In General Public Use: An Unnecessary Test to Determine Whether the Use of Advanced Sensing Technology was a Fourth Amendment Search

By Mike Petridis

I.       Introduction

Kyllo v. United States[1] created a rule with an unnecessary test that allows a home, a person’s castle, to be searched without a warrant.  The Kyllo rule states: “[O]btaining by sense-enhancing technology any information regarding the interior of the home that could not otherwise have been obtained without physical ‘intrusion into a constitutionally protected area’ constitutes a search — at least where . . . the technology in question is not in general public use.”[2]  This rule was intended to be forward-looking and anticipate future technology.[3]  However, the “general public use” test is a loophole that can be used by law enforcement officers to conduct warrantless searches of homes in violation of Fourth Amendment principles.

Danny Kyllo’s home was scanned by an Agema Thermovision 210, a thermal imager, after law enforcement officials suspected him of growing marijuana.[4]  The scan of the home determined that certain areas of the house were significantly warmer than surrounding homes.[5]  The temperature difference indicated a strong possibility that Kyllo was running halide lights, which are used in the growing of marijuana.[6]  Based on the thermal imaging, informants, and utility bills,  law enforcement officials were able to obtain a search warrant for Kyllo’s home.[7]  When agents searched the house, they found more than 100 marijuana plants.[8]  Kyllo was charged with “one count of manufacturing marijuana.”[9]  Kyllo moved to suppress the evidence[10] but suppression was unsuccessful, and Kyllo “entered a conditional guilty plea.”[11]  As a result, “[t]he Court of Appeals for the Ninth Circuit remanded the case for an evidentiary hearing regarding the intrusiveness of thermal imaging.”[12]  On remand, the District Court of Oregon found that the Agema 210 was not intrusive because it did not penetrate the walls or allow observation of intimate details within the home.[13]  The Ninth Circuit Court of Appeals held that Kyllo had no subjective expectation of privacy in regards to the heat leaving his home and that there was no “objectively reasonable expectation of privacy because the imager did not expose any intimate details.”[14]  The Supreme Court held that the Agema 210 scan was a search under the Fourth Amendment because a device that is not in “general public use” explored details of a home that could only be found through physical intrusion.[15]

This blog will examine how the “general public use” test creates a loophole that allows for unwarranted searches that violate the purpose of the Fourth Amendment.  Section II will examine the original reasons behind the Fourth Amendment.  These reasons will then be applied to crafting a principle of the Fourth Amendment.  Section III will provide an overview of current “see through the wall” technology available to law enforcement. In addition, this section will compare thermal imaging as it was when the Court decided Kyllo to the current state of thermal imaging.  Section IV is an attempt to define in “general public use” and will examine how lower courts have dealt with the test.  Except for a brief mention in a footnote, the Supreme Court did not provide any definition or formula to determine when the technology is in general public use.[16]  The lower courts have struggled to use this test and instead avoid it entirely, ruling on cases by using other elements of the case.  Section V will examine Supreme Court cases that involved advanced technology relative to the time the case was decided.  These cases could provide guidelines on how a court should handle advanced sensing technology.  After examining these cases, Section VI will conclude by arguing that in order to preserve the spirit of the Fourth Amendment, the Supreme Court needs to eliminate the “general public use” test and only use the property test.

II.       What is the Principle of the Fourth Amendment?

The Fourth Amendment provides “[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.”[17]  Searching for the original meaning in an amendment provides inherent difficulties because the Framers “had no opportunity to confront [modern practices] or to consider the fundamentally different social conditions of today.”[18]  With this caveat in mind, a court can still determine the general scope of protection by the circumstances the Framers were responding to when drafting the Fourth Amendment.  The Fourth Amendment was created to protect against general warrants[19] and writs of assistance.[20]

In considering the Framers’ intent, the principle of the Fourth Amendment can be reasoned as a protection against physical intrusions into the home.[21]  The home has enjoyed a special protection from very early times[22] and can be viewed as the place where individuals are free to  enjoy the privileges afforded to them by a democratic society.[23]

These ideas form the traditional property-based Fourth Amendment jurisprudence.[24]  In Katz v. United States,[25] the Supreme Court seemingly abandoned this view of the Fourth Amendment.[26]  However,  in Florida v. Jardines,[27] the Court established that the Fourth Amendment property-based analysis is the minimum level of protection provided to people in their homes.[28]  Following Jardines,[29] the property-based analysis of the Fourth Amendment recognizes certain areas as constitutionally protected against physical and intangible intrusions.[30]  The “general public use” test is a loophole that can violate constitutionally protected areas.

III.       Current Advanced Sensing Technology

There are currently several hand-held devices that the National Institute of Justice has classified as through-the-wall sensors (“TTWS”).  These devices include: Range-R series,[31] Xaver series,[32] Retwis 5,[33] and the Eagle5-NCL.[34]  TTWS devices use radar[35] transmitted at low power and across several frequencies.[36]  The radar penetrates walls and reflects when it comes into contact with an object or different materials.[37]  As the radar reflects off the objects or materials, the frequency shifts and the measurement “distinguishes between stationary and moving objects.”[38]  When radar passes through objects, it becomes attenuated.[39]  Attenuation is the loss of signal strength.[40]  Attenuation is reduced by using a wide range of frequencies to “probe” the area.[41]  To provide as much information about the area being “probed” and to minimize attenuation problems, TTWS devices will use either a Pulse Wave System or a Ultra-Wide Band Pulse System (“UWB”).[42]  The difference between these two systems is the amount of information they relay back to the device.[43]  One specific limitation of the technology is that it cannot “see through solid metal surfaces,”[44] but it can operate through concrete and wood.[45]

The devices can display information gathered in 1 degree (“d”), 2d, or 3d.[46]  Other differences between the devices include various technical specifications, such as the degrees of the field of view, maximum distance of the scan, weight, and battery life.[47]  Additionally, the devices also differ in price.  For example, a Range-R will cost $6,000 while a Xaver-400 will cost $47,500.[48]

Current thermal imagers are superior to the Agema-210 used in Kyllo.[49]  Heat detecting devices have been around for several decades.[50]  Infrared thermal imaging devices have continued to advance from the time of the Kyllo decision; many different models are now available to the average person.[51]  These products are cheaper than the Agema-210[52] and provide more detail and accuracy than the Agema-210.[53]

IV.      How Have the Lower Courts Dealt with the General Public Use Test and How Can General Public Use Be Defined

In Kyllo, the Supreme Court did not provide a definition or an outline to determine when an item is in “general public use.”[54]  Because the Supreme Court did not provide direction for the lower courts, the resulting jurisprudence has not been consistent.  Courts have avoided determining whether an item is in “general public use,” unless the item, such as a camera, is easily considered to be in “general public use.”[55]

A state appeals court avoided examination of an item’s “general public use” in McClelland v. State.[56]  Daryl J. McClelland was arrested by police officers who were investigating individuals that downloaded child pornography.[57]  The police officers traced McClelland’s Wi-Fi signal using a Yagi antenna.[58]  At trial, McClelland moved to suppress the child pornography found on his computer on the grounds that the Yagi antenna “constituted an enhanced technology which breached the expectation of privacy that McClelland had within his motorhome.”[59]  The trial court concluded that McClelland did not have a reasonable expectation of privacy because he was broadcasting signals outside his motorhome and that the use of the Yagi antenna was lawful because it was in “general public use.”[60]  The Florida District Court of Appeal reviewing the case declined to examine the issue of “general public use” because McClelland did not have an expectation of privacy.[61]

Courts have decided night vision goggles, flashlights, and cameras are in “general public use.”[62]  However, courts have not provided an in-depth analysis as to why these products are in the “general public use.”[63]  Flashlights or cameras do not require an in-depth analysis because of their availability as consumer products for decades.  As for the night vision goggles, the court in United States v. Vela[64] reasoned that “they are available to the public via internet.  More economical night vision goggles are available at sporting goods stores.  Therefore, night vision goggles . . . are available for general public use.”[65]

The definitions section of the Federal Acquisition Regulations System[66] provides factors that classify an item as a commercial item.  An analogy can be drawn between a commercial item and “general public use.”  The factors that define an item as commercial can be used to determine if the item should be considered in “general public use.”  Under § 2.101, there are eight types of items that are considered commercial items.[67]  Relevant portions include:

(1) Any item, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, and—

(i) Has been sold, leased, or licensed to the general public; or

(ii) Has been offered for sale, lease, or license to the general public.[68]

When considering these factors, an item is in “general public use” when two conditions are met.  First, the item is not restricted to governmental agency use.  Second, a person can buy, sell, or lease the item.

V.       Courts Should Analyze Advanced Sensing Technology Under a Property Analysis

While it is impossible to predict the exact path technology will take, the trend is usually for smaller and more portable uses.  The evolution of the infrared camera displays this trend; the infrared camera evolved from large bulky devices to attachments that people can place on a phone.[69]  A corollary to this progress is that devices created for the military might become available for the general public; an example of this progress is the internet[70] and GPS devices.[71]  With this trend in mind, judging the validity of a search on whether the public is using an item is a precarious position.

In assessing the proper lens to view advanced sensing technology searches, the courts should analyze how the Supreme Court has dealt with other types of technology and its rationale in those cases.  The Supreme Court has held that an electronic listening device placed on the outside of a telephone booth was a search under the Fourth Amendment, requiring a search warrant.[72]  The Government argued that there was no reason to invoke the Fourth Amendment because there was “no physical penetration of the telephone booth.”[73]  The Court reasoned that the Fourth Amendment protects “people – and not simply ‘areas.’”[74]  The Fourth Amendment principle derived from Katz is that a search has not occurred “unless ‘the individual manifested a subjective expectation of privacy in the object of the challenged search, and ‘society [is] willing to recognize that expectation as reasonable.’”[75]  Thus, Katz asserted that “privacy, not property, was a centralizing principle upon which the Fourth Amendment rights were premised.”[76]

The Court has also ruled that a software that is used to locate computers that are piggy-backing onto other Wi-Fi routers[77] is not a Fourth Amendment search.[78]  The Court justified this position under two rationales.  First, if a person is intentionally sharing their activities outside of the confines of the home, then the privacy protections afforded by the home are lost.[79]  Second, a person who uses a third-party Wi-Fi router without consent in an attempt to disguise a signal’s origin has no legitimate expectation of privacy.[80]

While not strictly human-made like other technologies, narcotics sniffing dogs can also be described as a sense enhancing technology.[81]  Justice Scalia, writing for the majority, decided Jardines on property grounds.[82]  The government argued that no privacy interest was violated when the narcotics dog sniffed around the outside of the house.[83]  However, as Justice Scalia explained, the home and curtilage are constitutionally protected areas that are unaffected by expectations of privacy.[84]  If a constitutionally protected area is intruded upon without authorization, then a violation of the Fourth Amendment has occurred.[85]  Justice Kagan, in a concurring opinion, reasoned that the case could have been decided using Kyllo.[86]  A narcotics sniffing dog is similar to a sense enhancing tool that is not in “general public use” because the narcotics dog can explore details of the home that one could have an expectation of privacy in.[87]

Two principles emerge from the Supreme Court’s jurisprudence on the Fourth Amendment.  First, a person has a reasonable expectation of privacy modified by his or her location or behavior.[88]  Second, the home has a property-based protection.[89]  Advanced sensing technology searches should be analyzed under the property rubric.  Similar to the Jardines property-based ruling, a police officer should not be allowed to invade a home’s curtilage[90] to use a handheld or portable advanced sensing device to exam the interior of the home.  Additionally, as the property-based analysis also protects against intangible intrusions of a constitutionally protected area, a search of a home beyond the curtilage with advanced sensing technology should also not be allowed.  The property-based analysis provides a-bright line rule that is easy for the courts to use.  The property-based analysis is the Kyllo rule without the “general public use” test.  Without the “general public use” test, the Kyllo rule is “[w]here, as here, the Government uses a device . . . to explore details of the home that would previously have been unknowable without physical intrusion, the surveillance is a ‘search’ and is presumptively unreasonable without a warrant.”[91]

The rule would not be complete without the exigent circumstances exception.[92]  The use of advanced sensing technology should be allowed in those situations.  Further, the naked eye observation of a law enforcement official should also be accounted for.[93]  A reasonable application of the naked eye observation exception is illustrated by a hypothetical scenario.  A police officer views contraband or illegal activity through a window from a public area.  The police officer can then, within a reasonable time frame from the observation, use the advanced sensing technology to provide further information.  Of course, even under the naked eye observation, the officer should be held to the exigency standard.  The situation must call for a “warrantless search [that] is objectively reasonable under the Fourth Amendment.”[94]  Therefore, if the situation observed meets the exigency standard for warrantless entry, then it follows that an advanced sensing search would also be valid.

VI.       Conclusion

The Court intended the Kyllo rule as a bright-line test for the use of sense enhancing technology.  However, the addition of the “general public use” test defeats that purpose.  Technology that can see into a home is arguably moving into “general public use.”  Additionally, courts struggle to apply the “general public use” test.  In order to preserve the spirit of the Fourth Amendment and provide a clear guide to the lower courts, searches involving advanced sensing technology should be analyzed under a property analysis.  Advanced sensing technology that is used by invading the curtilage of the home or penetrating the walls to see into the interior of the home is presumptively unreasonable and requires a warrant.  Therefore, the property analysis should provide coverage well into the future as science creates new methods to see the unseen.

 

[1] 533 U.S. 27 (2001).

[2] Id. at 34 (citation omitted).

[3] Id. at 36.  “[T]he rule we adopt must take account of more sophisticated systems that are already in use or in development.”  Id.

[4] Id. at 29.

[5] Id. at 30.

[6] Id.

[7] Id.

[8] Id.

[9]   Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id. at 31.

[15] Id. at 40.

[16] Id. at 39 n.6.

[17] U.S. Const. amend. IV.

[18] James J. Tomkovicz, Beyond Secrecy for Secrecy’s Sake: Toward an Expanded Vision of the Fourth Amendment Privacy Province, 36 Hastings L.J. 645, 671 (1985).

[19] “The general warrant, issued by a magistrate, provided government officials with an unlimited ability to search the home of anyone listed in the warrant, regardless of the nature of the violation alleged.”  Quin M. Sorenson, Comment, Losing a Plain View of Katz: The Loss of a Reasonable Expectation of Privacy Under the Readily Available Standard, 107 Dick. L. Rev. 179, 181 n.14 (2002).

[20] “The writ of assistance is most easily described as a form of a general warrant.  Under a writ of assistance, issued by a magistrate, customs officials could engage in arbitrary and effectively limitless searches of any home in which they suspected that prohibited goods may be located.”  Id. at 181 n.15.

[21] Tomkovicz, supra note 18, at 673.

[22] Id.   “The poorest man may, in his cottage, bid defiance to all the forces of the Crown.  It may be frail . . . but the King of England may not enter; all his force dares not cross the threshold of the ruined tenement.”  Id. at 673 n.120.

[23] See id. at 674.

[24] See Olmstead v. United States, 277 U.S. 438 (1928), overruled by Katz v. United States, 389 U.S. 347 (1967) (holding that the Fourth Amendment only involves tangible seizures or physical intrusions).

[25] 389 U.S. 347 (1967).

[26] See id. at 353.  “[I]t becomes clear that the reach of [the Fourth] Amendment cannot turn upon the presence or absence of a physical intrusion.”  Id.

[27] 569 U.S. 1 (2013).

[28] See id. at 11.

[29] See Carpenter v. United States, 138 S. Ct. 2206 (2018); Collins v. Virginia, 138 S. Ct. 1663 (2018).

[30] See Carpenter, 138 S. Ct. at 2214 (“[W]e rejected in Kyllo a ‘mechanical interpretation’ of the Fourth Amendment.”) (citation omitted)).

[31] The Range-R series includes several models: The Range-R, Range-R Link, Range-R 2d, Range-R 2d Link.   Security & Detection Systems, L3Harris, https://www.sds.l3t.com/military-first-responders/RANGE-R.htm (last visited Aug. 31, 2019).

[32] The Xaver series includes several models: Xaver 100, 400, 800.  Xavertm Products, Camero, https://www.camero-tech.com/xaver-products/ (last visited Sept. 15, 2019).

[33] About ReTWis 5, RETiA, https://retwis.eu/ (last visited Oct. 21, 2019).

[34] TiaLinx Unveils New Breathing Detection Sensor to Identify Multiple Individuals Through Thick Concrete Walls, AZO sensors (July 13, 2016), https://www.azosensors.com/news.aspx?newsID=11326.

[35] Types of radar used includes: Continuous Wave System, Pulse Wave System, and Ultra-Wide Band Pulse System.  ManTech Advanced Sys. Int’l. Inc., U.S. Dep’t of Justice, Through-the-Wall-Sensors for Law Enforcement: Market Survey 9-14 (2012), https://www.justnet.org/pdf/00-WallSensorReport-508.pdf [hereinafter Market Survey].

[36] Becky Lewis, Through-the-Wall Sensor Technology Can Add Another Tool to the Kit, TechBeat 1 (2013), https://www.justnet.org/pdf/Through-the-Wall.pdf.

[37] Id.

[38] Id.

[39] Market Survey, supra note 35, at 4.

[40] Id. at 4.

[41] Id. at 5.

[42] See id. at 5-6.

[43] See id. at 4-6, 11-14.

[44] Lewis, supra note 36, at 1.

[45] Market Survey, supra note 35, at 4.

[46] 1d, 2d, and 3d is shorthand for the dimensions provided by the display.  The difference between 1d and 2d is that 1d provides the range and status (moving/breathing) of the target and 2d will provide a graphic display of the area scanned, such as the general shape of the room, and multiple persons in the room.  See ManTech Advanced Sys. Int’l. Inc., U.S. Dep’t of Justice, Through-the-Wall-Sensors for Law Enforcement: Best Practices 10 (2014), https://www.justnet.org/pdf/ThroughWallSensorBestPractices-508.pdf.

[47] Market Survey, supra note 35, at 11-16.

[48] Id. at 15.

[49] Kyllo v. United States, 533 U.S. 27, 29-30 (2001).

[50] The first thermographic camera was created by Kálmán Tihanyi in 1929.  Nic Fleming, The Man who Makes you See the Invisible, BBC (June 14, 2017), https://www.bbc.com/future/article/20170614-thermal-imaging-reveals-the-hidden-heat-lost-from-your-home.

[51]  At the time of this writing, 30 products are available and some products have different models.  See Handheld Thermal Cameras, FLIR, https://www.flir.com/browse/industrial/handheld-thermal-cameras/?page=2 (last visited Mar. 8, 2020).  Thermal cameras can also attach to a smartphone.  FLIR ONE Pro, FLIR, https://www.flir.com/products/flir-one-pro/?model=435-0006-02 (last visited Mar. 8, 2020).  The PerfectPrime is an infrared camera available on Amazon that comes in different models and ranges in price from $129.99 to $299.99 at the time of this writing.  PerfectPrime IR0002 Thermal Camera, amazon, https://www.amazon.com/Perfect-Prime-IR0001-Infrared-Resolution Temperature/dp/B075F61GFH?ref_=fsclp_pl_dp_5 (last visited Apr. 20, 2020).

[52] Considering the time when the Agema-210 was used, it probably cost at least $10,000.  See Adam W. Brill, Kyllo v. United States: Is the Court’s Bright-Line Rule on Thermal Imaging Written in Disappearing Ink?, 56 Ark. L. Rev. 431, 433 n.13 (2003) (reporting that thermal imagers range from $15,000 to $35,000); see also Ed Kochanek, Thermal Imaging from the Beginning of the Thermographer’s Camera to the Present, IRINFO.Org, https://irinfo.org/12-1-2013-kochanek/ (last visited Sept. 15, 2019) (explaining that a thermal camera sold for $25,000 in 1997).

[53] Contrast the Agema-210 technical specification with a $10,000+ modern model or the smartphone camera.  Agema Infrared Systems, THERMOVISION 210 Series Operating Manual Section 6 at 1-9 (2002), https://support.flir.com/DocDownload/Assets/dl/1557627$a.pdf; Agema Infrared Systems, Thermovision 400 & 200  (1990), https://support.flir.com/DocDownload/Assets/dl/1557569$a.pdf; FLIR, Technical Data FLIR T5xx Series (2019), https://support.flir.com/DocDownload/Assets/dl/t810463-en-us.pdf; FLIR, FLIR One Pro, https://support.flir.com/DocDownload/Assets/dl/17-1746-oem-flir_one_pro_datasheet_final_v1_web.pdf (last visited Oct. 21, 2019).

[54] Kyllo, 533 U.S. at 39 n.6 (“Given that we can quite confidently say that thermal imagining is not ‘routine,’ we decline in this case to reexamine that factor.”).

[55] See McClelland v. State, 255 So. 3d 929 (Fla. Dist. Ct. App. 2018); United States v. Hachey, No. 16-0128, 2017 U.S. Dist. LEXIS 34192 (E.D. Pa. 2017); United States v. Vela, 486 F. Supp 2d 587 (W.D. Tex. 2005); United States v. Deleston, No. 15-cr-113, 2015 U.S. Dist. LEXIS 107341 (S.D.N.Y. 2015); Idaho v. Howard, No. CR-2011-2029, 2012 Ida. Dist. LEXIS 31 (Idaho 2012).

[56] McClelland, 255 So. 3d 929.

[57] Id. at 930-31.

[58] Id.

[59] Id. at 931.

[60] Id. at 932.

[61] Id. at 932 n.2 (“It is unnecessary for us to make any determination regarding whether this was an accurate conclusion due to our agreement with the trial court that McClelland lacked an expectation of privacy that society would be willing to recognize as reasonable.”).

[62] See United States v. Vela, 486 F. Supp. 2d 587 (W.D. Tex. 2005); United States v. Deleston, No. 15-cr-113, 2015 U.S. Dist. LEXIS 107341 (S.D.N.Y. 2015); Idaho v. Howard, No. CR-2011-2029, 2012 Ida. Dist. LEXIS 31 (Idaho 2012).

[63] See cases cited supra note 62.

[64] 486 F. Supp. 2d 587 (W.D. Tex. 2005).

[65] Id. at 590.

[66] 48 C.F.R. § 2.101 (LEXIS through the Sept. 9, 2019 issue of the Federal Register).

[67] Id.

[68] Id.

[69] See supra notes 50-53 and accompanying text.

[70] Evan Andrews, Who Invented the Internet?, History, https://www.history.com/news/who-invented-the-internet (last updated Oct. 28, 2019).

[71] Global Positioning System History, NASA, https://www.nasa.gov/directorates/heo/scan/communications/policy/GPS_History.html (last updated Aug. 7, 2017).

[72] See Katz v. United States, 389 U.S. 347, 358-59 (1967).

[73] Id. at 352.

[74] Id. at 353.

[75] Kyllo v. United States, 533 U.S. 27, 33 (2001) (citation omitted).

[76] Thomas K. Clancy, The Fourth Amendment Its History and Interpretation 88 (2nd ed. 2014).

[77] The software in this case is called a MoocherHunter.  It is a software tool that uses a laptop and a directional antenna.  “The user enters the MAC address of the wireless card he wishes to locate and the program measures the signal strength of the radio waves emitted from this card.”  United States v. Stanley, 753 F.3d. 114, 115-17 (3d Cir. 2014).

[78] See id. at 124.

[79] Id. at 119-20.

[80] Id. at 120-21 (“Stanley, was, in effect, a virtual trespasser.”).

[81] Florida v. Jardines, 569 U.S. 1, 14-15 (Kagan, J., concurring).

[82] See id. at 3-12.  “The Katz reasonable-expectations test ‘has been added to, not substituted for,’ the traditional property-based understanding of the Fourth Amendment.”  Id. at 11 (citation omitted).

[83] See id. at 10.

[84] See id. at 5-11.

[85] Id. at 10-12.

[86] Id. at 14 (Kagan, J., concurring).

[87] Id. at 14-15 (Kagan J., concurring).

[88] See Katz v. United States, 389 U.S. 347 (1967); Kyllo v. United States, 533 U.S. 27 (2001); United States v. Stanley, 753 F.3d 114 (3d Cir. 2014); United States v. Karo, 468 U.S. 705 (1984).

