Notes Archives – Page 9 of 32 – Southern California Law Review

In many ways, Michael C. Hughes is an average American family man. He is a middle-aged father of four from Rochester, Minnesota. He has been married to his wife for twelve years. He has a broad, muscular frame and is partial to cowboy hats and wide belt buckles. But Hughes is unlike the average American family man in one fundamental way: he was born biologically female.[1] Hughes is one of the more than 1.4 million transgender adults in the United States,[2] a small but increasingly visible group of people who are currently facing a unique legal battle to use restrooms and single-sex facilities that align with their gender identity.[3]

Hughes garnered publicity with a viral photo taken in a public restroom, in protest of “bathroom bills”—laws that require Hughes to use women’s restrooms and facilities, despite his gender identity.[4] “Bathroom bill” is the common name for legislation that prohibits individuals from using bathrooms (or other private, single-sex facilities like locker rooms) that do not match their biological sex or sex markers on their identification documents, depending on the bill.[5] Posing in front of the bathroom mirror in a women’s restroom, as female patrons look on questioningly, Hughes “presents” as a male—making him appear out of place in the restroom that nonetheless matches his biological sex. Hughes’ photo and its accompanying hashtag, “#WeJustNeedtoPee,” went viral in 2016, reflecting Americans’ rapt attention on transgender issues.[6]

Hughes’ photo was a direct reaction to North Carolina’s Public Facilities Privacy & Security Act, or House Bill 2 (“H.B. 2”), which to date remains the only bathroom bill to successfully pass a state legislature.[7] H.B. 2 was enacted shortly after the passage of Ordinance 7056 in Charlotte, North Carolina, which prohibited discrimination on the basis of gender identity in Charlotte’s public accommodations and, in doing so, permitted transgender people to use the restrooms of their choosing.[8] H.B. 2 prohibited individuals from using bathrooms and changing facilities in government buildings—including schools, government agencies, and courthouses—that did not correspond with the sex listed on their birth certificates.[9] The bill also overturned Charlotte Ordinance 7056 and prohibited municipalities from enacting their own anti-discrimination policies.[10] Many transgender rights activists argued that H.B. 2 was the most anti-LGBT piece of legislation then operating in the United States.[11] It launched a series of lawsuits, as proponents and opponents of the bill prepared to battle over the application and extent of transgender rights.[12] It also faced severe pushback and resulted in harm to North Carolina’s economy and public image.[13] On March 30, 2017, a year after H.B. 2’s passage, both the state House and Senate partially overturned the bill, doing away with the prohibition on transgender bathroom access.[14]

Although there are currently no state laws prohibiting transgender individuals from using the bathroom of their choice, transgender bathroom access remains an important issue for two reasons. First, numerous bathroom bills are currently pending: in the 2017 legislative session alone, sixteen states [15] considered legislation that would restrict transgender access to bathrooms, locker rooms, and other sex-segregated facilities that match their assigned sex at birth or “biological sex.”[16] Second, private employers may adopt policies or practices preventing their transgender employees from accessing bathrooms and other single-sex facilities corresponding to their gender identity. This Note will focus on this second issue, dealing specifically with the legality of private employers’ policies restricting transgender bathroom access.

While transgender people have become more prominent in mainstream America over the last ten years, their status under the law is still an open question in many areas. This includes whether transgender employees are legally entitled to access bathrooms and single-sex facilities matching their gender identity in the workplace. The answer to this question is far from clear: in the absence of explicit federal protections against transgender discrimination, advocates and supporters look to Title VII of the Civil Rights Act of 1964 (“Title VII”), the main source of federal employment anti-discrimination law. Title VII prohibits discrimination on the basis of “sex” in employment and thus potentially provides protection for transgender persons against discrimination in the workplace.[17]

Multiple federal agencies, including the Equal Employment Opportunity Commission (“EEOC”), an independent federal agency that oversees enforcement of Title VII, have issued guidances that affirm these federal laws protect transgender employees from discrimination.[18] The Obama administration also embraced this view.[19] And multiple federal courts have found federal laws prohibiting sex discrimination also cover discrimination on the basis of transgender status, including the Courts of Appeals for the First, Sixth, Ninth, and Eleventh Circuits and lower courts in the second and fifth circuits. However, some argue that these agencies, the Obama administration, and the courts overstepped their sphere of authority and argue that Title VII was never intended to (and thus should not) offer protection for transgender status.[20] This includes Attorney General Jeff Sessions, who has helped steer the Trump-era Department of Justice in the direction of rolling back administrative policies that offered transgender employees protections in the workplace.[21]

This question is hotly debated, and both sides of the aisle have made public policy arguments in support of their interpretation of the law. Proponents of these policies cite privacy concerns, employee comfort, and the protection of women and children as the motivation for these policies.[22] On the other hand, opponents argue these concerns are at best a myth and at worst a thinly veiled pretext for denying transgender people equal rights.[23] Moreover, they claim that not allowing transgender employees to access bathrooms corresponding to their gender identity poses serious privacy and safety concerns for those employees.[24]

This Note will critically analyze arguments on both sides. Ultimately, this Note argues that Title VII should be read to protect transgender status and gender identity from discrimination on the basis of sex. Thus, employer policies that prevent transgender employees from using bathrooms matching their gender identity violate the provisions of Title VII that protect individuals from discrimination on the basis of sex. When this issue eventually goes to the Supreme Court, the Court should affirm that transgender people are protected from discrimination and disparate treatment in their employment under federal law and that denying them access to bathrooms matching their gender identity in the workplace is a form of discrimination.

This Note will proceed in six parts. Part I defines terms and describes the history of transgender status and bathroom access under the law. Part II provides background information on Title VII and discusses how other federal laws protecting against discrimination on the basis of sex, like Title IX, have been interpreted with regard to transgender status and bathroom access. Part III discusses the disjointed stance taken by the executive branch, including the postures of the Trump administration and administrative agencies. Part IV outlines various federal courts’ approaches to transgender rights under Title VII, including bathroom access. Part V introduces the various arguments for and against reading Title VII as prohibiting discrimination on the basis of transgender status. Finally, Part VI argues that federal law protects transgender people from discrimination on the basis of their gender identity in employment and prohibits private employer policies that restrict transgender bathroom access.

I. Background

A. Defining Transgender

Before diving into the substance of the debate over transgender discrimination’s legal protections, it is helpful to define the terms that will be used throughout this Note and provide brief information on transgender individuals. Transgender people (or “transpersons”) identify with a gender that does not correspond to their biological sex as assigned at birth.[25] Most commonly, transgender people identify with the opposite sex from what they were assigned at birth.[26] For example, a person who was born biologically male but identifies as a female is referred to as a trans–woman, and a person who was born biologically female but identifies as a male is called a trans–man. However, the term transgender may also apply to people who do not exclusively identify as either male or female—for example, genderfluid, genderqueer, and agender people, and those who identify with a third gender outside of the male-female binary.[27] The term transgender does not conventionally apply to cross-dressers—individuals who derive pleasure or satisfaction from dressing as the opposite sex—unless those individuals have gender identities that do not match their sex at birth.[28] Finally, it is a common misconception that being transgender relates in some way to sexual orientation. However, transgender status is completely separate from sexual orientation, and transgender individuals can be straight, gay, lesbian, bisexual, and so on.[29]

A “gender transition” is the process by which transgender people begin “presenting” as their gender identity (that is, taking steps to outwardly appear as the sex matching their gender identity and identifying themselves as such). This process is sometimes coupled with undergoing medical treatments or procedures to change their biological sex.[30] These medical treatments may include the following: hormone replacement treatment; breast reduction or augmentation; and sexual reassignment surgery, which involves reconstructing the genitals to match those of the biological sex that corresponds with the individual’s gender identity.[31] Not all transgender people undergo procedures or medical treatment in their transitions, and the desire or intent to have medical procedures is not a requirement for being transgender. When a transgender person physically appears as the sex corresponding with their gender identity to the public at large, this is called “passing.”[32]

Transgender status is no longer considered a mental health disorder by the American Diagnostic and Statistical Manual of Mental Disorders (“DSM”), though it once was.[33] However, the DSM and many mental health professionals recognize “gender dysphoria”—the discomfort and distress associated with one’s assigned gender role—as a mental health disorder in need of treatment.[34] Indeed, treatment plans can include “counseling, cross-sex hormones, puberty suppression and gender reassignment surgery.”[35]

It is important to note that the word “transsexual,” which was previously used to describe transpeople, is disfavored by the transgender community [36] and will not be used in this Note.

B. History of Transgender Status & Rights in the United States

Transgender status and the concept of gender identity is not a recent phenomenon. Individuals from many cultures over time have identified with genders that do not match their biological sex.[37] For example, many Native American tribes recognized a third gender, which embraced biological males who identified with a gender separate from male and female.[38] These individuals were sometimes referred to as “two-spirit” people.[39] According to some scholars, at least 155 Native American tribes historically accepted these two-spirit people who existed outside of the gender binary.[40] In addition, during the American Civil War, many biological women disguised their sex to fight as soldiers; although most who survived presumably lived as women after the war, some lived out the rest of their lives as men.[41] The most famous example, Albert Cashier, “served in the army as a man, lived his life as [a] man and was buried at 71 with full military honors in 1915, as a man,” despite being biologically female.[42] Almost a century after the Civil War, in 1951, Christine Jorgensen became famous for undergoing the first sex reassignment surgery that was widely publicized in the United States, bringing an early transition to light.[43]

But while people have long identified as transgender, at least in effect if not in name, there is no question that transgender people and the legal questions surrounding their rights have become much more visible in the last decade. Transgender celebrities like Chaz Bono (formerly Chastity Bono), the son of musicians Cher and Sonny Bono, and Matrix directors Lana and Lilly Wachowski (formerly Larry and Andrew Wachowski) brought media attention to transgender people by publicly coming out in 2009, 2010, and 2016, respectively.[44] In 2014, Laverne Cox, a transgender woman and star of the Netflix hit show “Orange is the New Black,” became the first openly transgender person to be nominated for an Emmy in an acting category for her portrayal of the transgender inmate Sophia Burset.[45] In the same year, Ms. Cox was on the cover of Time, stirring up conversations about transgender people and gender identity at dinner tables across the country.[46]

Finally came a tipping point for transgender visibility: Olympic gold medal-winning decathlete Caitlyn Jenner (formerly Bruce Jenner) publicly came out as a trans–woman in April 2015.[47] Ms. Jenner’s coming out was, in many ways, the perfect vehicle for bringing transgender issues to light. To older generations, the 67-year-old was an American hero and phenom who brought home gold in the 1974 Olympics.[48] To younger generations, Jenner was the stepfather of Kim Kardashian and member of the Kardashian clan, one of America’s most famous families. As arguably the most famous openly transgender person in the world, Ms. Jenner’s public coming-out and televised transition firmly solidified transgender people as prominent players in media and entertainment.

Most recently, in a historic moment for transgender representation in government, Virginia House of Delegates candidate Danica Roem became the first openly transgender woman to win a seat in a state legislature in November 2017.[49] Roem’s win was particularly notable because she unseated incumbent Republican candidate Robert G. Marshall, the author of Virginia’s ultimately unsuccessful bathroom bill.

Yet despite these changes, the legal status of transgender people and the rights they are afforded vary widely across the country and depend on the laws enacted within each state. Though the 14th Amendment includes a general guarantee of equal protection,[50] transgender people are not explicitly a protected class under federal law.[51] Congress has repeatedly tried, and failed, to pass the Employment Non-Discrimination Act (“ENDA”), a law that would include explicit protections against both sexual orientation and gender identity discrimination in the workplace.[52] Given the current makeup of the Republican-controlled Congress, it seems unlikely the ENDA or a similar law will pass anytime soon.[53] Thus, there are no over-arching federal laws offering employees protection from discrimination on the basis of transgender status. As of January 2017, twenty-one states and at least 225 local jurisdictions had adopted legislation specifically prohibiting discrimination based on gender identity or transgender status.[54] These protections variably include prohibitions on discrimination in housing, employment, and public accommodations.[55]

Nevertheless, many questions remain for transgender people in the remaining states, who face potential discrimination from employers, schools, and the state itself without recourse. This is especially true since the Supreme Court has not addressed whether existing federal laws, like Title VII, apply to transgender status or prevent discrimination on the basis of gender identity.[56] Throughout history, transgender people have faced, and continue to face, discrimination in a variety of areas including: employment, housing, public accommodations, education, health, marriage, parenting, and adoption.[57] Transgender people are also predisposed to higher levels of depression and suicide, face substantially higher homelessness rates, and are more often victims of violent crimes than their non-transgender peers.[58] Unfortunately, transgender people do not fare any better in the workplace; 47% of those surveyed by the National Transgender Discrimination Survey reported experiencing adverse job outcomes as a result of their transgender status and 90% reported experiencing harassment, mistreatment, or discrimination on the job.[59]

C. Transgender Bathroom Access in the United States

The laws surrounding transgender peoples’ access to restrooms and other single-sex facilities matching their gender identity is equally muddy. In some states, using a restroom that does not match an individual’s biological sex or “official” state-recognized sex found on identification documents is not a criminal act.[60] Other states have gone further and passed non-discrimination laws that specifically give individuals the right to use single-sex restrooms and other gendered public accommodations that conform with their gender identity.[61] In these states, there are no legal repercussions for transgender people who use restrooms or facilities that do not match their biological sex or identification markers.

In other states, using a public restroom that does not correspond with an individual’s biological or state-recognized sex is quasi-illegal.[62] This means that if an individual is told to leave a restroom by a security guard or police officer and refuses, they may be cited or arrested for disturbing the peace.

At the other end of the spectrum, some states have passed or considered bathroom bills that specifically require individuals to use restrooms and other single-sex facilities that match the sex listed on their birth certificates.[63] In these jurisdictions, transgender people must use facilities corresponding to the sex that is listed on their IDs, use gender neutral or “family” restrooms, or use restrooms specifically designated for transgender people.[64] While North Carolina remains the only state to pass a bathroom bill, Florida, Arizona, Texas, and Kentucky are among states that have considered such laws.[65]

Finally, some jurisdictions have taken a different approach to resolve this problem, addressing the facilities themselves. For example, California passed a law in September 2016 that required all single-occupancy restrooms to be gender-neutral.[66] Although this law is limited to single-occupancy restrooms and does not apply to many restrooms in the state, it is one of the more progressive approaches taken by a state. Vermont passed a similar law on May 11, 2018.[67] As of May 2018, no other states had passed similar legislation.

D. Transgender Bathroom Access in the Workplace

Additional legal questions are implicated when examining transgender bathroom access in the employment sphere. Without the passage of an amendment to Title VII or clarification from the Supreme Court, it is unclear whether the prohibition on “sex” discrimination in the workplace applies to discrimination on the basis of transgender status or gender identity. If it does apply to such discrimination, bathroom bills restricting transgender access to gender identity-affirming facilities would violate federal law. Moreover, this could make private employers liable for discrimination under Title VII if they refuse to allow their transgender employees to access facilities matching their gender identities.

However, even if transgender status was covered by the word “sex” in Title VII, it is unclear whether prohibiting employees from using restrooms or other single-sex facilities that do not correspond with their biological sex is discriminatory. The argument has been made that employers enforcing such rules would not be discriminating on the basis of sex because they would be allowing all employees to have equal access to the restroom or single-sex facility that matches that individual’s biological sex.[68] Of course, opponents of bathroom bills and other restrictions on transgender bathroom access argue that such actions are discriminatory because they allow cisgender employees to access bathrooms matching their gender identities, but not transgender employees, resulting in disparate treatment.[69]

There is an additional wrinkle: the Occupational Safety and Health Administration (“OSHA”), an agency of the United States Department of Labor, views bathroom access as a basic condition of employment and “requires employers to provide their employees with toilet facilities.”[70] For this reason, OSHA prohibits employers from putting “unreasonable restrictions” on employees’ restroom access.[71] To the extent that requiring a transgender employee to use the bathroom that corresponds with their biological sex may be interpreted to “unreasonably restrict” that individual’s access to employer restrooms, employers may be legally required to offer transgender employees an alternative.[72] This may feasibly include access to either a private or gender-neutral bathroom or to a bathroom matching that individual’s gender identity.

II. Federal Anti-Discrimination Laws and Transgender Rights

A. Title VII of the Civil Rights Act of 1964

Title VII of the Civil Rights Act of 1964 is the fundamental federal employment discrimination law in the United States. Title VII states that an employer covered under the act may not discriminate against employees on the basis of their race, color, religion, sex, or national origin.[73] Specifically, Title VII prohibits discrimination on the basis of these protected categories in the terms, conditions, and privileges of employment. Thus, employees do not have a claim for disparate treatment under Title VII, unless their employer took an adverse employment action against them because of their race, color, religion, sex, or national origin. Although Title VII breaks up employers into two categories, federal employers and private sector employers, and addresses them separately, the laws are analogous in their prohibition of discrimination on the basis of the defined protected characteristics.[74] The Equal Employment Opportunity Commission (“EEOC”) is tasked with interpreting and enforcing Title VII.

What is covered under “sex” discrimination has long been a subject for debate and has been interpreted to cover an expanding set of actions over time.[75] When the Civil Rights Act of 1964 was originally proposed, it did not include sex as one of the characteristics it would protect from employment discrimination.[76] At the time, the concept of prohibiting employers from discriminating against female employees (who were deemed to be covered by this protection) was so radical that it almost prevented the Civil Rights Act from being passed.[77] In fact, some argue that staunch civil rights opponent, Representative Howard W. Smith (Virginia), proposed that the bill include sex “to prevent discrimination against another minority group, the women,” in an effort to kill the bill.[78] Nonetheless, the Civil Rights Act, with Title VII, was passed.[79] In its early days, the EEOC largely ignored sex as a discrimination category under Title VII and viewed it as a “fluke” that was not intended by the passage of the bill.[80] As protection against sex discrimination has grown to be a critical element of Title VII, however, the slapdash birth of sex as a protected category has made questions of what Congress intended to protect somewhat unclear.

Because Title VII does not define “sex” or make explicit reference to protection for transgender status, it is unclear if discrimination against transgender employees is protected under the law. One of the earliest legal challenges to whether transgender status was a protected characteristic came in 1984, in Ulane v. Eastern Airlines, Inc.[81] In Ulane, a pilot who was born biologically male underwent sex reassignment surgery and began publicly identifying as a woman. She was terminated because of her transition, as the airline argued she would distract her flight crew and prevent them from working in a manner conducive to safety. Ulane subsequently filed a claim with the EEOC for sex discrimination in violation of Title VII. At the trial court level, District Court Judge Grady held for Ulane, finding that Eastern Airlines had discriminated against Ulane on the basis of her transgender status, which was covered as a form of sex discrimination under Title VII.[82] Judge Grady also found that Ulane was discriminated against for being a woman, which was also prohibited by Title VII.[83] In his opinion, Judge Grady relied on scientific information to examine how “sex” could mean more than male or female, including other nuances of sexual identity, such as gender identity.[84] He also rejected the argument that Title VII was not intended to apply to transgender status because “Congress never intended anything one way or the other on the question of whether the term, ‘sex,’ would include transsexuals.”[85] This, in his view, justified a broad understanding of “sex” that included psychological and social understandings.[86] However, Judge Grady’s ruling was reversed on appeal when the Seventh Circuit refused to apply Title VII sex discrimination to Ulane’s case, holding explicitly that: (1) Title VII does not prohibit discrimination against transgender status and (2) Ulane was not a woman under the law.[87]

Although the Supreme Court has never explicitly found that Title VII prohibits transgender discrimination, the Court has held that sex discrimination includes discrimination against gender expression in the form of gender stereotyping.[88] In Price Waterhouse v. Hopkins, the Court used a broad definition of “sex” when it extended Title VII sex discrimination to prohibit the actions of an employer who discriminated against its female employee for dressing and acting overly “masculine.”[89] In that case, Ann Hopkins sued her former employer, the accounting firm Price Waterhouse, after she was denied partnership. Hopkins argued that she faced this adverse employment action because she didn’t match the other partners’ ideas of how a woman should act, speak, and dress.[90] Indeed, representatives of the firm instructed her to “walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry.”[91] The Supreme Court held that the firm discriminated against Hopkins on the basis of her sex when it didn’t offer her partnership because she did not conform to stereotypical ideals of femininity.

Importantly, post-Price Waterhouse, it is unclear whether a sex-stereotyping claim would be successful if an employer could show it took an adverse action against a transgender woman employee, not because she did not dress as a stereotypical man, but because she was transgender. Out of this confusion, some believe Price Waterhouse represents a victory for transgender people, while others believe the holding of the case does not go far enough to protect transgender people from discrimination on the basis of their gender identity as it requires the logical leap that discrimination against transgender individuals is inherently a form of gender stereotyping.[92]

B. Comparison to Transgender Status Protections under Other Federal Laws

Title VII’s anti-discrimination language is most analogous to Title IX of the Education Amendments of 1972, which similarly prohibits discrimination on the basis of “sex,” though in schools as opposed to the workplace.[93] The laws not only share similar language, but also similar controversy regarding the breadth of their anti-discrimination coverage. Indeed, a debate currently rages regarding whether transgender students’ bathroom access is protected under Title IX’s sex discrimination prohibition. This question “has roiled the nation, pitting LGBT activists and transgender youth and their parents against those who say privacy and safety are compromised by accommodating transgender youth in school restrooms and locker rooms.”[94]

Taking a side in this debate, numerous state courts have ruled that transgender students have the right to use bathrooms and facilities that match their gender identity. For example, in Doe v. Regional School Unit 26, the Maine Supreme Court ruled that a school discriminated against a female transgender student by denying her access to the women’s restroom because it had effectively treated her differently from other students on the basis of her transgender status.[95] The Colorado Division of Civil Rights came to a similar conclusion in Mathis v. Fountain-Fort Carson School District 8, in which the court ruled that “[b]y not permitting [a student] to use the restroom with which she identifies, as non-transgender students are permitted to do, the [school] treated the [student] less favorably than other students seeking the same service.”[96]

Federal courts have also grappled with whether Title IX gives transgender students the right to access restrooms and locker rooms that correspond with their gender identity. In 2015, the Fourth Circuit became the first federal Court of Appeals to determine whether Title IX’s prohibition on sex discrimination applies to transgender status in G.G. ex rel. Grimm v. Gloucester County School Board.[97] In G.G., a transgender high school student named Gavin Grimm challenged his school board’s policy that prohibited him from using the boys’ restroom on campus. When Grimm refused to use the girls’ restroom, he was told he could use a unisex restroom that he believed singled him out and humiliated him. Grimm’s case was dismissed at the district court level, but on appeal, the Court of Appeals decided in Grimm’s favor with a tie vote.[98] The school board appealed the decision, and in October of 2016, the Supreme Court granted certiorari, agreeing for the first time to take up the question of Title IX’s application to transgender status and discrimination.[99]

But the Supreme Court withdrew cert in March of 2017, after the Trump administration rescinded guidance from the Obama Administration’s Department of Justice that had advised schools that denying transgender students access to the bathroom of their choice violated Title IX.[100] Because the Fourth Circuit had initially deferred to this guidance in deciding for Grimm, this change in policy sharply changed the question before the Court.[101] In light of this, the Court vacated the Fourth Circuit’s decision and sent it back for reconsideration, where it remains as of May 2018. Had the Supreme Court decided this case, it may have shed some light on the proper interpretation of sex discrimination in Title VII. Unfortunately, without the Supreme Court’s final word, the Title IX question remains muddy.

III. Executive Branch Incoherence on Transgender Protections

A. Trump Administration Changes Direction

Since taking office in January 2017, President Trump’s administration has clearly departed from the pro-LGBT statements he made during his candidacy. This has caused uncertainty over the administration’s future stance on transgender issues. On the campaign trail, Trump made multiple statements that seemed to evince his commitment to LGBT causes. At a 2016 campaign rally, following the tragic mass shooting at the Pulse nightclub in Orlando, Florida, Trump said “[a]s your president, I will do everything in my power to protect our LGBTQ citizens . . . .”[102] At a different event, he held a large pride flag onstage with the words “LGBTs for Trump” written on it.[103]

In April 2017, amidst controversy over North Carolina’s bathroom bill, H.B. 2, then-candidate Trump said in an interview that transgender North Carolinians should be allowed to “use the bathroom they feel is appropriate.”[104] He later doubled down, agreeing that Caitlyn Jenner would be welcome to use any bathroom at Trump Tower if she were to visit.[105] This was in clear contrast to the other Republican presidential candidate front-runner, Ted Cruz, who voiced support for H.B. 2 and bathroom bills in general.[106]

Yet the first year of Trump’s presidency was marked by anti-LGBT policies and stances. As discussed above, in February 2017, the Trump administration rescinded an Obama-era Department of Education guidance that instructed schools to allow transgender students to use bathrooms and locker rooms that match their gender identities.[107] Though some praised the administration for leaving the issue to the states,[108] others argued this move showed “the president’s promise to protect LGBT rights was just empty rhetoric.”[109] Then in July 2017, Trump announced he would reinstate a ban on transgender individuals serving in the military, tweeting that the “military must be focused on decisive and overwhelming . . . victory and cannot be burdened with the tremendous medical costs and disruption that transgender [sic] in the military would entail.”[110] Most recently, in October 2017, Trump’s Justice Department reversed an Obama-era memo that interpreted Title VII to protect transgender employees from discrimination on the basis of their gender identity.[111] In a memo announcing this decision, Attorney General Jeff Sessions argued “Title VII’s prohibition on sex discrimination encompasses discrimination between men and women but does not encompass discrimination based on gender identity per se, including transgender status.”[112] This was not surprising considering Trump’s Justice Department had previously filed an amicus brief in the Second Circuit Court of Appeals, arguing that Title VII should not be interpreted to prohibit discrimination on the basis of sexual orientation.[113]

Curiously, the Trump administration has continued to support one Obama-era protection against transgender discrimination—Executive Order 13672, which forbids federal government contractors from discrimination against employees on the basis of sexual orientation or gender identity.[114] In a briefing issued in January of 2017, the White House affirmed that the president intended to continue enforcing this executive order, stating “President Trump continues to be respectful and supportive of LGBTQ rights, just as he was throughout the election.”[115]

Considering these discrepancies, it is unclear what side the Trump administration will take on transgender rights and issues as they emerge, including the issue of transgender bathroom access. However, the decision to walk back from the Obama administration’s interpretation of Title VII strikes a blow to transgender employees who can no longer rely on the guidance as legal support for their right to use gender-affirming bathrooms at work.

B. Federal Agencies in Conflict

While the position of the Trump administration seems disjointed, the broader stance of the executive branch and the federal agencies within it is a true quagmire. As discussed above, the Department of Justice has interpreted sex discrimination as not encompassing discrimination on the basis of transgender status.[116] In doing so, it has implicitly rejected arguments from transgender employees that being denied access to gender-affirming facilities is unlawful discrimination. But, a separate group of federal agencies has weighed in on the issue in favor of broader transgender rights.[117] These agencies include the EEOC, OSHA, and the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”).[118]

The EEOC is the federal agency tasked with enforcing anti-discrimination law in employment;[119] as such, its position on Title VII is persuasive. Though Title VII does not explicitly mention transgender status or gender identity as a basis for discrimination, the EEOC takes the position that such discrimination is covered by the prohibition on sex discrimination.[120] This, the EEOC argues, is because discriminating against employees for being transgender and thus not conforming to the stereotypical behaviors of their biological sex is a form of gender stereotyping, which the Supreme Court held is unlawful sex discrimination.[121] Applying this position, the EEOC has issued numerous opinions in recent years that protect transgender employees from discrimination on the basis of gender identity or transgender status.[122] For example, the EEOC has found the following can constitute a claim for sex discrimination: 1) failing to hire an employee because she is a transgender woman;[123] 2) firing an employee because he is transitioning or plans to transition;[124] and 3) an employer’s intentional misuse of a transgender employee’s preferred name and pronouns.[125] Numerous federal courts have cited the most prominent of these cases, Macy v. Holder.[126] Macy, decided in 2012, was a landmark decision for the EEOC, wherein the agency held that a transgender plaintiff could pursue a Title VII claim against an employer for sex discrimination.[127]

The EEOC has also addressed the issue of bathroom access. In a Fact Sheet titled “Bathroom/Facility Access and Transgender Employees,” the agency advises that denying employees equal access to bathrooms and other facilities that correspond to their gender identity is a form of sex discrimination in violation of Title VII.[128] The Fact Sheet cites to the 2015 EEOC case Lusardi v. McHugh, in which the EEOC ruled as follows:

1. a federal agency that denied an employee equal access to a common bathroom/facility corresponding to the employee’s gender identity discriminated on the basis of sex;

2. the agency could not condition this right on the employee undergoing or providing proof of surgery or any other medical procedure; and

3. the agency could not avoid the requirement to provide equal access to a common bathroom/facility by restricting a transgender employee to a single-user restroom instead (though the employer can make a single-user restroom available to all employees who might choose to use it).[129]

In Lusardi, a transgender woman named Tamara Lusardi brought a claim against her employer, a department of the U.S. Army, for disparate treatment.[130] Lusardi had been instructed to use a single-user restroom called the “executive restroom” instead of the common women’s restroom on the premises, until such a time as she had undergone “surgery,” the extent of which was unspecified.[131] Lusardi used the common women’s restroom on three occasions, when the executive restroom was unavailable; each time, her superior confronted her and told her she must use the executive restroom until she could provide “proof” that she had undergone surgery.[132] The EEOC held that Lusardi was discriminated against because of her transgender status, which was a violation of Title VII.[133] Thus, if the EEOC’s interpretation of Title VII is to be followed, employer restrictions on transgender employees’ access to facilities matching their gender identity constitute unlawful discrimination in violation of federal law.

Although EEOC decisions are not binding on the courts, the agency’s position is persuasive, so courts often give the EEOC some level of deference on issues of employment law.[134] Therefore, courts may adopt the EEOC in their rulings in cases of gender identity discrimination.[135]

Similarly, OSHA has taken the position that employees should be permitted to use the bathroom that corresponds to their gender identities in the workplace.[136] Under OSHA’s Sanitation standard (1910.141), employers are required to provide bathroom facilities to employees to prevent the “adverse health effects that can result if toilets are not available when employees need them.”[137] These health effects can include urinary tract infections, bladder problems, and bowel problems. To this end, OSHA identifies as a “Core Principle” that “[a]ll employees, including transgender employees, should have access to restrooms that correspond to their gender identity.”[138] OSHA also advises that transgender employees should not be required to use a “segregated facility,” though they may elect to use one provided for them.[139] Although not interpreting Title VII, OSHA’s position exemplifies the public policy reasons for prohibiting employer policies that restrict access to gender-affirming bathrooms—namely, the health and safety of transgender employees.

Finally, the Department of Labor (“DOL”) has adopted prohibitions on employer policies that restrict access to gender-affirming bathrooms.[140] Per the DOL’s OFCCP, government contractors subject to Executive Order 11246 must allow transgender employees to use bathrooms and other facilities that correspond to their gender identities.[141] Like the OSHA regulations, this prohibition does not interpret Title VII; however, it reflects policy considerations in favor of protecting transgender employees from discrimination.

In sum, there are two clear sides to the executive branch when it comes to interpretations of Title VII. Though the Trump Department of Justice recently rejected its predecessor’s expansive reading of the law as it applies to transgender employees, there is growing momentum toward the EEOC’s position. Time will tell if the Trump administration influences the other agencies to its adopt its position, if the opposite will occur, or if the executive branch schism will simply remain.

IV. Federal Courts’ Approaches to Gender Identity Discrimination and Transgender Bathroom Access

A. Circuit Split in Title VII Interpretation

In the absence of clear federal law prohibiting discrimination on the basis of transgender status, federal courts have grappled with whether Title VII’s prohibition on sex discrimination covers these actions. U.S. appellate courts are currently split on this issue.[142] Two Circuit Courts of Appeals—the Seventh and Tenth Circuits—have issued decisions holding that sex discrimination under Title VII does not include discrimination on the basis of gender identity or transgender status.[143] Four Circuit Courts of Appeals—the First, Sixth, Ninth, and Eleventh Circuits—have held that Title VII sex discrimination does include discrimination on the basis of gender identity.[144] Finally, the remaining five Circuit Courts of Appeals—the Second, Third, Fourth, Fifth, and Eights Circuits—have not addressed this issue, though lower district courts in these circuits have.[145]

B. Cases Interpreting Title VII to Protect Transgender Status

Representing one side of the Circuit Split, the First, Sixth, Ninth, and Eleventh Circuits have held that discrimination on the basis transgender status or gender identity is a form of sex discrimination under Title VII.[146] In general, these cases find that discrimination on the basis of transgender status is a form of sex stereotyping discrimination because discriminating employers are mistreating transgender employees for not conforming to established gender norms.[147]

Examples of this line of reasoning can be found in Sixth Circuit precedents. Following Price Waterhouse, two Sixth Circuit cases, Smith v. City of Salem and Barnes v. City of Cincinnati, used the gender stereotyping doctrine to hold that sex discrimination under Title VII includes discrimination based on gender identity.[148] In Smith, the Sixth Circuit applied Price Waterhouse’s prohibition of sex stereotyping discrimination to a transgender plaintiff for the first time.[149] There, a transgender fire department lieutenant who began expressing himself in a more traditionally feminine way was fired for not conforming to sex stereotypes. The court argued there was no reason why a transgender plaintiff could not be protected from discrimination on the basis of sex stereotyping by Title VII, holding “discrimination against a plaintiff who is a transsexual—and therefore fails to act and/or identify with his or her gender—is no different from the discrimination directed against Ann Hopkins in Price Waterhouse, who, in sex-stereotypical terms, did not act like a woman.”[150]

Similarly, in Barnes, a transgender police officer argued he was demoted for his gender non-conformity, as he presented and lived as a woman while off-duty.[151] Relying on Smith, the court found that (1) Title VII protected Barnes as someone who did not conform to sex stereotypes and (2) he had been demoted for this non-conformity, in violation of federal law.[152]

The Eleventh Circuit also embraced this reasoning in Glenn v. Brumby. In Glenn, a transgender woman brought a claim for unlawful discrimination on the basis of sex in violation of the Equal Protection Clause after she was terminated from her employment with the Georgia General Assembly.[153] Although the claim was brought under 42 U.S.C. § 1983, the court analyzed Title VII precedent, including Price Waterhouse.[154] In doing so, the court concluded that the defendant discriminated against the employee on the basis of her sex by firing her due to her gender transition and concerns that other women would object to her use of the women’s bathroom.[155] The court found there is “congruence” between transgender-based discrimination and sex-stereotyping discrimination because an individual is regarded as transgender “precisely because of the perception that his or her behavior transgresses gender stereotypes.”[156] And because all employees are protected from discrimination based on sex stereotypes, the court held these protections must be available to transgender employees.[157]

It is important to note other courts have approached this question from a textualist perspective, finding that discrimination on the basis of gender identity is sex discrimination precisely because it is related to the “sex” of the targeted employees. The strongest example of this is the EEOC case Macy v. Holder, in which the Commission held that anti-transgender discrimination is per se sex discrimination and does not require evidence of gender stereotyping, which is “simply one means of proving sex discrimination.”[158] Under this line of reasoning, transgender employees can establish they were discriminated against because of sex if, for example, they have evidence that their employer has animus against transgender individuals or is uncomfortable with the employee’s transition.[159] A similar approach was articulated in a District Court for the District of Columbia case, Schroer v. Billington, with an opinion by Judge Robertson, who argued that it ultimately does not “matter[] for purposes of Title VII liability whether the [defendant] withdrew its offer of employment because it perceived [the employee] to be an insufficiently masculine man, an insufficiently feminine woman, or an inherently gender-nonconforming transsexual.”[160] Judge Robertson reasoned that since the employer refused to hire the plaintiff because she planned to change her anatomical sex through sex reassignment surgery as part of her transition to female, the adverse employment action was quite literally “because of sex.”[161] The opinion also analogized to discrimination against religious converts, which is clearly encompassed by religious discrimination, arguing that similar discrimination against those who seek to change their sex must constitute sex discrimination.[162]

C. Federal Cases Interpreting Title VII to Not Encompass Gender Identity Discrimination

On the other side of the Circuit Split, the Seventh and Tenth Circuit Courts of Appeals have explicitly held that Title VII does not protect transgender employees from discrimination on the basis of their gender identity. Both circuits primarily argue that Congress never intended Title VII to protect transgender status, so broadening Title VII to cover gender identity would be an impermissible overreach of the court’s adjudicatory role.[163]

In the Tenth Circuit, Etsitty v. Utah Transit Authority established the prevailing approach to gender identity discrimination claims under Title VII. In Etsitty, a bus driver was fired from the Utah Transit Authority shortly after she revealed that she was transgender to her employers.[164] Far from denying that she was fired due to being transgender, her employer’s proffered reason for terminating her was that she intended to use women’s public restrooms while wearing her employee uniform, despite still having male genitalia.[165] The court held that “discrimination against a transsexual based on the person’s status as a transsexual is not discrimination because of sex under Title VII,” as “sex” must be taken to mean the “traditional binary conception of sex.”[166] Notably, the court acknowledged that the plain language of the statute, not the legislative intent, should guide its interpretation of Title VII; indeed, it expressed willingness to change its interpretation should “scientific research . . . someday cause a shift in the plain meaning of the term ‘sex’ so that it extends beyond the two starkly defined categories of male and female.”[167]

In the Seventh Circuit, Ulane remains the applicable interpretation of Title VII’s sex discrimination provision. However, the precedential value of Ulane has been questioned for two reasons: First, Ulane predates Price Waterhouse, which not only fundamentally changed the meaning of sex discrimination in Title VII, but also provided a new potential protection to employees discriminated against because of their transgender status.[168] Second, a Seventh Circuit case, Hively v. Ivy Tech Community College of Indiana, called into question the logic of Ulane as it relates to the proper interpretation of sex discrimination and, some have argued, may actually overrule Ulane.[169] In Hively, the court held that discrimination on the basis of sexual orientation is cognizable as sex discrimination under Title VII because the plaintiff, a lesbian woman, would not have been discriminated against for marrying a woman if she were a man, thus, the discrimination occurred “because she is a woman.”[170] The court also stated it was time to “overrule [its] previous cases that have endeavored to find and observe [the] line” between sexual orientation discrimination and sex discrimination.[171] This language could theoretically include Ulane, but the court clearly limited its decision to “the issue put before [it]”—namely sexual orientation—leaving “[a]dditional complications . . . for another day.”[172] Thus, it seems the famous Ulane precedent remains alive and well in the Seventh Circuit. Nevertheless, the Seventh Circuit’s reasoning in Hively should encourage transgender rights activists as it seems to fly directly in the face of Ulane and may generate pro-transgender case law in the near future.

D. Federal Cases Addressing Bathroom Access

In addition to the overarching Title VII case law on transgender discrimination, some federal courts have explicitly addressed transgender bathroom access. Perhaps the best known of these cases is Roberts v. Clark County School District, in which a Nevada district court explicitly adopted the holdings of the EEOC cases, Macy and Lusardi.[173] In Roberts, the plaintiff informed his employer that he was transgender and would be transitioning from female to male; shortly after, he began using the men’s restroom at his workplace.[174] In response, the school district instructed him to only use the gender neutral restrooms “to avoid any future complaints” and officially banned him from using the men’s or women’s restrooms until he could present documentation of a sex change.[175]

The Nevada District Court granted the plaintiff summary judgment on his sex discrimination claim, finding that the school district “banned Roberts from the women’s bathroom because he no longer behaved like a woman, [which] . . . alone shows that the school district discriminated against Roberts based on his gender and sex stereotypes.”[176] The court also addressed the school district’s claim that even if discrimination on the basis of Robert’s transgender status was prohibited by Title VII, it did not discriminate against him by prohibiting his use of the men’s room because he was biologically female and other similarly-situated females were also prohibited from using the men’s room.[177] The court summarily dismissed this argument because Roberts, unlike other biological females, was not allowed to use the women’s restroom and so was treated differently.[178]

Similarly, in Mickens v. General Electric Co., the Western District of Kentucky denied an employer’s motion to dismiss a transgender employee’s Title VII sex discrimination claim based on allegations that the employee was denied access to a gender-affirming bathroom and was terminated for attendance issues stemming from that denial.[179] In Mickens, the employee alleged that his employer, General Electric (“GE”), instructed him to not use the men’s restroom at the workplace and that he was required to use a restroom further away from his workstation, causing him to return late from breaks, which he was reprimanded for.[180] The court rejected the employer’s argument that discrimination on the basis of transgender status is not actionable under Title VII, citing Price Waterhouse and the prohibition against discrimination due to sex stereotyping.[181] On this basis, it found that the plaintiff met his burden of pleading a sex discrimination claim as he had alleged “continued discrimination and harassment against him . . . because he did not conform to the gender stereotype of what someone who was born female should look and act like.”[182]

The issue has also been addressed from the other side, where a non-transgender employee alleged she had been discriminated against on the basis of sex and religion because her employer permitted a transgender coworker to use the women’s restroom.[183] In Cruzan v. Special School District No. 1, a female teacher filed a suit against her school district for discrimination after the school permitted a transgender employee, Davis, to use the women’s bathroom and she encountered Davis in said bathroom.[184] The court rejected Cruzan’s argument that requiring her to share the women’s restroom with someone who was biologically male constituted sexual harassment.[185] It further held that in order establish a case of discrimination on these grounds, a plaintiff must show that the school enacted a policy directed at the plaintiff and that the plaintiff suffered adverse employment action as a result.[186] Because the school’s policy was not directed at the plaintiff and the plaintiff had “convenient access to numerous restrooms,” including single-stall bathrooms, summary judgment for the defendant was appropriate.[187]

Taken together, this recent case law demonstrates momentum toward broader interpretations of Title VII that protects employees from both discrimination on the basis of transgender status broadly and specific policies preventing transgender employees from using gender-affirming bathrooms and facilities.

V. Arguments for Competing Interpretations of Title VII as Pertaining to Transgender Bathroom Access

A war currently rages between those who believe Title VII protects transgender employees from restrictive bathroom policies and those who disagree. Both the circuit split that has developed in the courts and the divide in the executive branch exemplify this divide.[188] This Part will canvass the major legal arguments made by both sides of this debate. These arguments run the gambit from the proper interpretation of Title VII, to what constitutes discrimination in the workplace, to policy arguments regarding employee health, comfort, and safety. For clarity, this Note will refer to those who believe Title VII does not provide protection against transgender bathroom restrictions as supporters of the DOJ’s position. It will refer to those who believe Title VII does offer this protection to transgender employees as supporters of the EEOC’s position.

A. Supporters of The DOJ’s Position on Transgender Bathroom Access

First, the Trump DOJ and supporters of its position argue that Title VII’s prohibition on sex discrimination does not include transgender status; thus, it is inappropriate to read Title VII as offering protection against transgender status discrimination in the terms, conditions, and privileges of employment.[189] This, they argue, is because a plain language reading of the word “sex” does not include notions of gender identity, but refers only to the two traditionally recognized sexes—male and female.[190] Thus, gender identity is a completely separate concept from sex. This side also argues that Title VII’s legislative history shows that when the law was passed, Congress intended to protect women from discrimination in employment and did not intend (let alone envision) the law to apply to transgender status.[191] Proponents of this argument may point to federal laws that explicitly protect both “sex” and “gender identity” discrimination, like the Violence Against Women Act, to argue that if Congress had intended to protect gender identity discrimination, it would have explicitly provided for that protection.[192]

The Seventh Circuit made these arguments in Ulane to hold that Title VII does not protect against employment discrimination on the basis of transgender status. First, majority opinion author Judge Wood argued that although “some may define ‘sex’ . . . to mean an individual’s ‘sexual identity,’ [the court’s] responsibility is to . . . determine what Congress intended when it decided to outlaw discrimination based on sex.”[193] Finding no evidence Congress intended to protect “sexual identity” discrimination, Judge Wood dismissed that broader interpretation.[194] Second, Judge Wood referenced a “maxim of statutory construction that, unless otherwise defined, words should be given their ordinary, common meaning;” in his view, the ordinary, common meaning of sex discrimination is discriminating against women because they are women and vice versa—nothing more.[195]

Notably, this argument faced pushback from opponents who argue cases like Price Waterhouse broadened the meaning of sex discrimination since Ulane.[196] In response, supporters of the DOJ position argue that Price Waterhouse and subsequent Sixth Circuit cases, Smith and Barnes, are limited to discrimination for non-conformance with gender stereotypes as opposed to transgender status itself.[197] Thus, proponents of this limited view of Title VII discrimination would argue that an employer who fires a transgender employee because of personal distaste for transgender individuals (absent evidence of sex stereotyping) does not violate Title VII.

Second, supporters of the DOJ position argue that even if Title VII protects against transgender discrimination, policies requiring employees to use bathrooms matching their biological sex are not discriminatory because they affect all employees equally and, as such, are facially neutral.[198] Under this argument, policies requiring that employees use the bathroom matching their biological sex do not unfairly single out transgender employees or create disparate treatment in the terms, conditions, and privileges of employment.[199] While the right to a bathroom in the workplace is required, this side views employees’ ability to use the bathroom of their choice as a mere privilege.[200] When the privilege to use the bathroom of the employee’s choosing is withheld from all employees, employers argue these policies are evenly applied and non-discriminatory.[201]

In addition, supporters of the DOJ position argue that employer policies restricting transgender bathroom access serve public policy goals because they protect the majority of employees from feeling uncomfortable and unsafe in workplace bathrooms.[202] They buttress their position by arguing that because transgender people are a very small minority in America,[203] it is unreasonable to subject the interests of the many to the preferences of the very few.[204] They claim that requiring employers to permit transgender employees to use the bathrooms of their choice unfairly burdens the privacy and comfort of the vast majority of employees who are cisgender.[205] This view seeks to protect individuals like the plaintiff in Cruzan, who brought suit against her employer because she felt uncomfortable sharing a restroom with a transgender coworker and believed she had a “right to privacy and modesty which the school district must respect.”[206] Indeed, employers may feel that by allowing transgender employees to use the restroom of their choice, they are appeasing one or a few employees, while upsetting the rest and essentially giving “special treatment” to their transgender employees.[207]

Finally, supporters of the DOJ position may point to safety concerns, arguing permissive bathroom policies are rife for abuse and could allow predators unfettered access to female employees in the women’s bathroom. This argument has primarily come about in the context of bathroom bills like H.B. 2, but it could easily be extended to the workplace. For example, lawmakers who supported North Carolina’s H.B. 2 argued that it ensured women and children were not placed in a “vulnerable situation[] in . . . bathrooms and changing areas,” citing concerns that men might fraudulently pretend to be transgender to commit sexual assaults.[208] Opponents of this view argue these concerns are unfounded and unsupported by statistics.[209] Nonetheless, proponents of these restrictive policies may argue such policies offer protection to female employees and thus should be allowed for policy reasons.

B. Supporters of the EEOC’s Position on Transgender Bathroom Access

Primarily, supporters of the EEOC’s position argue that Title VII’s use of “sex” should be interpreted to include gender identity for one of two reasons: 1) because Supreme Court precedent broadened the initial meaning of “sex”[210] or 2) because the plain language of “sex” naturally includes gender identity.[211] According to the first argument, Price Waterhouse broadened the meaning of sex discrimination by recognizing discrimination due to gender stereotyping; thus, regardless of the basic meaning of “sex,” sex discrimination under Title VII now necessarily encompasses notions of gender non-conformity.[212] Federal courts, including the Sixth Circuit, have embraced this view as a basis for transgender employees to seek relief from discrimination.[213] And some have pointed to the landmark Supreme Court case, Oncale v. Sundowner Offshore Services, as also broadening the scope of sex discrimination.[214]

In Oncale, the Supreme Court held for the first time that a man who was subjected to same-sex workplace harassment could bring a hostile work environment sex discrimination claim under Title VII.[215] This transgressed the traditional understanding of sex discrimination as discrimination against a woman because she is a woman and vice-versa. Writing for the majority, Justice Scalia argued that the interpretation of Title VII was not restricted to the intentions of Congress in 1964. So, despite conceding that Congress had not intended to attack same-sex harassment, he argued “statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.”[216] Thus, supporters of the EEOC position argue that taken together, Price Waterhouse and Oncale create an expanded base of coverage for transgender employees under Title VII’s sex discrimination prohibition.[217]

Second, some argue that a plain language interpretation of “sex” simply includes more than just genitalia. The Obama-era Justice Department made this argument in its Complaint against North Carolina in opposition to H.B. 2, arguing that an individual’s “sex” includes “multiple factors, which may not always be in alignment.”[218] These factors include “hormones, external genitalia, internal reproductive organs, chromosomes, and gender identity, which is an individual’s internal sense of being male or female.”[219] Thus, this argument suggests that limiting the interpretation of sex to sexual assignment at birth is overly restrictive and fails to capture the full picture of a person’s sex.[220]

Supporters of the EEOC’s position further argue that policies preventing transgender employers from using restrooms that match their gender identity are discriminatory because they disproportionately burden the transgender population.[221] According to this argument, these policies create an unequal situation in which “employees . . . may access bathrooms and changing facilities that are consistent with their gender identity in their places of work, while transgender employees may not access bathrooms and changing facilities that are consistent with their gender identity . . .”[222] In this way, they argue, transgender people are unfairly singled out by restrictive bathroom policies and therefore face disparate treatment. Supporters also argue that these policies contribute to the stigmatization of transgender status and unfairly alienate transgender people from their fellow employees in the workplace.[223] Thus, these restrictive employer policies are discriminatory, in violation of Title VII.

Lastly, supporters of the EEOC position argue that policies restricting transgender bathroom access should be unlawful for policy reasons because they can cause serious harm to transgender employees.[224] According to transgender rights advocates, prohibiting transgender people from using restrooms corresponding with their gender identity may expose them to higher levels of violence.[225] As it is, transgender people are subject to very high levels of violent crime. For example, approximately half of the transgender population will be sexually assaulted in their lifetime, as opposed to one–third of women and one–sixth of men.[226] Bathroom access implicates this issue because transgender people may be exposed to even greater risk of harassment or harm if they are forced to use restrooms not matching their gender identity, particularly if they are in the process of outwardly transitioning.[227] In fact, a survey conducted by UCLA’s Williams Institute found that almost 70% of transgender people have experienced a negative interaction in restrooms and that transgender people “who experienced issues [using the restroom] in the workplace felt it contributed to poor job performance, and some even changed jobs or simply quit their jobs to avoid the confrontations.”[228] In response to arguments from the other side, namely that allowing transgender individuals to use the bathroom of their choice threatens women, transgender rights advocates argue that these allegations are not supported by statistical evidence and present less severe threats of harm to cisgender people than to transgender people.[229]

Supporters of the EEOC’s position also argue that forcing transgender employees to use restrooms matching their biological sex can cause serious mental distress and physical health problems.[230] For instance, in its Complaint against North Carolina, the United States argued that H.B. 2’s prohibition on transgender people’s use of gender-corresponding restrooms caused them to suffer, “emotional harm, mental anguish, distress, humiliation, and indignity . . . .”[231] This is in part because transgender people do not identify with the gender they were assigned at birth and may therefore be disaffirmed in their identity when their workplaces and coworkers categorize them as their biological sex.[232] In addition, policies restricting transgender bathroom access can cause physical health issues for transgender people, who may avoid workplace restrooms based upon fear of outing themselves as transgender, being confronted, or being harassed. One study found that 54% of transgender people had suffered “physical complications like dehydration, urinary tract infections, kidney infections, and other kidney problems simply because of the tactics they used to avoid going to the restroom during the day.”[233] Thus, supporters argue these mental and physical health issues unfairly burden transgender employees, and Title VII should be interpreted to protect against this form of discrimination.

VI. Analysis

Accounting for the EEOC’s and DOJ’s competing interpretations of “sex,” the possible disparate treatment of transgender people in the workplace due to restrictive bathroom policies, and policy concerns, Title VII should be interpreted to protect against discrimination on the basis of transgender status. Moreover, denying transgender employees access to gender-affirming restrooms and other single-sex facilities should be regarded as a form of sex discrimination in violation of Title VII.

A. Interpretation of “Sex” in Title VII

Title VII’s prohibition of sex discrimination should be interpreted to include gender identity discrimination for three reasons. First, Supreme Court precedents support a broad reading of “sex” discrimination. Second, an originalist approach to statutory interpretation is probably inappropriate in this case and thus does not preclude defining “sex” as encompassing gender identity. Third, “sex” is best understood as including transgender status given the spirit and purpose of Title VII.

First, the Supreme Court precedents, Price Waterhouse and Oncale, support an expansive interpretation of sex discrimination that encompasses notions of gender identity and expression, under which transgender individuals are protected. The Seventh Circuit’s argument in Ulane, that sex discrimination includes only discrimination against women for being women and men for being men, can no longer be the prevailing interpretation since the Court decided Price Waterhouse and Oncale. Given that discrimination against transgender individuals is typically based on the idea these individuals do not think or act like members of their biological sex should, transgender discrimination clearly finds a home under the Price Waterhouse sex–stereotyping doctrine. Indeed, discrimination against individuals who are gender non-conforming is precisely the type of “reasonably comparable evil” Title VII prohibits, according to Justice Scalia’s Oncale opinion.

Second, the EEOC’s interpretation is persuasive because it is not contrary to lawmakers’ express intent. The intent of the original legislators who added sex discrimination to Title VII in 1964 is muddy; some argue the provision was only added as a last-minute poison pill to prevent the law’s passage,[234] while others dispute this claim, arguing the senator that originated the sex discrimination provision was sympathetic to feminist activists and wanted to ensure black women did not “enjoy more protection in the workplace—by virtue of their race—than white woman.”[235] Regardless, the interpretation of sex discrimination was unclear from its inception and has been a moving target ever since.[236] Legal scholars have long-criticized intentionalism because it can be difficult to discern the legislator’s intent and thus is a poor tool for interpreting law. As for Title VII, legislative intent may be even harder to pinpoint because it is not clear why sex discrimination was included. For these reasons, the interpretation of Title VII’s sex discrimination provision should not turn on legislative intent.

Third, Title VII should be read to protect employees from gender identity discrimination because this interpretation best reflects the broad goals of the remedial law. Title VII was designed to prevent employers from treating prospective or current employees unequally based on non-qualitative features like race, religion, national origin, or sex. Just as the law would protect a female employee who is not promoted because she is a woman (without regard for her skills or job performance), it should similarly protect transgender employees who are not given the same privileges and rights in employment as their cisgender peers merely because of their gender identity. By adopting a broad interpretation of “sex” to include more than the male-female gender binary, Title VII can better protect vulnerable populations from unfair employment actions, which is within the spirit, if not the letter, of Title VII. After all, even the Seventh Circuit, in issuing perhaps the strongest rejection of transgender rights under Title VII that remains in effect, acknowledged the well-recognized “maxim that remedial statutes [like Title VII] should be liberally construed.”[237] For these reasons, Title VII should be interpreted to prohibit discrimination on the basis of gender identity.

B. Equal Bathroom Access and Discrimination

In addition, restricting bathroom access for transgender employees should be regarded as facial discrimination in violation of Title VII, even where alternatives like gender-neutral or private bathrooms are provided. Although employer policies requiring all employees to use bathrooms corresponding to their biological sex are facially neutral, this alone does not end the inquiry with respect to underlying discrimination. Upon a closer look, such policies are unquestionably discriminatory because they disproportionately impact transgender employees. While being legally required to use the bathroom matching one’s “official” sex is unlikely to ever inconvenience a cisgender person, such policies substantially impact the day-to-day life and working conditions of a transgender person.[238] Moreover, the employer’s intent in adopting these policies is to prevent transgender employees from using restrooms matching their gender identity, not cisgender employees. This alone should expose the discriminatory nature of facially neutral policies restricting bathroom access as they are designed to single out transgender employees and have clear discriminatory intent.[239]

It is important to note that policies requiring transgender employees to use private or gender-neutral facilities are often an improvement on policies requiring transgender employees to use gender-disaffirming bathrooms. But such policies are actually more discriminatory on their face because they clearly segregate the workplace by providing transgender individuals with different employment privileges than their peers. Even assuming the bathrooms provided are identical, this implicates the issue of “separate but equal,” and, as Brown v. Board of Education made clear, such separate facilities are not equal.[240] For these reasons, policies restricting transgender bathroom access on the basis of gender identity are probably discriminatory under Title VII.

C. Policy Implications of Bathroom Access

Finally, policy reasons, including the safety and health of transgender individuals, weigh in favor of finding bathroom bills and similar policies impermissible under Title VII. Transgender individuals are disproportionately vulnerable to sexual and physical violence. Requiring them to use restrooms not matching their gender identity may expose them to even greater levels of assault and violence by outing them as “other” in facilities meant to ensure privacy. Although there are concerns about the health and safety of employees if violent predators manage to abuse permissive bathroom access policies, these concerns are not based on evidence. This is in sharp contrast to the abundance of evidence showing that transgender individuals are a particularly vulnerable minority group. For these reasons, public policy warrants protecting transgender individuals’ access to gender-affirming workplace bathrooms.

Public policy also supports greater transgender bathroom access for health reasons. Many transgender individuals report experiencing serious health issues, including kidney stones and bladder infections, as a result of avoiding public bathrooms and the conflicts that arise in them. Moreover, forcing transgender individuals to use restrooms that do not match their gender identity can be emotionally damaging, psychologically disaffirming, and otherwise harmful to a group already subject to higher than average levels of depression and suicide.[241]

This Note does not ignore the concerns of some individuals who are made uncomfortable by the notion of sharing single-sex facilities with transgender coworkers, whom they perceive to be from the opposite sex. However, the discomfort of these employees does not justify imposing serious and life-threatening harms on transgender employees through restrictive bathroom policies. It also does not justify the exclusion of transgender individuals as “other” that results when transgender employees are forced to use gender-neutral bathrooms. This is especially true given that people share bathrooms with transgender people every day without ever knowing it.[242] Notably, individuals who did not want to share spaces with members of a different race during the Civil Rights movement made similar arguments.[243] As the argument failed then, so too should it fail today.

Ultimately, the greater severity of physical and mental harm to transgender employees outweighs the potential for harm to their coworkers. For these policy reasons, Title VII should be read to protect transgender employees from discrimination.

Conclusion

Transgender bathroom access is a morass. With sharp divisions among the courts, the states, and even the executive branch of the federal government, it is unclear when and how this issue will be resolved. This is punctuated by the fact that the Supreme Court will not hear a single case involving transgender rights this term. Yet there is a path forward, and it may exist in the building momentum toward recognizing a protection for transgender employees under Title VII’s sex discrimination prohibition. Supreme Court precedent that takes an expansive view of sex discrimination and society’s growing understanding of gender identity and expression provides good reason to read Title VII to protect transgender employees. Such a reading of Title VII is also compelling because it protects one of the Unites States’ most vulnerable populations from further harm. It is this approach that best meets the remedial goals of Title VII, providing the most equality, justice, liberty, and protection for minorities. As such, it is the approach the Supreme Court should take when it hears this issue in the future.

[*] *. Executive Senior Editor, Southern California Law Review, Volume 91; J.D. 2018, University of Southern California Gould School of Law; B.A. Political Science 2014, University of California, Los Angeles. I would like to thank Professor Ronald Garet and Professor David B. Cruz for their assistance and valuable insights on this project. I would also like to thank Kathy Bader and Seth Jones for their support. Finally, I would like to thank the staff and editors of the Southern California Law Review for their excellent work.

[1]. Michael Hughes, Transgender Lives: Your Stories, N.Y. Times, https://nyti.ms/2FdI6DG (last visited May 9, 2018).

[2]. Flores et al., Williams Institute, How Many Adults Identify as Transgender in the United States? 2–3 (2016), http://williamsinstitute.law.ucla.edu/wp-content/uploads/How-Many-Adults-Identify-as-Transgender-in-the-United-States.pdf.

[3]. Restroom Access for Transgender Employees, Human Rights Campaign, http://www.hrc.org/resources/restroom-access-for-transgender-employees (last visited May 9, 2018).

[4]. Mitch Kellaway, Trans Folks Respond to ‘Bathroom Bills’ With #WeJustNeedtoPee Selfies, Advocate (Mar. 14, 2015), https://www.advocate.com/politics/transgender/2015/03/14/trans-folks-respond-bathroom-bills-wejustneedtopee-selfies.

[5]. German Lopez, Tennessee’s Anti-Transgender Bathroom Bill, Explained, Vox (Apr. 7, 2016, 9:10 AM), https://www.vox.com/2016/4/7/11381400/tennessee-transgender-bathroom-bill.

[6]. Id.

[7]. See Public Facilities Privacy & Security Act, ch. 3, 2016 N.C. Sess. Laws 12 (codified as amended at N.C. Gen Stat. § 143-760 (2016)), repealed by ch.4, 2017 N.C. Sess. Laws 1 [hereinafter H.B. 2]; Joellen Kralik, “Bathroom Bill” Legislative Tracking, National Conference of State Legislators (July 28, 2017), http://www.ncsl.org/research/education/-bathroom-bill-legislative-tracking635951130.aspx.

[8]. Jason Hanna, Madison Park & Elliot C. McLaughlin, North Carolina Repeals “Bathroom Bill,” CNN Politics, https://www.cnn.com/2017/03/30/politics/north-carolina-hb2-agreement/index
.html (last updated Mar. 30, 2017, 9:36 PM).

[9]. Notably, in North Carolina, an individual may only change the sex marker on their birth certificate if they have undergone full sexual reassignment surgery. See Changing Birth Certificate Sex Designations: State-By-State Guidelines, Lambda Legal, https://www.lambdalegal.org/know-your-rights/article/trans-changing-birth-certificate-sex-designations (last visited May 9, 2018).

[10]. David A. Graham, North Carolina Overturns LGBT-Discrimination Bans, Atlantic (Mar. 24, 2016), https://www.theatlantic.com/politics/archive/2016/03/north-carolina-lgbt-discrimination-transgender-bathrooms/475125.

[11]. See, e.g., Michael Gordon et al., Understanding HB2: North Carolina’s Newest Law Solidifies State’s Role in Defining Discrimination, Charlotte Observer (March 26, 2016, 11:00AM), http://www.charlotteobserver.com/news/politics-government/article68401147.html; Avianne Tan, North Carolina’s Controversial “Anti-LGBT” Bill Explained, ABC News (Mar. 24, 2016, 6:51 PM), http://abcnews.go.com/US/north-carolinas-controversial-anti-lgbt-bill-explained/story?id=37898153; Judy Woodruff & John Yang, How North Carolina Signed a Bill Dubbed the Most Anti-LGBT Law in the U.S., PBS (Mar. 24, 2016, 8:07 PM), https://www.pbs.org/newshour/show/how-north-carolina-signed-a-bill-dubbed-most-anti-lgbt-law-in-the-u-s.

[12]. Craig Jarvis et al., McCrory, NC Lawmakers Sue Justice Department Over HB2; Feds Counter With Lawsuit, Charlotte Observer (May 9, 2016, 10:35 AM) http://www.charlotteobserver.com/news/politics-government/article76502777.html; McCrory Drops House Bill 2 Lawsuit, Cites Costs, Assoc. Press (Sept. 18, 2016), http://abc11.com/politics/mccrory-drops-house-bill-2-lawsuit-cites-costs/1516428; Press Release, U.S. Dep’t of Justice, Justice Department Files Complaint Against the State of North Carolina to Stop Discrimination Against Transgender Individuals (May 9, 2016), https://www.justice.gov/opa/pr/justice-department-files-complaint-against-state-north-carolina-stop-discrimination-against.

[13]. Tom Jensen, HB 2 Deeply Unpopular in North Carolina; Voters Think It’s Hurting State, Pub. Pol’y Polling (Apr. 25, 2016), http://www.publicpolicypolling.com/main/2016/04/hb-2-deeply-unpopular-in-north-carolina-voters-think-its-hurting-state.html.

[14]. See ch.4, 2017 N.C. Sess. Laws 1 (codified as amended at N.C. Gen Stat. § 143-760 (2017)); Allen Smith, N.C. Repeals “Bathroom Bill,” Pre-Empts Local Employment Laws, Soc’y for Human Resource Mgmt. (Mar. 31, 2017), https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/h.b.-2-repeal.aspx.

[15]. These states are: Alabama, Arkansas, Illinois, Kansas, Kentucky, Minnesota, Missouri, Montana, New York, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, and Wyoming. Joellen Kralik, “Bathroom Bill” Legislative Tracking, Nat’l Conf. of State Legislators (July 28, 2017), http://www.ncsl.org/research/education/-bathroom-bill-legislative-tracking635951130
.aspx.

[16]. Id.

[17]. Laws, Regulations & Guidance: Title VII and the Civil Rights Act of 1964, Equal Emp. Opportunity Commission, https://www.eeoc.gov/laws/statutes/titlevii.cfm (last visited May 9, 2018) [hereinafter EEOC].

[18]. Office for Civil Rights, U.S. Dep’t of Educ., Dear Colleague Letter: Transgender Students (May 13, 2016), http://www2.ed.gov/about/offices/list/ocr/letters/colleague-201605-title-ix-transgender.pdf; Title VII and the Civil Rights Act, supra note 17; Bathroom/Facility Access and Transgender Employees, Equal Emp. Opportunity Commission, https://www.eeoc.gov/eeoc
/publications/fs-bathroom-access-transgender.cfm (last visited May 15, 2018).

[19]. Chris Geidner, Justice Department Will Now Support Transgender Discrimination Claims in Litigation, BuzzFeed News (Dec. 18, 2014, 11:06 AM), https://www.buzzfeed.com/chrisgeidner
/justice-department-announces-reversal-on-litigating-transgen?utm_term=.vhkNLmjp3#.sjyP4705N.

[20]. William Duncan, How the Feds Began Rewriting Title IX To Push Trans Policies, Federalist (May 25, 2016), http://thefederalist.com/2016/05/25/how-the-feds-began-rewriting-title-ix-to-push-trans-policies/; Eugene Volokh, Successful Religious Freedom Defense in Title VII Case Brought by Transgender Employee, Wash. Post: Volokh Conspiracy (Aug. 19, 2016), https://www.washingtonpost.com/news/volokh-conspiracy/wp/2016/08/19/successful-religious-freedom-defense-in-title-vii-case-brought-by-transgender-employee.

[21]. Kevin Johnson, Jeff Sessions: Transgender People Not Protected from Workplace Discrimination, USA Today (Oct. 5, 2017, 4:45 PM), https://www.usatoday.com/story/news/politics
/2017/10/05/jeff-sessions-transgender-people-not-protected-workplace-discrimination/735709001.

[22]. Compare Jae Alexis Lee, What if a Pervert Pretending to be Transgender Entered the Opposite Sex’s Bathroom?, Huffington Post (Oct. 28, 2017), http://www.huffingtonpost.com
/quora/what-if-a-pervert-pretend_b_12677938.html, with Nicole Russell, Don’t Put My Five-Year-Old Girl in a Bathroom with a Transgender Boy, Federalist (July 24, 2015), http://thefederalist.com
/2015/07/24/transgender-bathroom-my-daughter.

[23]. Katy Steinmetz, Why LGBT Advocates Say Bathroom “Predators” Argument Is a Red Herring, Time (May 2, 2016), http://time.com/4314896/transgender-bathroom-bill-male-predators-argument.

[24]. See, e.g., Jeff Brady, When a Transgender Person Uses a Public Bathroom, Who Is at Risk?, NPR (May 15, 2016, 7:48 AM), http://www.npr.org/2016/05/15/477954537/when-a-transgender-person-uses-a-public-bathroom-who-is-at-risk.

[25]. See Transgender FAQ, GLAAD, http://www.glaad.org/transgender/transfaq (last visited May 15, 2018).

[26]. Id.

[27]. Id.

[28]. Id.

[29]. Id.

[30]. Id.

[31]. Id.

[32]. Id.

[33]. See American Psychiatric Ass’n, Diagnostic and Statistical Manual of Mental Disorders 451 (5th ed. 2013). See also Wynne Parry, Gender Dysphoria: DSM-5 Reflects Shift in Perspective on Gender Identity, Huffington Post, http://www.huffingtonpost.com/2013/06/04
/gender-dysphoria-dsm-5_n_3385287.html (last updated Aug. 4, 2013).

[34]. Ranna Parekh, What is Gender Dysphoria?: Treatment, Am. Psychiatric Ass’n, https://www.psychiatry.org/patients-families/gender-dysphoria/what-is-gender-dysphoria (last updated Feb. 2016).

[35]. Id.

[36]. Fenway Health, Glossary of Gender & Transgender Terms 15 (2010), http://fenwayhealth.org/documents/the-fenway-institute/handouts/Handout_7-C_Glossary_of_Gender
_and_Transgender_Terms__fi.pdf.

[37]. See Avery Martens, Commentary, Transgender People Have Always Existed, ACLU Ohio (June 10, 2016), http://www.acluohio.org/archives/blog-posts/transgender-people-have-always-existed; A Map of Gender-Diverse Cultures, PBS (Aug. 11, 2015), http://www.pbs.org/independentlens
/content/two-spirits_map-html.

[38]. John Leland, A Spirit of Belonging, Inside and Out, N.Y. Times (Oct. 8, 2006), http://www.nytimes.com/2006/10/08/fashion/08SPIRIT.html.

[39]. See generally Harlan Pruden & Se-ah-dom Edmo, Two-Spirit People: Sex, Gender & Sexuality in Historic and Contemporary Native America (2014), http://www.ncai.org/policy-research-center/initiatives/Pruden-Edmo_TwoSpiritPeople.pdf.

[40]. Trista Wilson, Comment, Changed Embraces, Changes Embraced? Renouncing the Heterosexist Majority in Favor of a Return to Traditional Two-Spirit Culture, 36 Am. Indian L. Rev. 161, 169 (2011).

[41]. Steve Hendrix, A History Lesson for Trump: Transgender Soldiers Served in the Civil War, Wash. Post (Aug. 25, 2017), https://www.washingtonpost.com/news/retropolis/wp/2017/07/26/a-history-lesson-for-trump-transgender-soldiers-served-in-the-civil-war/?utm_term=.79df6a8d4c44.

[42]. Id.

[43]. John T. McQuiston, Christine Jorgensen, 62, Is Dead; Was First to Have a Sex Change, N.Y. Times (May 4, 1989), http://www.nytimes.com/1989/05/04/obituaries/christine-jorgensen-62-is-dead-was-first-to-have-a-sex-change.html.

[44]. See, e.g., Erica Keppler, Chaz Bono’s Place in History, Huffington Post, http://www.huffingtonpost.com/erica-keppler/chaz-bonos-place-in-histo_b_981508.html (last updated Feb. 2, 2016); Lana Wachowski Received the HRC Visibility Award, Human Rights Campaign (Oct. 25, 2012), https://www.hrc.org/videos/videos-lana-wachowski-receives-the-hrc-visibility-award.

[45]. Aleksandra Gjorgievska & Lily Rothman, Laverne Cox Is the First Transgender Person Nominated for an Emmy—She Explains Why That Matters, TIME (July 10, 2014, 4:00 PM), http://time.com/2973497/laverne-cox-emmy.

[46]. Katy Steinmetz, Laverne Cox Talks to TIME About the Transgender Movement, TIME (May 29, 2014), http://time.com/132769/transgender-orange-is-the-new-black-laverne-cox-interview.

[47]. Daniel D’Addario, Bruce Jenner Comes Out as Transgender: “For All Intents and Purposes, I Am a Woman”, TIME (Apr. 24, 2015, 10:53 PM), http://time.com/3835205/bruce-jenner-diane-sawyer-transgender.

[48]. Arash Markazi, How Bruce Jenner Became an Olympic Icon Exactly 39 Years Ago, ESPN (July 30, 2015), http://www.espn.com/olympics/story/_/id/13346959/bruce-jenner-became-olympic-icon-exactly-39-years-ago.

[49]. Susan Milligan, Danica Roem Becomes First Transgender Woman to Win State Seat, U.S. News (Nov. 7, 2017, 9:53 PM), https://www.usnews.com/news/politics/articles/2017-11-07/danica-roem-becomes-first-transgender-woman-to-win-state-seat-in-virginia.

[50]. See U.S. Const. amend. XIV.

[51]. Compare Adkins v. City of New York, 143 F. Supp. 3d 134, 139 (S.D.N.Y. 2015), with Glenn v. Brumby, 663 F.3d 1312, 1319 (11th Cir. 2011).

[52]. About ENDA, Americans for Workplace Opportunity, http://web.archive.org
/web/20160318164443/http://workplaceopportunity.org/about-enda (last visited May 15, 2018).

[53]. See Shaan Rizvi, The Latest LGBT Legal Updates for the Workplace, Employment Practices Solutions (Feb. 28, 2017), http://www.epspros.com/news-resources/whitepapers/2017/the-latest-lgbt-legal-update-for-the-workplace%20.html.

[54]. Cities and Counties with Non-Discrimination Ordinances that Include Gender Identity, Human Rights Campaign, https://www.hrc.org/resources/cities-and-counties-with-non-discrimination
-ordinances-that-include-gender (last visited May 15, 2018).

[55]. Id.

[56]. Aaron Lacey & Jesse Doggendorf, A Look at the Legal Issues in the Transgender Bathrooms Debate, Thompson Coburn LLP (Aug. 5, 2016), http://www.thompsoncoburn.com/insights/blogs
/regucation/post/2016-08-05/a-look-at-the-legal-issues-in-the-transgender-bathrooms-debate.

