Thursday, May 24, 2018

The Solicitor General’s Brief In Fosamax – An End To Levine Preemption?

I’ve written many times before about the Supreme Court’s opinion Wyeth v. Levine, 555 U.S. 555 (2009), such as when the opinion came out in 2009 and when opioid manufacturers tried to use it and related preemption case law to stop the cases filed against them. Levine is by and large a good case: the Supreme Court held that, when a drug manufacturer fails to warn patients about the real harms of their drugs and injured patients bring lawsuits, the drug manufacturer can’t blame the FDA for the problem (for having approved the drugs) and demand the court throw out the patients’ cases.
The underlying logic of Levine was quite simple: the Food, Drug, and Cosmetic Act (“FDCA”) says that drug manufacturers, not the FDA, are responsible for the “Prescribing Information” and “Medication Guide” provided with each medication, and the FDCA does not say that injured patients can’t bring state tort lawsuits.
The Supreme Court, however, appeared to leave open the potential that some lawsuits could be “preempted” — as in, kicked out of court, even if the patient could prove the drug company was negligent — if the drug company could show “clear evidence that the FDA would not have approved a change to [the drug’s] label.” Levine at 571. Years later, the Supreme Court stated the rule a little bit more clearly: a drug company can “show, by ‘clear evidence,’ that the FDA would have rescinded any change in the label and thereby demonstrate that it would in fact have been impossible to do under federal law what state law required.” Pliva, Inc. v. Mensing, 564 U.S. 604, 624 fn 8.

The Supreme Court didn’t give much guidance on what it meant by “clear evidence.” The most natural interpretation is that courts should require the drug manufacturer to prove the FDA would have rescinded a change by “clear and convincing” evidence (which is higher than “preponderance”), which is what “clear evidence” meant in other Supreme Court cases, like Microsoft Corp. v. i4i Ltd. Partnership, 131 S. Ct. 2238, 2243 (2011). In practice, however, few District Courts or Circuit Courts ever needed to reach this question, because the evidence provided by the drug manufacturer to support preemption wasn’t enough under any standard. See, e.g., In re Incretin-Based Therapies Prod. Liab. Litig., 2017 WL 6030735, at *3 (9th Cir. Dec. 6, 2017)(holding there was no need to interpret “clear evidence” because “Uncertainty about whether the FDA considered the ‘new safety information’ and whether it would have altered the FDA’s conclusion establishes that a disputed issue of material fact should have prevented entry of summary judgment on the defendants’ preemption claim.”); see also Mason v. Smithkline Beecham Corp., 596 F.3d 387, 395 (7th Cir. 2010); Koho v. Forest Labs., Inc., 17 F. Supp. 3d 1109, 1117 (W.D. Wash. 2014); Dorsett v. Sandoz, 699 F. Supp. 2d 1142, 1157 (C.D. Cal. 2010).
In the Fosamax case, 852 F.3d 268 (3d Cir. 2017)(cert pending as Merck v. Albrecht, No. 17-290), in which people who used osteoporosis drug Fosamax suffered serious thigh bone fractures (the drug label warns about them now, although it didn’t then), the case had complicated enough facts that the Third Circuit reached the issue of “What is ‘clear evidence’? And who should determine whether clear evidence exists?” Id. at 282. The Third Circuit answered, “at the summary judgment stage, the court cannot decide for itself whether the FDA would have rejected a change, but must instead ask whether a reasonable jury could find that the FDA would have approved the change.” Id.
The Third Circuit provided a thorough explanation for how it reached its ruling, but, in truth, a thorough explanation wasn’t needed. Defendant drug companies typically raise preemption as a matter of summary judgment (the whole point for them is to try to avoid having a jury hear the case), but summary judgment — when a court decides there’s no “genuine dispute of material fact,” and so a jury trial won’t be held on that issue — is the exception, not the norm. The standards for applying summary judgment are well-settled, and in 2014 the Supreme Court reiterated:

Summary judgment is appropriate only if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed. Rule Civ. Proc. 56(a). In making that determination, a court must view the evidence in the light most favorable to the opposing party. …

The witnesses on both sides come to this case with their own perceptions, recollections, and even potential biases. It is in part for that reason that genuine disputes are generally resolved by juries in our adversarial system. By weighing the evidence and reaching factual inferences contrary to Tolan’s competent evidence, the court below neglected to adhere to the fundamental principle that at the summary judgment stage, reasonable inferences should be drawn in favor of the nonmoving party.

Tolan v. Cotton, 134 S. Ct. 1861, 1866, 1868 (2014)(quotations omitted). The drug companies try to avoid this well-settled law by claiming that what the FDA “would have” done if presented with the labeling change is solely a question of law, not of fact, but that doesn’t work, either. Whether or not the FDA would have rescinded a labeling change under the FDCA is a mixed question of law and fact, and those questions also go to the jury. As the Supreme Court held earlier this year,

We here arrive at the so-called “mixed question” of law and fact at the heart of this case. Pullman-Standard v. Swint, 456 U. S. 273, 289, n. 19 (1982) (A mixed question asks whether “the historical facts . . . satisfy the statutory standard, or to put it another way, whether the rule of law as applied to the established facts is or is not violated”). …