[89] See Jardines, 569 U.S. at 5-7, 11.

[90] Id. at 6-7.  “We therefore regard the area ‘immediately surrounding and associated with the home’—what our cases call the curtilage—as ‘part of the home itself for Fourth Amendment purposes.’”  Id. at 6 (citing Oliver v. United States, 466 U.S. 170, 180 (1984)).

[91] Kyllo, 533 U.S. at 40.

[92] Some situations include “hot pursuit,” imminent destruction of evidence, and the preservation of life.  See Brigham City v. Stuart, 547 U.S 398, 403-04 (2006).

[93] See California v. Ciraolo, 476 U.S. 207, 213 (1986) (“The Fourth Amendment protection of the home has never been extended to require law enforcement officers to shield their eyes when passing by a home on public thoroughfares.”).

[94] Brigham City, 547 U.S. at 403.

Who Gets the Dog in the Divorce? Examining a Standard for the New York Legislature to Adopt

By Jared Sanders

I.       Introduction

As a newly married couple, a husband surprises his wife on her birthday with an adorable puppy.  Fast-forward two years and the marriage is in disarray.  While the husband is out of town, the wife packs up her belongings, takes the dog, and leaves. Unable to repair the marriage, the wife files for divorce.  The question at trial becomes: who gets custody of the dog?  The husband argues that he should get custody because he bought the dog with his funds.  On the other hand, the wife argues that she should obtain custody because she primarily cared for the dog, and they formed a close bond.[1]  How should the court decide which spouse receives custody of their beloved dog?  What standard should the court apply?

A national survey shows that sixty-seven percent of United States households own a pet – the equivalent of 84.9 million homes.[2]  In 2019, there is an estimated $75.38 billion spent on pets in the United States.[3]  Statistics show that seventy-six percent of pet owners feel guilty when they leave their pet at home, forty-one percent take their dogs on vacations with them, and thirty-eight percent “speak” to their pets on the phone when they are away on vacation.[4]  While pet owners may view their beloved pets as part of the family, the majority of the law categorizes them as personal property – often referred to as “chattel.”[5]  Thus, in the eyes of the court, the adorable puppy as described above is analogous to a kitchen table or a car.[6]

In a New York divorce action,[7] when children are involved, child custody is an issue that is decided under the “the best interest of the child” standard.[8]  Although pet owners may feel their pets are “children,” the courts have historically applied a strict property-based approach to pets when determining custody.[9]  However, New York State courts are starting to depart from a property-based approach and ask “what is in the ‘best interest for all concerned?’”[10]

Section II of this blog will provide a background of New York’s statutory approach to distribution of marital property in a divorce action.  Section III will review New York tort case law and the traditional classification of household pets.  Section IV will examine New York matrimonial law, demonstrating the changing approach to pet custody in marital dissolutions.  Part V will explore Alaska’s groundbreaking statute instituting the standard of the “well-being of the animal,” as well as the criticism that the standard has faced.  Part VI will argue that the New York legislature should amend the Domestic Relation Law to provide clarity in adjudicating marital dissolutions involving the custody of household pets.

II.       Equitable Distribution of Marital Property

In a marital dissolution action between spouses, the State of New York utilizes the system of equitable distribution.[11]  “The purpose of the equitable distribution law is to achieve a fair allocation of marital property upon dissolution of the marital economic partnership.”[12]  The New York Court of Appeals has stated, “[e]quitable distribution of marital property in a divorce action is based on the premise that a marriage is, among other things, an economic partnership to which both parties contribute as spouse, parent, wage earner, or homemaker.”[13]  However, the “equitable distribution of marital property does not necessarily mean equal,” giving the New York Supreme Court substantial discretion in awarding equitable distribution.[14]

The New York law of equitable distribution applies to marital property, but not separate property.  Subject to the exception enumerated below, marital property is defined as “all property acquired by either or both spouses during the marriage . . . regardless of the form in which title is held.”[15]  In contrast, separate property includes property acquired before marriage or acquired by bequest, devise, descent, or gift from a party other than the spouse;[16] compensation for personal injuries;[17] property acquired in exchange for or the increase in value of separate property;[18] and property described as separate property by written agreement of the parties.[19]  Thus, any personal or real property acquired during the marriage, such as a pet, is considered marital property and subject to equitable distribution.

Since “equitable” does not necessarily mean “equal,” the equitable distribution statute sets out an exhaustive list of factors that a court must consider when distributing marital property.[20]  Some factors include the duration of the marriage and the age and health of both parties,[21] any award of maintenance,[22] and any other factor which the court shall expressly find to be just and proper.[23]  It is noteworthy that these factors include “no consideration for the happiness or comfort of the articles to be divvied up between the parties-which is sensible, considering that these factors were intended to be the basis for determining title to inanimate objects.”[24]  It is difficult to believe any pet owner would consider his or her pet an “inanimate object;” yet, traditionally, that is how pets have been classified under the law.

III.       Household Pets Under New York Tort Law

In New York tort actions, pets are considered personal property; thus, the owner of an animal negligently killed cannot recover for their emotional distress.[25]  The New York Court of Appeals in Bovsun v. Sanperi[26] recognized a cause of action called the “zone-of-danger rule.”[27]  The rule allows a plaintiff to recover for emotional distress caused by the negligent infliction of bodily injury on a family member when the plaintiff observed the serious physical injury and was at risk of serious physical injury or death.[28]  However, in Fowler v. Town of Ticonderoga,[29] distinguished from Bovsun, the Third Department of New York’s Appellate Division held that a dog owner may not recover under the “zone-of-danger rule” when he witnessed the defendant negligently kill his dog.[30]  The court ruled the claim failed because a dog is “personal property, not a family member.”[31]

Even when a pet owner’s family shares a strong emotional attachment with a family pet, New York case law states that a pet owner may only recover for property damage.[32] Akin to a couch, it treats a family pet as if it were an inanimate object. Thus, in the most unfortunate circumstance, in which one wrongfully kills another’s dog, the dog owner’s only remedy in tort is to recover the market value of the dog.[33]

IV.       New York Case Law Regarding Household Pets in Marital Dissolutions

During a marital dissolution, New York courts are tasked with deciding the equitable distribution of property.[34]  However, the courts are not unanimous as to which standard to apply when determining which spouse will receive custody of the marital pets.  The court in C.R.S. v. T.K.S. utilized a strict-property analysis;[35] however, several courts are slowly adopting the “best interests for all concerned” approach.[36]

The court in C.R.S. v. T.K.S. utilized a strict property analysis when awarding the wife temporary possession of the marital dog, a Chocolate Labrador Retriever, pending a final judgment.[37]  There, the husband, a wealthy corporate vice president,[38] purchased a Chocolate Labrador Retriever for his wife’s 35th birthday.[39]  During the midst of a dissolution action between the parties, the wife was prevented from entering the spousal residence in New York and was forced to move to their Florida residence without the dog.[40]  The husband was allegedly keeping the dog to punish the wife.[41]  The court granted a pendente lite order, awarding temporary custody of the dog to the wife.[42]  Moving for a stay of the order, the husband claimed that the grant of temporary possession of the dog to the wife was “an impermissible prejudgment distribution of marital property” because the dog is a chattel, “no different than [sic] a sofa, home or bank account.”[43]  Moreover, the husband asserted that the dog has no monetary value and does not produce income nor is the dog an asset that will increase in value.[44]

The court upheld its grant of temporary possession of the five-year-old Chocolate Labrador Retriever to the wife,[45] “based solely on the fact that the dog was an interspousal gift to her.”[46]  The court’s property analysis is confirmed when they stated that “[t]he determination of the final distributive award of the dog will be made at trial.  A credit for any proven value of the dog could be made at that time.”[47]  “The clear implication is that the Labrador retriever was to be ‘distributed’ just like any other item of marital property subject to equitable distribution, be it a television or a set of dishes.”[48]

Prior to the decision in C.R.S., New York saw its first court utilize the “best for all concerned standard.”[49]  In Raymond v. Lachmann, the First Department was tasked with determining which party was “entitled to ownership and possession of the subject cat, Lovey, nee Merlin.”[50]  The court stated:

Cognizant of the cherished status accorded to pets in our society, the strong emotions engendered by disputes of this nature, and the limited ability of the courts to resolve them satisfactorily, on the record presented, we think it best for all concerned that, given his limited life expectancy, Lovey, who is now almost ten years old, remain where he has lived, prospered, loved and been loved for the past four years.[51]

This is “one of the most important statements from a ‘modern court’ as to the ‘de-chattelization’ of household pets.”[52]  This new approach takes into consideration the “intangible, highly subjective factors that are called into play when a cherished pet is the property at issue.”[53]  The landmark decision in Raymond set the stage to allow New York courts to adopt a new standard for actions involving pet custody.[54]

A little over fourteen years later, the court in Travis v. Murray embraced the Raymond holding by following the “best for all concerned standard.”[55]  In Travis, the parties to a divorce sought sole custody of a dog named Joey, who they had acquired during the marriage.[56]  While the plaintiff was away on a business trip, the defendant moved out of the marital residence, taking Joey with her.[57]  Plaintiff argued that Joey was her property because she used her funds to buy the dog, while the defendant argued that it was in Joey’s “best interest” to live with the defendant because she “was the one who cared for and financially supported Joey  on a primary basis.”[58]  The court noted that the plaintiff was asserting a strict property-based approach, while the defendant was invoking a custody analysis.[59]  Utilizing the rationale in Raymond and the “best for all concerned” approach, the court explained “[t]his new view takes into consideration, and gives paramount importance to, the intangible, highly subjective factors that are called into play when a cherished pet is the property at issue.”[60]  Ultimately, the court ordered a full hearing, applying the standard of “best for all concerned” to determine which party will receive full custody of Joey.[61]

V.       Alaska’s Statutory Standard: “Well-Being of the Animal”

Alaska’s legislature passed H.R. 147, which orders courts to consider the “well-being of the animal,” when determining the ownership of the pets in a divorce action.[62]  This amendment to Alaska’s divorce statute was predicated on the idea that “companion animals are often viewed as family members and have an inherent self-interest in their continued well-being and existence.”[63]  This statute was groundbreaking as the first law to recognize a pet is more than mere property.  In passing this statute, the legislature adopted a view that companion animals are “living property,” as distinguished from tangible personal property.[64]  As defined and argued by David Favre, living property is “physical, movable living objects—not human—that have an inherent self-interest in their continued well-being and existence.”[65]  The legislature looked to the Alaska Supreme Court’s opinion in Juelfs v. Gough[66] to further justify the passing of H.R. 147. In Gough, during a marital dissolution, the Alaska Superior Court granted shared custody and visitation of the marital dog, Coho.[67]  Several years later, the wife appealed the superior court’s decision, arguing she should receive sole custody of Coho because her ex-husband had failed to comply with the visitation schedule.[68]  The Alaska Supreme Court affirmed the holding of the superior court.[69]  This outcome of Gough is noteworthy because it established visitations rights in situations where it would be in the best interest of a companion animal.[70]  The court clearly distinguished companion animals from other forms of tangible personal property, as a court would not grant visitation of a couch or table.  Based on the concept of “living property” and the need to clarify Alaska’s statute regarding custody of companion animals, H.R. 147 became effective on January 17, 2017.[71]

A.     Criticism of the “Well-Being of the Animal” Standard

Applying the standard of the “well-being of the animal” does not come without negative criticism.  One of the largest concerns of the United States court system is judicial economy.[72]  In a marital dissolution, the Florida appellate court in Bennet v. Bennet reversed and remanded the district court’s grant of visitation by the ex-wife of the parties’ dog.[73]  The court’s reasoning was based in part on the issue of judicial economy.[74]  The court explained, such an expansion in the law is “unwise” because the court system is already overwhelmed by the enforcement and “supervision of custody, visitation, and support matters related to the protecting of our children.”[75]  Essentially, the courts do not have the resources to adjudicate an influx of complex issues regarding custody and visitation of companion animals.[76]

As illustrated by the court in Bennet, there is also the issue of enforcement.  In New York, the courts must consider “the best interest of the child” in orders for child custody.[77]  A court may consider several factors in their determination.[78]  Applying these factors to just children is a challenge; but, according to the court in Nuzzaci v. Nuzzaci, applying the factors to a companion animal is an impossible task.[79]  Concerned about enforcement, the court asked, “would it be abusive to forget to clean the fishbowl or have Tabitha declawed?”[80]  Expanding the law to include the “best interest of the animal” invites litigation over “which dog training school, if any, is best for [the dog’s] personality type.”[81]  Commenting on the stated concerns and referring to Alaska’s “well-being of the animal” standard, Justice William W. Bedsworth wrote, “let’s say a little prayer for those Alaska judges.”[82]

VI.       Conclusion

The courts and legislatures across jurisdictions are slowly embracing a changed viewpoint regarding household pets in divorce proceedings.[83]  From once being viewed under the law as strict, tangible personal property, jurisdictions are adopting the view that companion animals are “living property”[84] and recognized as “a special category of property.”[85]

While New York case law is evolving to embrace this view, legislation must be passed to provide clarity in adjudicating cases involving companion animals.  In light of changing perspectives, the New York legislature should amend the Domestic Relation Law to mandate courts to consider the “well-being of the animal.”

The idea that pets are the legal equivalent of furniture does not reflect the feelings of modern society.  Further, the traditional property standard is inappropriate for both the parties and the pet.  The parties are owed the opportunity to have their day in court to explain why they deserve custody of their pet, and how they can promote the well-being of the animal. Not only will this promote a more equitable distribution, but it will ensure that the animal, as “living property,” can continue a healthy, loving life.

[1] This hypothetical is loosely based on the facts of Travis v. Murray, 42 Misc. 3d 447 (Sup. Ct. 2013).

[2] Pet Industry Market Size & Ownership Statistics, Am. Pet Product Ass’n https://www.americanpetproducts.org/press_industrytrends.asp (last visited Sept. 15, 2019).

[3] Id.

[4] Ann Hartwell Britton, Bones of Contention: Custody of Family Pets, 20 J. Am. Acad. Matrim. Law 1, 19 (2006).

[5] See, e.g., Rowan v. Sussdorff, 147 A.D. 673, 673 (2d Dep’t 1911) (stating that a dog is property).

[6] Travis, 42 Misc. 3d at 452.

[7] Sometimes referred to as “dissolution of marriage.”

[8] N.Y. Dom. Rel. Law § 70 (McKinney 2019); see also Eschbach v. Eschbach, 56 N.Y.2d 167, 171(1982).

[9] See C.R.S. v. T.K.S., 192 Misc. 2d 547 (Sup. Ct. 2002).

[10] See Travis, 42 Misc. 3d at 453.

[11] See Dom. Rel. § 70.

[12] 1 Timothy Tippins, New York Matrimonial Law and Practice § 3:29 (2019)

[13] O’Brien v. O’Brien, 66 N.Y.2d 576, 585 (1985).

[14] Lurie v. Lurie, 94 A.D.3d 1376, 1378 (3d Dep’t 2012).

[15] Dom. Rel. § 236 pt B(1)(c).

[16] Id. § 236 pt B(1)(d)(1).

[17] Id. § 236 pt B(1)(d)(2).

[18] Id. § 236 pt B(1)(d)(3).

[19] Id. § 236 pt B(1)(d)(4).

[20] Id. § 236 pt B(5)(d).

[21] Id. § 236 pt B(5)(d)(2).

[22] Id. § 236 pt B(5)(d)(6).

[23] Id. § 236 pt B(5)(d)(14).  For the complete list of factors, see id. § 236 pt B(5)(d).

[24] Tabby McLain, Adapting the Child’s Best Interest Model to Custody Determination of Companion Animals, 6 J. Animal L. 151, 168 (2010).

[25] Schrage v. Hatzlacha Cab Corp., 13 A.D.3d 150, at *5 (1st Dep’t 2004); see also Johnson v. Douglas, 289 A.D.2d 202, 202 (2d Dep’t 2001) (“[A] pet owner in New York cannot recover damages for emotional distress caused by the negligent killing of a dog.”); DeJoy v. Niagara Mohawk Power Corp., 13 A.D.3d 1108, 1108-09 (4th Dep’t 2004) (holding that an owner may not recover for loss of companionship of horse negligently killed by defendant’s electric wires).

[26] 61 N.Y.2d 219 (1984).

[27] See id. at 848.  In Bovsun, the plaintiffs, mother and daughter, were sitting in their station wagon on the side of the highway while the husband-father (“Mr. Bovsun”) was at the rear of the car leaning through the tailgate window.  Id. at 844.  The defendant’s vehicle struck the station wagon in the rear, pinning and seriously injuring Mr. Bovsun, and also injuring the mother and daughter.  Id.  The mother and daughter suffered emotional distress as a result of seeing Mr. Bovsun’s injury.  Id. at 844-45.

[28] See id. at 848 (emphasis added).

[29] 131 A.D.2d 919 (3d Dep’t 1987).

[30] See id. at 921.

[31] Id.

[32] Di Michele v. Filacchione, 60 Misc. 2d 619, 619-20 (N.Y. City Civ. Ct. 1969).

[33] See Melton v. South Shore U-Drive, Inc., 32 A.D.2d 950, 951 (2d Dep’t 1969).  Conversely, the Supreme Court of Oregon in McCallister v. Sappingfield rejected the idea that the correct recovery for a dog wrongfully killed is its “market value.”  McCallister v. Sappingfield, 72 Or. 422, 427-28 (Or. 1914).  Rather, the monetary damages are the “special or pecuniary” value of the dog, ascertained by the “usefulness or services of the dog.”  Id. at 428.

[34]  See N.Y. Dom. Rel. Law § 236 (McKinney 2019).

[35] 192 Misc. 2d 547, 553 (Sup. Ct. 2002).

[36] See Travis v. Murray, 42 Misc. 3d 447, 453 (Sup. Ct. 2013); Finn v. Anderson, 64 Misc. 3d 273, 279 (N.Y. City Ct. 2019).

[37] C.R.S., 192 Misc. 2d at 553.

[38] Id. at 550.

[39] Id. at 548.

[40] Id.

[41] Id. at 553.

[42] Id. at 547.

[43] Id. at 549.

[44] Id. at 553.

[45] Id. at 552.

[46] Travis v. Murray, 42 Misc. 3d 447, 453 (Sup. Ct. 2013) (internal quotations omitted).

[47] C.R.S., 192 Misc. 2d at 550.

[48] Travis, 42 Misc. 3d at 453.

[49] Raymond v. Lachmann, 264 A.D.2d 340, 341 (1st Dep’t 1999).

[50] Id. at 340.

[51] Id. at 341(emphasis added).

[52] Travis, 42 Misc.3d at 455.

[53] Id.

[54] See id. at 447; Finn v. Anderson, 64 Misc. 3d 273 (N.Y. City Civ. Ct. 2019); Hennet v. Allan, 43 Misc. 3d 542 (Sup. Ct. 2014).

[55] Travis, 42 Misc. 3d at 460.

[56] Id. at 450.

[57] Id.

[58] Id.

[59] Id. at 451.

[60] Id. at 455.

[61] Id. at 460.

[62] Alaska Stat. Ann. § 25.24.160(a)(5) (West 2019).

[63] Morgan Chandler Handy, The “De-Chattelization” of Companion Animals Through Family Law Legislation: How Alaska’s H.R. 147 Has Dismantled the Traditional Property Law View of Pets, 52 Fam. L.Q. 169, 176 (2018).

[64] Alaska St. Legis., Res. Servs. Rep., Custody Awards and Protective Orders for Pets, H.R. 29-15.142, 2d Sess., at 2 (2015), http://www.akleg.gov/basis/get_documents.asp?session=29&docid=6017.

[65] Id.

[66] 41 P.3d 593 (Alaska 2002).

[67] Id. at 594.

[68] Id. at 594-95.

[69] Id. at 599.

[70] Id.

[71] Alaska H. Journal, 29th Leg., 2d Sess. 3212 (Nov. 7, 2016), http://www.akleg.gov/pdf/29/J/H2016-11-07.PDF.

[72] Courts often raise the concern of judicial economy.  See, e.g., Romandetti v. Cty. of Orange, 289 A.D.2d 386, 386 (2d Dep’t 2001) (“[W]e find that consolidation [of claims] would best serve the interest of justice and judicial economy.”); In re Vistaprint Ltd., 628 F.3d 1342, 1347 (Fed. Cir. 2010) (“[J]udicial economy can be of paramount consideration.” (internal quotation and citation omitted)); Realtime Data, LLC v. Morgan Stanley, No. 6:09CV326-LED-JDL, 2010 WL 4274576, at *2 (E.D. Tex. Oct. 28, 2010) (“Courts in this District have consistently recognized the pronounced significance of judicial economy.”).

[73] Bennett v. Bennett, 655 So. 2d 109, 111 (Fla. Dist. Ct. App. 1995).

[74] Id. at 110-11.

[75] Id.

[76] Id.

[77] N.Y. Dom. Rel. Law § 240 (1)(a) (McKinney 2019).

[78] The following factors include:

[T]he quality of the home environment and the parental guidance the custodial parent provides for the child, the ability of each parent to provide for the child’s emotional and intellectual development, the financial status and ability of each parent to provide for the child, the relative fitness of the respective parents, and the effect an award of custody to one parent might have on the child’s relationship with the other parent.

Elliott v. Felder, 69 A.D.3d 623, 623 (2d Dep’t 2010) (citations omitted)).

[79] Nuzzaci v. Nuzzaci, No. CN94-10771, 1995 WL 783006, at *1 (Del. Fam. Ct. 1995).

[80] Id.

[81] Id.

[82] J. William W. Bedsworth, Fight On, 59-APR Orange County Law. 71, 72 (2017).

[83] See ALASKA ST. LEGIS., supra note 64; Travis v. Murray, 42 Misc. 3d 447 (Sup. Ct. 2013).

[84] See ALASKA ST. LEGIS., supra note 64.

[85] Feger v. Warwick Animal Shelter, 59 A.D.3d 68, 72 (2d Dep’t 2008).

Criminal Usury and Its Impact on New York Business Transactions

By Christopher Basile

I.       Introduction

Choice-of-law provisions may bypass state statutes implemented to protect the general public and they may also reduce the effectiveness of the state’s legislative intent.  A choice-of-law clause is a provision in a contract where the parties choose a state’s law to govern any conflicts or disputes that may arise between the parties.[1]  Companies may implement choice-of-law clauses in their contracts to avoid statutes or regulations of various states.[2]  Many companies use choice-of-law provisions to intentionally avoid New York laws and regulations.  Companies attempt to avoid a series of criminal usury statutes in New York.  Usury is defined as an illegal rate of interest that may be charged on a financial instrument.[3]  In conclusion, many companies intentionally try to avoid New York’s criminal usury statutes through the use of choice-of-law provisions.

When a transaction has been executed in New York between two businesses, New York law should govern if the transaction is substantially related to New York.[4]  Additionally, when a transaction has been executed between parties in New York, and fundamental public policy is being violated by enforcing a choice-of-law provision, New York law should govern the transaction.[5]

Part II will provide a brief history of usury in New York.  Part III will analyze the various usury statutes of New York.  This section will also discuss how businesses may invoke criminal usury as an affirmative defense, the required percentage threshold for criminal usury to be invoked in New York, and the various financial instruments that may be deemed as criminally usurious in New York.  Part IV will delve into the intent of predatory businesses and explain why these businesses choose certain states to govern their contracts.  Part V will discuss New York’s substantial relationship test and how it impacts choice-of-law provisions.  Part VI will discuss New York’s fundamental public policy and how it supersedes choice-of-law provisions.  Part VII will examine the ramifications of criminally usurious transactions and how these transactions are void in New York.  Finally, Part VIII will conclude by summarizing the decisions of New York’s Court of Appeals and the Second Circuit and the impact that these decisions will have on a business that has entered into a transaction with a predatory company where a choice-of-law provision exists.