[57]. See Angela Dallara, Groundbreaking Report Reflects Persistent Discrimination Against Transgender Community, GLAAD (Feb. 4, 2011), https://www.glaad.org/2011/02/04/groundbreaking-report-reflects-persistent-discrimination-against-transgender-community. See generally Jaime M. Grant et al., Injustice at Every Turn: A Report of the National Transgender Discrimination Survey (2011), https://transequality.org/sites/default/files/docs/resources/NTDS
_Report.pdf.

[58]. Katy Steinmetz, Why Transgender People Are Being Murdered at a Historic Rate, TIME (Aug. 17, 2015), http://time.com/3999348/transgender-murders-2015.

[59]. Grant et al., supra note 57.

[60]. National Equality Map, Transgender L. Ctr., https://transgenderlawcenter.org
/equalitymap (last updated Feb. 7, 2018).

[61]. Id.

[62]. Id.

[63]. Id.

[64]. “Bathroom Bill” Legislative Tracking, supra note 7.

[65]. Id.

[66]. Jeremy B. White, All-Gender Bathroom Bill Passes California Assembly, Sac. Bee (May 9, 2016, 2:25 PM), http://www.sacbee.com/news/politics-government/capitol-alert/article76595197.html.

[67]. Kwegyirba Croffie, Vermont Passes Gender-Neutral Bathroom Bill, CNN (May 13, 2018, 8:50 PM), https://www.cnn.com/2018/05/13/us/vermont-gender-neutral-restroom-bill/index.html.

[68]. See, e.g., NC Gov Defends “Bathroom Bill,” Says Law Is About Privacy, Not Discrimination, Fox News (Apr. 29, 2016), http://www.foxnews.com/politics/2016/04/29/nc-gov-defends-bathroom-bill-says-law-is-about-privacy-not-discrimination.html.

[69]. Alia E. Dastagir, The Imaginary Predator in America’s Transgender Bathroom War, USA Today (Apr. 29, 2016, 5:32 PM), http://www.usatoday.com/story/news/nation/2016/04/28
/transgenderbathroom-bills-discrimination/32594395.

[70]. See, e.g., Interpretation of 20 C.F.R. 1910.141(c)(1)(i): Toilet Facilities, Occupational Safety and Health Admin. (Apr. 4, 1998), https://www.osha.gov/pls/oshaweb/owadisp.show_document?p
_table=INTERPRETATIONS&p_id=22932; Occupational Safety and Health Admin., Best Practices: A Guide to Restroom Access for Transgender Workers (2015) https://www.osha.gov/Publications/OSHA3795.pdf.

[71]. Best Practices, supra note 70.

[72]. Id.

[73]. EEOC, supra note 17.

[74]. Lusardi v. Dep’t of the Army, EEOC Appeal No. 0120133395, 2015 WL 1607756, at *6 (Apr. 1, 2015).

[75]. See generally Price Waterhouse v. Hopkins, 490 U.S. 228 (1989); Ulane v. E. Airlines Inc., 742 F.2d 1081 (7th Cir. 1984); Smith v. City of Salem, 378 F.3d 566 (6th Cir. 2004); Barnes v. City of Cincinnati, 401 F.3d 729 (6th Cir. 2005) (collecting cases).

[76]. See, e.g., Gillian Thomas, Because of Sex 1–7 (2016); Scott Highhouse, The History Corner: Was the Addition of Sex to Title VII a Joke? Two Viewpoints, Soc’y for Indust. & Org. Psych., http://www.siop.org/tip/jan11/12highhouse.aspx (last visited May 15, 2018); Mark Joseph Stern, How a 1964 Civil Rights Law Makes North Carolina’s Bathroom Bill Illegal, Slate (May 18, 2016, 10:14 AM), http://www.slate.com/blogs/outward/2016/05/18/sex_discrimination_is_trans
_discrimination_gilliam_thomas_explains.html.

[77]. See Thomas, supra note 76, at 3.

[78]. See Jo Freeman, How “Sex” Got into Title VII: Persistent Opportunism As a Maker of Public Policy, 9 Law & Ineq. 163, 163–75 (1991).

[79]. Id.

[80]. Id.

[81]. Ulane v. E. Airlines, Inc., 742 F.2d 1081, 1082 (7th Cir. 1984).

[82]. Id.

[83]. Id.

[84]. Ulane v. E. Airlines, Inc., 581 F. Supp. 821, 823, 825 (N.D. Ill. 1983), rev’d, 742 F.2d 1081 (7th Cir. 1984), cert. denied, 471 U.S. 1017 (1985) (“After listening to the evidence in this case, it is clear to me that there is no settled definition in the medical community as to what we mean by sex.”).

[85]. Id. at 823–25.

[86]. See id.

[87]. See Ulane, 742 F.2d at 1084–87.

[88]. Price Waterhouse v. Hopkins, 490 U.S. 228, 250 (1989).

[89]. Id. at 228–36.

[90]. Id. at 235.

[91]. Id.

[92]. Thomas Bourgeois, Title VII Protections for Transgender and Transsexual Employees, La. L. Rev. (Oct. 28, 2015), https://lawreview.law.lsu.edu/2015/10/28/title-vii-protections-for-transgender-and-transsexual-employees.

[93]. Title IX and Sex Discrimination, Office for Civil Rights, https://www2.ed.gov/about
/offices/list/ocr/docs/tix_dis.html (last updated Apr. 2015).

[94]. Robert Barnes, Supreme Court Sends Virginia Transgender Case Back to Lower Court, Wash. Post (Mar. 6, 2017), http://wapo.st/2mvVo80?tid=ss_mail&utm_term=.38cd70402500.

[95]. See Doe v. Reg’l Sch. Unit 26, 86 A.3d 600, 607 (2014).

[96]. See Mathis v. Fountain-Fort Carson Sch. Dist. No. 8, Charge No. P20130034X, (Colo. Civ. Rights Div. 2013), https://archive.org/stream/716966-pdf-of-coy-mathis-ruling/716966-pdf-of-coy-mathis-ruling_djvu.txt.

[97]. G.G. ex rel. Grimm v. Gloucester Cty. Sch. Bd., 822 F.3d 709, 718 (4th Cir. 2016).

[98]. G.G. v. Gloucester County School Board, Am. Civil Liberties Union, https://www.aclu.org/cases/gg-v-gloucester-county-school-board (last updated Mar. 6, 2017) [hereinafter ACLU].

[99]. See Gloucester County School Board v. G.G., SCOTUSBlog, http://www.scotusblog.com
/case-files/cases/gloucester-county-school-board-v-g-g (last updated Apr. 7, 2017).

[100]. ACLU, supra note 98.

[101]. Barnes, supra note 94.

[102]. German Lopez, Watch Donald Trump Reach Out to “L, G, B, T . . . Q” Americans, Vox (July 21, 2016, 11:34 PM), https://www.vox.com/2016/7/21/12254616/trump-acceptance-speech-lgbtq-rnc.

[103]. Michelangelo Signorile, Why Donald Trump Unfurled an Upside Down Rainbow Flag Onstage, Huffington Post (November 1, 2016, 11:19 AM), https://www.huffingtonpost.com/entry
/why-donald-trump-unfurled-an-upside-down-rainbow-flag-onstage_us_58189a60e4b0990edc336c51.

[104]. Karma Allen, Trump’s Reversal of Transgender Bathroom Guidance Contradicts His Past Claims of Support, ABC News (Feb. 23, 2017, 2:16 AM), http://abcnews.go.com/Politics/trumps-reversal-transgender-bathroom-guidance-contradicts-past-claims/story?id=45678113.

[105]. Id.

[106]. Deena Zaru, Caitlyn Jenner Takes Trump Up on the Offer, CNN Pol. (Aug. 16, 2017, 8:59 PM), http://www.cnn.com/2016/04/28/politics/caitlyn-jenner-bathroom-trump-tower-donald-trump
/index.html.

[107]. Trump Rolls Back Transgender Bathroom Guidelines for Schools, Fortune (Feb. 23, 2017), http://fortune.com/2017/02/22/trump-lgbt-transgender-bathroom-guidelines.

[108]. Id.

[109]. How Liberals and Conservatives Are Reacting to Trump’s Transgender Bathroom Decision, Fortune (Feb. 23, 2017), http://fortune.com/2017/02/22/trump-transgender-school-bathroom-reaction.

[110]. Donald J. Trump (@realDonaldTrump), Twitter (July 26, 2017, 5:55 AM), https://twitter.com/realDonaldTrump/status/890193981585444864?ref_src=twsrc%5Etfw; Donald J. Trump (@realDonaldTrump), Twitter (July 26, 2017, 6:04 AM), https://twitter.com/realDonaldTrump
/status/890196164313833472?refsrc=twsrc%5Etfw; Donald J. Trump (@realDonaldTrump), Twitter (July 26, 2017, 6:08 AM), https://twitter.com/realDonaldTrump/status/890197095151546369?ref
_src=twsrc%5Etfw. See also Zeke J. Miller, President Trump Has Taken a Key Step to Implement His Transgender Military Ban, TIME (Aug. 25, 2017), http://time.com/4916871/donald-trump-transgender-military-ban.

[111]. German Lopez, Trump’s Justice Department Just Rescinded a Memo Protecting Transgender Workers, Vox (Oct. 5, 2017, 11:08 AM), https://www.vox.com/identities/2017/10/5/16429800/trump-sessions-transgender-workers.

[112]. Id.

[113]. German Lopez, It’s Not Only the Military. Trump’s Administration Just Took Another Big Anti-LGBTQ Step., Vox (July 27, 2017, 9:50 AM), https://www.vox.com/identities/2017/7/27
/16049306/trump-sessions-justice-department-lgbtq.

[114]. Press Release, U.S. White House, President Donald J. Trump Will Continue to Enforce Executive Order Protecting the Rights of the LGBTQ Community in the Workplace (Jan. 31, 2017), https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-will-continue-enforce-executive-order-protecting-rights-lgbtq-community-workplace.

[115]. Id.

[116]. See Lopez, supra note 1111.

[117]. See Michelle E. Phillips, EEOC Stresses Title VII Bars Discrimination Against Transgender Workers, Including Regarding Bathroom Access, Jackson Lewis (May 4, 2016), https://www.jacksonlewis.com/publication/eeoc-stresses-title-vii-bars-discrimination-against-transgender-workers-including-regarding-bathroom-access.

[118]. Id.

[119]. About EEOC, Equal Employment Opportunity Comm’n, https://www.eeoc.gov/eeoc (last visited May 15, 2018).

[120]. What You Should Know About EEOC and the Enforcement Protections for LGBT Workers, Equal Employment Opportunity Comm’n, https://www.eeoc.gov/eeoc/newsroom/wysk
/enforcement_protections_lgbt_workers.cfm (last visited May 15, 2018).

[121]. Id.

[122]. Id.

[123]. Id. See generally Macy v. Holder, EEOC Appeal No. 0120120821, 2012 WL 1435995 (Apr. 20, 2012) (discussing an EEOC decision that held that failing to hire a transgender woman can be sex discrimination).

[124]. See Press Release, EEOC, Deluxe Financial to Settle Sex Discrimination Suit on Behalf of Transgender Employee (Jan. 21, 2016), https://www.eeoc.gov/decisions/0120133395.txt.

[125]. Lusardi v. McHugh, EEOC Appeal No. 0120133395, 2015 WL 1607756, at *1 (Apr. 1, 2015).

[126]. See, e.g., Fowlkes v. Ironworkers Local 40, 790 F.3d 378, 386 (2d Cir. 2015); Brown v. Subway Sandwich Shop of Laurel, Inc., No. 2:15-CV-77-KS-MTP, 2016 U.S. Dist. LEXIS 76526, at *5–6 (S.D. Miss. 2016); Doe v. Arizona, No. CV-15-02399-PHX-DGC, 2016 WL 1089743, at *2 (D. Ariz. 2016); Roberts v. Clark Cty. Sch. Dist., 215 F. Supp. 3d 1001, 1014 n.104 (D. Nev. 2016); Martin v. EEOC, 19 F. Supp. 3d 291, 297 (D.D.C. 2014).

[127]. Macy v. Holder, EEOC Appeal No. 0120120821, 2012 WL 1435995, at *1 (Apr. 20, 2012).

[128]. Fact Sheet: Bathroom/Facility Access and Transgender Employees, Equal Employment Opportunity Comm’n, https://www.eeoc.gov/eeoc/publications/fs-bathroom-access-transgender.cfm (last viewed May 15, 2018).

[129]. Id. See also Lusardi v. McHugh, EEOC Appeal No. 0120133395, 2015 WL 1607756 at *8 (Apr. 1, 2015).

[130]. Lusardi, 2015 WL 1607756, at *1.

[131]. Id. at *2.

[132]. Id.

[133]. Id. at *10.

[134]. See, e.g., Ryan v. Grae & Rybicki P.C., 135 F.3d 867, 870 (2d Cir. 1998).

[135]. See Rizvi, supra note 533; Patrick Dorrian, EEO Roundup: What Deference Do Courts Give to the EEOC’s Views?, Bloomberg BNA (June 8, 2016), https://www.bna.com/eeo-roundup-deference-b57982073811 (discussing the deference given to the EEOC).

[136]. Best Practices, supra note 70, at 1.

[137]. Id.

[138]. Id. (emphasis added).

[139]. Id. at 2.

[140]. Office of Fed. Contract Compliance Programs, Dep’t of Labor, Frequently Asked Questions: Sexual Orientation and Gender Identity, https://www.dol.gov/ofccp/LGBT/LGBT_FAQs.html#Q24 (last visited May 15, 2018).

[141]. Id.

[142]. See, e.g., Examples of Court Decisions Supporting Coverage of LGBT-Related Discrimination Under Title VII, Equal Employment Opportunity Comm’n, https://www.eeoc.gov
/eeoc/newsroom/wysk/lgbt_examples_decisions.cfm (last visited May 15, 2018); Scott Rabe, Sam Schwartz-Fenwick & Marlin Duro, TITLE VII: Court Breaks from Department of Justice on Transgender Rights, Seyfarth Shaw: Employment Law Outlook (Nov. 2, 2017), https://www.laborandemploymentlawcounsel.com/2017/11/title-vii-court-breaks-from-department-of-justice-on-transgender-rights.

[143]. Equality Maps: Federal Courts Decisions Title VII: Gender Identity, Movement Advancement Project, http://www.lgbtmap.org/equality-maps/federal_court_decisions (last updated May 15, 2018).

[144]. Id.

[145]. Id.

[146]. See generally Barnes v. City of Cincinnati, 401 F.3d 729 (6th Cir. 2005); Smith v. City of Salem, 378 F.3d 566 (6th Cir. 2004); Rosa v. Park West Bank & Trust Co., 214 F.3d 213 (1st Cir. 2000); Schwenk v. Hartford, 204 F.3d 1187 (9th Cir. 2000); Glenn v. Brumby, 72 4 F. Supp. 2d 1284 (N.D. Ga. 2010), aff’d, 663 F.3d 1312 (11th Cir. 2011).

[147]. See cases cited supra note 1466.

[148]. Barnes v. City of Cincinnati, 401 F.3d 729, 741 (6th Cir. 2005); Smith v. City of Salem, 378 F.3d 566, 575 (6th Cir. 2004). See also Sexual Orientation and Transgender Discrimination, Katz, Marshall & Banks, LLP http://www.kmblegal.com/practice-areas/discrimination-retaliation/sexual-orientation-transgender-discrimination (last visited May 15, 2018).

[149]. Smith, 378 F.3d at 572. See also Eric S. Dreiband & Brett Swearingen, The Evolution of Title VII—Sexual Orientation, Gender Identity, and the Civil Rights Act of 1964 7–8 (2015).

[150]. Smith, 378 F.3d at 575.

[151]. Barnes, 401 F.3d at 733. See also Dreiband & Swearingen, supra note 14949, at 8.

[152]. Barnes, 401 F.3d at 737–38.

[153]. Glenn v. Brumby, 663 F.3d 1312, 1313–14 (11th Cir. 2011).

[154]. Id. at 1316.

[155]. Id. at 1320–21.

[156]. Id. 1316–17.

[157]. Id. at 1318–19.

[158]. See Macy v. Holder, EEOC Appeal No. 0120120821, 2012 WL 1435995, at *7–10 (Apr. 20, 2012) (“Thus, a transgender person who has experienced discrimination based on his or her gender identity may establish a prima facie case of sex discrimination through any number of different formulations.”).

[159]. Id. at *7–8.

[160]. Schroer v. Billington, 577 F. Supp. 2d 293, 305 (D.D.C. 2008).

[161]. Id. at 307–08.

[162]. Id. at 306–07.

[163]. See, e.g., Etsitty v. Utah Transit Auth., 502 F.3d 1215, 1221 (10th Cir. 2007); Ulane v. E. Airlines Inc., 742 F.2d 1081 (7th Cir. 1984).

[164]. Etsitty, 502 F.3d at 1218.

[165]. Id. at 1224–25.

[166]. Id. at 1221–22.

[167]. Id. at 1222.

[168]. See, e.g., Glenn v. Brumby, 663 F.3d 1312, 1318 n.5 (11th Cir. 2011) (discussing the impact of Price Waterhouse on the Ulane decision); Chavez v. Credit Nation Auto Sales, 49 F. Supp. 3d 1163, 1189–90 (N.D. Ga. 2014) (same).

[169]. See Hively v. Ivy Tech Cmty. Coll. of Ind., 853 F.3d 339, 345–46 (7th Cir. 2017). For an argument that Hively overruled Ulane, see Mark Joseph Stern, The 7th Circuit’s Landmark Anti-Gay Discrimination Ruling is also Great News for Trans Rights, Slate (Apr. 5, 2017, 2:16 PM), http://www.slate.com/blogs/outward/2017/04/05/_7th_circuit_decision_in_hively_is_great_news_for_trans_rights.html (“Hively therefore overturned Ulane.”).

[170]. Id.

[171]. Id. at 350–51.

[172]. Id. at 351–52.

[173]. Roberts v. Clark Cty. Sch. Dist., 215 F. Supp. 3d 1001, 1014–15 (D. Nev. 2016).

[174]. Id. at 1005–06.

[175]. Id.

[176]. Id. at 1015.

[177]. Id. at 1016.

[178]. Id.

[179]. Mickens v. GE Co., No. 3:16CV-00603-JHM, 2016 U.S. Dist. LEXIS 163961, at *10 (W.D. Ky. 2016).

[180]. Id. at *2–3.

[181]. Id. at *8–9.

[182]. Id. at *9.

[183]. Cruzan v. Special Sch. Dist. No. 1, 294 F.3d 981, 982–83 (8th Cir. 2002).

[184]. Id.

[185]. Id. at 984.

[186]. Id. at 982, 984.

[187]. Id.

[188]. See supra Parts III, IV.

[189]. See Emily McCord, North Carolinians Who Support “Bathroom Law” Say They’re Being Drowned Out, NPR (May 15, 2016, 5:14 PM), http://www.npr.org/2016/05/15/477946675/north-carolinians-who-support-bathroom-law-say-theyre-being-drowned-out.

[190]. Complaint for Declaratory Judgement at 6, McCrory v. United States, No 5:16-cv-00238-BO (E.D. N.C. May 9, 2016).

[191]. See Jim S. McNeill & Peter Stockburger, Transgender Bathroom Debate: What’s the Deference?, Law360 (May 18, 2016, 1:07 PM), https://www.law360.com/articles/796989.

[192]. Id.

[193]. Ulane v. E. Airlines Inc., 742 F.2d 1081, 1084 (7th Cir. 1984).

[194]. Id. at 1084–85.

[195]. Id. at 1085.

[196]. See, e.g., Dana Beyer, Jillian T. Weiss & Riki Wilchins, New Title VII and EEOC Rulings Protect Transgender Employees 3 (2014), http://transgenderlawcenter.org/wp-content
/uploads/2014/01/TitleVII-Report-Final012414.pdf.

[197]. See Etsitty, 502 F.3d at 1223–24; Dreiband & Swearingen, supra note 1499.

[198]. See McNeill & Stockburger, supra note 191.

[199]. Id.

[200]. Nicole Russell, The Transgender Lobby’s Demands Are Not Civil Rights, Federalist (Nov. 22, 2016), http://thefederalist.com/2016/11/22/transgender-lobbys-demands-not-civil-rights.

[201]. Id.

[202]. Id.

[203]. Transgender people are estimated to represent about 0.5% of the United States population. Flores et al., supra note 2, at 5.

[204]. Business Leaders Support HB2 & Governor McCrory, Keep NC Safe, http://keepmyncsafe.com/hundreds-business-leaders-show-support-hb2-governor-mccrory (last updated Apr. 29, 2016).

[205]. Id.; Complaint for Declaratory Judgement, supra note 190, at 2.

[206]. Legal Battle is Building Over Transgender Librarian, Tuscaloosa News (Aug. 25, 1999), https://genderidentitywatch.com/2015/01/07/cruzan-v-special-school-dist-1-usa.

[207]. Id.; Business Leaders Support HB2, supra note 204.

[208]. Stevie Borrello, Sexual Assault and Domestic Violence Organizations Debunk “Bathroom Predator Myth”, ABC News (Apr. 22, 2016, 7:15 PM), http://abcnews.go.com/US/sexual-assault-domestic-violence-organizations-debunk-bathroom-predator/story?id=38604019.

[209]. Id.

[210]. See, e.g., Arthur S. Leonard, A Battle Over Statutory Interpretation: Title VII and Claims of Sexual Orientation and Gender Identity Discrimination, Other Publications, 2017, at 3.

[211]. See, e.g., Complaint at 7, United States v. North Carolina, No. 1:16-cv-00425 (M.D. N.C. May 19, 2016).

[212]. See Leonard, supra note 210, at 4.

[213]. See, e.g., Barnes v. City of Cincinnati, 401 F.3d 729, 737 (6th Cir. 2005); Smith v. City of Salem, 378 F.3d 566, 571–73 (6th Cir. 2004).

[214]. See Leonard, supra note 210, at 4–5.

[215]. Oncale v. Sundowner Offshore Servs., 523 U.S. 75, 81–82 (1997). See also Leonard, supra note 210, at 4–5.

[216]. Oncale, 523 U.S. at 79–80.

[217]. See Leonard, supra note 210, at 4–5.

[218]. Complaint, supra note 211, at 7.

[219]. Id.

[220]. Id. at 7–9.

[221]. Id. at 4, 6.

[222]. Id. at 9.

[223]. See id.

[224]. See, e.g., Jody L. Herman, Gendered Restrooms and Minority Stress: The Public Regulation of Gender and Its Impact on Transgender People’s Lives, 19 J. Pub. Mgmt. & Soc. Pol’y 65, 71–78 (2013).

[225]. Brady, supra note 24.

[226]. Sexual Assault and the LGBTQ Community, Human Rights Campaign, http://www.hrc.org/resources/sexual-assault-and-the-lgbt-community (last visited May 15, 2018).

[227]. Jennifer Litton Tidd, Segregated Bathrooms Will Increase Violence Against Women, LGBTQ Nation (May 14, 2016), http://www.lgbtqnation.com/2016/05/segregated-bathroom-laws-will-increase-violence-trans-people.

[228]. Zach Ford, STUDY: Transgender People Experience Discrimination Trying to Use Bathrooms, Think Progress (June 26, 2013, 1:06 PM), https://thinkprogress.org/study-transgender-people-experience-discrimination-trying-to-use-bathrooms-34232263e6b3.

[229]. See generally Herman, supra note 224; Ford, supra note 228.

[230]. Shoshana Goldberg & Andrew Reynolds, The North Carolina Bathroom Bill Could Trigger a Health Crisis Among Transgender Youth, Research Shows, Wash. Post: Monkey Cage (Apr. 18, 2016), https://wapo.st/1S5q0px?tid=ss_tw-bottom&utm_term=.66bad834133f.

[231]. Complaint, supra note 211, at 9–10.

[232]. Goldberg & Reynolds, supra note 230.

[233]. Ford, supra note 228.

[234]. How A Poison Pill Worded As “Sex” Gave Birth to Transgender Rights, NPR: Politics (May 15, 2016, 7:36 AM), https://www.npr.org/2016/05/15/478075804/how-a-poison-pill-worded-as-sex-gave-birth-to-transgender-rights.

[235]. Mark Joseph Stern, How a 1964 Civil Rights Law Makes North Carolina’s Bathroom Bill Illegal, Slate: Outward (May 18, 2016, 10:14 AM), http://www.slate.com/blogs/outward/2016/05/18
/sex_discrimination_is_trans_discrimination_gilliam_thomas_explains.html. See generally Gillian Thomas, Because of Sex (2016) (discussing the inception of protection against sex discrimination in Title VII).

[236]. See generally Thomas, supra note 235.

[237]. Ulane v. E. Airlines, Inc., 742 F.2d 1081, 1084, 1086 (7th Cir. 1984).

[238]. See, e.g., Ford, supra note 229.

[239]. See Elizabeth Bartholet, Proof of Discriminatory Intent Under Title VII: United States Postal Service Board of Governors v. Aikens, 70 Calif. L. Rev. 1201, 1202–03 (1982).

[240]. See Brown v. Bd. of Educ., 347 U.S. 483, 495 (1954); Brief for NAACP Legal Defense and Educational Fund, Inc. and the Asian American Legal Defense and Education Fund as Amici Curiae in Support of Respondent, Gloucester Cty. Sch. Bd. v. G.G., 137 S. Ct. 1239 (2017) (No. 16-273).

[241]. See generally Ann P. Haas, Philip L. Rodgers & Jody L. Herman, Williams Inst., Suicide Attempts Among Transgender and Gender Non-Conforming Adults (2014), https://williamsinstitute.law.ucla.edu/wp-content/uploads/AFSP-Williams-Suicide-Report-Final.pdf.

[242]. See Questionable Questions About Transgender Identity, Nat’l Ctr. for Transgender Equality (Sept. 2, 2016), https://transequality.org/issues/resources/questionable-questions-about-transgender-identity.

[243]. See Vincent J. Samar, The Right to Privacy and the Right to Use the Bathroom Consistent with One’s Gender Identity, 24 Duke J. Gender L. & Pol’y 33, 55 (2016).

“Moore” Than Just a Number: Why IQ Cutoffs Are an Unconstitutional Measure for Determining Intellectual Disability – Note by Courtney Johnson

May 2018August 2018Southern California Law Review Admin

From Volume 91, Number 4 (May 2018)
DOWNLOAD PDF

“Moore” Than Just a Number: Why IQ Cutoffs are an Unconstitutional Measure for Determining Intellectual Disability

Courtney Johnson [*]

TABLE OF CONTENTS

INTRODUCTION

I. BACKGROUND

A. Creating a Constitutional Exemption for the Intellectually Disabled

B. Defining “Mental Retardation” after Atkins

1. Significantly SubAverage Intellectual Functioning

2. Adaptive Behavior Criteria

3. Manifesting Before Age Eighteen

4. State Interpretations of the Factors: Ex parte Briseno

C. Setting the Stage for Moore

II. MORE PROTECTION UNDER MOORE?

III. ARGUMENT

A. Retroactivity

B. Current States with IQ Cutoffs

C. A Shifting National Consensus Against the
Death Penalty

D. Expanding the Exemption

CONCLUSION

INTRODUCTION

“Yeah,” said George. “I’ll come. But listen, Curley. The poor bastard’s nuts. Don’t shoot ‘im. He di’n’t know what he was doin’.”

– John Steinbeck, Of Mice and Men [1]

Bobby James Moore was twenty years old when he “fatally shot a store clerk” while robbing a grocery store in April 1980.[2] On paper, this is a tragic felony murder, but behind the scenes lies a different story. Bobby was not a typical twenty-year–old; he did not understand “the days of the week, the months of the year, [or] the seasons.”[3] Bobby could barely tell time, and he could not understand standard measurements or that subtraction is the opposite of addition.[4] Bobby suffered an “abuse-filled childhood.”[5] Bobby dropped out of high school due to “his limited ability to read and write,” and he lived on the streets after being kicked out of his home for being “stupid.”[6] Bobby is intellectually disabled, and despite the evidence put forth demonstrating his disability, he was sentenced to death pursuant to a set of factors used by a Texas court; these factors are largely based on stereotypes and caricatures from literature.[7] As the United States Supreme Court decided in 2017, this was a gross violation of the Eighth Amendment’s protection against cruel and unusual punishment to rely on “wholly nonclinical”[8] factors rather than the “medical community’s diagnostic framework.”[9]

Mental health and the criminal justice system consistently interact when it comes to theories of punishment and culpability. When they clash, the crime often takes center stage, while the mental health of the defendant remains ignored. Individuals suffering from intellectual disabilities, mental disorders, or both are treated unfairly as criminal defendants when their conditions, consisting largely of impairments of the ability to make rational decisions, are not taken into serious consideration at sentencing. Courts, legislatures, and the public generally have struggled to understand criminal defendants with intellectual disabilities. It was not until 2002 that the United States Supreme Court ruled it unconstitutional to execute intellectually disabled persons in the landmark decision Atkins v. Virginia.[10] The Court found there is a “national consensus” that people who suffer from “mental retardation”[11] should be exempt from the death penalty.[12] Before Atkins was decided in 2002, at least forty-four people who would have been exempt under Atkins were executed.[13]

Like many prior landmark decisions, states resisted Atkins because of its failure to define “intellectual disability” and the fact that it left to the states “the task of developing appropriate ways to enforce the constitutional restriction.”[14] Several states took this opportunity to implement harsh IQ cutoffs for determining intellectual disability in capital cases.[15] Many states passed legislation prior to Atkins defining intellectual disability as requiring an IQ score of below seventy, and following Atkins, these states began denying its exemption to any claimants with IQ scores of seventy or above. Twelve years after Atkins, the Supreme Court addressed the issue of IQ cutoffs in Hall v. Florida, in which the Court concluded that Florida’s cutoff “disregards established medical practice[s]” and that when a defendant’s IQ falls in a certain margin of error, the defendant must be able to present additional evidence of adaptive deficits.[16] Hall reinforced the need to focus on adaptive behavior in addition to IQ, but again, the states still had discretion over how to consider the behavior. Then came Moore v. Texas, the most striking example post-Hall that there remains a long-standing misperception of intellectual disabilities.

Before reaching the Supreme Court, the Texas Court of Criminal Appeals (“CCA”)[17] denied Bobby James Moore’s habeas petition claiming exemption from the death penalty under Atkins. The CCA relied on its prior decision in Ex Parte Briseno, in which it determined a defendant was essentially not disabled enough for death penalty exemption, contrasting with the classic example of a character with a severe disability, Lennie in John Steinbeck’s Of Mice and Men.[18] The CCA in Briseno held that “[m]ost Texas citizens might agree that Steinbeck’s Lennie should, by virtue of his lack of reasoning ability and adaptive skills, be exempt [from the death penalty],” but because the petitioner did not fall in the category of “severely mentally retarded” like Lennie would, he was denied exemption from the death penalty.[19]

Reasoning based on a literary character is dangerous, and, as this Note will argue, intellectual disabilities cannot be boiled down to stereotypes or an isolated number from an IQ test. This Note will look to recent court decisions, state statutes, and literature from the psychological and psychiatric communities, and it will evaluate the Supreme Court’s decision in Moore v. Texas overturning the CCA. It will further consider what the Supreme Court’s decision could mean not only for the future of intellectually disabled defendants, but also for defendants with mental illnesses facing the death penalty.

Part I of this Note focuses on the legal background pre- and post-Atkins and how courts have treated individuals with intellectual disabilities. It will examine attempts to define “mental retardation” for the purpose of exemption under Atkins by looking at how various literatures, state statutes, lower court decisions, and how clinicians define it. Part II then focuses on the recent Supreme Court case on this issue, Moore v. Texas. Lastly, Part III discusses Moore’s future implications on the ability of intellectually disabled persons to argue that without Hall and Moore applying retroactively or a specific holding from the Court regarding the unconstitutionality of IQ cutoffs, such persons will continue to have their constitutional rights violated.

I. BACKGROUND

A. Creating a Constitutional Exemption for the Intellectually Disabled

The Eighth Amendment prohibits the infliction of cruel and unusual punishment.[20] Initially, this prohibited archaic punishments that were considered “cruel and unusual” when the Bill of Rights was adopted, but the Supreme Court has since recognized it encompasses the “evolving standards of decency that mark the progress of a maturing society.”[21] In addressing these “evolving standards,” the Court has looked to evidence from society’s current views on punishment, most often found in state legislation and data from jury sentencing.[22] Since the adoption of the Bill of Rights, the Eighth Amendment has been expanded to prohibit the execution of juveniles,[23] individuals deemed incompetent at the time of execution,[24] and the “mentally retarded.”[25] All three protected classes represent important facets within the complexity of the death penalty issue; however, this Note focuses on the latter: how the Eighth Amendment has come to prohibit the execution of individuals with “mental retardation.”

The Supreme Court has come a long way in its treatment of the intellectually disabled in regards to the death penalty since its first decision on the matter in Penry v. Lynaugh.[26] Decided in 1989, this was the first time the Court addressed the issue of whether the Eighth Amendment’s prohibition against cruel and unusual punishment exempts intellectually disabled individuals from execution. The Court held that executing the “mentally retarded” did not violate the Eighth Amendment, but based its decision largely on the fact that only two states at the time (Georgia and Maryland) banned executions of “mentally retarded” criminals.[27] The Court found that this was not sufficient evidence of a “national consensus” that the practice violated “standards of decency.”[28]

Just as the states began to change their position on the issue, so did the Supreme Court. Following the decision in Penry, sixteen states across the country enacted statutes like those in Georgia and Maryland from the period of 1990 to 2002, totaling eighteen states with exemptions for the mentally disabled when Atkins was decided.[29] Even more significant is the fact that no states passed legislation enforcing the power to execute intellectually disabled individuals in this time period.[30] This shift in the national consensus, arising from the states, changed the way the Court viewed intellectual disabilities. The same year the eighteenth state enacted legislation exempting the “mentally retarded,” the Supreme Court handed down its landmark decision Atkins v. Virginia, in which it held it is unconstitutional and a violation of the Eighth Amendment to execute people with “mental retardation.”[31]

Atkins was largely based on this shift in national consensus (demonstrated by state’s enacting laws banning the execution of “mentally retarded” individuals), which the Court found to provide “powerful evidence that today our society views mentally retarded offenders as categorically less culpable than the average criminal.”[32] Eighteen states is still short of half the country, but the Court found it significant that in the states that still allowed the execution of intellectually disabled offenders, actually carrying out the practice is rare.[33] In fact, only five states executed individuals with an IQ of less than seventy between the time Penry and Atkins were decided.[34]

In addition to a shifting national consensus, the Court considered two goals of the criminal justice system—retribution and deterrence—and evaluated how executing the petitioner in Atkins would serve either of those interests.[35] First, with respect to retribution, the Court reasoned that a defendant deemed “mentally retarded” acts with a “lesser culpability” than the average person guilty of murder, and thus a death sentence would be disproportional and would not serve the interests of retribution.[36] Secondly, with respect to deterrence, the Court found that capital punishment would serve as a deterrent only for potential murderers with a “cold calculus that precedes the[ir] decision” to kill.[37] The theory behind deterrence rests upon the notion that the severity of the punishment, in this case death, will dissuade criminal conduct.[38] That is simply not true for individuals with “mental retardation,” as the Court found that it makes one “less likely … [to] process the information of the possibility of execution as a penalty and, as a result, control their conduct based upon that information.”[39] This is also true in reverse: exempting individuals with “mental retardation” will not lessen the deterrent effect on those unprotected. Given that, in Atkins, the individual had an IQ of fifty-nine, as well as clinician testimony and school records supporting a finding of “mental retardation,” it is not likely others would attempt to claim “mental retardation” falsely to gain exemption without such evidence.

The core of the Atkins decision is its recognition that intellectually disabled individuals are less culpable because of their cognitive and behavioral impairments. This creates a “diminished ability to understand and process information, to learn from experience, to engage in logical reasoning, or to control impulses . . . .”[40] Not only does this impairment affect an individual’s decisionmaking throughout the circumstances of their crime and lead to a failure to appreciate risks and consequences, but also it can inhibit one’s ability to receive proper counsel, resulting in deficient due process.[41]

The Court in Atkins felt secure in its decision given the supportive national consensus, but did note that to the extent there is any disagreement, it will be in “determining which offenders are in fact retarded.”[42] This prediction by the Court anticipated the ambiguity and difficulty states have had post-Atkins in determining which defendants qualify as “mentally retarded” to be exempt from execution. Thus, while Atkins serves as a momentous step for intellectually disabled defendants, it leaves uncertainty on how to properly protect such individuals from execution by failing to define “mental retardation.” It left “to the State[s] the task of developing appropriate ways to enforce the constitutional restriction upon . . . [its] execution of sentences,”[43] meaning that the states retained discretion in determining the criteria for who exactly is “mentally retarded” for purposes of a death penalty exemption under Atkins.

B. Defining “Mental Retardation” after Atkins

The Supreme Court’s reasoning for leaving the definition of “mental retardation” ambiguous is that “[n]ot all people who claim to be mentally retarded will be so impaired as to fall within the range of mentally retarded offenders about whom there is a national consensus.”[44] The Court appears to refrain from defining “mental retardation” to avoid a categorical ban that would exempt some individuals who claim to be intellectually disabled, but actually are not impaired to the extent that it diminishes their culpability. The Court did however explain that the medical community defines “mental retardation” per three criteria: (1) significantly subaverage intellectual functioning,[45] (2) deficits in adaptive functioning,[46] and (3) that these deficits manifest prior to age eighteen.[47]

1. Significantly SubAverage Intellectual Functioning

The American Association on Mental Retardation (“AAMR”) defines “significantly subaverage” intellectual functioning as having an IQ of about seventy or below.[48] An IQ can be obtained by one or more of the standardized, individually administered intelligence tests, such as the Wechsler Adult Intelligence Scales (WAIS), Wechsler Intelligence Scales for Children (WISC), the Otis-Lennon Mental Ability Test (OLMAT) and the Stanford-Binet-V (SB-V).[49] The American Psychiatric Association Diagnostic and Statistical Manual of Mental Disorders, fifth edition, (“DSM-5”) has recognized there is a measurement error of approximately five points in assessing IQ.[50] DSM-5’s guidelines ensure that no one would be diagnosed with an IQ lower than seventy if no significant defects in adaptive functioning are shown, however, that also makes it possible “to diagnose Mental Retardation in individuals with IQ’s between [seventy] and [seventy-five] who exhibit significant deficits in adaptive behavior.”[51] The DSM-5 also designates classifications of mental retardation into degrees: “profound (IQ below 20–25), severe (IQ 20–25 to 35–40), moderate (IQ 35–40 to 50–55), and mild (IQ 50–55 to 70–75).”[52] Approximately 85% of all intellectually disabled persons, and the “overwhelming majority of capital defendants with mental retardation,” fall in the mild range.[53] Only 3–4% fall in the “severe mental retardation” category,[54] where Lennie from Of Mice and Men would likely fall. There are several moral and practical implications of setting a strict IQ cutoff at seventy for defendants bringing Atkins claims that will be discussed in Part IV.

2. Adaptive Behavior Criteria

The American Association on Mental Deficiency (“AAMD”) defines significant impairments on adaptive functioning as “limitations in an individual’s effectiveness in meeting the standards of maturation, learning, personal independence, and/or social responsibility that are expected for his or her age level and cultural group, as determined by clinical assessment and, usually, standardized scales.”[55] In other words, this analysis focuses generally on ordinary skills the typical individual possesses to function in everyday life. The level of everyday adaptive functioning is compared “to an individual’s age, gender, and socioculturally matched peers.”[56]

The AAIDD and DSM-5 sum this up in three adaptive-behavior skills: conceptual, social, and practical.[57] The conceptual domain, also called academic domain, involves, among other abilities, competence in functions such as memory, language, reading, writing, math, problem solving, and ability to form judgment in novel situations.[58] The social domain focuses on personal interactions and how one reacts to them. This domain includes: awareness of others’ thoughts, feelings, and experiences; empathy; interpersonal communication skills; ability to make friends and judge social situations.[59] Lastly, the practical domain focuses on the individual’s ability to live a productive life in the world by evaluating self-management, ability to care for oneself, ability to adhere to school or job responsibilities, and ability to manage money, among other skills.[60] The DSM-5 recommends gathering evidence of skills deficits in these domains by various means, such as looking into educational, developmental, and medical history.[61]

3. Manifesting Before Age Eighteen

The third, and least litigated, factor of the definition of intellectual disability requires that the disability “manifest[s] before age 18.”[62] The DSM-5 requires evidence of both intellectual and adaptive deficits, the first two prongs, to be shown during this “developmental period.”[63] In most Atkins claims this is not as vigorously litigated, as courts often review evidence of childhood environment, medical histories, behavioral records, school records, and testimony of behavior from those who knew the individual as a child.[64]

A recent Sixth Circuit decision arising out of Tennessee provides an example of how this third requirement can impact an Atkins claim. There, an Atkins claimant’s school records indicated IQ scores from eighty-three to ninety-seven from ages seven to thirteen years old, yet at age forty-five he was receiving scores of fifty-seven and sixty-nine.[65] Those scores were not evidence of lifelong “mental retardation,” manifesting during childhood, and because all of his scores before he turned eighteen were higher than seventy (even considering the Flynn effect and other deviations), the defendant’s Atkins challenge was rejected.[66]

4. State Interpretations of the Factors: Ex parte Briseno

One of the most blatant departures from the principles established in Atkins—Ex parte Briseno—came out of Texas in 2004. Jose Garcia Briseno sought state habeas relief, “alleging he was mentally retarded and . . . exempt from execution” for the murder he was sentenced to death for in 1991.[67] The Texas legislature had not adopted a statute implementing Atkins, so the Texas Criminal Court of Appeals (“CCA”) took matters into its own hands, resulting in a wholly nonclinical approach that evaluated what became known as the Briseno factors.

In the absence of any state statute, the CCA looked at the DSM-IV,[68] bills the Texas Legislature had passed, relevant case law, and finally the AAMR. First, the court examined the DSM-IV and found that mental health professionals define intellectual disability “broadly to provide an adequate safety net for those who are at the margin and might well become mentally-unimpaired citizens if given additional social services support.”[69] The broad range of intellectual disabilities is shown by “[t]he DSM-IV categoriz[ing] the mentally retarded into four subcategories: mildly retarded, moderately mentally retarded, severely mentally retarded, and profoundly mentally retarded.” The court noted that “mental retardation is not necessarily a lifelong disorder” given that many individuals fall into the “mildly mentally retarded” category.[70] Further, due to the broad categorization and range of IQ numbers, the court was unsure whether the petitioner’s disability was severe or long-standing enough for exemption.

The only other source the CCA looked to was Texas House Bill 236, passed by the 77th Legislature in 2001, “before the Atkins decision was announced.”[71] House Bill 236 would have prohibited the execution of intellectually disabled defendants, adopting the definition of “mental retardation” found in Texas Health and Safety Code Section 591.003(13).[72] However, House Bill 236 “was vetoed by the Governor,” and subsequently “[t]he 78th Texas Legislature did not pass a statute implementing Atkins.”[73]

The CCA thus adopted the definition set by the AAMR, the same criteria Atkins discusses, including the requirement that the defendant’s “adaptive deficits” are related to the intellectual disability.[74] The CCA settled on this definition because it closely resembles the definition under the Texas Health and Safety Code: “‘[i]ntellectual disability’ means significantly subaverage general intellectual functioning that is concurrent with deficits in adaptive behavior and originates during the developmental period.”[75] Despite adopting the same definition, state courts could vary wildly in determining what is considered “significantly subaverage” functioning.

Indeed, unlike any other jurisdiction, the CCA adopted a narrower focus than what mental health professionals recommend by looking to the “level and degree of mental retardation at which a consensus of Texas citizens would agree that a person should be exempted from the death penalty.”[76] The CCA said unless the defendant seems retarded enough to the average person in Texas, they will not be exempt. The court cited Atkins, that “[n]ot all people who claim to be mentally retarded will be so impaired as to fall within the range of mentally retarded offenders about whom there is a national consensus.”[77] The CCA took this phrase and ran with it, interpreting it to allow the execution of persons whose disability falls in the mild range—the largest portion of intellectually disabled criminal defendants and the range in which the Atkins claimant fell. The fact that Texas did not yet have any statutory provisions applying Atkins further allowed the court to ignore the holding in Atkins and create its own “factors” test not based on any clinical determination.[78]

The Briseno court argued that adaptive behavior criteria are “exceedingly subjective” and thus set out a list of seven evidentiary factors to guide the determination of whether a defendant is considered intellectually disabled under Atkins:[79]

[1.] Did those who knew the person best during the developmental stage—his family, friends, teachers, employers, authorities—think he was mentally retarded at that time, and, if so, act in accordance with that determination?

[2.] Has the person formulated plans and carried them through or is his conduct impulsive?

[3.] Does his conduct show leadership or does it show that he is led around by others?

[4.] Is his conduct in response to external stimuli rational and appropriate, regardless of whether it is socially acceptable?

[5.] Does he respond coherently, rational, and on point to oral or written questions or do his responses wander from subject to subject?

[6.] Can the person hide facts or lie effectively in his own or others’ interests?

[7.] Putting aside any heinousness or gruesomeness surrounding the capital offense, did the commission of that offense require forethought, planning, and complex execution of purpose?[80]

The court applied these factors to the defendant-petitioner in Briseno to determine that he “did not prove, by a preponderance of the evidence, that he had significant limitations in adaptive functioning.”[81] They found that stories of him running away from home to escape the beatings from his great-grandma signified “good survival skills,” that officers testified his “behavior seemed ‘normal’ and ‘appropriate’ in prison,” and his own testimony seemed “clear, coherent and responsive.”[82] As later held in Moore v. Texas, these types of factors cannot provide an adequate basis for determining adaptive behavior because they overemphasize the strengths without considering the deficits.[83] Several courts in Texas since Briseno have dissented from the application of the factors as “decidedly non-diagnostic,” giving Texas judges “amorphous latitude . . . to supply the normative judgment to say, in essence, what mental retardation means in Texas . . . for Eighth Amendment purposes.” [84]

After Briseno, it is estimated that Texas executed thirty to forty people with strong claims of intellectual disability relying on the nonclinical “we know it when see it approach” that was “as meaningless as answers given by a Magic 8 Ball.”[85] After the progressive step the Court took in Atkins, Briseno ran afoul the long-standing principle that the Eighth Amendment protects “evolving standards of decency that mark the progress of a maturing society,” making clear that Atkins was just one battle won in the fight for the constitutional rights of intellectually disabled persons.[86]

C. Setting the Stage for Moore

In 2014, ten years after Briseno, the Supreme Court revisited the issue in Hall v. Florida, holding that a Florida capital punishment law requiring an individual claiming an intellectual disability to score seventy or below on an IQ test violates the Eighth and Fourteenth Amendments of the Constitution.[87] Freddie Lee Hall was convicted of two murders in 1978, a jury sentenced him to death, and both the Court of Appeals and Florida Supreme Court affirmed concluding that his intellectual disability could not justify or excuse his moral culpability based their interpretation of a Florida statute.[88] While the Florida statute appeared nearly identical to the three criteria in Atkins, it went further by defining “significantly subaverage” intellectual functioning as “performance that is two or more standard deviations from the mean score on a standardized intelligence test.”[89] The standard deviation is fifteen points, two deviations is then thirty points, but the Florida Supreme Court interpreted the statute as creating a strict IQ cutoff of seventy.[90]

When Hall was first sentenced, the Supreme Court had not yet decided Atkins, thus, in 2004, Hall filed a motion claiming an intellectual disability that would have exempted him from the death penalty pursuant to Atkins.[91] It took five years for Florida to hold a hearing considering his motion, and when they finally did, he presented evidence that his IQ score was seventy-one.[92] Notably, Hall actually received nine IQ tests over forty years ranging from scores of sixty to eighty, but the scores below seventy were excluded for “evidentiary reasons.”[93] Under the Florida Supreme Court’s analysis, a score of seventy-one put Hall above the mandatory cutoff, and thus other evidence could not be considered.[94]

The Supreme Court noted that Florida’s mandatory IQ cutoff disregards the medical practice because it treats IQ as “conclusive evidence” of an individual’s intellectual functioning, without considering other evidence of deficiencies in adaptive behavior.[95] In fact, the very professionals who create and run IQ tests are in consensus that they “should be read not as a single fixed number but as a range.”[96] This is because each test has a “standard error of management” (“SEM”),[97] reflecting the inconsistency and imprecision of the test. For individuals like Hall with an IQ of seventy, considering the SEM places him in a range between sixty-six and seventy-six.[98] The SEM also applies to an individual like Hall—who has taken multiple tests—and must be applied to each one separately.

Turning now to the Eighth Amendment analysis of whether there is a national consensus that the practice of IQ cutoffs violates standards of decency, the Court found a “significant majority of States implement the protections of Atkins by taking the SEM into account,” reflecting the “error inherent” in using the test.[99] Additionally, only two other states had “adopted a fixed score cutoff identical to Florida’s” at the time of this decision.[100] There are however, nine states with statutes that could be interpreted as requiring bright-line cutoffs of seventy, but the Court found that four of them have not had courts rule on the issue.[101] In stark contrast, eighteen states have abolished the death penalty altogether and at least five states have passed legislation permitting a defendant bring a claim under Atkins, despite an IQ above seventy.[102] For all of these reasons, the Court rejected the strict cutoff.[103] Rather, the Court found significant evidence must be considered: “social and cultural environment, including medical histories, behavioral records, school test and reports, and testimony regarding past behavior and family circumstances.”[104]

After disregarding the strict cutoff under Florida’s statute, the Court’s analysis considered Hall’s school records, and testimony from his teachers, his lawyer, medical clinicians, and his family, finding them to be “substantial and unchallenged evidence of intellectual disability.”[105] The Court went beyond the IQ test’s simple number by delving into the defendant’s childhood. The opinion cites several different testimonies that demonstrated his intellectual disability. For example, his siblings testified there was “something ‘very wrong’ with him as a child,” and he was “slow with speech and . . . slow to learn.”[106] Strikingly, his mother “would strap [Hall] to his bed at night . . . [and] awaken [him] by hoisting him up and whipping him with a belt, rope, or cord” and on one occasion she “buried him in the sand up to his neck to ‘strengthen his legs.’”[107] In light of the powerful evidence presented, the Court found that “Hall’s upbringing appeared to make his deficits in adaptive functioning all the more severe.”[108]

The Court’s reasoning in Hall is significant because it acknowledges that a person is more than just a number.[109] Not only is an important constitutional protection against cruel and unusual punishment at stake, but also the rights of a group of individuals who have long suffered due to the stigma of their intellectual disabilities. What is at stake here is not automatically excusing anyone with an intellectual disability from punishment, but rather ensuring that an individual has the opportunity to present evidence of his disability, including deficits in adaptive behavior. Florida’s decision to execute Hall because his IQ score was one point above the cutoff was an extreme circumstance, and the Court properly championed the rights of intellectually disabled persons in its opinion. However, its ruling only invalidated the Florida statute under the Eighth Amendment; thus the Court has not yet categorically banned state reliance on IQ tests.

II. MORE PROTECTION UNDER MOORE?

Two years after Hall v. Florida, on June 6, 2016, the Supreme Court granted certiorari in its most recent case regarding the intellectually disabled, Moore v. Texas.[110] The Supreme Court granted certiorari, taking up the specific issue of whether it violates the Eighth Amendment under Hall and Atkins to prohibit the use of current medical standards on intellectual disability and instead require the use of outdated medical standards in determining whether an individual can be exempt from the death penalty. The main issue is whether medical definitions govern how courts rule, or whether courts have discretion to develop the legal standard on their own.

In 1980, Bobby James Moore and two accomplices attempted to rob a grocery store. Moore was meant to be a look-out guard positioned at the front booth with a shotgun, but when he approached the booth, he shot and killed an employee.[111] Moore was “convicted of capital murder and sentenced to death.”[112] Moore brought habeas petitions in both state and federal courts, and the U.S. Court of Appeals for the Fifth Circuit found Moore received ineffective assistance of counsel during his trial and sentencing because his attorney failed to develop or present mitigating or exculpatory evidence.[113] After a new state court sentencing hearing in February 2001, Moore was sentenced to death again.

Because Moore v. Texas came out of the CCA in Texas, it evaluated Moore’s intellectual functioning pursuant to the Briseno factors. The CCA found Moore failed to meet the Briseno factors and again imposed a death sentence.[114] In doing so, the CCA reversed a lower court ruling that followed the scientific diagnostic criteria set by medical professionals, which had found that Moore did have an intellectual disability.[115] Texas is the only state that followed the Briseno factors, allowing the CCA the flexibility to interpret the three prongs in whichever way it felt the majority of Texas citizens would. Thus, the CCA side-stepped Atkins and deemed Moore not intellectually disabled enough under Briseno. This decision was made in the face of showing a history of intellectual disability that had been documented throughout Moore’s childhood. This included testimony from a clinical neuropsychologist that Moore’s “‘mental age’ at the time of the offense was no greater than fourteen years” and he had a “lack of impulse control and a diminished ability to think through the consequences of his actions.”[116] Since Moore had the same cognitive functioning of a fourteen-year-old, he had the same “diminished capacity”[117] to make decisions that makes juveniles less culpable than adults. The Supreme Court has held juveniles less culpable than adults for several reasons, including a susceptibility to peer pressures and influence by others.[118]

Demonstrating his intellectual limitations, testimony at a 2014 evidentiary hearing revealed that “when [Moore] was in second and third grade, he could not tell a $1 bill from a $5 or $10 bill.”[119] Further, Moore’s siblings testified about the “neglectful, physically and verbally abusive alcoholic” father they had.[120] According to their testimony, Moore received the harshest beatings and was thrown out of the house at age fourteen because he could not spell and his father “thought he was stupid.”[121] This testimony was corroborated by a neighbor who could attest to witnessing the beatings as well as Moore’s “haggard” and bruised appearance.[122] Experts acknowledged that emotional disturbances and environmental conditions like that of Moore’s upbringing can adversely impact an individual’s learning ability and IQ scores.[123]

Resulting from his childhood hardships at home, Moore “dropped out of school around age fifteen or sixteen” and “started living ‘a street life.’”[124] Part of this new life included “smoking marijuana and taking 7 to 14 Quaalude pills per day.”[125] Moore led a troubled life as a teenager, part of which stemed from his intellectual challenges. He stated that due to “his inability to read or write,” he skipped school starting as early as fourth grade [126] After reviewing Moore’s entire record, Dr. Borda, the clinical neuropsychologist who originally reviewed his case, stated in a 2013 affidavit that Moore “met the criteria for a[n] intellectual-disability diagnosis.”[127]

The CCA in Ex parte Moore began its analysis first by evaluating Moore’s “significantly sub-average” intellectual functioning, as laid about by Atkins, but added that this is “generally shown by an IQ of 70 or less.”[128] As mentioned previously, IQ scores can vary significantly over the years, but they can also vary given the type of test administered. These cases can become particularly confusing for both judges and the public alike, given that there are so many different clinical and technical ways to determine IQ. Moore had taken several IQ tests, varying in form, and the scores before the court in its deliberation were: seventy-seven on the OLMAT at age twelve, fifty-seven on the Slosson at age thirteen, seventy-eight on the WISC at age thirteen, seventy-one on an abbreviated WAIS-R at age thirty, seventy-four on a complete WAIS-R at age thirty, eighty-five on the RCPM at age fifty-four, and fifty-nine on the WAIS-IV at age fifty-four .[129] Dr. Borda identified the score of fifty-seven as the “first and most accurate assessment” and discounted the score of seventy-eight on the WISC because it “should be adjusted to 70 for the Flynn Effect.”[130] The Flynn Effect is a phenomenon in which IQ of the general population is estimated to increase at a rate of three points per year, so IQ tests must be renormed.[131] Dr. Borda provided opinions as to each score and why it was not reliable and asserted that Moore was “‘very limited’ to begin with,” so being in harsh environmental conditions likely adversely affected Moore’s learning ability and IQ scores.[132]

The CCA next found that “[e]ven if [Moore] had proven that he suffers from significantly sub-average general intellectual functioning,” he still could not win an Atkins claim because he did not prove the second prong, limitations on adaptive functioning by a preponderance of the evidence.[133] The state pointed to Moore’s job mowing grass and “hustling pool” as evidence of money skills, knowledge, and “self-direction” to obtain a job, however expert Greenspan did not find any of those as “adaptive” behavior.[134] Moore’s school records reflect poor grades, below-grade-level scores on academic achievement tests, and as early as kindergarten, he was considered potentially intellectually disabled.[135] The court found a “far more credible” forensic psychologist, Compton, who testified that Moore did exhibit some deficits in academic and social-interaction skills during his developmental period, but was at too high a level of adaptive functioning to support an intellectual disability diagnosis.[136] Compton further pointed to the advances Moore made while on death row as evidence that his early life problems were not caused by a disability, but derived from his difficult childhood.[137] Considering the Briseno factors, the court ultimately found that there was not enough evidence of adaptive behavior deficits due to Moore’s ability to lie, and his “forethought, planning, and moderately complex execution of purpose.”[138]

The American Civil Liberties Union (“ACLU”) argued in its amicus brief in support of the petitioner in Moore that given current clinical standards, the Briseno factors cannot stand. In its brief, the ACLU argued that the Briseno factors are based on a stereotyped view of intellectual disability derived from the character of Lennie in John Steinbeck’s Of Mice and Men, and that in practice, it subjects defendants with mild intellectual disability to the death penalty, thus violating the Constitution’s ban on cruel and unusual punishment.[139]

The Texas court’s “flawed interpretation” of Atkins allows the execution of those who fall in the mild intellectual disability range with significant deficits in adaptive behavior, but whose IQ scores are above the threshold of seventy for exemption.[140] The Briseno court mistakenly turned to the character Lennie, largely representative of a stereotype, for guidance in creating its factors and thus relied closely on a fictional character rather than clinical findings.[141] The ACLU points out how dangerous Briseno’s holding is because it allows the state to execute individuals with mild intellectual disability, even under Atkins, and the “overwhelming majority” of intellectually disabled persons “fall in the mild range.”[142] Even more shocking is that the individuals who fall in the more severe disability range, “rarely, if ever, have the capacity to commit capital crimes.”[143] In Atkins, the defendant-petitioner on death row was “mildly mentally retarded.”[144] For these reasons, the brief persuasively calls into question both Briseno’s reasoning and conclusion. Although Atkins left to the states how to implement the decision, that does not allow the states to make their own determination as to what the Eighth Amendment encompasses and certainly does not allow for concluding a person is not disabled enough on the basis of stereotypical ideas. Hall made clear that the inquiry should be informed by the medical community’s framework and clinical standards. The medical community and clinical authorities agree that “an individual with an IQ score above 70 may properly be diagnosed with intellectual disability if significant limitations in adaptive functioning also exist.”[145]

In oral argument on November 29, 2016, counsel for Petitioner Moore argued that Hall prohibits lower courts from ignoring current medical standards, like the court in Briseno did.[146] Texas, on the other hand, argued the Court’s long-standing view is that there is subjectivity in the medical diagnosis, and the habeas judge erred by employing the current standard rather than following the Briseno factors.[147]

Petitioner Moore’s counsel further argued that even if the Briseno factors are an acceptable framework, the CCA erroneously applied them in two ways. First, the court did not factor in the standard error of measurement in IQ tests. When it accepted Moore’s score of seventy-four as valid, the CCA treated it as a decisive number rather than applying the standard error of five points, which would bring his score down to sixty-nine and within the range for an intellectual disability.[148]

Second, Moore’s counsel argued that the CCA erroneously applied the adaptive-function prong. They pointed out that it is undisputed in the record that Moore exhibited signs of his disability that would support this prong; at age thirteen he could not understand the days of the week, months, seasons, how to tell time, and even lacked basic math skills such as subtraction, addition, and units of measurement.[149] Texas emphasized how the CCA believed Moore’s “strengths” outweighed his deficits, highlighting his ability to mow grass and play pool for money.[150] Again, Texas’ conclusion is contradicted by clinical standards which state that “adaptive skill limitations often coexist with strengths.”[151] This argument speaks to the misunderstanding and stereotype that individuals who are not of the “severely mentally retarded” category are not intellectually disabled. Texas grasped for evidence that Moore could function normally in everyday life, when in reality many individuals who fall in the “mildly mentally retarded” category hold jobs and appear to function normally in certain aspects of their lives.

Texas also defended the CCA’s decision by questioning how Moore became disabled. It pointed to poor nutrition, poverty, his history of poor academic performance, and depression while on death row to ultimately argue that these are not attributable to intellectual functioning, but rather are evidence of lack of a good home environment.[152] This argument is directly contradicted by current medical standards which state that intellectual disability can be derived from multiple causations. For instance, the AAMR advocates that etiology has a role in the diagnosis. The etiology approach is a multifactorial construct consisting of four categories: biomedical, social, behavioral, and educational.[153] The AAMR cites as “risk factors” for a disability, the exact reasons Texas argued are not evidence of an intellectual disability; these include malnutrition, family poverty, child abuse and neglect, and institutionalization among others.[154]

In oral argument, counsel for Texas argued that because the DSM-5 states there is an “imperfect fit” between the two concepts of subaverage intellectual functioning and adaptive behavior, states do not have to “adopt the positions of current medical organizations.”[155] This argument supports adhering to the Briseno factors instead to help clarify the prongs set out by the DSM-5. However, the danger of adhering to the Briseno factors is that they are based on a “consensus of Texas citizens,”[156] and thus based on the layperson’s stereotyped view of intellectual disability. Arguing that the Briseno factors trump clinical consensus violates Atkins. The entire basis for the Atkins decision was a shifting national consensus, based on clinical findings and the medical community because “[t]he [state] statutory definitions of mental retardation are not identical, but generally conform to the clinical definitions.”[157] If the three prongs are based entirely on clinical definitions, how then can a court conclude that they are free to ignore clinical consensus on how to apply those prongs? The Supreme Court’s decision in Atkins suggests an intent to follow the evolving standards of the medical community, and nowhere does the Court condone following the lay persons’ view, which has no basis in comparison to a professional clinical judgment.

Bobby James Moore ultimately prevailed, with Justice Ginsburg writing the 5-3 decision vacating the CCA’s judgment on March 28, 2017.[158] The majority opinion emphasized that although the states are tasked with deciding how to enforce Atkins, their discretion is not “unfettered” and the decision must be “informed by the medical community’s diagnostic framework.”[159] First, in considering IQ score, the Court held CCA’s conclusion—that Moore’s IQ scores establish he is not intellectually disabled—is “irreconcilable with Hall,” which mandates that when an IQ score is close to and above seventy, “courts must account for the test’s standard error of measurement.”[160] The standard error of measurement (“SEM”) is particularly important because it “reflects the reality that an individual’s intellectual functioning cannot be reduced to a single numerical score.”[161] Accounting for the SEM, Moore’s score of seventy-four actually yields a range of sixty-nine to seventy-nine, because it can be plus or minus five points either way.[162] Justice Ginsburg’s opinion emphasizes the importance that “the Eighth Amendment [does not turn] on the slightest numerical difference in IQ score”[163] and reinforces the importance of considering adaptive behavior deficits, not strengths, when the IQ is around this range. The CCA erred by “overemphasiz[ing] Moore’s perceived adaptive strengths” such his lawn mowing and time living on the streets.[164] The medical consensus is to focus on deficits, not strengths.[165]

Chief Justice Roberts, writing for the dissent, agrees with the majority that the Briseno factors are an “unacceptable method,” but dissents because he believes “clinicians, not judges, should determine clinical standards; and judges, not clinicians, should determine the content of the Eighth Amendment.”[166] In the dissent’s view, it is the evolving standards of decency that matters for Eighth Amendment, not a medical assessment.

Despite Chief Justice Roberts best efforts, Moore held that courts must follow the medical community consensus in determining intellectual disability—SEMs must be considered, and adaptive strengths cannot be overemphasized. However, Part III will argue that without the retroactive effect of Moore or Hall and without a ban on IQ cutoffs, this decision may not fully protect future intellectually–disabled defendants or reach those currently sitting on death row.

III. ARGUMENT

Bobby James Moore received his justice in Moore v. Texas, but where does that leave the remaining intellectually–disabled persons sitting on death row? Will future intellectually–disabled criminal defendants be given the same treatment without a bright-line rule from the Court on IQ cutoffs? Although Moore represents a triumphant moment in the judicial system’s effort to understand mental deficiencies, these two major questions remain given the majority in Moore again left the states some discretion in determining when a defendant is intellectually disabled enough to qualify for the Atkins exemption. This Note will explore (1) whether Moore and Hall can be given retroactive effect, (2) whether a ban on harsh IQ cutoffs is possible to protect current and future intellectually disabled claimants, and (3) how evidence of mental illness must be more seriously considered along with intellectual disability for death penalty exemption.

A. Retroactivity

States have always resisted complying with Supreme Court ruling they dislike, often finding ways to limit the decisions’ impact. One way lower courts can side-step a Supreme Court decision is to argue that the decision does not apply retroactively. Post-Moore, lower courts have begun pointing to retroactivity as a reason to continue to deny Atkins claims. For example, only a few months after Moore was decided, a federal court in Alabama held Moore is not retroactive, but rather is a mere, new application of Hall.[167] There, petitioner Smith argued that the Alabama court unreasonably applied federal law by failing to apply the SEM adjustment to his IQ score.[168] The Alabama court reasoned that because Moore had not been decided when the Alabama Court of Criminal Appeals entered its decision, there was no error in failing to consider the SEM when examining Smith’s IQ scores.[169] Without applying the SEM, if an IQ score does not go below seventy, the Alabama court can consider a claimant’s adaptive strengths more convincing than the deficits. Alabama viewed Moore as simply cautioning against over-emphasis of adaptive strengths, and with neither Moore or Hall being retroactive,[170] the court dismissed petitioner’s claim despite evidence that his IQ scores ranged from as low as sixty-four to seventy-five.[171] Petitioner Smith filed an appeal in the U.S. Court of Appeals for the Eleventh Circuit on November 9, 2017 and is currently awaiting review. The Supreme Court in Moore and its line of precedents aim to uphold and protect the Eighth Amendment right against cruel and unusual punishment. Yet despite holding in Moore that the SEM and adaptive deficits must be considered, individuals are being denied that right because they happen to appear before a court that does not agree with the Supreme Court. The Eighth Amendment applies to all, and when states to continue to uphold harsh IQ cutoffs of seventy, it goes against the premise that the Court is the “supreme law of the land.” One solution, if possible, is for the Supreme Court to give retroactive effect to Hall and Moore.

The framework for retroactivity in cases on federal collateral review was established in 1989 in Teague v. Lane.[172] As a general matter, “a new constitutional rule of criminal procedure does not apply . . . to convictions that were final when the new rule was announced.”[173] Teague recognizes two categories of rules that are not subject to this bar: new substantive rules of constitutional law and new “watershed rules of criminal procedure.”[174] Substantive rules include those “forbidding criminal punishment of certain primary conduct” and those “prohibiting a certain category of punishment for a class of defendants because of their status or offense.”[175] This Note seeks to determine whether Moore and Hall are new substantive rules qualifying as an exception to Teague.

The Supreme Court has done this before. In 2011, the Court held in Miller v. Alabama that mandatory life without the possibility of parole for juvenile homicide offenders violates the Eighth Amendment, and such a sentence is disproportionate for all but the “rare juvenile offender whose crime reflects irreparable corruption.”[176] In the wake of Miller, it was unclear whether its holding could be applied retroactively to juvenile offenders whose convictions were final when Miller was decided. In 2016, the Court came back to the issue in Montgomery v. Louisiana to clarify that Miller is retroactive because the Constitution requires state collateral review courts to give retroactive effect when a new substantive rule of constitutional law controls the outcome of a case.[177] Because Miller concluded a “sentence of life without parole is disproportionate for the vast majority of juvenile offenders,” not giving it retroactivity raised a “grave risk that many are being held in violation of the Constitution.”[178] In comparison, the vast majority of intellectual disabled persons fall on the “mild” range (IQ 50–55 to 70–75). Applying the SEM to the 70–75 range could protect individuals whose range goes as high as eighty in one direction, and as low as sixty-five in the other. Like the juveniles Montgomery sought to protect, mildly intellectually disabled persons with IQ scores of 70–75 are being denied rights under Atkins, Hall, and Moore in states that cut off protection at seventy, leaving them at a “grave risk” of being detained in violation of the Constitution. Montgomery clarified that when a State enforces a penalty barred by the Constitution, the sentence is unlawful.[179] Here, if states like Alabama are continuing to enforce statutes with IQ cutoffs set at seventy, they are enforcing penalties barred by the Constitution given the Court’s holding in Hall that it violates the Eighth Amendment not to consider adaptive behavior when defendants are in the range “close to, but above, 70.”[180] Like how Miller’s rule controls the outcome of juvenile life without parole cases, Hall and Moore now control the outcome of Atkins claims with new guidance on how to determine intellectual disability.

The Kentucky Supreme Court agrees and in 2016 held that Hall should be applied retroactively because “[i]t is ‘a substantive restriction on the State’s power to take the life’ of individuals suffering from intellectual disabilities.”[181] The Kentucky Supreme Court reasoned that Hall is a “directive that not only proscribes intellectually disabled people from being put to death, but defines the manner in which the mental deficiencies of offenders must be evaluated.”[182] Kentucky’s emphasis that following Hall, there is a new method to evaluate intellectually disabled defendants fits within Montgomery’s holding that a new substantive rule exists when it controls the outcome of a case. Hall rejected the bright-line cutoff of seventy because it “create[d] an unacceptable risk that persons with intellectual disability will be executed” and was an unconstitutional violation of the Eight Amendment.[183] Hall’s requirement to consider the SEM and its rejection of an IQ cutoff would change the outcome of many cases where a defendant with IQ scores between seventy and seventy-five brings an Atkins claim in a state like Alabama that employs a harsh cutoff of seventy.

If a petitioner with scores ranging from sixty-four to seventy-five brings a claim in Florida, under Hall courts would be required to consider adaptive deficits. If a petitioner with the same scores brings this claim in Alabama, under its current law the claim likely would be denied in part because Hall and Moore are not retroactive. Inconsistency as such among the states results in similarly situated persons receiving vastly different treatment. The decision between life and death for an individual with an intellectual disability should not hinge on whether they are in a state that follows the clinical approach of following the SEM or not.

The argument against retroactivity should not be overlooked. There is a persuasive point that Hall and Moore cannot be applied retroactively because they announce procedural rules rather than substantive rules. In Montgomery, Louisiana noted that Miller did not categorically bar a penalty for a class of offenders or type of crime, but only mandated a process to follow by creating a set of factors courts must consider when sentencing juveniles to life without parole. Although it was a losing argument for Louisiana, here lower courts might argue that Atkins barred a penalty for the class of intellectually disabled persons constituting a substantive rule, but Hall and Moore do not bar a penalty for a class, but provide guidance to courts on how to make the intellectual disability finding, and thus mandate a process as a procedural rule. It could be argued that Hall and Moore did not place any punishment beyond the State’s power to impose—and this power rests solely with the states. This argument brings the question of whether defendants who are “close to, but above 70” can be considered a “class of defendants.” Nowhere in Hall did the Court say how far above seventy this class could include. The Court applied the SEM to Bobby James Moore’s IQ of seventy-four, so is that where it stops? Applying the SEM, the majority explained it can go five points in either direction, rendering Moore with a range of 69–79. If this means someone with a score of seventy-nine could still be considered intellectually disabled, perhaps the solution is to consider defendants who fall between seventy and seventy-nine a class of persons in need of protection from an unconstitutional death sentence.

The argument against retroactivity also stresses that retroactivity may lead to an increase in frivolous intellectual disability claims. Atkins recognized that “[n]ot all people who claim to be mentally retarded will be so impaired as to fall within the range of mentally retarded offenders,” so the question about which group of intellectually disabled individuals there exists a national consensus prohibiting execution is a valid concern.[184] The worry is that courts will receive an influx of frivolous or dishonest habeas petitions alleging intellectual disability. Frivolous litigation, however, is not likely a threat. A recent study found that from the time of Atkins in 2002, through the end of 2013, only 371 death row inmates or capital defendants claimed intellectual disability.[185] This study calculated the filing rate of these 371 persons to be “only approximately 7.7% of persons whose lives could potentially be spared by a determination of intellectual disability”—a fairly consistent number over the ten years since Atkins.[186] The empirical evidence from this study “also refutes any concern that significant numbers of frivolous claims would be filed.”[187] Given that Atkins did not generate much frivolous litigation, it follows that if retroactive, Hall and Moore would continue the trend of allowing justice for the true claims of those intellectually disabled still on death row, without generating many frivolous claims.

Moore may not need to be applied retroactively if is viewed as simply dealing with the narrow circumstance of Texas’s reliance on nonclinical factors. Yet how many cases in the above study were denied because courts relied too heavily on adaptive strengths rather than deficits like Moore now demands? There is arguably a subset of cases, which were denied pre-Moore and could now be granted post-Moore, that will not see justice because courts are not treating Moore as retroactive. Through 2013, the study found that 31% of all unsuccessful cases were denied for failure on prong one, significantly subaverage intellectual functioning, and 12% were unsuccessful for lack of adaptive deficits.[188] Of those who lost on prong one, 71% had an average IQ score over seventy-five, while the successful cases had an average score of sixty-eight.[189] However, of the successful cases finding intellectual disability, “46% of the [claimants] had at least one IQ score over seventy-five, and 20% [had] one or more IQ scores over 80.”[190] It is important to note that these cases were decided before Moore held that the SEM must be applied to the overall scores. Of the 71% with an average over 75, it is possible there are cases with scores between seventy-six and seventy-nine, a range that when the SEM is applied, falls within the same range that Hall and Moore protect.