For all their differences, both parties rightly point us to the same query: What is the nature of the mixed question here and which kind of court (bankruptcy or appellate) is better suited to resolve it? See Miller v. Fenton, 474 U. S. 104, 114 (1985) (When an “issue falls somewhere between a pristine legal standard and a simple historical fact,” the standard of review often reflects which “judicial actor is better positioned” to make the decision). …

[In a mixed question] [t]he court takes a raft of case-specific historical facts, considers them as a whole, [and] balances them one against another…

U.S. Bank National Association v. Village at Lakeridge (U.S., March 5, 2018). Such “mixed” questions of law and fact go to the fact-finder, which is the jury. In the Oracle v. Google litigation, the Federal Circuit just applied the same analysis to a jury finding:

The Supreme Court has recently explained how we are to determine what the standard of review should be in connection with any mixed question of law and fact. Id. Specifically, the Court made clear that an appellate court is to break mixed questions into their component parts and to review each under the appropriate standard of review. Id. at *5-7. …

Where applying the law to the historical facts “involves developing auxiliary legal principles of use in other cases—appellate courts should typically review a decision de novo.” Id. (citing Salve Regina College v. Russell, 499 U.S. 225, 231-33 (1991)). But where the mixed question requires immersion in case-specific factual issues that are so narrow as to “utterly resist generalization,” the mixed question review is to be deferential. Id.

Even one of the very few cases to find preemption of a branded drug injury lawsuit — a case that was settled before the appeal was finished, so we don’t know if it would have been affirmed — held “application of the clear evidence standard is necessarily fact specific.” Dobbs v. Wyeth Pharms., 797 F. Supp.2d 1264, 1270 (W.D. Okla. 2011). If the “clear evidence” standard of Levine is “fact specific,” which no one denies, then it is the type of question that goes to the jury.
In other words, Fosamax wasn’t any sort of departure from the ordinary. Rather, it was a straight-forwarded application of well-settled law. Such is likely why the Third Circuit panel’s order was unanimous and why the Third Circuit denied en banc review.
Unsurprisingly, the drug company (Merck) disagreed, and so sought certiorari from the Supreme Court. Justice Alito recused himself (properly, because he owns Merck stock) and thereafter the Supreme Court requested the Solicitor General of the United States to file a brief expressing their views on the case.
Which brings us to yesterday, when the Solicitor General filed their brief.
I have no doubt that my frenemies over at Drug and Device Law Blog (they represent drug manufacturers–I call them “frenemies” in jest because our blogs have had a good rapport for years) would go ballistic over the description I just gave of Fosamax, which they considered “pure hogwash,” “based on crazy reasoning,” and myriad other colorful phrases, raising some other lawyers’ eyebrows. They were quite happy to see yesterday that the Solicitor General’s office has recommend the Supreme Court grant certiorari in the Fosamax case and reverse it.
In my humble opinion, however, the Solicitor General’s brief is not the silver bullet the drug companies have been looking for. In many ways, it supports the arguments plaintiff-patients usually make more than the arguments made by defendant drug companies.
First, the Solicitor General’s brief essentially concedes that this case presents none of the usual reasons for granting certiorari. Supreme Court Rule 10 isn’t binding on the Court, but it’s a good guide, and it lists the three primary circumstances in which certiorari is granted:

(a) a United States court of appeals has entered a decision in conflict with the decision of another United States court of appeals on the same important matter; has decided an important federal question in a way that conflicts with a decision by a state court of last resort; or has so far departed from the accepted and usual course of judicial proceedings, or sanctioned such a departure by a lower court, as to call for an exercise of this Court’s supervisory power;

(b) a state court of last resort has decided an important federal question in a way that conflicts with the decision of another state court of last resort or of a United States court of appeals;

(c) a state court or a United States court of appeals has decided an important question of federal law that has not been, but should be, settled by this Court, or has decided an important federal question in a way that conflicts with relevant decisions of this Court.

The Solicitor General’s brief admits right up front that they don’t have any of these: “[n]o circuit conflict yet e​xists, however, and further percolation in the courts of appeals could potentially refine the issue for review.” They even admit that they have no argument for how a decision in Fosamax could make any difference in other cases: “It is also unclear whether the decision below will influence other courts addressing similar preemption defenses.”
The Solicitor General’s brief tries to squeeze in an argument, in the very last sentence, that “the Court’s consideration of the proper method for resolving the preemption issue in this case may inform the proper analytical framework for resolving FDA preemption issues in light of Wyeth more generally.” Problem for them is that the new “analytical framework” they present, on pages 18-19, has never been adopted by any court in the country, as revealed by the absence of any citations in support.
The Solicitor General is thus asking the Supreme Court to take up a case where there’s no conflict and no reason to believe it will make any difference in future cases, all so the Supreme Court can obliterate nine years of precedent interpreting Levine and make up an entirely new rule for cases with different facts that aren’t in front of the Court.
I suspect the drug companies begged the Solicitor General’s office to file this brief — I spotted some language that is almost verbatim to language I’ve seen in drug company briefs — but the brief admits every way that it can that this just isn’t the type of circumstance that warrants certiorari.
Second, the Solicitor General’s brief makes a concession that could be devastating to the preemption arguments made by drug companies in most drug injury lawsuits:

This case does not present circumstances in which there is no actual FDA labeling decision to interpret—for instance, because the manufacturer did not submit a labeling supplement. In such circumstances, Wyeth’s use of the phrase “clear evidence” could arguably be read to suggest that determining what FDA would have done with respect to such a supplement presents a question of fact for the jury to decide.