II.       A Brief History of Usury in New York

Since its founding, the courts in New York have taken a strong position against enforcing payments with a rate of interest above what is permitted by law.  Amidst establishing the foundation of interest limits on financial instruments, “the ‘Statute of Anne’ (1713)[6], which fixed a maximum rate of interest at five percent for all loans, was the model followed.”[7]  In New York State, the leading case regarding criminally usurious transactions is Curtiss v. Teller,[8] in which the New York Court of Appeals held that usury statutes declare a usurious transaction void and provide for forfeitures and penalties against the usurer.[9]  The decision and reasoning of the Curtiss Court was sustained nearly seventy years later in Szerdahelyi v. Harris.[10]  The Court of Appeals in Szerdahelyi analyzed the history surrounding usury laws and noted that the interpretation of the usury statutes in Curtiss is consistent with New York’s legislative view on the matter.[11]

Further, the Court held that a usurious transaction is void ab initio (invalid from the outset), and a financial instrument with a total interest charge exceeding the statutory limit results in the lender being unable to recoup on the money that he or she has advanced.[12]  Additionally, a total interest charge exceeding the statutory limit results in the lender being unable to collect the interest due on the transaction.[13]  At the time Szerdahelyi was being heard, the New York State Legislature made further revisions to the usury laws due to the evolving complexity of financial crimes such as loan-sharking.[14]  Loan-sharking has been described by the courts in New York as “one of the most heinous, virtually bloodsucking criminal activities of all times.”[15]  The Legislature in New York subsequently enacted comprehensive legislation to deal with this problem.[16] The express intent of this legislation was to “amend the penal law and the general obligations law, in relation to criminal usury and possession of records of a criminally usurious loan.”[17]  Usurious transactions are ultimately void under New York law, regardless of whether they violate the civil section of §5-501 or the criminal section under New York Penal Law § 190.40.[18]

III.       New York Usury Statutes

New York has enacted multiple statutes addressing the State’s legislative view on the heinous nature of usury.  According to New York Penal Law:

A person is guilty of criminal usury in the second degree when, not being authorized or permitted by law to do so, he knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum or the equivalent rate for a longer or shorter period.[19]

Further, “criminal usury in the second degree is a class E felony.”[20]  In the event of a criminally usurious interest rate under the sovereign of New York, the usurer is estopped from receiving interest on a loan.[21]  In New York, corporations are prohibited from interposing the defense of civil usury to a contract.[22]  In fact, only individuals may use civil usury as an affirmative defense to a contract.[23]  Civil usury in New York exists when the total interest on a financial instrument exceeds a rate of sixteen percent per annum.[24]  In New York, only individuals may use civil usury as an affirmative defense to a contract.[25]  At first blush, it appears that companies may be barred from claiming criminal usury as an affirmative defense in New York.  Nonetheless, while corporations cannot plead civil usury as a defense to a contract, corporations may plead criminal usury as an affirmative defense to a contract.[26]  There is no legislative difference between what is called “civil” usury and “criminal” usury when it comes to New York’s General Obligation Law § 5-511.[27]  However, usury is usury, and the Legislature saw fit to make two “levels” of usury in response to growing loan-sharking in the state, one that exceeds sixteen percent (civil), and the other that exceeds twenty-five percent (criminal).[28]

New York’s G.O.L § 5-501 caps the maximum amount upon which to assert a claim under §190.40 at $2,500,000.00.[29]  The plain language of §190.40 as read with § 5-501, states that anything below $2,500,000.00 is subject to criminal usury and once found, the transaction is automatically voided.[30]  Capping the maximum amount to $2,500,000.00 to make a financial instrument subject to the criminal usury statutes was intended to solve the usury problem in New York regarding substantial commercial loans, and is now a major part of the reason that multistate loan transactions are designated to be governed by New York law.[31]  Ultimately, the financial instruments subject to the criminal usury statutes of New York include bonds, bills, notes (both demand and promissory), assurances, and conveyances.[32]

IV.       Intent of Predatory Businesses

Usurious intent may be found by looking at the four corners of a financial instrument, and usurious intent may be found as a matter of law.[33]  Intent is a critical element in a usury analysis.[34]  Even if a lender of a financial instrument did not intend to violate the usury laws of New York, if the financial instrument in question charges an interest rate in excess of the statutory rate of twenty-five percent in New York, then it is immaterial whether or not the lender had actually intended to do so.[35]  In a situation such as this, the intent is considered to be implied even though a lender had no actual intent to violate the usury laws.[36]  New York courts have consistently ruled that when usury is determined to exist, the intent is implied.[37]

The court in In re Rosner[38] noted that when usurious intent is not found on the face of the financial instrument, usury becomes a disputed question of material fact.[39]  Nonetheless, the conversion discount option, the share reserve requirement, and the default remedies expressly stated in the contract of the financial instrument set the total interest charge of the financial instrument in excess of twenty-five percent, and therefore, the intent to charge a usurious rate of interest was established.[40]

It is settled that a person coming to court with unclean hands is not afforded any equitable remedies.[41]  When it comes to criminal usury, intent to charge a criminally usurious rate is implied based on the face of a financial instrument.[42]  Regarding financial recovery for creditors or lenders surrounding a financial instrument, “the equitable maxim that he who comes into equity must come with clean hands.”[43] Furthermore, a New York court will deny equitable relief to a corporation when a corporation attempting to recover demonstrates egregious conduct, such as fraud, unconscionability, or bad faith.[44]

V.       New York’s Substantial Relationship Approach and the Applicability of Choice-of-Law Provisions

If a contract between two parties is deemed to be usurious under the general usury statutes of all states to which it has a substantial relationship, then the forum will “apply the usury statute of that state that imposes the lightest penalty.”[45]  The Supreme Court of the United States has ruled that in order to ensure that the choice-of-law is neither arbitrary nor fundamentally unfair, the choice-of-law must be from a state that has significant contacts with the parties and the occurrence or transaction in question.[46] Although New York recognizes that “the choice of law principle that parties to a contract have a right to choose the law to be applied in their contract, this freedom of choice on the part of the parties is not absolute.”[47]

New York courts generally enforce choice-of-law clauses.[48]  The New York Court of Appeals addressed the substantial relationship approach and held that “while the parties’ choice of law is to be given heavy weight, the law of the state with the ‘most significant contacts’ is to be applied.”[49]  In a contract between parties, New York law should apply, even if there is a choice-of-law provision electing another state to govern if significant contacts were in New York.[50]  Moreover, when a state does not have a reasonable relationship to a contract between parties, and New York does have a reasonable relationship, then New York law should apply to the contract in question.[51] A reasonable relationship with New York may be established if the parties negotiate and execute a financial instrument in New York, the parties to a contract performed under the agreement in New York, and/or the principal place of business for either party has its principal place of business in New York.[52]  In addition to the substantial relationship approach, New York “has a strong public policy against interest rates which exceed twenty-five percent.”[53]

VI.       New York’s Fundamental Public Policy and Its Effect on Contract Provisions

New York has a strong fundamental public policy against interest rates from creditors that exceed twenty-five percent.[54]  Moreover, New York has a heavy stance public policy against excessive interest rates, which must be enforced.[55]  This essential public policy is further bolstered from the ruling in Clever Ideas, Inc. v. 999 Restaurant Corp,[56] in which the New York Superior Court held that the choice of Illinois law will not be given effect in part because New York’s usury prohibition is a fundamental public policy.[57]

Additionally, New York’s decision to criminalize interest rates exceeding twenty-five percent is further evidence that usury prohibition is a fundamental public policy.[58] The federal courts in the Second Circuit have recognized in its holdings that New York’s criminal usury laws represents an important and fundamental public policy that overrides a choice of law provision.[59]  Even if the substantial relationship test with another state is satisfied, New York’s vital public policy reflected in its usury laws overrides the substantial relationship test, and New York law must apply.[60]  Therefore, the substantive law of New York must be applied in a situation where a company brings a claim of criminal usury surrounding a financial instrument, even if there is a choice-of-law provision that states that another state’s law will govern the transaction in question between the company bringing the claim and the other party.

VII.       The Effects of Criminally Usurious Financial Instruments in New York

The New York usury laws apply to financial instruments, such as loans and forbearances.[61]  In order for a transaction to constitute a usurious loan, there must be two parties contracting (a debtor/borrower and a creditor/lender).[62]  Additionally, it must appear that the real purpose of the transaction was, on the one side, to lend or provide money or a form of money at a usurious interest reserved in some form by the contract and, on the other side, to borrow upon the usurious terms dictated by the creditor/lender.[63]

In transactions involving criminally usurious financial instruments, “the effect of the exaction of an illegal rate of interest differs under the various provisions of the consolidated laws which deal with interest and usury.”[64]  A criminally usurious financial instrument is null and void, and no equitable relief is granted to the creditor executing the usurious financial instrument under the sovereign of New York.[65]  A criminally usurious instrument is treated as a pretense in New York and is ineffectual as a source of obligation or of right as a matter of law.[66]  Further, in New York, not only is a criminally usurious transaction void, but a court also has the statutory power to declare any obligation or security taken by the lender in violation of the statute void as well, as a matter of law.[67]  A 2017 New York Appellate Division case recognized the applicability of G.O.L. §5-511 as an affirmative defense of a criminally usurious transaction, voiding the underlying transaction.[68]

VIII.       Conclusion

All in all, when a transaction has been executed in New York between two businesses, the transaction should be governed under New York law if the transaction is substantially related to New York.  Additionally, when a transaction has been executed between parties in New York, and fundamental public policy is being violated by enforcing a choice-of-law provision, New York law should govern the transaction.  If a company is unable to invoke criminal usury as an affirmative defense to an agreement due to a choice-of-law provision, the objective of protecting the public that New York attempts to achieve is frustrated and hindered.  Further, a choice-of-law provision creates loopholes where a company can side-step the substantive statutes and regulations of a state, setting a dangerous precedent for the future.

[1] Glen Banks, 28 New York Practice Series: New York Contract Law § 8:3 (2019).

[2] William B. Emmal, comment, Evading Prohibitions on Usury Through Choice of Law, 9 Transactional Law. 6 (2009).  Emmal stated, “[s]ome lenders might also use a choice-of-law clause to avoid the usury law of the state whose law would apply if no choice were made.”  Id.

[3] 75 Am. Jur. 3d. Proof of Facts § 103 (2019).

[4] 19A N.Y. Jur. 2d. Conflict of Laws § 34 (2019).  A choice-of-law provision will not be enforced or honored if the law chosen has no reasonable relationship or sufficient contacts with the transaction or subject matter of the contract in question.  Id.

[5] Id. § 35 (2019).  A choice-of-law provision will not be enforced or honored where to do so would violate a fundamental or public policy of the forum state.

[6] Public Act, 13 Anne., c. 15 (Gr. Brit. 1773).  An act passed by Parliament to reduce the rate of interest on a loan without any prejudice to any Parliamentary Securities.  Id.

[7] Franklin W. Ryan, Note, Usury and Usury Laws: A Juristic-Economic Study of the Effects of State Statutory Maximums for Loan Charges upon Lending Operations in the United States 181 (Boston & New York: Houghton Mifflin Company 1924).

[8] 217 N.Y. 649 (1916).

[9] Id. at 649.

[10] Szerdahelyi v. Harris, 67 N.Y.2d 42 (1986).

[11] Id. at 50.

[12] Id.

[13] Id.

[14] Id. at 50-51.

[15] Hammelburger v. Foursome Inn Corp., 76 A.D.2d 646, 650-51 (2d Dep’t 1981).

[16] Id.

[17] Szerdahelyi, 67 N.Y.2d at 51.

[18] See generally Bakhash v. Winston, 134 A.D.3d 468 (1st Dep’t 2015); Fareri v. Rain’s Int’l, Ltd 187 A.D.2d 481 (2d Dep’t 1992); Abir v. Malky, Inc., 59 A.D.3d 646 (2d Dep’t 2009); Russkaya Reklama, Inc. v. Milman, 47 Misc. 3d 88 (App. Term. 2d Dep’t 2d, 11th & 13th Dists. 2015) (holding in all these cases that the usurious transactions are void as a matter of law).

[19] N.Y. Penal Law § 190.40 (McKinney 2019).

[20] Id.

[21] N.Y. Gen. Oblig. law § 5-501(4) (McKinney 2019).  “Interest shall not be charged, taken, or received on any loan or forbearance at a rate exceeding such rate of interest as may be authorized by law at the time the loan or forbearance is made.”  Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id. § 5-521(3).  “(3) The provisions of subdivision one of this section shall not apply to any action in which a corporation interposes a defense of criminal usury as described in section 190.40 of the penal law.”  Id.

[26] Id.

[27] Id. § 5-511.

[28] Id. § 5-501.  On a note, the civil usury threshold is an interest rate in the excess of sixteen percent, whereas the criminal usury threshold on a note is an interest rate in the excess of twenty-five percent.  Id.

[29] Id.

[30] Id.

[31] Joshua Stein, Confusory Unraveled: New York Lenders Face Usury Risks In Atypical Or Small Transactions, N.Y. St. B.J. 26, 27-28 (August 2001).

[32] Gen. Oblig. § 5-501.

[33] Blue Wolf Capital Fund II, L.P. v. Am. Stevedoring Inc., 105 A.D.3d 178, 184 (1st Dep’t 2013) (holding that if usury can be gleaned from the face of an instrument, intent will be implied, and usury will be found as a matter of law).

[34] N.Y. Banking Law § 380-E (McKinney 2019).

[35] Fareri v. Rain’s Int’l, Ltd 187 A.D.2d 481, 483 (2d Dep’t 1992). (holding that a transaction and supporting documents were void as a matter of law because as stipulated by the parties, the agreement was usurious on its face, and therefore, usurious intent can be applied).

[36] Id.

[37] See generally Venables v. Sagona, 85 A.D.3d 904 (2d Dep’t 2011); Abir v. Malky, Inc., 59 A.D.3d 646 (2d Dep’t 2009) (noting that all usurious agreements will be void and unenforceable as a matter of law).

[38] 48 B.R. 538 (Bankr. E.D.N.Y. 1985).

[39] Id. at 548.

[40] Id.

[41] Blue Wolf Capital Fund II, L.P. v. Am. Stevedoring Inc., 105 A.D.3d 178, 185 (1st Dep’t 2013). (holding that companies found to be charging criminally usurious rates of interest on a financial instrument are not entitled to equitable relief).

[42] Id.

[43] Lia v. Saporito, 909 F. Supp. 2d 149, 173 (E.D.N.Y. 2012) (holding that a party seeking equitable relief must not have unclean hands).

[44] Balaber-Strauss v. Murphy, 331 B.R. 107, 135 (Bankr. S.D.N.Y. 2005) (holding that equitable relief may be denied where a party applying for such relief is guilty of conduct involving fraud, unconscionability, or bad faith related to the matter at issue).

[45] 72 N.Y. Jur. 2d Interest and Usury § 57 (2019).

[46] Allstate Ins. Co. v. Hague, 449 U.S. 302, 308-09 (1981) (holding that applying a choice of law from a state with a mere slight and casual relationship to the parties and transaction would be fundamentally unfair to a state with a greater relationship to the parties or the transaction in question).

[47] S. Leo Harmony, Inc. v. Blinks Mfg. Co., 597 F. Supp. 1014, 1025 (S.D.N.Y. 1984).

[48] Banks, supra note 1.  “In the absence of fraud or violation of a fundamental state policy, New York courts generally defer to the choice-of-law made by the parties in their contract.  Choice-of-law provisions are generally honored because the parties are free to reach an agreement on whatever terms they prefer.”  Id.

[49] Cargill, Inc. v. Charles Kowsky Resources, Inc., 949 F.2d 51, 55 (2d Cir. 1991) (ruling that New York law permits a court to disregard the parties’ choice-of-law provision in a contract when the most significant contacts surrounding the dispute in question are in another state).

[50] AM. Equities Grp., Inc. v. Ahava Dairy Prods. Corp., 2004 WL 870260, at *1, *8 (S.D.N.Y. Apr. 2004) (holding that because significant contacts were in New York, that New York law should apply, despite the agreement that New Jersey law would govern).

[51] Power Up Lending Grp., Ltd. v. Cardinal Energy Grp., Inc., 2:16-cv-1545 (DRH)(GRB), 2019 WL 1473090, at *1, *4 (E.D.N.Y. Apr. 3, 2019).

[52] Id.

[53] In re McCorhill Pub., Inc., 86 B.R. 783, 793 (Bankr. S.D.N.Y. 1988).

[54] AM. Equities Grp.​, 2004 WL 870260, at *8.

[55] American Exp. Travel Related Serv.’s Co., Inc. v. Assih​, 26 Misc.3d 1016 (N.Y. City Civ. Ct. 2009).

[56] Clever Ideas, Inc. v. 999 Rest. Corp.​, No. 0602302/06, 2007 N.Y. Misc. LEXIS 9248, at *1, *2–4 (Sup. Ct. N.Y. Cty. Oct. 12, 2007).

[57] Id.

[58] Electric & Magneto Serv. Co. v. AMBAC Int’l Corp., 941 F.2d 660, 663 (8th Cir. 1991) (holding that the existence of a criminal provision is significant because the legislature would not allow a criminal law to be bypassed by the mere existence of a choice-of-law provision contained in a contract).

[59] Madden v. Midland Funding, LLC., 237 F. Supp. 3d 130, 145 (S.D.N.Y. 2017) (holding that New York’s interest in preventing criminal usury prevails over the choice-of-law provisions set forth by parties in a contract).

[60] Id.

[61] See generally Orvis v. Curtiss, 157 N.Y. 657 (1899); Bristol Inv. Fund, Inc. v. Carnegie Intern. Corp., 310 F. Supp. 2d 556, 562 (S.D.N.Y. 2003) (holding that the defense of usury must be found upon a loan or forbearance of money).

[62] Donatelli v. Siskind, 170 A.D.2d 433 (2d Dep’t 1991).

[63] Id.

[64] 72 N.Y. Jur. 2d Interest and Usury § 143 (2019).

[65] Id.

[66] Id.

[67] Id.

[68] Roopchand v. Mohammed, 154 A.D.3d 986 (2d Dep’t 2017) (holding that the defendants successfully met the burden of proving criminal usury and granted defendants’ cross motion for summary judgment, dismissing the action).

Caveat Emptor: Real Property Law’s “Get Out of Jail Free” Card v. The Property Condition Disclosure Act

By Alessandra Albano 

I.      Introduction

The doctrine of caveat emptor, or the real-life “get out of jail free” card, is a common law doctrine that traces back to our English roots and has greatly influenced many state laws over time.[1] The premise of “let the buyer beware”[2] was replaced by some state legislation requiring disclosure statements in the purchase and sale of residential real property. While the use of the doctrine varies from state to state, it has been regarded favorably in New York for centuries.

In New York, the remnants of the doctrine of caveat emptor can be seen today, as the state has taken a different approach from its old roots.[3] Prior to March 1, 2002, New York was considered a caveat emptor state, in which it abided by the common law doctrine on all matters pertaining to the sale of residential real estate.[4] The doctrine imposed “no duty on the seller to disclose any information concerning the premises when the parties deal at arm’s length unless there is some conduct on the part of the seller which constitutes active concealment.”[5] To be successful in an action for active concealment, fraud, or nondisclosure, the purchasing party must prove that the selling party thwarted the purchasing party’s efforts in fulfilling its responsibilities, including its due diligence, which is outlined by the doctrine of caveat emptor.[6]

The New York Legislature on March 1, 2002 altered the way New York views residential real property transactions by enacting the Property Condition Disclosure Act (the “PCDA”).[7] This legislation provided that each seller of residential real property must furnish the purchaser with a truthful and complete property condition disclosure statement.[8] The PCDA gave more power to the purchasing party in obtaining accurate information about the property.[9] Additionally, the PCDA directed sellers to complete a forty-eight-question form, the Property Condition Disclosure Statement (the “PCDS”), which details property conditions.[10] If the premises differed from the description on the form, the seller would be liable for any defects.[11]

Seemingly, the institution of the PCDA diminished the viability of caveat emptor. However, Section 465 of the PCDA recalls the common law doctrine of caveat emptor.[12] This section allows sellers to opt-out of providing purchasers with a PCDS.[13] Instead of truthfully drafting and completing a PCDS, sellers can provide purchasers with a five-hundred-dollar credit at closing.[14] Such credit can be considered a form of liquidated damages which prevents the purchaser from suing the seller for any other defects or deficiencies regarding the property.[15] This method of conveying residential real estate mimics the doctrine of caveat emptor, thus creating a seller-centric selling environment.

This blog will be divided into four sections. Section II will provide a historical overview of the operation of the residential real property laws before the enactment of the PCDA. Section III will discuss New York’s approach to the doctrine of caveat emptor, including the addition of the PCDA to New York law. Section IV will examine the “opt-out” option included in the PCDA. Section V will include recommendations to change the PCDA for the future.

II.      Historical Overview and Background of Caveat Emptor

The doctrine of caveat emptor has been a longstanding rule within traditional English law. This doctrine acts as a warning to purchasers to beware of potential problems lurking in the shadows of their future purchases. In New York, the doctrine of caveat emptor heavily influenced the state’s residential real property laws. Under the doctrine, it shows that a seller has no duty to disclose any information concerning the property when dealing at arm’s length, unless there is a confidential, fiduciary relationship or the conduct of the seller rises to the level of active concealment or material misrepresentation.[16] To demonstrate active concealment, the purchaser must prove that the seller’s conduct “thwarted the plaintiff’s effort to fulfill their responsibilities fixed by the doctrine of caveat emptor.”[17] Proving intentional misrepresentation and concealment is a difficult task for purchasers. Furthermore, most residential real estate transactions involve arm’s length rather than fiduciary relationships. Thus, the doctrine of caveat emptor dominates residential real estate transactions.

An example of a typical caveat emptor case is Platzman v. Morris.[18] In Platzman, the plaintiff purchasers entered into a contract for the sale of a home in Nanuet, New York.[19] Upon inspecting the home and before entering the agreement with the defendant sellers, the purchasers observed that the home included three kitchens, one on each level of the home.[20] The sellers stated that the basement kitchen was illegal, while the kitchens on the first and second floors were legal.[21] In the sales contract, the sellers represented that the home was a legal one-family home.[22] Furthermore, the contract included an as-is clause which provided that the purchasers were aware of the current condition of the property and agreed to take possession in its final, as-is condition from the sellers.[23] Moreover, the as-is clause stated that the purchasers were not to rely on any other representations or information given by the sellers, as the purchasers were responsible for taking the property subject to their inspection.[24] After discovering the illegality of the second-floor kitchen, the purchasers claimed fraud.[25]

The court held that the doctrine of caveat emptor applied in this situation.[26] Here, the purchasers had the duty to inspect the property at their leisure.[27] A proper inspection would have included an inquiry as to the legality of each of the three kitchens.[28] Since the purchasers did not make any attempt to investigate, the liability fell on them.[29] Additionally, the purchasers signed the contract which contained an “as-is” clause,[30] which provided that the purchasers were fully aware of the condition of the property prior to purchase.[31] The presence of the as-is clause further emphasized the purchasers’ need to fully inspect the premises.

Prior to the enactment of the PCDA, New York Real Property Law focused heavily on limiting liability for the seller. Sellers clearly favored this approach while purchasers bore the brunt of the responsibility. Essentially, sellers were shielded from liability for property defects unless there was some indication of misrepresentation or fiduciary relationship. Purchasers, on the other hand, were responsible for knowing and understanding all patent and easily discoverable property conditions. However, it can be assumed that, as part of a purchaser’s due diligence, it is his or her responsibility to investigate the property prior to entering into a contract.

