided and abetted the firm’s alleged rule violations.
The reasoning in Lucia and Cochran recalls a case the Competitive Enterprise Institute was involved in several years ago, Free Enterprise Fund v. Public Company Accounting Oversight Board (2010). In that case, the Supreme Court held that the “for-cause” limitation on the removal of Board members is unconstitutional because it contravenes the Constitution’s separation of powers. My colleague Devin Watkins provided an excellent overview of how subsequent courts have cited and built upon it in the intervening years in a 2018 blog post.
Baldwin v. United States: This case takes on the Internal Revenue Service, which claims that their rules for how taxpayers can file their tax returns—issued after Howard and Karen Baldwin submitted their disputed 2005 tax refund claim—trumps longstanding precedent and clear statutory language. The reasoning of the Ninth Circuit, being challenged in a new request for cert from NCLA, depends heavily on the deference doctrine in the controversial case of National Cable & Telecommunications Association v. Brand X Internet Services (2005).
IRS claimed it never received their refund claim and refused to give them their money back. The Baldwins then sued IRS to obtain the refund. There was an easy way to prove—and they did so at trial—that they had in fact mailed the claim on June 21, 2011, four months before the October 15 refund-filing deadline.
The relevant statute, Ninth Circuit precedent, and the centuries-old common-law mailbox rule were all on the Baldwins’ side. That precedent clearly allowed the Baldwins to prove the postmark date, which is deemed the date of delivery, by using extrinsic evidence such as witness testimony.
After trial, the district court entered judgment against IRS. On appeal, however, the Ninth Circuit concluded that IRS’s later-in-time interpretation (issued in August 2011) trumps the centuries-old common-law mailbox rule, the Ninth Circuit’s longstanding precedent, and the plain text of Section 7502, all under the Brand X doctrine. IRS’s new interpretation did not allow use of extrinsic evidence to prove the postmark date of a tax document sent by regular U.S. mail.
Americans for Prosperity Foundation v. Becerra: Should Americans be allowed to remain anonymous when they donate to political nonprofit organizations? The Supreme Court ruled in the affirmative in the famous civil rights case of NAACP v. Alabama (1958), but now the state of California is trying to undermine those privacy protections.
The question presented in this case is whether the holding of NAACP v. Alabama will be applied to modern state attorneys-general who compel disclosure of supporter lists of unpopular organizations without articulating a substantial state interest in obtaining the information. That is, does this hard-won, bedrock civil rights era precedent still protect the vital relationship between the freedom to associate and privacy in one’s associations?
I moderated a panel discussion at FreedomFest 2017 titled “Campaigning for Free Speech” that featured AFP’s Vic Berenson and a discussion of their lawsuit in California. We also covered, with CEI President Kent Lassman, our own brush with overweening state attorneys general in the case of the infamous climate subpoenas of 2016. See also the 2016 op-ed in The Wall Street Journal by Darcy Olsen of the Goldwater Institute and Tracie Sharp of the State Policy Network on the very real harassment and intimidation that comes with being a politically outspoken citizen these days.
Michael Cargill v. ATF: Not all firearms disputes are about the Second Amendment—some of them are primarily about separation of powers. When the Bureau of Alcohol, Tobacco, Firearms and Explosives issued a new rule banning bump stocks in 2018, it effectively changed the meaning of the Firearm Owners Protection Act of 1986 by classifying just the stocks themselves as “machine guns,” which private individuals are banned from owning under the law. Cargill and NCLA are challenging this interpretation, arguing that the ATF exercised an impermissible degree of legislative, rather than executive, authority in publishing the bump stock ban.
A federal statute outlaws machine guns but it does not outlaw bump stock devices that attach to a rifle and allow it to fire many shots in succession. For years, the ATF correctly concluded that bump stocks are not illegal machine guns under federal law.
All that changed in 2019, when the ATF switched course and decided that bump stocks are now “machine guns” banned under federal law. That switch threatened to turn more than 500,000 people into criminals overnight and may face a 10-year prison sentence for owning something the government had told them before was legal to possess when they bought it.
Michael Cargill is one of those people. A gun shop owner, Army veteran and firearms instructor in Austin, Texas, Cargill bought two bump stocks in April 2018. Like hundreds of thousands of other Americans, Mr. Cargill bought his bump stocks in reliance on the ATF’s conclusion that the devices were entirely legal to own and use. In fact, a letter attached to the device said so.
The bump stock ban is also an example of how, despite a reputation for pursuing deregulatory measures in many areas, the Trump administration is also pursuing new regulations and red tape in other areas.