Fact is, Fosamax is unique because there is arguably an “actual FDA labeling decision to interpret.” In the vast majority of drug injury lawsuits, the manufacturer “did not submit a labeling supplement” at all, or did not submit a labeling supplement with either the language proposed by the plaintiff or with the scientific evidence identified by the plaintiff. Nexium and Prilosec? No warning for stomach or esophageal cancer proposed. Mirena? No warning for intracranial hypertension proposed. Januvia and Victoza? No warning for pancreatic cancer proposed. Onglyza? No warning for heart failure proposed (that is, in the time period when the plaintiffs took it — it has one now.)
Drug manufacturers try to use their own negligence to their advantage, claiming that, even if they didn’t submit a labeling change, they can establish preemption based on some hand-waving arguments about regulatory standards, but the Solicitor General’s brief knocks that down, too: “Wyeth therefore may be understood as consistent with the view that, to establish impossibility preemption, a name-brand drug manufacturer cannot rely on speculation or merely plausible interpretations of ambiguous features of FDA’s regulatory framework and practices.”
The fact that the United States has adopted those two positions is bound to make its way into plaintiffs’ briefs from now on. If the Supreme Court adopts them, too, then it will make most branded drug preemption arguments even more frivolous than they already are.
Third, the Solicitor General’s brief includes a paragraph and footnote that justifies everything plaintiffs’ lawyers have been saying since Levine was originally decided:

FDA’s May 2009 decision rejecting petitioner’s proposal to modify Fosamax’s Warnings and Precautions section to address atypical femoral fractures was based on the agency’s determination that the data was then insufficient to justify such a warning. That conclusion flows directly from the terms of the agency’s May 2009 Complete Response Letter, the relevant regulatory context, and the agency’s subsequent actions. Given FDA’s determination, respondents’ claim that petitioner should have updated its Warnings and Precautions labeling at that time is preempted.10

Footnote 10: The question presented is based on the premise that petitioner provided FDA with “the relevant scientific data,” Pet. i, and respondents’ brief in opposition does not appear to contend otherwise.

In every drug case, the drug manufacturers have inevitably withheld scientific data from the FDA, and so the drug manufacturers always try to avoid discovery into their scientific data by claiming that it’s irrelevant whether or not the FDA actually had and reviewed “the relevant scientific data.” The Solicitor General’s brief blows that argument up entirely.
Under the Solicitor General’s view, a drug manufacturer not only has to show the FDA rejected the same warning proposed by the plaintiff, but must also show that, along with the proposed warning, the drug manufacturer provided all of “the relevant scientific data.” But the drug companies never do that in the circumstances that lead to litigation; if they had done so, the drug would have had an adequate warning and there would be no case.
It’s usually folly to predict what the Supreme Court will do, but I’ll do it anyway: with Justice Alito recused, I don’t see how certiorari would be granted. Justice Roberts has been scrupulous about avoiding plurality decisions, and, way back when Levine was originally decided, Justice Thomas wrote a concurrence in support of the plaintiffs, and so he would be unlikely to up-end Levine in favor of the drug companies, and that would still likely produce a 4-4 opinion. There’s no clear path to victory for the drug companies here and, as the Solicitor General’s brief shows, there’s no good reason why the drug companies should be victorious.

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Monday, April 23, 2018

DNC Lawsuit Part 2: U.S. Intervention, Mueller, Free Speech, And The End-Game

My prior post went through the basics of the DNC Lawsuit against Russia, the Trump campaign, Wikileaks, and the individuals affiliated with each of them, specifically:

  1. Why Now
  2. Why The Complaint Alleges Those Causes Of Action
  3. Whether Russia And Its Agents Have “Sovereign Immunity”
  4. The “Plausibility” Pleading Requirement For The Case To Go Forward

Today we’ll follow up with four big-picture issues:

  1. The Potential Role Of The U.S. Government
  2. The Role Of Parallel Criminal Prosecutions
  3. The First Amendment Issues
  4. What This Lawsuit Can Actually Accomplish

V. The Potential Role Of The U.S. Government

My prior post talked about the Foreign Sovereign Immunities Act (“FSIA”), which sets out when foreign governments can be sued in United States courts. To sum up that discussion in a sentence, it’s unclear whether Russia (and the GRU and its agents) can be sued at all for hacking the DNC. “Computer network exploitation,” or “CNE,” is far closer to a matter of governmental policy than, say, an employee at the Russian embassy running a red light and hitting a pedestrian, or the Russian embassy ordering a pizza delivery and refusing to pay for it, both of which would clearly fall within the FSIA’s grant of jurisdiction to sue.
This post discusses something different: whether the United States under the Trump Administration can (and might) intervene in the DNC’s lawsuit.
The United States frequently intervenes in lawsuits against foreign governments. As a Congressional Research Service report from 2008 said,

In 1996 Congress amended the Foreign Sovereign Immunities Act (FSIA) to allow U.S. victims of terrorism to sue designated State sponsors of terrorism for their terrorist acts. The courts have handed down large judgments against the terrorist State defendants, generally in default, and successive Administrations have intervened to block the judicial attachment of frozen assets to satisfy judgments.