By continuing the use of caveat emptor, New York adheres to the notion that purchasers should not rely on sellers’ words when negotiating. It is a well-known rule of contract law that the duty of good faith and fair dealing only applies once the contract has been formed.[32] During the negotiation process, there is no direct duty of good faith and fair dealing.[33] The doctrine of caveat emptor essentially reiterates that principle to remind purchasers that they need to investigate for themselves, regardless of what was said or promised.[34]

III.      The Property Condition Disclosure Act

The doctrine of caveat emptor imposed a strict burden on the purchasers.[35] In response, on March 1, 2002, the New York Legislature enacted the Property Condition Disclosure Act.[36] This statute was designed to help buyers recover damages for undisclosed, defective conditions regarding residential real property. The PCDA states that “every seller of residential real property pursuant to a real estate purchase contract shall complete and sign a property condition disclosure statement . . . .”[37] The statement shall be delivered to the purchaser prior to signing the sales contract and affixed to the completed purchase contract.[38] However, the PCDA does not prohibit parties from entering into sales agreements which stipulate that the property shall be sold “as-is.”[39]

New York Real Property Law Section 462(2) specifies the format of the PCDS.[40] The PCDS is not a warranty by the seller, nor is it a substitute for property inspections.[41] The completed PCDS is a representation based on the seller’s actual knowledge at the time of completion.[42] However, a seller will be held liable for actual damages suffered by a purchaser, and other existing equitable or statutory remedies, if the seller’s conduct amounts to a willful failure to perform the requirements under the PCDA. New York legislators anticipated that such legislation would create turmoil within the residential real property industry, so they included an “opt-out option” section to help sellers.[43]

 

IV.      The “Opt-Out Option”

To avoid potential disputes, the New York Legislature built an interesting caveat into the PCDA: the “opt-out option.”[44] Similar to other state laws,[45] Section 465(1) of the New York Real Property Law provides that if a seller chooses not to furnish the purchaser with a PCDS prior to contracting, the seller shall give the purchaser a five-hundred-dollar credit at closing.[46]

The leniency of the “opt-out option” allows for the responsibility to shift back to the purchaser. Essentially, by a seller providing the five-hundred-dollar credit at closing, the traditional doctrine of caveat emptor is reinstated. In turn, practitioners in the real estate law industry typically recommend that sellers provide this credit to avoid responsibility for defective conditions affecting the property. Furthermore, the credit acts as “‘cheap insurance’ to protect sellers against an inadvertent ‘incomplete statement.’”[47]

Providing the purchaser with the five-hundred-dollar credit is a way of releasing the seller from liability. In Bishop v. Graziano,[48] purchasers brought an action against sellers for breach of contract and fraud.[49] Upon taking occupancy of the home, purchasers noticed damage to the floors and walls.[50] However, based on the contract and addendum to the contract, sellers elected not to furnish purchasers with a PCDS[51] but to exercise their opt-out rights.[52] This credit, therefore, precluded purchasers’ claims because it was their responsibility to inspect the home for defects prior to closing.[53] Furthermore, any purported reliance on the sellers’ statements would not be actionable under New York law due to the credit.[54]

The “opt-out option” opens purchasers up to significant risk, much like the doctrine of caveat emptor. The significance of the “opt-out option” is that it takes the risk, which was assigned to the sellers under the PCDA, and reassigns it back to the purchasers, thus invoking the doctrine of caveat emptor once more. The “red flag” starts to wave as soon as the seller fails to produce the PCDS and opts to provide the purchaser with the five-hundred-dollar credit. This further emphasizes the purchaser’s need to beware of all conditions regarding the property. If the purchaser receives the credit and notices defects after closing, courts are extremely reluctant to favor the purchaser because it is the purchaser’s responsibility to conduct a proper and thorough inspection of the property.

 

V.      Recommendations and Conclusion

The New York Legislature passed the PCDA to help shield purchasers from liability for undisclosed defects. New York desired to move away from the traditional doctrine of caveat emptor and implement a new purchaser-favored body of law.[55] The initial portion of the PCDA, the physical disclosure form, did just that.[56] It shifted the responsibility from the purchaser to the seller and nearly eliminated the concept of buyer beware.[57] This form forced sellers to remain liable for undisclosed or misrepresented property defects.[58] However, this provision of the PCDA opens up too many avenues for litigation. The courts must determine whether the defect was within the seller’s actual knowledge and if the seller misrepresented the property.[59] By completing the PCDS, the seller is asking to be sued.

The “opt-out” option of the PCDA is much more favorable to sellers because it shifts the burden back to the purchaser to be cognizant of all property conditions prior to purchasing the premises.[60] Essentially, the PCDA, with the utilization of the “opt-out” option, takes New York back to the very essence of the doctrine of caveat emptor.

Similarly, the “opt-out” option of the PCDA provides overwhelming advantages for sellers. Simply stated, the seller can pay his way out of disclosure. The “penalty” for failing to provide, or purposefully opting not to provide, the purchaser with a completed PCDS is only five hundred dollars.[61] This “penalty” acts as a “slap on the wrist.” This remedy is simply not effective. It is estimated that approximately eight out of ten sellers provide their purchasers with the five-hundred-dollar credit.[62] While New York home prices vary around the state due to New York’s extreme property diversity, the “opt-out” option credit is too low.

Based on statistical studies regarding median home values in New York,[63] the five-hundred-dollar credit is considered a sham. It is an inexpensive way for sellers to escape liability worth hundreds of thousands of dollars. To remedy this problem, New York should consider whether to adopt legislation which uses the doctrine of caveat emptor with a modified credit option or impose liability on sellers for defective property conditions with no “opt-out” provisions. It is this author’s recommendation to utilize the former because it still recognizes a purchaser’s duty to exercise due diligence, while not acting as a “get out of jail free card” for sellers.

If New York chooses to impose the doctrine of caveat emptor with the credit, it would be in New York’s best interest to increase the “opt-out” option credit to something of substantial worth. Some individual purchasers rely on the credit to pay for property inspections, and thus, it should be increased. Increasing the “opt-out” option credit to one-half percent of the property value would reflect the great variation of home values across the state. With this, there would be no definitive credit price for all properties.

The reasoning behind the percentage option is that each home across New York is valued at a different price. Some homes can be valued at upwards of two million dollars. The current five-hundred-dollar credit for property valued at this price is simply ineffective. The approximate percentage value of the five-hundred-dollar credit for a home priced at two million dollars is 0.025%. When put into this perspective, on its face, the credit resembles a nuisance.

On the other hand, for property valued at seventy-five thousand dollars, the five-hundred-dollar credit may be more than necessary. Under this author’s recommendation of applying the credit at one-half percent, the total credit for a residential property valued at seventy-five thousand dollars would equate to three hundred seventy-five dollars, less than the credit the purchaser would currently receive.

Applying a percentage option increases fairness for both the purchaser and the seller. If the credit is too little compared to the value of the home, it can be viewed as a sham. If the credit is too much compared to the value of the home, it could unnecessarily tip the balance in favor of the purchaser.

New York’s PCDA was a brief attempt to minimize the effects of the traditional common law doctrine of caveat emptor. While the thought was there, the PCDA’s main provision, the PCDS, has proven to be increasingly ineffective. This legislation gives sellers two options to choose from: one which significantly increases their liability or one that significantly decreases their liability. Most sellers wisely choose to limit their liability. With this, the statement provision is substantively inadequate and thus calls for its revision in favor of a modified reversion back to the doctrine of caveat emptor with an increased credit provision.

* J.D. Candidate 2021, Touro College Jacob D. Fuchsberg Law Center, B.S. Business Administration, St. Joseph’s College – Long Island.

[1] Cendant Mobility Financial Corp. v. Asuamah, 285 Ga. 818, 819 (2009).

[2] Id.

[3] See N.Y. Real Prop. Law § 462 (McKinney 2019).

[4] See Platzman v. Morris, 283 A.D.2d 561, 562 (2d Dep’t 2001).

[5] Id.

[6] Id.

[7] See N.Y. Real Prop. Law §§ 462-465 (McKinney 2019).

[8] See id. § 462.

[9] Id.

[10] Id.

[11] Id.

[12] See id. § 465.

[13] Id.

[14] Id. § 465(1).

[15] See generally id. § 465.

[16] Platzman v. Morris, 283 A.D.2d 561, 562 (2d Dep’t 2001); Glazer v. LoPreste, 278 A.D.2d 198, 198 (2d Dep’t 2000).

[17] Platzman, 283 A.D.2d at 562.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] U.C.C. § 1-304 (Am. Law Inst. & Unif. Law Comm’n 1977).

[33] In re 50 Pine Co., LLC, 317 B.R. 276, 283 (Bankr. S.D.N.Y. 2004) (See Restatement (Second) of Contracts § 205 (Am. Law Inst. 1981)).

[34] While this rule is clearly advantageous for sellers, it is blatantly unfair to unsuspecting purchasers. This opens up a realm of opportunity for justifiable reliance by the purchasers, which is seemingly pushed to the side when the doctrine of caveat emptor is involved.

[35] See Platzman, 283 A.D.2d 562; Perin v. Mardine Realty Co., 5 A.D.2d 685 (2d Dep’t 1957).

[36] N.Y. Real Prop. Law § 462(1) (McKinney 2019).

[37] Id.

[38] Id.

[39] Id.

[40] Id. § 462(2).

[41] Id.

[42] Id. Additionally, a seller is obligated to update the PCDS if the seller becomes aware of defects prior to closing.

[43] Id.

[44] Id. § 465(1).

[45] See 2019 Conn. Legis. Serv. P.A. No. 19-192 (H.B. 7179) (West); N.J. Admin. Code § 13:45A-29.1 (2019).

[46] Id.

[47] Blumenthal, Practice Commentary, McKinney’s Cons. Laws of N.Y., 2018 Electronic Update, Real Prop. Law § 465.

[48] 10 Misc. 3d 342 (Dist. Ct. Suffolk Cty. 2005).

[49] Id. at 343.

[50] Id.

[51] Id.

[52] Id.

[53] Id. at 345. Had the contract provided for an inspection contingency clause, the outcome would have been different.

[54] Id. at 346.

[55] See N.Y. Real Prop. Law § 462 (McKinney 2019).

[56] Id.

[57] Id.

[58] Id.

[59] Id.

[60] See id. § 465(1).

[61] Id.

[62] Emily Pickrell, Should You Sign a Property Condition Disclosure?, Newsday (Sept. 5, 2007), https://www.newsday.com/business/should-you-sign-a-property-condition-disclosure-1.876762.

[63] See Residential Median Sale Price Information by County, N.Y. State Dep’t Tax’n & Fin. (last updated Apr. 12, 2019), https://www.tax.ny.gov/research/property/assess/sales/resmedian.htm; See Oshrat Carmiel, NYC Homebuyers Find Biggest Price Reductions in Manhattan, Bloomberg (Jan. 23, 2020), https://www.bloomberg.com/graphics/property-prices/nyc/.

Employment-Based Immigration: Fifth Preference EB-5 Implications

By James Reiser

I. Introduction

In 1990, Congress implemented the Employment-Based Immigration Fifth Preference EB-5 Program (hereinafter “EB-5” or “EB-5 Program”) to stimulate the United States economy by allowing foreign investors to invest capital into companies to create jobs.[1]  The program has become problematic due to social, economic, and political changes.  The program is flawed in many respects as it creates problems of fraud and corruption regarding background checks and document verification.  There are also national security concerns.  While there has been an immense influx of investment since deployment, the implications of the deployment of the program far outweigh the positive economic gains generated by it.  Undoubtedly, the program must be changed, or removed altogether, to repair the vulnerabilities and to reduce the number of problematic scenarios caused the program’s weaknesses.

The name was coined for the fifth preference visa that participants receive for taking part and being approved for the program.[2]  In 1992, Congress created the Immigrant Investor Program, also known as the Regional Center Program, which sets aside EB-5 visas for participants who invest in commercial enterprises in association with regional centers approved by the United States Citizenship and Immigration Services (hereinafter “USCIS”) based on proposals for the purpose of promoting economic growth.[3]  An investor and his family members are granted a two-year conditional permanent resident visa once investor documents are verified and specified immigration forms are approved.[4]

Section II gives a background of the program, including some statistical information, application and petition requirements, and other important information.  Section III provides a discussion of the legislative intent of the program.  Section IV discusses the economic changes that have occurred in the United States over the past three decades and how these changes make the program less appropriate given its intent.  Section V discusses the various implications that have come about because of the program, whether intended or not.  Section VI addresses the need for reformation of the program due to the vast number of problems that have been created by EB-5.

II. Requirements

USCIS administers the EB-5 Program, which has multiple requirements that must be met in order to qualify for approval to obtain a visa.[5]  One requirement is that EB-5 investors must invest in a new commercial enterprise established after November 29, 1990.[6]  Investors can alternatively purchase an existing business that is restructured to create a new commercial enterprise or expand the existing business through investment resulting in a forty percent increase in number of employees or an increase in net worth of the business occurs.[7]  A commercial enterprise is defined as “activity formed for the ongoing conduct of lawful business including, but not limited to: [a] sole proprietorship[,] [p]artnership (whether limited or general)[,] [h]olding company[,] [j]oint venture[,] [c]orporation[,] [b]usiness trust[,] or [o]ther entity, which may be publicly or privately owned.”[8]

The second requirement is that the investment in the new commercial enterprise must create ten full-time positions for at least ten qualifying employees, and the new commercial enterprise, or a subsidiary, must itself be the employer of the qualifying employees.[9]  If the new commercial enterprise is within a regional center, then the full-time jobs created can either be created directly by an employer-employee relationship between the enterprise and the person it employs or indirectly by an outsider of the enterprise but created as a result of it.[10]  A qualifying employee is

a U.S. citizen, lawful permanent resident, or other immigrant authorized to work in the United States including, but not limited to, a conditional resident, a temporary resident, an asylee, a refugee, or a person residing in the United States under suspension of deportation. This definition does not include the immigrant investor; his or her spouse, sons, or daughters . . . .[11]

 

Full-time employment is established by a qualifying employee working a minimum of thirty-five hours per week for the new commercial enterprise or indirectly due to the new commercial enterprise with the allowance of a job-sharing arrangement.[12]

The final requirement that must be met to obtain an EB-5 visa is that the investor invests a minimum capital amount which is generally one million dollars, or five hundred thousand dollars in a rural or high unemployment area.[13]  A high unemployment area or a targeted employment area is an area that at the time of investment has experienced an unemployment rate of at least 150 percent of the national average rate.[14]  A rural area is a region not within either a metropolitan statistical location as determined by the Office of Management and Budget or the outer boundary of a city or town having a population of 20,000 or more in consonance with the most recent decennial census of the United States.[15]

The petition and application process require that a potential immigrant investor candidate submit an I-526 Form, designated the Immigrant Petition by Alien Entrepreneur.[16]  The petitioner or applicant must meet each element of the petition by merely a preponderance of the evidence.[17]  If the I-526 Form is approved, then an I-485 Form, the Application to Register Permanent Residence or Adjust Status, is to be filed with USCIS to adjust status to a conditional permanent resident within the United States.[18]  Alternatively, a DS-260, known as the Application for Immigrant Visa and Alien Registration, is to be filed with the U.S. Department of State for an EB-5 visa abroad for the purpose of seeking admission to the United States.[19]  After approval of either of these documents, the EB-5 investor and his or her derivative family members are granted a 2-year conditional permanent residency in the United States.[20]

Regional centers are public or private economic units in the United States that aid in promoting economic growth, particularly designated by USCIS for participation in the Immigrant Investor Program.[21]  As of October 10, 2018 there are 887 approved regional centers; however, approval as a regional center does not constitute USCIS endorsement of activities of that regional center, does not guarantee compliance with U.S. securities laws and does not minimize or eliminate risk for the investor.[22]  USCIS provides a list of approved regional centers but also disclaims investment liability on its Immigrant Investor Regional Centers webpage.[23]  USCIS further provides that the information available on this webpage is for informational purposes only.[24]

III. Legislative Intent

Congress passed the Immigration Act of 1990 to encourage investors and entrepreneurs with an interest in American business to invest capital.[25]  If an individual met the statutory requirements of the EB-5 program, then they were effectively on a fast track to obtaining a visa and ultimately purchasing conditional citizenship without having to go through the nationalization process by “purchasing” citizenship through investment.[26]  The congressional intent of the program was not incentivizing “purchasing visas,” but to inject capital into the United States from non-citizens.[27]  One scholar believes that

[t]he requirement of active engagement in the new enterprise is aimed at targeting an entrepreneur’s human capital investment contribution; this demonstrates Congress’s intent to attract entrepreneurs and not merely investors. The Senate Report also reveals specifically that the purpose of the EB-5 program was to create jobs for U.S. workers and to infuse new capital into the U.S. economy, “not to provide immigrant visas to wealthy individuals.”[28]

 

Essentially, the program incentivizes individuals with backgrounds and knowledge of running successful businesses to do so within the United States.  But while the idea of the program initially worked in theory, the early frameworks needed reform in order to ensure the EB-5 Program worked effectively.[29]

IV. Changing Times

            Since the creation of EB-5, there have been major improvements to the economy, including an increase in gross domestic product (hereinafter “GDP”), a decrease in unemployment, and an increase in United States stock markets.[30]  The program was enacted in 1990 and minimally altered in 1992.[31]  In 1990, the United States GDP was about $5,980,000,000 according to the World Bank.[32]  Compare this to the GDP of today, according to the U.S. Bureau of Economic Analysis, the United States GDP as of second quarter (Q2 2018) was $20,410,000,000, more than three times the 1990 valuation.[33]  The United States stock markets recovered in 1992 to a value equal to where they had been before a dip in 1987.[34]  The Immigration Act of 1990, which included the enactment of the EB-5 program, was created in order to provide employment opportunities for U.S. workers and to infuse capital into the country from foreign sources.[35]  Congress estimated as many as 4,000 foreign investors and their families would utilize the program to seek legal residence in the United States, bringing with them $4 billion in investment, ultimately creating 40,000 jobs each year.[36]  It must be noted that the United States Stock Market dipped substantially in October of 1987 and dipped again substantially in October, 1990,[37] further incentivizing Congress to come up with a program promoting a generation of capital investment and jobs in the United States.

Sparking investment by non-citizens in order to create jobs for qualified workers that do not have to be United States citizens is highly beneficial, especially because the United States unemployment rate fluctuated between 5.2 percent in 1989 and 7.5 percent in 1992.[38]  However, this bolster to the economy is unnecessary when unemployment is low.  As of July 2018, U.S. unemployment was at 3.9 percent, compared to 9.7 percent in 1982,[39] which may have triggered discussions of immigrant investor or similar programs at that time.  Less than 10 percent of total available EB-5 visas were issued between 1990 and 2010.[40]  This statistic shows that the program was not initially utilized as intended, partially due to the strict requirements and restrictions that were later relaxed or eliminated to increase EB-5 use.[41]  However, in easing requirements to expand access, increased use of the program has come with a fair share of vulnerabilities and unintended problems.

V. Implications

As requirements and regulation for the program have eased, there have been a growing number of concerns, including fraud.[42]  In October 2013, USCIS and the U.S. Securities Exchange Commission (hereinafter “SEC”) published an investor alert warning EB-5 investors that Regional Centers have falsely guaranteed a return and misused funds provided by EB-5 investors.[43]

With the immigration demographic constantly changing, along with an economy that has rapidly expanded since 2008, the number of applications received by USCIS has increased from 1,258 in 2008 to 12,165 in 2017.[44]  There is an uneven distribution of visas allocated to various countries as evidenced in 2014 when 10,692 applications were approved, over 85 percent of which were granted to Chinese investors.[45]  This bias potentially lies in the large population and the strong economy of China, but as the statistics show there is clearly a larger number of individuals coming from China than from the rest of the countries in the world combined.[46]  Although EB-5 and similar programs were not intended to be a safe-haven for corrupt officials, anyone with sufficient funds, intelligent counsel, and minimally sufficient evidence of funds can get a U.S. visa through the program.[47]  Powerful foreign officials suspected of corruption have utilized the EB-5 program to escape prosecution in their home country.[48]

As use of the program has expanded, there has been discussion of whether the capital requirements of $1,000,000 and $500,000 should be raised and whether an additional net worth requirement should be applied to investors for the EB-5 program.[49]

The United Kingdom, Netherlands, Australia, and Canada have similar programs with different requirements.[50]  These programs have been sought out by wealthy Chinese criminals and corrupt political figures, as a means of fleeing and expediting citizenship to escape the clutches of prosecution.[51]

VI. Conclusion

            Looking forward, there is a possibility for a decision in November 2018 to raise the minimum investment amounts for EB-5 investors.[52]  There is also a possibility for new legislation in November 2018 that would affect EB-5 relating to Department of Homeland Security appropriations for fiscal year 2019.[53]  Further, a deadline for discussion of EB-5 regional investor centers has been pushed to December 7, 2018; this is the date of the Continuing Resolution to extend the EB-5 Program.[54]  There has been intense debate about what is next for the EB-5 program.  There are many aspects to the program that should be amended or altered to meet the change in economic, political, and social circumstances.  Reform of the program is necessary in order to patch the vulnerabilities and slough of problems that have come about with the expanded interest in the program.  There is an immense need to increase the standard of review of evidenced funds of investment.  Further, business plans need to be analyzed and followed in order to ensure that funds are not misappropriated by individuals utilizing the investment for their project.  The initial investment minimum must be increased to meet the stronger economic conditions and in order to compete with other countries’ investment programs.  A third tier should be added that targets higher income and more developed areas that require greater investment and greater job creation.  This third tier should be the most highly regulated and analyzed by officials.  Finally, there needs to be more disclosure of statistical data, including a registry of individuals in the U.S. and their use of EB-5 funds to limit fraud and corruption.  This will allow for smoother regulation of cases so that misallocated funds can be recouped faster and more efficiently

Fraud, corruption, internal bias, increase of capital requirements, regulation, and data collection of investors and projects are just some of the areas where major alterations could be a key to the future success of the EB-5 Program.  Comparing similar programs of other countries, current economic data, future economic outlook, and analyzing problematic areas of the current programs will allow an efficient and necessary alteration to the EB-5 Program.  Immigration to the United States has always been a touchstone to expansion and growth of the country.  It is vital to allow people to come to the United States.  Nonetheless, fairness and safety are integral and are at stake in the EB-5 Program that has been in place for nearly three decades.

[1] EB-5, Immigrant Investor Program, U.S. Citizenship & Immigr. Services, https://www.uscis.gov/eb-5 (last visited Oct. 29, 2018).

[2] Id.

[3] Id.

[4] EB-5, Investors, U.S. Citizenship & Immigr. Services, https://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/eb-5-investors (last updated May 8, 2017).

[5] EB-5, Immigrant Investor Program, supra note 1.

[6] Id.

[7] About the EB-5 Visa Classification, U.S. Citizenship & Immigr. Services, https://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/about-eb-5-visa-classification (last updated Mar. 27, 2018).

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] EB-5 Investors, supra note 4.  Necessary documentation includes: Form I-526, Immigrant Petition by Alien Entrepreneur, which also needs evidence of new commercial enterprise investment, evidence that the investor is or will be engaged in the management of the new commercial enterprise through either day-to-day managerial control or through policy formulation, evidence of investment of required capital amount ($1 million or $500,000 depending on the area), proof that the funds being utilized were obtained through lawful means (by any one of the following: foreign business registration records, relevant enterprise entity, personal, or any other tax returns filed within the last 5 years, evidence identifying any other source of capital, certified copies of judgments or civil/criminal litigation (pending or otherwise) involving money judgments from any court in or outside the United States within the past 15 years), evidence that the new commercial enterprise will create at least 10 full-time positions for qualifying employees or a business plan showing that the nature of the projected size of the new enterprise will result in a need for at least 10 qualifying employees, and evidence that the number of existing employees is or will be maintained for a 2-year period, with photocopies of tax records, Form I-9, Employment Eligibility Verification, or other relevant documents for qualifying employees, along with a business plan in support of the petition.  See id.

[17] Matter of Chawathe, 25 I. & N. Dec. 369, 375-76 (A.A.O. Oct. 20, 2010).

[18] EB-5 Investors, supra note 4.

[19] Id.

[20] Id.

[21] EB-5 Immigrant Investor Regional Centers, U.S. Citizenship & Immigr. Services, https://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/eb-5-immigrant-investor-regional-centers (last updated June 6, 2018).

[22] Immigrant Investor Regional Centers, U.S. Citizenship & Immigr. Services, https://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/immigrant-investor-regional-centers (last updated Sept. 10, 2018).

[23] Id.

[24] Id.

[25] History of the EB-5 Program, EB-5 investors, https://www.eb5investors.com/eb5-basics/history-of-eb5 (last visited Nov. 8, 2018).

[26] See P.J. Tobia & Marina Lopez, How Chinese Millionaires Buy U.S. Citizenship, PBS News Hour (May 14, 2015, 11:07 AM), http://www.pbs.org/newshour/updates/chinese-millionaires-buy-u-s-citizenship/.

