Category: Notes

An Ocean Apart: The Transatlantic Data Privacy Divide and the Right to Erasure – Note by Paul J. Watanabe

From Volume 90, Number 5 (July 2017)
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This Note argues that fragmented free expression laws across European member states and data controllers’ ability to select their reviewing supervisory authority give U.S. data controllers latitude to exploit the privacy-expression balance in favor of the U.S. prioritization of expression. Whereas the current literature revolving around the right to be forgotten and the GDPR focuses on reconciling and converging transatlantic values of privacy and free expression, this Note examines the mechanisms of the European Union’s assertion and imposition of privacy values across the Atlantic through the right to be forgotten and the right to erasure and describes weaknesses in the GDPR that may undermine those mechanisms.

Part I outlines the diverging paths that led to the rift in data protection policy. Part II details how the experimental implementation of the Google Spain right to be forgotten preliminarily exported the European privacy scheme across the Atlantic, previewing the potential impact of the GDPR’s right to erasure. Part III outlines the provisions of the GDPR that thwart the right to be forgotten as a tool of imposing EU privacy values on U.S. data controllers. The Conclusion prophesies the ultimate effects of the Regulation on American privacy values, given the Regulation’s flaws.

 

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Home Court Advantage? The SEC and Administrative Fairness – Note by Kenneth Oshita

From Volume 90, Number 4 (May 2017)
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Under the Dodd-Frank Act of 2010, the Securities and Exchange Commission (SEC) was given expanded authority to bring enforcement actions against “any person” allegedly in violation of federal Securities and Exchange laws, with unhindered discretion as to whether these actions must be initiated before its own administrative law judges (ALJs) or in federal district courts. Since then, pursuant to its enhanced prosecutorial power, the SEC has increased its number of administrative proceedings—cases it has brought “in house”—sparking considerable controversy over the SEC’s perceived “home court advantage” and stirring up a series of constitutional challenges to its adjudicatory system. So far, only a few such challenges have garnered any success, while all others have been dismissed by federal district and appellate courts for lack of jurisdiction. Despite the attention the SEC has received, the Supreme Court has yet to address the issue, and Congress similarly has been slow to react. A federal bill addressing the matter, entitled the “Due Process Restoration Act,” has been proposed, but the bill is still in its infancy and has yet to pass the House of Representatives, much less reach the Senate.

This Note argues that the problem here is not the potential unconstitutionality of the SEC’s adjudicatory system, as the controversy so far suggests. Rather, the problem is uniquely sub-constitutional in that it pierces into issues of fairness that constitutional arguments seem able only to approximate. The constitutional claims brought against the SEC’s “home court advantage” cover a diverse and wide array of doctrines: non-delegation, the Seventh Amendment right to a jury, equal protection, substantive and procedural due process, and the appointment and removal of officers. Each of these arguments attempts to dismantle the SEC’s adjudicatory system by attacking the legitimacy of the SEC’s administration itself. Though these arguments seem to resonate with the outcries of injustice that have permeated the industry, they do not actually challenge the aspects of the SEC’s adjudicatory system that have upset plaintiffs—the perception that SEC ALJs are biased or that the SEC’s administrative proceedings are “rigged” and unfair. Instead, the arguments are both diverse and generalized, suggesting that the problem at hand is in some ways inarticulable; plaintiffs, it would seem, are hard-pressed to find a clear and precise constitutional critique. Importantly, upon closer examination, these constitutional challenges are not only inaccurate but also meritless. Thus, despite popular opinion, the supposedly broken SEC system is likely constitutional.

The main thrust of this Note, therefore, is to look beyond the constitutionality of the SEC’s adjudicatory system and to reframe the discussion by directing our attention toward the real issue: fairness. At the heart of the controversy over the SEC’s adjudicatory system is the perception that the agency’s ALJs are biased in favor of the SEC and that the administrative process provides fewer procedural safeguards to defendants than federal civil actions. These criticisms assume a preference for federal courts but with limited explanations as to why federal courts (judges and procedures alike) are more fair than administrative ones.

Such criticisms are not new. They echo much of the controversy that has surrounded administrative agencies since their inception. Administrative agencies have historically been seen as dangers to democracy, as being susceptible to tyranny by the majority and arbitrary government because of their mixture of prosecutorial, legislative, and judicial functions. Consequently, the administrative state that we know and expect today can be seen as a response to that fear: agencies evolved around the belief that they should abide by the “rule of law” and conform to “social rationality.” To this end, as manifested in the Administrative Procedure Act of 1940, agencies now have formally separated functions between “prosecutor and judge”; they are, importantly, subject to judicial review; and their processes are required to “approximate[] the structure, procedures, and logic of the judiciary.” The fairness, thus, that the public demands of the SEC today is an entirely expected and logical reaction when framed against this historical backdrop.