Many intellectually disabled defendants, like in Moore, have a range of IQ scores over time, but demonstrate adaptive deficits that must be considered and not ignored merely because some of the scores are above seventy. Bobby James Moore had an average IQ of seventy-four, but the Court refrained from setting a bright–line rule for IQ scores. On one hand, it could be argued that courts have been generally doing it right, and there is no need for Moore to apply retroactively because the majority of denied cases were above seventy-four. On the other hand, there is still the 29% who had IQ scores below seventy-five, and it is possible that several of those cases were close calls involving evidence of adaptive deficits not properly considered. If states like Alabama continue to render decisions that fly in the face of Hall and Moore, the goals the two cases aimed to accomplish will be continuously undermined.

Finding intellectual disability is not a black–and–white issue. With Moore requiring application of the SEM and Hall rejecting a harsh IQ cutoff of seventy, it is evident that Atkins claims require case-by-case analysis and that this is not too much to ask considering the relatively low number of claims being brought. The response to this complex analysis is to not continue allowing states to implement harsh IQ cutoffs of seventy. The variety of IQ scores, adaptive deficits, childhood trauma, and mental illnesses from which defendants suffer cannot be boxed into one number. For these reasons, IQ cutoffs, like in Hall, should be banned nationwide by giving Hall and Moore retroactive effect.

B. Current States with IQ Cutoffs

Texas provided one example of how states made it more challenging for claimants to prevail on an Atkins claim with its nonclinical Briseno factors, but state statutes with IQ cutoffs persist post-Moore. Side-stepping Moore by treating it as not retroactive, states with IQ cutoffs are free to ignore the SEM, adaptive deficits, and claims of those who do not have overall IQ scores below seventy. Although Moore applied the SEM to Moore’s score of seventy-four, yielding a sufficient range of sixty-nine to seventy-nine, the Court refrained from making a categorical holding as to constitutionality of IQ cutoffs. The Court left it open to the states to decide what a sufficient IQ score is. The opinion makes clear that the SEM should be considered plus and minus five points in both directions, but does not explain whether it should be applied to all IQ scores in a claimant’s life. This leaves the question on where to draw the line with IQ scores. Although Hall held that the cutoff of seventy was unacceptable in Florida, the Court did not make the decision retroactive, as discussed in Section III.A. As a result, states still enforce statutes with unconstitutional IQ cutoffs—even after Moore.

Several states have already taken the general position that “[w]hile IQ tests are one of the many factors that need to be considered, they alone are not sufficient to make a final determination on this issue.”[191] Currently, eleven states have statutes with IQ cutoffs in their definition of intellectual disability: Arizona, Arkansas, Kentucky, New Mexico, Nebraska, North Carolina, South Dakota, Tennessee, Washington, Idaho, and Oklahoma.[192] Of those eleven, all set the significantly subaverage functioning level at an IQ of seventy and below aside from Arkansas, which states that there is a “rebuttable presumption of mental retardation when a defendant has an intelligence quotient of sixty-five (65) or below.”[193] The Ohio Supreme Court held “that there is a rebuttable presumption that a defendant is not mentally retarded if his or her IQ is above 70.”[194]

Although state statutes and procedures post-Atkins differ, if a significant number of states come to a consensus that an IQ cutoff is not sufficient by itself, it could prove to be as influential as the “national consensus” was in Atkins’s overturning Penry. Of the eleven states with IQ cutoffs, several courts have started departing from their bright–line rules. Arizona’s statute was directly called into question by Hall, which explained that although it has the bright–line set at seventy, another provision of the statute “instructs courts to ‘take into account the margin of error for a test administered.’”[195] Hall cited what it called the “principal Arizona case on the matter” where a defendant had an IQ score of eighty, and “all but one of the sub-parts of the IQ test were ‘above 75.’”[196]

In a case remanded from the Eighth Circuit, a United States District Court in Arkansas on March 2, 2018, performed a thorough analysis to determine the intellectual disability of a defendant claiming an Atkins exemption because a diagnosis “cannot be justified solely on the basis of a fixed score.”[197] The court applied both the Flynn Effect and the SEM and considered all evidence of petitioner’s childhood, education, employment, financial abilities, and personal relationships.[198] Although the court ultimately did not find a “significant subaverage general intelligence” and upheld the 1993 Arkansas statute,[199] its analysis demonstrates a promising acceptance of Moore. Alternatively, the Supreme Court of Tennessee, before Moore was decided, held in 2011 that determining a defendant’s functional intelligence is “not limited to raw scores.”[200] The court required expert testimony to assist the determination and a “full and fair consideration” to all evidence, including the results of all IQ tests administered to a defendant.[201] To help inform its decision, the Tennessee Supreme Court reviewed all cases involving the relevant statute and found that neither litigants nor Tennessee courts in general have been limiting their consideration to raw IQ test scores, and there are even cases in which the State has argued and presented evidence challenging the accuracy of scores.[202]

An IQ score must not be the only factor considered and cannot be the only deciding factor for whether an individual qualifies for exemption under Atkins. “Because intelligence tests are indirect rather than direct measures of intelligence, experts in the field recognize that they, like other measures of human functioning, are not ‘actuarial determination[s],’ that these tests cannot measure intelligence with absolute precision and that these tests contain a potential for error.”[203] Indeed, as experts have recognized, it is dangerous to rely solely on IQ tests for proof of intellectual disability. Commonly used tests “in the public domain . . . are administered in a group setting with poor or non-existent test control,” and the test itself can be “sketchy” or “based on obsolete norms.”[204] The DSM-5 stresses that “clinical judgment is [required] in interpreting the results.”[205] Since 1959, clinicians have considered a person’s adaptive behavior in addition to IQ scores due to a decreasing confidence in the scores as the sole measure.[206] This suggests that in death penalty cases involving Atkins claims, courts should evaluate adaptive behavior on a case–by–case basis, rather than implement a categorical ban like the one states are trying to impose on defendants with IQs above seventy.

In the year since Moore was decided, the Supreme Court has remanded several cases for additional consideration in light of Moore.[207] If this is to be a continuing trend, for pure judicial economy reasons it would make sense to have Hall and Moore apply retroactively. In October 2017, the United States Supreme Court ordered the Florida Supreme Court to reconsider, in light of Moore, a decision denying death-row inmate Tavares Wright’s intellectual disability claim.[208] All of Wright’s nine IQ tests yielded scores of seventy-five or above [209] and the Supreme Court of Florida listed several adaptive strengths such as Wright’s job as a grocery clerk, job in prison, ability to write cards, cleanliness, and understanding of social interactions [210]—yet the Supreme Court found this was insufficient under Moore. This was the “sixth time the Court has vacated a state or federal court’s rejection of an intellectual-disability claim” and remanded for reconsideration under Moore.[211]

The Supreme Court also vacated a decision of the Alabama Court of Criminal Appeals (“CCA”) in May 2017 for Taurus Carroll because Alabama had overemphasized Carroll’s “adaptive strengths—that he had passed a GED exam . . . and . . . held . . . a job in the prison kitchen.”[212] On remand, the court reconsidered evidence that Carroll was in special education as a child, twice failed first and eighth grade, had an absent father, and experienced physical and sexual abuse as young as age seven.[213] However, the Alabama CCA again denied Carroll’s claim of intellectual disability, citing evidence that he had a good memory, knew dates and times of day, and had adequate school records, despite an IQ score of seventy-one that would adjust to sixty-six to seventy-six with the SEM.[214] Despite succeeding on prong one, Carroll lost his claim on prong two’s adaptive functioning requirement. The Alabama CCA pointed to the fact that in high school, Carroll was given the Wechsler Intelligence Scale for Children twice and received scores of eighty-five and eighty-seven.[215]

A recent report from 2017 revealed that almost all twenty-six men scheduled for execution in Ohio over the next three years suffer from mental, emotional, or cognitive impairments or limitations; “at least 11 have evidence of intellectual disability, borderline intellectual disability, or a cognitive impairment, including brain injury.”[216] Stanley Fitzpatrick, sentenced to death for murder committed at nineteen, not only suffered from hallucinations that the devil appeared to him and he “saw demons,” but he also had a “devastatingly low [IQ of] 69.”[217] Fitzpatrick’s death sentence was affirmed by the Ohio State Supreme Court in 2004, but his defense lawyers never introduced his low IQ during the penalty phase, and neither did they pursue evaluations to argue that he qualified as intellectually disabled.[218] James Frazier failed first grade, was a “slow learner,” attended “special classes,” dropped out of high school, and has an IQ of seventy-two.[219] Frazier was brought up in a household with a weekly wage of $64, with no supervision, and he was sexually abused as a child. Frazier’s Atkins claim was denied by the Supreme Court of Ohio in 2007.[220] James Derrick O’Neal had a reported IQ score of sixty-four at age fourteen, with three other scores of sixty-three, sixty-seven, and seventy-one.[221] O’Neal’s death sentence was affirmed by the Supreme Court of Ohio in 2000, two years before Atkins was decided, and he currently sits on death row. David Sneed suffers from both mental illness and impaired intellectual functioning, about which two psychiatrists testified at the penalty phase “combined to prevent him from appreciating the criminality of his actions.”[222] Sneed’s conviction was affirmed by the Supreme Court of Ohio in 1992, and he currently sits on death row. Lastly, Angelo Fears, with an IQ of seventy-five, family history of mental illness, and traumatic childhood of beatings, sits on death row following an affirmation of his sentence by the Ohio Supreme Court in 2008.[223]

These cases represent complex issues—the presence of mental illness, childhood trauma, and drug use, along with evidence of intellectual disability—but all together they show that the process of finding an Atkins exemption cannot be merely a numbers game. Based on the cases above, Ohio does not give proper consideration, as required by Moore, to other factors when IQ scores are above seventy. It is wholly inconsistent with Moore to count evidence of mental illness or trauma against a finding of intellectual disability. In Moore, the majority found that the CCA had erred in failing to appreciate his childhood trauma and requiring a showing that Moore’s adaptive deficits were not related to a “personality disorder.”[224] It is now recognized that “many intellectually disabled people also have other mental or physical impairments” such as depression, bipolar disorder, and autism.[225]

Neither the AAMR nor the DSM diagnostic criteria intend that a fixed IQ cutoff be used to diagnose intellectual disabilities, given the known measurement of errors. Hall and Moore make clear that when an individual is “close to, but above, 70, courts must account for the test’s standard error of measurement.”[226] The difficulty lies with how far from seventy scores can deviate or how many can be over seventy when there are multiple IQ scores over the developmental period, but a bright-line rule is not the answer.

C. A Shifting National Consensus Against the Death Penalty

The issue of how to determine intellectual disability for the purposes of Atkins rests on the fundamental idea that those individuals are less culpable due to their diminished capacity.[227] Culpability is at the center of the analysis for death penalty purposes, so it is necessary to take a step back and look at the arguments in favor and against the death penalty in general, without narrowing it to the intellectually disabled. The Supreme Court has expressed a trend away from imposing the death penalty, and today “academic defenders of the death penalty are few and far between.”[228] Simply put, the death penalty is “almost universally agreed . . . at worst barbaric and at best a waste of money.”[229]

The few academic defenders of the death penalty take the position that the death penalty, in certain cases, can be “morally required . . . to prevent the taking of innocent lives.”[230] This argument assumes the death penalty has a deterrent effect. A study in 2003 found that “each execution prevents some eighteen murders, on average,” which supports defenders of the death penalty and the theory of deterrence.[231] As discussed in Part II, deterrence is not necessarily at play when criminal defendants are intellectually disabled, and in the last decade, opinions have changed and new studies have come out. In fact, a 2012 report by the National Research Council found that studies claiming the death penalty has a deterrent effect on murder rates have “fundamental flaws” and should not be relied on for policy decisions.[232]

Further, simply because the death penalty fits a theory of punishment does not mean it can be justified all things considered. For instance, torture could potentially “fulfill the purposes of punishment,” but as many Americans agree, it “might not be permissible on other moral [or] legal grounds.”[233] While the death penalty may fit a theory of punishment in general terms, here, in the case of intellectually disabled persons, it does not because of their inability to consider the risks and consequences of their actions, resulting in their overall diminished culpability. To otherwise justify the death penalty for intellectually disabled defendants is to move outside the theories of punishment, against Atkins’ position that “[u]nless the imposition of the death penalty on a mentally retarded person ‘measurably contributes to one or both of these goals, it is nothing more than the purposeless and needless imposition of pain and suffering, and hence an unconstitutional punishment.’”[234] By failing to consider adaptive behavior in determining exemption under Atkins, states are failing to uphold Atkins by allowing individuals like Stanley Fitzpatrick, James Frazier, and the others on Ohio’s death row to be subjected to needless pain and suffering.

Because the death penalty does not contribute to the goals of deterrence or retribution as applied to intellectually disabled, it must go beyond these theories as the Court did in Atkins by considering the national consensus. States are trending away from executing criminal defendants and are abolishing capital punishment altogether. The numbers are striking. In 2012, forty-three executions took place, thirty-nine in 2013, thirty-five in 2014, and twenty-eight in 2015.[235] Only twenty individuals were executed in 2016.[236] Further, the number of death sentences per year has also dropped dramatically from 279 in 1999, to only thirty-one in 2016.[237] These statistics encompass all criminal defendants and could include murderers and rapists with IQs well over seventy and the ability to fully understand the consequences of their actions, yet states are trending against sentencing those individuals to death. If states are shifting that way, they certainly should agree that defendants with even lesser culpability should not be executed either.

D. Expanding the Exemption

With a constitutional ban on executing intellectually disabled persons, it follows that there should be a serious conversation regarding the execution of mentally ill defendants to find an avenue for exemption other than the rarely used insanity defense.

Following the Court’s decision in Atkins, the American Bar Association (“ABA”) has taken several steps towards enforcing and expanding its precedential value. The ABA established a Task Force on Mental Disability and the Death Penalty, which deliberated from 2003 to 2005.[238] The Task Force was comprised of roughly twenty-four lawyers and mental health practitioners, as well as members of the American Psychiatric Association and American Psychological Association. The Task Force successfully put together a proposal which became the ABA’s official recommendation on the death penalty exemption post–Atkins.[239] The ABA formally takes a position that goes beyond the scope of Atkins, calling for exemption from the death penalty of not only individuals with an intellectual disability, but also those with serious mental illnesses.[240] The ABA put forth this recommendation in its 2006 122A Recommendation, outlining two scenarios in which defendants should not be executed: those with “significant limitations in both intellectual functioning and adaptive skills,” and those with “severe mental disabilities.”[241] The language from the Recommendation is as follows:

1. Defendants should not be executed or sentenced to death if, at the time of the offense, they had significant limitations in both their intellectual functioning and adaptive behavior, as expressed in conceptual, social, and practical adaptive skills, resulting from mental retardation, dementia, or a traumatic brain injury;

2. Defendants should not be executed or sentenced to death if, at the time of the offense, they had a severe mental disorder or disability that significantly impaired their capacity (a) to appreciate the nature, consequences or wrongfulness of their conduct, (b) to exercise rational judgment in relation to conduct, or (c) to conform their conduct to the requirements of the law.[242]

The first paragraph is essentially the ABA’s definition of “mental retardation” as taken from the American Association of Mental Retardation, and is thus in line with Atkins except that it also encompasses dementia and traumatic brain injury. This highlights an important and often overlooked problem in the three-prong criteria set out for defining an intellectual disability: the requirement that the deficiencies manifest prior to eighteen does not consider later dementia or brain injury. For instance, what happens to a defendant who grew up at a normal level of intellectual functioning, but was in a car accident after turning eighteen in which they suffered traumatic brain injury rendering them unable to function at the same level? This recommendation would serve as an important step towards expanding protection to those rare individuals who suffer from late on-set deficiencies.

The second paragraph, strikingly, is an unprecedented call for exemption of defendants with severe mental disorders or disabilities. The ABA elaborates that this narrowly refers to only those with “severe” disorders, meaning those disorders that mental health professionals would consider to be on “Axis I diagnoses.”[243] Among these “include schizophrenia and other psychotic disorders, mania, major depressive disorder, and dissociative disorders,” all of which are associated with delusions, hallucinations, disorganized thinking, and disruption of consciousness, memory, and perception of the environment.[244] Although this is seemingly a shift towards a more inclusive mental health law system, the ABA was sure to impose limitations in its recommendation by requiring a “significant impairment” requirement for individuals with severe mental disorders or disabilities. This “requires that the disorder significantly impair cognitive or volitional functioning at the time of the offense.”[245]

The recommendation is in line with the goals of the criminal justice system. Defendants with established disorders that are considered “severe” enough to fall on the “Axis I diagnoses” certainly lack the ability to make rational decisions in comparison to the average offender without a mental disorder. In fact, the effect that a serious mental disorder has on a person’s culpability is essentially the same as the effect that being a juvenile or having an intellectual disability has on a person’s culpability. If the individual meets the “significant impairment” requirement discussed above, then the individual certainly lacked proper decision-making abilities at the time of their offense. Thus, like the Court reasoned in Roper and Atkins, punishing a person with lesser or low culpability due to a mental disorder does not properly serve the goals of deterrence since they lack the capacity to understand what they did or lacked the capacity to fully understand the consequences of their actions at the time of their offense.

Expanding the exemption to serious mental disorders is also important because the “scientific and clinical definitions emphasize that individuals with mental retardation often have mental disorders as well.”[246] This was an issue in Williams v. Quarterman, where an individual meeting the IQ cutoff of seventy faced a different problem: the Fifth Circuit interpreted evidence of his social and practical skill deficits as “bizarre and antisocial conduct,” demonstrating characteristics that are “just as easily seen as attention-getting behaviors as they are evidence of mental retardation.”[247] The Fifth Circuit found that these characteristics “could be explained by anti-social personality rather than mental retardation.”[248] This is clearly not in line with the rationale the Supreme Court has been implementing in its series of cases, from Roper to Moore, because someone exhibiting effects of both an intellectual disability and mental disorder absolutely lacks the mental culpability necessary to impose the death penalty. To discount an intellectual disability due to evidence of mental illness would be a grave practice threatening the constitutional rights and liberty of a class which has long suffered under perpetuated stereotypes of mental disability and illness.

CONCLUSION

The Supreme Court in Moore reinforced the long-standing theme that “[t]o enforce the Constitution’s protection of human dignity, we look to the evolving standards of decency that mark the progress of maturing society.”[249] Intellectual disability involves complex factors that cannot be reduced to a single IQ score. An evaluation of state statutes, current litigation, and the Supreme Court’s stance since Atkins reveals a trend away from bright-line IQ rules of seventy, and towards taking a holistic, case-by-case approach to Atkins’ claims. The individuals who need protection—whom Atkins seeks to protect—are the “mildly retarded” individuals who live successfully in the community, either independently or in supervised settings, and who have jobs, families, maintain a home, and even raise children. A mere number cannot define whether someone is intellectually disabled;[250] “[t]he term ‘intellectual disability’ does not refer to a single disorder or disease, but rather to a heterogeneous set of disabilities that affect the level of a person’s functioning in defined domains.”[251] These are people who engage in actions with lesser culpabilities than normal–level–functioning people, but who are not recognized as needing protection because of lasting stereotypes that intellectually disabled persons are only the severe, Lennie character types.

[*] *. Managing Editor, Southern California Law Review, Volume 91; J.D. 2018, University of Southern California Gould School of Law; B.A. Political Science 2015, University of San Diego. I would like to thank Professor Saks for her invaluable guidance and feedback on earlier drafts of this note. In addition, I would like to thank the staff and editors of the Southern California Law Review for their excellent work.

[1]. John Steinbeck, Of Mice and Men 263 (Penguin Books 1993) (1937).

[2]. Moore v. Texas, 137 S. Ct. 1039, 1044 (2017).

[3]. Id. at 1045.

[4]. Id.

[5]. Id. at 1047.

[6]. Id. at 1045.

[7]. See id. at 1044. See also Ex parte Briseno, 135 S.W.3d 1, 6 (Tex. Crim. App. 2004).

[8]. Moore, 137 S. Ct. at 1053.

[9]. Id. (citation omitted).

[10]. Atkins v. Virginia, 536 U.S. 304, 321 (2002).

[11]. Id. at 316-17 At the time the Supreme Court first heard cases on this issue, the terminology used was “mental retardation,” however today the DSM-5 has changed the term to “intellectual disability.” See Am. Psychiatric Ass’n, Diagnostic and Statistical Manual of Mental Disorders 33 (5th ed. 2013) [hereinafter DSM-5].

[12]. Atkins, 536 U.S. at 316–17.

[13]. Denis Keyes, William Edwards & Robert Perske, People with Mental Retardation Are Dying, Legally: At Least 44 Have Been Executed, 40 Mental Retardation 243 (2002).

[14]. Atkins, 536 U.S. at 316–17 (citation omitted).

[15]. States that Have Changed Their Statutes to Comply with the Supreme Court’s Decision in Atkins v. Virginia, Death Penalty Info. Ctr., (Mar. 2, 2018), https://deathpenaltyinfo.org/states-have-changed-their-statutes-comply-supreme-courts-decision-atkins-v-virginia.

[16]. Hall v. Florida, 134 S. Ct. 1986, 1995, 2001 (2014).

[17]. The CCA is Texas’s court of last resort in criminal cases. See Tex. Const. art. V, § 5.

[18]. See Ex parte Briseno, 135 S.W.3d 1, 5–6 (Tex. Crim. App. 2004).

[19]. See id.

[20]. U.S. Const. amend. VIII.

[21]. Penry v. Lynaugh, 492 U.S. 302, 330–31 (1989).

[22]. Id. at 331.

[23]. See Roper v. Simmons, 543 U.S. 551, 578 (2005).

[24]. See Ford v. Wainwright, 477 U.S. 399, 401 (1986).

[25]. See Atkins v. Virginia, 536 U.S. 304, 316–17 (2002).

[26]. Penry, 492 U.S. at 333–34.

[27]. Id.

[28]. Id.

[29]. See Atkins, 536 U.S. at 314–15. The seventeen states listed include: Kentucky and Tennessee in 1990; New Mexico in 1991; Arkansas, Colorado, Washington, Indiana, and Kansas in 1993 and 1994; New York in 1995, Nebraska in 1998; South Dakota, Arizona, Connecticut, Florida, Missouri, North Carolina, and Texas. When Atkins was decided, Texas had just passed a similar bill, and both Virginia and Nevada had similar bills passed in at least one house, but it was not yet law in these states. Id.

[30]. See id. at 315–16.

[31]. See id.

[32]. Id.

[33]. See id. (noting that New Hampshire and New Jersey were two states that continued to allow execution sentences, but had not actually carried one out in decades).

[34]. Id.

[35]. Id. at 318–20.

[36]. Id. at 319.

[37]. Id. (citation omitted).

[38]. Id. at 320.

[39]. Id.

[40]. Id.

[41]. See id. at 320–21.

[42]. Id. at 317.

[43]. Id. (citation omitted).

[44]. Id.

[45]. Examples of “deficits in intellectual functions” can be demonstrated by the level of an individual’s “reasoning, problem solving, planning, abstract thinking, judgment, academic learning, and learning from experience.” DSM-5, supra note 11, at 33.

[46]. Limitations in adaptive skills refer to “the inability to learn basic skills and adjust behavior to changing circumstances.” Hall v. Florida, 134 S. Ct. 1986, 1994 (2014).

[47]. Atkins, 536 U.S. at 318.

[48]. Am. Ass’n on Intellectual and Developmental Disabilities, Intellectual Disability: Definition, Classification, and Systems of Supports 41 (11th ed. 2010) [hereinafter AAIDD].

[49]. See Bryan Lester Dupler, Capital Cases Involving Mental Retardation, in 93 American Jurisprudence Trials 1, §§ 17–19 (Westlaw 2018) (2004).

[50]. DSM-5, supra note 11, at 37.

[51]. Dupler, supra note 49, § 11.

[52]. Id. § 12 (citation omitted) (Persons with mild retardation “‘typically develop social and communication skills during the preschool years . . . have minimal impairment in sensorimotor areas, and often are not distinguishable from children without mental retardation until a later age.’ They can acquire basic academic skills up to about the sixth grade level.”).

[53]. Id.

[54]. Id.

[55]. AAIDD, supra note 48, at 3, 11.

[56]. DSM-5, supra note 11, at 37.

[57]. AAIDD, supra note 48, at 44; DSM-5, supra note 11, at 37.

[58]. DSM-5, supra note 11, at 37.

[59]. Id.

[60]. Id.

[61]. Dupler, supra note 49, § 11.

[62]. Atkins v. Virginia, 536 U.S. 304, 318 (2002).

[63]. DSM-5, supra note 11, at 33.

[64]. See Hall v. Florida, 134 S. Ct. 1986, 1994 (2014); Moore v. Texas, 137 S. Ct. 1039, 1055–56 (2017).

[65]. Black v. Carpenter, 866 F.3d 734, 738 (6th Cir. 2017).

[66]. Id. at 748–49.

[67]. Ex parte Briseno, 135 S.W.3d 1, 1 (Tex. Crim. App. 2004).

[68]. At the time Briseno was decided in 2004, DSM-5 was not yet published and DSM-IV was the current edition.

[69]. Briseno, 135 S.W.3d at 6.

[70]. Id. at 5–6 (citation omitted).

[71]. Id. (citation omitted).

[72]. Id. (“‘Mental Retardation’ means significant subaverage general intellectual functioning that is concurrent with deficits in adaptive behavior and originates during the developmental period.”).

[73]. Id. at 6–7. Texas did however make another attempt with Tex. H.B. 614, 78th Leg., R.S. (2003), but its definition of “mental retardation” did not significantly differ from Tex. H.B. 236, 77th Leg., R.S. (2001), and “[n]either of [the] bills addressed the issue of determining mental retardation claims on a post-conviction habeas corpus writ brought by inmates sentenced to death before the Supreme Court decision in Atkins.” See id. at 7 n.22.

[74]. Id. at 7–8, 13.

[75]. Tex. Health & Safety Code Ann. § 591.003(7-a) (West 2015).

[76]. Briseno, 135 S.W.3d at 6.

[77]. Id. at 5 (quoting Atkins v. Virginia, 536 U.S. 304, 317 (2002)).

[78]. See id. at 6.

[79]. Id. at 8.

[80]. Id. at 8–9.

[81]. Id. at 14.

[82]. Id. at 15, 18.

[83]. Moore v. Texas, 137 S. Ct. 1039, 1059–60 (2017).

[84]. Brief for the American Civil Liberties Union & the ACLU of Texas as Amici Curiae Supporting Petitioner at 28, Moore v. Texas, 137 S. Ct. 1039 (2017) (No. 15-797) [hereinafter ACLU] (citation omitted).

[85]. Robin M. Maher, Moore v. Texas: The Supreme Court Limits State Discretion to Make the ‘Protection of Human Dignity’ a Reality for the Intellectually Disabled, Geo. Wash. L. Rev. On the Docket (Apr. 9, 2017), http://www.gwlr.org/moorevtexas.

[86]. Atkins v. Virginia, 536 U.S. 304, 311–12 (2002) (citation omitted).

[87]. Hall v. Florida, 134 S. Ct. 1986, 1990 (2014). The Court uses “intellectual disability” to mean the same as “mental retardation,” and noted that the change in terminology is used by professionals and approved by DSM-5. Id.

[88]. Id. at 1991.

[89]. Id. at 1994 (citation omitted).

[90]. See id. (“[The Florida Supreme Court] has held that a person whose test score is above 70, including a score within the margin for measurement error, does not have an intellectual disability and is barred from presenting other evidence that would show his faculties are limited.”).

[91]. Id. at 1990–92.

[92]. Id. at 1992.

[93]. Id.

[94]. Id. at 1994.

[95]. Id. at 1995.

[96]. Id.

[97]. Id. The SEM is considered “[o]ne of the most important concepts in measurement theory,” because “[a]n individual’s IQ test score on any given exam may fluctuate” for several reasons including: the person’s health, how many tests they have taken in the past and thus can remember how to do well on them, the environment they take the test in, the behavior of the examiner administering it, the “subjective judgment involved in scoring certain questions,” and even simple luck. Id.

[98]. Id.

[99]. Id. at 1996.

[100]. Id. (citations omitted). However, the Court notes that “Arizona, Delaware, Kansas, North Carolina, and Washington have statutes which could be interpreted to provide a bright-line cutoff leading to the same result that Florida mandates in its cases.” Id.

[101]. Id. at 1997.

[102]. Id.

[103]. See id. at 1998 (citation omitted) (“The rejection of the strict 70 cutoff in the vast majority of States and the ‘consistency in the trend,’ toward recognizing the SEM provide strong evidence of consensus that our society does not regard this strict cutoff as proper or humane.”).

[104]. Id. at 1994.

[105]. See id. at 1990–91 (discussing how Hall’s teachers described him as “mentally retarded,” his lawyer testified that he “[c]ouldn’t really understand anything [Hall] said” and compared him to his four-year-old daughter, and medical clinicians testified that he was “significantly retarded.”).

[106]. Id. at 1991.

[107]. Id.

[108]. Id.

[109]. Id. at 1990–91 (“This rigid rule, the Court now holds, creates an unacceptable risk that persons with intellectual disability will be executed, and thus is unconstitutional.”).

[110]. Case Files: Moore v. Texas, SCOTUSblog, http://www.scotusblog.com/case-files/cases
/moore-v-texas (last visited May 24, 2018).

[111]. Ex parte Moore, 470 S.W.3d 481, 490 (Tex. Crim. App. 2015), cert. granted in part sub nom Moore v. Texas, 136 S. Ct. 2407 (2016), vacated and remanded by 137 S. Ct. 1039 (2017).

[112]. Id. at 484.

[113]. Id.

[114]. See id. at 489.

[115]. Id. at 528.

[116]. Id. at 495, 506.

[117]. Id. at 542.

[118]. Miller v. Alabama, 567 U.S. 460, 476–78 (2012) (discussing the hallmark features of youth which include immaturity, impetuosity, failure to appreciate risks and consequences, and what the child’s family and home environment is like from which they cannot usually extricate themselves).

[119]. Moore, 470 S.W.3d at 509–10.

[120]. Id. at 495.

[121]. Id. at 496.

[122]. Id.

[123]. Id. at 515.

[124]. Id. at 506.

[125]. Id.

[126]. Id. at 507.

[127]. Id. at 511.

[128]. Id. at 486, 513.

[129]. Id. at 514.

[130]. Id.

[131]. See Dupler, supra note 49, § 18.

[132]. Moore, 470 S.W.3d at 515.

[133]. Id. at 520.

[134]. Id. at 520–21 (Greenspan also denied the following as evidence of adaptive skills: “(1) in preparation for his new punishment trial, consulting with counsel about whether to inform the jury that he had been on death row; (2) concealing a shotgun in a shopping bag when entering a store to rob it; (3) attempting to conceal his appearance during the offense by wearing a wig and sunglasses, and after the offense, changing his appearance by shaving his head; (4) arguing with accomplices over how to divide the proceeds of the crime; (5) deciding to stipulate that he had prior criminal convictions … (6) writing four letters to his appellate lawyer …[(7)] hustling pool; and [(8)] working as a barber and a porter in prison.”).

[135]. See id. at 526.

[136]. Id. at 524, 526.

[137]. Id. at 526.

[138]. Id. at 527.

[139]. See ACLU, supra note 84, at 3–6.

[140]. See id. at 2.

[141]. See id. at 19–24 (discussing each factor and how they were modeled after the character Lennie to exemplify a stereotype based off someone with severe disability).

[142]. Id. at 9.

[143]. Id.

[144]. Atkins v. Virginia, 536 U.S. 304, 308 (2002).

[145]. Hall v. Florida, 134 S. Ct. 1986, 1994–95 (2014).

[146]. Transcript of Oral Argument at 9–11, Moore v. Texas, 137 S. Ct. 1039 (2017) (No. 15–797) [hereinafter Transcript] (explaining that the Briseno court viewed the medical standards that were current at the time of its decision as “exceedingly subjective,” and instead came up with nonclinical factors based on “lay stereotypes”).

[147]. Id. at 11–12.

[148]. Id. at 16–17.

[149]. Id. at 20.

[150]. Ex parte Moore, 470 S.W. 3d 481, 520 (Tex. Crim. App. 2015).

[151]. AAIDD, supra note 48, at 45.

[152]. Transcript, supra note 146, at 17.

[153]. AAIDD, supra note 48, at 61.

[154]. Id. at 60.

[155]. Transcript, supra note 146, at 30–31.

[156]. Ex parte Briseno, 135 S.W.3d 1, 6 (Tex. Crim. App. 2004).

[157]. Hall v. Florida, 134 S. Ct. 1986,1999 (2014) (citation omitted).

[158]. See generally Moore v. Texas, 137 S. Ct. 1039 (2017).

[159]. Id. at 1047 (citation omitted).

[160]. Id. at 1049.

[161]. Id. (citation omitted). See also AAIDD, supra note 48, at 22‑23; DSM-5, supra note 11, at 37.

[162]. Moore, 137 S. Ct. at 1060.

[163]. Id. at 1061.

[164]. Id. at 1050.

[165]. AAIDD, supra note 48, at 47 (“[S]ignificant limitations in conceptual, social, or practical adaptive skills [are] not outweighed by the potential strengths in some adaptive skills.”).

[166]. Moore, 137 S. Ct. at 1054 (Roberts, J., dissenting).

[167]. See Smith v. Dunn, No. 2:13-CV-00557-RDP, 2017 U.S. Dist. LEXIS 113862, at *10–13 (N.D. Ala. July 21, 2017). An appeal has been filed to the Eleventh Circuit.

[168]. Id. at *3.

[169]. Id. at *10–13.

[170]. Id. at *13–16.

[171]. Smith v. State, 112 So. 3d 1108, 1128–29 (Ala. Crim. App. 2012).

[172]. See Teague v. Lane, 489 U.S. 288, 300 (1989).

[173]. Montgomery v. Louisiana, 136 S. Ct. 718, 728 (2016) (discussing Teague, 489 U.S. at 307).

[174]. Id. See also Teague, 489 U.S. at 311.

[175]. Montgomery, 136 S. Ct. at 728 (citation omitted).

[176]. Miller v. Alabama, 567 U.S. 460, 479–80 (2012).

[177]. Montgomery, 136 S. Ct. at 729.

[178]. Id. at 736.

[179]. See infra Section III.B for a full discussion on state statutes similar to Alabama’s.

[180]. Moore v. Texas, 137 S. Ct. 1039, 1049 (2017).

[181]. White v. Commonwealth, 500 S.W.3d. 208, 215 (Ky. 2016).

[182]. Id.

[183]. Hall v. Florida, 134 S. Ct. 1986, 1990 (2014).

[184]. Atkins v. Virginia, 536 U.S. 304, 317 (2002).

[185]. John H. Blume, et al., A Tale of Two (And Possibly Three) Atkins: Intellectual Disability and Capital Punishment Twelve Years After the Supreme Court’s Creation of a Categorical Bar, 23 Wm. & Mary Bill of Rts. J. 393, 396 (2014).

[186]. Id. at 396–97.

[187]. Id. at 397.

[188]. Id. at 400–01.

[189]. Id. at 402.

[190]. Id. at 404.

[191]. State v. Lott, 779 N.E.2d 1011, 1014 (2002) (citing Murphy v. State, 54 P.3d 556, 568, 573–74 (Okla. Crim. App. 2002)).

[192]. See Ariz. Rev. Stat. Ann. § 13-735(F) (2017) (validity called into question by Hall v. Florida, 134 S. Ct. 1986, 1996–97 (2014)); Ark. Code Ann. § 5-4-618(a)(2) (2017); Idaho Code § 19-2515A(1)(b) (2017); Ky. Rev. Stat. Ann. § 532.130(2) (West 2017) (limited by White v. Commonwealth, 500 S.W.3d 208, 214 (2016) (holding in light of Hall, “trial courts in Kentucky must consider an IQ test’s margin of error” as well as “additional evidence of intellectual disability”)); Neb. Rev. Stat. § 28-105.01(3) (2017); N.M. Stat. Ann. § 31-9-1.6(E) (2018); N.C. Gen. Stat. § 15A-2005(a)(1)(c) (2017); Okla. Stat. tit. 21, § 701.10b(A)(3) (2017); S.D. Codified Laws § 23A-27A-26.2 (2017); Tenn. Code Ann. § 39-13-203(a)(1) (2017); Wash. Rev. Code § 10.95.030 (2017) (held unconstitutional on other grounds by State v. Bassett, 198 Wash. App. 714 (2017)).

[193]. Ark. Code Ann. § 5-4-618 (2017).

[194]. Lott, 779 N.E.2d at 1014.

[195]. Hall v. Florida, 134 S. Ct. 1986, 1996 (2014) (citation omitted).

[196]. Id. at 1996–97 (citation omitted).

[197]. Sasser v. Kelley, No. 4:00-CV-04036, 2018 WL 1147102, *10–12 (W.D. Ark. Mar. 2, 2018).

[198]. Id.

[199]. Id. at *12.

[200]. Coleman v. State, 341 S.W.3d 221, 221, 224 (Tenn. 2011).

[201]. Id. at 241–42 (citation omitted).

[202]. Id. at 247–48.

[203]. Id. at 245 (citation omitted).

[204]. Dupler, supra note 49, § 15.

[205]. DSM-5, supra note 11, at 37.

[206]. AAIDD, supra note 48, at 43–44.

[207]. See generally Long v. Davis, 663 Fed. Appx. 361 (5th Cir. 2016), judgement vacated, 138 S. Ct. 72 (2017); Weathers v. Davis, 659 Fed. Appx. 778 (5th Cir. 2016), judgement vacated, 138 S. Ct. 315 (2017); Martinez v. Davis, 653 Fed. Appx. 308 (5th Cir. 2016), judgement vacated, 137 S. Ct. 1432 (2017); Henderson v. Stephens, 791 F.3d 567 (5th Cir. 2015), judgement vacated, 137 S. Ct. 1450 (2017).

[208]. Supreme Court Directs Florida to Reconsider Intellectual Disability Decision in Death Penalty Case, Death Penalty Info. Ctr., https://deathpenaltyinfo.org/node/6902 (last visited May 14, 2018) [hereinafter Florida, Death Penalty Info.]. See also Wright v. State, 213 So. 3d 881 (Fla. 2017), cert. granted, vacated, 138 S. Ct. 360 (2017).

[209]. Wright, 213 So. 3d at 897.

[210]. Id. at 899–901.

[211]. Florida, Death Penalty Info. Ctr., supra note 208.

[212]. Supreme Court Tells Alabama to Reconsider the Factors It Has Used to Determine Intellectual Disability, Death Penalty Info. Ctr., https://deathpenaltyinfo.org/node/6756 (last visited May 24, 2018).

[213]. Caroll v. State, No. CR-12-0599, 2017 WL 6398236, at *4–5 (Ala. Crim. App. Dec. 15, 2017).

[214]. Id. at *5–6.

[215]. Id. at *6.

[216]. New Report: Prisoners on Ohio’s Execution List Defined by Intellectual Impairment, Mental Illness, Trauma, and Young Age, Fair Punishment Project (Aug 29, 2017) http://fairpunishment.org
/prisoners-on-ohios-execution-list.

[217]. Id. Pre-Atkins, Fitzpatrick’s lawyers did not assert the defense of intellectual disability in the last review of his case. See also State v. Fitzpatrick, 810 N.E.2d 927, 932 (2004).

[218]. Fair Punishment Project, supra note 216.

[219]. Id.

[220]. State v. Frazier, 873 N.E.2d 1263, 1263 (2007).

[221]. Fair Punishment Project, supra note 216. See also State v. O’Neal, 721 N.E.2d 73 (Ohio 2000).

[222]. Fair Punishment Project, supra note 216. See also State v. Sneed, 584 N.E.2d 1160 (Ohio 1992).

[223]. Fair Punishment Project, supra note 216. See also Fears v. Bagley, No. 1:01-cv-183, 2008 WL 2782888 (S.D. Ohio July 15, 2008), aff’d, 462 F. App’x 565 (6th Cir. 2012).

[224]. Moore v. Texas, 137 S. Ct. 1039, 1051 (2017).

[225]. Id. (citation omitted).

[226]. Id. at 1049.

[227]. Atkins v. Virginia, 536 U.S. 304, 349–50 (2002) (Scalia, J., dissenting) (citation omitted) (“[T]he ‘diminished capacities’ of the mentally retarded raise a ‘serious question’ whether their execution contributes to the ‘social purposes’ of the death penalty, viz., retribution and deterrence.”).

[228]. Chad Flanders, The Case Against the Case Against the Death Penalty, 16 New Crim. L. Rev. 595, 596 (2013).

[229]. Id.

[230]. Cass R. Sunstein & Adrian Vermeule, Is Capital Punishment Morally Required? Acts, Omissions, and Life-Life Tradeoffs, 58 Stan. L. Rev. 703, 705, 711 (2005) (citing a study used from 3,054 U.S. counties between 1977 and 1996, in which it was “found that the murder rate is significantly reduced by both death sentences and executions,” and that “each execution results in eighteen fewer murders”). See also Hashem Dezhbakhsh et al., Does Capital Punishment Have a Deterrent Effect? New Evidence from Postmoratorium Panel Data, 5 Am. L. & Econ. Rev. 344, 344 (2003) (arguing “that capital punishment has a strong deterrent effect”).

[231]. See Sunstein & Vermeule, supra note 230, at 706.

[232]. See Comm. on Deterence and the Death Penalty, Nat’l Research Council, Deterrence and the Death Penalty 4 (Daniel S. Nagin & John V. Pepper eds., 2012). The study provides three reasons for why these studies are fundamentally flawed: (1) they ignore impact of noncapital punishment; (2) the studies use unrealistic assumptions to model potential murderers’ responses to the possibility of the death penalty; and (3) the statistical models assume (without reason) that the effect will be the same across states and years. See generally id.

[233]. Flanders, supra note 228, at 598.

[234]. Atkins v. Virginia, 536 U.S. 304, 319 (2002) (citation omitted).

[235]. Facts About the Death Penalty, Death Penalty Info. Ctr., (Mar. 17, 2018), http://www.deathpenaltyinfo.org/documents/FactSheet.pdf.

[236]. Id.

[237]. See id.

[238]. Section of Individual Rights and Responsibilities, et al., Am. Bar Ass’n, Recommendation 3 (Am. Bar Ass’n 2006) http://www.deathpenaltyinfo.org/documents
/122AReport.pdf.

[239]. See id.

[240]. Id. at 3–5.

[241]. Id.

[242]. Id. at 1, 20.

[243]. Id. at 5, 7.

[244]. Id. at 7.

[245]. Id. (emphasis added).

[246]. John H. Blume, Sheri Lynn Johnson & Christopher Seeds, Of Atkins and Men: Deviations from Clinical Definitions of Mental Retardation in Death Penalty Cases, 18 Cornell J.L. & Pub. Pol’y 689, 692 (2009).

[247]. Id. (citation omitted).

[248]. Id.

[249]. Moore v. Texas, 137 S. Ct. 1039, 1048 (2017).

[250]. DSM-5, supra note 11, at 37. (“IQ test scores are approximations of conceptual functioning but may be insufficient to assess reasoning in real-life situations and mastery of practical tasks. For example, a person with an IQ score above 70 may have such severe adaptive behavior problems in social judgment, social understanding, and other areas of adaptive functioning that the person’s actual functioning is comparable to that of individuals with a lower IQ score.”).

[251]. Coleman v. State, 341 S.W.3d 221, 230 (Tenn. 2011) (citation omitted).

Eyewitness Identifications: Recommendations to the Third Circuit – Note by Brady Witbeck

March 2018July 2018Southern California Law Review Admin

From Volume 91, Number 3 (March 2018)
DOWNLOAD PDF

Eyewitness Identifications: RecoMmendations to the Third Circuit

Brady Witbeck [*]

TABLE OF CONTENTS

INTRODUCTION

I. DENNIS V. SECRETARY, Pennsylvania Department of Corrections

II. HISTORY OF THE SCIENTIFIC AND JUDICIAL ANALYSIS OF EYEWITNESS IDENTIFICATION EVIDENCE

III. PHOTO ARRAYS, LINEUPS, JURY INSTRUCTIONS, AND SYSTEM VARIABLES

A. Photo Arrays and Live Lineups Defined

B. System Variables and Accuracy

C. Jury Instructions

IV. DIFFERING JURISDICTIONAL APPROACHES

A. New Jersey

B. Oregon

C. North Carolina

D. Scholarly Proposals

V. RECOMMENDATIONS FOR THE THIRD CIRCUIT
TASK FORCE

CONCLUSION

INTRODUCTION

Just before two o’clock in the afternoon on October 22, 1991, two high school students, Chedell Williams and Zahra Howard, ascended the steps of the Fern Rock train station in North Philadelphia, planning to take a train back to their homes.[1] Seemingly out of nowhere, two men appeared, blocked the girls’ way up to the station, and demanded Chedell’s earrings. Terrified, the girls bolted in opposite directions. The two men followed Chedell. They soon caught her and tore out her earrings. Then “[o]ne of the men grabbed her, held a silver handgun to her neck, and shot her.”[2] The perpetrators fled. Chedell was pronounced dead within the hour.[3]

Police soon focused their investigation on James Dennis, who lived relatively close to the train station in the Abbotsford Homes projects. Detectives would later explain that they heard rumors that Dennis was involved in the shooting, though they were at that time “unable to identify the source of the rumors.”[4] The detectives obtained preliminary descriptions of the perpetrators from three eyewitnesses.[5] These initial descriptions did not align well with Dennis’s actual appearance. Nonetheless, a few eyewitnesses identified Dennis during subsequent photo lineups, live lineups, and the trial.[6] In presenting the government’s case, the prosecution relied heavily on these eyewitness identifications.[7] Dennis was found guilty of “first-degree murder, robbery, carrying a firearm without a license, criminal conspiracy, and possession of an instrument of a crime.”[8] He was sentenced to death.

Then, after spending twenty–four years challenging his conviction, Dennis was granted a conditional writ of habeas corpus.[9] In Dennis v. Secretary, Pennsylvania Department of Corrections, the Third Circuit Court of Appeals found that prosecutors had improperly withheld evidence that bolstered Dennis’s alibi and implicated another man in Chedell’s death.[10]

Dennis is most notable not for unearthing aberrant prosecutorial misconduct, but for Chief Judge Theodore McKee’s lengthy concurrence, which illuminated endemic failures by courts and police departments to understand and mitigate the unreliability of eyewitness identification evidence.[11] Shortly after issuing its decision in Dennis, the Third Circuit formed a task force instructed to “make recommendations regarding jury instructions, use of expert testimony, and other procedures and policies intended to promote reliable practices for eyewitness identification and to effectively deter unnecessarily suggestive identification procedures, which raise the risk of a wrongful conviction.”[12] The Task Force will rely on scientific research and is co-chaired by Chief Judge McKee.[13] By establishing this Task Force, the Third Circuit recognized that not only is there a problem with the way the criminal justice system deals with eyewitness identification evidence, but also that unreliable identifications correspond to false convictions. Chief Judge McKee’s concurrence in Dennis and the commissioning of the Task Force demonstrate that the legal system is opening up to implementing scientifically proven methods to lessen the problem of false identifications and convictions.[14]

This Note will concentrate on how system variables impact the reliability of eyewitness identifications.[15] “System variables are the procedures and practices law enforcement use to elicit eyewitness identifications.”[16] Because system variables are generally within the exclusive control of law enforcement, they present the most straightforward method through which the criminal justice system can make eyewitness identifications reliable, thus decreasing the risk of false convictions. This Note will focus on how the criminal justice system can improve the eyewitness identification process. In particular, this Note evaluates suggested reforms for photo arrays, live lineups, and jury instructions.

This Note will present simple, scientifically proven approaches to reform that will lead to a more just system and more accurate identifications and convictions. The Third Circuit Task Force should adopt recommended methods found in the volumes of psychological research written on eyewitness identification and analyzed in detail in this Note. Through a combination of legislative and judicial action, the system can be dramatically improved with minimal cost and inconvenience. Part I of this Note will examine Dennis in-depth and demonstrate how failures on the part of the criminal justice system led to false identifications and Dennis’s conviction. Part II will analyze the scientific research concerning system variables as well as the intersection of science and the criminal justice system. Part III will discuss current procedures for photo arrays, live lineups, and jury instructions, and their deficiencies. Part IV will discuss how different states have tried to solve these problems. Part V will make recommendations to the Third Circuit Task Force.

I. DENNIS V. SECRETARY, Pennsylvania Department of Corrections

As Chief Judge McKee examined the data and scientific research on eyewitness identifications, he came to the conclusion that cases like Dennis are not mere anomalies; instead, they are serious miscarriages of justice that occur too frequently and should be rectified by the judiciary.[17] Even when multiple eyewitnesses identify a person, those identifications can be unreliable and “[a]lmost without exception, eyewitnesses who identify the wrong person express complete confidence that they chose the real perpetrators.”[18] Even though three people identified the defendant as the perpetrator in Dennis, the way those identifications were obtained raised “serious questions about the accuracy of those identifications.”[19] Perhaps most troubling, the jury had no way of knowing the unreliable nature of the identifications, and as a result, an innocent man spent more than twenty years on death row.[20]

On the day Chedell Williams was murdered, the police obtained initial reports from eyewitnesses to the crime.[21] Five eyewitnesses claimed they could identify the shooter.[22] These five eyewitnesses were at varying distances from the shooter when the crime took place. The eyewitnesses said the shooter wore a red sweat suit and wielded either a dull silver gun or a shiny, chrome-plated gun. One of the key eyewitnesses told police that he “would be able to identify the shooter if he saw him again,” as he was only “about six feet from the perpetrators” and looked directly at the shooter as the shooter ran away.[23]

After the police heard rumors that the shooter was Dennis, they arranged for several eyewitnesses to see if they could identify Dennis as the shooter by placing his picture in a photo array.[24] The police “compiled three arrays of eight photographs each.”[25] The first array was used to identify the shooter, the second to identify the accomplice, and the third to give the eyewitnesses an opportunity to identify a suspect. Police composed the photo arrays with pictures of seven innocent fillers and a recently taken photo of Dennis. They then individually showed the photo arrays to each eyewitness and instructed each witness to “[s]ee if you recognize anyone.”[26] Four of the nine eyewitnesses stated that Dennis looked familiar, but no eyewitness expressed a high degree of confidence in their identification at the time of the photo array.[27] Following at least two of these uncertain identifications, the photo array administrator asked the eyewitnesses if they were confident in their identifications; when responding to this question, two eyewitnesses reported greater confidence in their identifications.[28] The remaining five eyewitnesses were not able to identify the shooter with any degree of certainty.[29]

Around a month and a half later, police conducted a live lineup, which included six persons: Dennis and five fillers.[30] Only the four eyewitnesses that identified Dennis in the prior photo arrays were present at this live lineup, and “[t]he police had those four witnesses view the lineup at the same time, in the same room.”[31] The police gave instructions to each eyewitness to carefully look at all of the lineup participants to see if they recognized any one of them as the suspect, and they also instructed that none of the eyewitnesses had to make an identification if they could not recognize the suspect in the lineup.[32] Two of the eyewitnesses somewhat confidently pointed out Dennis, one eyewitness was less sure, and one—the eyewitness who initially claimed that he was so close to the perpetrator that he could easily make an identification—identified a filler.[33] Later at the trial, the prosecution put three eyewitnesses on the stand, all of whom confidently pointed at Dennis, “even though all three had expressed doubt in their earlier identifications.”[34]

II. HISTORY OF THE SCIENTIFIC AND JUDICIAL ANALYSIS OF EYEWITNESS IDENTIFICATION EVIDENCE

The debate about what role science should play in eyewitness identification evidence is not new. In 1908, Hugo Münsterberg, a pioneering psychologist, published On the Witness Stand.[35] In it, Münsterberg profiles different judicial and police practices and analyzes them to see how the judicial system could improve with respect to eyewitness testimony.[36] To illustrate the need to incorporate science into the criminal justice system, he detailed an experience that occurred after his family home was burglarized.[37] As an eyewitness at the burglary trial, he recounted various details about the robbery.[38] But after comparing his testimony to the crime-scene evidence, Münsterberg realized there were significant errors in his testimony and that, despite his best intentions, some of his memories were distorted.[39] He emphasized that human memory is inherently faulty and that perhaps the greatest impediment to justice is not intentional lies on the part of the eyewitness but the unintentional failings of memory.[40] Finally, he spoke to the issue of how the judicial system has failed to put into practice the scientific research of the time.[41]

Münsterberg was repudiated by John Wigmore for what Wigmore viewed as an uncouth attack on the legal profession, an attack that was not justified by the scientific research Münsterberg touted.[42] Wigmore viewed Münsterberg as a popular scientist—someone more interested in fame than properly integrating science and the law.[43] While Wigmore criticized Münsterberg, he himself was a strong proponent of the use of psychology in the legal profession.[44] This debate, which took place over a century ago, demonstrates that even among those who believe science should play a greater role in evidence, it is difficult to achieve a consensus on the specifics.

Today, there are some in the legal profession who believe few or no reforms are necessary to bring science and evidence together. For example, Justice Antonin Scalia, in his concurrence in Kansas v. Marsh, rejected the idea that the way the justice system handles eyewitness identifications is deeply flawed.[45] He wrote his Marsh concurrence primarily as a response to Justice Souter’s dissent, in which Souter acknowledged the primary risk of capital punishment: that the defendant is innocent.[46] Scalia claimed that because Souter did not list an instance when an innocent person was put to death, this risk is overstated.[47] Scalia went further, claiming that DNA evidence has confirmed guilt more often than it has proved the innocence of convicted persons.[48] He also claimed that the recent reversals of false convictions are not the result of “the operation of some outside force to correct the mistakes of our legal system, rather than as a consequence of the functioning of our legal system.”[49] Scalia stated that capital cases are actually given heightened judicial scrutiny, which leads to better and more accurate results, as the appeals process can be very lengthy in these cases.[50] Scalia echoed the claims of many who say that while the system may be imperfect, it still functions at a high rate of accuracy and needs minimal reform, if any.[51]

Scalia’s assessment contrasted with that of Chief Judge McKee in Dennis, in which McKee tied together the best psychological research on eyewitness identifications and recognized that the criminal justice system must improve in order to be more accurate.[52] McKee began by quoting Justice Brennan, who had stated over three decades prior that juries are likely to believe eyewitness testimony over other types of evidence, especially when the eyewitness is confident.[53] “James Dennis was sentenced to death because three eyewitnesses appeared at trial and confidently pointed their fingers at him when asked if they saw Chedell Williams’ killer in the courtroom.”[54] Because the jury was not properly instructed as to how to handle eyewitness identifications by the court and the police department was not properly trained, an innocent man was sentenced to death.[55] His purpose in writing his lengthy and thoughtful concurrence was to push the law to catch up with the science and persuade both police departments and juries to reform.[56] Reform is critical as mistaken identifications “‘erode public confidence in the criminal justice system as a whole.’”[57]

The Supreme Court itself recognized the problems inherent in eyewitness identifications in United States v. Wade.[58] In Wade, the Court declared that “the vagaries of eyewitness identification are well-known; the annals of criminal law are rife with instances of mistaken identification.”[59] The Court cited “the degree of suggestion inherent in the manner in which the prosecution presents the suspect to witnesses for pretrial identification” as a major factor contributing to misidentification.[60] The Court’s opinion recognized the danger that once an eyewitness has identified someone during a lineup, that eyewitness’s confidence in that identification can be artificially inflated. Improper suggestions and poor lineup construction during the lineup process can taint an entire trial.[61]

III. PHOTO ARRAYS, LINEUPS, JURY INSTRUCTIONS, AND SYSTEM VARIABLES

In the United States, eyewitnesses identify some 77,000 suspects annually.[62] Often, juries place great weight on eyewitness identifications and, accordingly, the identifications provide powerful evidence against a defendant.[63] Despite the importance of eyewitnesses, their accounts are generally less accurate than most people—including judges, jurors, and attorneys—would assume.[64]

In one study, 590 participants were tested to determine if, after having spoken to a woman for fifteen seconds, they could later identify that same woman.[65] During a live lineup where the woman was present, only forty-nine percent of the participants were able to correctly identify the woman.[66] While 62% of participants correctly refrained from making an identification when the target was absent from the lineup, the remaining thirty-eight percent of participants made an identification.[67]

Police departments generally use three types of methods to obtain identifications from eyewitnesses: showups, photo arrays, and live lineups.[68] But how police departments administer these three methods varies greatly and lacks uniformity across jurisdictions.[69] With thousands of police departments and courts, it is difficult to obtain a clear picture of how different jurisdictions obtain eyewitness identifications.[70] Many police departments have no standing procedures or policies, and many police officers are not aware of how system variables, which police control, can influence the reliability of this type of evidence.[71]

This Section describes how photo arrays, live lineups, and jury instructions function and how these processes often fall short of their objective to obtain reliable identifications. Show–ups, ad hoc procedures where law enforcement officers bring eyewitnesses to a location to show them a suspect, will not be discussed at length.[72]

A. Photo Arrays and Live Lineups Defined

Photo arrays and live lineups constitute important ways in which police can obtain eyewitness identifications.[73] Police regularly use both photo arrays and live lineups in their investigative efforts.[74] Though live lineups are generally considered more accurate than photo arrays, they are conducted less frequently.[75] In most photo arrays, the eyewitness is presented with a number of photographs and instructed to identify the photo of the person who the eyewitness believes committed the crime.[76] A defendant does not have the right to have an attorney present during a photo array.

Like photo arrays, live lineups are used by police either to determine or confirm the identity of a suspect.[77] In a live lineup, an eyewitness is presented with a number of people and asked to identify the person the witness believes to be the suspect.[78] Live lineups can occur either before or after an indictment.[79] Most live lineups in the United States contain around five participants.[80] Eyewitnesses either view the lineup participants sequentially or simultaneously.[81] Sequential lineups compel the eyewitness to make an absolute judgment of identity, while simultaneous lineups allow the eyewitness to make a relative judgment of identity.[82]

In a sequential lineup the eyewitness views the suspect and fillers one at a time. . . . In the original sequential lineup for each person (i.e., the suspect and fillers) the eyewitness either identifies the person as the culprit or not. If the eyewitness makes an identification the procedure ends. If no identification is made then the next person is shown to the eyewitness.[83]

In a simultaneous lineup, the eyewitness is presented with all the lineup participants at one time.[84]

B. System Variables and Accuracy

As Chief Justice McKee stated in Dennis, system variables are within the control of law enforcement.[85] Because police departments control the practices and procedures used to acquire eyewitness identifications, the Third Circuit Task Force (“Task Force”) should examine the scientific research concerning the accuracy of those procedures. Studies have identified simple, cost-effective ways to adjust system variables to improve the reliability of eyewitness identification evidence.

Though photo arrays and live lineups are most accurate when administered blindly—that is, when the person administering the lineup does not know the identity of the suspect—very few police departments conduct blind lineups and arrays.[86] In an experiment, students were randomly assigned to play the role of either a lineup administrator or a mock eyewitness.[87] The mock eyewitnesses were shown a video of a theft in which they were exposed to the perpetrator’s face for twenty-five seconds.[88] One group, who was assigned the role of lineup administrator, was told the identity of the suspect, while the other group was not.[89] The researchers found that the non-blind administrators often smiled when the mock eyewitness viewed the suspect in the photo array and smiled after the eyewitness identified the suspect.[90] The non-blind photo arrays resulted in significantly more false identifications than the photo arrays that were administered blind.[91] The researchers also found that the non-blind administrators affected eyewitnesses’ confidence in their selections.[92]

Feedback from a non-blind administrator can manipulate eyewitnesses’ confidence in their identifications.[93] This is even true when the eyewitness mistakenly identifies the wrong person; feedback confirming an eyewitness’s mistaken identification impairs the eyewitness’s memory of the original perpetrator.[94] When an administrator makes statements like “[w]e thought this might be the one,” “[t]hat’s the one you picked out in the photo,” or even more subtle, non-verbal communications, eyewitnesses’ confidence can increase and their ability to recognize the actual suspect can decrease.[95] “Relative to a no feedback condition, witnesses who received good-memory feedback expressed higher post-identification confidence in a subsequent lineup identification, whereas those who received poor-memory feedback evinced lower confidence.”[96]

Jurisdictions, as well as experts, disagree as to the advantages of using sequential lineups instead of simultaneous lineups. Some jurisdictions have reformed their procedures in order to have eyewitnesses make absolute judgments of identity, while others have cited evidence that claims relative judgments of identity are more reliable.[97] A study that purports to go against the grain of recent evidence—in that it supports simultaneous lineups—found that eyewitness identifications based on relative judgments are less reliable than those based on absolute judgments.[98] “[A] witness using an absolute judgment makes an identification of a lineup member if the match between that lineup member and the witness’s memory of the perpetrator is sufficiently high,” while a relative judgment can be made when the match is relatively better than any other member of the lineup.[99] The study also found that “witnesses’ reliance on relative judgments undermines the reliability of the identification evidence, and increases the relative risk of a false identification that can ultimately lead to a wrongful conviction.”[100] Despite this recent study, the scientific community is still somewhat divided on this issue, with some studies claiming that there is little difference in reliability between the two approaches.[101]

Lineup instructions given to eyewitnesses before they make identifications impact the reliability of any identification that follows.[102] Biased instructions occur when “the lineup administrator fails to explicitly instruct the eyewitness that the perpetrator may not be present in the lineup and that it is permissible to identify no one.”[103] In some instances, biased instructions “compel[] witnesses to adopt a lower criterion for accepting their sense of recognition of the most familiar-looking lineup member as correct . . . and thereby enhances their confidence in making a positive identification of that lineup member,” and can also artificially increase eyewitnesses’ confidence in their identifications because they may assume the suspect is in the lineup.[104] In one study, participants viewed a video of a mock theft and were instructed to identify a suspect from both a thief-present and thief-absent live lineup.[105] One group was given biased instructions before they attempted to make an identification, while the other group was not. The mock eyewitnesses’ confidence was then measured. The results found that “[b]iased instructions and positive feedback increased confidence and ratings of eyewitnessing conditions.”[106] The study also found that eyewitnesses’ confidence in their identifications only modestly relates to the accuracy of those identifications.[107]

C. Jury Instructions

Jury instructions that provide the jury with information on how to use eyewitness identifications could improve a jury’s evaluation of eyewitness evidence, thus improving the deliberation process. Instructions can inform the jury how memory works, how an identification was obtained, and dismiss the myth of the infallibility of the identification process.[108] Jury instructions regarding eyewitness identifications and their use in trials typically contain some qualifications about their accuracy, but these instructions are often generic and do not properly convey scientific realities.[109] Some experts claim that most current jury instructions do not increase a jury’s sensitivity to possible errors in eyewitness testimony.[110] This is because jurors weigh eyewitness evidence too heavily and because they are “often uncritical of the reliability of the testimony.”[111]

For example, the instructions received by the jury in Dennis were “plain vanilla” and unhelpful.[112] The instructions were long, confusing, and did not include any “explanation of the relevant system or estimator variables that so crucially impact the reliability of witness identifications.”[113] Jurors are often not aware, or at least do not receive instructions from the court, of possible inaccuracies of eyewitness testimony generally and of eyewitness identifications specifically.[114] Studies have shown that jurors do not understand how memory functions or how memory can be influenced and manipulated.[115] Juries have limited knowledge about memory and rely on eyewitness confidence, an eyewitness’s memory for minor details, and the consistency of an eyewitness’s testimony, while ignoring the impact system variables have on the reliability of eyewitness identifications.[116] The myth that people can never forget a face or that an encounter with an armed suspect increases or enhances one’s ability to identify a suspect can lead to a jury overvaluing an identification during its deliberations.[117]

IV. DIFFERING JURISDICTIONAL APPROACHES

In the past decade, a few jurisdictions have reformed procedures with the goal of improving the reliability of eyewitness identification evidence. This Section will discuss three states in particular: New Jersey, Oregon, and North Carolina. These jurisdictions used scientific research to improve how police departments obtain identifications and to ensure that courts only admit into evidence eyewitness identifications that have indicia of truth and reliability. New Jersey and Oregon addressed eyewitness identification procedures through their respective Supreme Courts.[118] North Carolina’s legislature instituted reforms statutorily.[119] In addition to analyzing the reforms adopted by these states, this Section will evaluate proposals from experts in the fields of law and psychology who have proposed procedures and practices to increase the reliability of eyewitness identification evidence.

A. New Jersey

Recently, the Supreme Court of New Jersey attempted to improve the reliability of eyewitness identification evidence with its decision in State v. Henderson.[120] The court overhauled its test for the admission of eyewitness identification evidence.[121] The decision called for blind administration of photo arrays and live lineups, new pre-lineup instructions, the creation of rules for lineup construction, and new record keeping procedures.[122] The court also determined that jury instructions needed to improve in order to better equip juries in their process of deliberation.[123]

In Henderson, an eyewitness to a crime was shown a photo array that included eight photographs—one of the suspect and seven of innocent fillers.[124] Before the photo array was administered, the eyewitness was given instructions that were standard in New Jersey police departments.[125] He was informed that an administrator would show him photos sequentially and the perpetrator’s photo was not necessarily included in the array.[126] The eyewitness also was instructed that the suspect could have either gained or lost weight since the incident and that facial hair could easily be altered.[127] The photos were shown to the eyewitness in an order that was random to the administrator.[128] During the photo array, the eyewitness narrowed the photos down to two, but he could not make a clear identification.[129] Police later testified that during this point in the photo array, the eyewitness was excited, so police removed him from the room, calmed him down for one to five minutes, and then showed him the eight photos again.[130] Police claimed that the eyewitness was then quickly and confidently able to identify the police suspect. The eyewitness later testified that he felt pressured to make an identification and that police pushed him to identify the suspect.[131]

The jury instructions provided at trial did not inform the jury about the influence suggestive police behavior can have on the reliability of identifications.[132] The instructions were long, confusing, and included scientific language most likely unfamiliar to jurors, and to determine whether the identification was reliable, the instructions asked jurors to consider a number of competing and seemingly contradictory factors.[133]

To improve the reliability of eyewitness identifications, the New Jersey Supreme Court addressed system variables within the control of the criminal justice system that it believed would best improve the reliability of identification evidence.[134] The court determined that because even subtle, non-intentional suggestions by police during the identification process can influence memory, photo arrays and live lineups should be administered blindly.[135] Because police departments have limited resources, the court suggested that departments could use the “envelope method” for the administration of photo arrays.[136] With the envelope method, “an officer who knows the suspect’s identity places single lineup photographs into different envelopes, shuffles them, and presents them to the witness. The officer/administrator then refrains from looking at the envelopes or pictures while the witness makes an identification.”[137] This method would decrease the likelihood of improper suggestion by the police.[138]

The court ordered that before administering a photo array or a live lineup, New Jersey police must always instruct the eyewitness that the person who committed the crime may or may not be present and that the eyewitness should not feel pressure to make an identification.[139] In order to decrease the possibility of an eyewitness simply guessing the identity of the suspect, every lineup should be composed of fillers who look similar to the suspect, so the suspect does not stand out.[140] This is so an eyewitness’s confidence is not artificially inflated by a perception that the identification process was “easy.”[141] There should be at least five fillers in a live lineup, and lineups should not feature more than one suspect.[142] The court also reminded police departments that all lineups should be recorded and preserved so that courts can later determine if the lineup was properly constructed.[143]

In order to avoid improper feedback from police that could inflate eyewitnesses’ confidence in their identification, the court held that “law enforcement officers should make a full record—written or otherwise—of the witness’ statement of confidence once an identification is made.”[144] Officers should not allow eyewitnesses to view the suspect multiple times, as this can artificially increase confidence in their identification.[145] The New Jersey Supreme Court took no position on whether police departments should favor sequential or simultaneous lineups.[146] The court believed that there was insufficient scientific evidence to show a preference for either and that more studies needed to be conducted before the court could state a preference.[147]

To better help jurors understand the eyewitness identification process, the court reformed jury instructions.[148] Lay people, on the whole, do not understand how memory works.[149] The court identified the common misconceptions that memory is similar to a video recording and that memory cannot be contaminated or distorted by outside influence.[150] Juries also tend to give disproportionate weight to the confidence of the eyewitness.[151] In order to better equip the jury to evaluate eyewitness identifications, jury instructions need to clearly and comprehensively inform the jury about the science of eyewitness identification and the nature of memory.[152] However, jury instructions should not overwhelm the jury and must be helpful to jurors.

B. Oregon

In State v. Lawson, the Supreme Court of Oregon overhauled its test for determining the admissibility of eyewitness identifications.[153] In Lawson, the court consolidated two cases, in which the admissibility of eyewitness identification evidence was at issue.[154] Two defendants were separately tried and convicted, at least in part because of eyewitness identifications that “had been subject to an unduly suggestive police procedure in the course of identifying” the defendants.[155]

The test used by Oregon courts during the defendants’ trials to evaluate the admissibility of eyewitness identification evidence was fairly permissive, and it failed in its purpose of preventing suggestive and inaccurate identifications from being admitted into evidence.[156] The test was comprised of generic, unhelpful factors that attempted to make sure the time between the event and the identification was minimized, the certainty of the eyewitness was high, and the eyewitness had a chance to clearly see the suspect before the identification was admitted.[157]

In one of the cases consolidated in Lawson, a victim was shot in the chest and admitted to the hospital, where she was questioned by police as to the identity of her attacker.[158] The victim was shown a black-and-white photo array while heavily medicated, sedated, and restrained in her hospital bed.[159] Moreover, because her injuries necessitated a breathing tube, the victim could only respond to police questioning by nodding or shaking her head. At first, the victim did not identify anyone from the photo array; however, she eventually nodded “yes” to leading questions regarding the suspect’s identity.[160] The victim later had no recollection of this interview.[161]

Approximately two weeks later, when the victim could speak, she said that she was not able to identify the person who shot her; the following month, she was not able to pick the defendant out of another photo array, but shortly thereafter the police informed her that she had identified someone during her stay in the hospital.[162] After hearing this, the victim said she recognized the man police had identified as a suspect; however, she stated that she was not certain he was the perpetrator.[163] At a much later date, and after police repeatedly exposed the victim to the suspect’s photo, the victim identified the suspect at a live lineup and even testified at trial that she “always knew it was him.”[164] Based in part on this evidence, the defendant was convicted.[165] On appeal, the Oregon Supreme Court held that the identification should not have been admitted into evidence as it was subject to suggestive police procedure.[166]

In the case, the Oregon Supreme Court examined scientific research about system variables that the court believed could prevent false or unreliable identifications from being admitted into evidence.[167] Based on their examination of the science, the court mandated judicial and police department reforms.[168] Additionally, the Lawson court shifted the defendant’s burden to prove suggestibility onto the prosecution.[169]

In order to improve the reliability of eyewitness identification evidence, the Oregon Supreme Court found that the criminal justice system needed to improve several system variables, which are in the exclusive control of the justice system.[170] The court called for the blind administration of photo arrays to prevent an administrator from improperly influencing an identification.[171] When police administer photo arrays or live lineups, the administrator should inform eyewitnesses that they do not have to make an identification, as the perpetrator may not be in the lineup or array.[172] The court called for live lineups to be constructed using fillers that look physically similar to the suspect so the suspect does not stand out.[173] Furthermore, live lineups and photo arrays in Oregon must now be conducted sequentially so that the eyewitness makes an absolute judgment of identity instead of a relative judgment.[174]

The fact that the victim in Lawson viewed the suspect multiple times was a major factor in determining the identification was unreliable.[175] When police continually expose a victim to images of one suspect, the victim tends to become more familiar with the suspect’s face; this can result in the victim eventually identifying that suspect with confidence, even if initially the victim was unsure of the perpetrator’s identity. Because police continually exposed the victim to images of the suspect, the victim became more familiar with his face, so much so that the victim could eventually identify him with confidence, even though initially the victim was unsure of the perpetrator’s identity.[176] For this reason, after Lawson, Oregon police are required to avoid multiple viewings when conducting photo arrays and live lineups.[177]

The opinion did not elaborate in-depth about how Oregon courts should craft jury instructions on how to evaluate eyewitness identifications, but the court suggested that future jury charges should include reference to system variables that influence reliability.[178] The court cited an Oregon evidence rule that stated identifications must be helpful to the trier of fact.[179] Therefore, identifications, when admitted, should not serve to confuse the jury but should help the jurors with their fact-finding, thus providing another reason to improve the reliability of eyewitness identifications.[180]

C. North Carolina

While legislatures lack some of the sophisticated legal experience of the courts, passing laws to regulate police conduct can be an effective way to quickly and authoritatively adjust system variables. North Carolina took this approach with the North Carolina Eyewitness Identification Reform Act (“the Act”).[181] The Act, passed in 2007, attempts to incorporate scientific advances in the field of eyewitness identifications to better assure reliability and bolster the truth finding function of the criminal justice system in North Carolina.[182] To further this goal, it provides instructions for police departments on how to administer identifications according to the best available practices.[183]

The Act calls for independent administrators, who are not aware of the suspect’s identity, to carry out both photo arrays and live lineups.[184] The independent administrator will give instructions that inform the eyewitness that the perpetrator may or may not be in the lineup or photo array, and will also state that the investigation does not hinge on the eyewitness making an identification, so the eyewitness should not feel undue pressure to make one.[185]

Under the Act, both photo arrays and live lineups should contain at least five innocent fillers who resemble the suspect.[186] Lineups and photo arrays with more than one suspect are prohibited, and eyewitnesses are separated from others who are making an identification to prevent them from conferring with one another before or during the live lineup or photo array.[187] Eyewitnesses are not be provided any information about the suspect, and police make a video recording of the process or an audio recording if a video recording is not feasible.[188] The Act also proposes that lineups could be administered by a computer program as an alternative method to keep the administrator from seeing the photo in front of the witness.[189]

In order to facilitate these reforms, law enforcement officers are required to go through training programs so that they know how to conduct lineups and photo arrays in compliance with this statute.[190] The Act calls for the creation of materials and classes to facilitate the training of law enforcement officers.[191] Two pre–existing North Carolina police-training agencies, the North Carolina Criminal Justice Education and Training Standards Commission and the North Carolina Sheriffs’ Education and Training Standards Commission, were made responsible for creating these programs and materials.[192]

D. Scholarly Proposals

Legal scholars have proposed reforms that often go further than the changes made in states like New Jersey, Oregon, and North Carolina. For example, the National Academy of Sciences issued a report addressing the reliability of eyewitness identification evidence.[193] The academy’s goal was to digest the current scientific research on the subject and present it to law enforcement and the legal community, and the academy called for greater cooperation among the law enforcement and scientific communities so that identification procedures can improve across the country.[194] Scholars hope that the training of law enforcement as to how memory works and how law enforcement can unintentionally influence identifications will allow police to see why reform is necessary.[195]

The report made recommendations as to how jurisdictions can improve the reliability of eyewitness testimony.[196] It called for blind administration of lineups, uniform and “easily understood instructions” to be provided to the eyewitness prior to an identification, and careful documentation of eyewitnesses’ confidence in their identifications.[197] These instructions should inform the eyewitness that “the perpetrator may or may not be in the photo array or lineup and that the criminal investigation will continue regardless of whether the witness selects a suspect.”[198] The report suggested that due to a lack of consensus as to the merits of sequential versus simultaneous lineups, neither method should be preferred.[199]

The academy acknowledged that some police departments are hesitant to make changes that would require them to stretch their limited resources.[200] In response, the committee suggested that “departments consider procedures and new technologies” that would alleviate this concern.[201] For example, if a non-blind administrator is not available, a department could use either a “computer-automated presentation of lineup photos”[202] or the envelope method that is employed in New Jersey.[203] The eyewitness identification process should also be videotaped, even though doing so could increase costs and burden eyewitnesses’ privacy interests.[204] However, when these concerns arise, departments can videotape the process non-intrusively, and in fact, many departments already have the technology that would allow them to document these procedures.[205]

The report called for the “use of clear and concise jury instructions” to assist jurors in their fact-finding mission.[206] Jury instructions can convey the most important underlying aspects of the identification process in clear language.[207] This would allow the jury to properly give weight to eyewitness identification evidence in its deliberations.[208] “Appropriate legal organizations, together with law enforcement, prosecutors, defense counsel, and judges, should convene a body to establish model jury instructions regarding eyewitness identifications.”[209]

Going forward, the academy recommended that a national research initiative be established to increase our understanding of the science of eyewitness identifications.[210] The research initiative would allocate future funds for research, formulate new policy positions, review research, advocate future policy changes, and provide formal assessments of reforms across the country.[211]

Separately, Dan Simon, in his book In Doubt, proposed a series of reforms that could fix the systematic errors inherent in the identification process.[212] He proposed a series of reforms that would “provide best-practice protocols” and “are directed at the twofold goal of maximizing the accuracy of identifications and the transparency of the procedures used to elicit them.”[213] Simon’s reforms include:

2. . . . [L]ive and video lineups should be preferred over photographic arrays.