[27] Beth MacDonald, The Immigrant Investor Program: Proposed Solutions to Particular Problems, 31 Law & Pol’y Int’l Bus. 403, 409 (2000) (“The main goals of the program are to create new employment for U.S. workers and to infuse new capital into the country and not to provide immigrant visas for wealthy individuals.” (internal quotation marks omitted)).

[28] Annie Anjung Lin, Splitting the EB-5 Program: A Proposal for Employment-Based Immigration Reform to Better Target Immigrant Entrepreneurs and Investors, 18 Chap. L. Rev. 527, 537-38 (2015) (citation omitted).

[29] MacDonald, supra note 27 (explaining the weakness of the 1990 Act).

[30] See Databases, Tables & Calculators by Subject, U.S. Dep’t Labor, https://data.bls.gov/pdq/SurveyOutputServlet (last visited Nov. 7, 2018); see also GDP (current US$), World Bank National Accounts Data, And OECD National Accounts Data Files, World Bank, https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2017&locations=US&start=1990 (last visited Aug. 31, 2018); Dow Jones – 100 Year Historical Chart, Macrotrends, https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart (last visited Aug. 31, 2018).

[31] MacDonald, supra note 27.

[32] GDP (current US$), supra note 30.

[33] Gross Domestic Product: Second Quarter 2018 (Second Estimate); Corporate Profits: Second Quarter 2018 (Preliminary Estimate), U.S. Bureau Econ. Analysis (Aug. 29, 2018), https://www.bea.gov/news/2018/gross-domestic-product-second-quarter-2018-second-estimate-corporate-profits-second.

[34] Dow Jones – 100 Year Historical Chart, supra note 30.

[35] History of the EB-5 Program, supra note 25.

[36] Christine Ryan, Too Porous for Protection? Loopholes in EB-5 Investor Visa Oversight Are Cause for National Security Concern, 16 S.D. Intl. L.J. 417, 425 (2015).

[37] Dow Jones – 100 Year Historical Chart, supra note 30.

[38] Databases, Tables & Calculators by Subject, supra note 30.

[39] Id.

[40] Ryan, supra note 36, at 425.

[41] Id.

[42] See generally William A. Haddad, EB-5 Visa Fraud Cases-What Practitioners Need to Know, Pasquarello, Fink, Haddad, LLC, Sept./Oct. 2017, http://www.pasqfinklaw.com/uploads/8/1/9/0/8190135/eb5_visa_fraud_article.pdf.

[43] Ryan, supra note 36, at 433 (2015) (citing Investor Alert: Investment Scams Exploit Immigrant Investor Program, U.S. Sec. & Exchange Commission, Oct. 9, 2013, https://www.sec.gov/oiea/investor-alerts-bulletins/investor-alerts-ia_immigranthtm.html).

[44] Number of Form I526, Immigrant Petition by Alien Entrepreneur, by Fiscal Year, Quarter, and Case Status 20082018, U.S. Citizenship & Immigr. Services, https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/Employment-based/I526_performancedata_fy2018_qtr2.pdf (last visited Sept. 2, 2018).

[45] Taylor C. Byrley, Selling Citizenship to the Highest Bidder: A Proposal to Reform the United States EB-5 Investor Visa Program, 27 Ind. Intl. & Comp. L. Rev. 79, 96 (2017).

[46] Lee Li, Navigating EB-5 Visa Usage Statistics: A Historical and Current Perspective, 5 Int’l Perspectives 68 (2017), https://iiusa.org/blog/wp-content/uploads/2017/12/Navigating-EB-5-Visa-Usage-Statistics2C-A-Historical-and-Current-Perspective.pdf.

[47] Kyra Gurney et al., Suspected of Corruption at Home, Powerful Foreigners Find Refuge in the U.S., ProPublica (Dec. 9, 2016, 9 A.M.), https://www.propublica.org/article/corrupt-foreign-officials-find-refuge-in-united-states.

[48] Id.

[49] Byrley, supra note 45, at 111.

[50] See Quick Countries Comparison, Best Citizens, https://best-citizenships.com/countries.htm (last visited Oct. 4, 2018) for a list of 54 countries that have investor-based visa and immigration programs with a short summary comparing the program of each country.

[51] Andy J. Semotiuk, EB-5 Fraud Highlights Risks Of Investor Program, Forbes (Jan. 5, 2015, 1:50 P.M.), https://www.forbes.com/sites/andyjsemotiuk/2015/01/05/the-eb-5-investor-program-risks-and-rewards/#1fb1dd6d43a5 (referring to an increase of corrupt Chinese officials seeking to utilize the Australian Investor Based Immigration program, similar to the EB-5 program of the United States; there is cause for concern that this problem will also occur, if it has not already, through utilization of the EB-5 Program).

[52] RC program authorization (12/7/2018), Lucid Prof. Writing EB-5 Blog (Sept. 28 2018), https://blog.lucidtext.com/.

[53] Regulations update (Fall 2018), Lucid Prof. Writing EB-5 Blog (Oct. 17, 2018), https://blog.lucidtext.com/.

[54] RC program authorization (12/7/2018), supra note 50.

A Political Gaslight: Attorney General Jeff Sessions and Matter of A-B-

By Jessica Senat*

Gregory Anton: You see how it is, Elizabeth.

Elizabeth: I see JUST how it is, sir.[1]

 

Part I: Introduction

In Matter of A-B-,[2] Attorney General Jeff Sessions (hereinafter “A.G. Sessions”) reversed a decision that allowed women fleeing domestic violence to apply for asylum.[3]  A.G. Sessions used a rare authority, the “referral and review mechanism,” to refer the case to himself.[4]  In the opinion, he dismissed domestic and gang violence as a claim that is “unlikely to satisfy the statutory grounds for proving group persecution that the government is unable or unwilling to address.”[5]  The governing asylum statute states that an “applicant must establish that race, religion, nationality, membership in a particular social group, or political opinion was or will be at least one central reason for persecuting the applicant” when seeking asylum protection.[6]  A.G. Sessions did not implement new standards that may bar individuals who suffer gender-based violence from applying for refugee protection; his holding is directed at the Board of Immigration Appeals’ (hereinafter “BIA”) failure to apply precedent law.[7]  It is hard to distinguish this holding from surrounding dicta because the holding is overshadowed by his outdated views on gender-based persecution, over-generalized statements without factual backing, and inflated legal requirements that cause more confusion than clarity.

A.G. Sessions’ decision reflects a harsh reality: adjudicators still struggle to accept gender-based violence as a legitimate basis for persecution under refugee law.  This blog post will first discuss the legislative history of the asylum statute and the concept of gender-based persecution.[8]  The Refugee Convention, which was created as an answer to the refugee crisis after World War II,[9] was the foundation for asylum law in the United States.  It did not speak to gender-based violence as the drafters did not realize it existed.[10]  This  blog post will then discuss the “Particular Social Group” requirement.  Legislative history has shown that asylum law is amorphous.  It is riddled with inconsistent holdings between both administrative and judicial adjudication.[11]  The BIA attempted to provide a standard in determining the PSG requirement in Matter of Acosta, but the decision only fueled more confusion amongst the courts.[12]

Parts IV and V discuss how A.G. Sessions’ opinion arguably gaslights the American public.[13]  He trivializes gender-based persecution and undermines immigration policy by (1) abusing a rarely used procedural tool to refer immigration cases to himself; (2) incorporating over-generalized statements without factual or precedential support; and (3) conflating requirements under the asylum statute.  This blog post proposes administrative and legislative reform: the BIA should establish separate regulatory standards as guidance to determine whether gender-based violence is “acceptable” persecution under the immigration statute.  Furthermore, there should be a push for reforming the self-referral provision to prevent abuse of the authority.

Part II: Legislative History

            The history of refugee law in the United States errs more on the side of exclusivity than inclusivity.[14]  Discriminatory policies were prevalent throughout history.  An example of this is the Emergency Quota Acts of 1921 and 1924.[15]  Congress designed a quota system that limited the number of minorities permitted to enter the United States and made the process easier for Northern and Western Europeans.[16]  Remnants of these discriminatory policies remained under the enactment of the Immigration and Nationality Act (hereinafter “INA”) in 1955 and even after the quota system was eliminated under the amendments to the INA laws.[17]

In 1967, the United States began to take steps to eliminate discriminatory refugee policies.  Today’s immigration and refugee laws are based on the 1951 United Nations Convention Relating to the Status of Refugees or Refugee Convention.[18]  The Refugee Convention was a response to the refugee crisis left in the wake of World War II.  Its defined purpose was to protect any “person who faces serious human rights abuses where a state has failed in its fundamental obligation of protection for reasons of the person’s status or beliefs, resulting in fundamental marginalization and an inability of the person to vindicate his or her rights in his or her home country.”[19]  Under the Convention, an applicant only needed to show that he or she had a “well-founded fear” of persecution.[20]

Congress incorporated the provisions of the Refugee Convention when it signed the United Nations Protocol Relating to the Status of Refugees (the Protocol of 1967).[21]  However, it was not until the Refugee Act of 1980 where the United States removed geographical or ideological biases and expanded the definition of “refugee” to include all persons regardless of ethnicity or nationality.[22]  It also included the new Particular Social Group (hereinafter “PSG”) standard.  Under this standard, an applicant is required to prove that he or she is fleeing persecution on the basis of being a member of a particular social group.[23]

Part III: The Standard

Under 8 U.S.C. § 1158(b)(1)(B)(i),[24] the PSG requirement has been the source of various interpretations since enactment.  Mainly, the ambiguity of the term has caused many contradictions between the circuit courts and the BIA.  In 1987, the BIA sought to provide clarification on the term in Matter of Acosta.[25]  It stated that the “shared characteristic” is found in the fact that it cannot be changed.[26]

In 2008, the BIA established additional requirements for satisfying the PSG standard.[27]  In Matter of S-E-G- and Matter of E-A-G-, the BIA concluded that in order to satisfy the PSG standard, the group must be based on (1) an immutable and shared characteristic; (2) be socially visible; and (3) particularly defined.[28]  The BIA stated that “[t]he essence of the ‘particularity’ requirement . . . is whether the proposed group can accurately be described in a manner sufficiently distinct that the group would be recognized, in the society in question, as a discrete class of persons.”[29]  In Matter of M-E-V-G-,[30] the BIA further defined particularity as having “definable boundaries”; it must be defined specifically and not be “amorphous, overbroad, diffuse or subjective.”[31]  The “social visibility” element is satisfied if the society in question perceives the group as socially distinct.[32]  The PSG standard also requires causation, referred to as “nexus.”[33]  Nexus is established when the applicant shows that “his membership in a particular social group was or will be a central reason for his persecution.”[34]  The BIA stated that the persecutors’ views and motives are important in establishing nexus.[35]

a. Jumping Through Hoops of Fire: The Problem of Circularity with Social Distinction and Particularity Standards 

The BIA claimed to have clarified the PSG elements as separate but necessary.[36] However, BIA’s nitpicking creates a narrow standard for applicants, increases the burden of proof, and confuses the requirements with overlapping definitional terms.  In Rejecting the Children of Violence: Why U.S. Asylum Law Should Return to the Acosta Definition of “A Particular Social Group, Rachel Gonzalez Settlage noted the difficulty in proving the social distinction and the particularity requirement.[37]  Settlage stated “[p]articularity . . . suggests hard limits and requires specificity of definition. A group cannot be too broad or too diffuse.”[38]  However, if the applicant provides evidence proving that the society in question uses specific parameters to define the social group, rendering them “socially distinct,” these parameters may not satisfy the particularity requirement if the BIA finds that it is too “broad” or “amorphous.”[39]  Although Settlage discusses this difficulty for applicants that are fleeing gang violence,[40] the standards can frustrate applicants from various backgrounds.

b. The Difficulty of Proving Gender-Based Persecution[41]

The phrase “jumping through hoops of fire” is an accurate description of the process applicants must go through in order to establish asylum protections from domestic abuse.[42] Historically, the laws did not address gender-based violence.[43]  The definition of gender-based persecution can be divided into two categories: being persecuted as a woman and being persecuted because of being a woman.[44]  In Gender and the “Membership in A Particular Social Group” Category of the 1951 Refugee Convention, Andrea Binder stated that being persecuted as a woman relates to “forms of persecution that are gender-specific, such as rape, female genital mutilation (FGM), or domestic abuse.”[45]  The concept that women are persecuted because they are women “is often discussed in the context of the ‘membership in a particular group’ category.  The definition of refugee is deficient in addressing the concerns of persecuted women.”[46]

Historically, the Refugee Convention’s “main concern was to address the mass persecutions suffered by the European Jews and other targeted persons based on racial, religious and political grounds.”[47]  According to Binder, traditional definitions of human rights violations focused on abuse from the state instead of social or economic rights.[48]  This led to characterizing a woman’s experience as a “private matter” to be addressed by the government.[49]  Such “gender deficiency”[50] within the refugee law should not be carried over to modern day interpretations of asylum statutes.

Part IV: Modern-Day Gender-Based Persecution

It is not a secret that U.S. asylum laws do not include gender as one of the enumerated bases for persecution.[51] The BIA often conflates the two types of persecution women suffer into one broad category of domestic violence or dismisses them altogether.[52]  The archaic perspectives that places domestic violence as a private matter to be handled within the confines of the home is harmful for those who seek legal recourse in any context.  With this backdrop, Matter of A-R-C-G- is still viewed as a huge step forward for asylum law.  At the time, it signaled that the BIA was finally ready to address the problem of “gender-deficiency” within U.S. immigration laws.

a. Matter of A-R-C-G-

In Matter of A-R-C-G-,[53] respondent, a mother of three minors at the time, had entered the United States from Guatemala in 2005 to flee from her abusive husband.[54]  She filed a timely application for asylum and withholding of removal on behalf of herself and her three children.[55] It was undisputed that respondent was repeatedly abused by her husband.[56]  Respondent contacted the police many times, but the police failed to help her and arrest the husband after he hit her.[57]  She knew that her husband would harm her if she returned to Guatemala.[58]

On appeal, the Department of Homeland Security (hereinafter “DHS”) subsequently conceded that she satisfied the PSG requirement and only requested remand for further factual development.[59]  The BIA held that respondent successfully satisfied the particular social group requirement.[60]  The BIA looked to social factors when determining whether the group had a social distinction within the Guatemalan society:

Such evidence would include whether the society in question recognizes the need to offer protection to victims of domestic violence, including whether the country has criminal laws designated to protect domestic abuse victims, whether those laws are effectively enforced, and other sociopolitical factors.[61]

 

As this blog post suggests, these sociopolitical criteria are necessary not only for determining whether an applicant belongs to a particular social group, but for determining whether a government can actually handle civil domestic violence.  The BIA should use these factors to formulate a test that is subject to the Chevron test of judicial deference, and require courts and administrative judges to evaluate whether the government has the resources to address domestic violence.

b. In the Matter of A-B-

In Matter of A-B-, A.G. Sessions overruled Matter of A-R-C-G-, holding that the case was erroneously decided because it followed concessions made by the DHS as conclusive legal points instead of applicable law.[62]  This, he argued, prevented the BIA from holding that applicants fleeing domestic violence or gender-based violence are not likely to satisfy the requirements for asylum.[63]  Sessions’ opinion failed to provide any clarity for several reasons.

First, he confuses the standard to establish a presumption of future persecution and creates his own standard to establish persecution.[64]  A.G. Sessions states that in order to prove persecution, an applicant must show that (1) there was an intent to target a belief or characteristic; (2) the level of harm was severe; and (3)  the government is unable to control or prevent the harm.[65]  Although the elements are correct, A.G. Sessions mistakenly believes it proves an applicant has suffered persecution.  In actuality, an applicant must satisfy these elements to prove that he or she is in danger of future persecution.[66]

Second, most of his criticism was not backed with supporting evidence or cases.  A.G. Sessions stated that “the opinion has caused confusion because it recognized a new category of particular social groups based on private violence.”[67]  However, A.G. Sessions did not cite to any material or evidence that supports that statement.[68]  Another example demonstrating a lack of authority is his statement that while “there may be exceptional circumstances when victims of private criminal activity could meet these requirements, they must satisfy established standards when seeking asylum.”[69]  There has never been an exceptionality requirement for those who seek protection from domestic abuse.  A.G. Sessions himself does not cite to any precedent law to confirm this.[70]

In addition, A.G. Sessions incorrectly concluded that the PSG requirement failed in Matter of A-R-C-G- because “a particular social group must exist independently of the harm asserted in an application for asylum or statutory withholding of removal.”[71]   The well-founded fear of future persecution is an alternative argument available for applicants who may not be able to establish past persecution; the applicant must prove that he or she is in danger of future persecution.[72]

Part V: Conclusion

It is reasonable to suggest that A.G. Sessions’ opinion serves a broader goal in the form of political gaslighting.  The Trump Administration, Republican Party and the greater American population are familiar with this tactic in politics.[73]  A.G. Sessions’ opinion is an example of how to subtly subvert the greater issues of gender-based violence and the lack of acceptance of gender-based persecution.  He does this by implementing harrowing language that attacks America’s faltering sense of inclusivity under immigration law.  His confusing summation of asylum law requirements undermines the foundational principle of protecting a “person who faces serious human rights abuses” under asylum law.[74]  This only contributes to the growing inaccurate view of immigrants today.

* Jessica Senat, Law Student at Touro College Jacob D. Fuchsberg Law Center, class of 2020. Received a Bachelor of Arts in English Literature from Fordham University at Lincoln Center.

[1] Gaslight (Metro-Goldwyn-Mayer 1944) (a mystery-thriller film about a husband who manipulates his wife into believing that she is going insane).

[2] 27 I. & N. Dec. 316 (A.G. June 11, 2018).

[3] Id. at 317.

[4] The provision states in relevant part “[t]he Board shall refer to the Attorney General for review of its decision all cases that: (i) The Attorney General directs the  Board to refer to him.”  8 C.F.R. § 1003.1(h)(1) (2018).

[5] Matter of A-B-, 27 I. & N. Dec. at 320 (discussing that one must show that the government is unable to address violence or persecution in order to successfully apply for asylum).

[6] 8 U.S.C. § 1158(b)(1)(B)(i) (2018) (“To establish that the applicant is a refugee within the meaning of such section, the applicant must establish that race, religion, nationality, membership in a particular social group, or political opinion was or will be at least one central reason for persecuting the applicant.”).

[7] Matter of A-B-, 27 I. & N. Dec. at 333.

[8] Andrea Binder, Gender and the “Membership in a Particular Social Group” Category of the 1951 Refugee Convention, 10 Colum. J. Gender & L. 167 (2001).

[9] Id. at 169.

[10] Id. at 170.

[11] Benitez Ramos v. Holder, 589 F.3d 426 (7th Cir. 2009); Martinez v. Holder, 740 F.3d 902 (4th Cir. 2014), as revised (Jan. 27, 2014) (4th and 7th Circuits holding that being a former gang member is recognized as a particular social group); Arteaga v. Mukasey, 511 F.3d 940 (9th Cir. 2007); Gonzalez v. U.S. Atty. Gen., 820 F.3d 399 (11th Cir. 2016) (the 9th and 11th Circuits holding that former/current gang membership does not constitute a particular social group for the purposes of the Asylum statute).

[12] Matter of Acosta, 19 I. & N. Dec. 211, 211 (BIA March 1, 1985).

[13] Merriam-Webster defines Gaslighting as “manipulative behavior used to confuse people into thinking their reactions are so far off base that they’re crazy.”  Gaslighting, Merriam-Webster, https://www.merriam-webster.com/dictionary/gaslighting (last visited Oct. 26, 2018).

[14] Kathryn M. Bockley, A Historical Overview of Refugee Legislation: The Deception of Foreign Policy in the Land of Promise, 21 N.C. J. Int’l L. & Com. Reg. 253, 259 (1995); Refugee Timeline: Immigration and Naturalization Service Refugee Law and Policy Timeline, 1891-2003, U.S. Citizenship & Immigr. Services, https://www.uscis.gov/history-and-genealogy/our-history/refugee-timeline (last updated Feb. 20, 2018).

[15] Bockley, supra note 14, at 259.

[16] Bockley, supra note 14, at 259 (“The Quota Act set forth percentages of immigrants eligible for admission from both northern and southeastern Europe based on percentages derived from the U.S. Census Bureau.  However, immigration from the western European countries remained unrestricted . . . the Quota Act has been widely criticized for elevating the issues of race, ethnic prejudice and assimilation above any concerns for human suffering or the desperate situation of particular refugees.” (footnote omitted)).

[17] Refugee Timeline, supra note 14 (discussing that the INA got rid of the quota system but still included preferences that favored immigrants from eastern and northern Europe).

[18] Law of Asylum in the United States § 1:2 (2018) (explaining that, in the United States, there are three major forms of protections for refugees: asylum, withholding of removal, and convention against torture).

[19] Id.; see also Bockley, supra note 14, at 253.

[20] Bockley, supra note 14, at 253.

[21] Refugee Timeline, supra note 14.

[22] Refugee Timeline, supra note 14.

[23] Bockley, supra note 14, at 253; also see Melissa J. Hernandez Pimentel, The Invisible Refugee: Examining the Board of Immigration Appeals’ “Social Visibility” Doctrine, 76 Mo. L. Rev. 596 (2010).

[24] 8 U.S.C. § 1158(b)(1)(B)(i) (2018) (“To establish that the applicant is a refugee within the meaning of such section, the applicant must establish that race, religion, nationality, membership in a particular social group, or political opinion was or will be at least one central reason for persecuting the applicant.”).

[25] Matter of Acosta, 19 I. & N. Dec. 211, 233 (BIA March 1, 1985) (holding that the PSG requirement meant “persecution that is directed toward an individual who is a member of a group of persons all of whom share a common, immutable characteristic.  The shared characteristic might be an innate one such as sex, color, or kinship ties, or in some circumstances it might be a shared past experience such as former military leadership or land ownership”).

[26] Id.

[27] See Matter of S-E-G-, 24 I. & N. Dec. 579 (BIA July 30, 2008); Matter of E-A-G-, 24 I. & N. Dec. 591 (BIA July 30, 2008) (in both cases, respondents were fleeing gang violence, and the BIA reviewed the eligibility of persons who applied for asylum on the basis of being a member of a gang).

[28] Matter of S-E-G-, 24 I. & N. Dec. at 584; Matter of E-A-G-, 24 I. & N. Dec. at 593.

[29] Matter of S-E-G-, 24 I. & N. Dec. at 584.

[30] 26 I. & N. Dec. 227 (BIA Feb. 7, 2014).

[31] Id. at 240.

[32] Id. at 241.

[33] Id. at 242.

[34] Matter of W-G-R-, 26 I. & N. Dec. 208, 223 (BIA Feb. 7, 2014).

[35] Id. at 223 (“[T]he persecutor’s views play a greater role in determining whether persecution is infliction on account of the victim’s membership in a particular social group.”).

[36] Matter of M-E-V-G-, 26 I. & N. Dec. 227, 241 (BIA Feb. 7, 2014).

[37] Rachel Gonzalez Settlage, Rejecting the Children of Violence: Why U.S. Asylum Law Should Return to the Acosta Definition of “A Particular Social Group”, 30 Geo. Immigr. L.J. 287, 310 (2016).

[38] Id.

[39] Id.; see also Particular Social Group Practice Advisory: Applying for Asylum After Matter of M-E-V-G- and Matter of W-G-R, Nat’l Immigrant Just. Ctr., June 2018, https://www.immigrantjustice.org/sites/default/files/PSG%2520Practice%2520Advisory%2520and%2520Appendices-Final-1.22.16.pdf.

[40] Settlage, supra note 37, at 310.

[41] This blog post does not attempt to provide an exclusive definition of gender-based violence.  For the sake of the argument, the focus is to look into how it affects women under U.S. refugee and asylum laws.