By contrast, Professor David Zaring, one of the few scholars to have written about the SEC’s constitutional conundrum, sees the current issue as a conflict of perspective, as a clashing of “worldviews” between the adjudicatory justice offered by the SEC’s administrative proceedings and the adjudicatory justice offered by federal district courts. In particular, Zaring observes that the controversy is essentially created out of a desire for equity: on the one hand, “routinized and procedurally minded” ALJs that are interested in “bureaucratic regularity” do not and cannot exercise equitable relief for the parties brought before them, while on the other hand, duly confirmed federal district judges are necessarily interested in equity and do just that. Though Zaring succinctly highlights the equity-oriented, functional differences between administrative and federal judges in relation to the current controversy, he does not elaborate on the deeper sense of unfairness triggered by these differences, nor does he evaluate how fairness should be approached, considered, and ultimately understood in this context. Zaring’s insightful but abbreviated analysis reflects a shortcoming in the wider discourse surrounding the SEC controversy: namely, that there has been a clear underdevelopment of the implicated issue of fairness and its measure.

This Note posits that the fairness issue underlying this dispute, in its simplest form, is rooted in the polarity between an individual view of fairness and a collective view of fairness—that is, how fairness is viewed by the person targeted by the SEC in an administrative proceeding and how fairness is viewed by Congress and the SEC. The individual disagrees with the government over the “fair” level of adjudicator partiality (whether for an ALJ or federal judge), and the individual disagrees with the government over the “fair” level of procedural safeguards in adjudicatory proceedings (whether in an administrative forum or Article III forum). These disagreements then manifest in constitutional rhetoric, capturing ideas of fairness that roughly translate into a balancing of individual rights and due process with administrative efficiency and consistency. In reality, the conversation quickly turns from an intuitive concern about fairness to an elaborate fight over the legitimacy of the SEC and its statutory mandates.

This constitutionally oriented and highly legal battle, however, does not address the fairness that is at the issue’s core. Even due process arguments are fundamentally misguided. Professor D. J. Galligan observes that “due process, as developed by the Supreme Court, does not mean a general duty to treat [a] person fairly; it means only that decisions about certain, protected interests be in accordance with the law.” Thus, constitutional arguments, like those here, are bound to the law at hand and can therefore only address fairness if fairness is embedded in the law itself. While it is true to some extent that fairness is implicitly considered in constitutional doctrines, it is not generally or practically true in this instance. As will be discussed, the constitutional arguments thinly address our fairness concerns, and fairness must now be deliberately considered.

Part I of this Note begins by summarizing the laws that motivate and govern the current SEC controversy. Part I next explains the SEC’s adjudicatory and enforcement systems and reviews the various reactions, in the media and otherwise, that have given shape to the public outrage with the SEC. Part II then evaluates the constitutional arguments that have been raised against the SEC and ultimately rejects them, supporting the conclusion that the SEC’s adjudicatory system is likely constitutional despite the many allegations that it is unfair. Part III addresses this conundrum—how an otherwise constitutional system can be seen or felt as unfair—providing a framework for understanding fairness in relation to the judicial and procedural biases at the heart of this controversy. Finally, the Note concludes with parting thoughts.

 

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Preserving International Comity: The Foreign Sovereign Immunities Act of 1976 and OBB Personenverkehr AG v. Sachs – Note by Jason E. Myers

From Volume 90, Number 4 (May 2017)
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In accordance with a time-honored tradition, foreign sovereigns are generally immune from being summoned to court in another country. This doctrine of “sovereign immunity” was codified and modified in the Federal Sovereign Immunities Act of 1976 (“FSIA”). The FSIA divests United States courts of jurisdiction over defendants that are foreign states, subject to a number of general exceptions designed to provide a level of recourse for an aggrieved party against a foreign government. The FSIA codifies the long-standing attitude against suing foreign governments in the United States and “places in the federal courts the task of determining whether the general immunity provided by the Act attaches” in a given scenario, “weighing ‘the interests of justice’ and ‘the rights of both foreign states and litigants in United States courts.’” As such, the Act is designed to protect “both the rights of domestic litigants and foreign states.” However, the framers of the statute were, and those currently adjudicating disputes arising under the statute are, wary that “err[ing] in the former direction could implicate foreign policy concerns, while being overly solicitous of the status of foreign states could make it impossible for aggrieved parties to be made whole.” This virtual tug-of-war between these two interests was at the forefront of a case decided by the United States Court of Appeals for the Ninth Circuit in 2013, Sachs v. Republic of Austria, a battle that ultimately reached the Supreme Court.