3. Suspects should not be placed in identification procedures absent an appreciable threshold of guilt.

4. Prior to the lineup, witnesses should not be exposed to any identifying information about the suspect from any source.

5. Lineups should be conducted as soon as possible after the witnessed event.

6. Lineups should include only one suspect and five or more fillers whose innocence is beyond doubt.

7. Fillers should match the witness’s description of the perpetrator and not be noticeably dissimilar from the suspect.

8. The suspect should be allowed to determine his place in the lineup and to change places between lineups.

9. The witness should be instructed that the perpetrator “may or may not be” in the lineup, and that it is appropriate to respond “perpetrator is not present,” and “don’t know.”

10. Targets should be presented sequentially (rather than simultaneously).

11. All identification procedures should be “double blind”: the administrator must be kept unaware of the identity of the suspect; the witness should be informed that the administrator does not know the suspect’s identity.

12. The administrator should refrain from any communication or behavior that could be interpreted as suggestive or revealing of the identity of the suspect.

13. The witness should announce his recognition or nonrecognition, followed immediately by a confidence statement. The witness should not be given any feedback before completing the statement.

14. The time it took the witness to announce recognition should be measured and recorded. . . .

16. Witnesses who at any time pick someone other than the suspect should not be allowed to provide any identification testimony about the suspect.

17. Witness [sic] who fail to identify the suspect, make a hesitant decision, or express low confidence at the initial identification should be deemed to have a weak memory of the suspect.

18. The procedure should be recorded in its entirety, preferably on videotape. Recording should include the images used and the instructions given. The witness should be videotaped throughout the procedure.[214]

Simon also suggests that the composition of lineups be computerized to altogether remove the human error element from the equation.[215]

Simon does recognize that the implementation of most of these ideas is uncontroversial, but also that there is an inherent trade off “between the intended objective of reducing false identifications and the unintended effect of losing correct identifications.”[216] Despite this, Simon argues that these proposed reforms would provide a net gain for the judicial system.[217] Providing a complete record of identification procedures is critical for minimizing “the effects of memory decay, contamination, and any other biases induced by the investigation and pretrial procedures” and providing “fact finders and other decision makers with the best possible information for assessing the reliability of the identifications.”[218]

V. RECOMMENDATIONS FOR THE THIRD CIRCUIT TASK FORCE

The Third Circuit should borrow the best and most practicable reforms undertaken by North Carolina, New Jersey, and Oregon. These states have taken steps toward integrating scientific research into the judicial system, thus making eyewitness identification evidence more reliable. The Task Force has the opportunity to combine the best ideas of these states to lower the risk of wrongful convictions in the Third Circuit. These reforms can further serve as a model for other jurisdictions to reform their policies and procedures. Though live lineups generally produce more reliable evidence than photo arrays, the Task Force should recommend reforms for both photo arrays and live lineups given the impracticality of having a live lineup for every identification. The Task Force should also address jury instructions.

Because the composition of a lineup can greatly influence the reliability of the resulting identification, the Task Force should provide clear guidelines on how and when lineups should be conducted. Lineups and photo arrays should be conducted close in time to when the crime took place, so the eyewitness is more likely to remember the suspect. In many of the cases discussed above, police conducted lineups months or even a year after an event occurred, which led to decays in memory and ultimately false identifications.

The Task Force should adopt a policy similar to that of North Carolina, which requires that live lineups include at least five fillers.[219] These fillers should be similar in race, height, age, and facial structure to the suspect. Ideally, lineups will be composed by a computer program to ensure similarity among the lineup participants. If the suspect has a unique feature, such as a mole or a tattoo, lineup administrators should select photos of other suspects with the same features or alter the filler photos so that the unique feature is present in all or most of the photographs.[220] Photos of the suspect should not be more than a year old [221] and, whenever possible, should not be photos where the suspect has different facial hair than during the time the incident took place.[222] Lineups should never include more than one suspect.[223] As in New Jersey, all live lineups and photo arrays should be recorded and preserved, so that if the reliability of the identification is brought into question, a court can use the recording to help determine if the identification was reliable.

Whenever possible, photo arrays and live lineups should be administered in isolation, away from third parties who could influence the evidence. Lineup administrators should select quiet, separate areas of police precincts and ensure that the eyewitness is separated from other police officers and other eyewitnesses. The lineup administrator should ensure that the eyewitness does not have any access to case materials, including “information about the case, [and] the progress of the investigation.”[224] Eyewitnesses should not be allowed to see images of the suspect outside of the lineup administration, including wanted posters of the suspect that may be hanging in the police department where the photo array or live lineup is being administered.[225]

The Third Circuit should mandate that police departments administer both photo arrays and live lineups blindly. Blind administration increases the accuracy of eyewitness identifications and lowers the risk of feedback from the lineup administrator.[226] Because police resources are limited, the task force should recommend that even where the photo array administrator is not blind to the suspect’s identity, the police department should follow the envelope method employed in New Jersey. This method will prevent the administrator from seeing the photographs before eyewitnesses make an identification, removing the risk that the administrator could influence the eyewitnesses beforehand.[227] However, because the administrator could provide feedback to the eyewitness post-identification, the envelope method should only be used when a fully blind test is impractical.

The Task Force should recommend that police departments change the way they instruct eyewitnesses prior to administering either a photo array or a live lineup. Because biased instructions lead to false identifications and artificially increased confidence in those identifications, it is critical that police departments give uniform, unbiased instructions to eyewitnesses.[228] Lineup administrators should explicitly state that the suspect may or may not be in the photo array or live lineup and that the entire case does not rely on the eyewitness making an identification. Police should try to ensure that eyewitnesses do not feel pressure to make an identification and that they are aware they can say that they do not know if the suspect is in the lineup. These eyewitness instructions are important because an eyewitness should not assume that the suspect is in the lineup. Furthermore, multiple viewings of the suspect by eyewitnesses should not be allowed, so as not to inflate their confidence in the identification.

Once an eyewitness makes an identification, police should immediately record the level of confidence the eyewitness has in that identification. Although juries often overvalue eyewitness confidence, it can serve a role at trial, especially if the confidence is measured immediately after an identification.[229] Eyewitnesses’ confidence in their identifications can be used as a factor to determine if the evidence is admissible. When an eyewitness identifies a suspect without hesitation and without prompting by the lineup administrator, that identification is more likely to be reliable. The eyewitness should also confirm in writing the identification. This provides an additional fail–safe to ensure that the eyewitness was not coerced into making an identification and allows for a statement of confidence to be in writing.

Because the scientific community is split on whether sequential or simultaneous viewing of a lineup results in the most reliable identifications, the Task Force should not state a preference for either.

The Task Force should improve existing jury instructions. If a jury were equipped to properly weigh eyewitness evidence and were aware of how and why some identifications are unreliable, police departments could internally strive to improve system variables knowing that a jury may discard improperly obtained identification evidence. Some jurisdictions use expert testimony to inform the jury about eyewitness identifications; however, this method generally appears unsuccessful.[230] Because current instructions do not assist the jury in properly evaluating eyewitness identifications, new, standard instructions should be implemented.

As in Dennis, the jury instructions in New Jersey prior to judicial reform were confusing and muddled.[231] This led the New Jersey Supreme Court to implement new jury instructions. Because the Third Circuit’s jury instructions are similar to those previously used in New Jersey—in that they are too long and do not explain simply how eyewitness identifications can be inaccurate and unreliable—the Task Force should also implement better jury instructions.[232] Proper instructions give juries a tool to compensate for their limited knowledge of how memory functions. Instructions should encourage a jury to examine various factors to determine not only if police procedure leading up to the identification was proper, but also if the eyewitness’s memory shows indicia of reliability. As in New Jersey, the Task Force should inform juries that they should refrain from assigning undue weight to eyewitness confidence; however, they should also be wary of overwhelming the jury with scientific information.

Finally, the Third Circuit Task Force should recommend a training program for police departments that will help implement these reforms. When implementing its legislative reforms, North Carolina recognized that training was essential to increase the reliability of eyewitness identification evidence.[233] Police officers should be instructed that following these procedures will not necessarily result in fewer convictions, but will help ensure that investigations are conducted in a manner most conducive to truth–finding. The Task Force could appoint a team of experts to travel to conferences and individual police departments to train police on how best to implement the proposed reforms. In order to ensure compliance, the Task Force should require periodic reports from both trial courts and police departments as to how the proposals are being implemented and if any modifications to the reforms are necessary in the future. The Task Force should reconvene in five years to reexamine scientific evidence and suggest any further changes.

CONCLUSION

The investigative procedures used in Dennis that caused such an unjust outcome are employed in many jurisdictions across the country. The Third Circuit Task Force on Eyewitness Identifications has been presented with the unique opportunity to examine every facet of the eyewitness identification process and recommend changes that will serve to decrease the risk of false convictions. New Jersey, Oregon, and North Carolina, among others, provide a path forward that the Task Force should follow. Through blindly administrated lineups, correct pre-lineup instructions, proper construction of lineups, helpful jury instructions, and other reforms analyzed above, the Third Circuit can serve as an example of how scientific research can be implemented into the justice system to produce both fair and just results.

[*] *. Executive Articles Editor, Southern California Law Review, Volume 91; J.D. Candidate 2018, University of Southern California Gould School of Law; B.A. History 2015, Brigham Young University. I would like to thank Professor Dan Simon and Professor Sam Erman for valuable guidance and feedback on earlier drafts of this note. In addition, I would like to thank the staff and editors of the Southern California Law Review for their excellent work.

[1]. Dennis v. Sec’y, Pa. Dep’t of Corr., 834 F.3d 263, 269 (3d Cir. 2016).

[2]. Id.

[3]. Id.

[4]. Id.

[5]. Id. at 270.

[6]. Id. at 270–71.

[7]. Id.

[8]. Id. at 275.

[9]. Id. at 269.

[10]. Id. at 275, 287.

[11]. See generally id. at 313–44 (McKee, C.J., concurring).

[12]. Order Establishing Third Circuit Task Force on Eyewitness Identifications (Sept. 9, 2016), http://www.ca3.uscourts.gov/sites/ca3/files/TFEyewitnessIdOrder_11042016.pdf.

[13]. Id.

[14]. See Dennis, 834 F.3d at 313 (McKee, C.J., concurring); Order, supra note 12.

[15]. While there are other factors that contribute to unreliable eyewitness identification evidence, this Note will only focus on system variables.

[16]. Dennis, 834 F.3d at 321 (McKee, C.J., concurring).

[17]. Id. at 313–16.

[18]. Id. at 315.

[19]. Id.

[20]. Id. at 316.

[21]. Id. at 317.

[22]. Id.

[23]. Id.

[24]. Id. at 318. Police never clarified where the rumors originated or why the detectives decided to further investigate the rumors. Id.

[25]. Id.

[26]. Id.

[27]. Id.

[28]. Id.

[29]. Id. at 319.

[30]. Id.

[31]. Id.

[32]. Id. at 320.

[33]. Id.

[34]. Id.

[35]. Hugo Münsterberg, On the Witness Stand: Essays on Psychology and Crime (1908).

[36]. See generally id.

[37]. Id. at 39–44.

[38]. Id. at 39.

[39]. Id. at 39–40.

[40]. See id. at 40, 67–68.

[41]. See generally id.

[42]. See James M. Doyle, Ready for the Psychologists: Learning from Eyewitness Errors, 48 Ct. Rev. 4, 4–5 (2012).

[43]. See id. at 4.

[44]. Id.

[45]. See Kansas v. Marsh, 548 U.S. 163, 182–99 (2006) (Scalia, J., concurring).

[46]. Id. at 185–86.

[47]. Id. at 188.

[48]. Id.

[49]. Id. at 193.

[50]. Id. at 198.

[51]. Id.

[52]. See generally Dennis v. Sec’y, Pa. Dep’t of Corr., 834 F.3d 263, 313–44 (3d Cir. 2016) (McKee, C.J., concurring).

[53]. Id. at 313.

[54]. Id.

[55]. Id.

[56]. Id.

[57]. Id. at 316 (quoting Comm. on Sci. Approaches to Understanding and Maximizing the Validity and Reliability of Eyewitness Identification in Law Enforcement and the Courts et al., Identifying the Culprit: Assessing Eyewitness Identification 22 (2014)).

[58]. See generally United States v. Wade, 388 U.S. 218 (1967).

[59]. Id. at 228.

[60]. Id.

[61]. Id. at 231–33.

[62]. Dan Simon, In Doubt: The Psychology of the Criminal Justice Process 50–51 (2012).

[63]. Id.

[64]. Id. at 51, 53.

[65]. A. Daniel Yarmey, Eyewitness Recall and Photo Identification: A Field Experiment, 10 Psychol. Crime & L. 53, 53 (2004).

[66]. Id.

[67]. Id.

[68]. Simon, supra note 62, at 51.

[69]. Id.

[70]. Id.

[71]. Id. at 76.

[72]. For an in-depth discussion of show-up procedures, see id. at 70–71, 77–78.

[73]. Id. at 51–52.

[74]. Id. at 52.

[75]. Id. at 69.

[76]. Id. at 51–52.

[77]. Id. at 70.

[78]. Id.

[79]. Id. at 81.

[80]. Id. at 72.

[81]. Id. at 71.

[82]. Id.

[83]. Daniel B. Wright, The Impact of Eyewitness Identifications from Simultaneous & Sequential Lineups, 15 Memory 746, 748 (2007).

[84]. Simon, supra note 62, at 71.

[85]. Dennis v. Sec’y, Pa. Dep’t of Corr., 834 F.3d 263, 321 (3d Cir. 2016) (McKee, C.J., concurring).

[86]. Steve D. Charman & Vanessa Quiroz, Blind Sequential Lineup Administration Reduces Both False Identifications and Confidence in Those False Identifications, 40 Law & Hum. Behav. 477, 477, 483–84 (2016).

[87]. Id. at 477.

[88]. Id. at 480.

[89]. Id. at 477.

[90]. Id.

[91]. Id.

[92]. Id. at 484.

[93]. Laura Smalarz & Gary L. Wells, Confirming Feedback Following a Mistaken Identification Impairs Memory for the Culprit, 38 Law & Hum. Behav. 283, 283 (2014).

[94]. Id.

[95]. Id.

[96]. Michael R. Leippe, Donna Eisenstadt & Shannon M. Rauch, Cueing Confidence in Eyewitness Identifications: Influence of Biased Lineup Instructions and Pre-Identification Memory Feedback Under Varying Lineup Conditions, 33 Law & Hum. Behav. 194, 197 (2009).

[97]. See infra Part IV (discussing how various jurisdictions have either adopted or rejected this reform).

[98]. Steven E. Clark, Michael A. Erickson & Jesse Breneman, Probative Value of Absolute and Relative Judgments in Eyewitness Identification, 35 Law & Hum. Behav. 364, 364 (2011).

[99]. Id.

[100]. Id. at 377.

[101]. See, e.g., Comm. on Sci. Approaches to Understanding & Maximizing the Validity & Reliability of Eyewitness Identification in Law Enf’t & the Courts et al., Identifying the Culprit: Assessing Eyewitness Identification 104 (2015) [hereinafter Comm. on Sci.].

[102]. Leippe, supra note 96, at 196, 204.

[103]. Id. at 196.

[104]. Id.

[105]. Id. at 194.

[106]. Id.

[107]. Id.

[108]. See Dennis v. Sec’y, Pa. Dep’t of Corr., 834 F.3d 263, 341–44 (3d Cir. 2016) (McKee, C.J., concurring).

[109]. Id. at 342.

[110]. See, e.g., Richard A. Wise et al., An Examination of the Causes and Solutions to Eyewitness Error, Frontiers Psychiatry, Aug. 14, 2014, at 1, 4.

[111]. Wright, supra note 83, at 747.

[112]. Dennis, 834 F.3d at 342 (McKee, C.J., concurring).

[113]. Id.

[114]. Id.

[115]. See generally Wise, supra note 110.

[116]. Id. at 1–2.

[117]. Dennis, 834 F.3d at 342–43 (McKee, C.J., concurring).

[118]. See generally State v. Lawson, 291 P.3d 673 (Or. 2012); State v. Henderson, 27 A.3d 872 (N.J. 2011).

[119]. N.C. Gen. Stat. § 15A-284.50–.53 (2015).

[120]. See Henderson, 27 A.3d at 896–903.

[121]. See id.

[122]. Id. at 896–900.

[123]. Id. at 878.

[124]. Id. at 880–81.

[125]. Id.

[126]. Id.

[127]. Id. at 881.

[128]. Id.

[129]. Id.

[130]. Id.

[131]. Id.

[132]. See id. at 882–83.

[133]. Id.

[134]. See id. at 892, 896.

[135]. Id. at 896–97.

[136]. Id. at 897.

[137]. Id.

[138]. Id.

[139]. Id.

[140]. Id. at 897–98.

[141]. Id. at 898.

[142]. Id.

[143]. Id.

[144]. Id. at 900.

[145]. Id. at 900–01.

[146]. Id. at 901–02.

[147]. Id.

[148]. Id. at 910–11.

[149]. Id. at 910.

[150]. Id. at 894–95.

[151]. Id. at 910–11.

[152]. See id. at 910–11, 924–25.

[153]. See State v. Lawson, 291 P.3d 673, 688 (Or. 2012).

[154]. Id. at 678.

[155]. Id.

[156]. Id. at 683–84, 688–89.

[157]. Id. at 683–84.

[158]. Id. at 678–79.

[159]. Id. at 679.

[160]. Id.

[161]. Id.

[162]. Id.

[163]. Id. at 679–80.

[164]. Id. at 680.

[165]. Id.

[166]. Id. at 698.

[167]. Id. at 685–88.

[168]. Id. at 698.

[169]. Id. at 693–94.

[170]. Id. at 685.

[171]. Id. at 686.

[172]. Id.

[173]. Id.

[174]. Id.

[175]. See id. at 698.

[176]. Id. at 686–87.

[177]. Id.

[178]. Id. at 688.

[179]. Id. at 693–94.

[180]. Id.

[181]. N.C. Gen. Stat. § 15A-284.50–.53 (2015).

[182]. See id. § 15A-284.51–.52.

[183]. Id. § 15A-284.52.

[184]. Id. § 15A-284.52(b).

[185]. Id.

[186]. Id.

[187]. Id.

[188]. Id.

[189]. Id. § 15A-284.52(c).

[190]. Id. § 15A-284.53.

[191]. Id.

[192]. Id.

[193]. See generally Comm. on Sci., supra note 101.

[194]. See id. at xiii–xiv.

[195]. Id. at 106.

[196]. Id. at 105–12.

[197]. Id. at 104.

[198]. Id. at 107.

[199]. Id. at 104.

[200]. Id. at 106–07.

[201]. Id. at 106.

[202]. Id. at 107.

[203]. Id. See also State v. Henderson, 27 A.3d 872, 897–99 (N.J. 2011).

[204]. Comm. on Sci., supra note 101, at 109.

[205]. See id.

[206]. Id. at 112.

[207]. See id.

[208]. Id.

[209]. Id.

[210]. Id. at 113–14.

[211]. Id.

[212]. See generally Simon, supra note 62.

[213]. Id. at 82–83.

[214]. Id. at 83–84.

[215]. Id. at 86–87.

[216]. Id. at 84.

[217]. See id at 84–86.

[218]. Id. at 85.

[219]. N.C. Gen. Stat. § 15A-284.52 (2015).

[220]. Memorandum from Deputy Att’y Gen. Sally Q. Yates to Heads of Dep’t Law Enf’t Components All Dep’t Prosecutors (Jan. 6, 2017) (on file with author) [hereinafter Yates].

[221]. Although Yates’s memo recommends against using a photograph that is “several years old,” the routine use of photographs that are no more than one year old would be ideal to increase the probability of accurate identifications. See id.

[222]. Id.

[223]. Simon, supra note 62, at 83.

[224]. Yates, supra note 220.

[225]. Id.

[226]. Charman, & Quiroz, supra note 86, at 484.

[227]. See State v. Henderson, 27 A.3d 872, 897 (N.J. 2011).

[228]. Leippe, supra note 96, at 197.

[229]. Yates, supra note 220.

[230]. Wise, supra note 110, at 4–5.

[231]. Henderson, 27 A.3d at 882–84.

[232]. Dennis v. Sec’y, Pa. Dep’t of Corr., 834 F.3d 263, 342 (3d Cir. 2016) (McKee, C.J., concurring).

[233]. See N.C. Gen. Stat. § 15A-284.50–.53 (2015).

Should Statistical Sampling Be Used to Prove Liability Under the False Claims Act in Healthcare Fraud? – Note by Milene Vega

March 2018July 2018Southern California Law Review Admin

From Volume 91, Number 3 (March 2018)
DOWNLOAD PDF

Should Statistical Sampling Be Used to Prove Liability Under the False Claims Act in Healthcare Fraud?

Milene Vega, R.N.[*]

TABLE OF CONTENTS

INTRODUCTION

I. BACKGROUND

A. Proving Liability Under the FCA

B. Damages Under the FCA

C. Statistical Sampling and the FCA

1. How Statistical Sampling Would Establish Liability

2. How Statistical Sampling Would Establish Damages

D. Legal Precedent for the Use of Statistical Sampling

1. Daubert Generally Permits Use of Statistical Methods

2. Wal-Mart Stores, Inc. v. Dukes: Individualized Determination Cannot Be Replaced by “Trial by Formula”

3. Tyson Foods: Admissibility of Statistical Sampling Turns on Reliability

E. Sampling in Other Types of Litigation

II. ANALYSIS

A. Cases Allowing the Use of Statistical Sampling

B. Cases Not Allowing the Use of Statistical Sampling

C. Courts That Likely Would Have Allowed Statistical Sampling if Data Had Been Reliable or Timing Was
Proper

D. Courts That Did Not Decide the Issue Determinatively

E. United States ex rel. Michaels v. Agape Senior
Community, Inc.

1. The District Court Case

2. The Circuit Court Case

III. IMPACT

A. Consequences of Rejecting Statistical Sampling for Liability

B. Consequences of Permitting Statistical Sampling for Liability

IV. A SOLUTION and a SUGGESTED OUTCOME

A. Criticisms and Potential Flaws in Judicial Reasoning

1. Courts Conflate the Use of Statistical Sampling in Proving Liability and Establishing Damages

2. Evidentiary Burden

3. Many Medical Decisions Are Subjective, and Medical Opinions Can Differ

4. Is Justice Being Served?

B. A More Reasonable Approach

CONCLUSION

INTRODUCTION

In recent years the False Claims Act (“FCA”)[1] has become the Department of Justice’s (“DOJ”) favorite tool to combat large-scale fraud—particularly healthcare fraud. In fact, from 2009 to 2016 alone, the DOJ recovered over $19.3 billion in health care fraud [2]—“more than half the health care fraud dollars recovered since the 1986 amendments to the False Claims Act.”[3] In general, the statute prohibits (1) knowingly submitting false claims to the federal government or causing another to submit a false claim, (2) knowingly creating a false record or statement to get a false claim paid by the federal government, and (3) retaining funds improperly received from the federal government.[4]

Although the FCA originated during the Civil War, Congress has periodically strengthened the FCA through amendments, which have converted it into a “modern weapon” that the DOJ and whistleblowers use to punish providers who knowingly submit false claims or false records or retain funds improperly received from the government.[5] The amendments have permitted larger damages, which in turn have incentivized whistleblowers and the DOJ to use whatever means available to prove liability in as many false claims as possible. During the last five years in particular, that has meant turning away from proving liability for each individual claim and instead using statistical sampling as proof of liability for a much larger number of claims.[6]

While many courts have consistently approved statistical sampling to calculate damages, they have not resolved whether statistical sampling is sufficient to establish liability under the FCA.[7] Some district courts have held that plaintiffs must prove the falsity of each individual claim, while others have held that falsity and liability may be established for thousands of Medicare and Medicaid claims from only a relatively small sampling.[8] This controversy has recently come to the fore in United States ex rel. Michaels v. Agape Senior Community, Inc.,[9] the first instance in which a circuit court has considered this issue. Notably, the government, despite refusing to intervene in the underlying action, filed a brief concerning the use of statistical sampling once the case was appealed,[10] suggesting its intent to continue using statistical sampling to prove liability.

Ultimately, the combination of the FCA’s trebling of damages and the civil penalties it imposes per false claim means that billions of dollars in potential damages hinge on how courts use statistical sampling.[11] This paper will (1) consider how district courts have treated the use of statistical sampling to prove liability in FCA cases concerning healthcare fraud, (2) analyze the outcome of Michaels, and (3) consider the effect of the courts’ decisions on future FCA and qui tam litigation. This paper will then criticize the courts’ decisions and propose that a more reasonable approach would be to use a bellwether trial to determine whether there is sufficient evidence to prove a generalized fraudulent practice and the likelihood of commonality between the claims. Only after preliminary liability has been established in such a way through a bellwether trial could statistical sampling then be used to establish liability for the remainder of claims, when it would otherwise be infeasible to prove the elements of liability for each individual claim.

I. BACKGROUND

The FCA originated in 1863, as a way to deter fraud against the government during the Civil War.[12] It targeted Union suppliers who were defrauding the United States, incentivizing private citizens to bring actions against suppliers at a time when the government lacked resources to investigate and prosecute such fraud.[13] Since then, the FCA has undergone several revisions, most recently in 2010 as part of the Patient Protection and Affordable Care Act (“ACA”).[14] Despite its 155–year history, the FCA is certainly not a war relic; today it remains more relevant than ever, with some scholars calling it a “modern nightmare for the health care industry.”[15] The FCA continues to serve as the federal government’s safeguard against being overcharged or provided “shoddy goods or services.”[16] In fact, FCA actions have significantly increased since 2009, with the DOJ recovering more than $3.5 billion in fiscal year 2015,[17] more than $4.7 billion in 2016,[18] and $3.7 billion in 2018—the eight consecutive year in which over $2 billion of yearly recoveries were from the healthcare industry [19]—and there are no signs of a slowdown. Indeed, the former head of the Justice Department’s Civil Division has called the FCA the “government’s most effective civil tool to ferret out fraud.”[20]

Today, most FCA litigation is originated by whistleblowers (called “relators”) under the statute’s qui tam provisions.[21] A typical claim at issue in healthcare fraud cases under the FCA is a request by a provider for reimbursement of services or items, submitted to the Centers for Medicaid & Medicare Services (“CMS”) or a state Medicaid agency.[22] A claim may be submitted individually or as part of annual cost reports presented to CMS or a state agency.[23] However, because the healthcare industry is so highly regulated, there are “an innumerable variety of issues [that] can cause claims to be false or fraudulent.”[24]

Generally, the issues can be categorized into claims that are factually false and claims that are legally false.[25] Factually false claims include misrepresentations of services provided, such as (1) when a service occurred in a different location than the one stated (for example, a service was provided at a physician’s office but is billed as having been provided at an ambulatory care center); (2) when service was not performed at all or a different service was performed; and (3) when a claim indicates that a physician performed a service, but in reality it was performed by unlicensed personnel.[26] Another type of factually false claim is for a service that CMS deems not medically necessary for a specific patient.[27] If a claim indicates that a service was medically necessary, but according to CMS it was not, the claim is false even if the services were provided and the treating physician is of the opinion that the service was necessary.[28]

On the other hand, legally false claims are those that, despite being factually accurate (for example, the services were provided as stated in the claim), have failed to meet a condition for payment under a “federal healthcare program.”[29] Such claims can be as simple as a patient failing to qualify under specific eligibility criteria or failing to meet a requirement under one of the federal government’s complicated payment rules.[30] Legally false claims also include claims resulting from a violation of the Anti-Kickback Statute or the Stark Law.[31] Further, under the implied false certification theory upheld by the Supreme Court in 2016, a claim for payment “impliedly certifies compliance with all conditions of payment.”[32] Therefore, if such a claim fails to disclose a violation of “material statutory, regulatory, or contractual requirement . . . it has made a misrepresentation that renders the claim ‘false or fraudulent’” under the FCA.[33] Regardless of whether it is a legally or factually false claim, plaintiffs must first prove liability and then, separately, damages.

A. Proving Liability Under the FCA

An individual or entity is liable under the FCA for (1) submitting a “false or fraudulent claim for payment or approval” or causing another person or entity to submit a false claim for payment or approval; (2) submitting a “false record or statement material to a false or fraudulent claim;” or (3) possessing or controlling funds improperly received.[34] Thus, not only does the statute prohibit actively submitting fraudulent claims or information, it also prohibits failing to pay back an overpayment within a specified timeframe, in what is sometimes referred to as the reverse false claims provision.[35]

One of the most important aspects of the FCA from a liability perspective is that a plaintiff must prove scienter.[36] To prove scienter, the government or a relator must prove either “actual knowledge,” “deliberate ignorance,” or “reckless disregard.”[37] However, specific intent to defraud is not required.[38] In other words, for there to be liability based on “actual knowledge,” an individual or entity must have “known” at the time that they were submitting a claim or statement that it was false or, in the case of improper retention of money, that they were not entitled to those funds.[39] Nonetheless, scienter can also be proved if the violator acted with “reckless disregard” or “deliberate ignorance.”[40] As such, to avoid liability an individual or entity must still establish reasonable safeguards to protect against filing inaccurate claims.[41]

B. Damages Under the FCA

While the stakes are already extremely high for providers, who risk being excluded from federally funded programs such as Medicare and Medicaid for losing at trial on just one FCA claim,[42] once liability is established, FCA damages are particularly large.[43] The FCA not only issues a civil penalty between $5,000 and $10,000 per false claim but also awards treble damages to a successful plaintiff-relator.[44] To put this in perspective, in United States v. Krizek, despite having only $245,392 in actual damages, the government sought $81 million in total damages as a result of treble damages and civil penalties of $10,000 for each of the 8,002 separate claims.[45] Additionally, violators are liable for the legal costs incurred by the government or plaintiff-relator.[46]

The FCA does, however, permit reduced damages if certain conditions are met. First, the violating party must provide the investigating officials with “all information known to such person about the violation within 30 days” of obtaining the information.[47] Second, the violating party must fully cooperate with the investigation.[48] Third, when the violating party provides the information, there must be no actions regarding the violation (criminal, civil, or administrative) commenced against them under the FCA, and the violating party must “not have actual knowledge of the existence of an investigation into such violation.”[49] Even the reduced damages, however, are to be assessed at no less than two times the amount sustained by the government.[50] Because the damages at stake are so incredibly high, the method by which plaintiff-relators can prove liability for each claim is a major point of contention in FCA cases: the lower the burden to prove liability, the higher the number of claims and subsequent damages.

C. Statistical Sampling and the FCA

Statistical sampling is one of the methods that ultimately reduces the burden of proving liability in FCA cases. While the FCA does not statutorily authorize statistical sampling, it also does not prohibit it.[51] FCA cases, as courts have acknowledged, present a particular challenge, because for especially large fraud schemes it becomes prohibitively expensive and impractical for qui tam relators and the government to pursue and prove each individual claim.[52] As a result, starting in 1991 with Chaves County Home Health Service, Inc. v. Sullivan,[53] courts have allowed statistical sampling and extrapolation to be used to establish damages once liability has already been proven.[54]

Despite its past use, until recently [55] statistical sampling was generally limited to establishing damages.[56] In other words, plaintiffs had to prove liability through other evidence, as courts recognized that “establish[ing] damages when liability has been proven is different than using extrapolation to establish liability.”[57] In recent years, though, district courts have taken different approaches in determining whether statistical sampling can be used to establish liability.[58] However, no circuit court has yet resolved the issue, and the one time the issue has been certified for appeal, the court declined to decide it.[59] As such, the question remains whether statistical sampling is sufficient evidence to establish liability under the FCA. Additionally, as will be discussed in greater detail, courts frequently conflate statistical sampling for liability and damages, even when they claim to only be using statistical sampling to calculate damages. Thus, it is important to understand how statistical sampling can be used in practice to establish liability and to determine damages, clearly highlighting the differences between the two uses.

1. How Statistical Sampling Would Establish Liability

The following example demonstrates how statistical sampling would typically be used to establish liability in an FCA case. Assume that the government brings suit against a healthcare provider for allegedly false claims submitted to Medicare between 2012 and 2015. During that period, the healthcare provider submitted 100,000 claims. It would be highly impractical for the government to carefully review each of the 100,000 claims and bring suit on every single claim found to be false. Instead, the government reviews a statistically valid random sample of 500 claims. Upon completing its review, the government has proof that of these 500 claims, 250 (50 percent) are false under the FCA. Accordingly, based on this statistical sampling, the government claims that 50 percent of the total number of claims, or 50,000, are false. If the court were to allow statistical sampling to establish liability, the healthcare provider could be held liable for 50,000 claims, even though the government definitively proved the falsity and knowledge elements of only 250 claims.

Using statistical sampling to establish liability would require using statistical sampling to establish damages almost by default. In the example above, liability for 50,000 claims means little without corresponding damages. However, since the government could only establish the exact amount of damages for 250 claims, the government would have no choice but to rely on statistical sampling to also calculate damages for the remaining 49,750 claims.

2. How Statistical Sampling Would Establish Damages

In theory, it is possible to use statistical sampling only to calculate damages (and not to establish liability in any way). For example, a defendant healthcare provider could admit that every single time they submitted certain types of claims to Medicare, they knew the claims were false. The government could then determine that 3,000 of these types of claims were submitted and decide that it would be impractical to determine the exact amount of damages for each one. Instead, the government could review a statistically valid sample of 300 of these 3,000 claims. If based on its review the government calculates an average damage amount of $250 per false claim, then the government could be awarded $750,000 in damages (or $2,250,000 after trebling) for the 3,000 false claims, despite having only reviewed 300 of them.

In practice, however, such situations are exceedingly rare in FCA litigation. Given the FCA’s trebling of damages and how its civil penalties are levied on each individual claim, defendants have virtually no incentive to admit liability on claims the government is unable or unwilling to thoroughly review, and they have a strong incentive to challenge the alleged falsity of such claims. Accordingly, even when a court claims that it is using statistical sampling solely to determine damages, unless liability has already been proven for every single claim, the court is actually using statistical sampling to establish liability.[60]

Having discussed how statistical sampling could feasibly be used to establish liability and damages separately, this Note turns now to an overview of the legal precedent surrounding the use of statistical sampling.

D. Legal Precedent for the Use of Statistical Sampling

1. Daubert Generally Permits Use of Statistical Methods

Statistical sampling evidence is typically introduced through expert testimony. Generally, the Federal Rules of Evidence allow for the admission of an expert’s testimony if certain requirements are met.[61] Those requirements, provided in Rule 702, are that (1) the expert’s knowledge will help the trier of fact to better understand evidence in the case or make a factual determination; (2) the testimony is sufficiently based on facts or data; and (3) the testimony both results from, and properly applies to, the facts of the case and reliable principles and methods.[62] Accordingly, a court must first determine that an expert is testifying as to specialized knowledge and that this knowledge will be helpful to the trier of fact.[63]

Under Daubert v. Merrell Dow Pharmaceuticals, Inc., a court must determine not only if evidence is relevant but also whether it is reliable.[64] The court, acting as gatekeeper, must consider the following factors, commonly known as the “Daubert factors”:

1) whether the expert’s scientific technique or theory can be, or has been, tested; 2) whether the technique or theory has been subject to peer review and publication; 3) the known or potential rate of error of the technique or theory when applied; 4) the existence and maintenance of standards and controls; and 5) whether the technique or theory has been generally accepted in the scientific community.[65]

It follows then, under Daubert, that an expert can testify as to extrapolated data so long as the methodology is appropriate and the data is “randomly selected” and “representative of the whole.”[66] However, the Daubert factors are not exclusive,[67] and the court is ultimately given considerable leeway in determining whether evidence is admissible.[68] Additionally, the proponent of the expert testimony must establish by a preponderance of the evidence that the testimony satisfies the admissibility requirements.[69]

2. Wal-Mart Stores, Inc. v. Dukes: Individualized Determination Cannot Be Replaced by “Trial by Formula”

One of the main legal precedents for the use of statistical sampling comes from the landmark case Wal-Mart Stores, Inc. v. Dukes, in which the Supreme Court refused to allow trial by statistics.[70] However, the Court did not close the door to the use of statistical sampling during the damages phase.[71] In Wal-Mart, respondents attempted to certify a class of 1.5 million female employees by alleging that local managers pervasively discriminated against women in the workplace, favoring male employees for promotions and higher pay, and that Wal-Mart had refused to restrain the managers’ discretion in these decisions.[72] To certify the class,[73] respondents had to prove that “‘questions of law or fact [were] common to’ all the women of Wal-Mart.”[74] To satisfy this requirement, they attempted to use anecdotal testimony of 120 women, the expert testimony of a sociologist, and statistical evidence showing pay and promotion disparities between male and female employees.[75]

The Court disregarded the expert testimony, finding that the anecdotal evidence was too weak.[76] The statistical evidence consisted of a regression analysis showing a disparity between the number of women promoted to management positions and the total number of available employees.[77] The Court found that the evidence did not raise an inference of a company-wide discriminatory policy, and “merely proving that the discretionary system has produced a racial or sexual disparity is not enough.”[78] The Court noted that a defendant is “entitled to litigate its statutory defenses to individual claims”[79] and has “a right to contest the fact of its liability to each claimant, including the fact of the claimant’s injury.”[80] The Court reversed the Ninth Circuit, holding that “individualized determinations of each employee’s eligibility for backpay” could not be replaced by “Trial by Formula.”[81]

In the post–Wal-Mart period, courts have typically allowed statistical sampling to prove damages but not aspects such as liability or commonality of issues.[82] For example, in Dailey v. Sears, Roebuck & Co., the court held that plaintiffs in a class action could not use statistical sampling to show commonality of issues for class certification.[83]

3. Tyson Foods: Admissibility of Statistical Sampling Turns on Reliability

In 2016, the Supreme Court revisited the use of statistical sampling evidence in Tyson Foods, Inc. v. Bouaphakeo.[84] Here, the Court rejected bright–line rules regarding statistical sampling, instead preferring a case-by-case approach.[85] In Tyson Foods, a class action suit was filed against an employer. The suit alleged that the employer failed to compensate employees for the time it took to put on and take off protective gear, resulting in unpaid overtime wages in violation of the Fair Labor Standards Act (“FLSA”).[86] To establish the amount of unpaid time, the plaintiffs relied on an expert study that reviewed evidence concerning only a sample of class members, such as videotaped observations of the time it took some employees to put on and take off the protective gear.[87] Based on the review of the sample, the expert determined that one category of employees averaged eighteen minutes a day putting on and taking off the gear, while another averaged twenty-one minutes and fifteen seconds.[88] Since the employer did not maintain records tracking this time for each individual, the plaintiffs calculated the damages for each affected member of the class based on the averages from the sample.[89] The employer did not move for a hearing to determine the validity of the study under Daubert or attempt to discredit the expert’s testimony with a rebuttal expert, but rather argued that the study overstated the average times and that the actual differing times it would take each individual to put on and take off the protective gear “made the lawsuit too speculative for classwide recovery.”[90] In affirming the damages awarded, the Court recognized that statistical sampling is just another piece of evidence that can “establish or defend against liability”[91] and is at times “the only practicable” approach to prove liability, and thus under the circumstances of the instant case sampling could be used.[92]

Despite both parties and their respective amici urging the Court to establish “broad and categorical rules governing the use of representative and statistical evidence,” the Court refused to do so.[93] The Court instead concluded that whether statistical sampling is appropriate depends on “the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action”[94] and the “facts and circumstances particular” to each case.”[95] The opinion in Tyson extends well beyond the FLSA and class actions and has been hailed by some legal practitioners as the new roadmap to FCA claims.[96]

E. Sampling in Other Types of Litigation

Statistical sampling is also used in other types of litigation, and the breadth of its use as appears to be expanding. For example, statistical sampling is frequently used in antitrust, equal employment opportunity, discrimination, voting rights, product liability, trademark, fairness in sentencing, and mass tort cases (including environmental cases such as toxic torts).[97] In 2010, statistical sampling was also permitted in MBIA Insurance Corp. v. Countrywide Home Loans, Inc., a notable mortgage securities case.[98]

II. ANALYSIS

As Tyson Foods indicates, courts, including the Supreme Court, are reluctant to establish clear, general rules regarding the use of statistical sampling in litigation, and this is no different in cases involving the FCA. As such, parties involved in FCA litigation and courts deciding FCA claims must rely on the sometimes–conflicting reasoning of previous decisions regarding the use of statistical sampling. Accordingly, an overview of frequently cited and relied–upon cases addressing the use of statistical sampling in FCA claims is necessary in order to fully understand the legal arguments made for and against their use. Having already reviewed the background of the FCA and established the legal precedents for the use of statistical sampling evidence, this Note will now analyze how district courts have approached the use of statistical sampling to prove liability in FCA cases pertaining to healthcare fraud.

The following is an overview and survey of the sixteen most cited and relevant cases. This Part of the Note extracts their fundamental legal principles concerning statistical sampling and categorizes and discusses them as follows: Section A, courts allowing the use of statistical sampling to prove liability; Section B, courts not allowing the use of statistical sampling to prove liability; Section C, courts that likely would have allowed statistical sampling if data had been reliable or the timing was proper; and Section D, courts that did not decide the issue determinatively. Section E provides an in-depth discussion of Michaels v. Agape Senior Community, Inc., given the magnitude of its importance as the only case concerning statistical sampling and FCA liability to reach an appellate court.

Table 1. Healthcare Fraud Cases with Statistical Sampling for Liability

Case	Venue	Year	Statistical Sampling Allowed for Liability?	Notes
United States ex rel. Martin v. Life Care Centers. of America, Inc.[i]	E.D. Tenn.	2014	Y
United States v. Robinson [ii]	E.D. Ky.	2015	Y
United States v. Aseracare Inc [iii]	N.D. Ala.	2014	Y
United States ex rel. Ruckh v. Genoa Healthcare, LLC [iv]	M.D. Fla.	2015	Y
United States ex rel. Loughren v. UnumProvident Corp. [v]	D. Mass.	2009	Y
United States ex rel. Wall v. Vista Hospice Care, Inc. [vi]	N.D. Tex.	2016	N
United States v. Medco Physicians Unlimited [vii]	N.D. Ill.	2000	N
United States ex rel. Trim v. McKean [viii]	W.D. Okla.	1998	N*	*Denied based on “tainted” data.
United States ex rel. El-Amin v. George Washington University [ix]	D.D.C.	2008	N*	*Denied because of inappropriate timing, and relators failed to define parameters of sample size.
United States ex rel. Guardiola v. Renown Health [x]	D. Nev.	2014	Y*	*Only allowed statistical sampling in discovery; did not rule as to trial phase.
United States v. Cabrera-Diaz [xi]	D.P.R.	2000	Y*	*Granted on a motion for default summary judgment.
United States v. Krizek [xii]	D.D.C.	1994	Y*	*Defendants agreed to use of a small sample to determine liability.
United States v. Fadul [xiii]	D. Md.	2013	Y*	*Addressed statistical sampling only with regard to common law claim, not FCA claim.
United States v. Friedman [xiv]	D. Mass.	1993	N*	*Acknowledged validity in general of statistical sampling but only referred to statistical sampling regarding damages.
United States ex rel. Michaels v. Agape Senior Community, Inc. [xv]	D.S.C.	2015	N
United States ex rel. Michaels v. Agape Senior Community, Inc. [xvi]	4th Cir.	2017	N*	*Held that it was inappropriate to review issue through an interlocutory appeal.

A. Cases Allowing the Use of Statistical Sampling

The following are cases in which the court allowed the use of statistical sampling to prove liability in FCA litigation. These summaries demonstrate that courts arrive at this decision primarily based on (1) the FCA’s purpose of combating large scale fraud, (2) the impracticability of the government or a relator proving each one of thousands of claims, and (3) the lack of authority that would disallow the use of statistical sampling.

First, in United States ex rel. Martin v. Life Care Centers of America, Inc., the defendants argued that “the Government cannot satisfy its burden of proof through evidence based on statistical sampling and extrapolation.”[99] The court, finding that no legal precedent was determinative,[100] held that statistical sampling could be used by a plaintiff to attempt to prove liability in FCA litigation.[101] The court reasoned that the purpose of the FCA—to fight large-scale fraud against the government—would be undermined were it not to allow statistical sampling, because it would be impractical to review individual claims on a large scale.[102] Notably, however, the court ruled that the fact finder must determine how much weight is given to the statistical evidence.[103]

Similarly, in United States v. Robinson, the court denied the defendant’s motion for summary judgment, finding the defendant had not proven that the use of extrapolated data was inappropriate.[104] Agreeing with Martin, it held that, with “over 25,000 claims at issue,” it would be impracticable to require a plaintiff to present evidence of each claim individually and that it would defeat the purpose of the FCA.[105]

Additionally, the court in United States v. Aseracare Inc., found that “statistical evidence is evidence” and deferred to the fact finder as to the weight such evidence should receive.[106] Notably, the court did not distinguish between the use of statistical sampling at the damages stage and at the liability stage, although it did ask the plaintiffs whether they were using sampling to establish liability or damages.[107]

In another example, United States ex rel. Ruckh v. Genoa Healthcare, LLC, the relator moved to admit expert testimony on statistical sampling before any sampling had been done.[108] The defendant argued that the expert testimony was inadmissible, citing United States v. Friedman (discussed infra in Part II.D).[109] The court was not persuaded by the defendant’s arguments and, quoting Martin, explained that even though Friedman did not allow statistical sampling for the case at hand, it did “not stand for the proposition that statistical sampling cannot be used” at all.[110] Instead, the court “recognized the validity of statistical sampling” in general [111] and held that no testimony was excludable solely because it was statistical sampling.[112]

Finally, in United States ex rel. Loughren v. UnumProvident Corp., the court concluded that statistical sampling was adequate to determine the number of false claims.[113] Notably, however, it only did so after a bellwether trial, during which testimony was presented that the defendant had a generalized policy of coercing its insureds to file for Social Security disability benefits when it “knew or should have known that these insureds did not meet the statutory definition of disability required to qualify.”[114] While the court ultimately granted the motion to exclude the expert’s testimony, it did so only because it found the statistical sampling and expert testimony to be unreliable.[115]

B. Cases Not Allowing the Use of Statistical Sampling

The following two cases are examples of courts disallowing statistical sampling in FCA litigation and the typical reasoning behind that decision. Courts arrive at this decision primarily based on (1) the claims at issue involving subjective medical judgment, (2) the plaintiff’s burden in establishing falsity and scienter for each claim, and (3) the lack of authority that would allow the use of statistical sampling.

In United States ex rel. Wall v. Vista Hospice Care, Inc., a case involving patient eligibility for hospice care, the court struck expert statistical sampling testimony.[116] The court reasoned that statistical sampling was insufficient to prove liability in an FCA claim when the “underlying determination of eligibility for hospice is inherently subjective, patient-specific, and dependent on the judgment of involved physicians.”[117] While the court recognized the general validity of statistical sampling, it noted that it is not always permissible and instead turns on “the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”[118] In fact, the court argued that any ruling that extrapolation and sampling are always reliable, no matter the “nature of the data and the nature of the claim,” is incorrect in light of Wal-Mart, which requires “a particularized analysis of . . . whether extrapolation from a particular data set can reliably prove the elements of the specific claim.”[119]

In arriving at its decision the court also noted how the facts were analogous to those in Michaels v. Agape Senior Community, Inc., in that each claim involved subjective decision–making based on the facts and circumstances surrounding each individual patient.[120] The court then differentiated the case at hand from several decisions that did permit sampling, because those cases did not involve a physician’s necessary “subjective clinical judgment” in predicting an individual’s life expectancy.[121] Further, one of the cases, Robinson, dealt with only a single optometrist, as opposed to Vista Hospice Care, which involved many physicians at different locations.[122] These points were particularly important because even if there were sufficient proof in one particular claim requiring subjective judgment, such a finding could not impact the burden of proof for a different claim requiring subjective judgment involving “different patients, different medical conditions, different caregivers, different facilities, different time periods, and different physicians.”[123]

Ultimately, the court determined that an FCA claim based on the exercise of a physician’s subjective clinical judgment “must be predicated on the presence of an objectively verifiable fact at odds with the exercise of that judgment,” and not simply question the subjective judgment.[124] An example of such a claim involving an “objectively verifiable fact” would be a physician not actually exercising clinical judgment where he neither reviewed a patient’s medical condition nor saw the patient.[125] Accordingly, an FCA claim cannot rely solely on an expert’s disagreement with a certifying physician’s subjective conclusion.[126]

Separately, the court emphasized that the FCA’s scienter requirement is independent of the requirement to show the falsity of records or claims.[127] In other words, showing that a defendant operated with reckless disregard for falsity does not in itself prove actual falsity under the FCA.

In an older case, United States v. Medco Physicians Unlimited, the plaintiff asked the court to extrapolate from an expert review of sixteen of the defendant’s patients that the defendant had fraudulently billed for all of its patients.[128] The court declined because the plaintiff had failed to cite any authority supporting extrapolation, or even to provide evidence sufficient to prove fraudulent billing for the sixteen reviewed patients, let alone the rest.[129]

C. Courts That Likely Would Have Allowed Statistical Sampling if Data Had Been Reliable or Timing Was Proper

FCA cases sometimes discuss the issue of statistical sampling but refuse to allow it for reasons specific to the case at hand. However, if these case–specific issues had been corrected, statistical sampling would likely have been allowed. As demonstrated in the summaries that follow, courts have refused to permit the use of statistical sampling to prove liability when (1) the data or methodology used in conducting the sample was flawed, (2) the plaintiff raised the issue of statistical sampling after an unreasonable delay, or (3) the plaintiff failed to properly establish the parameters of the sample.

In United States ex rel. Trim v. McKean, the court rejected the use of audits as statistical data for extrapolation because the data was “tainted.”[130] The court appeared to take issue with the method and factual circumstances surrounding the performance of the audit and not necessarily the use of extrapolated statistical data in FCA claims generally.[131] In fact, it found that the audit was “persuasive evidence of false claims.”[132]

In United States ex rel. El-Amin v. George Washington University, the court denied the relators’ motion for “trial by representative sample” because the litigation had been pending for eleven years, and at no point had the relators raised the issue of statistical sampling.[133] In addition to the practical inconveniences presented by this last–minute argument, the relators were unprepared to even define the universe of claims, instead merely providing an estimate of somewhere between 5,000 to 15,000 claims.[134] It seems very likely, however, that the court would have allowed statistical sampling had the issue been raised by the relators in a timely matter, given the court’s emphasis on the injustice of allowing the case to be converted to a trial by representative sample so late into the litigation and its mention that the “[r]elators [had not] taken the preparatory steps that would give them the proper foundation to try this case by statistical sample.”[135]

D. Courts That Did Not Decide the Issue Determinatively

Finally, some courts discuss the issue of statistical sampling but refuse to rule on the matter. As demonstrated by the following summaries, courts have failed to decide the issue of statistical sampling when they (1) deferred the decision to a later stage of the litigation that never occurred; (2) decided the matter on a motion for default judgment or the defendants agreed to the use of a sample; (3) addressed statistical sampling outside of the FCA context, even though the opinion also addressed FCA claims; and (4) recognized the general validity of statistical sampling but opted to award damages only on claims the court was able to actually examine. It is worth noting, however, that each of these cases, in some way, acknowledges the validity of statistical sampling.

In United States ex rel. Guardiola v. Renown Health, the court allowed statistical sampling in the discovery phase but did not make a ruling on admissibility of statistical sampling, reserving it instead for the “pre-trial stage.”[136] While the case settled before trial, the judge’s willingness to allow statistical sampling at the discovery phase suggests that he would likely have permitted it in pre-trial motions.

In another case, United States v. Cabrera-Diaz, the court granted the plaintiff’s motion for default judgment, finding—based on statistical sampling—that the defendants had violated the FCA by knowingly “caus[ing] to be presented false or fraudulent claims to the United States”[137] However, Cabrera-Diaz is exceptional, as the Martin court argued, in that it was decided on a motion for default judgment.[138] Because the physician was not present to oppose the motion, liability was proven not by the use of statistical sampling but instead as a result of the defendant’s failure to answer.[139] As such, given that the outcome was determined by a “procedural mechanism,” the court’s reasoning should not be viewed as determinatively binding.[140] While one cannot say with certainty what the outcome would have been had the defendants responded to the motion, the opinion still reflects a willingness to accept statistical sampling to prove liability.

A similarly unique case is United States v. Krizek, in which the court conducted a trial based on seven patients and 200 claims “that the government believed to be representative” of 8,002 reimbursement claims.[141] This decision resulted from the defendants’ motion to quash a subpoena seeking office records, on the grounds of patient confidentiality.[142] Apparently for the purposes of protecting such confidentiality, the court decided to move forward with a smaller sample trial based on the seven patients’ records that the government already possessed.[143] The opinion noted, however, that the defendants had agreed “that a determination of liability” on the smaller trial would then extend the liability to the remaining 8,002 claims.[144] Because the defendants had agreed, the court did not explain its rationale or the legal precedent for using a sample to establish liability; therefore this opinion cannot be used as binding precedent for the use of statistical sampling to prove liability in FCA claims.

Another case, United States v. Fadul,[145] is often cited by defendants and courts to reject the use of statistical sampling to prove liability in FCA claims. Nonetheless, while Fadul technically addressed statistical sampling, it did not address statistical sampling in the context of an FCA claim.[146] In Fadul, the government moved for summary judgment on both the FCA and common law claims.[147] The court determined, however, that summary judgment on the FCA claim was inappropriate because there were discrepancies in the record regarding scienter and because of the “general preference for allowing the issue of scienter to be decided by a fact finder.”[148] Thus, the court never addressed statistical sampling in the context of the government’s FCA claim.

Rather, statistical sampling came up only when determining damages for the common law claim based on payment by mistake of fact relating to improper Medicare and Medicaid coding.[149] The court made clear that, “[n]otably, ‘[k]nowledge of falsity is not a requisite for recovery under the mistake doctrine.’ . . . Thus, even where it cannot establish that a defendant acted knowingly for purposes of the False Claims Act, the Government may be entitled to recovery under the alternative theory of payment by mistake of fact.”[150] Accordingly, Fadul provides no insight as to whether statistical sampling is appropriate in FCA claims.

Another case frequently cited as precedent for rejecting statistical sampling to prove liability [151] is United States v. Friedman.[152] There, however, the court did not outright reject statistical sampling to prove liability. Instead, it “recognize[d] the validity of the mathematical and statistical projections based on a review of a smaller number of claims” but noted that it was “reluctant to accept a statistical sampling” in that particular case because it had the opportunity to scrutinize discrete claims and wanted the opportunity to do the same for the remaining claims.[153] The court referred to the use of statistical sampling in calculating damages but did not delve into its admissibility for purposes of proving liability.[154]

E. United States ex rel. Michaels v. Agape Senior Community, Inc.

All of the cases summarized above are district court cases. Michaels is the only case involving statistical sampling in FCA litigation to reach a circuit court. For this reason, a thorough summary of the district court opinion and the arguments made to the Fourth Circuit is appropriate, as the arguments may serve as a guide for future litigants.

1. The District Court Case

In Michaels, the plaintiff-relators alleged that their former employer, an entity owning twenty-four nursing homes, had engaged in a widespread fraud by submitting false claims for reimbursement of home healthcare services.[155] The number of claims at issue was approximately between 53,280 and 61,643.[156]

During discovery, the court ruled that statistical sampling could not be used to determine damages.[157] The case later settled before trial, but the government objected to the settlement, believing that it represented only 10 percent of the potential damages of the case, which it estimated to be around $25 million.[158] As a result, the defendants filed a motion to enforce the settlement.[159] During oral argument it was revealed that the government had relied on statistical sampling in arriving at its estimated damages, despite the previous order from presiding Judge Joseph F. Anderson, Jr. rejecting such use in the instant case.[160] Given the voluminous number of claims, and the great expense and time involved were the case to continue to trial, Judge Anderson detailed his reasoning for denying the use of statistical sampling for the purpose of certifying the issue for interlocutory appeal.[161]

Judge Anderson affirmed the reasoning of the court in Friedman,[162] denying the use of statistical sampling because the claims at issue were distinct and based on evidence that should be subject to individual examination in court.[163] He made a distinction between the case at hand, in which all relevant medical records were available to the parties, and cases in which evidence was no longer available and thus statistical sampling was the only way that the case could be tried.[164] Denying the use of statistical sampling in those cases would “allow widespread fraud to go unpunished.”[165] Here, however, because the claims at issue concerned medical records and patient information that varied from patient to patient, the case was not conducive to statistical sampling.[166] The court carefully noted numerous cases cited for and against the use of statistical sampling before certifying the decision for interlocutory appeal.[167]

It is worth noting that the court seemed to conflate the use of statistical sampling in proving liability and in establishing damages. At no point did the court distinguish between the two.[168]

2. The Circuit Court Case

On appeal, the government relied heavily on Martin and argued that statistical sampling was essential to these types of cases.[169] In turn, the defendants argued that as hospice eligibility is subjective and individualized, statistical sampling would not be an appropriate method for establishing liability.[170] The defendants also emphasized that statistical sampling is typically used to calculate damages once liability has been conceded or is indisputable.[171] Additionally, they argued that scienter could not be proved through statistical sampling, making an analogy to Fadul, in which the court found that collective knowledge of employees/agents was insufficient to prove scienter.[172] Thus, Agape posited that aggregate data from sampling is not sufficient to prove scienter.[173]

Amicus briefs were also filed in support of the defendants-appellees by Savaseniorcare Administrative Services, LLC (“Savaseniorcare”); the American Hospital Association (“AHA”) and the Catholic Health Association of the United States (“CHA”); and the American Health Care Association (“AHCA”).[174] These amici provide a glimpse into what the arguments against statistical sampling could look like should this issue reach the Supreme Court in the future—as some practitioners have suggested it might [175]—and thus are worthy of detailed review.

Savaseniorcare argued that whether a treatment is reasonable or necessary, and thus appropriately reimbursable, cannot be decided by a mathematical formula. These decisions are necessarily subjective, involving complex circumstances that require individualized medical judgment.[176] Additionally, it noted that “reasonable disagreement of professional opinion” is insufficient to establish liability under the FCA;[177] the conduct must instead be objectively false.[178] As such, it would be inappropriate to conduct a trial by formula when the relevant conduct consisted of subjective medical decisions concerning whether a patient should be admitted to hospice care.[179] Further, it emphasized that FCA liability does not attach to an “underlying fraudulent scheme” but rather only attaches when there is an actual claim for payment.[180] Therefore, trial by formula would be insufficient, since it would not provide proof that each individual claim was false.[181]

Savaseniorcare also noted that the government had been trying to avoid appellate review in both the case at hand and Martin because the government is accustomed to using the threat of statistical sampling to obtain large settlements from providers.[182] It urged the court to recognize the government’s assertion that the inability to use statistical sampling would allow large-scale fraud to run rampant and unpunished is nothing more than a scare tactic.[183] It then argued that the court should not sidestep the decision, given how often the issue arises in healthcare fraud litigation and FCA cases in general, and that it is a controlling question of law.[184]

The AHA and CHA made similar arguments, but they also focused heavily on the plaintiff’s burden of proof, arguing that it would be illogical and counter to the purpose of the FCA to shift the burden to defendants.[185] Doing so would essentially make way for “financially motivated relators to attempt to collect large judgments . . . by second guessing doctors’ medical judgments.”[186] They also relied heavily on United States ex rel. Nathan v. Takeda Pharmaceuticals North America, Inc. to assert that if “statistical allegations” are insufficient to plead a cause of action, they should be insufficient to find liability.[187]

AHA and CHA also contended that arguments regarding whether statistical sampling is appropriately conducted under the Daubert standard have no bearing as to whether statistical sampling should be used to establish liability in the first place.[188] In other words, it is ultimately irrelevant whether the statistical sampling is reliable under Daubert because statistical sampling should not be used to establish liability, even if it is reliable. Further, they suggested that since relators can recuperate reasonable fees under the FCA, including expert fees, it is particularly unjustified that liability standards should be relaxed: if what the relators allege is true, and they prove each claim, then they will be able to recuperate the expenses incurred in satisfying their burden of proof.[189] They also argued that the district court cases that the relators and the government relied upon only address the issue of proving damages, not the issue of proving liability.[190] Finally, they argued that the approval of statistical sampling to establish liability would prove catastrophic to the healthcare industry, ultimately resulting in increased healthcare costs.[191]

Similar to the AHA and CHA, the AHCA espoused concern over the burden of proof.[192] It also argued, however, that the use of statistical sampling to prove liability would violate the Due Process Clause.[193] Given the FCA’s treble damages allowance, amounting to “essentially punitive damages,” due process rights would be violated if defendants were not permitted to defend their liability for each specific claim.[194] Finally, it emphasized the practical effects of allowing statistical sampling to prove FCA liability, namely, continued pressure for providers to settle meritless cases.[195]

During oral argument, the Fourth Circuit judges seemed uninterested in the statistical sampling arguments, commenting that the district court had the ability to decide whether statistical sampling was appropriate for each individual case given the factual context.[196] Instead, the court was more interested in the government’s veto power over the settlement.[197]

Ultimately, the Fourth Circuit dismissed the statistical sampling portion of the relators’ appeal as improvidently granted, finding that it was not a pure question of law and, as such, was not appropriate for interlocutory review under 28 U.S.C. § 1292(b).[198] The court noted that the relators themselves presented the issue as whether the statistical sampling was properly conducted under the Daubert standard, not whether it could be used at all.[199] Thus, the question at issue was whether the district court had discretion to allow the relators to “use statistical sampling to prove [the] case.”[200] The court emphasized that there was a difference “between a question of law, which will satisfy § 1292(b), and a question of fact or matter for the discretion of the trial court,” concluding that the statistical sampling issue in Michaels was a factual matter subject to the abuse of discretion standard and thus inappropriate for interlocutory appeal.[201] Through its emphasis that the issue as presented was a factual one, the circuit court was careful to avoid comment as to whether the use of statistical sampling is appropriate for proving liability as a matter of law. Despite passing on the issue for the moment, the decision in practice allows district courts to continue to use discretion in determining whether statistical sampling is appropriate for a particular case.[202]

With the resolution of the interlocutory appeals, Michaels settled and was dismissed in August 2017.[203] While Michaels did not ultimately provide the answer practitioners were looking for, other circuits will likely have to determine in the near future whether statistical sampling can be used to prove liability. As such, this Note turns now to the impact a more definitive ruling would have.

III. IMPACT

A. Consequences of Rejecting Statistical Sampling for Liability

Should a circuit court decide to reject the use of statistical sampling to prove liability, FCA discovery would become significantly more burdensome given the increase in the number of claims that must be proven.[204] Whistleblowers also argue that the costs would be so significant that “combat[ing] large scale fraud through whistleblower litigation” would become much harder,[205] potentially defeating the very purpose of the FCA. They argue that attorney’s fees would increase insurmountably, and cases would take much longer to settle. A rejection of statistical sampling would also reduce the potential recovery of damages, since litigants would have to prove each individual claim and would be unable to collect damages from as many claims as they would if statistical sampling was allowed. Ultimately, this would greatly reduce the incentive for whistleblowers to file suit. Arguably more importantly, it would also reduce the incentive—and possibly make it prohibitively expensive—for attorneys to take on contingent whistleblower litigation cases.

Additionally, some may argue that this significantly increased discovery would also burden courts through an increase in pre-trial motions.[206] However, this argument fails to recognize that the burden would also be borne by prosecutors and whistleblowers who, as a result, could only pursue claims that they could individually prove, likely decreasing in the number of actions filed. Further, the number of claims would also decrease because of the reduced financial incentive for attorneys and whistleblowers, as discussed above, thereby negating the increased burden on courts.

B. Consequences of Permitting Statistical Sampling for Liability

On the other hand, a circuit court allowing the use of statistical sampling to prove liability would have its own significant consequences. First, such a result would significantly increase the pressure providers feel to settle FCA actions—even in instances where they did little or nothing wrong. Defendants could risk going bankrupt if they do not settle, due to the potentially devastating financial effects that the FCA’s civil penalties and treble damages [207] could have if only a small sample of false claims were to establish wide liability

Additionally, since the use of statistical sampling would significantly increase the financial risk to any provider receiving reimbursements from the federal government (such as providers accepting Medicare and Medicaid), the use of statistical sampling would reduce the number of providers accepting patients covered by federal programs. There is already a shortage of primary care providers willing to accept Medicare and Medicaid, and the population eligible for these programs has significantly increased under the Affordable Care Act.[208] Allowing statistical sampling to establish liability would, therefore, exacerbate the shortage problem. Ultimately, this decision would negatively affect access to care for those who are most needy and ill. Without access to preventative care through a primary care doctor, a large portion of this population will develop serious illnesses that could have otherwise been prevented or managed—and taxpayers will have to foot the hospital bills.

IV. A SOLUTION and a SUGGESTED OUTCOME

To provide a workable solution regarding the use of statistical analysis to establish liability in FCA cases, the problems with previous court decisions must be addressed and corrected. In this Part, Section A highlights and describes common problems and potential flaws in the judicial reasoning regarding the use of statistical liability in FCA litigation. Section B takes these criticisms into consideration as it recommends a general framework for the proper use of statistical sampling in such cases, helping litigants and courts to balance the negative consequences of always either allowing or disallowing the use of statistical sampling to establish liability.

A. Criticisms and Potential Flaws in Judicial Reasoning

1. Courts Conflate the Use of Statistical Sampling in Proving Liability and Establishing Damages

As briefly described above, a common problem in statistical sampling cases is conflation of the use of statistical sampling to prove liability with use to establish damages. Take, for example, Michaels.[209] At first, the court discussed the matter as a damages issue (that is, whether statistical sampling could be used to prove damages).[210] Later, in the same opinion, the court said it is a liability and damages issue.[211] At no point did the court distinguish between the elements to prove liability versus the requirements for damages. Under the FCA, however, plaintiffs must prove several elements: falsity, scienter, material conduct, and actual damages.[212]

The court in Robinson did the same. It began by discussing the defendant’s claim that it is inappropriate to use statistical sampling to extrapolate liability and damages.[213] The court then proceeded to rule that the results of the statistical sampling, per the evidence submitted, could be submitted to a jury, primarily because such methods “have been accepted in the Sixth Circuit and in other jurisdictions as reliable and acceptable evidence in determining facts related to FCA claims.”[214] The court did not go into detail about whether the results of the statistical sampling could be used for the purpose of determining damages, establishing liability, or both, and instead ruled that “[t]he weight to be given to such statistical evidence is necessarily one which must be considered by the fact finder in light of the practical difficulties in obtaining a claim-by-claim review.”[215] Thus, by permitting the statistical sampling without providing any guidance for the fact finder (or future cases) as to its permissible uses, the court either confused or ignored the difference between use to establish damages and use to establish liability.

The danger of purportedly using statistical sampling only for damages, without establishing liability, can be illustrated by looking instead at a Medicaid overpayment case, which parties have cited in FCA cases to support the validity of statistical sampling for purposes of proving damages.[216] In Goldstar Medical Services, Inc. v. Department of Social Services, the government conducted an audit of a sample of ninety-three out of 3,496 relevant claims.[217] Based on the ninety-three sample claims, the government determined that sixty-nine, or 74%, contained errors resulting in an excess reimbursement from Medicaid.[218] The government then extrapolated that from the entire universe of 3,496 claims, the defendant’s excess reimbursements totaled $261,303.45.[219] The court recognized that “[i]t is well established that proof of damages through the use of statistics and statistical sampling has been endorsed in numerous cases involving Medicare and Medicaid overpayments” and upheld the government’s use of statistical extrapolation.[220] Since this was an appeal from an administrative judge’s ruling on a post-payment Medicaid audit,[221] it is not subject to the elements of an FCA claim. However, assume instead that the claims were FCA claims and the court was alleging that the statistical sampling was only being used to establish damages. In that situation, the court would implicitly be using the sampling to establish both liability and damages. While definitive proof was found regarding the sixty-nine claims, no such proof was found or presented for any claims outside of the ninety-three–claim sample. Accordingly, to extrapolate damages regarding claims outside of the sample, the court would have to accept that the defendant was liable for errors that the government established solely through statistical data.

Instead, courts should recognize that the analysis as to whether statistical sampling is appropriate for establishing liability requires looking at the individual elements of liability under the FCA. That analysis differs from—and requires a different legal foundation than—the analysis regarding statistical sampling for damages. First, the scienter element of the FCA must be proved. If scienter is being proved through actual knowledge, it must be proven that the defendant knowingly submitted a false claim. Establishing through statistical sampling that a certain number of false claims were likely submitted does not address scienter here. Furthermore, even if relators were able to prove an “underlying fraudulent scheme” to satisfy scienter through deliberate ignorance or reckless disregard, this, although likely evidence of fraud and liability, is not alone sufficient.[222] This is because a defendant could maintain fraudulent records, and even prepare fraudulent claims, but never actually submit a false claim to the government. Thus, it would still be necessary to establish that a false claim was actually presented for payment to satisfy the falsity element of the FCA.

Additionally, muddling the requirements for establishing liability and for calculating damages would effectively remove one of the few protections that the FCA provides defendants. The FCA’s requirement that the falsity and scienter of each specific claim be proved safeguards against abuse by potential plaintiffs.[223] This is of particular importance because the FCA allows for treble damages, which could be devastating in cases where thousands of claims are at issue.

2. Evidentiary Burden

Another problem with using statistical sampling to prove liability is the plaintiff or government’s “evidentiary burden to establish the elements of a FCA claim.”[224] While the government often argues that forbidding the use of statistical sampling would allow large-scale fraud to go unpunished, this ignores a critical point: permitting the use of statistical sampling to establish liability creates a perverse incentive for relators—who already have a significant pecuniary incentive to bring suit—to allege large-scale fraud with little or no proof.[225] In this instance, the larger the fraud that one alleges, the lower the burden of actually having to prove the fraud; as long as the plaintiff can use statistical sampling, the government no longer has the burden of establishing proof of falsity and scienter for each individual claim. Instead, the government or plaintiff can establish proof of falsity and scienter for only a subset of cases and claim that they have satisfied their burden for hundreds, if not thousands, of other unexamined claims. Defendants would effectively have the burden of discrediting the statistical evidence or proving that each claim in the claims universe was actually valid.