[42] Courts often deny the petitioners characterization of the membership group he or she alleges to belong to: Gomez v. I.N.S., 947 F.2d 660 (2d Cir. 1991) (Petitioner appealed decision from BIA that denied asylum protection from guerrilla Salvadorian guerillas who raped and assaulted her. The Second Circuit concluded that Gomez “failed to produce evidence that women who have previously been abused by the guerillas” were a particular social group and that petitioner did not meet her evidentiary burden by submitting evidence of past persecution.); S.E.R.L. v. Attorney Gen. U.S., 894 F.3d 535, 555 (3d Cir. 2018) (holding that appellant failed to meet the social distinct standard because courts did not believe “immediate family members of Honduran women unable to leave a domestic relationship” was a socially distinct group in Honduras); Reyes v. Sessions, No. 17-9550, 2018 U.S. App. LEXIS 26376, at *7 (10th Cir. Sept. 18, 2018) (rejecting Appellant Castillo Reyes’s proposal that she belonged to a “social group of female victims of domestic violence “as is circularly defined by the harm suffered by its members and therefore isn’t a valid particular social group under the INA.”).

[43] Binder, supra note 8, at 169.

[44] Binder, supra note 8.

[45] Binder, supra note 8, at 167-168.

[46] Binder, supra note 8, at 168.

[47] Binder, supra note 8, at 169.

[48] Binder, supra note 8, at 169.

[49] Binder, supra note 8, at 169.

[50] Binder, supra note 8, at 167.

[51] Melanie Randall, Refugee Law and State Accountability for Violence Against Women: A Comparative Analysis of Legal Approaches to Recognizing Asylum Claims Based on Gender Persecution, 25 Harv. Women’s L.J. 281, 294 (2002) ( “U.S. refugee law has yet to grapple adequately with the fact that gender can form the basis of a ‘particular social group,’ and, as a result, some gender claims have been allowed but only through convoluted legal logic, while others have simply been denied.”).

[52] 8 U.S.C. § 1158(b)(1)(B)(i) (2018); see also In re Fauziya Kasinga, 21 I. & N. Dec. 357 (BIA June 13, 1996) (though this case was viewed as a breakthrough for addressing gender violence as an actual basis for asylum protection, it did not directly address persecution on account of gender but opted for a more narrow analysis instead).  See Randall, supra note 51, at 295.

[53] 26 I. & N. Dec. 388 (BIA August 26, 2014).

[54] Id. at 389.

[55] Id.

[56] Id.

[57] Id.

[58] Id.

[59] Id. at 392.

[60] Id. at 393-4.

[61] Id.

[62] Matter of A-B-, 27 I. & N. Dec. 316, 319 (A.G. June 11, 2018).

[63] Id.

[64] Asylum Practice Advisory: Applying for Asylum after Matter of A-B-, Nat’l Immigrant Just. Ctr., June 2018, https://www.immigrantjustice.org/sites/default/files/content-type/resource/documents/2018-06/Matter%20of%20A-B-%20Practice%20Advisory%20-%20Final%20-%206.21.18.pdf.

[65] Matter of A-B-, 27 I. & N. Dec. at 337.

[66] Asylum Practice Advisory, supra note 64.

[67] Matter of A-B-, 27 I. & N. Dec. at 319.

[68] Id.; “The fact that in some cases, Courts have found an A-R-C-G style PSG not viable based on the facts of the case, or that the asylum seeker was not a member of her proposed group, does not mean that A-R-C-G- is not workable, rather that it is a functioning legal tool.”  Asylum Practice Advisory, supra note 64.

[69] Matter of A-B-, 27 I. & N. Dec. at 317.

[70] Asylum Practice Advisory, supra note 64.

[71] Matter of A-B-, 27 I. & N. Dec. at 334-35 (“[I]f a group is defined by the persecution of its members then the definition of the group moots the need to establish actual persecution.”).

[72] Asylum Practice Advisory, supra note 64 (citing Lukwago v. Ashcroft, 329 F.3d 157 (3d Cir. 2003) (“a group based on the characteristic of having been forcibly recruited as a child soldier includes the harm of forced recruitment as a part of its definition and so would fail as to past persecution if the asylum seeker was arguing he had been persecuted in the form of forced recruitment because of his status as a forcibly recruited child solder.  But if vigilantes were targeting children who had been forced to be soldiers, the claim could prevail because the harm feared (e.g. attacks by vigilantes) is different from the harm that places one in the PSG.”)).

[73] Amanda Carpenter, I’m a Republican. Why is My Party Gaslighting America?, Politico (Jan. 30, 2018), https://www.politico.com/magazine/story/2018/01/30/republican-party-release-the-memo-gaslighting-america-216554; Heidi Li Feldman, What Lawyers Can and Should Do About Mendacity in Politics, 56 Duq. L. Rev. 125 (2017).

[74] Law of Asylum in the United States, supra note 18.

Section 230 of the Communications Decency Act, the FOSTA Amendment, and its Impact on Online Sex Trafficking

By Kaitlyn Wells

 

Historically, human trafficking has plagued societies for centuries, and modern advancements in science and technology have contributed to an increase in trafficking.  A contributing factor to the rise of human trafficking victims is the internet.  Section 230 of the Communications Decency Act (hereinafter “CDA”) played a significant role in the promotion of online sex trafficking.[1]  CDA § 230 provides immunity to providers and users of interactive computer services who publish information provided by third parties.[2]  “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”[3]

Websites such as Backpage.com have shielded themselves behind the CDA, an act created to regulate pornographic material on the internet, to avoid state criminal and civil litigation.[4]  The federal government had remained silent on this increasingly alarming issue until recently when the Senate passed a bill, called “The Allow States and Victims to Fight Online Sex Trafficking Act” (hereinafter “FOSTA”).[5]  President Donald Trump signed the bill into law on April 11, 2018.[6]

Section 2 of FOSTA states that § 230 of the CDA was not intended to afford legal protection to websites that “promote and facilitate prostitution and websites that facilitate traffickers in advertising the sale of unlawful sex acts with sex trafficking victims.”[7]  Since President Trump has signed the bill into law, FOSTA has met a great deal of criticism.  In June of 2018, The Electronic Frontier Foundation filed complaints in federal district court claiming FOSTA’s broad scope violates the First Amendment right to free speech.[8]  FOSTA, an amendment to § 230 of the CDA, is a necessary step towards combating online sex trafficking.  Part I will discuss a brief history of § 230 of the CDA; Part II will provide a brief history of sex trafficking; Part III will discuss the correlation between the CDA and online sex trafficking; and Part IV will discuss FOSTA and its critics.

Part I: The History of Section 230 of the CDA

Senator Jim Exon of Nebraska introduced the 1996 Amendment to the CDA.[9]  This Amendment extended the anti-harassment, indecency and anti-obscenity restrictions that were already placed on telephone calls to “telecommunication devices” and “interactive computer services.”[10]  The 1996 Amendment to the CDA stood for the premise that it was just as wrong to provide pornography to children on computers as it was to do it on the street or anywhere else.[11]  The CDA made it a crime to knowingly use an interactive computer to send indecent material in a mode accessible to children.[12]  The CDA does not ban any constitutionally protected materials from adults.  The Supreme Court has repeatedly recognized that protecting children from indecency is a compelling state interest.[13]   Congress modeled the CDA “after the existing dial-a-porn law which allow[ed] telephone sex services to ply their wares to adults but prohibit[ed] access by minors.”[14]  The Supreme Court held that the dial-a-porn law did not violate the First Amendment.[15]

In August of 1995, the Cox-Wyden Amendment was enacted which modified the CDA, and later became § 230 of the act.  The Cox-Wyden Amendment protected online services that make a “good faith effort” to restrict access to offensive material.[16]  “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”[17]  Many cases have been dismissed based on interactive service providers asserting the defense that, pursuant to § 230 of the CDA, they were not in violation of any laws.  More simply stated, providers and users assert the defense that they cannot be held liable for the actions of third-party publishers or speakers.[18]

In Zeran v. America Online, Inc.,[19] a customer sued America Online, an internet service provider, in federal district court because of alleged unreasonable delay in removing defamatory messages posted by an anonymous third-party user.[20]  The district court ruled in favor of America Online because section 230 of the CDA barred the customer’s claims.[21]  The district court held that Congress measured the weight of the speech interests implicated and elected to immunize service providers to avoid any restrictive result.[22]  The Fourth Circuit held that Congress intended to give broad immunity to internet providers when faced with possible liability because of messages originated by third-party users.[23]

For years, websites have been immune from liability under the CDA § 230 as long as the website is an interactive computer service and the posting is that of a third-party publisher or speaker.  It was not until websites began using this shield to avoid legal action regarding sex trafficking that the government finally stepped in.

Part II: History of Online Sex Trafficking

The National Human Trafficking Hotline (hereinafter “NHTH”) is a national anti-trafficking hotline servicing victims and survivors of human trafficking, as well as the anti-trafficking community in the United States.[24]  Since 2007, the NHTH reported a total of approximately 28,291 cases of sex trafficking, and in 2017 alone, the NHTH reported approximately 5,579 sexually trafficked victims, 1,954 of which were minors.[25]  NHTH defines trafficking as “[t]he recruitment, harboring, transportation, provision, obtaining, patronizing, or soliciting of a person for the purposes of a commercial sex act, in which the commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such an act has not attained 18 years of age.”[26]  Human trafficking is the third fastest growing criminal activity.[27]  According to the International Labor Organization, there are approximately 40.3 million victims of human trafficking worldwide, with hundreds of thousands in the United States alone.[28]  In the United States a person is guilty of sex trafficking by force, fraud or coercion, under federal law, when:

(a)Whoever knowingly—

(1) in or affecting interstate or foreign commerce, or within the special maritime and territorial jurisdiction of the United States, recruits, entices, harbors, transports, provides, obtains, advertises, maintains, patronizes, or solicits by any means a person; or

(2) benefits, financially or by receiving anything of value, from participation in a venture which has engaged in an act described in violation of paragraph (1), knowing, or, except where the act constituting the violation of paragraph (1) is advertising, in reckless disregard of the fact, that means of force, threats of force, fraud, coercion described in subsection (e)(2), or any combination of such means will be used to cause the person to engage in a commercial sex act, or that the person has not attained the age of 18 years and will be caused to engage in a commercial sex act, shall be punished as provided in subsection (b).[29]

 

Under the United States definition, transportation or physical movement of the victim does not necessarily need to be present for the crime to occur.[30]  The mere presence of exploitation (force, fraud, or coercion) indicates whether a trafficking crime has occurred.[31]

Victims of sex trafficking can be in any number of services within the sex trafficking industry including, but not limited to, prostitution, strip clubs, live-sex shows, mail-order brides, escort services, and fake massage businesses.  Many victims of sex trafficking are sold and bought online through websites like Craigslist, Backpage, HarlotHub, Eros, and Switter, to name a few.  A common misconception about human trafficking is that the victims are all trafficked into the United States from other countries.  This is simply not the case.  While some victims are trafficked and transported into the United States, many of the trafficking victims are United States citizens.[32]  There is no single profile for trafficking victims; trafficking occurs in rural, suburban, and urban communities across the country.[33]  Victims of human trafficking can be adults and children and have diverse socio-economic backgrounds and different levels of education.[34]  Traffickers target victims using methods of recruitment and control that they find to be effective in compelling that victim into commercial sex.[35]  The internet alone allows for many people from all walks of life to fall victim to sex trafficking.[36]

Part III: The Correlation between the CDA and Online Sex Trafficking

Section 230 was intended to shield interactive internet sites from liability for subject matter posted by their users.[37]  It treats internet companies like libraries: a library is not responsible for the offense people take to the content of the books it carries, just like a website is not responsible for the offense that people take to comments and posts by other users.[38]  Backpage.com is a classified advertising website that was launched in 2004 and is similar to Craigslist.[39]  Backpage is most known for its “adult” classifieds section.  Backpage featured ads from prostitutes, escorts, and sex trafficking victims.[40]  Websites such as Backpage have shielded themselves behind the CDA to avoid state criminal and civil litigation.

Backpage consistently used § 230 of the CDA as a defense against liability until the FBI seized Backpage in February of 2018.[41]  Backpage would cite to the statute’s language that states “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”[42]  Backpage claimed that it could not be charged for online users content, i.e., a pimp posting an advertisement prostituting a victim of sex trafficking.[43]  The most notorious case regarding Backpage is Doe v. Backpage.com, LLC.[44]  In Doe, three sex trafficking victims sued Backpage.com alleging that Backpage created or changed, expressly or impliedly, the advertisements regarding these victims on its website.[45]  More specifically, Jane Doe 1, Jane Doe 2, and Jane Doe 3 alleged that Backpage violated the Trafficking Victims Protection Reauthorization Act of 2008, 18 U.S.C. § 1595; Massachusetts Anti-Human Trafficking and Victim Protection Act of 2010, Mass. Gen. Laws ch. 265, section 50; and Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A, section 9.[46]  Each Doe also alleged violations of their individual intellectual property rights.[47]  With regard to Jane Doe 1 and Jane Doe 2, the court held that their complaint was lacking factual allegations that reasonably supported the claim that Backpage created content.[48]  Therefore, the CDA barred their claims.[49]  However, with regard to the ad about Jane Doe 3, the court held that Backpage substantially changed the ad.[50]  Therefore, the CDA did not bar Jane Doe 3’s claims.[51]  There is no doubt that the actions of Backpage.com consistently hiding from liability under § 230 of the CDA was a factor Congress looked to when deciding whether to pass the FOSTA.

Part IV: The FOSTA and its Critics

The FOSTA was signed into law by President Trump on April 11, 2018.[52]  This Act is an amendment to 47 U.S.C. § 230.  FOSTA was necessary to express that it was not the intention of Congress to afford legal protection to websites that “promote and facilitate prostitution and websites that facilitate traffickers in advertising the sale of unlawful sex acts with sex trafficking victims.”[53]  More specifically, the FOSTA states:

(1) section 230 of the Communications Act of 1934 (47 U.S.C. § 230; commonly known as the “Communications Decency Act of 1996”) was never intended to provide legal protection to websites that unlawfully promote and facilitate prostitution and websites that facilitate traffickers in advertising the sale of unlawful sex acts with sex trafficking victims;

(2) websites that promote and facilitate prostitution have been reckless in allowing the sale of sex trafficking victims and have done nothing to prevent the trafficking of children and victims of force, fraud, and coercion; and

(3) clarification of such section is warranted to ensure that such section does not provide such protection to such websites.[54]

 

In response to FOSTA, the website Craigslist.com released a statement expressing that, due to FOSTA, Craigslist.com can be subject to criminal and civil liability when third-party users of the website misuse Craigslist’s personal advertisement section unlawfully.[55]  Craigslist further stated “[a]ny tool or service can be misused.  We can’t take such risk without jeopardizing all our other services, so we are regretfully taking craigslist personals offline.”[56]  A pimp can no longer solicit a sex trafficking victim on Craigslist.  However, an advocate for sex workers could argue that sex workers can no longer find work through Craigslist or Backpage.com, forcing him or her to look to the dark web or the streets for a job.

Prior to the FOSTA Amendment, the CDA was praised as a “core pillar of internet freedom” and “the most important law protecting free speech online” that “gave us the modern internet.”[57]  The Electronic Frontier Foundation (hereinafter “EFF”), a nonprofit that defends civil liberties in the digital world, is afraid that the increased potential for liability will cause online services to become much more restrictive and “err on the side of censorship.”[58]  The EFF was founded in 1990 and works to ensure that rights and freedoms are protected as the internet grows.[59]  According to the EFF, “FOSTA attacks online speakers who speak favorably about sex work by imposing harsh penalties for any website that might be seen as ‘facilitating’ prostitution or ‘contribute to sex trafficking.’”[60]

FOSTA is necessary to combat online sex trafficking.  There were flaws in the CDA that made FOSTA necessary.  The biggest flaw of the CDA was the enablement of Backpage using 47 U.S.C.S. § 230(c) as a shield, thereby allowing traffickers to use the website to sexually exploit victims on their website.[61]  A perfect example of Backpage using the CDA as a shield is the Doe case.[62]  However, if Doe were to have occurred after the enactment of FOSTA, Backpage would not have been able to hide behind the CDA so long as the plaintiffs could prove that Backpage promoted and facilitated prostitution and had done nothing to prevent the trafficking of children and victims.  After Backpage was seized, the CEO of Backpage, Carl Ferrer, pleaded guilty in three state courts to money laundering and conspiracy to facilitate prostitution.[63]  Backpage was doing precisely what the CDA was not supposed to protect—changing and creating ads and knowingly taking money from pimps to post ads on its website exploiting trafficking victims.[64]

In June of 2018, the EFF filed a complaint in federal district court claiming FOSTA’s broad scope violates the First Amendment.[65]  The EFF released a statement on its website about the lawsuit stating that it is asking the court to deem FOSTA unconstitutional.[66]  It further explains that, in its own opinion, the “law was written so poorly that it actually criminalizes a substantial amount of protected speech and, according to experts, actually hinders efforts to prosecute sex traffickers and aid victims.”[67]  This is simply untrue; the FOSTA was specifically created to help stop sex trafficking.  Senator Rob Portman, from Ohio, one of the creators of the law, explained that the FOSTA is not a free speech issue but instead about protecting victims of sex trafficking.[68]  The CDA protects websites so long as a website is not knowingly promoting or facilitating prostitution, which is a crime in forty-nine states, and facilitating traffickers in advertising sex trafficking victims.[69]  There is a compelling government interest in protecting people (adults and children) from being sexually exploited online.

Section 230 of the CDA limits the legal liability of interactive websites for content that was posted by a third party.  Section 2 of the FOSTA states that § 230 of the Communications Act of 1934 was not intended to afford legal protection to websites that “promote and facilitate prostitution and websites that facilitate traffickers in advertising the sale of unlawful sex acts with sex trafficking victims.”[70]  While the EFF argues that the FOSTA violates the First Amendment, the FOSTA is a necessary and long overdue amendment to the CDA and is a massive step towards combating online sex trafficking.

[1] Danah Boyd et al., Human Trafficking and Technology: A Framework for Understanding the Role of Technology in the Commercial Sexual Exploitation of Children in the U.S., http://www.indiana.edu/~traffick/_resources/_literature/_research/_assets/Human-Trafficking-and-Technology.pdf

[2] 47 U.S.C.S. § 230 (LexisNexis 2018).

[3] Id.

[4] Id.  Section 230 of the CDA was not part of the original Senate legislation but was separately introduced by Representatives Chris Cox of California and Ron Wyden of Oregon as the Internet Freedom and Family Empowerment Act.  Congressional Record, Congress.gov (Aug. 4, 1995), https://www.congress.gov/congressional-record/1995/08/04/house-section/article/H8460-1.  Cox and Wyden wanted to make sure that, while everyone in the United States has an open invitation to the internet, there is certain offensive material that children should not see.  Id.  The statute was intended to screen offensive material and to provide protection from taking on liability to computer “Good Samaritans,” which are online service providers who take steps to screen indecent and offensive material for their customers.  Id.  Section 230 established as policy that the United States does not wish to have content on the internet regulated by the Federal Government.  Id.

[5] Colin Lecher, Senate Passes Controversial Anti-Sex Trafficking Bill, Verge (Mar. 21, 2018, 4:23 PM), https://www.theverge.com/2018/3/21/17147688/senate-sesta-fosta-vote-anti-sex-trafficking.

[6] Tom Jackman, Trump signs ‘FOSTA’ Bill Targeting Online Sex Trafficking, Enables States and Victims to Pursue Websites, Wash. Post (April 11, 2018), https://www.washingtonpost.com/news/true-crime/wp/2018/04/11/trump-signs-fosta-bill-targeting-online-sex-trafficking-enables-states-and-victims-to-pursue-websites/?noredirect=on&utm_term=.21bafe66e9fd.

[7] 115 Pub. L. No. 164, 132 Stat. 1253 (2018).

[8] David Greene, EFF Sues to Invalidate FOSTA, an Unconstitutional Internet Censorship Law, EFF (June 28, 2018), https://www.eff.org/deeplinks/2018/06/eff-sues-invalidate-fosta-unconstitutional-internet-censorship-law.

[9] Robert Cannon, The Legislative History of Senator Exon’s Communications Decency Act: Regulating Barbarians on the Information Superhighway, 49 Fed. Comm. L.J. 51 (1996).

[10] Id. at 51.   An interactive computer service is “any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.”  47 U.S.C.S. § 230(f)(2) (LexisNexis 2018).

[11] Cannon, supra note 9, at 77.

[12] Cannon, supra note 9, at 57.

[13] Cannon, supra note 9, at 58.

[14] Jim Exon, The Communications Decency Act, 49 Fed. Comm. L.J. 95, 96 (1996).

[15] Id. at 96.  See Sable Commc’ns of Cal. v.   FCC, 492 U.S. 115 (1989).  Congress took great care in drafting the law to protect children from indecency as the Supreme Court had consistently acknowledged that as a compelling state interest.  Exon, supra note 14, at 96.

[16] Cannon, supra note 9, at 61.

[17] 47 U.S.C.S. § 230 (LexisNexis, 2018).

[18] Id.  § 230(c).

[19] 129 F.3d 327 (4th Cir. 1997).

[20] Id. at 328.

[21] Id. at 329.

[22] Id. at 331.

[23] Id. at 328.

[24] Human Trafficking, Human Trafficking Hotline, https://humantraffickinghotline.org/type-trafficking/human-trafficking (last visited Sept. 1, 2018).

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] 18 U.S.C.S. § 1591 (LexisNexis 2018).

[30] Id.; 18 U.S.C.S. § 1584.  Fact Sheet: Human Trafficking, Office on Trafficking in Persons (Nov. 21, 2017), https://www.acf.hhs.gov/otip/resource/fshumantrafficking

[31] Fact Sheet: Human Trafficking, supra note 30.

[32] Fact Sheet: Human Trafficking, supra note 30.

[33] Fact Sheet: Human Trafficking, supra note 30.

[34] Fact Sheet: Human Trafficking, supra note 30.

[35] Fact Sheet: Human Trafficking, supra note 30.

[36] In Los Angeles, police arrested a teenage girl for prostitution.  U.S. Attorney’s Office, Man Pleads Guilty and Is Sentenced to 17½ Years in Federal Prison for Sex Trafficking of Minors, Fed. Bureau Investigation: L.A. Division, June 10, 2010, http://www.fbi.gov/losangeles/press-releases/2010/la061010.htm.  Investigators learned that the teenage girl was a runaway working for Dwayne Lawson.  Lawson “contacted the girl in the fall of 2008 on Myspace.com and, after promising to make her a ‘star,’ gave her a bus ticket from Florida to Las Vegas, Nevada.”  Id.  Once the teen arrived in Nevada, Lawson brought the girl to California where she worked for him as a prostitute.  Id.

[37] 47 U.S.C.S. § 230 (LexisNexis 2018).

[38] Emily Stewart, The Next Big Battle Over Internet Freedom is Here, Vox (Apr. 23, 2018, 12:20 PM), https://www.vox.com/policy-and-politics/2018/4/23/17237640/fosta-sesta-section-230-internet-freedom.

[39] Derek Hawkins, Backpage.com Shuts down Adult Services Ads after Relentless Pressure from Authorities, Washington Post, (January 10, 2017) https://www.washingtonpost.com/news/morning-mix/wp/2017/01/10/backpage-com-shuts-down-adult-services-ads-after-relentless-pressure-from-authorities/?utm_term=.5baa004c9824.

[40] Martha Irvine, Backpage Ad Site: Aider of Traffickers, or Way to Stop Them?, Seattle Times (Aug. 16, 2015, 6:44 PM), https://www.seattletimes.com/seattle-news/backpage-ad-site-aider-of-traffickers-or-way-to-stop-them/.

[41] Doe v. Backpage.com, LLC, No. 17-11069-LTS, 2018 U.S. Dist. LEXIS 53198 (D. Mass. Mar. 29, 2018); Backpage.com, LLC v. Lynch, 216 F. Supp. 3d 96 (D.D.C. 2016); Backpage.com, LLC v. Cooper, 939 F. Supp. 2d 805 (M.D. Tenn. 2013); Backpage.com, LLC v. Dart, No. 15 C 06340, 2015 U.S. Dist. LEXIS 112161 (N.D. Ill. Aug. 24, 2015).

[42] 47 U.S.C.S. § 230(c) (LexisNexis, 2018).

[43] Doe v. Backpage.com, LLC, No. 17-11069-LTS, 2018 U.S. Dist. LEXIS 53198, *5 (D. Mass. Mar. 29, 2018).