As one example, in Acree v. Republic of Iraq, 17 American soldiers who were captured and tortured during the 1991 Gulf War sued the Republic of Iraq for compensatory and punitive damages. The United States tried to intervene in the case, the District Court denied the intervention, but the D.C. Circuit reversed, holding “the District Court abused its discretion in finding the United States’ motion to intervene to be untimely and erred in denying that motion. The United States possesses weighty foreign policy interests that are clearly threatened by the entry of judgment for appellees in this case.” Acree, 370 F.3d 41, 43 (D.C. Cir. 2004).
In many ways, our analysis here is far less complicated than in most of the cases, because (a) the DNC does not raise claims relating to terrorism, which have their own statutes and (b) Congress has not passed a statute specific to this situation, which it has done in other lawsuits against foreign governments. The DNC lawsuit instead has a rather straightforward application of Federal Rule of Civil Procedure 24(a), which says:

(a) Intervention of Right. On timely motion, the court must permit anyone to intervene who …  claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.

That was the basis for the United States intervening in Acree. It’s difficult to dispute that the United States has “an interest relating to … the subject of the action,” not least because of the potential effect on diplomatic relations, the existence of multiple governmental investigations into the DNC hack (i.e., the same reports referenced by the DNC’s complaint, as discussed in my prior post), and the ongoing Special Counsel investigation and the indictments already filed. If the United States wants to intervene in the case, it’s hard to see how a court could tell them “no.”
Will the United States intervene? I wouldn’t be surprised if they did, and, if they did, there’s nothing necessarily suspicious about it. As discussed above, the United States has a history of intervening in lawsuits involving foreign governments. (That isn’t to say anything the Trump Administration does with respect to this case is beyond criticism; if, for example, the Administration intervened and took positions that appeared designed more to benefit the Trump campaign than to serve the foreign policy interests of the United States, that would be worth evaluating more closely.)
Attorney General Sessions has recused himself “from any existing or future investigations of any matters related in any way to the campaigns for President of the United States.” Presumably by “investigations” he meant investigations by the Department of Justice, which wouldn’t necessarily apply to intervention in the DNC’s civil suit. However, I hope for everyone’s sake he recuses himself from this issue as well, so that the decision is made by Deputy Attorney General Rosenstein, which would mitigate the appearance of a conflict of interest. Indeed, it’s possible that Special Counsel Mueller files to intervene, on the basis of the on-going investigation. Neither of these actions would suggest anything untoward — they are what we would expect in this situation, regardless of the underlying politics.
Once the United States intervenes, they can raise a host of arguments, from immunity under FSIA to the “political question” doctrine.
If you saw Narcos on Netflix, you might recall the real-life case of Kiki Camarena, a DEA agent abducted, tortured, and murdered by drug cartels — and the DEA’s retaliatory response, which was so aggressive that cartels thereafter refrained from harming DEA agents. Part of that response involved kidnapping, without the permission of the Mexican government, a physician alleged to have participated in the torture and bringing him back to the United States. He was tried, acquitted, then returned to Mexico, after which he brought suit against the DEA and the people involved. I mention his case because of a footnote in the Supreme Court’s opinion dismissing it:

Another possible limitation that we need not apply here is a policy of case-specific deference to the political branches. For example, there are now pending in federal district court several class actions seeking damages from various corporations alleged to have participated in, or abetted, the regime of apartheid that formerly controlled South Africa. The Government of South Africa has said that these cases interfere with the policy embodied by its Truth and Reconciliation Commission, which “deliberately avoided a `victors’ justice’ approach to the crimes of apartheid and chose instead one based on confession and absolution, informed by the principles of reconciliation, reconstruction, reparation and goodwill.” The United States has agreed. In such cases, there is a strong argument that federal courts should give serious weight to the Executive Branch’s view of the case’s impact on foreign policy. Cf. Republic of Austria v. Altmann, 541 U. S. 677, 701-702 (2004) (discussing the State Department’s use of statements of interest in cases involving the Foreign Sovereign Immunities Act of 1976, 28 U. S. C. § 1602 et seq.).

Sosa v. Alvarez-Machain, 542 U.S. 692, 733, Fn 21 (2004)(record citations omitted). The full passage in the case referenced, Altmann, rejected the idea that the courts have to defer to the United States’ interpretation of FSIA, but added:

[S]hould the State Department choose to express its opinion on the implications of exercising jurisdiction over particular petitioners in connection with their alleged conduct, that opinion might well be entitled to deference as the considered judgment of the Executive on a particular question of foreign policy. See, e. g., Verlinden, 461 U. S., at 486; American Ins. Assn. v. Garamendi, 539 U. S. 396, 414 (2003) (discussing the President’s “`vast share of responsibility for the conduct of our foreign relations'”). We express no opinion on the question whether such deference should be granted in cases covered by the FSIA.