Courts, like those in Martin and Aseracare, that take the approach that due process is satisfied so long as defendants can rebut the evidence at trial and through cross-examination fail to recognize that this approach shifts the burden of proof. Although these courts state that statistical sampling is the only practical way for the government and relators to logistically and cost-effectively try large FCA claims, they ask defendants to bear the very cost that they are shielding plaintiffs from. In effect, the courts require defendants to individually sift through thousands of claims to combat statistical evidence obtained cost-effectively by plaintiffs. As a result, wise defendants are likely to perform a cost-benefit analysis to determine whether the costs of document review for thousands of claims and the associated legal fees are worth combating the litigation, or whether it is more cost–effective to settle. It is also worth noting that some defendants who are single practitioners may not have the means to hire a law firm or expert to conduct such an analysis. Thus, this shifting of the burden creates the opportunity for the government to impose (or extort) settlement from providers. This outcome is not true to the statutory purpose of the FCA, and it contradicts Congress’s express desire to place the burden of proof on the government.

3. Many Medical Decisions Are Subjective, and Medical Opinions Can Differ

One of the issues plaguing the use of statistical sampling in FCA cases involving the healthcare industry is that many of the claims being reviewed for fraud result from a treating physician’s clinical judgment—a subjective decision. These decisions are made on a “patient-by-patient basis” and are not an exact science.[226] Thus, it would be inappropriate to draw conclusions from a small sampling for claims based on clinical judgments because the samples could not possibly account for the subjective nature of such decisions for the entire universe of claims.

For example, in Vista Hospice Care, the relator claimed that the defendants had submitted fraudulent claims to the government when it admitted patients who were ineligible for hospice into hospice care and then submitted claims for reimbursement.[227] Determining whether a patient is eligible for hospice care, however, is a subjective clinical decision.[228] Under Medicare regulations, “terminally ill” patients are eligible for hospice care,[229] and a “terminally ill” person is one whose life expectancy is “[six] months or less if the illness runs its normal course.”[230] A bystander without clinical or medical experience might assume that determining whether a person has six months to live is a simple process, based on some sort of scientific clinical criteria. The truth is far from that. While Medicare has published guidelines for hospice admissions,[231] these “guidelines are not necessarily accurate in predicting death within six months.”[232]

To make a prediction concerning life expectancy, a provider must first determine what exactly qualifies as a terminal condition and then assess, using subjective and objective symptomatology, whether that specific patient has less than six months to live. And while providers may look to Medicare’s guidelines to assist them with their decisions, these guidelines are not necessarily accurate in determining life expectancy, and the decision is ultimately subjective. It stands to reason, then, that if doctors must make an individualized and subjective clinical judgment, reasonable medical minds can differ as to whether the person could qualify for hospice care.[233]

Therefore, if we had a case involving 50,000 claims concerning hospice eligibility, it would be inappropriate to use statistical sampling of, say, 1,000 claims to prove liability for a percentage of all 50,000 claims. To do so would be making not only the assertion that a proportionate number of claims in the universe of claims were false, but also that the provider’s clinical judgment was incorrect in all of those cases—a highly illogical conclusion considering the subjectivity of the field of medicine as a whole and the subjective determinations that a provider has to make in forming clinical judgments. In other words, it would be inappropriate to use a sample in this context because it would be almost impossible to establish a truly representative sample given the unique circumstances surrounding each and every claim.

As illustrated above, it is particularly difficult to justify the argument that scienter and falsity can be proved via statistical sampling for FCA claims concerning subjective clinical decisions. In essence, we would be saying that a provider knew that thousands of clinical judgments were false and such clinical judgments actually were false simply because a small sample of those judgments were incorrect (or in many instances, just inconsistent with an expert witness’s clinical judgment). While this may seem practical, it also seems starkly unjust in light of the significant consequences of the FCA and the nature of the decisions involved. After all, reasonable minds can differ.

4. Is Justice Being Served?

Part of the issue also centers on justice—it is not fair to determine knowledge as to thousands of claims from a small sampling. This is especially so in the realm of healthcare, not only because decisions are often times subjective, but also because they pertain to different patients and circumstances. Unlike in cases dealing with uniform products, healthcare providers frequently deal with many different patient scenarios, and because no two patients are alike, neither are two claims. Further, it seems particularly unjust to assume liability from just a small sampling when the corresponding damages are trebled.

On the other hand, not allowing statistical sampling to prove liability could lead to abuse by providers who know of the disallowance, which is also not in the interest of justice. However, it seems ultimately more unjust that some providers should suffer such severe consequences as treble damages and civil penalties for thousands of claims, potentially bankrupting their practice, just because there is the potential for abuse.

Additionally, while many would say that not allowing statistical sampling would frustrate the government’s ability to sue,[234] this is simply not the case. The government would still be able to sue, but it would have to focus its efforts on the claims it can actually prove. It would accordingly focus on the meritorious cases, instead of attempting to sue for as many claims as possible by bundling them and seeking to bypass its evidentiary burden. Limiting the government’s ability to use statistical sampling to establish liability would therefore not frustrate its ability to sue under the FCA, but it would protect defendants from potential governmental abuse. This is because if statistical sampling is generally permitted to establish liability, the government can pressure defendants to settle for arguably unjustifiably large amounts, due to the prospect of their being held liable for even greater amounts on top of the costs of defending against the statistical sampling.[235]

B. A More Reasonable Approach

An approach more reasonable than broadly allowing or disallowing statistical sampling to establish FCA liability in the healthcare industry would be to limit its use to cases where there is sufficient evidence of a company-wide policy that results in the submission of false claims. This could be accomplished through a bellwether trial [236] to determine whether there is sufficient evidence of a generalized policy of fraud.[237] If there are sufficient findings following the bellwether trial, then the court could proceed to use statistical sampling to extrapolate and establish liability for the universe of claims.

A model case is UnumProvident, in which there was sufficient evidence of liability in the eyes of the fact finder before using statistical sampling.[238] This was accomplished through a bellwether trial that uncovered a generalized fraudulent policy.[239] Another model case is Fadul, in which the court did not rely solely on statistical evidence to prove falsity and scienter.[240] The court in Fadul relied on significant evidence, including expert reports, employee testimony, and an audit to establish liability.[241] Only after liability was properly established was statistical sampling used to establish liability for a universe of claims and to determine the total amount of damages.[242]

However, the approach used in UnumProvident and Fadul would still be insufficient in my suggested framework. Similar to the approach used in those cases, evidence of liability would need to be provided prior to the use of statistical sampling. Unlike those cases, though, I suggest that the use of statistical sampling to extrapolate liability in FCA cases concerning healthcare fraud should be limited to cases where evidence is presented (again prior to the use of statistical sampling) indicating a known company-wide procedure or policy that results in the systematic submission of false claims. For example, the government or plaintiff might submit evidence of a standard policy or procedure that any time an abdominal scan was performed on a Medicare or Medicaid patient, a claim would instead be submitted for a full-body scan, generating a larger reimbursement. Statistical sampling to establish liability in such an arrangement would therefore be appropriate because the government or plaintiff could approximate the total number of incorrectly submitted scans in a given timeframe based on a representative sample of claims, and there would be an acceptably high level of certainty that the defendant should be held liable for—and pay damages on—every single one of the extrapolated number of claims. This outcome would be a just and reasonable middle ground.

Furthermore, these cases would not be subject to the criticisms surrounding the subjective nature of most healthcare decisions. For example, this framework would not apply to the situation in Vista Hospice Care, in which the issue centered around a particularly subjective matter, hospice-care eligibility. Additionally, this proposed outcome would accommodate the government’s reasonable assertion that in cases involving tens of thousands of claims, statistical sampling is the only efficient way to avoid wasting judicial resources. However, it would subject only defendants who violate the FCA in a particularly egregious manner to the burdens of statistical sampling to establish liability. This would result in plaintiffs being able to more easily collect large amounts of damages in cases involving such violations, thereby deterring egregiousness, while also protecting the vast majority of defendants from potential abuse by the government. In turn, this could help increase the number of healthcare providers who accept Medicare or Medicaid.

While opponents may point to judicial economy to argue against this proposed approach, given the additional resources required to conduct bellwether trials, we must weigh judicial economy against the interests of justice. When billions of dollars per year in damages are potentially at stake, it is the courts’ responsibility to make sure they justly establish liability for those damages. Fulfilling this responsibility requires a certain amount of time and resources. Here, such additional resources are warranted. In any event, it is difficult to judge if these concerns are even valid, given that limiting the use of statistical sampling will likely lead to an overall decrease in the number of claims filed.

CONCLUSION

Statistical sampling and its use in FCA cases remains a “hotly contested issue” and one that may eventually have to be decided by the Supreme Court, should circuits split on its use for establishing liability.[243] Despite the Fourth Circuit’s refusal to rule on whether statistical sampling could be used to prove liability in qui tam litigation,[244] circuit courts will inevitably be faced with the decision—likely in the near future—as the government continues to combat large-scale fraud. Given the subjective nature of the medical field and the negative effects a decision may have on the healthcare system as a whole, however, courts considering whether statistical sampling should be used to establish FCA liability in healthcare cases should carefully weigh the interests of justice and judicial efficiency.

[*] *. Executive Online Editor, Southern California Law Review, Volume 91. J.D. Candidate 2018, University of Southern California Gould School of Law; B.A. Nursing 2015, Florida International University; A.S. Nursing 2014, Miami-Dade College. I would like to thank my note advisor, Professor Alexander Capron. I would also like to thank to my husband, Austin Stack, and my parents, Rafael and Leticia Vega, whose sacrifices and unending support have made this possible. Finally, I owe an immense debt of gratitude to the editors of Volume 91 of the Southern California Law Review for their outstanding editing and feedback, especially Eli Tarlow, Justin Bongco, and James Salzmann.

[1]. See 31 U.S.C. §§ 3729–3733 (2012).

[2]. Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Justice Department Recovers Over $4.7 Billion from False Claims Act Cases in Fiscal Year 2016 (Dec. 14, 2016), https://www.justice.gov/
opa/pr/justice-department-recovers-over-47-billion-false-claims-act-cases-fiscal-year-2016 [hereinafter U.S. Dep’t of Justice 2016].

[3]. Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Justice Department Recovers Over $3.5 Billion from False Claims Act Cases in Fiscal Year 2015 (Dec. 3, 2015), https://www.justice.gov/
opa/pr/justice-department-recovers-over-35-billion-false-claims-act-cases-fiscal-year-2015 [hereinafter U.S. Dep’t of Justice 2015].

[4]. 31 U.S.C. § 3729(a)(1)(A)–(B), (D) (2012); Laura Laemmle-Weidenfeld, Litigation Under the Civil False Claims Act, in An Introduction to Health Law Litigation Based on Contract and Government Claims 133, 133–34 (Aaron Krauss ed., 2016).

[5]. Patricia Meador & Elizabeth S. Warren, The False Claims Act: A Civil War Relic Evolves into a Modern Weapon, 65 Tenn. L. Rev. 455, 455–56, 459–61 (1998).

[6]. See Jeanne A. Markey & Raymond M. Sarola, 4th Circ. FCA Statistical Sampling Case Is One to Watch, Law360 (Oct. 8, 2015, 10:33 AM), https://www.law360.com/aerospace/articles/712001.

[7]. Eric Topor, Appellate Review of Medicare Statistical Sampling Anticipated, Bloomberg BNA: Health L. Rep., Apr. 13, 2016, at 1.

[8]. See infra Part II.

[9]. See United States ex rel. Michaels v. Agape Senior Cmty., Inc., 848 F.3d 330, 340–41 (4th Cir. 2017).

[10]. See Matthew M. Curley, FCA at the 4th Circ.: Contemplating 2 Key Issues, Law360 (Oct. 27, 2016, 5:20 PM), https://www.law360.com/appellate/articles/855918.

[11]. See, e.g., U.S. Dep’t of Justice 2016, supra note 2 (providing examples of recent settlements that range from $125 million to $784.6 million).

[12]. See United States ex rel. Martin v. Life Care Ctrs. of Am., Inc., 114 F. Supp. 3d 549, 557 (E.D. Tenn. 2014); Charles Doyle, Cong. Research Serv., R40785, Qui Tam: The False Claims Act and Related Federal Statutes 5 (2009).

[13]. Robin Page West, Advising the Qui Tam Whistleblower: From Identifying a Case to Filing Under the False Claims Act 2 (2d ed. 2009).

[14]. Laemmle-Weidenfeld, supra note 4, at 133.

[15]. Meador & Warren, supra note 5, at 456.

[16]. See A Roadmap for New Physicians: Fraud & Abuse Laws, Off. Inspector Gen., https://oig.hhs.gov/compliance/physician-education/01laws.asp (last visited Apr. 7, 2018).

[17]. U.S. Dep’t of Justice 2015, supra note 3.

[18]. U.S. Dep’t of Justice 2016, supra note 2.

[19]. Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Justice Department Recovers Over $3.7 Billion from False Claims Act Cases in Fiscal Year 2017 (Dec. 21, 2017), https://www.justice.gov/
opa/pr/justice-department-recovers-over-37-billion-false-claims-act-cases-fiscal-year-2017.

[20]. U.S. Dep’t of Justice 2015, supra note 3.

[21]. Laemmle-Weidenfeld, supra note 4, at 136.

[22]. Id. at 146–47.

[23]. Id. at 147.

[24]. Id.

[25]. See id. at 147–48.

[26]. Id. at 147.

[27]. Id. (“Medicare has issued significant amounts of guidance in the form of regulations, national coverage decisions, and other less formal means indicating what criteria must be met in order for particular items and services to be medically necessary.”).

[28]. See id.

[29]. See id. at 148.

[30]. Id.

[31]. Id. at 148–51. See also 42 U.S.C. §§ 1320a–7b(b), 1395nn (2012).

[32]. Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1995 (2016).

[33]. Id.

[34]. 31 U.S.C. § 3729(a)(1)(A)–(B), (D). See also Laemmle-Weidenfeld, supra note 4, at 133–34.

[35]. Laemmle-Weidenfeld, supra note 4, at 134, 147–48. See also 42 U.S.C. § 1320a-7k(d).

[36]. See Laemmle-Weidenfeld, supra note 4, at 135.

[37]. 31 U.S.C. § 3729(b)(1)(A) (“the terms “knowing” and “knowingly”—(A) mean that a person, with respect to information—(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information”).

[38]. Id. § 3729(b)(1)(B)).

[39]. See id. § 3729(b)(1)(A); Laemmle-Weidenfeld, supra note 4, at 135.

[40]. Id.

[41]. See United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1169 (9th Cir. 2016).

[42]. See Laemmle-Weidenfeld, supra note 4, at 135–36 (citing 42 U.S.C. §§ 1320a-7(b)(7),
-7a(a)(1)(B)) (explaining that the Department of Health and Human Services can exclude providers from participating in federal healthcare programs if the providers submit false claims).

[43]. Id. at 135.

[44]. 31 U.S.C. § 3729(a)(1).

[45]. United States v. Krizek, 111 F.3d 934, 936 (D.C. Cir. 1997).

[46]. 31 U.S.C. § 3729 (a)(3); Laemmle-Weidenfeld, supra note 4, at 146.

[47]. Id. § 3729 (a)(2)(A).

[48]. Id. § 3729 (a)(2)(B).

[49]. Id. § 3729 (a)(2)(C).

[50]. Id. § 3729 (a)(2).

[51]. See Michael Koon & Savannah Wiseman, What Are the Odds?: Proving Liability in False Claims Act Cases Through Statistical Sampling, ABA Health eSource (June 2015), http://www.americanbar.org/publications/aba_health_esource/2014-2015/June/fca.html.

[52]. See, e.g., Ill. Physicians Union v. Miller, 675 F.2d 151, 157 (7th Cir. 1982); United States ex rel. Martin v. Life Care Ctrs. of Am., Inc., 114 F. Supp. 3d 549, 565 (E.D. Tenn. 2014); United States v. Fadul, No. DKC 11-0385, 2013 U.S. Dist. LEXIS 27909, at *47 (D. Md. Feb. 28, 2013).

[53]. Chaves Cty. Home Health Serv., Inc. v. Sullivan, 931 F.2d 914, 922–23 (D.C. Cir. 1991).

[54]. See United States v. Cabrera-Diaz, 106 F. Supp. 2d 234, 240–42 (D.P.R. 2000) (outlining cases that have allowed statistical sampling to establish damages).

[55]. Markey & Sarola, supra note 6.

[56]. Martin, 114 F. Supp. 3d at 560.

[57]. Id. at 563.

[58]. See United States ex rel. Wall v. Vista Hospice Care, Inc., No. 3:07-cv-00604-M, 2016 U.S. Dist. LEXIS 80160, at *37 (N.D. Tex. June 20, 2016) (“No circuit has resolved whether statistical sampling and extrapolation can be used to establish liability in an FCA case where falsity depends on individual physicians’ judgment regarding individual patients.”).

[59]. United States ex rel. Michaels v. Agape Senior Cmty., Inc., 848 F.3d 330, 341 (4th Cir. 2017). See infra text accompanying notes 198–202.

[60]. See infra Part I.C.1.

[61]. See Vista Hospice Care, 2016 U.S. Dist. LEXIS 80160, at *42 & n.108.

[62]. Id. (citing Fed. R. Evid. 702).

[63]. Id.

[64]. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589–90 (1993).

[65]. United States v. Beverly, 369 F.3d 516, 528 (6th Cir. 2004) (citing Daubert, 509 U.S. at 592–95). See also United States ex rel. Martin v. Life Care Ctrs. of Am., No. 1:08-cv-251, 2014 U.S. Dist. LEXIS 142657, at *5–9 (E.D. Tenn. Sept. 29, 2014).

[66]. United States ex rel. Wall v. Vista Hospice Care, Inc., No. 3:07-cv-00604-M, 2016 U.S. Dist. LEXIS 80160, at *42 (N.D. Tex. June 20, 2016) (citing United States v. Pena, 532 Fed. App’x 517, 520–21 (5th Cir. 2013).

[67]. Martin, 2014 U.S. Dist. LEXIS 142657, at *7–8.

[68]. Id. at *8 (citing Baker v. Chevron U.S.A. Inc., 533 F. App’x 509, 520 (6th Cir. 2013)).

[69]. Vista Hospice Care, 2016 U.S. Dist. LEXIS 80160, at *42 & n.108.

[70]. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 355–60, 367 (2011).

[71]. See Jay Tidmarsh, Resurrecting Trial by Statistics, 99 Minn. L. Rev. 1459, 1474–75 (2015).

[72]. Wal-Mart, 564 U.S. at 343–45.

[73]. See Fed. R. Civ. P. 23(a) (listing class certification requirements).

[74]. Wal-Mart, 564 U.S. at 346 (quoting Fed. R. Civ. P. 23(a)(2)).

[75]. Id.

[76]. See id. at 353–55, 358.

[77]. Id. at 356.

[78]. Id. at 356–57. “Information about disparities at the regional and national level does not establish the existence of disparities at individual stores.” Id. (quoting Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 637 (9th Cir. 2010) (Ikuta, J., dissenting)).

[79]. Id. at 367.

[80]. Tidmarsh, supra note 71, at 1474 (emphasis omitted).

[81]. Wal-Mart, 564 U.S. at 366–67. The Court explained the proposed trial by formula: “A sample set of the class members would be selected, as to whom liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master. The percentage of claims determined to be valid would then be applied to the entire remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery—without further individualized proceedings.” Id. at 367. See also United States ex rel. Wall v. Vista Hospice Care, Inc., No. 3:07-cv-00604-M, 2016 U.S. Dist. LEXIS 80160, at *36–37 (N.D. Tex. June 20, 2016).

[82]. See Tidmarsh, supra note 71, at 1459–77 (discussing Wal-Mart’s effects on statistical sampling).

[83]. Dailey v. Sears, Roebuck & Co., 154 Cal. Rptr. 3d 480, 500–02 (Ct. App. 2013). See also Elizabeth J. Cabraser et al., California Class Actions and Coordinated Proceedings § 19.01 (2d ed. 2017), LexisNexis.

[84]. Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1040, 1044–45 (2016).

[85]. See id. at 1049; David L. Scher & R. Scott Oswald, Biggest Test Yet for Statistical Sampling in FCA Cases, Law360 (Oct. 18, 2016, 12:16 PM), https://www.law360.com/articles/851303/biggest-test-yet-for-statistical-sampling-in-fca-cases.

[86]. Tyson Foods, 136 S. Ct. at 1042.

[87]. Id. at 1042–44

[88]. Id. at 1043–44.

[89]. Id.

[90]. Id. at 1044.

[91]. Id. at 1046.

[92]. Id. (emphasis added) (quoting Manual for Complex Litigation (Fourth) § 11.493 (2004)).

[93]. Id. at 1049.

[94]. Id. at 1046.

[95]. Id. at 1049.

[96]. See Scher & Oswald, supra note 85. See also United States ex rel. Wall v. Vista Hospice Care, Inc., No. 3:07-cv-00604-M, 2016 U.S. Dist. LEXIS 80160, at *36–41 (N.D. Tex. June 20, 2016); Scott D. Stein & Brenna E. Jenny, Tyson Provides Road Map for Use of Sampling in FCA Cases, Law360 (Mar. 31, 2016, 11:13 AM), https://www.law360.com/articles/777949/tyson-provides-road-map-for-use-of-sampling-in-fca-cases.

[97]. See generally David H. Kaye & David A. Freedman, Reference Guide on Statistics, in Reference Manual on Scientific Evidence 211 (3d ed. 2011); Statistical Science in the Courtroom (Joseph L. Gastwirth ed., 2000) (explaining how statistical analysis is used in differing aspects of the law); Laurens Walker & John Monahan, Sampling Evidence at the Crossroads, 80 S. Cal. L. Rev. 969 (2007) (providing a brief history of statistical sampling in the law and the rise of statistical sampling in mass tort cases).

[98]. See MBIA Ins. Corp. v. Countrywide Home Loans, Inc., No. 602825/08, slip op. at 3–7 (N.Y. Sup. Ct. Dec. 22, 2010). See also George Bundy Smith & Thomas J. Hall, The Use of Statistical Sampling as Evidence, N.Y. L.J., Feb. 18, 2011, at 3, 3.

[99]. United States ex rel. Martin v. Life Care Ctrs. of Am., Inc, 114 F. Supp. 3d 549, 557 (E.D. Tenn. 2014).

[100]. Id. at 564.

[101]. Id. at 570–71.

[102]. Id. at 571. See generally Recent Case, United States ex rel. Martin v. Life Care Centers of America, Inc., Nos. 1:08-cv-251, 1:12-cv-64, 2014 U.S. Dist. LEXIS 142660 (E.D. Tenn. Sept. 29, 2014), 128 Harv. L. Rev. 2074 (2015) (providing an in-depth discussion of the opinion).

[103]. Martin, 114 F. Supp. 3d at 572.

[104]. United States v. Robinson, No. 13-cv-27-GFVT, 2015 U.S. Dist. LEXIS 41123, at *33–34 (E.D. Ky. Mar. 31, 2015).

[105]. See id. at *17, 29 (citing Martin, 114 F. Supp. 3d at 554 and Mich. Dep’t of Educ. v. U.S. Dep’t of Educ., 875 F.2d 1196, 1205 (6th Cir. 1989)).

[106]. United States v. Aseracare Inc., No. 2:12-CV-245-KOB, 2014 U.S. Dist. LEXIS 167970, at *25–26 (N.D. Ala. Dec. 4, 2014) (citing Bazemore v. Friday, 478 U.S. 385, 400 (1986)), substituted by 2014 U.S. Dist. LEXIS 191636 (N.D. Ala. Dec. 19, 2014), vacated by 2014 U.S. Dist. LEXIS 191640 (N.D. Ala. Dec. 19, 2014).

[107]. Reporter’s Official Transcript of Motion Hearing at 223–26, Aseracare, 2014 U.S. Dist. LEXIS 167970 (No. 305). See also infra Part IV.A (discussing how some courts do not seem to distinguish between liability and damages and their respective requirements when analyzing the use of statistical sampling).

[108]. United States ex rel. Ruckh v. Genoa Healthcare, LLC, No. 8:11-cv-1303-T-23TBM, 2015 U.S. Dist. LEXIS 55384, at *7 (M.D. Fla. Apr. 28, 2015).

[109]. Id. at *8–9.

[110]. See id. at *9–10 (quoting Martin, 114 F. Supp. 3d at 561).

[111]. Id. at *9 (quoting Martin, 114 F. Supp. 3d at 561).

[112]. Id. at *12–13.

[113]. United States ex rel. Loughren v. UnumProvident Corp., 604 F. Supp. 2d 259, 261 (D. Mass. 2009).

[114]. Id. at 260–61.

[115]. See id. at 269.

[116]. United States ex rel. Wall v. Vista Hospice Care, Inc., No. 3:07-cv-00604-M, 2016 U.S. Dist. LEXIS 80160, at *31–32, 89 (N.D. Tex. June 20, 2016).

[117]. See id. at *35.

[118]. Id. at *36 (quoting Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1046 (2016).

[119]. Id. at *40.

[120]. See id. at *37–38.

[121]. Id. at *40 (emphasis omitted).

[122]. Id.

[123]. Id. at *41–42.

[124]. Id. at *54.

[125]. Id. at *55–56.

[126]. See id. at *56–57.

[127]. Id. at *64.

[128]. United States v. Medco Physicians Unlimited, No. 98 C 1622, 2000 U.S. Dist. LEXIS 5843, at *23 (N.D. Ill. Mar. 15, 2000).

[129]. Id. at *23–24.

[130]. United States ex rel. Trim v. McKean, 31 F. Supp. 2d 1308, 1314 (W.D. Okla. 1998).

[131]. See id.

[132]. Id.

[133]. United States ex rel. El-Amin v. George Washington Univ., 533 F. Supp. 2d 12, 49–51 (D.D.C. 2008).

[134]. Id.

[135]. Id. at 50–51 (“In short, the Relators’ failure to take even the most basic steps in preparing for a trial by representative sample proves fatal to the instant motion because, as the Defendant convincingly argues, the time for trial preparation is over. . . . It would be unfair to the Defendant at this stage of the litigation and on the eve of trial to permit the Relators to convert this case to a trial by representative sample. The Defendant, like the Relators, has not consulted an expert statistician and, like both the Relators and this Court, cannot even identify the universe of allegedly fraudulent claims. In light of these practical considerations, the motion is denied.”).

[136]. United States ex rel. Guardiola v. Renown Health, No. 3:12-CV-0295-LRH (VPC), 2014 U.S. Dist. LEXIS 157410, at *5 (D. Nev. Nov. 5, 2014).

[137]. United States v. Cabrera-Diaz, 106 F. Supp. 2d 234, 243 (D.P.R. 2000).

[138]. United States ex rel. Martin v. Life Care Ctrs. of Am., Inc, 114 F. Supp. 3d 549, 563–64 (E.D. Tenn. 2014).

[139]. See id.

[140]. See Martin, 114 F. Supp. 3d at 564 (“Without evidence and argument opposing the government’s position, the Court cannot view the result in Cabrera-Diaz as anything other than an unopposed remedy suggested by the government, which was granted through a procedural mechanism to obtain judgment from unresponsive parties.”).

[141]. United States v. Krizek, 859 F. Supp. 5, 7 (D.D.C. 1994).

[142]. United States v. Krizek, No. 93-54, 1994 U.S. Dist. LEXIS 21095, at *1–2 (D.D.C. Mar. 9, 1994).

[143]. See id. at *3.

[144]. Krizek, 859 F. Supp. at 7.

[145]. United States v. Fadul, No. DKC 11-0385, 2013 U.S. Dist. LEXIS 27909 (D. Md. Feb. 28, 2013).

[146]. See id. at *23–39.

[147]. Id. at *21.

[148]. Id. at *37–38.

[149]. Id. at *44–45.

[150]. Id. at *39–40 (second alteration in original) (emphasis added) (footnote omitted) (quoting United States v. Mead, 426 F.2d 118, 125 n.6 (9th Cir. 1970)).

[151]. See, e.g., Brief of Defendants-Appellees Agape Senior Community Inc., et al. Regarding Statistical Sampling at 24–25, United States ex rel. Michaels v. Agape Senior Cmty., Inc., 848 F.3d 330 (4th Cir. 2017) (Nos. 15-2145, 15-2147) [hereinafter Defendants-Appellees Brief] (citing Friedman as precedent that courts do not allow statistical sampling for liability).

[152]. United States v. Friedman, No. 86-0610-MA, 1993 U.S. Dist. LEXIS 21496, at *9 n.1 (D. Mass. July 23, 1993).

[153]. Id. (noting that at trial specific claims “were analyzed and discussed and subjected to cross examination”).

[154]. See generally id.

[155]. United States ex rel. Michaels v. Agape Senior Cmty., Inc., No. 0:12-3466-JFA, 2015 U.S. Dist. LEXIS 82379, at *2 (D.S.C. June 25, 2015), aff’d in part and dismissed in part, 848 F.3d 330 (4th Cir. 2017).

[156]. Id. at *3 (discussing the disagreement between the plaintiff-relators and defendants about the number of patients and claims at issue).

[157]. Id. at *4.

[158]. Id. at *6–7.

[159]. Id. at *7.

[160]. Id. at *1, *7–8.

[161]. Id.

[162]. United States v. Friedman, No. 86-0610-MA, 1993 U.S. Dist. LEXIS 21496, at *9 n.1 (D. Mass. July 23, 1993).

[163]. Michaels, 2015 U.S. Dist. LEXIS 82379 at *19–20.

[164]. Id. at *18–19.

[165]. Id. at *19.

[166]. Id. at *24.

[167]. See id. at *20–22, *26–27.

[168]. See infra Part IV.

[169]. See Public Brief for the United States as Intervenor-Appellee at 37–42, Michaels, 848 F.3d 330 (Nos. 15-2145, 15-2147).

[170]. Defendants-Appellees Brief, supra note 151, at 7, 19–21.

[171]. Id. at 26–29.

[172]. See id. at 29–30.

[173]. Id. at 30.

[174]. Brief of Savaseniorcare Administrative Services, LLC as Amicus Curiae Supporting Defendants-Appellees Seeking Affirmance, Michaels, 848 F.3d 330 (Nos. 15-2145, 15-2147) [hereinafter Savaseniorcare Brief]; Brief for Amici Curiae the American Hospital Association and the Catholic Health Association of the United States in Support of Defendants-Appellees, Michaels, 848 F.3d 330 (Nos. 15-2145, 15-2147) [hereinafter AHA/CHA Brief]; Brief of American Health Care Association as Amicus Curiae in Support of Defendants-Appellees, Michaels, 848 F.3d 330 (Nos. 15-2145, 15-2147) [hereinafter AHCA Brief].

[175]. See Topor, supra note 7.

[176]. See Savaseniorcare Brief, supra note 174, at 5.

[177]. Id. at 10 (quoting 42 C.F.R. § 483.20(j)(2) (2017)) (“Clinical disagreement does not constitute a material and false statement.”).

[178]. Id. (citing United States ex rel. Wilson v. Kellogg Brown & Root Servs., Inc., 525 F.3d 370, 376 (4th Cir. 2008)).

[179]. Id. at 5–7, 10.

[180]. Id. at 11–12 (quoting United States ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013)).

[181]. See id.

[182]. See id. at 23–25.

[183]. Id. at 4, 20–21.

[184]. Id. at 24–25.

[185]. See AHA/CHA Brief, supra note 174, at 7–8. The burden of proof would shift to defendants if statistical sampling were allowed: plaintiff-relators would not have to prove the falsity of each individual claim, but defendants potentially would have to sift through each claim to disprove allegations of falsity. See id.

[186]. Id.

[187]. Id. at 13–14 (citing United States ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 459 (4th Cir. 2013)).

[188]. Id. at 19.

[189]. Id. at 20.

[190]. Id. at 21.

[191]. Id. at 22–25.

[192]. AHCA Brief, supra note 174, at 6–14.

[193]. Id. at 15.

[194]. Id. at 15–18 (internal quotation marks omitted) (quoting Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 784 (2000)).

[195]. Id. at 26–30.

[196]. Oral Argument at 2:24–9:40, United States ex rel. Michaels v. Agape Senior Cmty., Inc., 848 F.3d 330 (4th Cir. 2017) (Nos. 15-2145, 15-2147), http://coop.ca4.uscourts.gov/OAarchive/mp3/15-2145-20161026.mp3.

[197]. See id.

[198]. Michaels, 848 F.3d at 341.

[199]. Id.

[200]. Id.

[201]. Id. (quoting McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1258 (11th Cir. 2004)).

[202]. See Eric Topor, Ruling on Statistical Sampling in Fraud Cases Left for Another Day, BNA (Feb. 24, 2017), https://www.bna.com/ruling-statistical-sampling-n57982084379.

[203]. See Order, United States ex rel. Michaels v. Agape Senior Cmty., Inc., No. 0:12-03466-JFA, 2015 U.S. Dist. LEXIS 82379 (D.S.C. June 25, 2015), aff’d in part and dismissed in part, 848 F.3d 330 (4th Cir. 2017) (No. 345).

[204]. Topor, supra note 7.

[205]. Id.

[206]. See, e.g., id.

[207]. See supra text accompanying note 44.

[208]. See Kevin Murphy, Advanced Practice Nurses: Prime Candidates to Become Primary Caregivers in Relation to Increasing Physician Shortages Due to Health Care Reform, 14 J. Nursing L. 117, 117–19 (2011).

[209]. See United States ex rel. Michaels v. Agape Senior Cmty., Inc., No. 0:12-3466-JFA, 2015 U.S. Dist. LEXIS 82379, at *4, *17–18, *20 (D.S.C. June 25, 2015), aff’d in part and dismissed in part, 848 F.3d 330 (4th Cir. 2017).

[210]. Id.

[211]. See id. at *20–24.

[212]. United States v. Fadul, No. DKC 11-0385, 2013 U.S. Dist. LEXIS 27909, at *23–24 (D. Md. Feb. 28, 2013) (citing United States ex rel. Harrison v. Westinghouse Savannah River Co., 352 F.3d 908, 913 (4th Cir. 2003)). See also supra Part I.A (discussing in detail the requirements under the FCA).

[213]. United States v. Robinson, No. 13-cv-27-GFVT, 2015 U.S. Dist. LEXIS 41123, at *28 (E.D. Ky. Mar. 31, 2015).

[214]. Id. at *28–29.

[215]. Id. at *32 (quoting Mich. Dep’t of Educ. v. U.S. Dep’t of Educ., 875 F.2d 1196, 1205 (6th Cir. 1989)).

[216]. See, e.g., Opening Brief of Appellants at 12, United States ex rel. Michaels v. Agape Senior Cmty., Inc., 848 F.3d 330 (4th Cir. 2017) (Nos. 15-2145, 15-2147); Defendants-Appellees Brief, supra note 151, at 7, 26.

[217]. Goldstar Med. Servs., Inc. v. Dep’t of Soc. Servs., 955 A.2d 15, 21 (Conn. 2008).

[218]. Id.

[219]. Id. at 31.

[220]. Id.

[221]. Id. at 22–23; see, Anna Grizzle & Julia Tamulis, Medicare and Medicaid Audits, in An Introduction to Health Law Litigation Based on Contract and Government Claims 84, 99, 102–05 (Aaron Krauss ed., 2016).

[222]. See United States ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013) (citing United States ex rel. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir. 1999)).

[223]. See AHA/CHA Brief, supra note 174, at 6.

[224]. United States ex rel. Martin v. Life Care Ctrs. of Am., Inc., 114 F. Supp. 3d 549, 563 (E.D. Tenn. 2014).

[225]. See supra text accompanying note 44.

[226]. See United States v. Robinson, No. 13-cv-27-GFVT, 2015 U.S. Dist. LEXIS 41123, at *13 (E.D. Ky. Mar. 31, 2015).

[227]. See United States ex rel. Wall v. Vista Hospice Care, Inc., No. 3:07-cv-00604-M, 2016 U.S. Dist. LEXIS 80160, at *17–20 (N.D. Tex. June 20, 2016).

[228]. Id. at *8–9.

[229]. 42 C.F.R. § 418.20 (2017).

[230]. Id. § 418.3.

[231]. See Ctrs. for Medicare & Medicaid Servs., Medicare Hospice Benefits 7 (2017), https://www.medicare.gov/Pubs/pdf/02154-Medicare-Hospice-Benefits.PDF.

[232]. Medical Criteria for Hospice Eligibility, Stanf. Sch. Med., https://palliative.stanford.edu/home-hospice-home-care-of-the-dying-patient/medical-criteria-for-hospice-eligibility (last visited Apr. 9, 2018). See Amanda Jacobowski, Note, Calculating Death: Implications of the Six-Month Prognosis Certification Requirement for the Medicare Hospice Benefit, 19 Elder L.J. 187, 213–16 (2011) (explaining the deficiencies and problems of the “six-month prognosis” requirement and discussing what happens to patients who have outlived the six-month prognosis).

[233]. See, e.g., United States v. Aseracare, Inc., No. 2:12-CV-245-KOB, 2014 U.S. Dist. LEXIS 167970, at *23 (N.D. Ala. Dec. 4, 2014), substituted by 2014 U.S. Dist. LEXIS 191635 (N.D. Ala. Dec. 19, 2014), vacated by 2014 U.S. Dist. LEXIS 191640 (N.D. Ala. Dec. 19, 2014).

[234]. See, e.g., United States v. Robinson, No. 13-cv-27-GFVT, 2015 U.S. Dist. LEXIS 41123, at *32–33 (E.D. Ky. Mar. 31, 2015).

[235]. See, e.g., U.S. Dep’t of Justice 2015, supra note 3 (listing several examples of recent large settlements). See also Laemmle-Weidenfeld, supra note 4, at 146 (“As a practical matter, the vast majority of FCA cases settle . . . .”).

[236]. A bellwether trial used by a judge to try a smaller number of cases that are representative of the sample. Alexandra D. Lahav, Bellwether Trials, 76 Geo. Wash. L. Rev. 576, 577 (2008). The verdicts are then used “as a basis for resolving the remaining cases.” Id. These types of trials are commonly used to value cases in mass tort litigation and have been used to resolve human rights class actions. Id. at 577–78.

[237]. Alternatively, should sufficient evidence be presented at summary judgment, the permissibility of statistical sampling could be decided at that point.

[238]. See United States ex rel. Loughren v. UnumProvident Corp., 604 F. Supp. 2d 259, 260–61 (D. Mass. 2009).

[239]. Id.

[240]. See United States v. Fadul, No. DKC 11-0385, 2013 U.S. Dist. LEXIS 27909, at *27–28 (D. Md. Feb. 28, 2013); supra text accompanying notes 145–50.

[241]. Fadul, 2013 U.S. Dist. LEXIS 27909 at *27–28.

[242]. Id.

[243]. James Swann & Eric Topor, Outlook 2017: New Year May Bring Stark Reform, ACA Repeal, Heavy Dose of Uncertainty, BNA’s Health Care Fraud Rep., Jan. 6, 2017.

[244]. United States ex rel. Michaels v. Agape Senior Cmty., Inc., 848 F.3d 330, 341 (4th Cir. 2017).

[i]. United States ex rel. Martin v. Life Care Ctrs. of Am., Inc, 114 F. Supp. 3d 549, 572 (E.D. Tenn. 2014).

[ii]. United States v. Robinson, No. 13-cv-27-GFVT, 2015 U.S. Dist. LEXIS 41123, at *29–33 (E.D. Ky. Mar. 31, 2015).

[iii]. United States v. Aseracare Inc., No. 2:12-CV-245-KOB, 2014 U.S. Dist. LEXIS 167970, at *25 (N.D. Ala. Dec. 4, 2014), substituted by 2014 U.S. Dist. LEXIS 191635 (N.D. Ala. Dec. 19, 2014), vacated by 2014 U.S. Dist. LEXIS 191640 (N.D. Ala. Dec. 19, 2014).

[iv]. United States ex rel. Ruckh v. Genoa Healthcare, LLC, No. 8:11-cv-1303-T-23TBM, 2015 U.S. Dist. LEXIS 55384, at *10–13 (M.D. Fla. Apr. 28, 2015).

[v]. United States ex rel. Loughren v. UnumProvident Corp., 604 F. Supp. 2d 259, 261 (D. Mass. 2009).

[vi]. United States ex rel. Wall v. Vista Hospice Care, Inc., No. 3:07-cv-00604-M, 2016 U.S. Dist. LEXIS 80160, at *41–47 (N.D. Tex. June 20, 2016).

[vii]. United States v. Medco Physicians Unlimited, No. 98 C 1622, 2000 U.S. Dist. LEXIS 5843, at *23 (N.D. Ill. Mar. 15, 2000).

[viii]. United States ex rel. Trim v. McKean, 31 F. Supp. 2d 1308, 1314 (W.D. Okla. 1998).

[ix]. United States ex rel. El-Amin v. George Washington Univ., 533 F. Supp. 2d 12, 49–51 (D.D.C. 2008).

[x]. United States ex rel. Guardiola v. Renown Health, No. 3:12-CV-0295-LRH (VPC), 2014 U.S. Dist. LEXIS 157410, at *5 (D. Nev. Nov. 5, 2014).

[xi]. United States v. Cabrera-Diaz, 106 F. Supp. 2d 234, 240–41, 243 (D.P.R. 2000).

[xii]. United States v. Krizek, 859 F. Supp. 5, 7 (D.D.C. 1994).

[xiii]. United States v. Fadul, No. DKC 11-0385, 2013 U.S. Dist. LEXIS 27909, at *45–47 (D. Md. Feb. 28, 2013).

[xiv]. United States v. Friedman, No. 86-0610-MA, 1993 U.S. Dist. LEXIS 21496, at *9 n.1 (D. Mass. July 23, 1993).

[xv]. United States ex rel. Michaels v. Agape Senior Cmty., Inc., No. 0:12-3466-JFA, 2015 U.S. Dist. LEXIS 82379, at *4 (D.S.C. June 25, 2015), aff’d in part and dismissed in part, 848 F.3d 330 (4th Cir. 2017).

[xvi]. Michaels, 848 F.3d at 341.

Statutory Millennialism: Establishment and Free Exercise Concerns Arising from the Health Care Sharing Ministry Exemption’s 1999 Cutoff Date – Note by James R. Salzmann

January 2018March 2018Southern California Law Review Admin

From Volume 91, Number 2 (January 2018)
DOWNLOAD PDF

STATUTORY MILLENNIALISM:
ESTABLISHMENT AND FREE EXERCISE CONCERNS ARISING FROM THE HeaLth Care SHARING MINISTRY EXEMPTION’S 1999 CUTOFF DATE

JAMES R. SALZMANN [*]

TABLE OF CONTENTS

INTRODUCTION

I. CREATING A SOLUTION AND A PROBLEM

A. The PPACA

B. The Exemption

II. CHALLENGES TO THE LAW

A. Liberty University and the Establishment Clause

B. Liberty University Revisited

III. AN ALTERNATIVE INQUIRY: THE FREE EXERCISE
CONCERN

A. Genuine Burdens on Religious Exercise

B. The Burden’s Inequitable Effect

C. The Burden Shifted: Legislative and Administrative Hindrance

CONCLUSION

INTRODUCTION

For nearly a decade, health care reform has been at the center of American politics. The development, enactment, and reform of the Patient Protection and Affordable Care Act (PPACA)—“Obamacare,” in the parlance of both opposition and advocates—dominated the election cycles of 2010, 2012, 2014, and 2016, and continued policy changes and market instabilities are all but certain to remain in the spotlight through 2018 and 2020. The endurance of this debate should come as no surprise: national attempts to expand access to affordable medical services have a long history, beginning not with Barack Obama, Mitt Romney, Bill Clinton, or even Lyndon Johnson, but with Teddy Roosevelt and the Progressive Party in 1912.[1] Along the way, while employer-provided insurance came to form the cornerstone of American health care coverage, a wide range of proposals sought to extend benefits to the uninsured, including efforts to create tax subsidies, to introduce single-payer government care, and to impose employer and individual mandates.[2] Of course, it was that final option—the individual mandate, requiring that taxpayers either carry insurance or pay for their failure to do so—that featured in the law finally passed by Congress in 2010. Of “critical importance,” the mandate was “the price for the [insurance] industry’s cooperation.”[3] However, “perhaps because prominent Republicans had [originally] endorsed the idea, Democrats underestimated the problems it would cause.”[4] While the mandate still survives in full through 2018, it will continue only nominally thereafter: shortly before this Note went to press, the narrow Republican majorities in Congress—following years of promises to “repeal and replace”[5]—reduced the mandate’s penalty to $0 for 2019 and beyond, although procedural limitations required them to leave intact the theoretical command.[6]

The mandate has been the subject and survivor of substantial litigation, as well as of considerable scholarship.[7] Underexplored, however, is a provision within the mandate giving special consideration and accommodation to those who obtain membership in a type of medical collective known as a health care sharing ministry: such members are entirely exempt from the PPACA’s requirements.[8] This provision is unique in federal law. Unlike traditional conscientious-objector exemptions (which the PPACA also grants), the sharing ministry exemption demands no showing of a religious burden: to avoid the demands of the individual mandate, one need only join a club structured around shared ethical principles.[9] And as a nation, join we have: sharing ministry membership has expanded dramatically since 2010, so dramatically that the exemption may have helped to accelerate the destabilization of the very risk pools that the Act was meant to supply.[10] But the ability to join is not universal to people of all faiths and creeds, for the exemption contains a cutoff-date clause that not only forecloses the formation of new sharing ministries, but also limits the benefit of an exemption to members of just those sharing ministries which were in operation ten years before the PPACA’s passage.[11] Whether by accident or design, the effect of this limitation is to enshrine in law an accommodation for only five ministries—each one explicitly Christian in its tenets and joining requirements.[12]

This Note explores the sharing ministry exemption from several angles. Part I traces the history of the exemption’s creation, looking at the passage of the PPACA and attacks on Obamacare before turning to the rise of sharing ministries and their incorporation into the text of the law. Part II reviews a prior court challenge to the legality of the exemption, looking at why a suit brought on Establishment Clause grounds failed and how better probing of the legislative history might have warranted a different result. Finally, Part III examines unaddressed Free Exercise Clause concerns, including the burden on religious practice that the exemption creates (rather than alleviates); its inequitable effect on Muslim Americans, who are excluded from sharing ministry participation; and how these concerns fit within the framework established by the Religious Freedom Restoration Act. The Note concludes with a look ahead: whether or not the mandate’s 2017 defanging survives future elections, individual claims for faith-based exemptions to government mandates in other realms will continue to stand in tension with equality concerns. Such concerns simultaneously compel both the granting of and withholding of accommodation, but the “sensible balanc[ing]” test for resolving these conflicts, as provided by Congress, remains underused.[13] The sharing ministry exemption is a window into the usefulness of the test, and how in some cases it is possible to preserve legislative purpose only through the abrogation of legislative exemptions.

I. CREATING A SOLUTION AND A PROBLEM

A. The PPACA

On March 23, 2010, following protracted battles in Congress and in the court of public opinion, President Obama signed the PPACA into law.[14] The PPACA significantly expanded Medicaid, required insurers to cover pre-existing conditions, insured policyholders’ children into adulthood, gave insurance subsidies to lower-income households, and created marketplaces for the purchase of private health care policies.[15] To create a risk pool deep enough to ensure the affordability of such policies, the PPACA also included an “individual mandate,” requiring most Americans to carry a compliant form of health insurance from 2014 forward, regardless of their health or employment status.[16]

In pitching this version of health care reform to the country, Obama made a series of public promises to those who already had health coverage, promises which he reiterated at the bill’s signing:

If you like your current insurance, you will keep your current insurance. No Government takeover, nobody is changing what you’ve got if you’re happy with it. . . . [W]hat works in our system won’t change. And a lot of people are happy with the health care that they’ve got, and that won’t change because of this legislation.[17]

While the degree to which this commitment could ever have been generally met is debatable,[18] the PPACA does, in fact, contain a little-noticed provision guaranteeing exactly such rights to members of the then-obscure form of alternative risk distribution known as health care sharing ministries.[19]

That sharing ministries obtained a statutory accommodation for their members is remarkable: any exemptions from the individual insurance mandate had to be carefully limited by Congress if the wider program was to succeed, because the guarantee of preexisting-condition coverage hinged on the simultaneous enrollment of millions of healthy policyholders.[20] The list of exemptions was therefore short, with only two touching upon personal beliefs.[21] The first such exemption acknowledges that some Americans have a conscientious objection to insurance programs of any sort, and so “member[s] of a recognized religious sect or division . . . ,”[22] whose faith has also entitled them to absent themselves from participating in Social Security, face no penalty for failure to comply with the individual mandate.[23]11111111 This “[r]eligious conscience exemption”[24] thereby carries over precisely from the exemption already in place for a preexisting social welfare scheme, fulfilling, rather literally, the president’s promise that objectors may keep “the health care that they’ve got”: the care given internally by their sect, which their faith obliges them to take in preference to government assistance.[25]

But with the second belief exemption—for health care sharing ministries—the very concept was appearing in the federal code for the first time.[26] As defined by the PPACA, sharing ministries must be audited 501(c)(3) organizations, which have been “in existence at all times since December 31, 1999” and have spread the costs of members’ medical expenses “continuously and without interruption” since that date.[27] So long as a ministry’s members (1) “share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs” and (2) can “retain membership even after they develop a medical condition,”[28] the members are entirely exempt from the command to maintain coverage meeting PPACA standards.

Of course, the 2016 election of President Trump called the future of the entire PPACA into serious question.[29] A cornerstone of Trump’s campaign was a pledge “to immediately deliver a full repeal of Obamacare,” including the “eliminat[ion of] the individual mandate.”[30] Such action would obviate the need for special treatment of any insurance alternatives. Yet Trump took office espousing neither a clear nor a consistent vision of his administration’s health care policy, variously expressing a desire to keep some aspects of the PPACA intact,[31] to destroy Obamacare through inaction,[32] or to spend enough federal funds to expand health care coverage even further.[33] Through much of Trump’s first year in the White House, the mandate survived close calls. Early signs that Trump’s IRS would cease to enforce the individual mandate flagged,[34] and although the agency agreed to process tax returns which do not answer the question of whether health coverage was maintained during the year—a change from Obama-era policies—the tax authority stated that “barring a legislative change, it w[ould] continue enforcing the Affordable Care Act, while ‘taxpayers remain required to follow the law and pay what they may owe.’”[35]

That legislative action finally appeared at the end of 2017, a late addition to the tax reform bill advanced in Congress after the failure of attempts to more fully repeal the PPACA [36]:

Remarkably, after the millions of words written by lawyers to attack and defend the mandate in court, the tax bill wipes it out with just two sentences. The penalty is either a flat dollar amount, $695 for an adult, or 2.5 percent of household income above a certain threshold, whichever is greater. The tax bill slices the penalty to “$0” and “zero percent,” starting in 2019, relieving taxpayers of $43 billion in penalties they would otherwise pay through 2027, the budget office says.[37]

This tax legislation, signed into law in late December 2017, obviously represents a near-total neutering of the mandate’s power from 2019 forward.[38] But while the old maxim holds that there is no penalty without a law, the inverse is not quite true: there is still law without a penalty. With the structure of the mandate still enshrined in the code, restoration of the tax penalty is hardly unimaginable in a different political environment. This Note will therefore address the sharing ministry exemption as it stands through the 2018 tax year, mindful that even if the penalty’s abrogation is permanent, a rigorous examination of potential challenges to the law may prove useful in future debates over the nuances of both health care reform and belief-based exemptions.[39]

B. The Exemption

Taken at face value, the PPACA’s belief exemptions appear reasonable: if the purpose of the law is to expand the number of Americans with health insurance while allowing those who liked their existing plans to keep their coverage intact, then why not permit people of shared belief, with a communal commitment to one another, to continue to meet their obligations outside of the confines of a commercial insurance product? Several objections apply to the sharing ministries, however, which do not impact the legitimacy of the religious conscience objector exemption. First, the sharing ministries are not simply unregulated. Unlike religious conscience communities, the organizations themselves do not assume ultimate responsibility for care or claims. Each ministry serves as a clearinghouse for the sharing of costs amongst its membership; the costs are those billed by unaffiliated medical providers beyond the community, and there is no recourse if individual financial obligations go unmet.[40] Second, the sharing ministry exemption language avoids entirely the traditional underpinnings of faith-based exemptions.[41] While the religious conscience exemption applies to “an adherent of established tenets or teachings of such sect or division by reason of which he is conscientiously opposed to acceptance of the benefits of . . . insurance,”[42] sharing ministry members need simply “share a common set of ethical or religious beliefs” and “share medical expenses . . . in accordance with those beliefs.”[43] The religious conscience exemption is thus aimed at those whose religious beliefs require active opposition to a program, but sharing ministry members need only have a belief; whether that belief is sincere, or central to their faith, or even in any way burdened by the government is immaterial. It is especially noteworthy that the belief need not be religious: ethics alone suffice, even though the ethical difference between a secularized cost-sharing program and an insurance policy is nearly impossible to discern.[44] Third, and relatedly, there is potential for abuse: again unlike a religious conscience objector, a sharing ministry member expresses no belief barring participation in traditional insurance at a later date. While shared faith—especially regarding an opposition to contraceptive coverage—is undeniably important to some, economic incentives are also in play,[45] with non-comprehensive coverage, unsurprisingly, costing less than insurance which meets the federal mandate.[46] The door nevertheless remains open to the public market should a ministry member require treatment for a preexisting or otherwise-uncovered condition.[47]

There is also a fourth complication, critical yet largely unprobed, to be found within the cutoff date set by the PPACA. Because December 31, 1999 was chosen—when drafting the law a decade later—as the last possible date of establishment for qualified sharing ministries (though enrollment of new members therein is unrestricted), only five sharing ministries are eligible to extend an exemption to their memberships of “well over 625,000”[48]: Medi-Share, Samaritan Ministries, Christian Healthcare Ministries, Liberty HealthShare, and Altrua HealthShare.[49] This would not necessarily be a problem in and of itself if the range of pre-2000 ministries covered the full spectrum of ethical and religious beliefs within which medical costs might be shared.[50] But the sharing ministries began only in the 1990s, and at the end of the decade they remained a niche product, with perhaps 130,000 members across a handful of providers, some managing as few as forty families and all the subject of considerable skepticism from state insurance commissions.[51] As written, then, the PPACA’s 1999 cutoff enshrines in law an exemption that is open, both in practice and actuality, to only a handful of first-moving companies—all of which limit membership to a single sect.[52]

Each of the exemption-compliant ministries has a detailed set of joining requirements. Medi-Share, Samaritan, and Christian Healthcare each demand that members explicitly profess their faith, including testimony of “a personal relationship with the Lord Jesus Christ” confirmable by the member’s church.[53] Members must also “attend church regularly,”[54] and “embrace[] and follow[] the teaching of the New Testament in its entirety.”[55] The criteria used by Liberty and Altrua are somewhat broader, but they too remain deeply rooted in the Christian tradition.[56] At Liberty, in lieu of a statement of faith, members instead agree to “[o]bserve Christian [s]tandards” by following the teachings of the Bible and praying or worshipping regularly; to accept the community’s shared beliefs, including a fundamental “right to worship the God of the Bible;” and to live a “[g]odly [l]ifestyle” according to “Jesus Christ’s mandates.”[57] Altrua, originally marketed to Latter-Day Saints,[58] has a somewhat more liberal policy, requiring that members “share in . . . standards” based upon “biblical beliefs,” including prohibitions on alcohol, premarital or same-sex relationships, most abortions, and abuse.[59] Yet Altrua still makes clear that it is an organization for Christians, heading its membership guide with the exhortation of Galatians 6:2: “[c]arry each other’s burdens, and in this way you will fulfill the law of Christ.”[60] In short, while the PPACA created an exception nominally available to followers of any “common set of ethical or religious beliefs” so long as they had a collective agreement to share one another’s health care costs,[61] the only such organizations actually eligible to accept members are, to varying degrees, affiliates of a single religious tradition.

The law thus appears to give a clear benefit only to those willing to profess allegiance to Jesus Christ: an act of statutory millennialism, both in the literal fact of the cutoff date and in the practical implications for Christians. What, though, of persons sharing beliefs regarding mutual support and actively practicing such who, while similarly-situated, lie beyond the protection of the exemption scheme? When Congress backdated the sharing ministry exemption to 1999, it did not simply grandfather existing plans while precluding the formation of new sharing ministries, a permissible distinction.[62] Instead, Congress made it functionally impossible for ministries established between January 1, 2000 and the passage of the PPACA in 2010 to serve customers who otherwise met the criteria for a legislative exemption, customers whose ethics had also led them to seek to share their medical costs within a community of fellow-believers, but whose beliefs neither conformed to the standards of the grandfathered sharing ministries nor entitled them to the status of religious conscience objectors.[63]

II. CHALLENGES TO THE LAW

A. Liberty University and the Establishment Clause

To date, only one constitutional challenge to the sharing ministry exemption has advanced through the courts. In Liberty University, Inc. v. Geithner, a non-profit Christian college argued that both the religious conscience and the sharing ministry exemptions violated the Establishment Clause, discriminating against the university’s beliefs by granting accommodation only to sects which, respectively, qualified for the Social Security exemption or ran sharing ministries before 2000.[64] Their suit was dismissed by the trial court; on appeal, the Fourth Circuit found that the law did not explicitly discriminate amongst religions.[65] While the 1999 cutoff for sharing ministries might be “arbitrary, . . . neither the cutoff’s text nor its history suggests any deliberate attempt to distinguish between particular religious groups.”[66] Like the district court before them, it found the date cutoff to be similar in form to a 1950 cutoff date within the religious conscience exemption, a drawn line which had already survived Supreme Court challenges.[67] In the absence of a “‘proposed accommodation singl[ing] out a particular religious sect for special treatment’”[68] which “‘makes explicit and deliberate distinctions between different religious organizations,’”[69] the court would not subject the sharing ministry exemption to strict scrutiny, but instead reviewed for Establishment Clause violations under the “less rigorous” Lemon test.[70]

Applying Lemon, the court “require[d] ‘a secular legislative purpose,’ a ‘principal or primary effect . . . that neither advances nor inhibits religion,’ and no ‘excessive government entanglement with religion.’”[71] The Liberty University court suggested that the PPACA’s 1999 cutoff date advanced two secular purposes: ensuring the reliability of sharing ministries, and keeping closed “floodgates for any group to establish a new ministry to circumvent the Act.”[72] Without conducting further analysis, the court also determined that religion was neither advanced nor inhibited, and that the cutoff carried no entanglement risks for the government because “it applies only secular criteria”—in this case, a calendar date.[73]

B. Liberty University Revisited

Two factors suggest that a different plaintiff might have reached a different result on the sharing ministry question. First, Liberty University’s chief complaint was rooted, fatally, in the random nature of the cutoff date [74]: “Liberty alleges that the health care sharing ministries exemption discriminates against Liberty University’s religious beliefs by implementing an arbitrary date of December 31, 1999 for participation in a healthcare sharing plan.”[75] By asserting that the date was simply chosen at random, the plaintiff effectively foreclosed further inquiry into the legislative intent behind the exemption history. Both the trial and appeals courts simply proceeded on the assumption that the date was arbitrary, making no attempt to assess why the December 31, 1999 date was selected or what the consequences of such a cutoff might have been. While it is true that “[i]f Congress allowed any and all groups to form healthcare sharing 501(c)(3) organizations, it could effect an end-run around the mandatory coverage provisions,” the conclusion that the purpose was sect-neutral stands only if one accepts that the 1999 date was indeed arbitrary.[76]

At first glance, the date appears to be a classic example of legislative grandfathering. Grandfathering is a widespread practice throughout the federal code, enabling, in essence, time-tested and functional alternatives to new laws to continue status quo ante: “[t]hat grandfathering should be a common feature of the law is, of course, what one would expect . . . and . . . . the type of grandfathering that we see is what one would predict, in the sense that it focuses on durable forms of compliance . . . .”[77] Such concessions go to the very heart of Obama’s promise that “nobody is changing what you’ve got if you’re happy with it.”[78] This view of sharing-ministries as standard grandfathering was echoed by Representative Tom Perriello, Democrat of Virginia, a staunch advocate for the provision: “A major touchstone of our efforts toward comprehensive health care reform has been consumer choice . . . . [t]o that end, individuals who choose to receive their health care coverage through health sharing ministries instead of traditional health plans should not be penalized . . . .”[79]

But the question must be asked: why create a ten-year gap between the cutoff date and the passage of the PPACA? Tax-related grandfathering, although common, typically impacts decisions made “after the date on which the change is enacted or after some later date,” not a decade prior.[80] While backdating can be efficient where a “transition is being considered by Congress but before it has been enacted,” to prevent taxpayers from benefitting from action taken especially for the avoidance of consequences on the visible horizon,[81] efficiency and fairness demand only that this extend to “the date when the government first seriously considered the reform.”[82] That is very different from the sharing ministry situation. Obama’s first comprehensive health care reform policy address was obviously not delivered in December of 1999, but nearly a full decade later, on June 15, 2009.[83]

The closest statutory comparison, and the one made by the Fourth Circuit,[84] is to the 1965 act which enshrined in law the Social Security exemption for objecting “sect[s] or division[s] . . . in existence at all times since December 31, 1950,” incorporated into the PPACA for religious conscience.[85] As with the sharing ministry exemption, this cutoff date was set by Congress long after the year in question: in fact, eleven years following the Social Security Act first encompassed the self-employed.[86] Crucially, however, the December 31, 1950 date—even though much later imposed—represents a clear attempt to harmonize an exemption with the calendar and consequences of the original bill: “As originally enacted, the Self-Employment Contributions Act imposed a tax for each taxable year beginning after December 31, 1950, upon the self-employment income of every individual.”[87] The same date is used several times in the original 1954 act.[88] Although the 1965 accommodation may well have been tailored to meet the needs of Old Order Amish taxpayers,[89] it ultimately requires only that a sect have been in existence longer than the period affected by self-employment contribution legislation.[90] Accordingly, a sect cannot be created for purposes of avoiding the tax, but any sect that predates the tax remains eligible for consideration. The PPACA, on the other hand, pegs no other requirement, penalty, or privilege to the December 31, 1999 date: it appears ex nihilo.

If the choice of cutoff date reflects neither the conventions of tax-related grandfathering nor an attempt to harmonize with related provisions, then the process by which the date was chosen deserves further scrutiny. It may be that the date truly is purely arbitrary, as the Liberty University plaintiff alleged.[91] But the legislative history and statements from sharing ministry lobbyists suggest that there may have been a purpose behind it. According to a senior advisor to the Senate Committee on Health, Education, Labor, and Pensions (HELP), which drafted the sharing ministry exemption:

The Christian Care Ministry [CCM]—which runs . . . ‘Medi-Share’—reached out to Senate staffers and convinced us it was a legitimate, albeit unorthodox, coverage alternative for people of faith that would otherwise be forced out of business by the mandate. The exemption got into the original HELP bill markup in June 2009, got tightened along the way so that new entities could not use it as a loophole, and stayed.[92]

The untightened language was likely that of Senator Jim DeMint, Republican of South Carolina, introduced in his own health care measure (to rival that of President Obama) on June 23, 2009: “For purposes of this paragraph, the term ‘health care sharing ministry’ means any health care cost sharing arrangement among persons of similar beliefs that is not in the trade or business of providing health insurance,” full stop.[93] Four months later, though, when Senator Max Baucus, Democrat of Montana, introduced his version of the bill, the December 31, 1999 cutoff had been added to the definition.[94]

One possible explanation for the evolution is that CCM successfully lobbied for a particular date in a targeted effort to restrict competition. Publicly, the group’s lobbying motivations were rooted in a desire to expand sharing ministry access generally, and shortly after the first draft of an exemption appeared in the Senate bill, CCM issued a position paper explaining its rationale [95]:

[R]eform as it is being packaged right now will adversely affect our ability to serve the Christian community . . . . Religious freedom is in jeopardy. It starts with taking away the right to voluntarily share medical bills with other believers based on what CCM believes is a biblical mandate to care for one another. As Christians, CCM is concerned about any effort that limits the personal choice to help other Christians with dollars and prayers.[96]

But the Senate’s “tightening” of the window grandfathered Medi-Share and the other evangelical Christian sharing ministries while excluding, by the very narrowest of margins, their principal competitor, Altrua HealthShare—founded in March 2000.[97] By itself, this could have simply been a ruthless business practice, of no constitutional concern. However, Altrua was not just a competitor: run by Latter-Day Saints, it was also the only organization open to non-evangelicals while calling itself a sharing ministry.

Of course, “the Constitution allows the State to accommodate religious needs by alleviating special burdens,”[98] and in granting such an accommodation, the “government may (and sometimes must) accommodate religious practices and . . . may do so without violating the Establishment Clause.”[99] And CCM may fairly lobby for such accommodations in an attempt to safeguard its client base and business model. What is less clear, however, is whether the Senate’s response to the lobbying created not a lawful accommodation for religion generally, but instead constituted an “‘accommodation singl[ing] out a particular religious sect for special treatment.’”[100] A cutoff date engineered to favor evangelical sharing ministries while excluding a Mormon competitor would be an “explicit and deliberate distinction[] between different religious organizations”—or in other words, exactly what the Fourth Circuit claimed the exemption was not.[101] A single religious group asked for and received the accommodation they required. Consciously or not, Congress aided them in writing their similarly-situated competitors of a different faith out of a safe harbor, a devastating blow to Altrua’s business prospects which Altrua avoided only through a just-in-time 2014 merger with Blessed Assurance Bulletin, a hitherto-obscure Texas provider.[102]

With further evidence that the date was not arbitrary but was a knowing attempt to exclude Latter-Day Saints,[103] the inquiry might proceed along different, more rigorous lines. Under the precedent of Larson v. Valente, though “the Lemon v. Kurtzman ‘tests’ . . . . [may] reflect the same concerns that warrant[] the application of strict scrutiny” to a law discriminating amongst, rather than against, religions,[104] it is strict scrutiny that controls in the testing: “with . . . a denominational preference, our precedents demand that we treat the law as suspect and that we apply strict scrutiny in adjudging its constitutionality.”[105] In Larson, Minnesota had granted an exemption only to religious organizations receiving more than half of their contributions from non-members, and the legislative history indicated that this threshold was specifically meant to distinguish among sects, favoring the Roman Catholic archdiocese while discriminating against the Unification Church.[106] The Court found facial neutrality lacking not by looking to the plain language of the statute, but to the process of choosing its terms. The law having been constructed to preference certain denominations, “that rule must be invalidated unless it is justified by a compelling governmental interest and unless it is closely fitted to further that interest.”[107]

The sharing ministry exemption might not survive such scrutiny. Even assuming arguendo that President Obama’s promise—citizens with some form of health insurance can keep their existing coverage—represents a compelling government interest, the 1999 cutoff date is not “closely fitted” to that purpose. Sharing ministries created a mere three months after the deadline, ten years earlier, were providing customers with existing coverage of a type identical to that covered by the exemption. Additionally, consumers of traditional (commercial) insurance had been permitted to keep other non-compliant grandfathered plans so long as they held the policy on the date of the PPACA’s passage.[108] The sharing ministry exemption thus appears closely fitted only to the purpose of closing the door on a Mormon sharing ministry of ten years standing, while preserving identical programs run for evangelical Protestants. If a cutoff date predating Congressional consideration of the bill was necessary at all it would surely be to ensure that surviving ministries be able to demonstrate a degree of financial stability and reliability, so that consumers could rely on it in the absence of regular insurance; those ends could easily be met through less restrictive regulatory requirements,[109] including rigorous auditing standards and disclosure to the public of the percentage of claims covered in full and in part.[110]

As in Larson, therefore, a challenger equipped to aggressively argue a discriminatory legislative intent might well succeed in defeating the exemption on Establishment Clause grounds—although as in Larson, the likely remedy is not necessarily invalidation of the policy generally, but invalidation of the denominationally-discriminatory criteria.

III. AN ALTERNATIVE INQUIRY: THE FREE EXERCISE CONCERN

As Kathleen Brady has explained, “respect for conscience requires a judicially enforceable right of exemption under the Free Exercise Clause. . . . [and a]ccommodations by legislatures and administrators still play a critical role in protecting conscience . . . . where the Free Exercise Clause does not mandate relief.”[111] That ability to accommodate is not absolute, however; while the legislature may act to expand Free Exercise even when the judiciary would not be compelled to do so, it can and should be constrained by certain limits, rooted in Establishment Clause concerns and traceable through judicial precedent:

[T]he Court’s decisions have identified . . . limits [to legislative exemptions] that make sense in light of First Amendment values. First, religious exemptions and other forms of accommodation designed to meet the needs of religious believers in conflicts with the state must address genuine burdens on religious exercise. These exemptions cannot be used as a means to advance religion. . . . accommodations must [also] take account of the value of religious equality. . . . [and] sometimes the burdens that legislative and administrative accommodations place on others will be impermissibly high.[112]

These limitations are a useful rubric for evaluating actual and potential Free Exercise claims stemming from the sharing ministry accommodation, both in terms of the appropriateness of the original legislative action and of the shape of a legal challenge thereto.

A. Genuine Burdens on Religious Exercise

In addition to its Establishment Clause claims, Liberty University had also argued that the PPACA’s mandate constituted a violation of the Free Exercise Clause, on the grounds that it compelled Liberty to fund abortifacient contraceptives; and the Fifth Amendment, on the grounds that the granting of religious conscience and sharing ministry exemptions to other select groups denied equal protection to the school.[113] But while the university did offer alternative (non-compliant) insurance to its employees,[114] it never made a Free Exercise argument relating to that coverage. Instead, it argued that the existence of religious accommodations for some should simply invalidate the applicability of the PPACA for others. It is of course well-settled that legislative exemptions on religious grounds are in fact permissible,[115] part of the “room for play in the joints productive of a benevolent neutrality which will permit religious exercise to exist without sponsorship and without interference.”[116] The Fourth Circuit’s dismissal of the claim was thus unsurprising.[117] However, a plaintiff whose practices were identical to those of actual sharing ministry members—rather than one claiming a different sort of religious exemption altogether—would bring a much stronger Free Exercise Clause argument.[118] Altrua’s Mormon members might have been these plaintiffs save for the company’s merger,[119] but another class of potential plaintiffs also exists: not the Latter-Day Saints whom the law so nearly excluded, but a subset of American Muslims.[120]

Most Muslims in this country participate in both Social Security and regulated health care programs.[121] But “in the strictest sense of the religion, believers of Islam consider health insurance, and, for that matter, any form of risk insurance, to be forbidden or haraam.”[122] In 2008, in response to the problems conventional insurance causes such Muslims, the insurance giant AIG began to offer Lexington Takaful Solutions, a Sharia-compliant comprehensive insurance program, through which members contributed to a “pooling system” for the compensation of fellow participants.[123] The product line opened with homeowner’s coverage as a gateway to a full “range of Takaful products, including accident and health . . . .”[124] Such a pooling arrangement for health care would appear to fulfill not only the requirements of the faith, but also the requirements of a sharing ministry.[125]

This domestic takaful launch did not go unnoticed.[126] Within days, members of Congress joined voices with constituents critical of a Sharia-compliant product being sold by a AIG, the beneficiary of a federal bailout; in a scathing letter to the company’s chairman, Representatives Sue Myrick, Republican of North Carolina, and Frank Wolf, Republican of Virginia, declared that “Shariah law is radical and fanatic . . . . Islamists use Shariah finance to become legitimate and mainstream, and slowly change the legal system to suit their ideology . . . . We would hate to see the FBI visit you one day, look into your books . . . .”[127] Although Lexington Takaful Solutions later removed its product from the market, it first sold a small number of policies, accounting for 0.0006% of Lexington’s 2009 revenues.[128] However, the 1999 cutoff date meant that even if the Lexington policy suite expanded to include the planned health coverage before its withdrawal, it could not qualify as a sharing ministry under the PPACA—and no other provider has attempted to offer a health insurance product in the United States satisfying Sharia law as well as either the individual mandate or its permitted exceptions.[129] In its absence, currently-willing takaful participants, whether or not former holders of a takaful product which failed to satisfy the sharing ministry exemption because of the PPACA’s cutoff date, but whose participation in conventional insurance runs contrary to their religious practice, might bring a Free Exercise claim.[130] And thanks to the Religious Freedom Restoration Act of 1993 (RFRA), such suits are substantially easier to litigate than Establishment Clause claims.

Under RFRA, a federal law cannot “substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability [unless] . . . . it demonstrates that application of the burden to the person . . . (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.”[131] This statutory test repudiated the Supreme Court’s holding in Employment Division v. Smith that Free Exercise claims alone were generally insufficient grounds for the granting of exemptions from neutral laws of general applicability,[132] instead reinstituting (at least nominally) the strict scrutiny of the Sherbert test devised by Justice Brennan.[133] In RFRA analysis, the intent of the legislature is irrelevant, and “[l]aws valid under Smith would fall under RFRA without regard to whether they had the object of stifling or punishing free exercise.”[134]

The PPACA has already faced substantial and nearly-crippling challenges under RFRA, including, most famously, Burwell v. Hobby Lobby Stores, Inc.[135] In Hobby Lobby, a corporation’s owners objected (in the vein of Liberty University, though more successfully) to insuring the provision of contraceptives which they believed caused abortions, a newly-required element of PPACA-compliant employee health insurance plans.[136] The corporation sought refuge within an already-existing exemption from the so-called “contraceptive mandate,” created by Congress for the benefit of non-profit religious organizations. The Court found this accommodation expandable to for-profit, closely-held corporations whose owners asserted similar moral objections.[137] As “HHS [Health and Human Services] itself has demonstrated that it has at its disposal an approach that is less restrictive than requiring employers to fund contraceptive methods that violate their religious beliefs,” the Hobby Lobby owners should be given the same alternative.[138] The Court’s willingness to open wider the doors of an exemption to accommodate additional objectors, once the government has created it for the benefit of some subset, strongly suggests that a challenge to the sharing ministry exemption would receive a sympathetic hearing.