The case involved Carol Sachs, a United States citizen who purchased a train ticket through an online travel agent located in Massachusetts. While using that ticket in Austria to enter a train operated by OBB Personenverkehr AG (“OBB”), a railway company owned by the Republic of Austria, Sachs fell between the platforms; the train crushed both of her legs, ultimately requiring a double amputation. Sachs subsequently sued OBB in federal district court in California, accusing OBB of negligence, among other things. In response, OBB filed a motion to dismiss the case, claiming sovereign immunity under the FSIA. Agreeing with OBB, the district court dismissed the case for lack of subject matter jurisdiction, citing the FSIA and its grant of foreign sovereign immunity. On appeal, the Ninth Circuit initially affirmed the district court’s ruling, but upon a rehearing en banc, a majority reversed, holding that the “commercial activity” exception to the FSIA applied in this case because OBB is a “common carrier . . . [that] engage[d] in commercial activity in the United States when it [sold] tickets in the United States through a travel agent.” In October 2015, the parties presented their case to the Supreme Court in OBB Personenverkehr AG v. Sachs, and after two months of deliberation, the Court unanimously reversed the Ninth Circuit’s decision, concluding that Sachs’s suit “[fell] outside the commercial activity exception” and was, therefore, “barred by sovereign immunity.”

At the forefront of the decision was a question regarding the interpretation and scope of one of the principal exceptions set forth in the FSIA, namely the commercial activity exception. The relevant portion of the exception states that “[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.” While the narrow exception provides a limited avenue for domestic litigants to pursue redress against a foreign sovereign, the Ninth Circuit erroneously expanded the scope of the exception to encompass a dispute arising entirely based on an event that took place abroad.

As such, the Supreme Court correctly reversed the Ninth Circuit’s grant of subject matter jurisdiction over the Republic of Austria vis-à-vis OBB, because Sachs’s claims, which arose entirely from an accident in Austria, were not “based upon” commercial activity engaged in within the United States. Furthermore, the Court’s decision was also correct in light of the policy interests at stake, specifically relating to global commerce and U.S. diplomatic relations. Finally, while the Court declined to address whether the express definition of “agency” in the FSIA, the factors set forth in First National Bank v. Banco El Comercio Exterior de Cuba (“Bancec”), or common law principles of agency control in defining an agent of a foreign state under the commercial activity exception set forth in the FSIA, the express definition of agency in the FSIA offers the best approach for future cases.

The Supreme Court’s decision will preserve the synergy of global commerce in an era of both e-commerce and the emergence of state-owned corporations. Just in the European railway industry alone, there are hundreds of state-owned railway and shipping companies and “[t]ens of thousands” of United States citizens who use the aforesaid companies annually. Had the Court affirmed the lower court’s far-reaching interpretation of the commercial activity exception, such state-owned enterprises may have seen their foreign sovereign immunity undermined “simply because an American passenger purchased a ticket through a travel agency in the United States.” As a result, “European railways could [have] be[en] forced to defend tort actions in the United States arising from accidents occurring entirely in Europe.” In addition, the Supreme Court’s decision upheld the long-standing policy of favoring sovereign immunity as a mechanism of preserving international comity, and thus, creates a stable platform for diplomatic relations going forward.

Part I of this Note explores the origins of the doctrine of sovereign immunity and the history and application of sovereign immunity in federal courts prior to the FSIA’s codification. Part I also examines the legislative intent underlying the FSIA as well as the Act’s well-defined rules.

In addition, Part I provides an in-depth analysis of the commercial activity exception and the seminal United States cases that have interpreted the scope and substance of this exception. Part II focuses on the Supreme Court’s decision in OBB Personenverkehr AG, a case that arose under the FSIA, particularly reviewing the facts that gave rise to the dispute, the legal issues arising from the incident, the procedural posture of the case, and the legal arguments set forth by each side. Part III begins by demonstrating why the Supreme Court correctly found that Sachs’s claims were not based upon a commercial activity engaged in within the United States. In addition, Part III illustrates why, from a public policy standpoint, the Supreme Court was correct in reversing the Ninth Circuit’s expansive interpretation of the commercial activity exception. Finally, Part III makes a case for the adoption of the express definition of agency set forth in the FSIA for determining when an entity is an agent of a foreign state. In so doing, Part III briefly addresses the alternative standards proposed for agency determinations under the FSIA. This Note concludes by illustrating the presence of other forms of redress for those injured abroad and reiterates why the Supreme Court was correct in reversing the lower court’s decision.