Republic of Austria v. Altmann, 541 U. S. 677, 701-702 (2004). As the Supreme Court elaborated in Altmann, “we do not hold, however, that executive intervention could or would trump considered application of the FSIA’s more neutral principles,” and thus the Executive doesn’t have a blank check to stop lawsuits against foreign governments by simply asserting the case could affect foreign policy.
Nonetheless, one of the central issues raised by the DNC’s lawsuit — whether Russia should be held accountable for hacking into the DNC’s servers and then using that information to affect the 2016 election — sounds very much like a “political question.” The “Countering America’s Adversaries Through Sanctions Act” was passed by Congress to impose “sanctions with respect to activities of the Russian Federation undermining cybersecurity,” and it referenced intelligence community findings that “Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the United States presidential election.”
The decision whether or not to allow the case to continue remains in the power of the federal courts, not the Executive; that’s a basic Marbury v. Madison issue. Nonetheless, the Executive’s views on whether or not the DNC’s lawsuit could impact foreign policy will factor into the District Court’s analysis (and, if it gets there, the Circuit Court’s and potentially the Supreme Court’s analyses).

VI. The Role of Parallel Criminal Prosecutions: Mueller’s Investigation Doesn’t Necessarily Stop The DNC Lawsuit

In general, “The Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings.” Keating v. Office of Thrift Supervision, 45 F.3d 322, 324 (9th Cir. 1995). Yet, as Keating continued, “Nevertheless, a court may decide in its discretion to stay civil proceedings when the interests of justice seem to require such action.” Id. (citations omitted). The Second Circuit Court of Appeals would hear any appeal from the DNC lawsuit, and it has similarly ruled:

The power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. Courts may defer civil proceedings pending the completion of parallel criminal prosecutions when the interests of justice seem to require such action. Although civil and criminal proceedings covering the same ground may sometimes justify deferring civil proceedings until the criminal proceedings are completed, a court may instead enter an appropriate protective order. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance.

Louis Vuitton Malletier SA v. Ly USA, Inc., 676 F. 3d 83, 97 (2d Cir., 2012). The Second Circuit noted, “so heavy is the defendant’s burden in overcoming a district court’s decision to refrain from entering a stay that the defendants have pointed to only one case in which a district court’s decision to deny a stay was reversed on appeal, and that case was decided more than thirty years ago.” Id. at 100.
My point in raising all this is simple: to show that the court has ample flexibility in deciding whether or not to stay the litigation and wait for the Mueller investigation (and, e.g., the Papadopolous prosecution) to conclude, or to limit the proceedings in some way, or to plow forward with all deliberate speed.
In terms of testimony and the production of documents, five years ago I wrote about “Pleading The Fifth Amendment And Adverse Inferences In Civil Litigation.” Although “taking the Fifth” has tremendous power in criminal prosecutions, the effect on civil litigation is far more limited. As I wrote then,

Although in a criminal procedure, the court must instruct the jury that it cannot draw an inference of guilt from a defendant’s failure to testify about facts relevant to his case, Griffin v. California, 380 U.S. 609 (1965), in civil cases, “the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them.” Baxter v. Palmigiano, 425 U.S. 308, 318 (1976).

Thus, when a defendant’s criminal rights are at stake, the defendant can still choose to “take the Fifth” and avoid testifying or producing documents, but the court and the plaintiffs can use that against them, and can even instruct a jury to use that against them, and to presume that the defendant plead the Fifth to avoid revealing incriminating information.

VII. First Amendment Issues: Most Of The Defendants Have Colorable Free Speech Defenses

Let’s go back to January 27, 2010, when President Obama delivered his State of the Union, which included:

Last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests –- including foreign corporations –- to spend without limit in our elections. Well I don’t think American elections should be bankrolled by America’s most powerful interests, and worse, by foreign entities. They should be decided by the American people, and that’s why I’m urging Democrats and Republicans to pass a bill that helps to right this wrong.

Obama was referring to the Citizens United opinion. Justice Alito, who was in attendance and who had joined the majority in Citizens United, famously shook his head and mouthed “not true.”
I don’t raise this to re-litigate Citizens United, but to note that the zone of “free speech” surrounding political figures is quite broad under the current precedent. In McDonnell v. U.S., 136 S. Ct. 2355 (2016), for example, the Supreme Court invalidated a corruption conviction in part because:

[T]he Government’s expansive interpretation of “official act” would raise significant constitutional concerns. … [C]onscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time. The basic compact underlying representative government assumes that public officials will hear from their constituents and act appropriately on their concerns — whether it is the union official worried about a plant closing or the homeowners who wonder why it took five days to restore power to their neighborhood after a storm. The Government’s position could cast a pall of potential prosecution over these relationships if the union had given a campaign contribution in the past or the homeowners invited the official to join them on their annual outing to the ballgame. Officials might wonder whether they could respond to even the most commonplace requests for assistance, and citizens with legitimate concerns might shrink from participating in democratic discourse.