Even so, the question cannot be adjudicated unless the burden is substantial: “[a]s RFRA’s language makes explicit, strict scrutiny is triggered only by substantial burdens on religion, not by all burdens on religion.”[139] The definition of substantiality and the methods by which courts might assess that factor—including theological or civil measures—have long been debated: as Michael Dorf wrote not long after RFRA’s passage, “[n]either the text nor the legislative history of RFRA provides any clear indication of how courts ought to determine whether an incidental burden on religion is in fact substantial,” and the cases to which Congress specifically draws the court’s attention are “equally unilluminating” in resolving the question.[140] Even whether the substantiality is a measure of the pressure brought to bear by the government in its imposing of the burden, or instead a measure of the impact that compliance would bring upon the individual, is not a wholly settled question,[141] although Hobby Lobby was merely the latest in a long series of cases suggesting that the courts give the claimant significant latitude in this regard.[142] But however courts do the measuring, at some point they must “determine when the burden has crossed the line from being insubstantial to substantial.”[143] In other words, a law’s burden falls along a spectrum, impacting the faithful somewhere between their mere preferences and their sacred duties. Until the burden crosses a substantiality threshold, there is no need to even consider the government’s interest in determining whether RFRA demands accommodation.

Dorf has suggested a tripartite approach to answering the substantiality question.[144] First, is there a “bona fide religious belief that [the plaintiff] should engage in the burdened practice?”[145] Second, the courts should take a flexible approach to the consideration of alternative means of satisfying both the law and the belief.[146] Finally, “[b]y asking whether the burden imposed by a particular law on an adherent of a minority faith greatly exceeds the law’s effect on the majority—whose religious preferences the law reflects—we can give the substantiality test some concrete substance.”[147]

The theoretical faithful-Muslim plaintiff easily satisfies both the first and third prongs of this test.[148] As to the second, the alternative means of satisfaction are limited to three potential choices: (1) acquisition of a PPACA-compliant insurance policy, administered by a non-religious entity and structured so as to violate some interpretations of Sharia law; (2) membership in a PPACA-compliant sharing ministry, similar in structure to a takaful plan but requiring either a profession of Christian faith or a willingness to participate in a Christian mission of shared responsibility; or (3) surrender of the “individual shared responsibility payment” imposed for failure to carry such insurance, capped for 2018 at the higher of (a) 2.5% of household income or the national average price of minimally-compliant insurance, or (b) $695 per adult and $2,085 per household (though of course now falling to $0 in 2019).[149]

For a takaful adherent, the first option is a substantial burden by essentially any standard. In her Hobby Lobby dissent challenging the Court’s deference to substantiality claims,[150] even Justice Ginsberg appeared to consider a “command [to] purchase or provide [what] they find objectionable,” as would here be required, to be obviously substantial.[151] The second option, joining an existing sharing ministry, demands the equally untenable concession of subscribing to a Christian belief statement in order to satisfy a command of Islam. The third option, paying the shared responsibility payment tax for failure to carry insurance, is economically quantifiable—but a closer question. Willingness to pay the tax rather than purchase alternative insurance is by one measure itself confirmation of the substantiality of the first two burdens.[152] But while a “law [which] simply regulates a secular activity and . . . operates so as to make the practice of [] religious beliefs more expensive” is permissible,[153] the Court has recently recognized the “severe burden that taxation . . . can impose.”[154] And in Hobby Lobby, the Court declined to follow the argument of amici that the substantial burden of providing religiously-objectionable insurance coverage could be eliminated if the employer instead provided no insurance and paid the tax for so doing.[155] Because some sort of insurance is itself a valuable commodity for workers, it was not possible to state that the cost of the penalty and the lost benefit together were not higher than the cost of compliant insurance.[156] By the same logic, then, to say that no burden arises in paying a tax ignores the fact that an unaccommodated takaful adherent must (through this year) pay a penalty in addition to internalizing the out-of-pocket costs of health care, there being no acceptable insurance substitute to acquire. In short, a Muslim plaintiff should be able to demonstrate the substantiality of the burden through 2018.

B. The Burden’s Inequitable Effect

In creating the sharing ministry exemption, it is by no means certain that Congress was responding to what it perceived as a substantial Free Exercise burden on evangelical Christians. While other PPACA exemptions require takers to be “conscientiously opposed to acceptance of the benefits of . . . insurance,”[157] in the case of religious conscience, or to “oppose[] providing coverage . . . on account of religious objections,”[158] for religious employers, no oppositional requirement attaches to the sharing ministries. This absence reflects the theological problem faced by the exemption’s original advocates: the consumption of commercial health insurance does not burden the exercise of most Protestant faiths. (Despite the claims of some sharing ministry advocates that PPACA-marketplace insurance plans fund abortion, every state offers at least one plan which excludes abortion services.[159]) The sharing ministry accommodation, then, is not motivated by a religious burden in the traditional sense.

However, including the sharing ministry exemption within the PPACA shifts the analysis radically. When the “religious preferences the law reflects” are those of Christian ministry members, an entirely different group of minority faiths bears the burden, and the burden for some Muslims, if forced to buy secular commercial policies in a world in which Christian counterparts do not, is not insubstantial. Indeed, their burden may well be as great as that felt by a Christian religious-conscience objector, even though the terms of that particular clause exclude Muslims by virtue of their sect’s broad ability to participate in Social Security.[160] This goes straight to the heart of Brady’s argument for applying an equality test to legislative accommodations:

Accommodations that entail substantial expense for a discrete segment of the community raise issues of religious equality. The accommodated faith is afforded protection with costs only some incur. When the costs of accommodation are not shared by the community at large, we worry that more popular or powerful faiths are being advantaged at the expense of those with less communal support. Unequal burdens raise concerns of religious favoritism.[161]

Regardless of the original legislative intentions, the imbalance in the degree of burden between accommodated and unaccommodated parties should therefore be a cause for concern.

C. The Burden Shifted: Legislative and Administrative Hindrance

In Hobby Lobby, the Court found it unnecessary to examine whether the provision of a variety of contraceptives represented a compelling interest of the government, and instead focused on whether the mandate that employer-sponsored health insurance cover such contraceptives was, in fact, the least restrictive means of achieving such an interest.[162] Assessing the latter question requires asking, in the Court’s language, whether “the fundamental point would still be that there simply is no less restrictive alternative to the categorical requirement.”[163] And as previously discussed, the creation of an exemption for some does a great deal to undermine the argument that an extension of such an exemption would be fatal to the broader interest. Where “the record . . . shows that there is an existing, recognized, workable, and already-implemented framework to provide coverage. . . . [it appears that it] equally furthers the Government’s interest but does not impinge on the plaintiffs’ religious beliefs.”[164] By allowing some sharing ministries, therefore, the government makes it extremely difficult to tighten the spigot for similarly-situated—yet excluded—groups.

A Free Exercise challenge to the sharing ministry exemption would presumably not balance the believer’s burden against the compelling interest behind the exemption, but rather against that behind the wider law. Here, the interest (at least until 2019) is to make health insurance coverage both more robust, through improvements in the minimum standards of saleable policies, and more affordable,[165] through the requirement that Americans either spread risk by purchasing insurance or else offset the government’s health care spending via the shared responsibility payment.[166] But RFRA’s focus on the implications of a law “‘to the person’—the particular claimant whose sincere exercise of religion is being substantially burdened”—makes it difficult to defend the compelling interests inherent in a system which requires mass participation against any single defection.[167] The government has, in essence, conceded via the original exemption that the least restrictive means of achieving its wider ends do not require total consistency.

As with the contraceptive exception in Hobby Lobby, the existence of individual-mandate exemptions thus does nothing to help the government’s case, and Congress may have underestimated their potential to threaten the PPACA’s efficacy. Continuing criticism argues that “the law is poorly designed . . . . [and t]he penalties attached to the individual mandate are too weak,”[168] leading to a withdrawal of insurers from the marketplace and escalating costs for those who remain. The porousness of the sharing ministry exemption has appeared at least partly to blame,[169] though the anti-PPACA rhetoric and policy certainly had an effect, as well [170] and anticipation of the 2019 penalty-elimination is likely to further accelerate the spiral.[171] In 2011, however, shortly after the establishment of the exemption’s enshrinement but well before either Altrua’s qualification as an exempted sharing ministry or the individual mandate’s imposition date, membership amongst all ministries amounted to about 100,000—lower even than a decade earlier.[172] Six years later, though, enrollment had jumped tenfold, to more than a million.[173] While it is possible that some members may pay the mandate’s penalties inadvertently,[174] the plans are often marketed as a way to avoid having to do so,[175] and members often tout that avoidance as a key benefit.[176] Together, they represent more than 3% of the twenty-nine million Americans without health insurance;[177] if members had instead purchased marketplace insurance, they would have increased the size of the commercial pool by 8%.[178] The exempted population thus constitutes a non-inconsiderable threat to the pool’s stability, especially given that ministry members—who typically pledge to abstain from risky behaviors including extramarital sex and the use of tobacco, alcohol, and other drugs—may be relatively healthy, and therefore especially important for maintaining a lower cost-per-patient average.[179] How, then, could this impermissibly-narrow exemption be widened without further undermining the very purpose of the law?[180] Though perhaps a moot question after 2019, once the mandate’s penalty evaporates, the theoretical answer may nevertheless lie within RFRA’s resurrection of Sherbert, which contains the underpinnings of a solution for laws that risk being swallowed up by exceptions. “[A]dministrative inconvenience alone does not negate the feasibility of an otherwise less restrictive means—unless the administrative problem would be ‘of such magnitude’ that it would render ‘the entire statutory scheme unworkable.’”[181] To strip away the cutoff date and allow new sharing ministries of all faiths—or ethically-grounded ministries of no faith at all—risks exactly such a destruction of statutory purpose. And as Justice Ginsburg observed in her Hobby Lobby dissent, “[a]ccommodations to religious beliefs or observances, the Court has clarified, must not significantly impinge on the interests of third parties.”[182] Here the statutory accommodation impinges on the interests of non-Christian sharing ministry participants, while the most obvious remedy—expansion—impinges on those of the millions of American who participate in the health insurance marketplace.[183]

The theoretical Muslim plaintiff’s argument for the expansion of the exemption to include takaful participants thus runs aground. The legislature intended to accommodate sharing ministry members, but one unforeseen effect of the PPACA was to foreclose the offering of a sharing ministry equivalent catering to Muslims, forcing those same Muslims into a now-mandatory commercial insurance market, with Free Exercise concerns attendant. While an expanded exemption might restart American takaful programs, such an easy fix—via judicial elimination of the cutoff date—would undermine the legislature’s original purpose in passing the wider law and impose potentially dramatic third-party burdens as more and more consumers leave the secular marketplace. The harder fix, then, is to eliminate the exemption altogether.

Although politically complicated, such a remedy is constitutionally sound, and there is precedent for a court’s striking of accommodations. In Texas Monthly, Inc. v. Bullock, the Court found that a state sales-tax waiver for religious publications was unconstitutional, giving an effective grant-in-aid to religion in violation of the Establishment Clause:

[W]hen government directs a subsidy exclusively to religious organizations that is not required by the Free Exercise Clause and that either burdens nonbeneficiaries markedly or cannot reasonably be seen as removing a significant state-imposed deterrent to the free exercise of religion, as Texas has done, it “provide[s] unjustifiable awards of assistance to religious organizations” and cannot but “conve[y] a message of endorsement” to slighted members of the community.[184]

Similarly, and running in even closer parallel to the sharing ministry question, in Boone v. Boozman, the court examined the legislative exemption from vaccine laws granted to Arkansans whose “recognized church or religious denomination” forbade inoculations, in light of a religious plaintiff who had no denominational affiliation.[185] Faced with the construction of an exemption that excluded believers simply because they lack a recognized church, the court found it “difficult to imagine how the State would have a compelling interest in limiting the religious exemption to some religious sects . . . over others,” noting that “[w]here the State elects to accommodate religion on a particular issue like immunization, it is simply not constitutionally permissible for it to indulge the free exercise rights of some individuals and inhibit the free exercise rights of others on an arbitrary basis.”[186] But having found that the exemption cannot stand as written, the court did not expand its applicability. Instead, it focused on the legislative purpose of the vaccination law as a whole:

[T]he General Assembly sought to establish a comprehensive immunization program for school children, and the statute is complete in itself and capable of execution in accordance with that intent without the . . . religious exemption. [That exemption] must be stricken as unconstitutional, but the remaining portions of the statute remain in full force and effect. In other words, there now exists no statutory religious exemption to immunization in the State of Arkansas.[187]

The vaccine analogy is especially apt when considering the insurance problem, for just as it is epidemiologically demonstrable that an immunization scheme fails unless a critical level of coverage can be maintained, so is it also with insurance risk pools.

Here, as with health insurance, substantive Free Exercise concerns were already handled by the religious conscience exemption.[188] Like the religious-publication tax grant at issue in Texas Monthly, the additional accommodation for sharing ministries appears to have been conceived not as an attempt to alleviate a substantial burden on religion but rather to answer a political demand—with the result that it created a larger problem than the one it ostensibly solved.

Of course, President Trump and the 115th Congress were never likely to amend the PPACA in such a way as to strengthen the individual mandate through the elimination of faith-based exemptions; now, removing the mandate’s penalty will take the question of burdens off the table entirely come 2019. But so long as the mechanism of the mandate survives, there remains the potential for the legislature to restore the penalty—and with it, to restore exemption issues. A vigorous challenge, effectively litigated, would provide an opportunity not to extend the sharing ministry exemption to new groups, but to close it permanently, guiding consumers back into the regulated market, eliminating free-rider dangers, enhancing coverage, and helping to guarantee the efficacy of the mandate upon which the PPACA is built.

CONCLUSION

Regardless of the survival of the PPACA and the individual mandate, the need to measure a right to personal religious liberty against the rights of third parties, represented through compelling government interests—the very core of RFRA—will remain at the heart of how courts examine Free Exercise claims. In passing RFRA, Congress wrote its intentions into the statute, stating that “governments should not substantially burden religious exercise without compelling justification,” and “the compelling interest test as set forth in [pre-Smith] court rulings is a workable test for striking sensible balances between religious liberty and competing prior governmental interests.”[189] Yet more than two decades after RFRA’s bipartisan passage,[190] the “competing prior governmental interests” are too often ignored in discussions of religious freedom. In its 2016 platform, for example, the Republican Party argued not for “sensible balances,” but instead argued that:

The Free Exercise Clause is both an individual and a collective liberty protecting a right to worship God according to the dictates of conscience. Therefore, we strongly support the freedom of Americans to act in accordance with their religious beliefs, not only in their houses of worship, but also in their everyday lives. We support the right of the people to conduct their businesses in accordance with their religious beliefs and condemn public officials who have proposed boycotts against businesses that support traditional marriage. . . . We support the public display of the Ten Commandments as a reflection of our history and our country’s Judeo-Christian heritage and further affirm the rights of religious students to engage in voluntary prayer at public school events and to have equal access to school facilities. We assert the First Amendment right of freedom of association for religious, private, service, and youth organizations to set their own membership standards.[191]

The call for liberty is clear, but there is no acknowledgment of either the need to measure the substantiality of burdens upon that liberty, or the degree to which legitimate and compelling government interests might warrant imposition thereupon—unless the party in power hopes to elevate the “country’s Judeo-Christian heritage” itself to the status of such an interest.

The issues raised by the sharing ministry exemption deserve special consideration in an age of considerable deference to the individual belief-based claim. An object lesson in the complicated dynamics of religion-clause balancing tests, this exemption illustrates how the legislative process can give rise to Establishment Clause concerns, and how genuine desires to accommodate the needs of diverse faiths can both create new forms of discrimination and undermine the wider purposes of public laws. While sharing ministry litigation has been extremely limited, even in the era of the defanged mandate its persistence in the code will remain a potential landmine should the penalty be revived or the exemption’s structure be imported wholesale into new health care legislation. How the issue is eventually defused may have implications not just for the Christians who participate in ministries today, the Muslims who seek Sharia-compliant financial products, and the Americans of all faiths who rely on robust risk pools, but also for the larger challenge of how any administration must interpret and implement belief exemptions from social-cooperation laws. Though little noticed amidst a wider national debate, the choice here presented—whether to maintain a limited exemption, to open the floodgates to all claimants, or to excise the exemption for the sake of wider purpose—is thus one of fundamental importance.

[*] *. Editor-in-Chief, Southern California Law Review, Volume 91; J.D. Candidate 2018, University of Southern California Gould School of Law; M.A. Fine and Decorative Art 2008, Sotheby’s Institute of Art; A.B. History and Literature 2002, Harvard University. I am indebted to my wife, Dehn W.H. Gilmore, and to my son, Jack, for their boundless patience and loving support; to Professor Nomi Stolzenberg, for her encouragement, enthusiasm, and invaluable assistance; and to the superb attorneys and old friends who inspired me to pursue this new career and gave sound advice along the way, including Frances Cohen, Elizabeth N. Dewar, Judith G.H. Edington, John A.D. Gilmore, Patricia G. Hambrecht, Wheatly A. MacNamara, and James W. Lawson.

[1]. See Dan Balz, Introduction to Staff of the Wash. Post, Landmark: The Inside Story of America’s New Health-Care Law and What It Means for Us All 4 (2010) (“The [1912] party platform . . . call[ed] for ‘the protection of home life against the hazards of sickness, irregular employment and old age through the adoption of a system of social insurance adapted to American use.’”).

[2]. See Paul Starr, Remedy and Reaction: The Peculiar American Struggle over Health Care Reform 19–21 (2011).

[3]. Id. at 187.

[4]. Id. at 21. Cf. Stuart M. Butler, Assuring Affordable Health Care for All Americans, Address at Meharry Medical College (Oct. 2, 1989), in 218 Heritage Lectures 6 (1989) (addressing problems with the American health care system and proposing an insurance mandate as part of a conservative solution).

[5]. See, e.g., Editorial, Ding Dong. Repeal and Replace Is Dead. (For Now), L.A. Times (July 28, 2017, 9:15 AM), http://www.latimes.com/opinion/editorials/la-ed-healthcare-skinny-repeal-20170728-story.html. Cf., e.g., Alex Pappas, Trump: ‘Repeal and Replace Is Not Dead!,’ Fox News (July 29, 2017), http://www.foxnews.com/politics/2017/07/29/trump-repeal-replace-is-not-dead.html.

[6]. Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, Pub. L. No. 115-97, § 11801, 131 Stat. 2054, 2092 (2017) (to be codified at 26 U.S.C. §5000A(c)).

[7]. See Douglas A. Bass, Annotation, Validity of the Minimum Essential Medical Insurance Coverage, or “Individual Mandate,” Provision of § 1501 of the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119, 60 A.L.R. Fed. 2d 1 (2011).

[8]. See I.R.C. § 5000A(d)(2)(B) (2012).

[9]. See id. (“The term ‘health care sharing ministry’ means an organization . . . members of which share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs . . . .”).

[10]. See, e.g., Tracy Seipel, Obamacare: ‘Health Care Sharing Ministries’ Increase Membership in Wake of New Law, Mercury News (July 26, 2014, 10:33 AM), http://www.mercurynews.com/ 2014/07/26/obamacare-health-care-sharing-ministries-increase-membership-in-wake-of-new-law.

[11]. See I.R.C. § 5000A(d)(2)(B)(ii)(IV).

[12]. See infra note 49 and accompanying text.

[13]. 42 U.S.C. § 2000bb (emphasis added). See, e.g., Martin S. Lederman, Reconstructing RFRA: The Contested Legacy of Religious Freedom Restoration, 125 Yale L.J.F. 416, 419–20 (2016).

[14]. See Sheryl Gay Stolberg & Robert Pear, Obama Signs Health Care Bill into Law, with a Flourish, N.Y. Times (Mar. 23, 2010), https://nyti.ms/2jDDkXM.

[15]. See Shailagh Murray & Lori Montgomery, House Passes Health-Care Reform Bill Without Republican Votes, Wash. Post (Mar. 22, 2010), http://www.washingtonpost.com/wp-dyn/content/article/2010/03/21/AR2010032100943.html.

[16]. See I.R.C. § 5000A(a); Casey B. Mulligan, The Power of the Individual Mandate, N.Y. Times: Economix (Oct. 23, 2013, 12:01 AM), https://economix.blogs.nytimes.com/2013/10/23/the-power-of-the-individual-mandate. (“[T]he individual mandate can be enforced and thereby help discourage millions of people from going without health insurance.”).

[17]. Remarks on the Patient Protection and Affordable Care Act, 1 Pub. Papers 402, 404 (Mar. 23, 2010) [hereinafter Remarks].

[18]. See, e.g., Donald J. Trump (@realDonaldTrump), Twitter (Jan. 5, 2017, 4:01 AM), https://twitter.com/realDonaldTrump/status/816977937731878912 (“The fact is ObamaCare was a lie from the beginning. ‘Keep you [sic] doctor, keep your plan!’”).

[19]. I.R.C. § 5000A(d)(2)(A)(i).

[20]. See Allison K. Hoffman, Oil and Water: Mixing Individual Mandates, Fragmented Markets, and Health Reform, 36 Am. J.L. & Med. 7, 64 (2010) (“With an individual mandate, the government creates a requirement that all Americans obtain insurance. Yet it leaves implementation for the most part in the hands of private insurers, who, to whatever degree permitted, design, price, and issue the plans that Americans must buy. This power over design, in essence, imbues insurers with a tremendous amount of delegated state power to determine the contours of how the mandate is put in place and effects Americans. Regulations, thus, may be seen as a way to ensure insurers implement the mandate consistent with intended legislative objectives, including health redistribution.”).

[21]. Both come under the heading “[r]eligious exemptions,” even though the sharing ministry may theoretically be organized along purely ethical lines. I.R.C. § 5000A(d)(2).

[22]. Id. § 5000A(d)(2)(A)(i).

[23]. Congress defined this group by direct reference to the longstanding conscientious objector exemption within the Social Security Act: to be exempt, a sect must have been in existence since 1950, it must teach adherents not to participate in insurance plans, and it must have an independent system for ensuring the well-being of members. See id. § 1402(g)(1) (requiring objectors to be “conscientiously opposed to acceptance of the benefits of any private or public insurance . . . [for] death, disability, old-age, or retirement or . . . medical care.”).

[24]. Id. § 5000A(d)(2)(A).

[25]. A sect that made no care provision for its adherents would not fulfill the terms of the exemption.

[26]. See Edward A. Zelinsky, Do Religious Tax Exemptions Entangle in Violation of the Establishment Clause? The Constitutionality of the Parsonage Allowance Exclusion and the Religious Exemptions of the Individual Health Care Mandate and the FICA and Self-Employment Taxes, 33 Cardozo L. Rev. 1633, 1671 (2012).

[27]. I.R.C. § 5000A(d)(2)(B)(ii)(IV)–(V).

[28]. Id. § 5000A(d)(2)(B).

[29]. See Jeffrey Toobin, The Highest Court, New Yorker, Nov. 21, 2016, at 58.

[30]. Healthcare Reform to Make America Great Again, Donald J. Trump for President, https://web.archive.org/web/20170207063426/https://www.donaldjtrump.com/positions/healthcare-reform (last visited Jan. 3, 2018).

[31]. See Reed Abelson, Donald Trump Says He May Keep Parts of Obama Health Care Act, N.Y. Times (Nov. 11, 2016), https://nyti.ms/2eIXqcX.

[32]. See Thomas Kaplan, ‘Let Obamacare Fail,’ Trump Says as G.O.P. Health Bill Collapses, N.Y. Times (July 18, 2017), https://nyti.ms/2vyCGgZ.

[33]. See Damian Paletta, Trump Calls for More Spending on Health Care so It’s ‘The Best Anywhere,’ but He Just Proposed Big Cuts, Wash. Post (May 28, 2017), http://wapo.st/2r2UFNm.

[34]. See Peter Sullivan, IRS Loosening Enforcement of ObamaCare Mandate, Hill (Feb. 15, 2017, 12:41 PM), http://thehill.com/policy/healthcare/319672-irs-takes-step-against-obamacare-mandate.

[35]. Brianna Ehley & Aaron Lorenzo, Trump Still Enforcing Obamacare Mandate, Politico (May 3, 2017, 2:14 PM), http://politi.co/2pFTUqW.

[36]. Mike DeBonis & Damian Paletta, Senate GOP Changes Tax Bill to Add Obamacare Mandate Repeal, Make Individual Income Cuts Expire, Wash. Post (Nov. 14, 2017), http://wapo.st/2hsekQS.

[37]. See Robert Pear, Without the Insurance Mandate, Health Care’s Future May Be in Doubt, N.Y. Times (Dec. 18, 2017), https://nyti.ms/2CZJngA.

[38]. See Eileen Sullivan & Michael Tackett, In Signing Sweeping Tax Bill, Trump Questions Whether He Is Getting Enough Credit, N.Y. Times (Dec. 22, 2017), https://nyti.ms/2DyfGmW.

[39]. Although the PPACA is the only federal law to contain a sharing ministry exemption at present, Congress has considered adding the exception to existing legislation governing Health Savings Accounts (HSAs). E.g., H.R. 1752, 114th Cong. (2015). Additionally, although beyond the scope of this paper, it should be noted that a number of states recognize sharing ministries and accord them special consideration, in some cases following exactly the language of the federal exemption. See, e.g., N.H. Rev. Stat. Ann. § 126-V:1 (LexisNexis 2016).

[40]. See Benjamin Boyd, Health Care Sharing Ministries: Scam or Solution?, 26 J.L. & Health 219, 236–238 (2013) (discussing the dissent in Commonwealth v. Reinhold, 325 S.W.3d 272, 280–82 (Ky. 2010)). See also Ehren K. Wade, Comment, Just What the Doctor Ordered? Health Care Reform, the IRS, and Negotiated Rulemaking, 66 Admin. L. Rev. 199, 221 (2014) (“[M]inistries . . . may refuse to cover certain treatments on religious grounds and are largely unregulated, such that they may not have reserves to cover large expenses and are not required to carry such reserves.”).

[41]. Kent Greenawalt has identified three typical justifications for exemptions: necessity of avoiding offense to a religious belief; necessity of avoiding “grave practical difficulties” arising from noncompliance, as when a draftee refuses to fire on a battlefield; and necessity of allowing noncompliance from a law which compels morally abhorrent action or inaction. Kent Greenawalt, Exemptions 5–6 (2016).111111

[42]. I.R.C. § 1402(g)(1) (2012).

[43]. Id. § 5000A(d)(2)(B)(ii)(II).

[44]. See Charlene Galarneau, Health Care Sharing Ministries and Their Exemption from the Individual Mandate of the Affordable Care Act, 12 J. Bioethical Inquiry 269, 280 (2015) (“Notably, a commitment to share medical expenses is also the core ethical principle underlying secular health insurance. . . . [W]hat does it mean to share medical expenses in accordance with those beliefs?”). Cf. Wisconsin v. Yoder, 406 U.S. 205, 215 (1972) (“A way of life, however virtuous and admirable, may not be interposed as a barrier to reasonable state regulation . . . if it is based on purely secular considerations; to have the protection of the Religion Clauses, the claims must be rooted in religious belief.”).

[45]. See Kimberly Leonard, Christians Find Their Own Way to Replace Obamacare, U.S. News & World Rep. (Feb. 23, 2016, 1:12 PM), http://www.usnews.com/news/articles/2016-02-23/
membership-for-health-sharing-ministries-soars-under-obamacare (“People say they join health sharing ministries for a variety of reasons—whether they’ve found exchange plans to be prohibitively expensive or because they prefer sharing medical costs with others who hold their faith and will pray for their medical hardships. Some say they don’t want to pay into a plan that violates their religious objections, such as those that cover abortions or emergency contraception, the latter of which is obligated under Obamacare for all private plans.”).

[46]. See, e.g., Holly Johnson, Why We’re Joining a Healthcare Sharing Ministry, Club Thrifty (Dec. 10, 2014), http://clubthrifty.com/joining-healthcare-sharing-ministry (“[T]he fact is, when we shopped around for health insurance this year, we discovered that healthcare sharing ministries simply offered the best value out there.”).

[47]. See Galarneau, supra note 44, at 278–79.

[48]. Kate Shellnutt, Bearing Burdens After Obamacare: The Future of Christian Healthcare Sharing, Christianity Today (Feb. 2, 2017), http://www.christianitytoday.com/ct/2017/february-web-only/future-of-christian-healthcare-ministries-after-obamacare.html.

[49]. See Sean Parnell, Make That Five Sharing Ministries (Dec. 13, 2013), Self-Pay Patient, http://selfpaypatient.com/2013/12/13/make-that-five-sharing-ministries. The PPACA precludes members of later-established ministries from circumventing the mandate, regardless of the sincerity of belief or the actual ability of the ministry to satisfy claims. An alternative form of non-compliant ministry also exists, in which membership fees are redistributed to offset tax penalties charged for failure to carry insurance, but this curious subset is beyond the scope of this paper. See No Penalties for M.C.S. Members, M.C.S. Medical Cost Sharing, http://www.medicalcostsharing.com/penalties-m-c-s-members (last visited Jan. 3, 2018).

[50]. See Hillary Rosner, Opinion, Should I Lie About My Beliefs to Get Health Insurance?, N.Y. Times (Dec. 10, 2016), http://nyti.ms/2xXmpVr.

[51]. See Chuck Fager, Bearing (Some but Not All) Burdens, Christianity Today (Oct. 2, 2000), http://www.christianitytoday.com/ct/2000/october2/17.24.html.

[52]. Health Care Sharing Ministry Exemptions, Obamacare Facts, http://obamacarefacts.com/
healthcare-sharing-ministry-exemptions (last visited Jan. 3, 2018) (“If you don’t share the Biblical faith of a HCSM, then strongly consider another health coverage type. If you do, you may have just found a potentially cost effective health care option.”). Cf. Christen Varley, Comment to Ask a Zenefits Advisor: Are Health Care Sharing Ministries Exempt from ACA Penalties?, Zenefits, https://www.zenefits.com/blog/ask-bud-health-care-sharing-ministries/#comment-2402353068 (last visited Jan. 3, 2018) (“I am obligated to point out Liberty HealthShare does not inquire of it’s [sic] members religious affiliation and or church/temple membership, support, or attendance. . . . We expect members to care for their bodies as creations of God and to respect the rights of all to worship the God of the bible. We made the conscious decision to broaden the availability of HCS to more Americans.”).

[53]. E.g., Medi-Share, Program Guidelines & Frequently Asked Questions 12 (2017), https://mychristiancare.org/globalassets/media/medi-share/medi-share-guidelines.pdf. The Medi-Share Guidelines require that:

All adult Members age 18 and older must attest to a personal relationship with the Lord Jesus Christ. A church leader may be interviewed to verify their testimony. Adult Members profess the following Statement of Faith to qualify for Medi-Share membership: I believe that there is only one God (Deuteronomy 6:4) eternally existing in three Persons: the Father, Jesus Christ the Son, and the Holy Spirit (Matthew 28:19). I believe Jesus is God, in equal standing with the Father and the Holy Spirit (Colossians 1:15-20, 2:9). I believe the Bible is God’s written revelation to man and is verbally inspired, authoritative and without error (2 Timothy 3:16-17). . . . All Members agree to the following: Live by biblical standards[; b]elievers are to bear one another’s burdens[; a]ttend and actively support a fellowship of believers regularly.

Id. at 12–13.

[54]. E.g., Samaritan Ministries, Guidelines for Health Care Sharing 14–15 (2017), https://samaritanministries.org/uploads/documents/2017-02-guidelines.pdf. Samaritan requires that members:

A. Be a professing Christian according to Biblical principles. . . .

B. Be in agreement with the following member statement of faith:

I believe in the triune God of the Bible. He is one God Who is revealed in three distinct Persons—God the Father, God the Son, and God the Holy Spirit. I believe Jesus Christ was God in the flesh—fully God and fully man. . . .

C. Attend a Christian church regularly (at least three out of four weeks per month that your health or weather permits). . . .

D. Believe that you are to bear one another’s burdens as taught in the Bible. . . .

L. Have your pastor or church leader sign a statement confirming that you meet the above requirements.

Id.

[55]. E.g., Christian Healthcare Ministries, Christian Healthcare Ministries Guidelines 4 (2016), http://www.chministries.org/downloads/CHM_Guidelines_2016_V2.pdf. The Christian Healthcare Ministries membership requirements state that:

If you are a Christian, you can be a member of Christian Healthcare Ministries. A Christian is a person who embraces and follows the teaching of the New Testament in its entirety. Additionally, you must: abstain from the use of tobacco and the illegal use of drugs (I Corinthians 6:19-20)[;] follow biblical principles regarding the use of alcohol[;] attend group worship regularly as health permits (Hebrews 10:25) . . . .

Id.

[56]. Altrua was founded in 2000, but its post-PPACA acquisition of Blessed Assurance Bulletin, a small Texas sharing ministry in business since 1997, made the “December 31, 1999 date, chosen by the drafters . . . no longer an issue.” Sean Parnell, Altrua Qualifies for Obamacare Exemption, Plus More on CMF Curo, Self-Pay Patient (Oct. 15, 2014), http://selfpaypatient.com/2014/10/15/ altrua-qualifies-for-obamacare-exemption-plus-more-on-cmf-curo. Altrua’s narrow escape via this acquisition is discussed in more detail infra at note 102 and accompanying text.

[57]. Liberty HealthShare Sharing Guidelines, Liberty HealthShare 5 (2017), https://www.libertyhealthshare.org/Content/Sharing-Guidelines.pdf. The guidelines provide that:

In order to become and remain a Sharing Member, a person must . . . : A. Observe Christian Standards. The modern medical cost sharing movement was begun by a small band of Christians to practically demonstrate how to fulfill the command by Christ to ‘bear one another’s burdens’. In accordance with that practice, every member of Liberty HealthShare is expected to: 1111111111111111111111111111111111111111111111111111111111111111111111111Strive to live in accordance with biblical principles. Honor the biblical teaching to ‘share one another’s burdens’ (Gal. 6:2). Participate regularly in worship or prayer. B. Accept Our Shared Beliefs. . . . It is our spiritual duty to God and our ethical responsibility to ourselves and the other members of our cost-sharing ministry to care for our bodies and maintain our health. . . . At the core of what we do, and how we relate to and engage with one another as a community of people, is a set of common beliefs. Our Statement of Shared Beliefs is as follows: 1. We believe that our personal rights and liberties originate from God and are bestowed on us by God, and are not concessions granted to us by governments or men. 2. We believe every individual has a fundamental religious right to worship the God of the Bible in his or her own way. 3. We believe it is our biblical and ethical obligation to assist our fellow man when they are in need according to our available resources and opportunity. 4. We believe it is our spiritual duty to God and our ethical duty to others to maintain a healthy lifestyle and avoid foods, behaviors or habits that produce sickness or disease to ourselves or others. 5. We believe it is our fundamental right of conscience to direct our own healthcare, in consultation with physicians, family or other valued advisors, free from government dictates, restraints and oversight. These beliefs form the religious and ethical basis for our interaction and relationship as a community. . . . C. Maintain a Godly Lifestyle. Members highly value the spiritual principle that our bodies are gifts from God and we must respect and care for our physical bodies. Further, we have an ethical obligation to our fellow members to live healthy and make wise choices so as not to place any unnecessary burdens on those who are sharing with us. As a community of people we try our best to live out Jesus Christ’s mandates.

Id. at 5–6.

[58]. Randall Sluder, Comment to What Do You Know About Christian Healthcare Ministries as a Solution to the Health Insurance Problem? (January 2015 Update), Junior Ganymede (Jan. 29, 2015), http://www.jrganymede.com/2013/12/30.

[59]. Altrua HealthShare, Application 7, http://www.pohealthcare.com/application_
packet.pdf. Altrua requires a pledge, in full, that:

“Because of the biblical beliefs listed in the Statement of Standards, I chose to live a clean and wholesome life, and share in the following standards and convictions with members of Altrua HealthShare: I believe in keeping my body clean with proper nutrition and consuming foods in moderation. I believe that the use of tobacco, illicit drugs, and excessive alcohol consumption is harmful to body and soul. I do not currently use and have not used tobacco or illegal drugs in the past 12 months. According to the word of God sexual relations outside the bond of marriage between a man and a woman are morally wrong. I believe that abortion is wrong, except in special circumstances such as rape or serious injury to the mother, and then, only after careful consideration by all concerned. I believe that I am obligated to provide and care for my family and that abuse of any kind of a family member or anyone else is wrong. I currently meet each of these standards in my daily life and will continue to do so.

Id. (emphasis added).

[60]. Altrua HealthShare, Membership Guidelines 2 (2017), https://altruahealthshare.org/ pdfs/ahs_membership_guidelines_2017-2.pdf.

[61]. I.R.C. § 5000A(d)(2)(B)(ii)(II) (2012).

[62]. For a full discussion of the grandfathering issue, see infra Part II.B.

[63]. A review of groups which have obtained Social Security exemptions—thereby making their members eligible for the religious conscience exemption—found that only Anabaptists and the Amish have qualified. See Jeffrey R. Mullen, Note, Religion and the PPACA: An Analysis of Non-Secular Line Drawing Within the Health Insurance Mandate, 14 Rutgers J.L. & Religion 149, 178–80 (2012). This aligns with the intent of Congress in creating a very narrow exemption. See Wisconsin v. Yoder, 406 U.S. 205, 222–23 n.11 (1972) (“The history of the exemption shows it was enacted with the situation of the Old Order Amish specifically in view.”).

[64]. See Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611, 641 (W.D. Va. 2010), vacated, 671 F.3d 391 (4th Cir. 2011).

[65]. See Liberty Univ., Inc. v. Lew, 733 F.3d 72, 101–03 (4th Cir. 2013).

[66]. Id. at 102.

[67]. See id. at 101 (citing United States v. Lee, 455 U.S. 252, 260–61 (1982)); Liberty Univ., 753 F. Supp. 2d at 641.

[68]. Liberty Univ., 733 F.3d at 101 (citing Bd. of Educ. of Kiryas Joel Vill. Sch. Dist. v. Grumet, 512 U.S. 687, 706–07 (1994)).

[69]. Id. (citing Larson v. Valente, 456 U.S. 228, 246–47 & n. 23 (1982)).

[70]. Id.

[71]. Id. at 101–02 (citing Lemon v. Kurtzman, 403 U.S. 602, 612–13 (1971)).

[72]. Id. at 102.

[73]. Id. Relying on Justice O’Connor’s suggestion that primary effect and entanglement inquiries could be dealt with as one, the court also found that the religious conscience objector exemption was constitutional, as the secular purpose and primary effect of the PPACA were each to guarantee health coverage of some sort. See id. at 101–02 (citing Zelman v. Simmons-Harris, 536 U.S. 639, 668 (2002) (O’Connor, J., concurring)).

[74]. See id. at 102.

[75]. Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611, 641 (W.D. Va. 2010) (internal quotation marks omitted).

[76]. Id.

[77]. Steven Shavell, On Optimal Legal Change, Past Behavior, and Grandfathering, 37 J. Legal Stud. 37, 38–39, 69–70 (2008).

[78]. Remarks, supra note 17.

[79]. Janelle Rucker, Health Care Ministries Keep Close Eye on Legislation, Roanoke Times (Apr. 7, 2010), at A12.

[80]. Kyle D. Logue, Tax Transitions, Opportunistic Retroactivity, and the Benefits of Government Precommitment, 94 Mich. L. Rev. 1129, 1134 (1996).

[81]. Id. at 1179.

[82]. Louis Kaplow, An Economic Analysis of Legal Transitions, 99 Harv. L. Rev. 509, 607 (1986).

[83]. See President Barack Obama, Remarks by the President to the Annual Conference of the American Medical Association (June 15, 2009), https://obamawhitehouse.archives.gov/the-press-office/remarks-president-annual-conference-american-medical-association.

[84]. See Liberty Univ., Inc. v. Lew, 733 F.3d 72, 101 (4th. Cir. 2013).

[85]. Social Security Amendments of 1965, Pub. L. No. 89-97, § 319, 79 Stat. 286, 391 (codified as amended at I.R.C. § 1402(g)(1)(E) (2012)). See also I.R.C. § 5000A(d)(2).

[86]. See Social Security Amendments of 1954, Pub. L. No. 83-761, 68 Stat. 1052 (codified as amended at 42 U.S.C. §§ 402–405, 408–411, 413–418, 420–422).

[87]. Rev. Rul. 68-498, 1968-2 C.B. 377, 1968 IRB LEXIS 256.

[88]. See Social Security Amendments of 1954 passim.

[89]. Amish resistance to Social Security was the driving force behind the 1965 religious conscience objection. Believing that “to pay social security tax . . . is to admit that the government has a responsibility for aged Amish members, and to admit this is to deny the faith,” a resistance movement arose; the I.R.S.’s 1961 seizure and sale of farm animals to compensate for unpaid taxes drew such opprobrium that enforcement was curtailed and a legislative accommodation developed. John. A. Hostetler, The Amish and the Law: A Religious Minority and Its Legal Encounters, 41 Wash. & Lee L. Rev. 33, 44–45 (1984).

[90]. Cf. W. Wesley Hill, Thou Shalt Opt Out: Reforming the Religious Conscience Exemption from Social Security and the Affordable Care Act Based on State Experience, 43 U. Mem. L. Rev. 659, 661 (2013) (“Among the conditions of the exemption is that the individual belong to a religious sect that has a support system in place for dependent members similar to Social Security. Because of this and a host of other requirements, the exemption is foreclosed to the overwhelming majority of the public.”).

[91]. See supra text accompanying note 75.

[92]. John E. McDonough, Inside National Health Reform 122 (2011).

[93]. S. 1324, 111th Cong. (2009).

[94]. See S. 1796, 111th Cong. (2009). The committee report for Senator Baucus’s bill suggests that a sincerity test was intended to be inherent. See S. Rep. 111-89, at 52 (2009) (“Exemptions from the penalty are also allowed for . . . individuals with sincerely held beliefs who participate in health arrangements provided by established religious organizations (e.g., those participating in Health Sharing Ministries) . . . .”).

[95]. Robert Y. Baldwin, Healthcare Sharing and Healthcare Reform—A Position Statement from Christian Care Ministry, Inc. (CCM) in Response to Filing of Senate Bill on Healthcare, PRWeb (Sept. 21, 2009), http://www.prweb.com/releases/Medi/share/prweb2903324.htm.

[96]. Id.

[97]. See Sluder, supra note 58. See also The Kirtland Sharing Alliance, Utah Division Corporations & Com. Code, https://secure.utah.gov/bes/details.html?entity=4756607-0141 (last visited Jan. 3, 2018) (listing the corporate establishment date of The Kirtland Sharing Alliance, another Altrua predecessor corporation, as June 1, 2000).

[98]. Bd. of Educ. of Kiryas Joel Vill. Sch. Dist. v. Grumet, 512 U.S. 687, 705 (1994).

[99]. Id. at 705–06 (quoting Hobbie v. Unemp’t Appeals Comm’n of Fla., 480 U.S. 136, 144–45 (1987)).

[100]. Liberty Univ., Inc. v. Lew, 733 F.3d 72, 101 (4th Cir. 2013) (citing Kiryas Joel, 512 U.S. at 706–07).

[101]. Id. at 101.

[102]. See Sluder, supra note 58. Blessed Assurance Bulletin had served as few as forty families, but it had done so since before 2000; Altrua’s acquisition of it thereby enabled its own members to qualify for a PPACA exemption. See Fager, supra note 51.

[103]. Although this Note will argue infra in Section III.A that Muslims, and not Mormons, may be most disadvantaged by the cutoff date, there is no evidence to suggest that Muslim insurance alternatives were intended to be either included or excluded by Congress or the CCM; commentators appear to have realized that some Muslim insurance programs might count as sharing ministries only at the time the PPACA was passing, in March 2010. See Steve Gilbert, Islam Q&A: Health Insurance is “Haraam,” Sweetness & Light (Mar. 22, 2010), https://web.archive.org/web/20170630110718/ http://sweetness-light.com/archive/health-insurance-is-forbidden-under-islam; WordWayze, Amish, Muslims to Be Excused from Obamacare Mandate?, Am. Thinker (Mar. 24, 2010), http://www.americanthinker.com/ blog/2010/03/amish_muslims_to_be_excused_fr.html.

[104]. Larson v. Valente, 456 U.S. 228, 252 (1982).

[105]. Id. at 246.

[106]. Id. at 253–55.

[107]. Id. at 247 (citations omitted).

[108]. See 42 U.S.C. § 18011(a)(2) (2012) (“[W]ith respect to a group health plan or health insurance coverage in which an individual was enrolled on March 23, 2010, this subtitle and subtitle A (and the amendments made by such subtitles) shall not apply to such plan or coverage, regardless of whether the individual renews such coverage after March 23, 2010.”).

[109]. See Robin Fretwell Wilson, The Calculus of Accommodation: Contraception, Abortion, Same-Sex Marriage, and Other Clashes Between Religion and the State, 53 B.C. L. Rev. 1417, 1501–02 (2012).

[110]. See Samuel T. Grover, Religious Exemptions to the PPACA’s Health Insurance Mandate, 37 Am. J.L. & Med. 624, 648–49 (2011).

[111]. Kathleen A. Brady, The Distinctiveness of Religion in American Law: Rethinking Religion Clause Jurisprudence 258–59 (2015).

[112]. Id. at 260.

[113]. See Liberty Univ., Inc. v. Lew, 733 F.3d 72, 99–102 (4th Cir. 2013).

[114]. See id. at 86.

[115]. See, e.g., Corp. of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints v. Amos, 483 U.S. 327, 334 (1987).

[116]. Walz v. Tax Comm’n of N.Y., 397 U.S. 664, 669 (1970).

[117]. Liberty Univ., 733 F.3d at 100, 103. See also Sherbert v. Verner, 374 U.S. 398, 409–10 (1963) (“Nor do we, by our decision today, declare the existence of a constitutional right to unemployment benefits on the part of all persons whose religious convictions are the cause of their unemployment.”).

[118]. See Grover, supra note 110, at 644 (“A court will likely question why [a] group [claiming a Free Exercise violation] now needs a health care sharing ministry when it did not have one, or a predecessor to one, in existence prior to January 1, 2000. If indeed there is a religious group in existence that can convincingly answer these questions, then it is within the court’s power to strike down the grandfather clause . . . which is certainly severable from the rest of the exemption and from the rest of the PPACA.”).

[119]. See supra Part II.B.

[120]. This proposition has been advanced before, but on the assumption that some PPACA-compliant sharing ministries would be open to followers of Islam. See Mullen, supra note 63, at 174. See also Gilbert, supra note 103; WordWayze, supra note 103.

[121]. Even the most conservative of commentators appear to concede this point. See Eric Burns, Muslims Exempt from Obamacare? Separating Rumor from Reality, Frontpage Mag. (Oct. 13, 2011), https://www.frontpagemag.com/fpm/108489/muslims-exempt-obamacare-eric-burns. It is nevertheless critical to note that the existence of a “Muslim exemption” within the PPACA is a persistent rumor, and a falsehood. The Act contains no such exemption in either fact or practice but rather, as this paper seeks to demonstrate, it may instead actually unconstitutionally discriminate against Muslims. See David Mikkelson, Muslims Exempt from Obamacare Requirements, Snopes (Apr. 13, 2016), http://www.snopes.com/politics/medical/exemptions.asp.

[122]. Mullen, supra note 63, at 174.

[123]. AIG Offers First Takaful Homeowners Insurance Product for U.S., Ins. J. (Dec. 2, 2008), http://www.insurancejournal.com/news/national/2008/12/02/95930.htm.

[124]. Risk Specialists Companies Announces First Takaful Homeowners Product for U.S., BusinessWire (Dec. 1, 2008, 10:24 AM), http://www.businesswire.com/news/home/20081201005672/
en/Risk-Specialists-Companies-Announces-Takaful-Homeowners-Product.

[125]. See Mullen, supra note 63, at 180 (“Muslims seeking to be exempt from the PPACA’s individual mandate for religious purposes will have to qualify under the health care sharing ministries exemption. This is the very premise of takaful, a type of Islamic insurance where members contribute money into a pooling system to guarantee each other against loss or damage.”).

[126]. See, e.g., Jeffrey Imm, Exclusive: AIG Defies U.S. Taxpayers by Promoting Sharia in America, Fam. Security Matters (Dec. 5, 2008), http://www.familysecuritymatters.org/ publications/detail/exclusive-aig-defies-us-taxpayers-by-promoting-sharia-in-america.

[127]. Letter from Sue Myrick and Frank Wolf, Members of Cong., to Edward Liddy, Chairman of AIG (Dec. 18, 2008), http://www.just-a-regular-guy.com/2008/12/18/congressional-reminder-to-aig-ceo-taxpayers-are-company-stockholders-sharia-law-compliant-insurance-products-unacceptable.

[128]. See Murray v. Geithner, 763 F. Supp. 2d 860, 870 (E.D. Mich. 2011), aff’d on separate basis sub nom. Murray v. U.S. Dep’t of Treasury, 681 F.3d 744 (6th Cir. 2012). The date of Lexington’s withdrawal from the takaful market is unclear, but this foray into Sharia-compliant insurance formed the heart of an extensively-litigated post-PPACA Establishment Clause challenge to the Treasury Department’s bailout of AIG under the Emergency Economic Stabilization Act of 2008. See generally id.

[129]. One company does now offer homeowner’s policies, but without a health component. See Homeowner’s Takaful, Zayan Takaful, http://www.zayantakaful.com/products.php (last visited Jan. 3, 2018).

[130]. One Christian commentator, former pastor Drew Zahn, realized the exemption’s potential limitations for Muslim takaful adherents almost immediately after the PPACA’s passage. See Drew Zahn, Does Your Faith Free You from Forced Obamacare?: Why Amish Won’t Have to Purchase Insurance, but Muslims Will Cry Foul, WorldNetDaily (Apr. 6, 2010, 8:34 PM), http://www.wnd.com/2010/04/137221. Contra Gilbert, supra note 103; WordWayze, supra note 103 (raising the possibility that Muslims would be exempt).

[131]. 42 U.S.C. § 2000bb-1 (2016).

[132]. See Emp’t Div. v. Smith. 494 U.S. 872, 878–81 (1990). See also United States v. Lee, 455 U.S. 252, 263 n.3 (1982) (Stevens, J., concurring).

[133]. See Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2791 (2014) (Kennedy, J., concurring). See also Sherbert v. Verner, 374 U.S. 398, 403–04 (1963).

[134]. City of Boerne v. Flores, 521 U.S. 507, 534 (1997).

[135]. Hobby Lobby, 134 S. Ct. at 2751.

[136]. See id. at 2762–63.

[137]. Id. at 2785.

[138]. Id. at 2782.

[139]. Caroline Mala Corbin, Deference to Claims of Substantial Religious Burden, 2016 U. Ill. L. Rev. Online 10, 13.

[140]. Michael C. Dorf, Incidental Burdens on Fundamental Rights, 109 Harv. L. Rev. 1175, 1213–14 (1996).

[141]. See, e.g., Chad Flanders, Substantial Confusion About “Substantial Burdens,” 2016 U. Ill. L. Rev. Online 27, 28–29.

[142]. See Hobby Lobby, 134 S. Ct. at 2778–79 (“[I]n these cases, the [plaintiffs] sincerely believe that providing the insurance coverage demanded by the HHS regulations lies on the forbidden side of the line, and it is not for us to say that their religious beliefs are mistaken or substantial.”).

[143]. Michael A. Helfand, Identifying Substantial Burdens, 16 U. Ill. L. Rev. 1771, 1790 (2016).

[144]. See Dorf, supra note 140, at 1216–17.

[145]. Id. at 1216.

[146]. See id. at 1217.

[147]. Id.

[148]. For discussion of the disparate impact on the minority faith, see infra beginning at Part III.B.

[149]. Individual Shared Responsibility Payment—Reporting and Calculating the Payment, IRS (last updated Dec. 22, 2017), https://www.irs.gov/affordable-care-act/individuals-and-families/aca-individual-shared-responsibility-provision-calculating-the-payment. See also supra text accompanying note 37.

[150]. Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2799 (2014) (Ginsberg, J., dissenting) (“[T]oday’s decision elides entirely the distinction between the sincerity of a challenger’s religious belief and the substantiality of the burden placed on the challenger.”).

[151]. Id.

[152]. See Amy J. Sepinwall, Conscience and Complicity: Assessing Pleas for Religious Exemptions in Hobby Lobby’s Wake, 82 U. Chi. L. Rev. 1897, 1924 (2015) (“A mild preference to abstain will not do; instead, it must be the case that contributing would cause the objector to experience a deep rift in his self, so much so that he would be willing to incur some penalty to avoid betraying his convictions.”).

[153]. Braunfeld v. Brown, 366 U.S. 599, 605 (1961).

[154]. Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 574 (2012).

[155]. See Hobby Lobby, 134 S. Ct. at 2778–79.

[156]. See id.

[157]. I.R.C. § 1402(g)(1) (2012) (emphasis added).

[158]. 45 C.F.R. § 147.131(b)(1) (2016) (emphasis added).

[159]. Compare 45 C.F.R. § 800.602(a) (“OPM will ensure that at least one of the MSP issuers on each Exchange in each State offers at least one MSP option that does not provide coverage of services described in section 1303(b)(1)(B)(i) of the Affordable Care Act.”), with Obamacare Abortion Resources, Abortion Obamacare, http://www.obamacareabortion.com/resources (last visited Jan. 3, 2018) (“If you are dissatisfied with your state insurance choices, you may consider a healthcare sharing ministry. While healthcare sharing does not fix the problem of abortion funding in Obamacare, it does provide an option that respects conscience and moral values.”).

[160]. See Hania Masud, Comment, Takaful: An Innovative Approach to Insurance and Islamic Finance, 32 U. Pa. J. Int’l L. 1133, 1140 (2011) (“Because insurance typically involves risk, uncertainty, and interest, it poses a unique challenge to Islamic law. Under traditional Islamic law, the game-oriented risk profiles of insurance would not meet the requirements of a legally-valid contract between parties.”).

[161]. Brady, supra note 111, at 269.

[162]. See Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2780 (2014). See also supra text accompanying notes 136–38.

[163]. Hobby Lobby, 134 S. Ct. at 2758.

[164]. Id. at 2786 (Kennedy, J., concurring).

[165]. See Statement by the President on the Anniversary of the Affordable Care Act, 2013 Daily Comp. Pres. Doc. 180 (Mar. 23, 2013) (“Because of the Affordable Care Act, insurance companies will no longer have unchecked power to cancel your policy, deny you coverage, or charge women more than men. And soon, no American will ever again be denied care or charged more due to a pre-existing condition, like cancer or even asthma. . . . [and] private plans will compete to save middle class families money.”).

[166]. The shared responsibility payment was designed to ensure that individuals could not simply wait until they were unhealthy to purchase the coverage which, by law, would now have to be sold inclusive of pre-existing conditions. Congress expected that millions of “citizens may lawfully choose to pay [it] in lieu of buying health insurance.” Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 568 (2012).

[167]. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 430–31 (2006).

[168]. David Brooks, Opinion, The Incredible Shrinking Obamacare, N.Y. Times (Sept. 6, 2016), https://nyti.ms/2cg1WTk.

[169]. Early commentary appears to have expected exempted groups to be both static and small. See, e.g., Jessica Donoghue, New Development, PeopleV.US v. Obama, 12 Rutgers J.L. & Religion, 202, 207 (2010) (“The second religious exemption under the PPACA is for individuals who belong to a ‘Health Care Sharing Ministry.’ . . . A limited group of individuals qualify for this exemption.”).

[170]. See, e.g., Paul Demko & Rachana Pradhan, Trump’s War of Attrition Against Obamacare, Politico (July 21, 2017, 5:19 AM), http://www.politico.com/story/2017/07/21/trumps-war-of-attrition-against-obamacare-240777; Haeyoun Park, We’re Tracking the Ways Trump Is Scaling Back Obamacare. Here Are 12., N.Y. Times (Oct. 12, 2017), https://nyti.ms/2kIb9sO; Margot Sanger-Katz, Drop in Late Obamacare Enrollment Appears to Be a Trump Effect, N.Y. Times: Upshot (Feb. 3, 2017), https://nyti.ms/2k5jvGa.

[171]. Shelby Livingston, Insurers Brace for Repeal of Individual Mandate, Mod. Healthcare (Dec. 18, 2017), http://www.modernhealthcare.com/article/20171218/NEWS/171219884.

[172]. Compare Timothy Stoltzfus Jost, Loopholes in the Affordable Care Act: Regulatory Gaps and Border Crossing Techniques and How to Address Them, 5 St. Louis U. J. Health L. & Pol’y 27, 43 (2011), with Fager, supra note 51 (estimating roughly 130,000 members in 2000).

[173]. See History, Alliance Health Care Sharing Ministries, http://www.healthcaresharing.org/about-us/#history (last visited Jan. 3, 2018).

[174]. See Dan Mangan, IRS: More Paid Obamacare Fine than Expected, CNBC (July 20, 2015, 5:29 PM), http://www.cnbc.com/2015/07/20/irs-more-paid-obamacare-fine-than-expected.html (estimating that about 4% of those who paid penalties in 2015 were, in fact, entitled to an exemption of some sort).

[175]. See, e.g., Healthcare Reform, Christian Care Ministry, https://mychristiancare.org/medi-share/what-is-medishare/healthcare-reform (last visited Jan. 3, 2018) (“Medi-Share members are exempt from the mandate to purchase insurance or face financial penalties.”).

[176]. See, e.g., Leonard, supra note 45 (“Jennifer, whose family’s membership in the ministry means they won’t incur the $2,085 maximum fine families have to pay for going uninsured in 2016, estimates that members have shared $30,000 of her family’s medical bills.”).

[177]. See Jessica C. Barnett & Marina Vornovitsky, Health Insurance Coverage in the United States: 2015, U.S. Census Bureau 7 (2016), https://www.census.gov/content/dam/Census/library/
publications/2016/demo/p60-257.pdf. Although the government does not report the subset of uninsured Americans who claim exemption from the individual mandate—such as through sharing ministry membership—TurboTax estimates that 70 percent of uninsured filers pay no penalty because of their exempt status. See Sarah Ferris, TurboTax: Most Uninsured Escaped ObamaCare Penalty (Feb. 23, 2016, 9:38 AM), Hill, http://thehill.com/policy/healthcare/270385-turbotax-most-uninsured-people-exempt-from-obamacare-penalty-in-2015.

[178]. About 12.2 million Americans purchased marketplace coverage in 2017. See Health Insurance Marketplaces 2017 Open Enrollment Period Final Enrollment Report: November 1, 2016– January 31, 2017, Centers for Medicare & Medicaid Services (Mar. 15, 2017), https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-03-15.html [hereinafter 2017 Enrollment Report].

[179]. See Leonard, supra note 45. See also Stephanie Armour, Fewer Uninsured Face Fines as Health Law’s Exemptions Swell, Wall St. J. (Aug. 6, 2014, 10:30 PM), https://www.wsj.com/
articles/fewer-uninsured-face-fines-as-health-laws-exemptions-swell-1407378602 (estimating that 90 percent of uninsured Americans will qualify for an exemption from the mandate’s penalty).

[180]. Cf. Remarks at a Listening Session with Health Insurance Industry Leaders, 2017 Daily Comp. Pres. Doc. 144 (Feb. 27, 2017) (“Since Obamacare went into effect, nearly half of the insurers are stopped and have stopped from participating in the Obamacare exchanges. It has gotten so bad that nearly 20 million Americans have chosen to pay the penalty, or received an exemption rather than buy insurance. That’s something that nobody has ever heard of or thought could happen, and they’re actually doing that rather than being forced to buy insurance.”).

[181]. Priests for Life v. U.S. Dep’t of Health & Human Servs., 808 F.3d 1, 24 (D.C. Cir. 2015) (Kavanaugh, J., dissenting) (quoting Sherbert v. Verner, 374 U.S. 398, 408–09 (1963)). See also Cutter v. Wilkinson, 544 U.S. 709, 720 (2005) (citation omitted) (“Properly applying [the Religious Land Use and Institutionalized Persons Act of 2000], courts must take adequate account of the burdens a requested accommodation may impose on nonbeneficiaries . . . .”).

[182]. Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2790 (2014) (Ginsburg, J., dissenting).

[183]. See 2017 Enrollment Report, supra note 178.

[184]. Tex. Monthly, Inc. v. Bullock, 489 U.S. 1, 15 (1989) (Brennan, J., plurality opinion) (quoting Corp. of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints v. Amos, 483 U.S. 327, 348 (1987) (O’Connor, J., concurring)).

[185]. Boone v. Boozman, 217 F. Supp. 2d 938, 941–43 (E.D. Ark. 2002).

[186]. Id. at 951 (citing Sherr v. Northport-East Northport Union Free Sch. Dist., 672 F. Supp. 81, 90–91 (E.D.N.Y. 1987)).

[187]. Id. at 952.

[188]. But see Grover, supra note 110, at 643–44 (arguing that the religious conscience exemption should be subsumed within that granted to sharing ministries).

[189]. 42 U.S.C. § 2000bb (2012) (emphasis added).

[190]. See Peter Steinfels, Clinton Signs Law Protecting Religious Practices, N.Y. Times (Nov. 17, 1993), http://www.nytimes.com/1993/11/17/us/clinton-signs-law-protecting-religious-practices.html (noting bipartisan sponsorship and the Senate’s vote of 97-3).

[191]. Platform Comm., Republican Platform 2016, at 12 (2016).

Persuasive or Deceptive? Native Advertising in Political Campaigns – Note by Irina Dykhne

January 2018March 2018Southern California Law Review Admin

From Volume 91, Number 2 (January 2018)
DOWNLOAD PDF

Persuasive or deceptive?
Native Advertising in Political campaiGns

Irina Dykhne [*]

TABLE OF CONTENTS

INTRODUCTION

I. CAMPAIGN FINANCE DISCLOSURE

A. Buckley v. Valeo and the Supreme Court’s Disclosure Framework

B. The Bipartisan Campaign Reform Act of 2002 and
Disclosure Post-Buckley

C. Citizens United v. FEC

II. EMPIRICAL STUDIES MEASURE THE BENEFITS OF DISCLOSURE

A. The Effectiveness of Disclaimers

B. Voters Value Transparency

III. DISCLOSURE ONLINE

A. Free Communication

B. The Small-Items and Impracticable Exceptions

C. States Grapple with Loopholes

IV. NATIVE ADVERTISING

A. Growth of Digital Communication

B. Politicians Go Native

C. Potential for Self-Regulation by Online Platforms

D. A Proposal for Closing the Loopholes

CONCLUSION

Introduction

Political advertising is undergoing what some experts have coined a “revolution,” as digital advertising catches up with—and looks poised to overtake—television advertising as the most effective way of reaching voters during a political campaign.[1] An increasingly popular method of communicating with voters online is through native advertisements—ads that match the editorial content of media or technology platforms, making them less intrusive but also more difficult to identify as advertising. Native ads can be used to match a broad range of environments and now can be found in online newspapers, social media platforms like Facebook, and even mobile and video games. New native advertising techniques have become so sophisticated that, according to studies, many consumers cannot distinguish a native ad from editorial content.[2] Politicians have identified the potential appeal of native ads, particularly as a tool for engaging younger voters through popular mediums such as social media and games. But in the political sphere, due to several outdated loopholes in current federal election law, native ads may be exempt from having to include typically mandatory disclaimers, making them particularly difficult to identify as advertisements.[3] This Note argues that native ads create disclosure issues when they are used in settings such as mobile games, where users may have no expectation of seeing political advertisements, if the platforms are exempt from disclaimer requirements due to alleged practical limitations.

Part I of this Note provides a brief overview of the Supreme Court’s campaign finance jurisprudence since the seminal case, Buckley v. Valeo.[4] In Buckley, the Supreme Court identified three governmental interests that support upholding campaign finance disclosure: providing voters with information, deterring corruption, and enforcing campaign finance laws.[5] The cases discussed in Part I demonstrate that while the Supreme Court has gradually deregulated campaign finance laws in its jurisprudence since Buckley, it has continued to uphold disclosure as a “less restrictive alternative to more comprehensive regulations of speech.”[6]

Part II examines several empirical studies to show that disclosure can in fact promote the informational interest laid out by the Court and that voters care about being informed. With this background in place, Part III turns to Internet-specific advertising and points out that disclosure regulation is significantly less robust for online advertising than for other forms of political communication. In particular, the Federal Election Commission (“FEC”)’s small–items and impracticable exceptions—which allow certain items to forego disclaimers due to size limitations or in the interest of convenience—have created loopholes that digital advertisers have sought to take advantage of to circumvent traditional disclaimer requirements. Pointing to these exceptions, major Internet companies including Google and Facebook have argued that their ads should not be obligated to have disclaimers because of their small size. Part IV focuses on the rise of native advertising—specifically in unconventional contexts such as mobile games—arguing that the changing landscape of political advertising and the growing influence of potentially deceptive native ads have reinvigorated the need for the FEC to close outdated loopholes that may mislead and deceive voters. As made evident by the 2016 presidential campaign, false and misleading information can proliferate online. With everyone from politicians to the news media to social media websites acknowledging the problem of “fake news,” now is a particularly salient time for the FEC to do its part to promote truthfulness and transparency online.[7] Lastly, Part IV proposes a solution for closing the loopholes for paid Internet ads, tracking the regulatory language adopted by several states as a guidepost. Using Snapchat as a model of how such a regulatory solution may be implemented, this Note argues that it is possible to craft regulatory language that will protect voters without stifling innovation or technological advances.

I. CAMPAIGN FINANCE DISCLOSURE

The following discussion traces some of the Supreme Court’s most significant rulings in the realm of campaign finance from the past several decades, demonstrating that while the Court has gradually chipped away at campaign finance regulation—including striking down limits on campaign contributions and expenditures—it has continued to uphold disclosure as a less restrictive means of promoting important governmental interests. Today, disclosure laws seem to be the last remaining avenue for regulating campaign finance.[8]

A. Buckley v. Valeo and the Supreme Court’s Disclosure Framework

In 1971, Congress passed the Federal Election Campaign Act (“FECA”),[9] intending to reform campaign finance, including spending and fundraising.[10] Congress passed even more aggressive amendments to FECA just a few years later in 1974.[11] Together, the 1971 and 1974 FECA regulations created limits on both contributions and independent expenditures. Contributions are “anything of value” made directly to candidates for political office or to the political committees that support them [12] while independent expenditures are “expenditure[s] by a person for a communication expressly advocating the election or defeat of a clearly identified candidate that is not made in cooperation, consultation, or concert with, or at the request or suggestion of, a candidate, a candidate’s authorized committee, or their agents, or a political party committee or its agents.”[13] In other words, independent expenditures are not coordinated with a candidate or a political party. FECA prohibited individuals from contributing more than $25,000 in a single year or more than $1,000 to any one candidate in an election campaign.[14] FECA also prohibited expenditures in excess of $1,000 per year spent “relative to a clearly identified candidate.”[15]

In 1976, FECA was challenged before the Supreme Court in Buckley v. Valeo.[16] In Buckley, the Court upheld FECA’s contribution limits to quell the potential of “quid pro quo” corruption as well as the appearance of corruption.[17] The Court asserted that limits on contributions created only “marginal restriction[s] upon the contributor’s ability to engage in free communication”[18] because, more than anything else, contributions are “symbolic” showings of support for the candidate.[19] Limits on contributions would affect the size of an individual’s showing of support, but would not altogether prevent an individual from expressing his or her support for a political candidate.[20] At the same time, large political contributions might lead to an exchange of favors in return for political contributions, which could undermine the “integrity of our system of representative democracy.”[21] Even if contributions do not lead to actual corruption, the public might perceive corruption in a system where large individual contributions to political candidates are permitted, which would be nearly as dangerous to the integrity of our representative democracy as actual corruption.[22] Based upon these grounds, the Court deemed that a limited restriction on First Amendment rights was justified.[23]

Limits on individual and interest–group expenditures, on the other hand, were struck down.[24] First, the Court held that the statutory language limiting expenditures “relative to a clearly identified candidate” was too vague and must be more narrowly construed, to apply only to spending on “communications that in express terms advocate the election or defeat of a clearly identified candidate.”[25] But even on such narrower grounds, the Court found that the limitation on expenditures could not be justified by the governmental interest of preventing actual corruption or the appearance of corruption. Because expenditures cannot be made in coordination with a candidate or campaign—if they were, they would be treated as contributions—they do not pose a risk of quid pro quo relationships.[26] Moreover, the Court argued that spending was equivalent to speech, and thus restricting the ability to spend on an election was the same as cutting off one’s ability to speak, which would impermissibly violate the First Amendment while failing to promote any legitimate government interest.[27]

Despite striking down some of FECA’s spending limitations, the court fully upheld FECA’s reporting and disclosure requirements.[28] Under FECA, political committees had to register with the FEC and keep records of expenditures and contributions, including the names and addresses of anyone who had contributed more than $10 and the occupation and principal place of business of anyone who had contributed more than $100.[29] Candidates and political committees were also required to submit quarterly contribution and expenditure reports,[30] which would be available “for public inspection and copying.”[31] Additionally, any individual or group that made a contribution or expenditure of more than $100 in one year—excluding contributions to candidates or political committees—was required to file a statement with the FEC.[32]

The Court recognized that although mandatory disclosure has the potential to substantially encroach on First Amendment rights, it may be justified by a compelling government interest.[33] However, any such justification for compelled disclosure must survive “exacting scrutiny.”[34] The government interest must also have a “substantial relation” to the information that is to be disclosed.[35] The Court identified three governmental interests that are “sufficiently important to outweigh the possibility of infringement.”[36] The first interest is the information that disclosure provides to voters.[37] The Court stated that the source of campaign money and how candidates spend it allows voters to “place each candidate in the political spectrum” more accurately than using only party labels or speeches.[38] Disclosure may also help voters identify any potential interests the candidate might hold.[39] Second, by exposing a candidate’s source of money, disclosure helps deter corruption and the “appearance of corruption.”[40] Candidates might be less inclined to grant special favors to their major donors if voters have access to donor information and may spot a quid pro quo relationship.[41] Third, disclosure helps with enforcement of campaign finance laws by exposing any potential violations of contribution limits, since contributions can be tracked and monitored through reported documents.[42]

Although it upheld compelled disclosure requirements, the Court acknowledged that disclosure can pose some threats.[43] In particular, disclosure may have a chilling effect on some people who would have contributed money absent the requirements.[44] Disclosure may also pose risks of harassment and retaliation against contributors.[45] On the basis of these concerns, some parties may be eligible for an exception from disclosure requirements if they can show a “reasonable probability” of “threats, harassment, or reprisals.”[46] But despite these potential chilling effects, the Court, nevertheless, concluded that disclosure requirements “appear to be the least restrictive means of curbing the evils of campaign ignorance and corruption that Congress found to exist.”[47]

B. The Bipartisan Campaign Reform Act of 2002 and Disclosure Post–Buckley

Congress made another attempt to reform campaign finance laws in 2002 with the Bipartisan Campaign Reform Act (“BCRA”) (also known as the McCain-Feingold Act), which prohibited political parties from using funds raised outside of the limits of campaign finance laws, otherwise known as “soft money.”[48] BCRA also attempted to regulate “sham issue ads.”[49] An ad paid for by a party or an interest group that advocated for the election of a particular candidate by including “magic words” such as “vote for,” “elect,” “support,” and similar expressions was considered express advocacy and had to comply with strict regulation requirements.[50] Ads that did not contain these magic words were called issue ads and could be paid for with soft money.[51] This loophole led to the rise of sham issue ads, which presumed to promote broad party values and did not have to disclose their source of funding, even if they featured a candidate, as long as the magic words were not used.[52]

BCRA tackled the issue of sham issue ads by establishing regulations for “electioneering communications.”[53] An electioneering communication is “any broadcast, cable, or satellite communication which . . . refers to a clearly identified candidate for Federal office” and is made within thirty days of a primary or sixty days of a general election.[54] Unless the communication refers to a presidential or vice presidential candidate, it must also be “targeted to the relevant electorate,” meaning that the communication can reach fifty thousand or more people.[55] Under BCRA, electioneering communications had to disclose their donors, include a disclaimer identifying who supported the ad, and could not be paid for with funds from the general treasury of corporations or unions.[56]

BCRA was immediately controversial and was quickly challenged, eventually ending up in the Supreme Court in McConnell v. FEC.[57] In McConnell, the Court narrowly upheld BCRA’s prohibition against corporate funding of electioneering communications.[58] However, the Court left open the possibility that the ban on corporate spending could be subject to as-applied challenges.[59] The Court was more enthusiastic about BCRA’s disclosure requirements, upholding its provision that individuals or entities spending more than $10,000 on electioneering communications be disclosed to the FEC, identifying the names and addresses of anyone who contributed more than $1,000 to the communication.[60] The Court reaffirmed its reasoning from Buckley that disclosure supported important government interests.[61] The court held that “the important state interests that prompted the Buckley Court to uphold FECA’s disclosure requirements—providing the electorate with information, deterring actual corruption and avoiding any appearance thereof, and gathering the data necessary to enforce more substantive electioneering restrictions—apply in full to BCRA.”[62] In 2007, however, the Court narrowed BCRA’s reach in FEC v. Wisconsin Right to Life, Inc., by holding that BCRA’s ban on corporate or union spending on electioneering communications was constitutional only if the communication in question could be “susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.”[63]

C. Citizens United v. FEC

BCRA came under fire again in the now–infamous Citizens United v. FEC.[64] In Citizens United, the Supreme Court reviewed whether Section 203 of BCRA, banning corporate use of general treasury funds for electioneering communications, was constitutional on its face and as applied to the documentary film Hillary: The Movie, which criticized presidential candidate Hillary Clinton.[65] Additionally, the Court was evaluating whether BCRA’s disclosure and disclaimer requirements were unconstitutional as applied to the film and to the short advertisements used to promote it.[66] Specifically, the non-profit organization Citizens United objected to Sections 201 and 311 of BCRA.[67] Section 201 required corporations that spent more than $10,000 on electioneering communications to send a report to the FEC.[68] Section 311 required all electioneering communications not funded by a candidate to include a verbal disclaimer identifying who supported the ad as well as a written disclaimer, shown for four seconds, revealing the name and contact information of the sponsoring organization and stating that the communication was not authorized by any candidate or committee.[69] Citizens United argued that these requirements would subject their donors to harassment and distract viewers from their message.[70]

This time, the Supreme Court struck down BCRA’s ban on corporate electioneering and independent expenditures.[71] The Supreme Court held that banning corporations from using their general treasury funds on express advocacy impermissibly infringes on the First Amendment right to speech.[72] Writing on behalf of the Court, Justice Kennedy stated, “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.”[73] In reference to electioneering communications, he wrote, “it seems stranger than fiction for our Government to make this political speech [preceding an election] a crime.”[74]

Nevertheless, the Court remained firm on its support of disclosure, with all of the justices except Justice Thomas upholding BCRA’s disclosure and disclaimer requirements in Sections 201 and 311. Quoting itself from McConnell, the Court stated that while disclosure and disclaimer requirements “may burden the ability to speak,” they do not “prevent anyone from speaking.”[75] Moreover, reiterating its analysis from Buckley, the Court explained that disclosure and disclaimer requirements justify the encroachment on speech because they are sufficiently related to the important governmental interest of providing voters with information about the source of money in politics prior to an election.[76] Disclosure permits citizens and corporate shareholders to “make informed decisions and give proper weight to different speakers and messages.”[77] Therefore, even though disclaimer and disclosure requirements may infringe on the First Amendment, the information that they provide to the electorate justifies the cost.[78] As it had said in Buckley,[79] the Court repeated in Citizens United that disclosure requirements are a “less restrictive alternative to more comprehensive regulations of speech.”[80] Because of the weight of the informational interest, the Court did not even address the other governmental interests.[81]

Although the Court has by and large tended to uphold disclosure laws over the past several decades, it has not done so uniformly,[82] and there is no guarantee that it will continue to take a positive stance on disclosure in the future.[83] Katherine Shaw points out that the Court has always interpreted disclosure laws in relation to other regulations, so disclosure may have appeared less restrictive by comparison.[84] If, on the other hand, disclosure were to be the only issue in question, the Court might take a different stance.[85] Furthermore, changes in the composition of the Court will have an immense impact on how disclosure is perceived in the future.[86]

II. EMPIRICAL STUDIES MEASURE THE BENEFITS OF DISCLOSURE

As discussed in Part I, the Supreme Court has articulated three governmental interests that are supported by campaign finance disclosure: information, anti-corruption, and enforcement.[87] Focusing in particular on the informational benefit as first articulated in Buckley, this section outlines several empirical studies that have attempted to measure whether disclosure does in fact support this interest.