 

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Life is Short. Go to Court: Establishing Article III Standing in Data Breach Cases – Note by Megan Dowty

From Volume 90, Number 3 (March 2017)
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This is the digital age. As “the ratings machine, DJT [Donald J. Trump],” says, “all I know is what’s on the internet,” or “the cyber,” as he calls it. People’s use of and dependency on the Internet has made data breaches a serious and widespread threat to people’s privacy and security. In 2016, there were 1,093 data breaches, up from 780 in 2015. 75.6% of companies suffered at least one successful attack. Essentially “there are only two types of companies left in the United States, according to data security experts: ‘those that have been hacked and those that don’t know they’ve been hacked.’”

Major companies such as LinkedIn, Target, Ebay, Yahoo, Anthem, and Ashley Madison have been subject to data breaches, and subsequently to lawsuits. Not only can data breaches threaten people’s financial security, but breaches like Ashley Madison’s—a dating site whose slogan up until July 2016 was “Life is Short. Have an Affair”—can threaten people’s home lives and shatter careers. The government is not immune to dangerous cyber attacks either. Both the U.S. Office of Personnel Management and the Democratic National Committee (“DNC”) have suffered breaches. Presidential candidate Hillary Clinton’s e-mails were leaked as part of the DNC breach, which became a source of controversy throughout her campaign. Further, the U.S. intelligence community has concluded that the hack was tied to and possibly directed by the Russian government, which sets a troubling precedent for future hacks by hostile foreign governments.

Plaintiffs whose information has been exposed due to a company data breach have attempted to sue the hacked companies storing their information based on causes of action such as negligence, breach of contract, unjust enrichment, breach of fiduciary duty, unfair and deceptive business practices, invasion of privacy, violation of the federal Fair Credit Reporting Act (“FCRA”), and violations of various state consumer protection and data breach notification laws.

Data breach actions are expected to be the “next wave” of class actions. Typically plaintiffs try to bring these claims as class actions because of the large number of plaintiffs and small amount of damages involved. Most data breach actions are brought in federal court based on the Class Action Fairness Act, 28 U.S.C. § 1332(d) (2012), which extends federal diversity jurisdiction to all class actions in which minimal diversity exists and the amount in controversy exceeds $5 million. However, courts dismiss a large portion of these data breach actions because plaintiffs lack a cognizable injury in fact, which is a requirement for Article III standing.

The Supreme Court has not yet set a uniform standard for what constitutes injury in the context of data breaches. As a result, there is a circuit split as to how much injury is sufficient. This split largely centers around whether increased risk of identity theft or fraud and, more recently, “sorting-things-out” costs and monitoring expenditures are sufficient to constitute an injury. But even if an action is dismissed in federal court for lack of Article III standing, it may succeed in state court, which is not subject to the Article III standing requirement.

In the realm of data breaches, technology is progressing rapidly; consequently, there is a lag time between the progress of technology and progress of the law. Because legislatures are slow to act and generally want a consensus to develop in the public or industry before writing protective measures into law, courts bear the burden of first impression, establishing a standard through case law on which the public can rely. This Note will offer a proposed standard for establishing injury under Article III’s standing requirement in federal court. Part I provides background on the requirements of standing under Article III in the context of data breach cases. Part II discusses statutory standing and the effect of a recent Supreme Court statutory standing case on data breach litigation. Part III sets forth a proposed standard for recognizing injury in data breach cases. Part IV explores what effects this proposed standard would have on data breach litigation.

 

 

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Easy Come, Easy Go: A Guide to California Cap-and-Trade Spending – Note by Jonathan Kintzele

From Volume 90, Number 3 (March 2017)
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At the time of this writing, over $1.4 billion of unallocated polluter regulatory fees collect dust in a special government bank account as California agencies labor to figure out how to spend it, or more accurately, how to spend it fast enough. While state agency pockets smolder with anticipation, one inconvenience stands in their way: the cash must be used for programs or developments that reduce greenhouse gas (“GHG”) emissions. Thus, as lawmakers toil through the night to engineer new and creative spending proposals—ink dripping from the gold-embroidered parchment—the words “emission reductions” continue to get lost between nouns, verbs, exclamations points, and dollar signs.

Simply put, putting a price on carbon emissions has never been more lucrative for the State of California. Polluter fees not only fund the State’s climate change agenda, but also serve as the fiscal linchpin of the Governor’s statewide budgetary plan, from affordable housing development subsidies to the State’s herculean $64 billion bullet-train project. California has never been a state fearful of taking controversial positions on private property rights and protecting the public welfare, but with cap-and-trade, the entire world is watching.