The scope of McDonnell is so broad that it effectively ruined the corruption prosecution against Senator Robert Menendez.
There’s of course no First Amendment right to hack into someone’s computer servers and steal information. But what about a political candidate exploiting the fruits of a hack of their opponent? It doesn’t seem like there were any smoking guns contained within the DNC’s files, but it’s hard to deny that they were, at least to some extent, matters of “public interest.” That gets us into far more complicated territory. We don’t have enough facts yet to develop these arguments, but it’s likely everyone associated with the Trump campaign will raise a free speech defense to some, potentially all, of the allegations.
A similar analysis applies to Wikileaks. Media outlets frequently utilize materials that obviously came to them from unlawful activity of some sort, like the Panama Papers, which changed the political landscape world-wide for the better. At some point, a media outlet’s advance cooperation with hackers might subject them to joint liability for the unlawful conduct — but, as of yet, it does not appear there is any publicly-available evidence suggesting Wikileaks coordinated the hack with Russia or its GRU intelligence unit.
The disclosed communications reveal Wikileaks was hardly a neutral or objective player in its use of the DNC’s documents, and that it sought specifically to boost the Trump campaign, but “neutral” and “objective” aren’t the standard for free speech protections. To the contrary, courts tend to avoid looking at the viewpoint advanced by the speaker, and instead look to the overall nature of the conduct. “The First Amendment forbids the government to regulate speech in ways that favor some viewpoints or ideas at the expense of others.” Lamb’s Chapel v. Center Moriches Union Free School Dist., 508 U.S. 384, 394 (1993).

VIII. What Can This Lawsuit Actually Accomplish?

As I mentioned in my first post, it seems to me the DNC’s lawsuit was prompted by a simple fact: the statute of limitations for their claims was about to run. (Specifically, the statute of limitations for the Computer Fraud & Abuse Act and Stored Communications Act claims.) It was now or never, and the DNC made the decision to file it now rather than lose their right to ever file it.
So, what’s next? In my humble opinion, the DNC has solid CFAA and SCA claims against Russia, Russia’s GRU, and any hackers it can personally identify. The DNI investigation into Russia’s efforts to influence the election, the DHS/FBI investigation into “Grizzly Steppe,” and the CrowdStrike investigation into the DNC hack provide more than enough for a “plausible” claim that should survive a motion to dismiss.
But that’s just about all the DNC has going for it – even for those claims, pursuing them now walks right into Russia’s FSIA defense (and potential intervention by the United States), and if Russia and its agents are dismissed early, the rest of the case will likely fall apart completely, because Russia’s role in the alleged facts is likely so central that the other parties cannot be held liable without them. Moreover, the current facts against the other parties are weak. As a political matter, there is a lot that can be drawn from what we know about the contacts between the Trump campaign, Wikileaks, and Russia, but as a legal matter it is hard to see how the non-Russia parties can be held liable for anything on the existing record. It is likely in the DNC’s best interest to wait for the Mueller investigation to continue producing something, be it more indictments or a report that is made public or something else that can help bolster their allegations.
If I represented the DNC, I’d probably upfront admit the statute of limitations issue to the court and ask the court to stay all of the proceedings until, at the earliest, the Special Counsel investigation either concluded or at least indicated that it had finished its work relating to the Trump campaign. Whether they do that, and whether the court would grant it, is another matter.

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Saturday, April 21, 2018

The Who, What, Where, When, & Why of the DNC Lawsuit

Earlier today, the Democratic National Committee filed a massive lawsuit against almost everyone arguably associated with the hack on the DNC’s servers, including the Russian Federation, Russia’s foreign military intelligence agency (GRU), the hacker known as “Guccifer 2.0,” Wikileaks, Donald J. Trump for President, Inc., Donald Trump, Jr., Jared Kushner, Roger Stone, and others who have been, in press reports or in filings from the Special Counsel, alleged to have served as conduits between Russia and the Trump campaign. (Notably, Donald Trump was not himself named.) The complaint raises a host of claims ranging from the Computer Fraud & Abuse Act, the Stored Communications Act, the Racketeer Influenced and Corrupt Organizations Act, to the Digital Millennium Copyright Act, and a couple of state law tort claims too.
I’ve discussed almost all of these types of claims on this blog before (see, e.g., CFAA here and here, SCA here, RICO here, DMCA here), so the archive is rich with information if you want to learn more. For our purposes here, we’ll break everything in this lawsuit down into manageable chunks:

  1. Why Now
  2. Why The Complaint Alleges Those Causes Of Action
  3. Whether Russia And Its Agents Have “Sovereign Immunity”
  4. The “Plausibility” Pleading Requirement For The Case To Go Forward
  5. The Potential Role Of The U.S. Government (Next Post)
  6. The Potential Role Of Parallel Criminal Prosecutions (Next Post)


I. The DNC Had To File This Case Now Or The Statute Of Limitations Would Have Run

The core of the DNC’s complaint is, of course, about the hack on their servers, and thus the core of the case revolves around claims under the Computer Fraud & Abuse Act (“CFAA”) and the Stored Communications Act (“SCA”).
As the complaint says, “on April 28, 2016, DNC IT staff detected and ultimately confirmed access to the DNC network by unauthorized users.” The DNC thus had just one more week before the statute of limitations would have run: claims under the CFAA and SCA have to be brought, respectively, “within 2 years of the date of the act complained of or the date of the discovery of the damage,” 18 U.S.C. § 1030(g) and “[not] later than two years after the date upon which the claimant first discovered or had a reasonable opportunity to discover the violation,” 18 U.S.C. § 2707(f).