A. The Effectiveness of Disclaimers

Campaign finance disclosure may help voters make better decisions by prompting them to formulate mental shortcuts or heuristics that assist them in making voting choices that align with their policy preferences, even if they are fairly uninformed about the issue or candidate.[88] For example, Arthur Lupia found that voters who knew that the insurance industry supported a complicated insurance reform proposal were more likely to vote in a way that conformed to their policy interests.[89] Knowledge of the insurance industry’s position allowed uninformed voters to form the same inferences about the relationship between the proposition and their preferences as voters with “encyclopedic” knowledge.[90] These inferences led them to emulate the behavior of more informed voters more closely than uninformed voters who were not aware of the industry’s stance.[91] Similarly, in the context of political ads, disclaimers can help voters make judgments about the claims made in an ad if they recognize the political party or group sponsoring the message.[92]

Other studies have shown that disclaimers can mitigate the effects of attack ads, further demonstrating that disclaimers in political ads can affect voter perception. Conor Dowling and Amber Wichowsky showed study participants a real attack ad from a Senate race funded by a Republican organization called American Crossroads.[93] Participants were grouped into one of five disclosure treatment conditions. One group saw a disclaimer listing the top five donors to American Crossroads, the amounts they contributed, and their states of residence presented in table format. Three groups were shown news articles after viewing the ad, with all participants in these groups reading about the high spending in this campaign. One of these groups also received an article about the special interests that contributed to American Crossroads; another group read an article explaining the prevalence of anonymous donors sponsoring political ads, emphasizing in particular that American Crossroads had chosen to keep its donors secret; the third group in this treatment did not get any information about donors to American Crossroads at all. The final treatment group simply saw the ad without receiving any additional information about American Crossroads.[94]

Dowling and Wichowsky found that while the attack ads created a more negative perception of the attacked candidate, participants who received some additional information about the sponsors of the ads were more supportive of the attacked candidate than participants who watched the ads but received no additional information.[95] News articles stressing the anonymity of donors had the greatest effect of mitigating the attack ad’s persuasiveness.[96] Dowling and Wichowsky argue that this finding suggests voters might be suspicious of groups who choose not to disclose their donors.[97] A disclaimer identifying the top five donors of American Crossroads was the second most effective way of mitigating the attack ad’s negative effect on a targeted candidate.[98] Wichowsky and Dowling believe that their findings demonstrate not only that voters tend to find anonymous advertising less persuasive, but that the form of disclosure can also weigh heavily on its effectiveness.[99] They argue that disclaimers are more effective when they present information in “a more direct and novel fashion” in the form of a table similar to the way that information is presented on nutrition labels.[100]

In a separate study, Dowling and Wichowsky found that voters perceive attack ads differently depending on whether they are sponsored by a candidate as opposed to a political party or outside group.[101] Participants were again shown an attack ad from a real Senate race, but the ads were altered to include different disclaimers: one disclaimer attributed the ad to an attacking candidate, another to a political party, and a third to American Crossroads.[102] Participants who saw the group and party-sponsored ads were less supportive of the attacked candidate than participants who saw the candidate–sponsored ad.[103] In other words, an attack ad funded by a party or an outside group was more effective at creating a negative perception of the targeted candidate in the voter than an attack ad funded by a candidate. These findings of backlash were limited to partisans of the attacked candidate; by contrast, subjects who affiliated with the same party as the attacking candidate did not show a backlash regardless of who sponsored the ad.[104] Dowling and Wichowsky suggest that group and party-sponsored ads result in less backlash because, although voters tend to punish candidates for going negative, they cannot always connect the party or group ad back to the candidate.[105]

B. Voters Value Transparency

Empirical data further shows that voters not only benefit from the information they glean from disclosure, but they also value disclosure and reward more transparent candidates.[106] Abby Wood reviewed survey responses of 2,000 participants who were asked how often they seek out campaign finance information, ranging from “never” to “always.”[107] Around 75% of respondents reported seeking out disclosure information “at least some of the time,” and 66% of respondents reported that the amount of campaign finance information a candidate discloses is “important or very important.”[108]

To further test the value of transparency to voters, Wood conducted an experiment in which 1,000 respondents were given a blurb about the policy positions of two hypothetical candidates for state Senate whose ideologies were meant to align with the respondents’ stated political views.[109] Respondents were told that one of the candidates received a high transparency grade because she and the independent groups that supported her disclosed more campaign finance information than required by law. The second candidate, on the other hand, had a low transparency grade because she was supported by independent groups with anonymous donors.[110] A control group was presented with policy information about the candidates but was given no information about disclosure.[111] Compared with the control group, respondents who learned about a candidate’s lack of transparency rated her 9.4 percentage points lower in favorability; conversely, respondents were 3.9 percentage points more likely to vote for the candidate with a high transparency grade than the control group.[112] Wood explains that the differences in favorability can be partially explained by trust: respondents find less transparent candidates less trustworthy and therefore less favorable.[113] Wood’s findings suggest that voters not only care about transparency, but are more likely to vote for more transparent politicians.[114]

The studies discussed in this section suggest that disclosure can affect the persuasiveness of political ads. As such, disclaimers, particularly when clearly presented, may help further the informational interest identified by the Supreme Court as important by providing voters with information and context through which they can filter messages and potentially make decisions that are more aligned with their preferences. Moreover, voters want more information, and they reward candidates who are willing to be transparent with their constituents.

III. DISCLOSURE ONLINE

A. Free Communication

Although the Supreme Court has consistently upheld disclosure laws, and empirical studies suggest that disclaimers can be an effective way of supporting the informational interest that the Court has articulated as compelling since Buckley, the FEC has not treated all ads as equals when it comes to disclosure and disclaimers. The FEC requires that disclaimers appear on all “public communications,” identifying whether the communications were paid for or authorized by a candidate.[115] Ads that are neither paid for nor authorized by candidates must also identify the source of their funding.[116] Disclaimers must be “presented in a clear and conspicuous manner, to give the reader, observer, or listener adequate notice of the identity of the person or political committee that paid for and, where required, that authorized the communication.”[117] However, the FEC has made a distinction between television and Internet advertising, which has led to several important loopholes for online ads.[118]

Advertisements on television are required to include a visual disclaimer, as described above. An audio component must also identify whether the advertisement has been approved by a candidate or sponsored by an outside group.[119] In addition to using disclaimers, candidates must send itemized reports to the FEC detailing their expenditure.[120] Furthermore, pursuant to requirements by the Federal Communications Commission (“FCC”), television broadcast and cable stations must make their contracts for political advertising purchases publicly available, which creates a paper trail of sorts for television communications.[121]

Internet advertisements, on the other hand, are only required to have disclaimers when the ads are purchased for a fee.[122] This distinction developed because, in 2006, the FEC excluded the Internet from its definition of public communication. Such communications include “any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to the general public, or any other form of general public political advertising.”[123] However, the only covered Internet communications are those “placed for a fee on another person’s Web site.”[124] This definition of public communication leaves items such as social media posts and YouTube or candidate-website videos unregulated. Spending on advertising which is hosted online free–of–charge thus need not be disclosed to the FEC—and even contracts for Internet ad purchases are not made publicly available, as they are for television buys.[125] Lee E. Goodman, former Chairman of the FEC and a proponent of Internet deregulation, argues that the rules have created “a robust national forum for political discussion about public policy, government and elections.”[126] He contends that regulation of Internet platforms is both unfeasible and damaging to political speech and civic engagement.[127] Yet, these exceptions can also create less transparency because videos, social media posts, and other forms of free communication can reach millions of voters online with essentially no accountability.

B. The Small-Items and Impracticable Exceptions

Even paid online ads may be subject to further exceptions. Namely, an advertisement does not need to carry a disclaimer if it cannot be “conveniently printed” due to the ad’s small size.[128] Historically, this exception has applied to “[b]umper stickers, pins, buttons, pens, and similar small items.”[129] A disclaimer is also unnecessary if it would be impracticable to include one.[130] This exception has applied to formats such as skywriting and water towers, where it would be very difficult to post a disclaimer.[131] In recent years, these exceptions have generated newfound attention because of their potential application to Internet and mobile advertising.[132]

In 2010, Google, wishing to sell text ads to candidates and political committees, submitted a request for an advisory opinion from the FEC regarding its AdWords program.[133] When a search using particular keywords is run, AdWords displays small ads near the search results. These advertisements are limited in size: they can only have two lines of text, with a headline of up to twenty-five characters and a URL of up to seventy characters in length.[134] Google wanted to know whether these ads were exempt from the FEC’s disclaimer requirements under the small-items exception.[135] If not, the company wanted to know whether including a link to the sponsor’s website, which would carry a full disclaimer, could be a satisfactory alternative.[136] Although the commissioners could not obtain the four votes necessary to definitely state whether the AdWords program was exempt, in a vote joined by Chairman Matthew Peterson and Commissioners Cynthia Bauerly, Steven Walther, and Ellen Weintraub, the FEC ruled that the AdWords program did not violate any applicable statutes or regulations “under the circumstances described.”[137] In a separate concurring opinion, Commissioners Bauerly, Walther, and Weintraub wrote that the link itself provided useful information by including some indication of the sponsoring organization’s identity.[138] The concurrence also noted that, historically, the FEC has allowed alternate forms of disclaimers where a traditional one would be impracticable.[139]

Because an Advisory Opinion technically only applies to the party requesting it and is confined to the facts of a particular situation, the FEC revisited the issue of the small-items and impracticable exceptions in 2011, when Facebook requested an advisory opinion of its own.[140] Facebook sought an exemption for its standard ads and Sponsored Story ads, which each use under 200 characters of text and include a small image.[141] Some of the ads include links to either a Facebook page or an external website, but not all of the linked websites contain a disclaimer.[142] This time, a divided Commission was unable to agree on a response to Facebook’s request, so no advisory opinion was issued.[143]

A draft opinion supported by Commissioners Bauerly, Walther, and Weintraub argued that Facebook should not qualify for the small-items exception because nothing about Facebook’s platform made it “physically” or “technologically” impossible to include a disclaimer.[144] Facebook has the ability to make its ads bigger or expand the amount of permissible text to include a disclaimer even if it might not be desirable from a business perspective to do so.(Facebook had argued that bigger ads are disruptive to its users.)[145] Using the same line of reasoning, this draft opinion concluded that the impracticable exception should not apply to Facebook either.[146] Although Facebook had not proposed any disclaimer alternatives, this opinion suggested that in the future Facebook might be able to satisfy the disclaimer requirements by including a link to a full disclaimer or by providing necessary disclosure information using rollover technology or other technological means.[147] Taking the opposite position, though, Commissioners Caroline Hunter, Donald McGahn, and Matthew Peterson supported an alternative draft opinion stating that the impracticable exception should apply to Facebook’s ads as they are because the character limitations on the advertisements make disclaimers physically impossible.[148] This opinion pointed out that Facebook’s ability to enlarge its ads is irrelevant because the Commission must evaluate the “entity’s existing advertising model as it is.”[149]

The Commission was again unable to reach a decision on an advisory opinion request submitted in 2013 by Revolution Messaging, a digital strategy firm specializing in mobile communications, which sought to know whether the small-items or impracticable exceptions applied to banner ads on mobile phones.[150] Revolution Messaging argued that including too much content in a mobile banner ad is not possible without producing blurry, low–quality ads, given the pixel limitations established by the Interactive Advertising Bureau.[151] Although some mobile banners would have links to webpages with disclaimers, others would not.[152] Ads that did not link to a full disclaimer would contain identifying information in the advertisement itself, such as the name or the logo of the sponsoring committee.[153] As before, half of the Commissioners, including Goodman, Hunter, and Peterson, believed that the banner ads should be exempt from the disclaimer requirement.[154] But others, including Walther, Weintraub, and Ann Ravel, argued that as long as Revolution Messaging was physically and technologically capable of adjusting the size of its ads, no exception should apply.[155] Their draft opinion also added that while the FEC is willing to approve alternate forms of disclaimers, Revolution’s proposals to include the name or logo of the sponsor did not provide “‘adequate notice of the identity of the person or political committee that paid for and, where required, authorized the communication.’”[156]

C. States Grapple with Loopholes

Although the FEC has had trouble identifying the best way to approach the small-items and impracticable exceptions when it comes to Internet advertising, some states, including Texas, Florida, Maryland, and California, have had more success in creating guidelines.

In 2012, the Texas Ethics Commission issued an advisory opinion to a political committee, stating that ads appearing on social networking websites, which limit the amount of text that can be used in the ad, do not have to include a full, embedded disclaimer.[157] Nevertheless, these ads must link to a landing page that contains the entire disclosure statement required by the Texas Election Code.[158] The link itself must contain the words “political advertising,” “pol ad,” or another easily identifiable abbreviation.[159] The Ethics Commission explained that restrictions on the websites make full-size disclaimers impracticable, and it wished to interpret the laws with a focus on “reasonableness and practicality,” given technological advances.[160] Florida takes a similar approach, allowing political ads to forego disclaimers when they would not be “reasonably practical due to the size of the graphic or picture link,” provided that the link directs users to a website that contains a disclaimer identifying who paid for or approved the ad.[161] Nevertheless, Florida also seems amenable to excusing disclaimer requirements entirely in certain instances where a political ad is distributed through “any other technology-related item, service, or device for which compliance with [disclaimer requirements] is not reasonably practical.”[162] In Maryland, ads that are too small to carry a disclaimer must also include a link to another website.[163] If it is not possible to include a link, the ad and information about who sponsored or approved it must be registered with the State Board.[164] Items that Maryland considers too small to include a disclaimer on include micro bars, button ads, paid text ads with fewer than 200 characters, and small paid graphic or picture links.[165]

California has taken a slightly more flexible approach than the states discussed above. The California Fair Political Practices Commission specified in 2011 that Internet ads that are “limited in size” such as “a micro bar, a button ad, a paid text advertisement that is limited to 500 characters or less in length, or a small paid graphic or picture link” must display the disclaimer as a rollover, a link to another website that contains the disclaimer, or “other technological means that provide the user with disclosure information.”[166] Given the broad language of this provision, this solution is detailed enough to give specific guidance yet expansive enough to allow advertisers to take advantage of technological innovations, while still providing voters with relevant disclosures.

Former FEC Chair Cynthia Bauerly suggests that the FEC could look to states like California and Maryland for guidance in crafting not just advisory opinions but rules addressing how disclaimers should be treated in the Internet age.[167] Bauerly believes that a rulemaking would provide broader guidance than advisory opinions, which are confined to the particular facts at issue in a given case.[168] Yet the Commission seems hesitant to respond in a concrete way. In October 2011, the FEC opened comments on whether to move forward with rulemaking to update some of the current disclaimer rules for Internet advertising, including the small-items and impracticable exceptions. Despite this encouraging sign, the Commission took little action until it reopened the comment period on the issue in October 2016 and then again in October 2017.[169] Hopefully, these continued delays are not an indication that the Commission does not plan to address the issue after all.[170]

IV. Native Advertising

A. Growth of Digital Communication

The loopholes for Internet advertising are significant now in particular because online advertising is quickly catching up to more traditional forms of political communication, such as television and radio. Borrell Associates, which tracks advertising data, found that in 2016 a record $1.4 billion was spent on digital advertising across local, state, and national campaigns, which constitutes a 789% increase in digital spending from 2012.[171] The dramatic increase seems to correspond with voter preferences. According to the Interactive Advertising Bureau, based on a sample size of 1,513 registered voters, 61% relied on digital media to learn about candidates during the 2016 presidential primaries.[172] This finding is on par with the responders’ reliance on television for candidate information, which also polled at 61%.[173] Additionally, digital advertising offers politicians an opportunity to generate more voter engagement. According to a study conducted by the Rubicon Project, an online advertising firm, and the polling firm Penn Schoen Berland, 64% of those who have seen a political advertisement on their mobile device have clicked on it or have taken some other action in response.[174] Illustrating that television advertising is losing some of its dominance in the advertising arena, two-thirds of participants in the study further reported skipping ads recorded on their television “all or most of the time.”[175] The same study also found that gaming is important for political advertising. Half of the likely voters surveyed reported playing games on their mobile devices on a weekly basis, and over one-third of likely Democratic voters and one–quarter of likely independent voters reported playing mobile games daily.[176]

B. Politicians Go Native

Native advertising, also known as sponsored content, has become a popular component of the digital advertising landscape. Native advertising is designed to match the content of a media or technology platform, “bear[ing] a similarity to the news, feature articles, product reviews, entertainment, and other material that surrounds it.”[177] Native ads are popular with advertisers because they blend in with their surroundings, making consumers less likely to block or skip them.[178] It is projected that spending on sponsored content will grow to $21 billion in 2018, up from $7.9 billion in 2015.[179] A study by Facebook and IHS predicts that by 2020, native advertisements will make up over 63% of all mobile display ads.[180]

Just like corporate advertisers, politicians have recognized the allure of native ads.[181] During the 2016 presidential primaries, Senator Bernie Sanders actively turned to sponsored content to influence voters. In February 2016, Politico partnered with Sanders to run an article criticizing privatized prisons, featured under the label “Sponsored Story.”[182] According to a senior Politico executive, Politico had held discussions with “all the campaigns” about running similar features.[183] Sanders also ran an ad on BuzzFeed in the form of a list titled “15 Reasons Bernie Sanders is the Candidate We’ve Been Waiting For.”[184] A small logo below the headline identified that the posting was paid for by Bernie 2016, Sanders’s campaign organization.[185]

News sources are not the only platforms where native advertising has been used: games have also become a potential advertising option for politicians and their supporters. In 2008, Barack Obama became the first presidential candidate to campaign using video games.[186] Obama placed ads geared toward a male audience within sports-themed games; virtual pro-Obama billboards or other signs appeared in the background, reminding players to vote.[187] But as native ads become more sophisticated, they no longer have to look only like digital replicas of traditional banners or signs. Instead, they can be designed to blend in with the content of the platform even more seamlessly.

In January 2016, Zynga, the gaming company behind Words With Friends and Farmville, partnered with the Rubicon Project to work with political campaigns to develop native mobile ads for its gaming platforms.[188] The “SponsoredPLAY” ads are “optional mini–games” that appear while users play regular games.[189] According to Zynga’s chief data officer, SponsoredPLAY is “designed with players in mind while also incorporating the goals of political campaign clients.”[190] The games can incorporate campaign goals such as “issue awareness, email collection, fundraising or polling.”[191] Zynga can also draw on its player data to use “location-based targeting,” adjusting the games with customized messages for specific states.[192] Zynga is a potentially powerful marketing tool for politicians. The company claims that over one billion people have played its games since its founding in 2007.[193] Strikingly, about 90 percent of Zynga’s users were registered and planned to vote in 2016, according to a Nielsen study.[194] Combined with the findings that about half of potential voters play mobile games weekly, this statistic makes the value of games for political advertising even more apparent.[195]

Despite its growing popularity, native advertising is not without controversy. The characteristics that make native advertising commercially appealing can also pose ethical issues; studies show that consumers frequently cannot distinguish native ads from editorial content. A study by the International Advertising Bureau found that only 41% of participants were able to identify native ads as promotional materials,[196] and in a study by Contently, a media strategy company, 48% of participants felt deceived upon discovering that what they assumed was editorial content was, instead, an advertisement.[197]

The federal government prohibits false and misleading advertising, and the Federal Trade Commission (“FTC”), which is charged with enforcing truth in advertising laws, has recognized the potentially deceptive nature of native ads.[198] The FTC issued an enforcement policy statement in 2015 announcing that an ad will be considered deceptive if it “misleads reasonable consumers as to its nature or source, including that a party other than the sponsoring advertiser is its source.”[199] To determine whether an advertisement is deceptive, the FTC will evaluate where the ads are featured and will consider the “customary expectations based on consumers’ prior experience with the media.”[200] The adequacy of disclosure will also be judged by whether “reasonable consumers perceive the ad as advertising.”[201] The FTC advises businesses to use terms such as “Advertisement” and “Paid Advertisement”[202] to make the nature of ads more apparent to consumers. The Better Business Bureau (“BBB”), a non-profit group, has joined the FTC’s efforts, stating that any ad that is “designed to fool consumers is—plain and simple—a bad ad, and violates [the BBB’s] standards.”[203] Like the FTC, the BBB modified its Code of Advertising to require that sponsored content include clear disclaimers such as “sponsored advertising content” or “sponsored by.”[204] Regardless of its efforts to curtail the potentially deceptive effects of native advertising, the FTC does not have oversight over political ads, which are core political speech and are thus subject to strict First Amendment protections.[205] For this reason, the FTC’s enforcement policy regarding native advertising does not apply in the political arena.[206]

The lack of oversight for political ads is concerning because when used in non-political settings such as games, native political ads have a particularly strong potential for deceiving voters, as users may not expect to see political ads in an entertainment context. This potential for deception is further amplified when the ads are run on mobile platforms that might not feature a disclaimer because of the small-items or impracticable exceptions. Such ads would have several layers of deception: not only would users not know who paid for an ad, but they also may not realize that a mini-game, for example, is even an ad at all. Furthermore, many gamers are young and may be particularly prone to being deceived..[207] It has been difficult to find information regarding what disclaimers, if any, Zynga has used on its mobile political games. There also appears to be no data showing whether these ads were used by candidates during the 2016 election cycle. But given that the Obama campaign was interested in video games as early as 2008, and use of digital advertising has only grown since then, it is not hard to imagine that candidates did and will continue to turn to such creative formats in order to meet the challenge of engaging young voters.[208] Advertisers like Revolution Messaging have already requested an exemption from the FEC for mobile ads, and others are likely to follow.[209] Since the FTC can do nothing to help make native ads more transparent, the FEC should do its part. Closing the small-items and impracticable loopholes would be an important first step, since inherently deceptive native ads are especially likely to deceive voters if they are permitted to run without a disclaimer on “small” platforms such as mobile devices.

C. Potential for Self-Regulation by Online Platforms

Not everyone agrees that government agencies should intervene to make digital ads more transparent.[210] Nathaniel Persily of Stanford Law School argues that online advertising is too difficult to regulate because the definition of what counts as media has become too vast, as social media, blogs, and digital content platforms have become key political messaging tools.[211] Persily believes that in the digital era, it will not be government agencies, but rather platforms—particularly giants like Google and Facebook—that will enforce regulations through their user policies, due to “business necessity and [their] sense of public obligation.”[212] Unlike the government, technology platforms do not have to worry about violating the First Amendment by limiting certain kinds of speech.[213] Persily posits that technology platforms could set guidelines mandating truthful advertising, require advertisers to disclose financial information to be shared with users, and even set restrictions on the “sources and amounts of expenditures.”[214] But even Persily admits that such requirements may not always be in the platforms’ “economic self-interest.”[215]

Some Internet platforms are taking proactive steps to promote disclosure.[216] Snapchat requires that political ads disclose the purchaser’s identity and state whether a candidate authorized them.[217] The buyers of unauthorized ads must provide Snapchat with contact information for the sponsoring organization.[218] Snapchat also prohibits “misleading or deceptive” ads and requires that political advertisers abide by the website’s Terms of Service, Community Guidelines, and Advertising Guidelines.[219] Similarly, Twitter requires that political advertisers “comply with any applicable laws regarding disclosure and content requirements”[220] and is proactive in using disclaimers.[221] It labels political ads with a purple “Promoted by” icon to distinguish them from other content.[222]

Google’s policies, on the other hand, currently simply state that advertisers must follow “local campaign and election laws for any area the ads target,” including “election ‘silence periods.’”[223] However, Google plans to require election-related ads to include a disclaimer that will appear when a user hovers over the content.[224] Facebook, meanwhile, does not mention disclosure in its “best practices” for election-related advertising,[225] but it has plans to introduce “Paid for by” disclaimers for “election-related ads.”[226] Zynga does not include specific details regarding political advertising on its website, in spite of its push into the arena.[227]

Despite the encouraging steps taken by some technology companies, it may be that Facebook, Google, and Zynga do not, thus far, include more robust disclosure policies on their websites because, as Persily notes, such practices are not necessarily in the platforms’ immediate economic self-interest.[228] Advertisers like native ads precisely because they do not look like ads, and they are therefore less likely to be skipped, blocked, or ignored.[229] When asked to provide more transparency, advertisers complain that the ads lose their effectiveness.[230] Given that advertisers and media platforms are businesses first and foremost, it may seem counterintuitive to create policies that would harm their potential advertising revenues. Yet more transparency does not necessarily conflict with economic self-interest. Studies show that voters want more transparency,[231] and in the context of non-political sponsored advertising, consumers feel deceived if they cannot distinguish an ad from editorial content.[232] It is not a big stretch to assume that voters would feel similarly misled if they could not distinguish a political ad from an article or a game, especially since politics tend to stir up people’s most impassioned sentiments. Consumers are likely to be unhappy with a platform that they feel facilitates deceptive advertising or, at the least, is not as transparent as its competitors. So while more disclosure and disclaimers might hurt ad revenue in the short term, in the long run transparency is likely to be more beneficial to the platforms than the alternative of angering and alienating users.

But willingness or even desire of Internet platforms to self-regulate does not diminish the need for a revised rulemaking by the FEC. In fact, when the FEC opened the matter for comment in 2011, Facebook encouraged the Commission to revise the existing rules.[233] Attorneys for Facebook pointed out that the Commission’s handling of Internet “advertising has been unclear—to sellers of online advertising, to political committees and . . . to Members of Congress,” adding that “the Commission’s failure to provide a coherent approach to online political advertising has made it harder” for candidates to engage with voters.[234] As Facebook’s comment suggests, a rulemaking by the FEC would help platforms adopt more robust disclosure policies, including disclaimer requirements, because they would have a better sense of what approaches might or might not pass muster with the FEC. Similarly, in 2017, Google encouraged the FEC to update its rules to “provide the clarity that campaigns and other political advertisers need to determine what disclaimers they are required to include.”[235] Facebook’s and Google’s sentiments echo Cynthia Bauerly’s argument that a rulemaking would give advertisers more general guidance than one-off advisory opinions that are limited to a particular set of facts.[236]

D. A Proposal for Closing the Loopholes

While it is admittedly impossible to regulate all Internet communications, it is possible to close unnecessary and outdated loop-holes like the small-items and impracticable exceptions, which are particularly problematic in a world where the line between ads and content continues to blur. As discussed earlier, empirical studies suggest that disclaimers can support the informational interest identified as important by the Supreme Court, shaping voter perception and perhaps even helping voters to make better decisions.[237] As the Court stated in Buckley, providing voters with information about the source of campaign funding can create a more informed electorate,[238] and the electorate cares about being informed.[239] Digital platforms have the technological ability to include disclaimers, so there is no legitimate reason to grant them exceptions that other advertisers do not get.

Nevertheless, in developing new rules the FEC should tread lightly, to avoid interfering with innovation by imposing rigid regulations that would not only stifle creative invention but would quickly become obsolete as new platforms and technologies develop. California’s approach is a particularly good model for the FEC to follow, as it gives platforms guidelines but respects their need to experiment with new methods and technologies.[240]

Like the California government, the FEC should require that if an advertisement on an electronic, mobile, or new media platform is limited in size, the ad should include a link to a landing page containing a comprehensive disclaimer. An advertisement should be considered limited in size if it is a small graphic ad, if it is a text ad containing 200 characters or less, or if the text of a full disclaimer would contain more characters than the text of the advertisement itself.[241] Although California considers ads to be limited in size at 500 characters or less, other states have set the limit at 200,[242] closer to the size limitations for text ads set by advertisers like Google.[243] If the advertisement uses a link instead of an embedded disclaimer, the link should be distinct from the rest of the advertisement so that it easily catches the user’s eye; this can be accomplished by using a different font style or size, a contrasting color or an alternative distinguishing technique. The links should also contain some identifying information such as the name of the sponsoring group. As several of the FEC Commissioners noted in their concurrence in Google’s advisory opinion, links themselves can provide users with useful identifying information.[244] However, since users may not always closely read the name of a link, even if it stands out from the contents of the advertisement, the links should be accompanied by a short introductory phrase such as “Ad,” “Provided by,” “Sponsored by,” or another phrase clearly indicating that the content is promotional. Space-limited advertisers should not find it overly burdensome to include such a short phrase, as platforms have not found such requirements overly restrictive in the past. For instance, even Google’s space-restricted AdWords include a small shaded box with the word “Ad” to notify the user that the link is an advertisement.

Although providing a link to a landing page is a reasonable disclaimer alternative in some cases, requiring that all platforms include a link would not be a sufficiently flexible solution; for some platforms, a link is simply not feasible. For instance, Snapchat is a contained mobile platform. Most likely, it would not be practical to include a link on a Snapchat advertisement because it would force the user to leave the application and go to a separate website. Given these limitations, in a revised rule the FEC should say that a rollover disclaimer is an acceptable alternative to a link for size-limited advertisements. In one of its unofficial draft opinions regarding Facebook, some FEC Commissioners indicated willingness to approve this rollover option.[245] The FEC should take the next step to codify this language to give advertisers more clarity and assurance when designing alternative disclaimers. Rollover disclaimers, like the kind permitted in California, would let advertisers take advantage of the creative nature of native advertising while providing sponsor information to users who hover over the contents. Such rollover disclaimers must stay visible for a particular duration: California requires that rollover disclaimers remain visible for four seconds, which offers another specific reference point for the FEC to follow.[246] But since some users may not realize that the advertisement has a rollover feature unless they hold their cursor over the contents, these ads should also have a short phrase like “Ad” or “Provided by,” as outlined above, making the nature of the material clear to users.

To accommodate technologies that might find both a link and a rollover option impracticable—including technologies that have not yet been invented—the FEC, like California, should also include a broader statement in its rulemaking, allowing platforms to utilize other alternatives by including disclosure information through any other technological avenue that the platform chooses, so long as the content is clearly labeled as an ad and the chosen method provides users with full disclosure information, visible for at least four seconds. Offering technological platforms two specific ways of complying with disclosure requirements while also leaving the door open for companies to devise their own methods strikes a balance, protecting the public’s need for information and transparency without stifling the technology sector’s ability to grow, develop, and exercise creative and business choices. But in order for these alternatives to provide users with adequate notice, regardless of which option a platform and a campaign may choose, the FEC must require that advertisers make it very clear that the content is promotional by placing a small disclaimer in the content, which can be as concise as the two-letter word “Ad.”

In application, a platform like Snapchat, for example, could comply with this proposed FEC rulemaking by using the broadly construed third option. Currently, Snapchat allows advertisers to include extra features and content, which users can access by swiping up after an advertisement finishes playing. A politician could run a video or an even more interactive promotion, like a mini–game, on the platform.[247] While the video plays, a small “Ad” logo would appear in the corner, alerting the user that the content is promotional. After the video ends, users could swipe up to see a full disclaimer. Video ads on Snapchat already feature a small “Ad” logo, so this requirement for political ads would not be excessively burdensome or unreasonable. Similarly, since Snapchat allows other advertisers to include more content by swiping up, it can do so for political candidates as well. Other platforms like Facebook and Google can similarly comply with the rule proposed in this Note by either adopting one of the proposed options or by creating their own solution using the flexible third alternative.

Unfortunately, to make any impactful changes, the FEC must find a way to overcome the crippling gridlock that has rendered the agency basically ineffective.[248] The votes on the advisory opinions discussed in Part III were largely split along party lines, with Republican-appointed Commissioners wary of imposing disclaimer requirements.[249] As such, any action on the part of the FEC requires moving past this internal partisan divide. Ideally, Internet platforms would be guided by the FEC in formulating reasonable solutions, but even if the FEC does not act to issue new rules in the near future, platforms should take proactive steps to be more transparent. False and misleading information is rampant on the Internet, and disclaimers are one small way to promote more transparency online.[250] Users are likely to reward platforms for taking proactive action since research suggests that people want more information and transparency.[251] Twitter already offers a model of how to incorporate disclaimers; others, like Google, Facebook, and Snapchat, could adopt similar promoted icons and use rollover features to run disclaimers. If these options are not desirable, there is no shortage of creative minds within these organizations to produce practical and efficient solutions. Although not as definite as a rulemaking, the FEC’s existing advisory opinions, and even some of its drafts, can serve as guideposts for developing alternative disclaimers.

CONCLUSION

With the growing importance of digital advertising and the rise of sponsored content in particular, it is time for the FEC to acknowledge that its current rules lag behind technological changes. Because digital and mobile platforms are capable of creating alternative disclaimers, they should not benefit from the same exemptions designed for lapel buttons, skywriting, or water towers, where size and practicability are more insurmountable obstacles. When advertisers take advantage of non-political contexts such as games to promote political messages through cleverly designed native ads, the existing loopholes for Internet advertising make voters particularly vulnerable to deception, which undermines the informational interest set forth by the Supreme Court in Buckley. Moreover, new regulations do not have to shackle platforms’ ability to innovate and create. On the contrary, a flexible regulatory approach, as proposed by this Note and as already implemented by states like California, would give advertisers guidance and direction in crafting alternatives to disclaimer requirements while protecting voters from misleading content.

[*] *. Executive Senior Editor, Southern California Law Review, Volume 91; J.D. Candidate 2018, University of Southern California Gould School of Law; B.A. 2011, Northwestern University. Thank you to Professor Dan Nabel for sparking my interest in native advertising. A very special thank you to Professor Abby Wood for her constant feedback and guidance throughout the note-writing process as well as for her support and mentorship. Lastly, thank you to the members of the Southern California Law Review for their excellent editing and comments.

[1]. Nathaniel Persily, The Coming Revolution in Campaign Communication, Sacramento Bee (May 30, 2015, 5:00 PM), http://www.sacbee.com/opinion/california-forum/article22581321.html.

[2]. Joe Lazauskas, Article or Ad? When It Comes to Native Advertising, No One Knows, Contently (Sept. 8, 2015), https://contently.com/strategist/2015/09/08/article-or-ad-when-it-comes-to-native-no-one-knows; Erik Sass, Consumers Can’t Tell Native Ads from Editorial Content, MediaPost (Dec. 31, 2015), http://www.mediapost.com/publications/article/265789/consumers-consumers-cant-tell-native-ads-from-editorial-con.html (discussing findings by Grady College showing that fewer than 8% of participants identified native advertisements as promotions).

[3]. See infra Part III.B.

[4]. Buckley v. Valeo, 424 U.S. 1, 6 (1976) (per curiam).

[5]. Id. at 66–68.

[6]. Citizens United v. FEC, 558 U.S. 310, 369 (2010). See also Jennifer A. Heerwig & Katherine Shaw, Through a Glass, Darkly: The Rhetoric and Reality of Campaign Finance Disclosure, 102 Geo. L.J. 1443, 1445 (2014); Abby K. Wood, Show Me the Money: “Dark Money” and the Informational Benefit of Campaign Finance Disclosure 4–7, 13 (Ctr. for Law & Social Sci. Research Papers Series No. CLASS17-24, Legal Studies Research Papers Series No. 17-23, 2017), https://papers.ssrn.com/
sol3/papers.cfm?abstract_id=3029095 [hereinafter Show Me The Money].

[7]. See Katie Rogers & Jonah Engel Bromwich, The Hoaxes, Fake News and Misinformation We Saw on Election Day, N.Y. Times (Nov. 8, 2016), https://nyti.ms/2nyMJ4r; Sam Schechner, Facebook and Google Step Up Efforts to Combat Fake News, Wall St. J. (Feb. 6, 2017, 3:24 PM), https://http://www.wsj.com/articles/facebook–and-google-step-up-efforts-to-combat-fake-news-1486396476; Craig Silverman, This Analysis Shows How Viral Fake Election News Stories Outperformed Real News on Facebook, BuzzFeed (Nov. 16, 2016, 2:15 PM), https://www.buzzfeed.com/craigsilverman/viral-fake-election-news-outperformed-real-news-on-facebook.

[8]. See generally Heerwig & Shaw, supra note 6; Show Me the Money, supra note 6; Katherine Shaw, Taking Disclosure Seriously, Yale L. & Pol’y Rev. Inter Alia (Apr. 3, 2016), https://ylpr.yale.edu/inter_alia/taking-disclosure-seriously.

[9]. Federal Election Campaign Act of 1971, Pub. L. No. 92–225, 86 Stat. 3 (1972).

[10]. Erika Franklin Fowler et al., Political Advertising in the United States 14 (2016).

[11]. Federal Election Campaign Act Amendments of 1974, Pub. L. No. 93-443, 88 Stat. 1263; Fowler et al., supra note 10, at 14.

[12]. 11 C.F.R. § 100.52(a) (2017); Contribution Limits, Fed. Election Commission https://transition.fec.gov/pages/brochures/contrib.shtml#Contribution_Limits (last visited Jan. 12, 2018).

[13]. 11 C.F.R § 100.16(a).

[14]. Buckley v. Valeo, 424 U.S. 1, 13 (1976) (per curiam) (citing 18 U.S.C. § 608(b)(1), (3) (Supp. IV 1970) (repealed 1976)).

[15]. Id. (citing 18 U.S.C. § 608(e) (repealed 1976)).

[16]. Id. at 6; Fowler et al., supra note 10, at 16.

[17]. Buckley, 424 U.S. at 26–29.

[18]. Id. at 20–21.

[19]. Id. at 21.

[20]. Id. at 20–21

[21]. Id. at 26–27.

[22]. Id. at 27.

[23]. Id.

[24]. Id. at 50–51. See also Fowler et al., supra note 10, at 18. While limits on independent expenditures by political parties made on behalf of candidates survived Buckley, these limits were also later struck down. See Colo. Republican Federal Campaign Comm. v. FEC, 518 U.S. 604, 608 (1996).

[25]. Buckley, 424 U.S. at 43–44.

[26]. Id. at 44–49.

[27]. Id.

[28]. Heerwig & Shaw, supra note 6, at 1450–52 (citing Buckley, 424 U.S. at 83–84).

[29]. Buckley, 424 U.S. at 63 (citing 2 U.S.C. §§ 432(c)–(d), 433 (Supp. IV 1970)).

[30]. Id. (citing 2 U.S.C. § 434(a)).

[31]. Id. (quoting 2 U.S.C § 438(a)(4)).

[32]. Id. at 63–64 (citing 2 U.S.C § 434(e)).

[33]. See id. at 64–66.

[34]. Id. at 64.

[35]. Id.

[36]. Id. at 66.

[37]. Id.

[38]. Id. at 66–67

[39]. Id. at 67.

[40]. Id.

[41]. See id.

[42]. Id. at 67–68.

[43]. See id. at 68.

[44]. Id.

[45]. Id.

[46]. Id. at 74. See also Doe v. Reed, 561 U.S. 186, 199–201 (2010) (quoting Buckley, 424 U.S. at 74) (holding that the State of Washington did not violate the First Amendment by making public the identities of signers of an anti-gay marriage petition because the state had a sufficiently important interest in maintaining the “integrity of the electoral process,” but also noting that disclosure requirements may be struck down if a plaintiff shows a reasonable probability that the “compelled disclosure [of personal information] will subject them to threats, harassment, or reprisals from either Government officials or private parties”); Heerwig & Shaw, supra note 6, at 1452; Show Me the Money, supra note 6, at 5.

[47]. Buckley, 424 U.S. at 68. See also Heerwig & Shaw, supra note 6, at 1453.

[48]. Anthony Corrado et al., The New Campaign Finance Sourcebook 30–43 (2005); The FEC and the Federal Campaign Finance Law, Fed. Election Commission, https://transition.fec.gov/pages/brochures/fecfeca.shtml#Historical_Background (last updated Feb. 2, 2018).

[49]. Douglas M. Spencer & Abby K. Wood, Citizens United, States Divided: An Empirical Analysis of Independent Political Spending, 89 Ind. L.J. 315, 319 (2014). See also Fowler et al., supra note 10, at 19.

[50]. Fowler et al., supra note 10, at 19 (citing Buckley, 424 U.S. at 44 n.52).

[51]. Id. at 19.

[52]. See Spencer & Wood supra note 49, at 319. See also Fowler et al., supra note 10, at 19–20 (explaining political parties’ general strategy shift following BCRA).

[53]. Spencer & Wood, supra note 49, at 319–20.

[54]. Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, sec. 201(a), § 304(f)(3), 116 Stat. 81, 89 (codified as amended at 52 U.S.C. § 30104(f)(3) (2015)).

[55]. Id.

[56]. Spencer & Wood, supra note 49, at 320.

[57]. See McConnell v. FEC, 540 U.S. 93 (2003), overruled in part by Citizens United v. FEC, 558 U.S. 310 (2010). See also William M. Welch & Jim Drinkard, Passage Ends Long Struggle for McCain, Feingold, USA Today (Mar. 20, 2002, 10:24 PM), http://usatoday30.usatoday.com/
news/washdc/2002/03/21/usat-mccain.htm (reporting that Republican Senator Mitch McConnell vowed to challenge BCRA in court even before President Bush signed the bill into law).

[58]. McConnell, 540 U.S. at 201–02. See also Spencer & Wood, supra note 49, at 321.

[59]. McConnell, 540 U.S. at 201–02. See also Spencer & Wood, supra note 49, at 321.

[60]. Bipartisan Campaign Reform Act § 201; McConnell, 540 U.S. at 194–202. See also Heerwig & Shaw, supra note 6, at 1453–54.

[61]. McConnell, 540 U.S. at 196–202. See also Heerwig & Shaw, supra note 6, at 1454.

[62]. McConnell, 540 U.S. at 196. See also Heerwig & Shaw, supra note 6, at 1454.

[63]. FEC v. Wis. Right to Life, Inc., 551 U.S. 449, 469–70 (2007) (per curiam) (emphasis added). See also Spencer & Wood, supra note 49, at 321–22.

[64]. Citizens United v. FEC, 558 U.S. 310, 318 (2010).

[65]. Id. at 318–22. See also 2 U.S.C. § 441(b) (2006). For additional background on how the case that became Citizens United changed as it moved through the federal court system on its way to the Supreme Court, see Heerwig & Shaw, supra note 6, at 1455–59; Spencer & Wood, supra note 49, at 319–29.

[66]. Citizens United, 558 U.S. at 318–22. See also 52 U.S.C. §§ 30104(f), 30120(d) (2015).

[67]. Citizens United, 558 U.S. at 366–69.

[68]. Id. at 366.

[69]. Id.

[70]. Spencer & Wood, supra note 49, at 322 (citing Memorandum in Support of Preliminary Injunction Motion at 8, Citizens United v. FEC, 530 F. Supp. 2d 274 (D.D.C. 2007) (No. 07-2240)).

[71]. Citizens United, 558 U.S. at 362–66.

[72]. Id. at 371–72. See also Spencer & Wood, supra note 49, at 328. In striking down Section 203 (and 2 U.S.C. § 441(b), which it had amended), Citizens United overruled Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), which had upheld the prohibition of independent expenditures by corporations and unions expressly advocating the election or defeat of a candidate, as well as the portions of McConnell that had upheld Section 203. Citizens United, 558 U.S. at 324–41.

[73]. Citizens United, 558 U.S. at 357.

[74]. Id. at 372.

[75]. Id. at 366 (quoting McConnell v. FEC, 540 U.S. 93, 201 (2003)).

[76]. Id. at 366–67.

[77]. Id. at 371.

[78]. See id.

[79]. Buckley v. Valeo, 424 U.S. 1, 68 (1976) (per curiam) (“[W]e note and agree with appellants’ concession that disclosure requirements—certainly in most applications—appear to be the least restrictive means of curbing the evils of campaign ignorance and corruption that Congress found to exist.”).

[80]. Citizens United, 558 U.S. at 369.

[81]. Id.

[82]. See, e.g., McIntyre v. Ohio Elections Comm’n, 514 U.S. 334, 347–57 (1995) (striking down an Ohio statute prohibiting the distribution of anonymous campaign literature because it was not narrowly tailored to “serve an overriding state interest” and outlawed a category of speech in violation of the First Amendment); Brown v. Socialist Workers ’74 Campaign Comm., 459 U.S. 87, 88, 101–02 (1982) (striking down an Ohio statute requiring candidates for political office to disclose every contributor and recipient of campaign funds as applied to a minor political party that had been historically subject to harassment).

[83]. See Shaw, supra note 8, at 21–24; Show Me the Money, supra note 6, at 7.

[84]. Shaw, supra note 8, at 22–24.

[85]. Id.

[86]. Show Me the Money, supra note 6, at 7.

[87]. Buckley v. Valeo, 424 U.S. 1, 66–68 (1976) (per curiam).

[88]. Abby K. Wood, Campaign Finance Disclosure 4–5 (Nov. 12, 2016) (unpublished manuscript) (on file with author).

[89]. Arthur Lupia, Shortcuts Versus Encyclopedias: Information and Voting Behavior in California Insurance Reform Elections, 88 Am. Pol. Sci. Rev. 63, 63–64 (1994).

[90]. Id.

[91]. Id. at 71.

[92]. See Wood, supra note 88, at 5 (“The most obvious heuristic is a candidate’s party label.”). But it is important to acknowledge that scholars do not universally support the informational benefits of disclosure. David Primo also conducted a survey experiment in the ballot initiative context to measure the informational benefit of disclosure. David M. Primo, Information at the Margin: Campaign Finance Disclosure Laws, Ballot Issues, and Voter Knowledge, 12 Election L.J. 114, 117 (2013). Focusing on a ballot issue about taxes and illegal immigration, Primo presented survey participants with a series of newspaper articles, a voter guide, and two advertisements; participants were told that they could “review as much or as little” of the information as they wanted, with most choosing to look at only a “handful of items.” Id. at 118–20. Respondents were then asked to predict the likely position on the issue of several interest groups. The results found that responders who had access to disclosure information were only marginally better at identifying the positions of the interest groups than the control group. Id. at 121, 125–27. Abby Wood argues, however, that the “null effect[s]” of disclosure in Primo’s study may have been due to the research design in which “subjects did not access the disclosure information at all.” Show Me the Money, supra note 6, at 11.

[93]. Conor M. Dowling & Amber Wichowsky, Does It Matter Who’s Behind the Curtain? Anonymity in Political Advertising and the Effects of Campaign Finance Disclosure, 41 Am. Pol. Res. 965, 973–74 (2013).

[94]. Id. at 974–76.

[95]. Id. at 982–86.

[96]. Id. at 981.

[97]. Id. at 981–83.

[98]. Id.

[99]. See id at 982–86.

[100]. Id. at 981–82.

[101]. Conor M. Dowling & Amber Wichowsky, Attacks Without Consequence? Candidates, Parties, Groups, and the Changing Face of Negative Advertising, 59 Am. J. Pol. Sci. 19, 24–35 (2015).

[102]. Id. at 24, 28–31.

[103]. Id. at 32–35.

[104]. Id.

[105]. Id. at 23, 33–35.

[106]. Show Me the Money, supra note 6, at 23.

[107]. Id. at 13–14.

[108]. Id. at 14–16 & figs.1–3.

[109]. Id. at 17–18.

[110]. Id. at 19.

[111]. Id. at 19–20.

[112]. Id. at 21, 23.

[113]. Id. at 24–26.

[114]. See id.

[115]. 11 C.F.R. § 110.11(a)(1), (b)(1)–(3) (2017).

[116]. Id. § 110.11(b)(3).

[117]. Id. § 110.11(c)(1).

[118]. See Fowler et al., supra note 10, at 118–19.

[119]. 11 C.F.R. § 110.11(c)(3)–(4).

[120]. See Fowler et al., supra note 10, at 26–27.

[121]. Id. at 30. See also Libby Watson, FCC Votes to Expand Transparency for Political Ads, Sunlight Found. (Jan. 28, 2016, 3:45 PM), https://sunlightfoundation.com/2016/01/28/fcc-votes-to-expand-transparency-for-political-ads (reporting that while the FCC had previously required stations to keep physical copies of political ad sales, in January 2016, the Commission mandated that the files must be posted online).

[122]. Fowler et al, supra note 10, at 118.

[123]. 11 C.F.R. § 100.26.

[124]. Id.

[125]. Fowler et al., supra note 10, at 118–19.

[126]. Lee E. Goodman, Commentary, Online Political Opinions Don’t Need Regulating, Wall St. J. (Jan. 1, 2015, 6:37 PM), http://www.wsj.com/articles/lee-e-goodman-online-political-opinions-dont-need-regulating-1420155421.

[127]. Id.

[128]. 11 C.F.R. § 110.11(f)(i).

[129]. Id.

[130]. Id. § 110.11(f)(ii).

[131]. Id.

[132]. See Cynthia L. Bauerly, The Revolution Will be Tweeted and Tmbl’d and Txtd: New Technology and the Challenge for Campaign-Finance Regulation, 44 U. Tol. L. Rev. 525, 532–34 (2013) (arguing that the FEC should issue a rule to address the small-items and impracticable exceptions).

[133]. See Letter from Marc E. Elias & Jonathan S. Berkon, Counsel to Google, to Thomasenia Duncan, Gen. Counsel, FEC 1 (Aug. 5, 2010), http://saos.fec.gov/aodocs/1147698.pdf.

[134]. Id. at 2.

[135]. Id. at 4–6, 8.

[136]. Id. at 7–9.

[137]. FEC Advisory Op. 2010-19, at 2 (Oct. 8, 2010), http://saos.fec.gov/aodocs/AO%202010-19.pdf.

[138]. Concurring Statement of Vice Chair Cynthia L. Bauerly, Comm’r Steven T. Walther & Comm’r Ellen L. Weintraub, FEC Advisory Opinion 2010-19, at 3 (Dec. 16, 2010), http://saos.fec.gov/aodocs/1158390.pdf [hereinafter Concurring Statement].

[139]. Id. at 2. See also Bauerly, supra note 132, at 533–34 (reflecting on her vote in Google’s request for an advisory opinion).

[140]. See Letter from Marc E. Elias et al., Counsel to Facebook, to Christopher Hughey, Acting Gen. Counsel, FEC 1 (Apr. 26, 2011), https://www.fec.gov/files/legal/aos/2011-09/1174825.pdf.

[141]. Id. at 6–7.

[142]. See id.

[143]. See Letter from Rosemary Smith, Assoc. Gen. Counsel, FEC, to Marc E. Elias et al., Perkins Coie LLP 1 (June 15, 2011), https://www.fec.gov/files/legal/aos/2011-09/AO-2011-09.pdf. See also Bauerly, supra note 132, at 533.

[144]. Draft C, Advisory Opinion 2011-09, at 6 (June 15, 2011), https://www.fec.gov/files/legal/
aos/2011-09/1176195.pdf. For the vote tally, see Certification, In re Facebook, FEC AO 2011-09 (June 17, 2011), https://www.fec.gov/files/legal/aos/2011-09/1176290.pdf.

[145]. Letter from Marc E. Elias, supra note 140, at 7.

[146]. Draft C, Advisory Opinion 2011-09, supra note 144, at 7–8.

[147]. Id. at 9. It is important to recognize that advisory opinions are incredibly fact specific and therefore not necessarily predictive of future outcomes. For instance, in December 2017, the FEC Commissioners agreed that “under the circumstances described in [its] request” the non-profit Take Back Action Fund must include all of the required disclaimer information on its Facebook video and image ads. But the Commissioners relied on different reasoning to reach this conclusion and the decision did not result in an advisory opinion, leaving the issue unsettled. See Christopher Berg, AO 2017-12: Nonprofit Must Include Disclaimers on Its Facebook Ads, Fed. Election Commission (Dec. 18, 2017), https://www.fec.gov/updates/ao-2017-12-nonprofit-must-include-disclaimers-its-facebook-ads.

[148]. Certification, supra note 144; Draft B, Advisory Opinion 2011-09, at 5–6 (June 15, 2011), https://www.fec.gov/files/legal/aos/2011-09/1176020.pdf.

[149]. Id. at 5.

[150]. Certification, In re Revolution Messaging, LLC, FEC AO 2013-18 (Feb. 27, 2014), https://www.fec.gov/files/legal/aos/2013-18/1252337.pdf.

[151]. Letter from Joseph E. Sandler et al., Counsel to Revolution Messaging, LLC, to Lisa Stevenson, Deputy Gen. Counsel, FEC 2, 4 (Sept. 11, 2013), http://saos.fec.gov/aodocs/1247145.pdf.

[152]. Id. at 1.

[153]. See generally Letter from Joseph E. Sandler et al., Counsel to Revolution Messaging, LLC, to Lisa Stevenson, Deputy Gen. Counsel, FEC (Feb. 3, 2014), http://saos.fec.gov/aodocs/1251248.pdf.

[154]. See Certification, supra note 150; Revised Draft B, Advisory Opinion 2013-18, at 4 (Feb. 26, 2013), https://www.fec.gov/files/legal/aos/2013-18/201318_2.pdf.

[155]. See Certification, supra note 150; Revised Draft A, Advisory Opinion 2013-18, at 4, 7–8 (Feb. 21, 2014), https://www.fec.gov/files/legal/aos/2013-18/201318_1.pdf.

[156]. Id. at 10 (quoting 11 C.F.R. § 110.11(c)(1) (2014)). See also Statement for the Record by Vice Chair Ann M. Ravel, Comm’r Steven T. Walther, & Comm’r Ellen L. Weintraub in Advisory Opinion Request 2013-18, at 2 (Feb. 27, 2014), https://www.fec.gov/files/legal/aos/2013-18/1252267.pdf (reiterating the Commissioners’ position that disclaimer requirements should not be struck down on the basis of surmountable technological limitations).

[157]. See Tex. Ethics Comm’n Advisory Op. No. 491 (Apr. 21, 2010), https://www.ethics.state.tx.us/opinions/491.html. See also Interactive Advert. Bureau, Federal Election Commission (FEC) and State Regulation of Online Political Advertising 3–6 (2012), https://www.iab.com/wp-content/uploads/2015/07/Memo-FEC-and-Online-Poltical-Advertising.pdf (summarizing several state-level approaches to regulating online political advertising).

[158]. Tex. Ethics Comm’n Advisory Op. No. 491, supra note 157. See Tex. Elec. Code Ann § 255.001 (West 2017).

[159]. Tex. Ethics Comm’n Advisory Op. No. 491, supra note 157.

[160]. Id.

[161]. Fla. Stat. § 106.143(10)(c) (2017).

[162]. Id. § 106.143(10)(i).

[163]. Md. Code Regs. 33.13.07.02(D)(2)(b)(i) (2017).

[164]. Id. 33.13.07.02(D)(2)(b)(ii).

[165]. Id. 33.13.07.02(D)(2)(c)(i)–c(iv).

[166]. Cal. Code Regs. tit. 2, § 18450.4(b)(3)(G)(1) (2017).

[167]. Bauerly, supra note 132, at 533–35.

[168]. Id.

[169]. See Internet Communication Disclaimers, 82 Fed. Reg. 46,937 (proposed Oct. 10, 2017) (to be codified at 11 C.F.R. pt. 110).

[170]. See Nathaniel Persily, The Campaign Revolution Will Not Be Televised, Am. Interest (Oct. 10, 2015), https://www.the-american-interest.com/2015/10/10/the-campaign-revolution-will-not-be-televised (“[W]hen the current Chair of the FEC merely hinted at updating regulations to account for the transition to online campaigning, her opponents both within and beyond the FEC publicly criticized her.”).

[171]. Sean J. Miller, Digital Ad Spending Tops Estimates, Campaigns & Elections (Jan. 4, 2017), https://www.campaignsandelections.com/campaign-insider/digital-ad-spending-tops-estimates.

[172]. Interactive Advert. Bureau & Vision Critical, The Race for the White House 2016: Registered Voters and Media and Information During the Primaries 4 (2016), https://www.iab.com/insights/the-race-for-the-white–house-2016-registered-voters-and-media-and-information-during-the-primaries.

[173]. Id.

[174]. Rubicon Project, 2016 Voter Media Consumption Habits 2 (2016), http://rubiconproject.com/wp-content/uploads/2016/01/Rubicon-Project-Voter-Media-Consumption-Habits.pdf.

[175]. Id. at 1.

[176]. Id. at 2.

[177]. See Native Advertising: A Guide for Businesses, Fed. Trade Commission (Dec. 2015), https://www.ftc.gov/tips-advice/business-center/guidance/native-advertising-guide-businesses (providing guidance to businesses on using native advertising techniques without deceiving consumers).

[178]. See id.

[179]. BI Intelligence, Spending on Native Advertising Is Soaring as Marketers and Digital Media Publishers Realize the Benefits, Bus. Insider (May 20, 2015, 5:04 PM), http://www.businessinsider.com/spending-on-native-ads–will-soar-as-publishers-and-advertisers-take-notice-2014-11.

[180]. Eleni Marouli & Jack Kent, IHS Tech., The Future of Mobile Advertising Is Native 8 (2016), http://mma.nl/wp-content/uploads/2016/05/Future-of-mobile-is-native-1.pdf.

[181]. See Libby Watson, A New Frontier in Opaque Political Ad Spending: GIFs, Sunlight Found. (Mar. 30, 2016, 11:37 AM), https://sunlightfoundation.com/blog/2016/03/30/a-new-frontier-in-opaque-political-ad-spending-gifs.

[182]. Bernie Sanders, We Must End For-Profit Prisons, Politico (Feb. 26, 2016, 2:14 PM), http://www.politico.com/sponsor-content/2016/02/we-must-end-for-profit-prisons.

[183]. Simon Dumenco, Bernie Sanders Campaign Buys ‘Sponsored Story’ Ad on Politico, Ad Age (Feb. 26, 2016), http://adage.com/article/campaign-trail/bernie-sanders-campaign-buys-sponsored-story-politico-ad/302874.

[184]. See 15 Reasons Bernie Sanders Is the Candidate We’ve Been Waiting For, BuzzFeed (Jan. 8, 2016, 11:45 AM), https://www.buzzfeed.com/berniesanders/times-bernie-sanders-gave-us-all-hope.

[185]. See id.

[186]. Obama Campaign Buys Ads in 18 Video Games, Fox News (Oct. 15, 2008), http://www.foxnews.com/story/2008/10/15/obama-campaign-buys-ads-in-18-video-games.html.

[187]. Id.

[188]. Marty Swant, Zynga Is Now Offering Native Political Gaming Ads for Presidential Campaigns, Adweek (Jan. 7, 2016), http://www.adweek.com/news/technology/zynga-now-offering-native-political-gaming-ads-presidental-campaigns-168894.

[189]. Id.

[190]. Id.

[191]. Id.

[192]. Id.

[193]. Let’s Play, Zynga, https://www.zynga.com/about (last visited Jan. 26, 2018).

[194]. Swant, supra note 188.

[195]. Rubicon Project, supra note 174, at 2.

[196]. Interactive Advert. Bureau, Getting In-Feed Sponsored Content Right: The Consumer View 16 (2014), https://www.iab.com/wp-content/uploads/2015/07/IAB_Edelman_
Berland_Study.pdf. See also Sass, supra note 2.

[197]. Lazauskas, supra note 2.

[198]. See Truth in Advertising, Fed. Trade Commission, https://www.ftc.gov/news-events/media-resources/truth-advertising (last visited Jan. 26, 2018).

[199]. FTC, Enforcement Policy Statement on Deceptively Formatted Advertisements 16 (2015), https://www.ftc.gov/system/files/documents/public_statements/896923/
151222deceptiveenforcement.pdf.

[200]. Id. at 11.

[201]. Id. at 13.

[202]. Id. at 2–3, 13.

[203]. Native Advertising Added to BBB Code of Advertising; Deceptive Native Ads Now Violate Code, Better Bus. Bureau (Oct. 25, 2016), https://www.bbb.org/native-advertising-added-to-bbb-code-of-advertising.

[204]. Id.

[205]. Amy Sullivan, Truth in Advertising? Not for Political Ads, Time (Sept. 23, 2008), http://content.time.com/time/politics/article/0,8599,1843796,00.html.

[206]. See id.

[207]. The situation becomes even murkier if native ads are purchased by non-profit groups, as such organizations are not required to report the source of their funding to the FEC. However, a full discussion of such “dark money” groups is beyond the scope of this paper. See Dark Money Basics, OpenSecrets, https://www.opensecrets.org/dark-money/basics (last visited Jan. 26, 2018). See generally Spencer & Wood, supra note 49 (using experimental data to show that spending by donor-disclosure-exempt non-profit organizations has increased in the wake of Citizens United).

[208]. See Becky Kip, Are Native Ads the Key to Engaging Millennials in Political Movements?, Hill (Sept. 27, 2016, 11:35 AM), http://thehill.com/blogs/pundits-blog/presidential-campaign/298028-are-native-ads-the-key-to-engaging-millennials-in.

[209]. See, e.g., Letter from Joseph E. Sandler et al., supra note 151, at 1.

[210]. See, e.g., Persily, supra note 170.

[211]. Id.

[212]. Id.

[213]. Id. See also Nathaniel Persily, Facebook May Soon Have More Power over Elections than the FEC. Are We Ready?, Wash. Post (Aug. 10, 2016), http://wapo.st/2b3yWuH (arguing that the question is not whether social media platforms will regulate political ads, but whether they should treat such ads differently than other forms of advertising).

[214]. Persily, supra note 170.

[215]. Id.

[216]. After it became known that foreign meddlers had purchased political ads during the 2016 election, Facebook and other social media platforms announced plans to increase transparency for political advertising. See, e.g., Tony Romm & Kurt Wagner, Facebook Is Taking a Stricter Stance on Political Advertising Ahead of Its Testimony to the U.S. Congress Next Week, Recode (Oct. 27, 2017, 1:00 PM), https://www.recode.net/2017/10/27/16555926/facebook-political-advertising-ads-2016-russia; Craig Timberg et al., Russian Ads, Now Publicly Released, Show Sophistication of Influence Campaign, Wash. Post (Nov. 1, 2017), http://wapo.st/2zoHJqk; Kurt Wagner, Twitter Is Changing Its Advertising Policies Following Russia’s Election Interference, Recode (Oct. 24, 2017, 4:00 PM), https://www.recode.net/2017/10/24/16536934/twitter-change-policy-see-new-advertisements-russia-presidential-election. Meanwhile, legislators have introduced the Honest Ads Act to increase the amount of information Internet companies would have to disclose about political ads. See Kerry Flynn, Honest Ads Act Would Regulate Online Political Ads Like TV Commercials, Mashable (Oct. 19, 2017), http://mashable.com/2017/10/19/honest-ads-online-political-facebook-google-twitter-russia. In light of these rapid developments, the disclosure policies for many social media companies are in the process of being amended and revised.

[217]. Snapchat Political Advertising Guidelines, Snapchat, https://www.snapchat.com/ads/
political-guidelines (last visited Jan. 26, 2018).

[218]. Id.

[219]. Id.

[220]. Political Campaigning, Twitter, https://support.twitter.com/articles/20170492 (last visited Jan. 26, 2018).

[221]. Michelle Castillo, Twitter Will Now Label Political Ads, Including Who Bought Them and How Much They Are Spending, CNBC (Oct. 24, 2017, 5:34 PM), https://www.cnbc.com/2017/10/
24/twitter-will-label-political-ads-including-who-bought-and-spend.html.

[222]. Id.

[223]. Political Content, Google, https://support.google.com/adwordspolicy/answer/6014595 (last visited Jan. 26, 2018).

[224]. Tony Romm, Google Asked the U.S. Government to Consider New Rules of the Road for Online Political Ads, Recode (Nov. 9, 2017, 2:40 PM), https://www.recode.net/2017/11/9/16629978/

facebook-google-twitter-federal-election-commission-fec-russia.

[225]. See Page Best Practices, Facebook: Elections, https://politics.fb.com/page-best-practices (last visited Jan. 26, 2018).

[226]. Rob Goldman, Update on Our Advertising Transparency and Authenticity Efforts, Facebook: Newsroom (Oct. 27, 2017), https://newsroom.fb.com/news/2017/10/update-on-our-advertising-transparency-and-authenticity-efforts.

[227]. See Zynga Advertising Guidelines, Zynga, https://www.zynga.com/legal/zynga-advertising-guidelines (last visited Jan. 26, 2018). Zynga does ban “[c]ontent that exploits political agendas or uses ‘hot button’ issues for commercial use.” Id.

[228]. See Persily, supra note 170.

[229]. See Truth in Advertising, supra note 199, at 2.

[230]. See Sydney Ember, F.T.C. Guidelines on Native Ads Aim to Prevent Deception, N.Y. Times (Dec. 22, 2015), https://nyti.ms/2GkNp4X (noting that the FTC guidelines regarding native ads have caused marketers to “worry that the guidelines could stifle further advancements in an area that they both have come to increasingly rely on.”).

[231]. See, e.g., Show Me the Money, supra note 6, at 23–26.

[232]. Lazauskas, supra note 2.

[233]. See Letter from Colin S. Stretch, Deputy Gen. Counsel, Facebook, Inc., to Amy L. Rothstein, Assistant Gen. Counsel, Fed. Election Comm’n 2 (Nov. 14, 2011), http://sers.fec.gov/fosers/
showpdf.htm?docid=98769.

[234]. Id.

[235]. Paresh Dave, Google Supports U.S. Efforts to Disclose Buyers of Online Political Ads, Reuters (Nov. 9, 2017, 6:54 PM), https://www.reuters.com/article/us-usa-trump-russia-socialmedia/
google-supports-u-s-efforts-to-disclose-buyers-of-online-political-ads-idUSKBN1DA099.

[236]. See Bauerly, supra note 132, at 534.

[237]. See supra Part II.

[238]. Buckley v. Valeo, 424 U.S. 1, 66–67 (1976) (per curiam).

[239]. See Show Me the Money, supra note 6, at 23–26.

[240]. See supra notes 166–67 and accompanying text.

[241]. For example, the FEC requires that a message authorized but not financed by a candidate must include a disclaimer, such as “Paid for by the XYZ State Party Committee and authorized by the Sheridan for Congress Committee;” this particular statement contains 80 characters (95 with spaces). Special Notices on Political Ads and Solicitations, Fed. Election Commission (Oct. 2006), http://www.fec.gov/pages/brochures/notices.shtml#wording. See also 11 C.F.R. 110.11(b)(2) (2017).

[242]. See supra note 165 and accompanying text.

[243]. See About Text Ads, Google, https://support.google.com/adwords/answer/1704389 (last visited Jan. 27, 2017).

[244]. See Concurring Statement, supra note 138, at 3.

[245]. See Draft C, Advisory Opinion 2011-09, supra note 144, at 9.

[246]. Cal. Code Regs. tit. 2, § 18450.4(b)(3)(G)(1) (2017).

[247]. Political advertisers interested in incorporating games into their campaigns may draw upon an example from Snapchat, which partnered with Gatorade to support Serena Williams’s road to her twenty-third Grand Slam victory by running a mini video game that allowed users to play a short tennis match in the role of Williams. See Gatorade Success Story, Snapchat, https://storage.googleapis.com/
snapchat-web/success-stories/pdf/pdf_gatorade_snapads_en.pdf (last visited Jan. 27, 2018).

[248]. See Heerwig & Shaw, supra note 6, at 1477–78; Press Release, Pub. Citizen, Roiled in Partisan Deadlock, Federal Election Commission Is Failing (2012), https://www.citizen.org/
sites/default/files/fec-deadlock-press-statement.pdf (explaining the even-numbered, bipartisan structure of the FEC, which makes it difficult for the Agency to reach a consensus on challenging matters).

[249]. See supra Part III.B.

[250]. See Rogers & Bromwich, supra note 7; Silverman, supra note 7.

[251]. See Show Me the Money, supra note 6, at 23–26.

Navigating the Atlantic: Understanding EU Data Privacy Compliance Amidst a Sea of Uncertainty – Note by Griffin Drake

November 2017March 2018Southern California Law Review Admin

From Volume 91, Number 1 (November 2017)
DOWNLOAD PDF

Navigating the Atlantic: Understanding EU Data Privacy Compliance Amidst a Sea of Uncertainty

Griffin Drake [*]

TABLE OF CONTENTS

INTRODUCTION

I. BACKGROUND

A. Key Principles of Privacy Regulations

B. Schrems I and the Invalidation of the Safe Harbor

C. The Road to the Privacy Shield

D. Other Available Transfer Mechanisms

II. THE FUNDAMENTAL DIFFERENCES BETWEEN U.S. AND EU DATA PRIVACY POLICIES

A. EU Privacy Policies

B. U.S. Privacy Policies

III. HOW THE GDPR AFFECTS THE CURRENT AND FUTURE DATA PROTECTION LANDSCAPE

A. What’s New in the GDPR?

B. How Does This Affect Data Transfer Mechanisms?

1. BCRs

2. Model Clauses

3. Codes of Conduct and Certification

IV. THE FATAL FLAWS OF THE PRIVACY SHIELD, MODEL CLAUSES, AND BCRS

A. Privacy Shield

B. Model Clauses

C. BCRs

V. SO, WHAT OPTIONS DO COMPANIES HAVE?

A. Consent

B. Prepare for the GDPR

INTRODUCTION

United States government surveillance has reached a point where the government “c[an] construct a complete electronic narrative of an individual’s life: their friends, lovers, joys, sorrows.”[1] In June 2013, Edward Snowden released thousands of confidential documents from the National Security Agency (“NSA”) regarding classified government surveillance programs.[2] The documents brought to light the fact that that the NSA was spying on individuals, including foreign citizens, and deliberately misleading Congress about these activities.[3] According to Snowden, the spying was so extensive that the spying measures, including a program known as “PRISM,” involved the improper mass collection of data from citizens worldwide through NSA interactions with telecom giants like Google, Microsoft, and Facebook, and by tapping into global fiber optic cables.[4]

These revelations sent shockwaves around the globe, and the backlash was swift and unforgiving. One thing became clear to Americans and the rest of the world: the NSA and the U.S. government had prioritized the massive collection of private information over and above the personal privacy rights of the global population.[5] The concept of throwing civil liberties to the wayside through grossly intrusive surveillance pushed Snowden to step forward and reveal what he had seen all too closely.[6] He no longer wanted to “live in a world ‘where everything that I say, everything that I do, everyone I talk to, every expression of love or friendship is recorded.’”[7]

Across the Atlantic, the priorities of European Union member nations stand in stark contrast to those of the United States. The EU takes a much stronger stance on privacy and data protection and restricts how companies transfer data to non-EU nations. In the EU’s Data Protection Directive (the “Directive”), the right to privacy is described as a “fundamental right[] and freedom[].”[8] This sentiment is echoed in other landmark EU documents such as the Convention for the Protection of Human Rights and Fundamental Freedoms.[9]

Despite the very different treatment of the right to privacy in the U.S. and EU, we live in an era of lightning–quick information transfers and an interconnected global economy in which the sharing of private data (including names, IP addresses, health care information, and so forth) across borders is essential to companies conducting business worldwide.[10] The current state of the world necessitates that data flow seamlessly from country to country.[11] This reality led to the EU’s Safe Harbor Decision (“Safe Harbor”), allowing American companies to self-certify their compliance with certain heightened privacy restrictions when handling the private information of EU citizens and thus facilitating the transfer of information from the EU to the U.S.[12] However, the Safe Harbor was invalidated in Schrems v. Data Protection Commissioner (“Schrems I”).[13] This left American companies to rely on other EU–approved data transfer mechanisms—namely, Model Clauses,[14] Binding Corporate Rules (“BCRs”), or specific statutory derogations. In need of a replacement for the Safe Harbor, the EU and the United States agreed on a new deal known as the “Privacy Shield,” despite heavy criticism.[15] An additional layer of complexity exists due to the fact that the Directive, which long governed the handling of private information in the EU, is now being replaced with the significantly stronger General Data Protection Regulation (“GDPR”).