California is the twelfth largest GHG producer in the world and the original American cap-and-trade pioneer. On January 1, 2013, the state implemented the most complex market-driven environmental regulatory scheme of its kind ever put into action. California’s cap-and-trade program was designed to be a model which not only other states in the western United States could follow, but one that could eventually be replicated in developed economies across the world in the global movement to reverse centuries of unrestrained GHG pollution. As a bona fide experimental prototype, the importance of getting the system right cannot be overstated. However, as a concept-in-progress that regulates the sixth largest economy in the world—greater than the likes of Italy, Russia, and India—understanding its contours and evolving mandates could not be more important to the businesses and industry practitioners that are subject to its control. As such, this Note will analyze the practical components of the cap-and-trade program, assess the potential legal risks of current spending trends, and ultimately recommend additional, apt, and effective appropriation vehicles for cap-and-trade revenue.

 

 

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Get a Warrant: A Bright-Line Rule for Digital Searches Under the Private-Search Doctrine – Note by Dylan Bonfigli

From Volume 90, Number 2 (January 2017)
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A girlfriend hacks her boyfriend’s computer and discovers evidence of tax evasion. She contacts a local law enforcement officer who arrives at her house and looks at the files she found. Without a warrant, the officer opens other files in the same folder the girlfriend had searched. The officer notices another folder labeled “xxx.” He opens the folder and discovers child pornography. The officer seizes the computer based on what he found. The boyfriend is indicted for possession of child pornography and tax evasion. Before trial, the boyfriend moves to suppress all evidence obtained pursuant to the officer’s warrantless search of the computer. What evidence should the judge suppress?

The answer turns on the Fourth Amendment’s private-search exception. Under this exception, a government agent may recreate a search conducted by a private individual so long as the agent does not “exceed the scope” of the prior private search. The question under the existing framework is: at what point did the officer exceed the scope of the prior search—if at all? Was it when he viewed files the girlfriend had not viewed, when he opened files in a different folder, or did he stay within the scope of the girlfriend’s search by only searching the computer’s hard drive? This is what I will refer to as the denominator problem, which asks what courts should use as the unit of analysis to measure the scope of a digital search.

There are at least four competing approaches to the denominator problem, discussed in Part II, and the Supreme Court has provided little guidance on how the private-search doctrine applies to digital searches, resulting in a circuit split. Until this issue is resolved, law enforcement has little guidance on when to obtain a warrant following a private search and can unknowingly subject individuals to unreasonable invasions of privacy, which may result in suppression of relevant evidence. One recent example is United States v. Lichtenberger.

 

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Juvenile Justice: Searching for a Flexible Alternative to the Strict and Over-Inclusive Transfer System for Serious Juvenile Offenders – Note by Thucvy H. Nguyen

From Volume 90, Number 2 (January 2017)
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Morgan Geyser and Anissa Weier are two adolescent girls currently in Wisconsin’s criminal justice system. While Weier remains in a juvenile detention facility, Geyser spent several months in 2016 in a mental health facility receiving treatment for early-onset schizophrenia. Unlike other children their age, Geyser and Weier have both been charged with attempted first-degree intentional homicide for stabbing their friend, a girl named Payton Leutner, nineteen times with a kitchen knife and leaving her in the woods to die. At the time of the stabbing, all three girls were twelve years old. A fictional online character, known as Slender Man, served as the motivation behind Geyser and Weier’s attempt to kill their friend, who miraculously survived after crawling out of the woods. Furthermore, unlike most children who are charged with a crime, Geyser and Weier have been charged as adults. Additionally, a trial court judge decided to keep the adolescent girls in the criminal court during a reverse waiver hearing, and consequently their names were released to the public. Videos of the police questioning both girls after their initial arrest are also readily available on media outlets.

 

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(Un)reasonable Religious Accommodation: The Argument For an “Essential Functions” Provision Under Title VII – Note by Laura E. Watson

From Volume 90, Number 1 (November 2016)
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Title VII of the Civil Rights Act of 1964 requires employers to make reasonable accommodations for their employees’ sincerely held religious practices and beliefs as long as the accommodation does not pose an “undue hardship” on the conduct of the employer’s business. But “undue hardship” is a vague term that has led to unclear, inconsistent, unfair, and even discriminatory precedent. This Note proffers a new framework for religious discrimination law through the incorporation of the “essential functions” provision of a similar law, Title I of the Americans with Disabilities Act, in order to strike a fairer balance between the competing rights and interests of employers and employees.

 

 

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