II. To Understand The Lawsuit’s Causes Of Action, Put Aside Politics And Russia

The DNC’s Complaint looks like a smorgasbord of federal statutes and unusually-named common law claims, such as “conspiracy to commit trespass to chattels,” that give the impression of someone sneaking onto a farm and stealing a cow (which, truth be told, is indeed part of the historical origin of “trespass to chattels,” and of the phrase “caught red handed”). But the claims make sense in the context of the facts alleged.
Let’s start with a hypothetical to go through the alleged facts without politics getting in the way: the plaintiff is Wayne Enterprises (its former Chief Executive Officer is, of course, Bruce Wayne). Bruce Wayne has been regularly criticized by competitors in the media, and Wayne Enterprises’ computer systems remain under constant attack from hackers. It’s not unusual for Wayne’s competitor, Lex Luthor of LexCorp, to criticize him and point out his failings. It’s also not unusual for the League of Assassins to try to break into computers associated with him.
SIDENOTE: Before we go forward, perhaps you have questioned my decision to bless the DNC with the mantle of Batman while condemning Trump as Lex Luthor and Russia as the League of Assassins. That’s on purpose, so our hypothetical is consistent with the standard the court will apply when evaluating the initial motions in the case. When a federal court evaluates the allegations made by a plaintiff (such as when a court reviews a motion to dismiss a complaint), it assumes all of the properly-pleaded facts in the plaintiffs’ favor, along with all reasonable inferences that can be drawn from it. The court can (and will) ignore legal conclusions alleged by the plaintiff, as well as “facts” that seem to have no basis, but the court will not try to weigh the facts and decide who is right. Now, back to our hypothetical.
One summer, someone — government investigators and Wayne Enterprises’ cybersecurity firm both say it was likely the League of Assassins, but they don’t have a smoking gun or a confession — succeeds in hacking the company’s computers and stealing a large amount of information, including internal communications, copyrighted materials, and documents that are potentially trade secrets, and they start leaking that information through various channels. The situation is made even more frustrating by what appears to be an unusual amount of coordination with LexCorp and the leaked information, such that at least one consultant for LexCorp appears to have advance knowledge of the stolen information.
As the next year goes by, Wayne Enterprises learns of pre-existing connections between Lex Luthor and the League of Assassins. They also learn of meetings, emails, and other contacts between LexCorp employees and people associated with the League of Assassins that happened before the hack and which, in parts, suggest knowledge of the hacks. There’s a prosecutor looking into these issues, too — they’ve already filed indictments against multiple LexCorp employees for matters relating to the League of Assassins — but they won’t comment publicly on the status and Wayne Enterprises doesn’t have anything more than anonymously sourced press reports to determine where the investigation is going or when it will conclude.
So what does Wayne Enterprises do? It waits for as much information as it can get until the two year point, when the CFAA and SCA statutes of limitations will run, then it files a lawsuit with essentially the same claims raised by the DNC. It files a pile of claims relating to hacking / cybersecurity, like the Computer Fraud & Abuse Act, the Wiretap Act, the Stored Communications Act, the Virginia Computer Crimes Act, and a couple common law claims for trespass. It also adds claims relating to the specific property taken, like the Digital Millennium Copyright Act, and the federal and Washington D.C. Trade Secrets Acts.
Wayne Enterprises also files a RICO claim for a rather simple reason: because at the moment they don’t even know who actually hacked their servers — the ones the other claims are really aimed at — they just know the people that they believe were in on the conspiracy. One of the people they think is in on the conspiracy is Lex Luther’s son.
In real life, in the Complaint, that’s Donald Trump, Jr. Does anyone suspect that Donald Trump Jr. personally hacked the DNC servers? Of course not. At the very most, based on the allegations, he had knowledge of it having occurred and then exploited that for personal gain, which is hardly an ideal setup for tagging him with a CFAA claim, but which can fit into a RICO claim, or at least a RICO conspiracy claim. (We’re not yet getting into the merits of these specific claims. Accept this as an article of faith: despite the simple language in the statute, proving any form of RICO claim is quite difficult.)

III. Russia, the GRU, and Cyberattacks Under the Foreign Sovereign Immunities Act

Going way back, like The Schooner Exchange v. M’Faddon, 11 U.S. 116 (1812), the federal courts have recognized “sovereign immunity” for foreign governments, which prohibits them from being sued. Since 1976, however, the United States has had a codified, consistent method for determining when foreign governments may be sued under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1332, 1391, 1441, and 1602–1611 (not to be confused with the “Foreign Intelligence Surveillance Act,” which relates mostly to warrants for eavesdropping on matters of national security). A foreign state, as well as its “agents” and “instrumentalities,” are “presumptively immune from the jurisdiction of United States courts” unless one of the Act’s express exceptions to sovereign immunity applies. Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993).
The DNC complaint identifies, in the most general form, the two exceptions they intend to rely upon: 28 U.S.C. § 1605(a)(5), which removes immunity for tortious acts committed in the United States, and 28 U.S.C. § 1605(a)(2), which removes immunity for commercial activities.
Starting with § 1605(a)(5), it sure seems like a foreign government hacking into a political committee’s files would count for tortious conduct — trespass is, of course, a tort — but the FSIA was written with much more banal factual circumstances in mind, like a car accident caused by a negligent driver who happens to work for a foreign government:

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case … in which money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment;

except this paragraph shall not apply to … any claim based upon the exercise or performance or the failure to exercise or perform a discretionary function regardless of whether the discretion be abused