This Note will argue that in light of the pending commencement of the GDPR, American companies relying on the Privacy Shield are exposed to potential risk, as it fails to satisfy the “essentially equivalent protection” standard set forth in Schrems I, and that alternative data protection mechanisms, such as Model Clauses or BCRs, have serious drawbacks and face similar questions regarding their validity.[16] Subsequently, I will discuss some of the potential alternative mechanisms that companies can use to best mitigate exposure to the risks inherent in transatlantic data transfers.

Part I of this Note will describe the background that has led to the current uncertainty in the validity of the various data protection mechanisms. This Part will discuss the key principles behind data privacy protections, the Schrems I case and the subsequent invalidation of the Safe Harbor, the buildup to the Privacy Shield, and the other possible transfer mechanisms. Part II will discuss the fundamental differences between the United States’ and the European Union’s approaches to protecting individuals’ private information. This section will highlight the irreconcilable differences between U.S. surveillance policies and the EU’s view of the fundamental right to privacy. Part III will discuss the pending implementation of the GDPR and the relevant changes this directive will have to the current transatlantic data transfer legal regime. Part IV will outline the shortcomings inherent in the Privacy Shield, Model Clauses, and BCRs individually. Part V will conclude this Note by briefly discussing potential alternatives that companies can use to attempt to weather the shaky data privacy landscape that exists today. The proposed alternatives include obtaining consent, using codes of conduct and certification, and layering transfer mechanisms.

I. Background

A. Key Principles of Privacy Regulations

With the ability of companies to transfer swaths of consumers’ personal data globally at the click of a button, the United States and the European Union have been forced to adapt privacy regulations to meet this rapidly changing reality. In doing so, certain fundamental principles have arisen and been used to shape modern data privacy laws. In 1973, the U.S. Department of Health, Education, and Welfare developed a committee to review the use of automated data systems that maintained personal information.[17] This committee laid out five principles for data protection, known as the “Fair Information Practices” (“FIPs”).[18] These principles were incorporated, though not by name, in the Privacy Act of 1974.[19] The Privacy Act of 1974 also established the Privacy Protection Study Commission, which in 1977 refined the FIPs into eight clear principles.[20] The principles are: Openness, Individual Access, Individual Participation, Collection Limitation, Use Limitation, Disclosure Limitation, Information Management, and Accountability.[21] These principles, however, apply only to the public sector and were not formally referenced by Congress until 2002.[22]

In the EU in the 1970s, many laws were already consistent with the principles described in the FIPs.[23] In 1980, the Organization for Economic Co–operation and Development (“OECD”) developed a set of privacy guidelines with its own eight principles for data protection.[24] These principles include: Collection Limitation, Data Quality, Purpose Specification, Use Limitation, Security Safeguards, Openness, Individual Participation, and Accountability.[25] These principles clearly bear a strong resemblance to the FIPs with one major difference—they are broadly intended to apply across both the public and private sectors. In 1995, the EU took the principles a step further and adopted the Directive to protect individuals and their private data.[26] These principles were also included in the GDPR, along with a few additional principles.[27] All in all, the principles created in 1973 and revised over time often serve as the foundation for data privacy regulations today.

B. Schrems I and the Invalidation of the Safe Harbor

While transferring data around the world is a practical necessity for large companies, governments in the EU and the United States recognize that due to how quickly and easily personal data is being transferred, this data must be protected. Acknowledging these two conflicting important interests, the EU and the United States struck a deal. In 2000, the European Commission passed a decision known as the Safe Harbor, determining that the United States, in conjunction with the terms of the agreement, provided adequate privacy protection.[28] The Safe Harbor decision allowed U.S. companies to self-certify that they will abide by EU data protection standards when transferring data across the Atlantic.[29] This option was attractive to companies because it was relatively easy to institute and it efficiently lowered transaction costs compared to Model Clauses or BCRs—so much so that over five thousand companies chose to self-certify.[30] Self-certification involved companies (1) outlining specific information about the company and the company’s use of personal data obtained from EU citizens on an online form and (2) paying a processing fee of $200.[31] This option was considered to fall into the category of an “adequacy decision” by the Commission in accordance with Article 25 of the Directive.[32] It is important to note, though, that this decision did not allow free rein for all U.S. companies to freely exchange information across the Atlantic. Instead, this method of achieving adequate protections only applied to the companies that self-certified and complied with the requisite standards.

While this solution worked for over a decade, the revelations published by Edward Snowden served as evidence that the Safe Harbor was built on false assurances. The Safe Harbor met its ultimate demise in Schrems I, in which Maximillian Schrems, an Austrian privacy activist, complained to the Data Protection Commissioner that Facebook, a Safe Harbor–certified company incorporated in Ireland, was transferring personal data into the United States where “the law and practice in force in that country did not ensure adequate protection of the personal data held in its territory against the surveillance activities that were engaged in there by the public authorities.”[33] In his original case, Schrems cited Facebook’s voluntary participation in the aforementioned NSA PRISM program, which gave the U.S. government access to substantial amounts of private personal information.[34] The claim was that “there was ‘no meaningful protection in US law or practice’ regarding data transferred that was subject to US state surveillance.”[35]

The Irish High Court agreed with Schrems, stating that “[t]here is, perhaps, much to be said” for the Snowden revelations exposing “gaping holes in contemporary US data protection.”[36] Accordingly, the Irish High Court, in line with EU law, referred the matter to the Court of Justice of the European Union (“CJEU”) to adjudicate the validity of the adequacy decision regarding the United States.[37]

The CJEU agreed with the Irish High Court and took a large step by fully invalidating the Safe Harbor.[38] The standard as stated by the court vastly elevated the requirements for all future transfer mechanisms by stating that privacy protection measures in non-EU member nations need to be “essentially equivalent to that guaranteed in the EU legal order.”[39] Thus, the CJEU found that U.S. privacy law was incompatible with the EU charter.[40]

C. The Road to the Privacy Shield

With roughly five thousand companies relying on an invalidated measure, uncertainty as to what steps to take was apparent and widespread. But just as economic necessity drove the United States and the EU into the eventually invalidated Safe Harbor, it likewise drove them to craft a new, seemingly more robust agreement.[41] In coming to this agreement, the two parties faced incredible time constraints and deadlines from the Article 29 Working Party, the group designated to represent the EU member nations’ data protection authorities. The agreement that was developed, known as the Privacy Shield, was fully approved and placed into effect in July 2016, despite facing some bumps in the road,[42] and was intended to guarantee that the United States will provide the necessary “essentially equivalent” protections to individuals as those individuals would receive under the Directive.[43] The goal was that the Privacy Shield would fix the weaknesses inherent in the Safe Harbor as identified by the CJEU while providing a useful means to maintain the free flow of information.[44]

The dilemma faced by both the EU and the United States was that data necessarily needs to flow between them to maintain everyday business functions, while at the same time there must be protections in place to ensure the proper handling of the data being transferred.[45] The Privacy Shield was agreed upon because of this dilemma, and it has been described by some as a much stronger version of the invalidated Safe Harbor.[46] The Privacy Shield now includes stronger obligations regarding how companies handle data, increases transparency regarding how data is used, safeguards against U.S. government access, and provides new protections and remedies for individuals and a joint review mechanism.[47]

The agreement, though, was created in line with the Directive (and the Schrems I decision, which was made based on the Directive). Come 2018, the Directive will be replaced by the GDPR.[48] The GDPR was developed to modernize the protections given by the EU to individuals while greatly strengthening individual’s rights.[49] The GDPR is intended to protect personal data in a manner significantly stronger than under the Directive.[50] Further, the new, stronger protections of the GDPR may lead to the invalidation or revision of the Privacy Shield, which was hurriedly designed to comply with the CJEU court decision and the Directive. Even today, there are already complaints about the adequacy of the Privacy Shield’s ability to adequately protect EU citizens’ data, similar to those raised against the Safe Harbor.[51] These complaints have been exacerbated by an executive order issued by President Trump, excluding non-U.S. citizens from the protections of the Privacy Act of 1974.[52]

D. Other Available Transfer Mechanisms

So, what options does a U.S. company have for transferring personal data? The Directive outlines acceptable methods for such transfers, including an adequacy decision by the Commission, a Commission–approved transfer mechanism, or a statutory derogation.[53] A brief overview of these transfer mechanisms follows here, but they are discussed in more depth in Parts II, III, and IV.

An “adequacy decision” is a determination by the Commission that a non-EU member country “ensures an adequate level of protection.”[54] The Safe Harbor and the Privacy Shield were considered adequacy decisions in the sense that they developed certain rules and regulations that would strengthen the United States’ privacy protections to an “adequate” level. The Privacy Shield remains approved, meaning that a company can legally rely on it to transfer data. However, this mechanism could place a company in a position where if the Privacy Shield is invalidated or undergoes substantial revision, the company will need to undertake costly measures to ensure that its data transfers comply with the applicable laws and regulations in order to avoid hefty fines for non-compliance.[55]

A second option is either of the two European Commission-approved transfer mechanisms: Model Clauses or BCRs.[56] BCRs are company-developed rules governing the protection of private data that must undergo a rigorous, multi-step approval process by EU data authorities; they may be used to ensure that all transfers within a single group or company provide adequate protection as described in Article 26(2) of the Directive.[57] It is worth noting, though, that BCRs only legitimize data transfers made within a single overarching group.[58] A major benefit of BCRs is that unlike Model Clauses, there is no need to sign new contracts with each transaction.[59] This allows a company to have a clear internal procedure for handling private data and can lead to particular efficiencies.[60] Any company that is sharing or transferring data outside of its broader corporate entity structure, however, will still need to use a different method to validate those transfers, making this option less attractive to companies that exchange information externally.

This leads some companies to turn to Model Clauses, sets of contract clauses that, as determined by the European Commission, provide adequate safeguards to data privacy.[61] These have become an option oft–recommended by privacy experts and lawyers [62] due to the relative ease of implementation and their long-standing legal validity in the EU.[63] In order to receive the immunity given to companies using Model Clauses, the Clauses must be included in agreements verbatim, leading to the benefit of needing no prior authorization from country-specific data authorities.[64] Model Clauses also have the distinct advantage of covering a wide range of data transfers. Specifically, Model Clauses, like BCRs, can be used for intra-company transfers; they can be used for U.S.-EU transfers, like the Privacy Shield; and they have the additional benefit of being available for transfers between the EU and entities in any other jurisdiction, unlike the other two options.[65] This added flexibility, combined with the lower transactions costs associated with implementing these clauses, can be especially appealing to large, multinational companies that transfer data to different jurisdictions and between different entities. Model Clauses, though, are not without flaws, many of which will be discussed in Part IV.

Lastly, the data transfer itself may qualify for a statutory derogation.[66] Derogations may include a data transfer necessary to protect the vital interests of the data subject or a data transfer after the subject has given unambiguous consent, amongst other options.[67] Due to the highly specific and less common nature of many of the derogations, only consent will be discussed in this Note.

II. The Fundamental Differences Between U.S. and EU Data Privacy Policies

Data protection as a concept is itself a novel and rapidly changing field, due in large part to the fact that commercialized Internet is only a few decades old.[68] Despite the relative infancy of this field, developments in how data is used and managed electronically evolve rapidly, and legislators fight a constant battle to keep pace with these changes. In light of the practical realities that attach to this field, the EU and the United States have taken substantially different views on what measures should be taken to protect the data filling the technological universe. The EU has widely confirmed the belief that citizens have a “fundamental right[]” to data protection.[69] The United States, however, does not explicitly share the view that data privacy protection is a fundamental right of all persons.[70]

A. EU Privacy Policies

The notion that “[e]veryone has the right to the protection of personal data concerning him or her” is stated plainly in the Charter of Fundamental Rights of the European Union, a document designed to lay out the basic rights of European citizens and provide guidelines relating to these rights.[71] As mentioned earlier, this EU-recognized right is reiterated in the Directive with its specifically stated purpose “to ensure that ‘member states [] protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data.’”[72]

One explanation put forward by some commentators regarding the EU stance that data protection is a fundamental right stems from the 1940s.[73] During the Second World War, the Nazis appropriated European census records, using these records to expedite deportations to concentration camps and to strengthen Germany’s hold over Europe.[74] I argue that this experience, in part, prompted the EU to take a stronger stance on privacy protections, whereas the United States, a country that has not experienced such a scarring example of what can happen when private information falls into the wrong hands, is less inclined to push for stronger protections.

Another explanation can be seen by the early adoption of the FIPs by many EU nations and the EU as a whole.[75] By adopting these principles and incorporating them into early data privacy rules and regulations, the EU set a precedential course that influenced all future privacy–related decisions. This created a multi-generational awareness of, and belief in, the importance of protecting individuals’ privacy.

The focal point of the EU privacy regime has historically been the Directive. The Directive is an omnibus legislation protecting personal data, as opposed to a fragmented, country-by-country approach. The Directive has been hailed by commentators as “the most influential national data protection law.”[76] Additionally, the drafters of the Directive took an important step in Article 28, making the Directive applicable in countries outside of the EU.[77] Specifically, transfers of data outside of the EU require contracts or other legal acts explicitly governed by EU or member-nation law.[78]

Internationally, the trend has been to follow the EU in creating legislation that applies to all data processing inside and outside of the country, largely mirroring the strict protections laid out in the Directive.[79] The thought is that if foreign countries cannot process information about EU residents, private interests will lose out on a major global market, and thus, countries will have an overwhelming incentive to come into compliance. However, despite a global trend of compliance, two powerful nations have remained defiant in the face of such measures—China and the United States.[80]

Although at first glance it may appear that the EU has come up with a comprehensive and invaluable solution to the data privacy issue, it remains, like most legislation, imperfect. One flaw is apparent simply from the name of the document: it is a directive. As such, member nations maintain some control in dictating their own privacy laws, which has led to fragmentation in the interpretations of the principles laid out in the Directive.[81] This materially limits one of the major strengths of the Directive: its being a single document utilized by all member nations.

This, however, will change with the commencement of the GDPR.[82] The key again comes in the name of the document: here it is “regulation.” As a regulation, member nations no longer have the ability to interpret the document to create their individual data policies.[83] Regulations, therefore, carry with them an increased level of strength that does not exist in the Directive. All things considered, the general idea is to centralize power regarding data privacy and eliminate the sometimes patchwork effects of the Directive. This will be discussed in more detail in Part III.

B. U.S. Privacy Policies

In describing the United States’ approach to data privacy policy, it may be useful to imagine a scheme opposite to that of the EU. The United States government does not recognize a fundamental right to privacy.[84] Additionally, the United States “uses a sectoral approach that relies on a mix of legislation, regulation, and self-regulation.”[85] U.S. privacy laws are often responses to particular events and are tailored to particular industries and types of data, similar to a firefighter running around putting out individual fires one at a time.[86] This has led to not only inefficiently overlapping polices but also notable gaps in the U.S. privacy framework.[87] These gaps in protection have been used as an explanation as to why the United States failed to satisfy an adequacy decision by the EU before the initiation of the Safe Harbor.[88]

As discussed in Part I, the United States produced the FIPs in 1973 as an early step in privacy protection. Here, however, the United States went in a different direction than the EU, which is one possible explanation for the very different positions that each holds today. The United States did not explicitly create broad legislation with the FIPs in mind;[89] instead, it opted for various acts and statutes determined by the needs of certain industries and agencies which interpreted and revised the FIPs in various ways.[90] Further, early laws incorporating the FIPs were applicable only to public sector entities, applying only in specific circumstances to the private sector.[91] I argue that because of the lack of a longstanding and broad commitment to the protection of individuals’ private information, U.S. citizens do not have their EU peers’ deep-rooted, multi-generational awareness of and belief in the importance of protecting individuals’ privacy. This leads to less political pressure on the U.S. government to enact strong privacy policies, perpetuating a cycle of citizens accustomed to weaker protections.

Another explanation for why the United States would take an approach to privacy substantially different from that of the vast majority of developed nations is similar to one rationale behind the EU policy—namely, a massive tragedy. As one commentator described, “[t]he attacks of September 11, 2001, ‘have further weakened Washington’s will to protect data. [In fact, t]hrough new laws and new offices, Washington now has more unfettered access to citizens’ data than ever before.’”[92] Another author, in 2002, went so far as to predict that “[c]ommunications technology is necessarily intrusive and, spurred on by international efforts to ferret out terrorism as a result of the September 11, 2001, attacks on the United States, will become even more so.”[93] In summation, the September 11 tragedy planted an unshakable image in the minds of U.S. citizens as a whole, leading to an increase in concern and vigilance regarding terror threats. Whether this sentiment remains as vibrant today is beyond the scope of this Note, but terror threats are ever–present,[94] suggesting this rationale is unlikely to fade. Evidence of an ongoing desire to manage the danger includes the U.S. government’s covert surveillance tactics, as exposed by the documents leaked by Edward Snowden.[95]

An additional rationale for the U.S. stance on privacy regulation results from a desire to maintain a free market economy with limited government regulation. The idea is that the government should limit regulations on businesses and allow the market to police itself. For instance, the Clinton administration advocated for industry-specific self-regulation, as opposed to government regulation.[96] That is not to say that the Clinton administration was opposed to privacy regulations, but this advocacy was a clear endorsement of a fragmented system of dealing with privacy issues. Additionally, one commentator described the Safe Harbor as being a “minimalist solution” in order to avoid a trade war “that was supposed to evolve into something stronger. It transpired, however, that the United States never intended to follow through on commitments to strengthen it.”[97] While these anecdotes are far from dispositive, they do point to the endurance of an American philosophy holding that the government should not over-regulate markets.

This rationale, though, is at least debatable. For instance, President Obama released a report in January 2017 calling for increased privacy regulations and re-emphasizing the right to be protected from governmental intrusion.[98] The Obama administration itself, though, was heavily criticized upon the exposure of the PRISM program undertaken by the NSA.[99] Furthermore, the views expressed in this report may not be shared by the new administration, which removed the report from the White House website the day after President Trump’s inauguration and issued an executive order cutting back privacy protections for non-citizens just days after his inauguration.[100]

It would be remiss to paint a picture of the United States as being completely indifferent to individuals’ privacy rights. For instance, the First, Third, Fourth, Fifth and Fourteenth Amendments collectively provide the implicit foundation for many of the laws and regulations regarding privacy in the United States.[101] There are also numerous federal laws, including the Health Insurance Portability and Accountability Act of 1996, the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, and many others, that address the protection of private information.[102] Additionally, the Federal Trade Commission has broad powers to take enforcement actions regarding “unfair or deceptive acts or practices in or affecting commerce.”[103] On top of this, individual states have passed their own regulations, with California’s regarded as amongst the most comprehensive.[104] These different protective measures are likely in place because the U.S. government places at least some value on protecting individuals’ privacy.

The issue, however, is that a system like this is inherently flawed. Using a patchwork structure necessarily leaves gaps.[105] In addition to gaps, individual state and federal laws are often inconsistent with one another.[106] Unfortunately, the United States has consistently rejected both omnibus legislation and the fundamental–rights approach to data protection.[107] There is no more clear depiction of this than the egregious surveillance tactics used by the U.S. government and revealed in the Snowden leak. Just as September 11 dramatically changed the landscape of data privacy protection in the United States, the Snowden documents dramatically altered the state of EU-U.S. privacy relations.

III. How the GDPR Affects the Current and Future Data Protection Landscape

The Directive has stood as the basis for EU data privacy law since 1995. The Directive provides the structure and legal guidelines with which the Safe Harbor, the Privacy Shield, the Model Clauses, and other transfer mechanisms seek to comply. The Directive, however, is nearing extinction. On April 14, 2016, the European Parliament approved the GDPR; it takes effect on May 25, 2018, at which point companies will need to be in compliance with the new, stronger regulation.[108] This section of this Note will focus on how the GDPR differs from the Directive and what that means in terms of compliance and the potential transfer mechanisms.

A. What’s New in the GDPR?

The GDPR sets out to tackle the same goal as the Directive—protecting the fundamental rights and freedoms of the EU citizenry with regard to the handling of personal data.[109] The goal is to do this while also facilitating efficiencies within the European economy and helping to promote economic and social progress.[110] These goals, however, are pursued slightly differently in the GDPR than in the Directive.

First, as mentioned earlier, a relevant distinction between the GDPR and the Directive is identifiable by looking at the titles of the two enactments. The GDPR is a “regulation,” whereas the Directive is a “directive.” This matters because a directive gives only guidance to member nations, allowing each member nation to interpret the directive and achieve its purposes in whatever way they deem appropriate.[111] A regulation, however, is applicable to each member nation and does not have to be enacted into each individual country’s legal framework.[112]

The impact of this should not be understated. A major issue with the current system is that companies must deal with greatly differing regulations in each nation in which they maintain data. This, in large part, will be eliminated. The EU stated in a press release that the estimated savings from creating a “one-stop-shop” will be in the neighborhood of €2.3 billion per year.[113] Nevertheless, while the GDPR will remove a substantial amount of the difficulty that has arisen from potentially having to comply with twenty-eight different member-state data protection laws, companies must be aware that there are still some areas in which member nations have discretion.[114] An example can be seen in Article 6(1)(e), regarding one way in which a company can legally process personal data.[115] This provision allows processing when “processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller.”[116] All in all, though, one of the most consequential differences of the GDPR will be the decrease in administrative costs faced by companies who no longer have to negotiate, communicate, and work with data protection authorities from many different nations.

A second difference between the GDPR and the Directive is the strengthened focus on individuals’ rights vis-à-vis the way the world transfers, accesses, and uses data. In 2017, personal data is being transferred at speeds and in volumes that were unthinkable not long ago, and consumers recognize a need for strong protection. As stated by the EU, “[n]ine out of ten Europeans have expressed concern about mobile apps collecting their data without their consent.”[117]

The specific individual rights highlighted in the GDPR are the right to be informed, the right of access, the right of rectification, the right to erasure, the right to restrict processing, the right to data portability, the right to object, and rights related to automated decision-making and profiling.[118] These rights focus on two overarching goals of the GDPR. First, the GDPR increases the availability and clarity of the information provided to individuals whose data is being processed. Second, it grants citizens more control over the data they provide and also gives the citizens easier access to legal remedies for breaches. While not all of these rights are completely new or different than rights discussed in the Directive, in general they are written in a way that strengthens the rights of the citizen.[119]

Third, the definition and application of “consent” have been adjusted to further protect individuals. Consent needs to be clear, unambiguous, specific, informed, and freely given.[120] Further, the language in the GDPR seems to have noticeably narrowed the possibility of a type of implied consent arguably possible under the Directive.[121] The GDPR also has another important new feature regarding consent. Individuals are now allowed to withdraw consent at any time, and this withdrawal must be as easy to execute as the original consent.[122] This further emphasizes the strong weight the EU has placed on strengthening the role of the individual in the handling of one’s private information.

Fourth, the enforceability of the GDPR and the accountability of companies have been enhanced by new procedures, which companies must follow in order to ensure that data is appropriately protected and processed. The accountability principle accompanies transparency in an attempt to strengthen citizens’ trust in how their data is handled.[123] One way of accomplishing corporate accountability is by mandating “[d]ata protection by design” and “[d]ata protection by default.”[124] These concepts, in short, mean that projects being designed or undertaken by companies must consider appropriate data protection mechanisms from inception and throughout their duration.[125] This includes safeguards such as minimizing the processing of personal data, anonymizing data as soon as possible, and building services and applications with “state–of–the–art” data protection.[126] Accountability is also addressed in a few other ways. First, there are stricter regulations governing how companies record what data they are processing and for what purpose.[127] Second, extensive privacy impact assessments are necessary to comply with the requirement that companies maintain effective procedures to protect personal data.[128] These assessments analyze the risks to individuals, determine the necessity and proportionality of the processing in relation to the purpose, and give a description of the processing operations and the legitimate interests pursued by the data controller.[129] Lastly, data protection authorities will be able to fine companies up to 4 percent of their global annual revenue for violations of the rules.[130]

Certainly there are other differences between the two enactments, but I have highlighted the most relevant to the issue at hand. Altogether, the key differences between the GDPR and the Directive are that the GDPR (1) takes a stronger stance on the accountability and enforcement of the principles that underlie the regulation and (2) gives individuals access to more information and a larger role to play in the data processing process. Each of these goals is championed by the EU and appears to have played an important role in the creation of the GDPR.[131] The GDPR balanced pro-economic benefits by achieving a “one-stop-shop” concept to dramatically reduce transaction costs for companies—especially those operating in more than one EU nation—and secured pro-individual rights through greater transparency and accountability from companies processing personal data.

B. How Does This Affect Data Transfer Mechanisms?

As alluded to in the previous section, there are more than a few new and unique challenges that companies will face in trying to transfer data across the Atlantic. The GDPR, however, does quite a bit to clarify the transfer mechanisms available to companies, while also introducing a few new ones. I will focus on BCRs, Model Clauses, and Codes of Conduct and Certification Mechanisms.

1. BCRs

The GDPR provides a very important upgrade to the BCRs that were developed based on the Directive. In an attempt to increase consistency of the enforcement of the data protection laws, indirectly reducing transaction costs and thus appeasing businesses, the GDPR formally recognizes the use of BCRs and lays out a mechanism for utilizing and monitoring BCRs in Article 47.[132] Prior to this change, companies would need separate approvals from each country in which they handled personal data, and only two-thirds of EU member nations recognized BCRs as appropriate protective measures.[133] These upgrades will certainly help to make BCRs much more efficient for companies with entities in various countries.[134] However, as will be discussed in Part IV, BCRs are still far from a perfect option for the vast majority of companies.

2. Model Clauses

As stated in Article 46, Model Clauses will remain an appropriate safeguard for transferring data so long as the clauses are approved as described in Article 93(2).[135] As with BCRs, the provisions of the GDPR substantially reduce the administrative burden of Model Clauses. There are a few relevant changes that facilitate this increase in efficiency. First, the EU commission will create a new set of Model Clauses pursuant to the GDPR, which will not require the prior authorization of the nation from which the data is being processed.[136] While the Model Clauses have long been intended to need little–to–no approval from individual nations under the Directive, nation-specific issues still existed regarding appropriate filings, monitoring, and additional objections.[137] Another relevant change involves ad hoc contractual clauses. These can include independently drafted clauses or some variations to the terms of the Model Clauses. The GDPR makes it so that these clauses will need to be approved only by an appropriate supervisory authority in order to apply to all EU nations.[138] In contrast, the Directive’s clauses required approval by each and every nation’s data protection authority before they could be considered adequate.[139] Here, the important differences are that these clauses are intended to increase efficiency—accomplished by the overarching “one-stop-shop” notion—and to provide flexibility for companies to create adequate provisions that better fit their businesses.

3. Codes of Conduct and Certification

Two of the unique transfer mechanisms detailed in the GDPR are the Codes of Conduct and Certification. Article 40 of the GDPR explains that a notable goal of EU privacy officials is to encourage the creation of Codes of Conduct.[140] The Codes of Conduct in large part work like a non-member state seeking to acquire an adequacy decision under the Directive or a single entity seeking approval of BCRs, except that the codes apply to associations or representative bodies.[141] This option is targeted at small– and medium-size companies within certain sectors of the economy that frequently do business with one another.[142] The codes—if certified by an appropriate supervisory authority and combined with binding and enforceable commitments of the controller/processer to use adequate safeguards—qualify as an appropriate transfer mechanism for data leaving the EU.[143] The codes, however, must be reviewed by multiple levels of the EU data privacy hierarchy in order to be deemed to have “general validity within the Union,” which places an administrative hurdle on the use of this option.[144]

Certification, as described in Article 42, is a transfer mechanism that remains in its infancy, but it is very similar to the Codes of Conduct.[145] Certification mirrors the Codes of Conduct in the sense that it is intended to benefit small– and medium-size companies, it has a similar registration and approval process, and it legitimizes data transfers when combined with appropriate commitments of the controller/processer.[146] It also bears similarity in that it is has the effect of a non-member state’s receiving an adequacy decision, but the key difference between the two is that Certification can be obtained by a single company.

IV. The Fatal Flaws of the Privacy ShiEld, Model Clauses, and BCRs

A. Privacy Shield

It is worth stating at the outset that the Privacy Shield agreement is between the United States and the EU. This is an important starting point, because this transfer mechanism is unique: companies relying on it are relying not just on their own compliance with EU data regulations, but also on the assumption that actions of the U.S. government (such as the illegal surveillance actions that led to Schrems I and the Safe Harbor invalidation) will not jeopardize privacy relations with Europe. This is a risky position for a corporation to place itself in, as the relationship between the EU and the United States is sewn with distrust and remains incredibly fragile due to the Snowden revelations. Additionally, the necessity for a better understanding of the shortcomings of the Privacy Shield is underscored by the fact that over 2,400 companies have signed up for it as of late 2017.[147] This Note will now address some of the risks associated with choosing this method.

First, the Privacy Shield is an unsatisfactory solution for companies aware of the GDPR’s imminence. The Privacy Shield was created in line with the no–longer–applicable provisions of the Directive, instead of with the stronger privacy protections contained in the GDPR. Because of this, it will likely fail to meet the heightened requirements of the GDPR, and it will thus have to undergo serious revision.[148] As seen with the struggle to agree on the Privacy Shield in a quick and efficient manner following the invalidation of the Safe Harbor,[149] revisions to the Privacy Shield or the drafting of a new agreement altogether may create substantial delays and unwanted uncertainty.

Second, as laid out in Part II of this Note, the United States and EU have vastly different views on privacy rights. Granted, they each have a strong incentive to bridge the gap, given the undeniable economic benefits for doing so. But this may be especially hard to do in light of President Trump’s strong stance regarding the utilization of surveillance to combat terrorism. Before taking office, Trump had already encouraged a boycott of Apple products due to its refusal to create a “back door” entry into the cell phone of one of the San Bernardino shooters,[150] and said that he believed that the NSA “should be given as much leeway as possible. However . . . . [t]here must be a balance between those Constitutional protections and the role of the government in protecting its citizens.”[151]

Once in the White House, Trump further strained EU-U.S. privacy relations by issuing an executive order excluding non-U.S. citizens from the protections of the Privacy Act of 1974.[152] In reply, Jan Philipp Albrecht, the rapporteur for the EU’s data protection regulation, tweeted that the EU should immediately suspend the Privacy Shield and sanction the United States.[153] The European Commission issued a statement noting that the Privacy Shield “does not rely on the protections under the U.S. Privacy Act.”[154] Nonetheless, this has added to the tension between the EU and United States and further brought the validity of the Privacy Shield into question. While it is unclear how President Trump and Congress will handle impending issues related to privacy protections, like the expiration of Section 702 of the U.S. Foreign Intelligence Surveillance Act,[155] companies should be aware of the potential for the White House and Congress—each with an eye toward increasing government surveillance—to drastically increase U.S.-EU tensions and put the Privacy Shield at risk.

Third, there are fundamental aspects of the Privacy Shield that are inconsistent with the GDPR and are subject to the same criticisms that led to the Safe Harbor’s invalidation. First, the EU hails U.S. “assurances” that it will limit mass surveillance.[156] Not only did these assurances come from the potentially more privacy–friendly Obama administration, but they also seem weaker than is acceptable under the GDPR standards. For instance, the NSA maintains the ability to utilize “bulk” collection tactics, so long as they are consistent with various opaque limitations subject to a good deal of interpretation.[157] Second, the Privacy Shield’s lauded redress mechanisms, which utilize an independent ombudsperson,[158] are vastly overstated, as well as undermined by a clear conflict of interest: the ombudsperson is appointed by, and reports to, the U.S. Secretary of State.[159] Certainly, the Privacy Shield attempts to lay out provisions to ensure the independence of the ombudsperson, but these provisions are speculative at best. Most importantly, it is difficult to imagine their being considered protections “essentially equivalent” to those afforded by EU member nations.

Fourth, the Privacy Shield is already facing legal challenges, largely in line with the above points,[160] and the initial version received harsh criticism from the Article 29 Working Party regarding the precise issues that led to the Safe Harbor invalidation.[161] Are these legal challenges likely to succeed? It is unclear. Was the Privacy Shield revised to try and appease the Article 29 Working Party? Yes.[162] Regardless, it is concerning that the Privacy Shield is facing such hurdles so early on, especially considering the panicked state in which the Safe Harbor invalidation left so many companies, as well as the already tenuous relationship between the U.S. and EU.[163]

In summation, the Privacy Shield agreement is a potentially dangerous option for U.S. companies. While it certainly has some benefits in terms of relative ease of implementation and flexibility,[164] it is shrouded in uncertainty and question marks. The question marks remain the same as those that led to the invalidation of the Safe Harbor, and with a surveillance-friendly administration in the White House, the relationship between the EU and U.S. will likely remain uneasy going forward. A potential invalidation would leave thousands of companies scrambling for an alternative method of compliance while risking steep fines. Therefore, the decision to certify under the Privacy Shield is the decision to place faith in a hastily prepared band-aid fix for the bursting dam that followed the invalidation of the Safe Harbor. It requires not only trust in one’s own ability to comply with the more complex EU regulations but also trust that U.S.-EU privacy relations will not slip from the shaky ground on which they already reside. That is a scary decision to make, and one that I would not advise.

B. Model Clauses

While the forecast for the Privacy Shield is decidedly gloomy, the outlook for Model Clauses seems at least somewhat brighter. However, there are a few definitive practical flaws that make Model Clauses an insufficient option for long-term GDPR compliance. I will briefly discuss some of the basic practical issues with using Model Clauses, including their rigidity and the cumbersome aspect of having to include them in every data–transfer–related contract, before focusing on the more concerning, potentially fatal flaws regarding the legal validity of this compliance mechanism.

First, the GDPR has not expressly accepted the current Model Clauses. Instead, as described in Part III above, the GDPR outlines a process through which the EU Commission will create a new set of Model Clauses.[165] Utilizing one of the three current sets of Model Clauses is therefore a temporary solution at best. One additional general criticism of Model Clauses is that companies must be sure to include them in every single contract they have in order to validly transfer data. Thus, if the current Model Clauses are not valid under the GDPR, companies will be forced to amend every single contract relating to data transfers. While it is certainly possible that the current Model Clauses may be determined to provide adequate safeguards, it seems unlikely that the GDPR would make no mention of them if this were more assuredly the case, particularly since BCRs were explicitly included and described.

Second, and to go even further with the point above, the current Model Clauses’ validity is hotly contested. One of the strongest examples of pushback came in a position paper from the Independent Center for Privacy Protection in Schleswig-Holstein (“ULD”).[166] In this paper, the ULD took a powerful stance, stating that “a data transfer on the basis of Standard Contractual Clauses to the US is no longer permitted.”[167] Soon after, a conference of Germany’s data protection commissioners largely agreed.[168] Model Clauses also face legal challenges via Maximilian Schrems’s class–action lawsuit against Facebook.[169] The case is progressing slowly due to procedural issues, but it highlights the volatility surrounding the Model Clauses.[170] However, the views of those objecting to the validity of the Model Clauses are not unanimously held. For instance, the Article 29 Working Party and the EU Commission have continued to back the Model Clauses in spite of Schrems I.[171] Even so, it is difficult to ignore the uncertainty surrounding these clauses—and the potential expense their invalidation or amendment would incur.

Third, the current challenges described above have legitimacy. As the ULD stated, American companies using Model Clauses are subject to American surveillance laws—the same ones that led to the invalidation of the Safe Harbor and which make it impossible to provide the necessary protections for citizens.[172] The notion is simple: having Model Clauses in a contract will do nothing to stop the United States from conducting the types of surveillance that led to the invalidation of the Safe Harbor. Because of this, U.S. companies will not be able to comply with the section of the clauses stating that U.S. companies are not subject to laws that make it impossible to follow the instructions of the data exporter.[173] This contention has not yet led to the invalidation of the Model Clauses, but it remains a cloud hanging over their legitimacy.

In summation, Model Clauses are a risky option for companies for multiple reasons. First, using the current Model Clauses will lead to companies having to amend every one of their contracts when the GDPR begins to be enforced. This will be both costly and time–consuming. Also, the Model Clauses already face scrutiny from certain nations’ data protection authorities and could very well be invalidated even before the GDPR comes into play. Again, this would leave companies scrambling to find a new, legally valid mechanism. All this being said, of course, once the EU Commission approves GDPR–compliant Model Clauses, it may well be smart to utilize them, and they should be analyzed at that time. The issue is that these clauses do not yet exist, and the current Model Clauses are riddled with issues.

C. BCRs

BCRs are a long-standing mechanism available by which U.S. companies comply with EU privacy laws. Despite having a history of valid and adequate protection, however, BCRs today are practically useless for most companies. The fatal flaws of BCRs generally stem from the practical impediments to their use as well as their now-questionable legal validity.

First, BCRs only apply to a very specific type of data transfer, making them unavailable to many companies. They apply when data is transferred amongst entities that are part of the same corporate group.[174] Because of this, BCRs are useless for companies that transfer data externally. This excludes a wide variety of industries, including those which transfer human resources data to third parties and which transfer third-party market research data. Thus, many companies cannot use BCRs based upon a basic limiting factor.

Second, practical impediments to BCR approval eliminate this option for the vast majority of remaining companies. Companies must receive approvals from each separate data protection authority, which can take between eighteen and twenty-four months.[175] To further illustrate the difficulty and limited usefulness of BCRs, in more than ten years of their validity as a transfer mechanism, only around one hundred companies have actually obtained approval.[176] The enormous costs of compiling the BCRs make them viable only for massive multinational corporations like General Electric or Shell.[177] Entities with both the resources to pursue the BCR process and strictly (or mainly) intra-company data transfer requirements comprise a decidedly limited category, and many within it will still choose to pursue less burdensome and more practical mechanisms.

Third, BCRs currently face the same legal challenges as Model Clauses. To summarize, some data protection authorities have stopped considering BCRs as an acceptable transfer mechanism.[178] Currently, BCRs are only recognized by about two-thirds of member nations.[179] Ultimately, companies must recognize that the validity of BCRs, like Model Clauses, is necessarily clouded following Schrems I, and that countries have already begun to show distaste for them.

However, BCRs were significantly strengthened via the GDPR, and their future legal validity seems to stand on much firmer ground than the Model Clauses. The GDPR will also allow BCRs to apply to transfers outside the corporate group.[180] These transfers must be accompanied by commitments and agreements of the external parties to provide adequate protections,[181] a requirement that essentially replicates the Model Clauses. Companies will now have to take the time and effort to include contractual protections in every contract they make, thus removing one of the benefits of BCRs—not having the burden of exacting privacy commitments in every contract. Additionally, if a company is going to pursue this option, it is important to guarantee that its BCRs are GDPR–compliant. Companies currently using BCRs may see them invalidated or in need of revision in the future.

Nonetheless, BCRs remain an untenable option for most companies. While the GDPR appears to streamline the process of BCR adoption through the “one-stop-shop” concept that is inherent in the regulation,[182] it is still a complex process demanding substantial resources. Further, there is no evidence that approvals will indeed be streamlined using the GDPR. At this point, any increase in efficiency promised by the GDPR’s passage is speculative at best.

Ultimately, BCRs may be better suited to overcome legal concerns than the other mechanisms and may serve as a relatively stable transfer mechanism under the GDPR. However, BCRs still face the limitations mentioned in the first two points above: they are only viable for large, multinational corporations that are primarily transferring data amongst their own corporate groups. Because of this, BCRs are a solution in only very limited circumstances.

V. So, What Options Do Companies Have?

All hope is not lost. Data is still going to flow across the Atlantic. Many of the above mechanisms will continue to be used, and companies will, at least for the time being, be able to get away without updating and adjusting their privacy policies to conform with the upcoming implementation of the GDPR. For instance, a survey from July 2017 found that 89% of U.S. organizations impacted by the GDPR are unprepared for the upcoming changes.[183] Companies that choose not to address this matter risk facing massive expenses if and when their privacy policies become inadequate.

There are a few potential options that companies can begin to adopt in order to best prepare themselves for privacy regulations going forward. However, there simply is no right answer, no magic solution to insulate companies from all risk. The suggestions below have their flaws, but in my estimation, they provide additional security for companies facing an uncertain privacy landscape. Finally, though it almost goes without saying, companies must strongly consider layering their privacy measures. Having multiple levels of transfer mechanisms enables companies to continue operations if one mechanism faces legal troubles, and they can save companies from the substantial costs of having to rapidly institute new compliance measures. It would be foolish for cautious firms not to diversify their privacy measures, just as it would be foolish for cautious investors not to diversify their investments.

That said, I will discuss how obtaining consent and utilizing the GDPR Codes of Conduct and Certification are useful privacy protections to layer on top of other transfer mechanisms.

A. Consent

As discussed above, a major goal of the GDPR is to increase transparency and give individuals more of a role in how their data is handled.[184] Because of this, consent is discussed at great length in the GDPR.[185] The notion of consent necessarily depends on providing information to the individual whose data will be transferred. Thus, obtaining consent is a valuable tool for acting in accordance with the spirit of the GDPR and thus (potentially) appeasing privacy officials. Consent, however, is not a perfect solution. Consent must be free and specific.[186] This standard can be difficult to achieve in some situations and may not be in a company’s best interest in other situations. For instance, consent to the transfer of human resource data is problematic in an employer-employee relationship in which there is a clear bargaining advantage for the side receiving the data.[187] For example, if a job offer is conditioned on consent to data transfers, the consent that is received is unlikely to be considered “free.” Also, the GDPR mandates that individuals need to consent to the specific use of their data.[188] Some companies may be using data in ways that may be dissatisfying to its users or customers, which could cause bad publicity. Consent is also limited by the age of the individual whose data is being processed. The GDPR states that the processing of data of individuals younger than sixteen will require parental permission, and it gives member nations the choice to lower this age to thirteen.[189] Because of this, companies—like Facebook—with younger users face real difficulties in obtaining adequate consent.

Nonetheless, this is a very good starting point for many firms. Companies are already required to process data in a manner consistent with a clear purpose.[190] This purpose should be articulable to the individuals whose data is being processed, and so consent should be at least theoretically possible. Finally, the cost and additional burden associated with obtaining consent may be minimal for companies, depending on their specific situations, and proper attempts to obtain that consent will likely be viewed positively by the data protection authorities, who have clearly placed an emphasis on this transfer mechanism.

B. Prepare for the GDPR

During this notably volatile time for data privacy compliance, a company should utilize multiple transfer mechanisms, and beyond this, organizations would be wise to begin preparing to meet the stricter regulations of the GDPR. Updating transfer mechanisms in line with the GDPR is a time–consuming and expensive venture,[191] but it is the single best way to minimize risk during this volatile time. To do this, companies will want to work with data protection authorities and/or hire a data protection officer to revise their current Model Clauses or BCRs in line with what the GDPR expects. Further, companies should consider pursuing Codes of Conduct and Certification. These options allow for a certain level of flexibility and insulation from regulatory charges in the country.[192] Additionally, the EU Commission specifically emphasized using these mechanisms.[193] Using the mechanism may thus show an intention to act in line with the goals of the Commission and engender some goodwill. It is not to say that these must be pursued, but at minimum, they should be considered and evaluated. Moreover, despite the criticisms of Model Clauses and BCRs, they can be viable options when drafted in compliance with the GDPR. What is most important here is that companies take the time to work with data protection officers or agencies to ensure that the mechanisms they plan to utilize are GDPR compliant.

In conclusion, depending on the company’s data processing activities, Model Clauses, BCRs, Informed Consent, and/or Codes of Conduct/Certification may be utilized as viable transfer mechanisms if managed and developed in line with the stricter language of the GDPR. On the other hand, companies relying solely on the Privacy Shield, despite its questionable validity and the fragile state of EU–U.S. affairs, expose themselves to substantial risk, which could prove costly to the greater of €20,000,000 or 4% of annual revenue. That being said, determining the best way to insulate any given company from the risks associated with volatile data privacy laws is incredibly difficult. The best thing a company can do to combat this difficulty is to understand what exactly the GDPR will demand and to prepare accordingly. In the meantime, companies can weather the storm, using their understanding of the GDPR to revise current policies to align with the stricter realities of the future. Ultimately, developing an understanding of the variety of options that can be used, employing different transfer mechanisms based on particular data transfer needs and data types, and being proactive will save a company substantial costs and significantly reduce its risk exposure.

[*] J.D. candidate, University of Southern California Gould School of Law, 2018. I am forever grateful to my best friend and fiancée, Venessa Simpson, for the endless love and support she has provided me throughout college and law school, and to my mom and dad, the most loving, caring, and supportive parents there are; you three are my inspiration and make me want me to be a better person each and every day. Many thanks also to Professor Valerie Barreiro for your guidance and feedback during the note-writing process and to Jonathan Frimpong, Emily Arndt, and James Salzmann for your invaluable and much-needed feedback and editing expertise.

[1]. Luke Harding, How Edward Snowden Went from Loyal NSA Contractor to Whistleblower, Guardian (Feb. 1, 2014, 6:00 A.M.), https://www.theguardian.com/world/2014/feb/01/edward-snowden-intelligence-leak-nsa-contractor-extract.

[2]. Id.

[3]. Id.

[4]. Id.

[5]. See Schrems v. Data Protection Commissioner, Electronic Privacy Info. Ctr. [hereinafter Schrems], https://epic.org/privacy/intl/schrems (last visited Nov. 15, 2017).

[6]. See Harding, supra note 1.

[7]. Id.

[8]. Directive 95/46, of the European Parliament and of the Council of 24 October 1995 on the Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data, art. 1, 1995 O.J. (L 281) 31, 38 (EC) [hereinafter Directive 95/46/EC]. The Directive has since been replaced by the General Data Protection Regulation (“GDPR”). See Commission Regulation 2016/679, 2016 O.J. (L 119) 1 [hereinafter General Data Protection Regulation]. The GDPR will be addressed in depth in Part III of this Note.

[9]. See Convention for the Protection of Human Rights and Fundamental Freedoms, art. 8, Nov. 4, 1950, 213 U.N.T.S. 221, 230.

[10]. See McKay Cunningham, Complying with International Data Protection Law, 84 U. Cin. L. Rev. 421, 422 (2016).

[11]. See id.

[12]. See Commission Decision of 26 July 2000 Pursuant to Directive 95/46/EC of the European Parliament and of the Council on the Adequacy of the Protection Provided by the Safe Harbour Privacy Principles and Related Frequently Asked Questions Issued by the US Department of Commerce, art. 1, 2000 O.J. (L 215) 7, 8 [hereinafter Safe Harbor].

[13]. Case C-362/14, Schrems v. Data Prot. Comm’r, ECLI:EU:C:2015:650, http://curia.europa.eu/ juris/document/document.jsf?docid=169195&doclang=EN.

[14]. The EU Model Clauses are also referred to as Standard Contractual Clauses. For convenience, the term “Model Clauses” will be used throughout this Note.

[15]. See Article 29 Data Protection Working Party, Opinion 01/2016 on the EU-U.S. Privacy Shield Draft Adequacy Decision (2016) [hereinafter Opinion 01/2016], http://ec.europa.eu/justice/data-protection/article-29/documentation/opinion-recommendation/files/2016/wp238_en.pdf.

[16]. Schrems, ECLI:EU:C:2015:650, ¶¶ 73–74, 96.

[17]. U.S. Dep’t. of Health, Educ., & Welfare, No. (OS) 73–94, Records, Computers, and the Rights of Citizens: Report of the Secretary’s Advisory Committee on Automated Personal Data Systems 41 (1973).

[18]. See id.

[19]. Privacy Act of 1974, Pub. L. No. 93-579, 88 Stat. 1896 (codified as amended at 5 U.S.C. § 552a (2012)).

[20]. Robert Gellman, Fair Information Practices: A Basic History 5 (Apr. 10, 2017) (unpublished manuscript) (https://bobgellman.com/rg-docs/rg-FIPshistory.pdf).

[21]. Gellman, supra note 20, at 5.

[22]. Id. at 10. See also 6 U.S.C. § 142. For further discussion, see infra Part II.

[23]. Gellman, supra note 20, at 6.

[24]. Org. for Econ. Co-operation & Dev., Recommendation of the Council Concerning Guidelines on the Protection of Privacy and Transborder Flows of Personal Data (Sept. 23, 1980), reprinted in OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data 11 (2002).

[25]. Id. at 14–16. As further proof of the enduring nature of these principles, the OECD reviewed the principles in 2013 in light of the changes over the past thirty years, choosing to maintain the eight principles in their original form. Org. for Econ. Co-operation & Dev., The OECD Privacy Framework 14–15 (2013), http://www.oecd.org/sti/ieconomy/oecd_privacy_framework.pdf.

[26]. See Directive 95/46/EC, supra note 8, art. 1, at 38 (“In accordance with this Directive, Member States shall protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data.”).

[27]. See General Data Protection Regulation, supra note 8, art. 5, at 35–36.

[28]. See Safe Harbor, supra note 12, art. 1, at 8 (describing how companies that self-certify can comply with the Safe Harbor requirements).

[29]. See Kelli Clark, The EU Safe Harbor Agreement Is Dead, Here’s What to Do About It, Forbes (Oct. 27, 2015, 3:30 P.M.), http://www.forbes.com/sites/riskmap/2015/10/27/the-eu-safe-harbor-agreement-is-dead-heres-what-to-do-about-it/#29a319fc7171.

[30]. See id.

[31]. See U.S. Dep’t of Commerce, U.S.-EU Safe Harbor Framework: Guide to Self-Certification 4–10 (2013), https://build.export.gov/build/groups/public/@eg_main/@safeharbor/ documents/webcontent/eg_main_061613.pdf. See also Safe Harbor Fees, Export.gov, https://2016.export.gov/safeharbor/eg_main_020436.asp (last visited Oct. 15, 2017) (“An organization that is self-certifying its compliance with the U.S.-EU Safe Harbor Framework and/or the U.S.-Swiss Safe Harbor Framework for the first time on or after March 1, 2009 must remit a one-time processing fee of $200.00.”)

[32]. See Directive 95/46/EC, supra note 8, art. 25, at 45–46.

[33]. Case C-362/14, Schrems v. Data Prot. Comm’r, ECLI:EU:C:2015:650, ¶ 28, http://curia.europa.eu/juris/document/document.jsf?docid=169195&doclang=EN. See also Schrems, supra note 5.

[34]. See Schrems v. Data Protection Comm’n [2014] IR 75, ¶ 29 (H. Ct.) (Ir.).

[35]. Nora Ni Loidean, The End of Safe Harbor: Implications for EU Digital Privacy and Data Protection Law, 19 No. 8 J. Internet L. 1, 1, 9 (2016) (quoting Schrems, IR 75, ¶ 29).

[36]. Schrems, IR 75, ¶ 69.

[37]. See id. ¶ 71.

[38]. See Case C-362/14, Schrems, ¶ 107.

[39]. Id. ¶ 96.

[40]. Id. ¶ 86.

[41]. See Clark, supra note 29.

[42]. See Opinion 01/2016, supra note 15.

[43]. See European Commission Press Release IP/16/2461, European Commission Launches EU-U.S. Privacy Shield: Stronger Protection for Transatlantic Data Flows (Jul. 12, 2016), http://europa.eu/rapid/press-release_IP-16-2461_en.htm.

[44]. Id.

[45]. Loidean, supra note 35, at 7–12.

[46]. See European Commission Press Release IP/16/2461, supra note 43.

[47]. Id.

[48]. European Commission Statement 16/1403, Joint Statement on the Final Adoption of the New EU Rules for Personal Data Protection (Apr. 14, 2016), http://europa.eu/rapid/press-release_STATEMENT-16-1403_en.htm.

[49]. European Commission Memorandum 15/6385, Questions and Answers—Data Protection Reform (Dec. 21, 2015), http://europa.eu/rapid/press-release_MEMO-15-6385_en.htm.

[50]. European Commission Press Release IP/16/2461, supra note 43.

[51]. See Schrems, supra note 5; Tomaso Falchetta, New ‘Shield’, Old Problems, Privacy Int’l (July 7, 2016), https://www.privacyinternational.org/node/889.

[52]. See Exec. Order No. 13,768, 82 Fed. Reg. 8799 (Jan. 25, 2017). See also infra Part IV.A.

[53]. Schrems, supra note 5.

[54]. Id.

[55]. See General Data Protection Regulation, supra note 8, art. 83, at 82–83. Fines can total up to €20,000,000 or up to 4 percent of the total worldwide annual turnover of the preceding financial year, whichever is higher. Id. at 83.

[56]. Francoise Gilbert, EU General Data Protection Regulation: What Impact for Businesses Established Outside the European Union, 19 No. 11 J. Internet L., May 2016, at 3, 4–6.

[57]. Overview on Binding Corporate Rules, Directorate General for Just. & Consumers, http://ec.europa.eu/justice/data-protection/international-transfers/binding-corporate-rules/index_en.htm (last visited Nov. 16, 2017).

[58]. Id.

[59]. Id.

[60]. Id.

[61]. Id.

[62]. See Melinda L. McLellan & William W. Hellmuth, Safe Harbor is Dead, Long Live Standard Contractual Clauses?, Data Privacy Monitor (Oct. 22, 2015), https://www.dataprivacymonitor.com/enforcement/safe-harbor-is-dead-long-live-standard-contractual-clauses (summarizing best practices for the usage of Model Clauses following the invalidation of the Safe Harbor Framework by the CJEU).

[63]. See id. See also Model Contracts for the Transfer of Personal Data to Third Countries, Directorate General for Just. & Consumers, http://ec.europa.eu/justice/data-protection/international-transfers/transfer/index_en.htm (last visited Nov. 16, 2017).

[64]. Data Prot. Unit, Directorate Gen. for Justice and Consumers, Frequently Asked Questions Relating to Transfers of Personal Data from the EU/EEA to Third Countries 26–28 (2009), http://ec.europa.eu/justice/data-protection/international-transfers/files/international_ transfers_faq.pdf.

[65]. McLellan & Hellmuth, supra note 62.

[66]. Practical Law Intellectual Prop. & Tech., Expert Q&A: EU-US Personal Information Data Transfers (2016), Westlaw W-000-8901.

[67]. Id.; Data Prot. Unit, supra note 64, at 48.

[68]. Cunningham, supra note 10, at 422.

[69]. Directive 95/46/EC, supra note 8, art. 1, at 38.

[70]. See generally Cunningham, supra note 10, at 422 (“Unlike in Europe, U.S. law does not recognize a fundamental right to privacy.”); Loidean, supra note 35, at 8 (stating that the United States has a framework that has “rejected the fundamental rights approach to information privacy”).

[71]. Charter of Fundamental Rights of the European Union, art. 8, 2012 O.J. (C 326) 391, 397. Cf. Bradyn Fairclough, Privacy Piracy: The Shortcomings of the United States’ Data Privacy Regime and How to Fix It, 42 J. Corp. L. 461, 466 (2016) (discussing how in the United States this right is never explicitly stated in the Constitution, and it is only implied to be relevant in certain specific areas).

[72]. Jörg Rehder & Erika C. Collins, The Legal Transfer of Employment-Related Data to Outside the European Union: Is It Even Still Possible?, 39 Int’l Law. 129, 130 (2005) (quoting Directive 95/46/EC, supra note 8, art. 1, at 38).

[73]. Cunningham, supra note 10, at 426–27.

[74]. Id.

[75]. See Gellman, supra note 20, at 6–10.

[76]. Cunningham, supra note 10, at 427.

[77]. Directive 95/46/EC, supra note 8, art. 28, at 47–48.

[78]. See id. art. 25, at 45–46.

[79]. Cunningham, supra note 10, at 426–27.

[80]. See id. at 426–27 (“The Directive set the international standard for data privacy and security regulation and facilitated a trend among technologically advanced countries toward adopting nationalized data privacy laws.”).

[81]. See generally Rehder & Collins, supra note 72, at 132.

[82]. Manu J. Sebastian, The European Union’s General Data Protection Regulation: How Will It Affect Non-EU Enterprises?, 31 Syracuse J. Sci & Tech. L. 216, 225–26 (2015).

[83]. See id.

[84]. See Cunningham, supra note 10, at 422; Fairclough, supra note 71, at 464–66; Loidean, supra note 35, at 8.

[85]. W. Gregory Voss, The Future of Transatlantic Data Flows: Privacy Shield or Bust?, 19 No. 11 J. Internet L. 1, 1, 9 (2016). See also Julie Brill, Commissioner, Fed. Trade Comm’n, Keynote Address at the Amsterdam Privacy Conference, Transatlantic Privacy After Schrems: Time for an Honest Conversation (Oct. 23, 2015), 2015 WL 9684096.

[86]. See Cunningham, supra note 10, at 422–26.

[87]. See id.

[88]. Martin A. Weiss & Kristin Archick, Cong. Research Serv., R44257, U.S.-EU Data Privacy: From Safe Harbor to Privacy Shield 3, 7 (2016).

[89]. Gellman, supra note 20, at 10.

[90]. Fairclough, supra note 71, at 463–66, 476.

[91]. Gellman, supra note 20, at 19–20.

[92]. See generally Rehder & Collins, supra note 72, at 131 (quoting David Scheer, Europe’s New High-Tech Role: Playing Privacy Cop to the World, Wall Street J., Oct. 10, 2003, at A1).

[93]. Marsha Cope Huie et al., The Right to Privacy in Personal Data: The EU Prods the U.S. and Controversy Continues, 9 Tulsa J. Comp. & Int’l L. 391, 392 (2002).

[94]. See generally Uri Friedman, Is Terrorism Getting Worse?, Atlantic (July 14, 2016), https://www.theatlantic.com/international/archive/2016/07/terrorism-isis-global-america/490352 (explaining the rise of terrorist attacks in the period from Operation Iraqi Freedom to the present).

[95]. Harding, supra note 6, at 4–6.

[96]. See Cunningham, supra note 10, at 423.

[97]. Voss, supra note 85, at 10 (quoting Simon Davies, Privacy Opportunities and Challenges with Europe’s New Data Protection Regime, in Privacy in the Modern Age 55, 57 (Marc Rotenberg et al. eds., 2015)).

[98]. White House, Privacy in our Digital Lives: Protecting Individuals and Promoting Innovation, 3–9, 12–14 (2017).

[99]. Kate Kaye, New Privacy Report Already Removed from White House Site, Ad Age (Jan. 20, 2017), http://adage.com/article/privacy-and-regulation/privacy-report-removed-white-house-site/307632.

[100]. See Exec. Order No. 13,768, 82 Fed. Reg. 8799 (Jan. 25, 2017).

[101]. Cunningham, supra note 10, at 422.

[102]. Id. at 423–24. See Gramm-Leach-Bliley Act, Pub. L. 106-102, 113 Stat. 1338 (1999) (codified as amended at scattered sections of 12 U.S.C. (2012)); Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, 110 Stat. 1936 (codified as amended at scattered sections of 18 U.S.C., 26 U.S.C., 29 U.S.C., and 42 U.S.C.); Fair Credit Reporting Act, Pub. L. 91-508, 84 Stat. 1114-2 (1970) (codified at 15 U.S.C. 1681).

[103]. Brill, supra note 85, at 1 (quoting 15 U.S.C. § 45(a)).

[104]. Loidean, supra note 35, at 8.

[105]. Id.

[106]. See Cunningham, supra note 10, at 423.

[107]. Loidean, supra note 35, at 8.

[108]. EU GDPR Portal, http://www.eugdpr.org (last visited Nov. 16, 2017).

[109]. General Data Protection Regulation, supra note 8, at 1.

[110]. Id.

[111]. Gilbert, supra note 56, at 4.

[112]. Id.

[113]. European Commission Statement 16/1403, supra note 48.

[114]. Gilbert, supra note 56, at 4.

[115]. Lawful Processing, Info. Commissioner’s Off., https://ico.org.uk/for-organisations/data-protection-reform/overview-of-the-gdpr/key-areas-to-consider (last visited Nov. 16, 2017).

[116]. General Data Protection Regulation, supra note 8, at 9.

[117]. European Commission Memorandum 15/6385, supra note 49. There is a growing concern over data privacy associated with in-home connected devices and apps, such as Amazon’s Alexa, and health-tracking devices, like Fitbit. For further discussion, see Sarah Kellogg, Every Breath You Take: Data Privacy and Your Wearable Fitness Device, 72 J. Mo. B. 76, 78–81 (2016); Adam R. Pearlman & Erick S. Lee, National Security, Narcissism, Voyeurism, and Kyllo: How Intelligence Programs and Social Norms Are Affecting the Fourth Amendment, 2 Tex. A&M L. Rev. 719, 760–62 (2015).

[118]. Individuals’ Rights, Info. Commissioner’s Off., https://ico.org.uk/for-organisations/data-protection-reform/overview-of-the-gdpr/individuals-rights (last visited Nov. 16, 2017).

[119]. European Commission Memorandum 15/6385, supra note 49.

[120]. General Data Protection Regulation, supra note 8, arts. 4, 7, at 34, 37. Consent is further discussed throughout the GDPR. See id., passim.

[121]. See Gilbert, supra note 56, at 6–7. But see Cunningham, supra note 10, at 437–38.

[122]. Sebastian, supra note 82, at 233.

[123]. European Commission Memorandum 15/6385, supra note 49.

[124]. Id. See also Ann Cavoukian, Privacy by Design: The 7 Foundational Principles (2011), https://www.iab.org/wp-content/IAB-uploads/2011/03/fred_carter.pdf.

[125]. Sebastian, supra note 82, at 230.

[126]. General Data Protection Regulation, supra note 8, art. 25, at 48.

[127]. Accountability and Governance, Info. Commissioner’s Off., https://ico.org.uk/for-organisations/data-protection-reform/overview-of-the-gdpr/accountability-and-governance (last visited Nov. 16, 2017).

[128]. Sebastian, supra note 82, at 231.

[129]. Accountability and Governance, supra note 127.

[130]. European Commission Memorandum 15/6385, supra note 49. To understand the potentially massive scope of these penalties, the fines that could be levied against Amazon and Google, based on their 2016 reported revenues, would be approximately $5.4 and $3.6 billion, respectively. Richard Stiennon, Unintended Consequences of the European Union’s GDPR, Forbes (Nov. 27, 2017, 6:26 P.M.), https://www.forbes.com/sites/richardstiennon/2017/11/27/unintended-consequences-of-the-european-unions-gdpr/#46aae406243c,

[131]. Id.

[132]. General Data Protection Regulation, supra note 8, art. 47, at 62–64.

[133]. Gilbert, supra note 56, at 5 (stating that fewer than one hundred companies have sought to use BCRs, despite this option having been available for a decade).

[134]. See Practical Law Intellectual Prop. & Tech, supra note 66.

[135]. General Data Protection Regulation, supra note 8, arts. 46, 93, at 62, 86.

[136]. Gilbert, supra note 56, at 4–5.

[137]. See Directive 95/46/EC, supra note 8, arts. 21, 26, at 44, 46 (outlining the roles of member states in ensuring adequate protection for data transfers and the objections and limits that they may put in place). See also ULD Position Paper on the Judgment of the Court of Justice of the European Union of 6 October 2015, C-362/14 (Oct. 14, 2015), https://www.datenschutzzentrum.de/uploads/ internationales/20151014_ULD-PositionPapier-on-CJEU_EN.pdf (arguing that Model Clauses are an inappropriate transfer mechanism for transfers to the United States, due to direct conflicts between U.S. law and the provisions in the Model Clauses.).

[138]. General Data Protection Regulation, supra note 8, arts. 92–93, at 85–86.

[139]. Cunningham, supra note 10, at 438–40.

[140]. General Data Protection Regulation, supra note 8, art. 40, at 56.

[141]. See Directive 95/46/EC, supra note 8, arts. 25–26, 30, at 45–46, 48–49 (providing language regarding adequacy decisions).

[142]. General Data Protection Regulation, supra note 8, art. 40, at 56.

[143]. Gilbert, supra note 56, at 5.

[144]. General Data Protection Regulation, supra note 8, art. 40, at 57.

[145]. See generally id. art. 42, at 58–59.

[146]. Compare id. with id. art. 40, at 56.

[147]. Report from the Commission to the European Parliament and the Council on the First Annual Review of the Functioning of the EU–U.S. Privacy Shield, at 4, SWD (2017) 344 final (Oct. 18, 2017) [hereinafter Report on the First Annual Review]; Grant Gross, Tech Companies Like Privacy Shield but Worry About Legal Challenges, PCWorld (Dec. 21, 2016, 3:00 AM), http://www.pcworld.com/article/3152559/security/tech-companies-like-privacy-shield-but-worry-about-legal-challenges.html.

[148]. Doron S. Goldstein et al., Understanding the EU-US “Privacy Shield” Data Transfer Framework, 20 No. 5 J. Internet L. 1, 1, 21 (2016).

[149]. Privacy Shield Timeline, PrivacyTrust, https://www.privacytrust.com/privacyshield/ privacy-shield-timeline.html (last visited Nov. 16, 2017).

[150]. Reuters, Trump Election Ignites Fears over U.S. Encryption, Surveillance Policy, Fortune, (Nov. 9, 2016), http://fortune.com/2016/11/09/trump-encryption-surveillance-policy.

[151]. Yoni Heisler, A Comprehensive Look at All of Donald Trump’s Positions on Technology Issues, Boy Genius Rep. (Oct. 19, 2016, 10:53 A.M.), http://bgr.com/2016/10/19/donald-trump-politics-technology-opinions.

[152]. See Exec. Order No. 13,768, 82 Fed. Reg. 8799 (Jan. 25, 2017).

[153]. Jan Philipp Albrecht (@JanAlbrecht), Twitter (Jan. 26, 2017, 1:45 AM), https://twitter.com/ JanAlbrecht/status/824553962678390784.

[154]. Natasha Lomas, Trump Order Strips Privacy Rights from Non-U.S. Citizens, Could Nix EU-US Data Flows, TechCrunch (Jan. 26, 2017), https://techcrunch.com/2017/01/26/trump-order-strips-privacy-rights-from-non-u-s-citizens-could-nix-eu-us-data-flows.

[155]. See Report on the First Annual Review, supra note 147, at 4. For additional discussion, see Kaye, supra note 99.

[156]. European Commission Press Release IP/16/2461, supra note 43.

[157]. See Commission Implementing Decision 2016/1250, 2016 O.J (L 207) 1, 13–20 (EU).

[158]. See id. at 28–29 (explaining that the ombudsperson is supposed to be independent from the U.S. intelligence agencies and is in charge of following up on complaints and enquiries from individuals regarding potential privacy violations).

[159]. See id. at 27–29, 71.

[160]. See Loyens & Loeff, Digital Rights Ireland Challenges EU-US “Privacy Shield,” Lexology (Nov. 4, 2016), http://www.lexology.com/library/detail.aspx?g=5055de04-e2d7-4b0b-9bbe-789a4a97b318; Reuters, French Privacy Groups Challenge the EU’s Personal Data Pact with U.S., Fortune (Nov. 2, 2016), http://fortune.com/2016/11/02/privacy-shield-pact-challenge.

[161]. See Opinion 01/2016, supra note 15, at 9–14.

[162]. See generally Voss, supra note 85 (discussing how the Privacy Shield came about and what it is meant to do).

[163]. See Steven C. Bennett, EU Privacy Shield: Practical Implications for U.S. Litigation, 2 Prac. Law., Apr. 2016, at 60, 62–64.

[164]. Goldstein et al., supra note 148, at 20 (discussing the Privacy Shield requirements and implications for participating organizations).

[165]. See Cunningham, supra note 10, at 426–28; Gilbert, supra note 56, at 4–5.

[166]. See ULD Position Paper, supra note 137.

[167]. Id., at 4.

[168]. See DSK Position Paper (Oct. 21, 2015), https://www.datenschutz-hamburg.de/fileadmin/ user_upload/documents/DSK_position_paper_Safe-Harbor_2015-10-21.pdf.

[169]. Matt Burgess, Facebook Privacy Case Is Making Its Way to the European Court of Justice, Wired (Sept. 13, 2016), http://www.wired.co.uk/article/facebook-privacy-eu-case-cjeu.

[170]. Id.

[171]. Darren Isaacs, Practical Strategies for Maintaining HR Data Flows from Europe to the US and Beyond—After the Schrems Case, ‘Safe Harbor 2.0’ and the Incoming Data Protection Regulation, 1 Emp. & Indus. Rel. L. 33, 33, 35 (2016).

[172]. ULD Position Paper, supra note 137, at 4. See also Gross, supra note 147.

[173]. See Commission Decision 2001/497/EC, app. 2, 2001 O.J. (L 181) 19, 22, 30 (EC).

[174]. Overview on Binding Corporate Rules, supra note 57. See also Cunningham, supra note 10, at 439–40.

[175]. See Cunningham, supra note 10, at 440; Gilbert, supra note 56, at 5.

[176]. See Gilbert, supra note 56, at 5.

[177]. Sebastian, supra note 82, at 242.

[178]. DSK Position Paper, supra note 168, ¶ 2.

[179]. Gilbert, supra note 56, at 5.

[180]. See General Data Protection Regulation, supra note 8, art. 47, at 63.

[181]. See id.

[182]. European Commission Statement 16/1403, supra note 48.

[183]. Alex Hickey, 6 Months to GDPR: What’s Next, CIO Dive (Nov. 28, 2017), https://www.ciodive.com/news/6-months-to-gdpr-whats-next/511761.

[184]. See European Commission Statement 16/1403, supra note 48.

[185]. See General Data Protection Regulation, supra note 8, passim.

[186]. See id., arts. 4, 6–8, at 34, 36–38.

[187]. See Isaacs, supra note 171, at 35.

[188]. General Data Protection Regulation, supra note 8, art. 6, at 37.

[189]. Gilbert, supra note 56, at 4.

[190]. General Data Protection Regulation, supra note 8, at 6–7.

[191]. See Pulse Survey: GDPR Budgets Top $10 Million for 40% of Surveyed Companies, PwC, https://www.pwc.com/us/en/increasing-it-effectiveness/publications/general-data-protection-regulation-gdpr-budgets.html (last visited Nov. 29, 2017) (finding that 40% of companies that have completed their GDPR preparations have spent more than $10 million).

[192]. See General Data Protection Regulation, supra note 8, art. 40, at 56–58. See also Gilbert, supra note 56, at 3–5.

[193]. See Gilbert, supra note 56, at 3–5.

Transforming the Fair Use Landscape by Defining the Transformative Factor – Note by Laurie Tomassian

September 2017February 2018Southern California Law Review Admin

From Volume 90, Number 6 (September 2017)
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Fair use is a legal doctrine that is at once generous and parsimonious to our society’s innovators. The underlying function of fair use is to allow individuals to freely and legally use copyrighted works without obtaining permission from the work’s creator. It serves as an exception to the rights granted by copyright law, promoting society’s liberty of expression and innovation by allowing individuals to infringe on another’s creative efforts. Yet while those taking advantage of the fair use exception have much to gain from the doctrine, their experiences with fair use have been plagued with “pervasive and often crippling uncertainty.”

Since the doctrine’s judicial inception and subsequent statutory codification, courts have struggled to define and apply a uniform test assessing whether a copyrighted work’s use is protected under fair use. In the 1994 case Campbell v. Acuff-Rose Music, Inc., the Supreme Court introduced a new consideration into the fair use analysis: whether and to what extent a secondary use transforms the original copyrighted work. A use that sufficiently transformed the original work would weigh in favor of fair use; conversely, a use that failed to sufficiently transform the work would weigh against a fair use finding. This novel element of the fair use analysis left many questions unanswered. Where does the dividing line between a sufficiently transformative work and one that is not transformative enough lie? How much weight should this new inquiry hold in relation to the pre-existing statutory factors?

Answering such questions and clarifying the scope of the transformative inquiry has been a dominant focus of fair use case law since Campbell first introduced the transformative concept. It remains a prominent concern today, as courts stand sharply divided on how to resolve these questions. The Second Circuit has expanded to an unprecedented degree the definition of what makes a use sufficiently transformative, and has given it greater weight in the overall fair use analysis. The Seventh Circuit has criticized the Second Circuit for extending and prioritizing the reach of the transformative concept so far that it now has the potential to implicate copyright holders’ rights in a way neither contemplated nor intended by the drafters of the copyright statute. The Seventh Circuit contends that the fair use analysis should continue to be guided by the four statutory factors, none of which rely on the “transformative” question.

Despite the difficulty courts have faced in establishing a cohesive fair use doctrine, there is no denying “the function of fair use as integral to copyright’s objectives.” Fair use curtails the rights of some—copyright holders—to promote the rights of others: individuals seeking to exercise their First Amendment rights free from copyright law’s restrictions. The Second Circuit’s approach to the transformative question is more favorable to the copyright infringer, while the Seventh Circuit’s conservative approach is more protective of the copyright holder. A conclusive resolution of the ambiguities raised by the transformative question would provide the fair use doctrine with the tools necessary to best serve copyright law’s goal of supporting society’s innovators.

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