[44] Id.

[45] Id at *3.

[46] Id. at *2.

[47] Id.

[48] Id.

[49] Id. at *5.

[50] Id.

[51] Id.

[52] Colin Lecher, Senate Passes Controversial Anti-Sex Trafficking Bill, Verge (Mar. 21, 2018, 4:23 PM), https://www.theverge.com/2018/3/21/17147688/senate-sesta-fosta-vote-anti-sex-trafficking.

[53] 115 Pub. L. No. 164, 132 Stat. 1253 (2018).

[54] Id.

[55] FOSTA, Craigslist, https://www.craigslist.org/about/FOSTA (last visited Sept. 1, 2018).

[56] Id.

[57] Greene, supra note 8.

[58] Id.

[59] Id.

[60] Anna Schecter & Dennis Romero, FOSTA Sex Trafficking Law Becomes Center of Debate About Tech Responsibility, NBC News (July 19, 2018, 3:33 PM), https://www.nbcnews.com/tech/tech-news/sex-trafficking-bill-becomes-center-debate-about-tech-responsibility-n892876.

[61] Doe v. Backpage.com, LLC, No. 17-11069-LTS, 2018 U.S. Dist. LEXIS 53198, (D. Mass. Mar. 29, 2018); Backpage.com, LLC v. Lynch, 216 F. Supp. 3d 96 (D.D.C. 2016); Backpage.com, LLC v. Cooper, 939 F. Supp. 2d 805 (M.D. Tenn. 2013); Backpage.com, LLC v. Dart, No. 15 C 06340, 2015 U.S. Dist. LEXIS 112161 (N.D. Ill. Aug. 24, 2015).

[62] Doe v. Backpage.com, LLC, No. 17-11069-LTS, 2018 U.S. Dist. LEXIS 53198 (D. Mass. Mar. 29, 2018).

[63] Backpage CEO Carl Ferrer Says He’ll Testify Against Site’s Founders, NBC News (Apr. 12, 2018, 9:41 PM), https://www.nbcnews.com/news/us-news/backpage-ceo-carl-ferrer-says-he-ll-testify-against-site-n865616.

[64] Id.

[65] New Lawsuit Challenges FOSTA–The Federal Law Sparking Website Shutdowns, EFF (June 28, 2018), https://www.eff.org/press/releases/new-lawsuit-challenges-fosta-federal-law-sparking-website-shutdowns.

[66] Greene, supra note 8.

[67] Greene, supra note 8.

[68] Schecter & Romero, supra note 60.

[69] 47 U.S.C.S. § 230(c) (LexisNexis 2018).

[70] 115 Pub. L. No. 164, 132 Stat. 1253 (2018).

The Blurred Protection for the Feel or Groove of a Song under Copyright Law: Examining the Implications of Williams v. Gaye on Creativity in Music

By Olivia Lattanza

 

I. Introduction

In Williams v. Gaye,[1] the Ninth Circuit largely affirmed the judgment of the district court entered after the jury verdict finding that Pharrell Williams and Robin Thicke’s hit “Blurred Lines” infringed Marvin Gaye’s song “Got to Give It Up.”[2]  Although the Ninth Circuit’s decision turned on procedural grounds, namely the court’s deferential standard of review of the jury’s decision,[3] this case does not exemplify a straightforward and simple application of copyright law for several reasons.

While the 2013 hit “Blurred Lines” is subject to the protections under the Copyright Act of 1976, Gaye’s song is protected under the Copyright Act of 1909 because it was composed prior to January 1, 1978.[4]  Specifically, Gaye recorded “Got to Give it Up” in 1976, and he registered the work with the Copyright Office in 1977 by depositing sheet music based on the recorded version of his song.[5]  After his death, Frankie Christian Gaye, Nona Marvisa Gaye, and Marvin Gaye III inherited the copyright in Gaye’s song.[6]  Notably, the difference in copyright protection under both acts is central in determining what aspects of the song are protected.[7]  Under the Copyright Act of 1976, the actual sound recording of “Blurred Lines” is protected.[8]  In comparison, the 1909 Act requires that the work be published with notice or a deposit be made with the Copyright Office.[9]  While the actual recording of “Blurred Lines” is protected under the 1976 Act, the only protection of “Got to Give it Up” under the 1909 Act is in the musical composition.[10]

As a result, the district court excluded the sound recordings of both songs in this case.[11]  This meant that the jury did not compare the recorded versions of both songs, but only compared the “musical compositions” of elements extracted by the experts.[12]  However, in identifying the musical features present in both songs, the Gayes’ expert relied on elements that are not individually protectable.[13]  The similarity between the songs is not within the melody, lyrics, or harmony, but rather in the overall sound, groove, and vibe.[14]  It has been argued that this case should not have been sent to the jury because the jurors may have inaccurately evaluated the similarity in groove instead of the protected musical elements in the songs.[15]  Thus, this decision is groundbreaking as it improperly reinforces the notion that creating the “feel” of another song constitutes copyright infringement even if the melody and notes are completely different.[16]

Consequently, the Ninth Circuit’s affirmance of the jury’s decision inappropriately expanded the scope of copyright protection to the feel or groove of a song.[17]  Virtually every song or musical work has been inspired at least in part by some other artist or musical genre.[18]  By protecting the feel or groove of a song, the creative output of artists will essentially be destroyed.[19]  This blog post will argue that as long as the essential elements of a song are not copied, such as the melody, harmony, rhythm, or lyrics, the overall feel of a song should not be protected.  Therefore, in music copyright infringement cases, the Ninth Circuit should create a clearer rule for determining the “total concept and feel” of a work with respect to the feel of a song in the intrinsic analysis stage and reevaluate whether it is appropriate for the jury to hear cases involving the groove of a song.[20]

II. Overview of Copyright Law

In the United States Constitution, the Framers encouraged the creation of works “[t]o promote the Progress of Science and useful Arts.”[21]  Under the Copyright Act of 1976, copyright protection is secured “in original works of authorship fixed in any tangible medium of expression.”[22]  The 1976 Act expanded copyright protection to include both “musical works”[23] and “sound recordings.”[24]  In contrast, works subject to the 1909 Copyright Act “had to be published with notice or a deposit had to be made in the Copyright Office.”[25]  Thus, “under the 1909 Act, the work had to be reduced to sheet music or other manuscript form.”[26]

To succeed on a claim of copyright infringement, it is necessary to show “ownership of a valid copyright” and “copying of constituent elements of the work that are original.”[27]  Generally, any work subject to copyright protection must contain both originality and creativity.[28]  Nevertheless, “the requisite level of creativity is extremely low” for a work to be considered original.[29]  For musical works, originality is evident by the composer’s own effort and contribution to the song.[30]  While novelty is not required, originality means that the party claiming copyright protection did not copy another work.[31]  Likewise, creativity is represented by the musician’s use of rhythm, harmony, and melody.[32]  However, it is often difficult to obtain direct evidence of copying in music copyright infringement suits.[33]  In these cases, “a plaintiff may prove copying indirectly, with evidence showing that the defendant had access to the copyrighted work and that the purported copy is ‘substantially similar’ to the original.”[34]

To prove access of a musical work, the plaintiff may show “that its work was widely disseminated through sales of sheet music, records, and radio performances.”[35]  To determine substantial similarity, the Ninth Circuit utilizes “an objective extrinsic test and a subjective intrinsic test.”[36]  When applying the extrinsic test, “analytic dissection and expert testimony” are admissible in order to analyze objective criteria in the musical works.[37]  After the extrinsic phase has been satisfied, the jury will then apply the intrinsic test.[38]  In the subjective intrinsic test, the jury is presented with “whether the ordinary, reasonable person would find the total concept and feel of the works to be substantially similar.”[39]  Unlike the extrinsic test, expert testimony and analytic dissection are not admissible in this phase.[40]

III. Music Copyright Infringement Cases

To underscore the intricate and novel issue presented in this case, a brief application of copyright law in past music copyright infringement cases will be examined.  In some instances, a plaintiff may make a blatant and direct showing of copyright infringement.[41]  For example, in the song “Ice Ice Baby,” Vanilla Ice copied the bass line to the Queen and David Bowie song “Under Pressure” without asking for permission, resulting in a clear case of copyright infringement.[42]  However, absence of deliberate copying of another musical work does not prevent liability for copyright infringement.[43]  Specifically, George Harrison’s solo song “My Sweet Lord” was found to have subconsciously plagiarized the “pleasing combination of sounds” of “He’s So Fine” by The Chiffons.[44]  Although Harrison may not have deliberately copied the elements of “He’s So Fine,” the court held that Harrison was liable for copyright infringement since both songs were “virtually identical” and he had access to the song.[45]

In Selle v. Gibb,[46] Ronald Selle brought a copyright infringement suit against the Bee Gees arguing that their hit song “How Deep Is Your Love” copied his song “Let it End.”[47]  At trial, the expert witness testified that there were striking similarities between the songs, specifically in the Bee Gees’ use of identical rhythmic impulses and notes from Selle’s song.[48]  Although the jury found in favor of Selle, the judge granted the Bee Gees’ motion for judgment notwithstanding the verdict because Selle failed to show that the Bee Gees had access to his song.[49]  In fact, the Bee Gees introduced a work tape at trial showcasing their creative process of composing “How Deep is Your Love.”[50]  Thus, “a bare possibility” or mere speculation of access to a song is insufficient to prevail on a copyright infringement claim even if there is a striking similarity between songs.[51]

Moreover, in Three Boys Music Corp. v. Bolton,[52] the Ninth Circuit affirmed a jury verdict finding Michael Bolton’s 1991 song “Love is a Wonderful Thing” infringed the Isley Brothers’ 1964 hit of the same name.[53]  Evidence of access was provided and the jury found that Bolton was not only a fan and collector of the Isley Brothers’ music, but he also had access to the 1964 hit on both the radio and television.[54]  Next, the jury found infringement based on the substantial similarity of five unprotectable musical elements.[55]  Consequently, the Ninth Circuit applied judicial deference to the jury’s verdict in finding a case of copyright infringement.[56]

IV. Analysis

The Ninth Circuit’s decision improperly expanded the scope of copyright protection to the feel or groove of a song.[57]  In the dissenting opinion, Judge Nguyen stated, “The majority allows the Gayes to accomplish what no one has before: copyright a musical style . . . the majority establishes a dangerous precedent that strikes a devastating blow to future musicians and composers everywhere.”[58]  The majority opinion, on the other hand, declared that unlike the limited protections under the 1909 Act in this case, most cases in the future will arise under the 1976 Act, providing protections for works in sound recordings.[59]  However, even if the protections under the Copyright Act of 1976 applied in this case, that does not change the fact that the groove or style of a musical genre “is an unprotectable idea.”[60]  Therefore, although “Blurred Lines” and “Got to Give it Up” have an overall similar feel and vibe, the copyrightable elements of melody and lyrics are completely different.[61]

Additionally, virtually all music is inspired by another genre, style, or musician in some way.[62]  In fact, “[i]n the field of popular songs, many, if not most, compositions bear some similarity to prior songs.”[63]  If artists are unable to draw on their musical influences due to fear of copyright infringement, the degree of creativity in music will be severely limited.[64]  Thus, it has been argued that:

To suggest that this verdict will encourage better songwriting is to misunderstand the history of the arts. The freedom of artists and other creators to borrow from each other is connected with the principle that ideas cannot be copyrighted, a notion that is essential to free speech and artistic expression.[65]

Therefore, the Ninth Circuit’s decision creates a dangerous impediment to musical creativity as musicians will not know whether drawing inspiration from a song will result in copyright infringement.

Moreover, the Ninth Circuit’s intrinsic analysis stage should be clearer in music copyright infringement cases examining the groove or feel of another artist or musical genre.[66]  In particular, given that there are only a limited number of possible notes and chords, the courts have recognized that some pieces will contain “common themes.”[67]  In fact, Judge Learned Hand stated, “It must be remembered that, while there are an enormous number of possible permutations of the musical notes of the scale, only a few are pleasing; and much fewer still suit the infantile demands of the popular ear.  Recurrence is not therefore an inevitable badge of plagiarism.”[68]  Specifically, when lay jurors determine the “total concept and feel” of a work in the intrinsic stage, there is no clear test to determine whether a song evokes a similar feel or whether it infringes another song.[69]  In this case, it is clear that “Blurred Lines” and “Got to Give it Up” are similar in their “sonic environment,” but the core elements of melody, rhythm, and lyrics are not similar.[70]  Therefore, in determining substantial similarity in musical works, the Ninth Circuit should create a clearer rule for determining the “total concept and feel of a work” so that musicians will know whether their inspiration and borrowing of another work constitutes copyright infringement.

V. Conclusion

The Ninth Circuit decision in Williams v. Gaye has serious implications for the future of creativity in musical works.  In upholding the jury’s verdict that Thicke and Williams infringed Gaye’s song, when there was no similarity in the melody, lyrics, or harmonies, the Ninth Circuit essentially declared that the groove of a song is subject to copyright protection.  While the majority opinion emphasized that this case hinged on procedural grounds, the protections under the 1909 Act, and a deferential standard of review, the implications on musical creativity in evoking a style foster new concerns for musicians and artists.  Specifically, it is nearly impossible to say that a song is completely original without drawing inspiration from another artist, style, or genre.  If the groove of a song is protected under copyright law, musicians will be overly cautious into drawing on the style of another artist or genre, thereby stifling creativity. Therefore, it is vital for the Ninth Circuit to reconsider the intrinsic analysis stage with respect to the groove or feel of a song to clearly signify the line between infringement and inspiration.  Consequently, in order to preserve the creativity of music, the feel of a song should not be protected under copyright law.

[1] 885 F.3d 1150 (9th Cir. 2018).

[2] Id. at 1183.

[3] Id. at 1182.

[4] Id. at 1165; see Dolman v. Agee, 157 F.3d 708, 712 n.1 (“The 1909 Act is the applicable law in cases in which creation and publication of a work occurred before January 1, 1978, the effective date of the 1976 Act.”).

[5] Williams, 885 F.3d at 1160.

[6] Id.

[7] Beth Hutchens, How Sweet it is to be Sued by You (for Copyright Infringement), IP Watchdog (Feb. 19, 2015), http://www.ipwatchdog.com/2015/02/19/how-sweet-it-is-to-be-sued-by-you-for-copyright-infringement/id=54955.

[8] Williams, 885 F.3d at 1165; see 17 U.S.C. § 102(a)(7) (2016).

[9] Williams v. Bridgeport Music, Inc., No. LA CV13-06004 JAK, 2014 WL 7877773, at *8 (C.D. Cal. Oct. 30, 2014).

[10] Hutchens, supra note 7.

[11] Williams, 885 F.3d at 1165.

[12] David Post, Blurred Lines and Copyright Infringement, Wash. Post (Mar. 12, 2015), https://www.washingtonpost.com/news/volokh-conspiracy/wp/2015/03/12/blurred-lines-and-copyright-infringement/?noredirect=on&utm_term=.128eb87d3b51.

[13] Williams, 885 F.3d at 1187 (Nguyen, J., dissenting).

[14] Post, supra note 12.

[15] Melinda Newman, Top Lawyers On What Songwriters Must Learn From ‘Blurred Lines’ Verdict, Forbes (Mar. 11, 2015, 12:18 PM), https://www.forbes.com/sites/melindanewman/2015/03/11/top-lawyers-weigh-in-on-the-blurred-lines-verdict-and-what-songwriters-must-learn/#327891976bfa.

[16] Taylor Turville, Emulating vs. Infringement: The “Blurred Lines” of Copyright Law, 38 Whittier L. Rev. 199, 199 (2018).

[17] See Tim Wu, Why the “Blurred Lines” Copyright Verdict Should Be Thrown Out, New Yorker (Mar. 12, 2015), https://www.newyorker.com/culture/culture-desk/why-the-blurred-lines-copyright-verdict-should-be-thrown-out.

[18] Turville, supra note 16, at 218.

[19] See Randy Lewis, More Than 200 Musicians Rally Behind Appeal of ‘Blurred Lines’ Verdict, L.A. Times (Aug. 31, 2016), http://www.latimes.com/entertainment/music/la-et-ms-blurred-lines-appeal-musicians-20160831-snap-story.html (“The friend of the court brief argues that the ‘Blurred Lines’ verdict was flawed and that if it remains on the books it would create a profound chilling effect in the creative community because the similarities . . . had more to do with the general feel rather than specific musical elements in common.”).

[20] See Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir. 1996) (“[T]he subjective ‘intrinsic test’ asks whether an ‘ordinary, reasonable observer’ would find a substantial similarity of expression of the shared idea.” (citation omitted)).

[21] U.S. Const. art. 1, § 8, cl. 8.

[22] 17 U.S.C. § 102(a) (2016).

[23] Id. § 102(a)(2).

[24] Id. § 102(a)(7).

[25] Hutchens, supra note 7.

[26] 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 2.05[A] (2018).

[27] Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991).

[28] Nimmer, supra note 26, § 2.05[B].

[29] Feist, 499 U.S. at 345.

[30] Nimmer, supra note 26, § 2.05[B].

[31] Feist, 499 U.S. at 358.

[32] Nimmer, supra note 26, § 2.05[B].

[33] Copeland v. Bieber, 789 F.3d 484, 488 (4th Cir. 2015); see also Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481 (9th Cir. 2000) (“Proof of copyright infringement is often highly circumstantial, particularly in cases involving music.”).

[34] Id. (citation omitted).

[35] 2 Paul Goldstein, Copyright: Principles, Law, and Practice § 8.3.1.1, at 91 (1989).

[36] Swirsky v. Carey, 376 F.3d 841, 845 (9th Cir. 2004).

[37] Sid & Marty Krofft Television Prods. Inc. v. McDonald’s Corp., 562 F.2d 1157, 1164 (9th Cir. 1977).

[38] Three Boys Music, 212 F.3d at 485.

[39] Id. (quoting Pasillas v. McDonald’s Corp., 927 F.2d 440, 442 (9th Cir. 1991)).

[40] Krofft, 562 F.2d at 1164.

[41] See Joe Lynch, 8 Songs Accused of Plagiarism That Hit No. 1 on the Billboard Hot 100, Billboard (Mar. 12, 2015), https://www.billboard.com/articles/news/list/6501950/songs-accused-plagiarism-no-1-hot-100-blurred-lines (explaining that many hit songs sound similar to previous songs due to theft or coincidence).

[42] Jordan Runtagh, Songs on Trial: 12 Landmark Music Copyright Cases, Rolling Stone (June 8, 2016, 4:24 PM), https://www.rollingstone.com/politics/politics-lists/songs-on-trial-12-landmark-music-copyright-cases-166396/george-harrison-vs-the-chiffons-1976-64089/.

[43] Bright Tunes Music Corp. v. Harrisongs Music, Ltd., 420 F. Supp. 177, 180-81 (S.D.N.Y. 1976).

[44] Id. at 180.

[45] Id. at 180-81; See Williams v. Gaye, 885 F.3d 1150, 1171 n.16 (explaining that while this case was under the 1909 Act, the commercial sound recordings were listened to by the factfinders).

[46] 741 F.2d 896 (7th Cir. 1984).

[47] Id. at 898.

[48] Id. at 899.

[49] Id.

[50] Id.

[51] Selle, 741 F.2d at 903.

[52] 212 F.3d 477 (9th Cir. 2000).

[53] Id. at 480.

[54] Id. at 483-85.

[55] Id. at 485; see Swirsky v. Carey, 376 F.3d 841, 849 (9th Cir. 2004) (stating that courts have considered different elements of a musical composition when determining substantial similarity).  “Music, like software programs and art objects, is not capable of ready classification into only five or six constituent elements; music is comprised of a large array of elements, some combination of which is protectable by copyright.”  Id.

[56] Three Boys Music, 212 F.3d at 482.

[57] See Wu, supra note 17 (“The question is not whether Pharrell borrowed from Gaye but whether Gaye owned the thing that was borrowed. And this is where the case falls apart.  For it was not any actual sequence of notes that Pharrell borrowed, but rather the general style of Gaye’s songs.  That is why ‘Blurred Lines’ sounds very much like a Marvin Gaye song.  But to say that something ‘sounds like’ something else does not amount to copyright infringement.”).

[58] Williams, 885 F.3d at 1183 (Nguyen, J., dissenting).

[59] Id. at 1182 n.27.

[60] Id. at 1185 (Nguyen, J., dissenting).

[61] Post, supra note 12.

[62] Turville, supra note 16, at 218.

[63] Nimmer, supra note 26, § 2.05[B].

[64] Brief for 212 Songwriters, Composers, Musicians, and Producers as Amici Curiae Supporting Appellants at 3, 10, Williams v. Gaye, 885 F.3d 1150 (9th Cir. 2018) (CA No. 15-56880).

[65] Wu, supra note 17.

[66] See Brief for Amici Curiae, supra note 64, at 12 n.4.

[67] Gaste v. Kaiserman, 863 F.2d 1061, 1068 (2d Cir. 1988).

[68] Darrell v. Joe Morris Music Co., 113 F.2d 80, 80 (2d Cir. 1940).

[69] Brief for Amici Curiae, supra note 64, at 12 n.4.

[70] Post, supra note 12.

How To Get Away With Murder: The “Gay Panic” Defense

by Omar T. Russo

 

Introduction

In April of 2018, a jury found 69-year-old James Miller of Austin, Texas not guilty of murder for the 2015 slaying of his neighbor, Daniel Spencer.[1]  The jury convicted Miller of criminally negligent homicide, a crime that earned him a mere six months in jail and ten years of probation.[2]  Miller invited Spencer, his 32-year-old neighbor, to his house where they drank and listened to music; the two were musicians.[3]  According to Miller, he rejected a kiss from Spencer and stabbed him in a panic.[4]

Miller’s defense counsel argued that he acted in self-defense, which is one of the defenses defendants may assert, known unofficially as the “gay panic” defense.[5]  Only a handful of states have enacted legislation to proactively ban the defense, and similar legislation is pending at the federal level, in several states, and in the District of Columbia.[6]

The so-called “gay panic” defense stems from a phenomenon originally coined by psychotherapist Edward J. Kempf in 1920, who claimed that in his studies of heterosexual-identifying males, they became agitated, enraged and panicked by their acute homosexual thoughts or ideas.[7]  The concerns for psychological breakdown described by Kempf were not out of touch with the times, given the classification of “homosexuality” as a medically-recognized disorder until 1973.[8]

Today the gay panic defense continues to be used to influence jurors to mitigate a violent defendant’s conviction or sentence based on the premise that the victim was romantically interested in the defendant of the same sex that, consequently, struck some panic within the defendant and caused him or her to react violently.  The defense, based upon irrational “homophobia and transphobia, . . . send[s] the wrong message that violence against LGBT people is acceptable.”[9]  In an era post-pathological homosexuality, cases such as these move the focus of the case from the defendant to the victim.[10]  In order for this defense to work, defendants must prove that “the victim’s unwanted, nonviolent homosexual advance was characterized as an external stimulus causing the defendant’s homicidal reaction.”[11]

The basis for this defense is highly troublesome for another reason, namely, its equal protection implications.  If we swapped the victim’s supposed sexual identity with a religious identity or racial identity, then the defense would crumble.  Contemporarily, a defense of panic based on arbitrary characteristics of another person is illogical and poorly reflective of our current state of law, justice, and societal opinion.  The gay panic defense continues to perpetuate the message that LGBT people are frightening and somehow instill reasonable fear in people; that an LGBT individual’s unwanted and nonviolent romantic attempts are justification for violence and even murder.  To bring the issue of a victim’s sexual orientation to focus as a defense tactic is “like placing a woman’s sexual promiscuity at issue to show consent to rape.”[12]

Origins of the Gay Panic Defense

The first known use of the gay panic defense was the California case of People v. Rodriguez,[13] where the defendant argued that the victim touched him sexually while he urinated in an alley.[14]  In Rodriguez, the defendant beat to death an elderly man with a tree branch after following him into his yard where he was emptying his garbage.[15]  The defendant, however, argued that after his friends stole a woman’s purse, he ran to urinate in an alley and was grabbed in the process from behind.[16]  Fearing the man was “trying to engage in a homosexual act,” the defendant picked up the branch and beat the victim over the head.[17]

An expert testified at trial that the defendant was not acting under “acute homosexual panic,” but was sane when he committed the murder.[18]  The jury returned a verdict of guilty for murder in the second degree, rather than for murder in the first degree, with which the defendant was originally charged.[19]  This case opened the door for the gay panic defense as a mitigating factor for defendants’ violent actions.  Although the expert physician provided testimony as to the defendant’s sanity, which the jury accepted, the pervasive nature of the defendant’s story of having been touched while urinating led to a reduced conviction.