1605(a)(5)(italics added). That would be the “discretionary function” exception, and it is intentionally similar to the same “discretionary function” language contained in the Federal Tort Claims Act (“FTCA”), which outlines when the United States itself may be sued for causing injuries to persons or property. See Swarna v. Al-Awadi, 622 F. 3d 123 (2d Cir., 2010)(holding FSIA discretionary function exception should be interpreted in pari materia with FTCA).  
That’s a bit of a problem for the DNC, because the FTCA’s own “discretionary function” exception can be quite broad. As the Supreme Court held,

When established governmental policy, as expressed or implied by statute, regulation, or agency guidelines, allows a Government agent to exercise discretion, it must be presumed that the agent’s acts are grounded in policy when exercising that discretion. For a complaint to survive a motion to dismiss, it must allege facts which would support a finding that the challenged actions are not the kind of conduct that can be said to be founded in the policy of the regulatory regime. The focus of the inquiry is not on the agent’s subjective intent in exercising the discretion conferred by statute or regulation, but on the nature of the actions taken and on whether they are susceptible to policy analysis.

United States v. Gaubert, 499 U.S. 315-324 (1991). One relatively recent, and deeply frustrating, example involved the U.S. Army Corps of Engineers’ shocking failure to maintain Mississippi River Gulf Outlet Reach 2 Levee, resulting in the cataclysmic flooding of St. Bernard Parish and the Lower Ninth Ward during Hurricane Katrina. Judge Duval of the Eastern District of Louisiana presided over the ensuing litigation, finding the United States liable, just to see his decision metaphorically washed away by the Fifth Circuit. He wrote a law review article about it with a rather revealing title: “The Discretionary Function: License To Kill?” As he wrote, “If that analysis [by the Fifth Circuit] is correct, then the FTCA is practically meaningless for anything other than quotidian postal-car accidents or medical malpractice at a Veterans Administration Hospital.”
Coming back to our purposes, Russia’s alleged systematic effort to hack the DNC and then coordinate the release of documents to manipulate the 2016 election is certainly not a “quotidian postal-car accident.” It would appear to be the very sort of actions “founded in the policy of the [Russian] regulatory regime,” per Gaubert, and thus within the “discretionary function” exception, “regardless of whether the discretion be abused,” per § 1605(a)(5).
This sort of upside-down analysis in which the shocking nature of the alleged conduct works to the benefit of the defendant is, regrettably, somewhat commonplace in cases against government entities, whether it’s a claim against a foreign government, a tort claim against the United States, or a civil rights claim. Our liability regime is not well constructed for holding accountable those who abuse governmental power.
Moving to the other FSIA section cited by the DNC, the “commercial activities” clause says:

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case … in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States…

1605(a)(2). The DNC’s complaint alleges, “Russia committed the trespass in order to steal trade secrets and commit economic espionage, two forms of commercial activity undertaken in and directly affecting the United States.”
A recent Supreme Court opinion on “commercial activity” under FSIA would appear to be problematic for the DNC, because the Supreme Court reiterated that, for a plaintiff to avoid sovereign immunity, their claim had to be “based upon” the commercial activity at issue and not, say, sovereign acts abroad. Obb Personenverkehr AG v. Sachs, 136 S.Ct. 390 (2015). That said, in a footnote, the Supreme Court said “caution is warranted here,” and that, although they found sovereign immunity for a claim against Austria involving a railroad accident in Austria, “domestic conduct with respect to different types of commercial activity may play a more significant role in other suits under the first clause of § 1605(a)(2).” Thus, the DNC might have a solid hook here: whatever else can be said about the hacking, it most certainly involved the domestic activity of breaking into the DNC’s servers in the United States and removing the materials from the United States.

IV. Does The DNC Allege A “Plausible” Link Between The Hacking And The Trump Campaign?

Among the worst words in current legal jargon is “Twiqbal,” a bad portmanteau of the names Twombly and Iqbal, both Supreme Court cases about the level of factual detail required by a plaintiff for their lawsuit to survive a motion to dismiss.
Discussions about pleading standards are like quicksand, and it’s easy to get lost in them. So instead I’m going to quote the Second Circuit (the appellate court that oversees, among others, the Southern District of New York where this case was filed):

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. We must accept as true all of the allegations contained in a complaint, though threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Though we are confined to the allegations contained within the four corners of the complaint, we may also consider any documents attached to the complaint as an exhibit or incorporated in it by reference.

Carlin v. Davidson Fink LLP, 852 F. 3d 207, 212 (2d Cir., 2017)(quotations and citations omitted).
It would be neither worth my time nor your time for me to go through the “plausibility” of each claim as to each defendant — although that’s exactly what the parties and the court will do when a motion to dismiss is filed. So this is more a general overview.
You may have noticed the DNC’s complaint references a lot of documents, with 107 endnotes. It is not typical to have “endnotes” in a Complaint. But a couple of those endnotes deserve special mention:

These aren’t minor details, nor are they matters that can be easily swept aside. In general, I think it is quite “plausible” to allege that Russia was involved in the hack on the DNC and that various members of the Trump Organization had contemporaneous contacts with agents of the Russian government.
But does the DNC “plausibly” link the Trump Organization’s contacts to the hacking itself? In many ways, the question is a political Rorschach test, and odds are good you have already reached your own conclusions.
I’ll come back to this lawsuit and many of the other issues it raises in a subsequent post.

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