A Deeply Rooted LGBT Bias in the Law

As anti-gay sentiment grew in the first half of the twentieth century, laws developed to reflect the national opinion.  Through the enforcement of sodomy laws, many states engaged in “witch hunts” of gay men, which were the legal methods of criminalizing “gay conduct.”[20]  These sodomy laws were upheld by the Supreme Court’s 1986 landmark case, Bowers v. Hardwick,[21] in which the Court upheld a strict Georgia sodomy statue.  The defendant argued the statute that criminalized sodomy violated his constitutional rights to privacy and due process.[22]  Ultimately, the Court ruled in favor of Georgia,[23] essentially validating the sodomy laws of that state and others that were being used to punish gay men across the country.

The issue of sodomy laws would not be revisited by the Court until 2003, when it overturned its ruling in Bowers with its holding in Lawrence v. Texas.[24]  The Court held that the Texas sodomy statute that formed the basis for the case served “no legitimate state interest which [could] justify its intrusion into the personal and private life of the individual.”[25]  The Court set out that the Due Process Clause provides individuals the “full right to engage in their conduct without intervention of the government,” effectively invalidating state statutes prohibiting similar conduct to the Texas statute.[26]

The Impact of the Gay Panic Defense

Lawrence v. Texas stands, today, as a precursor to the national progression of LGBT rights.  Over a decade later, the Supreme Court continued its momentum in this area with its ruling in Obergefell v. Hodges,[27] effectively providing the right to marry to all citizens of the United States.[28]

Despite the public’s progressing views toward LGBT persons, and the law’s reluctant evolution in the same direction, gays and transgenders face violence at disproportionately high rates compared to any other group of people.[29]  The gay panic defense perpetuates the continued violence against LGBT persons by allowing perpetrators to have their sentences mitigated or avoid punishment entirely, solely on the basis of their victim’s actual or perceived sexual orientation or gender identity.[30]

While the gay panic defense itself is unrecognized in any jurisdiction in the country, defendants use it as an underlying defense to typically one of three recognized defenses: self-defense, provocation, or diminished capacity/insanity.[31]  By allowing a defendant to receive any benefit of the doubt for violence he perpetrates against another based solely on the victim’s LGBT status, or perceived status, is to play upon the implicit bias of some jurors and exacerbate the implication that LGBT persons do not matter.

Current and Pending Bans

States must act to proactively put an end to the use of gay panic defenses because of its detrimental impact to the proper function of the criminal justice system.  California, Illinois, and Rhode Island have each succeeded in passing legislation to that effect and are leading the nation on this front.

California

In 2014, California became the first state to ban the gay panic defense from being used in criminal proceedings, stating in relevant part:

For purposes of determining sudden quarrel or heat of passion . . . the provocation was not objectively reasonable if it resulted from the discovery of, knowledge about, or potential disclosure of the victim’s actual or perceived gender, gender identity, gender expression, or sexual orientation, including under circumstances in which the victim made an unwanted nonforcible romantic or sexual advance towards the defendant, or if the defendant and victim dated or had a romantic or sexual relationship.[32]

The bill limits a defendant’s ability to assert provocation as a defense for murder in reaction to a romantic interaction or attempt by a member of the same sex under the laws of the state. It is similar to the way state and federal laws protect rape victims in criminal trials through rape shield laws that limit a defendant’s ability to defend himself through probing into the victim’s sexual history.

Illinois

Illinois followed, introducing two new provisions which limit the use of the defense:

Provided, however, that an action that does not otherwise mitigate first degree murder cannot qualify as a mitigating factor for first degree murder because of the discovery, knowledge, or disclosure of the victim’s sexual orientation. . . .[33]

Serious provocation is conduct sufficient to excite an intense passion in a reasonable person provided, however, that an action that does not otherwise constitute serious provocation cannot qualify as serious provocation because of the discovery, knowledge, or disclosure of the victim’s sexual orientation. . . .[34]

Illinois’ statute essentially states that the discovery of a victim’s sexual orientation or gender identity may not suffice for an assertion of the provocation defense, and more broadly that any attempt to mitigate the crime of murder will fail if based solely upon a similar discovery.

Rhode Island

Rhode Island’s statute is arguably the most encompassing law of the three states that have banned the gay panic defense.  Rhode Island’s statute bans the use of the “unrecognized” defense under the three official defenses through which it is typically brought: provocation, self-defense and diminished capacity.

[P]rovocation was not objectively reasonable if it resulted from the discovery of, knowledge about, or potential disclosure of the victim’s actual or perceived gender, gender identity, gender expression, or sexual orientation . . . a defendant does not suffer from reduced mental capacity based solely on the discovery or, knowledge about, or potential disclosure of the victim’s actual or perceived gender, gender identity, gender expression, or sexual orientation . . . A person is not justified in using force against another based solely on the discovery of, knowledge about, or potential disclosure of the victim’s actual or perceived gender, gender identity, gender expression, or sexual orientation. . . .[35]

Along with California, Illinois, and Rhode Island, similar legislation to ban the use of gay panic defenses is pending in New Jersey, Washington, and the District of Columbia.[36]  At the federal level, a bill is pending that would prohibit such defenses in federal criminal cases.[37]  The federal bill in relevant part states that “no nonviolent sexual advance or perception or belief, even if inaccurate, of the gender, gender identity or expression, or sexual orientation of an individual may be used to excuse or justify the conduct of an individual or mitigate the severity of an offense.”[38]  While successfully passing this bill at the federal level will eliminate this defense tactic in federal courts, state courts would not be bound by the law, and each state legislature must codify their own individual bans.

Conclusion

The gay panic defense is an outdated defense technique that abuses unfortunate lingering bias against the LGBT community to reduce a defendant’s perceived culpability or absolve them entirely.  Alarmingly, the defense harms LGBT people in the very forum in which they, as victims, should be able to seek justice and protection.

Victims of violent crimes in these cases deserve justice, but rather they and their families are often re-victimized, as violent offenders receive reduced convictions and sentences.  Modern society has progressed to a point where it would be absurd to allow our justice system to be hindered by an obstacle based on apathy for the lives of gay and transgender citizens.  Gay panic defense bans should be universally implemented to protect LGBT victims in the same way that rape shield laws protect victims of sexual assault across the nation.  The gay panic defense is an affront to LGBT people in this country and a weakness within the criminal justice system that must be managed by states taking the initiative to protect all their citizens.

[1] Jackie Salo, Man Who Used ‘Gay Panic’ Defense for Killing Neighbor Avoids Prison, N.Y. Post (Apr. 27, 2018, 5:28 PM), https://nypost.com/2018/04/27/man-who-used-gay-panic-defense-for-killing-neighbor-avoids-prison/.

[2] Id.

[3] Cleve R. Wootson, Jr., A Former Police Employee Said He Killed a Man in ‘a Gay Panic’ – an Actual Legal Defense That Worked, Wash. Post (Apr. 27, 2018), https://www.washingtonpost.com/news/post-nation/wp/2018/04/27/a-former-cop-said-he-killed-a-man-in-a-gay-panic-an-actual-legal-defense-that-worked/?noredirect=on&utm_term=.5aafde75b8f6.

[4] Id.

[5] William Shepherd, Gay and Trans Panic Defenses Resolution, 2013 A.B.A. Resol. 113A, at 6, https://lgbtbar.org/wp-content/uploads/sites/6/2014/02/Gay-and-Trans-Panic-Defenses-Resolution.pdf.

[6] Gay and Trans Panic Defense, LGBT B., https://lgbtbar.org/what-we-do/programs/gay-and-trans-panic-defense (last visited Sept. 1, 2018).

[7] Edward J. Kempf, Psychopathology 477 (1920), https://archive.org/details/39002086348753.med.yale.edu.

[8] Jack Drescher, Out of DSM: Depathologizing Homosexuality, 5 Behav. Sci. 565 (2015), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4695779.

[9] Jordan Blair Woods et al., Model Legislation for Eliminating the Gay and Trans Panic Defenses, Williams Inst., Sept. 2016, at 3, https://williamsinstitute.law.ucla.edu/wp-content/uploads/2016-Model-GayTransPanic-Ban-Laws-final.pdf.

[10] David Alan Perkiss, A New Strategy for Neutralizing the Gay Panic Defense at Trial: Lessons From the Lawrence King Case, 60 UCLA L. Rev. 778, 797 (2013).

[11] Id.

 

[12] Developments in the Law: Sexual Orientation and the Law, 102 Harv. L. Rev. 1508, 1548 n.187 (1989).

[13] 64 Cal. Rptr. 253 (Ct. App. 1967).

[14] Id. at 256.

[15] Id. at 253.

[16] Id. at 256.

[17] Id. at 255.

[18] Rodriguez, 64 Cal. Rptr. at 255.

[19] Id. at 254.

[20] Richard Weinmeyer, The Decriminalization of Sodomy in the United States, 16 AMA J. Ethics 916, 916-17 (2014).

[21] 478 U.S. 186 (1986).

[22] Id. at 188.

[23] Id.

[24] 539 U.S. 558 (2003).

[25] Id. at 578.

[26] Id.

[27] 135 S. Ct. 2584 (2015).

[28] Id. at 2605.

[29] Jaime M. Grant et al., Injustice At Every Turn: A Report of the National Transgender Discrimination Survey, Nat’l Ctr. Transgender Equality, 2011, at 2, https://endtransdiscrimination.org/PDFs/NTDS_Report.pdf.

[30] Woods et al., supra note 9, at 2.

[31] Shepherd, supra note 5.

[32] Assemb. 2501, 2013 Leg., Reg. Sess. (Cal. 2014).

[33] S. 1761, 100th Gen. Assemb., Reg. Sess. (Ill. 2017).

[34] Id.

[35] H.R. 7066, 2017 Leg. Sess. (R.I. 2018).

[36] LGBT B., supra note 6.

[37] Gay and Trans Panic Defense Prohibition Act of 2018, H.R. 6358, 115th Cong. (2018).

[38] Id. § 3.

Executive Privilege from the Judicial Process: Indictments, Criminal Proceedings, and Pardons

By Nicholas Maggio

On August 21, 2018, President Donald Trump’s former personal attorney, Michael Cohen, admitted in federal court that, during the 2016 campaign, Mr. Trump ordered him to arrange payments for two women with the principal purpose of influencing the election.[1]  This is a recent development surrounding the special counsel investigation into whether Russia interfered with the 2016 United States Presidential elections. Investigators are looking into any coordination between the Trump election campaign and Russian officials and whether President Trump obstructed justice by lying or withholding information from the investigation.[2]  Most notable about Mr. Cohen’s admission is that it directly implicates the president as a co-conspirator in a proven federal crime.[3]

However, it remains unclear whether a sitting United States president can be indicted.  In 1973, the Department of Justice Office of Legal Counsel (“OLC”) issued a memo arguing that a sitting president could not be indicted.[4]  It reiterated this argument in 2000 after President Clinton’s sex scandal.[5]  The OLC argued that the nature of criminal proceedings, including the indictment process, would unduly interfere with the conduct of the president.[6]  The memos equated an  indictment to an incapacitation of the president.[7]  Accordingly, the memos concluded that indicting a sitting president would unconstitutionally impair the executive from executing his constitutional obligations.[8]

It is uncertain whether these are official Department of Justice policies.  The OLC argues that these memos are binding policies.[9]  Robert Mueller, the head of the special investigation, stated he would follow these memos as they relate to bringing an indictment.[10]  Nevertheless, legal scholars disagree whether the memos are binding authority of prosecutors and the Special Counsel.[11]  For instance, the arguments set forth in these memos are not settled law as they are neither found in statutes nor case law.  No court, including the Supreme Court of the United States, has heard a case or ruled on whether a sitting president can be indicted.

The author argues that prosecutors should bring their indictments and let the Supreme Court decide the constitutionality of their action.  The Department of Justice’s memos should not preclude this issue from going to the nation’s highest court.  Article 2, section 1, clause 6 of the United States Constitution provides the precedent conditions and procedure for replacing a sitting president.[12]  Specifically, the clause details that a president’s “inability to discharge the powers and duties of said office” shall allow for a new officer to act as the president until the disability is removed or a new president is elected.[13]  Clauses 3 and 4 of the 25th Amendment further clarify replacement procedures when a president can no longer discharge his duties.[14]  Thus, if an indictment would interfere with the President discharging his constitutional duties, we should utilize the provisions already in place.

The Constitution

There are no constitutional provisions dealing with whether a sitting president can be criminally indicted.  The recorded discussions during the Constitutional Convention do not help clarify the issue of presidential immunity from indictments either.[15]  Instead, the Constitution provides for the conditions under which a President may be removed from office.

In article 2, section 1, clause 6, the Constitution reads in relevant part: “[i]n Case of the . . . [i]nability to discharge the Powers and Duties of the said Office, . . . the Congress may by Law provide the Case of Removal . . . .”[16]  The records of the Federal Convention do not provide much clarity concerning how criminal indictments relate to this provision.[17]

The lack of case law on the subject forces one to turn towards peripheral, secondary sources of authority.  Some early analysis of the Constitution highlights how our system allows for indictments of officials in contrast to the English system.[18]  For instance, Patrick Henry, an American attorney and Founding Father, gave a speech suggesting that a President could be  indicted while in office.[19]  Modern legal scholars recognize founding figures’ conclusions that a President should not enjoy immunity from indictment while in office.[20]

The 25th Amendment

The 25th Amendment serves to clarify the order of succession and procedures in place to succeed a President.  However, there is a lack of law or instances that help define when one should invoke this amendment.  In relevant part, section 3 of the 25th Amendment reads that:

Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.[21]

Before passing the 25th Amendment, Congress conducted studies among legal scholars to determine what qualifies as an “inability” under the Constitution.[22]  While some survey responses contend that a disability should be defined as what the founders could have medically contemplated at their time, others argue that it is a practical matter concerning whether the president is discharging the duties of his office.[23]

There is only a small pool of Presidents that had their powers removed under the 25th Amendment.  In 1985, President Reagan penned a letter charging then-Vice President Bush with discharging presidential powers and duties.  This precipitated Reagan’s undergoing surgery, which left him temporarily incapacitated.[24]  President Reagan soon resumed his powers after his surgery.[25]  In 2002, President George W. Bush penned a letter discharging his duties to the Vice President under the 25th Amendment.[26]  This letter also preceded a medical procedure that required sedation.[27]  President Bush discharged his duties again in 2007 before another routine medical procedure that required sedation.[28]  He resumed his powers shortly thereafter both times.[29]

Office of Legal Counsel Memoranda

In 1973, the Department of Justice OLC drafted a memorandum arguing that a sitting President could not be indicted.[30]  The memo explained that the attention necessary to defend a criminal indictment would “interfere with the President’s unique duties.”[31]  Accordingly, the memo concluded that an indictment would frustrate a President’s ability to carry out his duties to such an extent that any proceeding should be deferred until after his term.[32]  In 2000, the OLC reaffirmed these conclusions with another memorandum.[33]

Federal prosecutors are expected to follow official Department of Justice policies and regulations.[34] While it has been an official practice of the Department of Justice to refrain from indicting a President, it is unclear whether doing so is an official policy.[35]  The official nature of these memoranda and their frequency suggest that federal prosecutors would be bound by them.

Indictment as a Disability

            History would lend itself to the notion that the 25th Amendment’s third and fourth clause are reserved for medical incapacities.  Even in letters to Congress before drafting the Amendment, legal scholars argued that a disability could only be understood as the founders understood intellectual illness.[36]  Yet, others still argued that the inability to discharge duties should extend to practical matters.[37]

For constitutional purposes, a mental or physical disability is worth considering because of the impairments it places on one to carry out their work.  In theory, we are not concerned with disabilities that do not impair an officer’s ability to produce a quality work product.  Accordingly, administration officials are solely concerned with circumstances that afflict one’s ability to practically function.  If a condition, either mental, physical, or legal, prevents a president from discharging his duties in any way, then that should be considered a disability sufficient for invoking the 25th Amendment.

History shows us that a President can still be effective while attending to legal proceedings.  In December of 1998, the House of Representatives introduced articles of impeachment against President Bill Clinton.  Still, he enjoyed a 68% approval rating and a 72% rating among Americans that felt he could be effective and lead successful foreign policy endeavors.[38]  Moreover, President Clinton deployed troops, after rallying support, to Serbia in March of 1999 (a month after his impeachment proceeding).[39]  This achievement complemented domestic accomplishments, too.  For instance, President Clinton, a member of the Democratic Party, was able to negotiate with the Republican Party (“GOP”) and agreed on paying dues to the United Nations (“UN”), doubling afterschool programs, and the 100,000 teacher initiative.[40]  In President Clinton’s case, attending to legal proceedings did not seem to debilitate him from executing his duties.  Nevertheless, the consequences of legal proceedings did not appear to impair the credibility or function of the government.

Insulating a President from indictment allows for a likely criminal actor to exercise powers in our nation’s highest office.  This circumstance was occasioned during Nixon’s presidency.[41]  Because of Nixon’s position, he secured funds to bankroll cover-ups of the Watergate scandal.[42]  These operations spanned across two terms.[43]  An indictment could have intercepted and stopped these operations sooner than an impeachment.

One rebuttal to this argument is that Congress is charged with removing a President when he does something dastardly.  It seems important to note that impeachment is a political process.  As such, its instigation is subject to the whims of politicians.  Its success also requires a two-thirds majority vote by Congress.  Accordingly, it is possible that a President can commit a federal offense without being removed from office.  It does not necessarily follow that because a President does something “dastardly,” he will be removed from office.

Conclusion

The Constitution provides for replacing a President while in office.  As a nation, we have seen this procedure carried out on several occasions.  Further, the President can execute both foreign and domestic initiatives with success while attending to legal matters and wrestling with the consequences of them.

Most importantly, perhaps, is that Congress could effectively insulate a President’s removal from office following an impeachment.  This serves to keep a person, likely guilty of crimes, with the gambit of executive power at his disposal.  Our experiences with President Nixon and his proclivity for cover-ups indicate why this is problematic.

In sum, not only does the Constitution provide for replacing a disabled sitting President, but our laws and history allow holding them accountable with an indictment.  It is not only permissible, but imperative, that we hold our chief executive accountable for his criminal behavior.  Thus, prosecutors should bring indictments and let the Supreme Court resolve the constitutionality of bring such allegations.

[1]  William K. Rashbaum et al., Michael Cohen Says He Arranged Payments to Women at Trump’s Direction, N.Y. Times (Aug. 21, 2018), https://www.nytimes.com/2018/08/21/nyregion/michael-cohen-plea-deal-trump.html.

[2] Chris Strohm & Shannon Pettypiece, Mueller Weighs Putting Off Trump Obstruction Decision, Bloomberg (Mar. 12, 2018, 4:00 AM), https://www.bloomberg.com/news/articles/2018-03-12/mueller-is-said-to-weigh-putting-off-trump-obstruction-decision.

[3] Aaron Blake, Michael Cohen’s Plea Deal is Very Bad for Trump, Wash. Post (Aug. 21, 2018) https://www.washingtonpost.com/politics/2018/08/21/why-cohen-plea-deal-is-bad-trump-it-puts-him-very-close-an-actual-crime/?noredirect=on&utm_term=.d44a53a1ec1c (discussing Mr. Cohen pleading guilty to eight counts of financial crimes).

[4] Robert G. Dixon, Jr., Amenability of the President, Vice President and other Civil Officers to Federal Criminal Prosecution while in Office, Dep’t Just., Sept. 24, 1973, https://fas.org/irp/agency/doj/olc/092473.pdf.

[5] Randolph D. Moss, A Sitting President’s Amenability to Indictment and Criminal Prosecution, U.S. Dep’t Just., Oct. 16, 2000, https://www.justice.gov/file/19351/download.

[6] Id.

[7] Id.

[8] Id.

[9] Andrew Crespo, Is Mueller Bound by OLC’s Memos on Presidential Immunity?, Lawfare (July 25, 2017, 9:00 AM), https://www.lawfareblog.com/mueller-bound-olcs-memos-Presidential-immunity.

[10] Michael S. Schmidt et al., Mueller Won’t Indict Trump if He Finds Wrongdoing, Giuliani Says, N.Y. Times (May 16, 2018), https://www.nytimes.com/2018/05/16/us/politics/mueller-trump-indictment.html.

[11] Crespo, supra note 9.

[12] U.S. Const. art. II, § 1, cl. 6.

[13] Id.

[14] U.S. Const. amend. XXV, § 3 (“Whenever the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary, such powers and duties shall be discharged by the Vice President as Acting President”).

[15] Eric M. Freedman, The Law As King and the King As Law: Is A President Immune from Criminal Prosecution Before Impeachment?, 20 Hastings Const. L.Q. 7, 16 (1992).

[16] U.S. Const. art. II, § 1, cl. 6.

[17]  See generally Max Farrand, The Records of the Federal Convention (1911), http://oll.libertyfund.org/titles/farrand-the-records-of-the-federal-convention-of-1787-3vols.

[18] William Rawle, A View of the Constitution of the United States of America 125-26 (1829), http://press-pubs.uchicago.edu/founders/documents/amendIIs9.html.

[19] Speech of Patrick Henry, Am. Hist., June 5, 1788, http://www.let.rug.nl/usa/documents/1786-1800/the-anti-federalist-papers/speech-of-patrick-henry-(june-5-1788).php.

[20] Freedman, supra note 15, at 13-15.

[21] U.S. Const. amend. XXV, § 3.

[22] Problem of Presidential Inability: Hearings Before the Spec. Subcomm. to Study Presidential Inability of the Comm. on the Judiciary H.R., 84th Cong. 16 (1956) [hereinafter “Hearings”].

[23] Id. at 18.

[24] Ronald Reagan, Letter to the President Pro Tempore of the Senate and the Speaker of the House on the President’s Resumption of His Powers and Duties Following Surgery, Am. Presidency Project, July 13, 1985, http://www.presidency.ucsb.edu/ws/?pid=38884.

[25] Id.

[26] George W. Bush, Letter to Congressional Leaders on Temporary Transfer of the Powers and Duties of President of the United States, Am. Presidency Project, June 29, 2002, http://www.presidency.ucsb.edu/ws/?pid=63676.

[27] Id.

[28] Bush, supra note 26.

[29] George W. Bush, Letter to Congressional Leaders on Resuming the Powers and Duties of the President of the United States, Am. Presidency Project, July 21, 2007, http://www.presidency.ucsb.edu/ws/?pid=75573.  See also Bush, supra note 26.

[30] Dixon, Jr., supra note 4.

[31] Dixon, Jr., supra note 4.

[32] Moss, supra note 5.

[33] Dixon, Jr., supra note 4.

[34] 9-27.000 – Principles of Federal Prosecution, U.S. Dep’t Just., https://www.justice.gov/jm/jm-9-27000-principles-federal-prosecution (last updated Sept. 19, 2018).

[35] Schmidt, supra note 10.

[36] Hearings, supra note 22.

[37] Hearings, supra note 22.

[38] Presidential Approval Ratings – Bill Clinton, Gallup: News, https://news.gallup.com/poll/116584/Presidential-approval-ratings-bill-clinton.aspx (last visited Oct. 2, 2018).

[39] Samuel J. Sarver, Effects of the Impeachment on Bill Clinton’s Staff, Cabinet, Agenda, and Legacy, Ill. St. U., https://pol.illinoisstate.edu/downloads/conferences/2006/Sarver13.pdf (last visited Oct. 2, 2018).

[40] Id.

[41] See generally John W. Dean, Blind Ambition (1976); Carl Bernstein & Bob Woodward, All The President’s Men (1974); Bob Woodward & Carl Bernstein, The Final Days (1976).

[42] Id.

[43] Id.