Why Your Company’s Cyber Breach Isn’t Currently a Bad Thing

Article | 105 KY. L. J. ONLINE 1 | November 14, 2016

Devon Paige Cobb[1]

Introduction

“[T]here are only two types of companies: those that have been breached and those that don’t know they have.”[2] Despite the frequency of these hacks, the stigma associated with cybersecurity breaches of business and customer information is a harsh one. That stigma is imposed before the financial hits are measured, the average cost of which can be as much as $25 per exposed record.[3] Target alone reported a net $17 million in breach-related costs as well as $44 million in insurance payments.[4] While those numbers are substantial, these hacks can cost companies even more in intangibles, such as the decline in a company’s reputation,[5] loss of customer goodwill,[6] and liability flowing from either class action lawsuits by customers whose information has been breached or shareholders’ derivative actions.[7]Cyber breaches of consumer information have plagued the private financial and healthcare sectors for years now, but only recently, in the wake of such scandals as Ashley Madison[8] and big business let downs like Target,[9] have these leaks focused society's attention on the public sector.[10] The Securities Exchange Commission (SEC) has been slow to regulate disclosure of cybersecurity breaches for publicly traded companies. Only in 2011 did it publish guidelines that require publicly traded companies to disclose material cyber attacks, threats of loss, and actual losses.[11] And although the SEC met again in 2014 in a roundtable discussion,[12] it still has failed to mandate a specific timeline for publicly traded companies to follow in making their breach disclosures to the public.[13]So can a cyber breach ever be a good thing for the company? Because there have not been specific regulations from the SEC, companies are free to take their time and consider only their own interests in making breach disclosures to the public; companies may even spin the breach as immaterial to avoid disclosure completely.[14] Without explicit SEC regulation of the timeline for disclosure, companies will inevitably waver on the time they take to make disclosures, creating ambiguity in industry standards and uncertainty in the marketplace following a breach. Furthermore, market distortions — the types that the SEC is most focused on preventing[15]— are likely to result from undisclosed information from data breaches. This Note argues that the SEC should mandate a specific timeline for requiring companies to disclose a cyber breach to maintain its objective of ensuring freely disseminated information, maintaining market integrity, and protecting investors.

I. The Setting: How Investors’ Interests Are Taking a Back Seat

Consumers, companies, and investors have competing interests in regards to a data breach. Unfortunately, investors’ interests are ultimately ignored. Consumers, however, need to be notified of breaches so that they can take remedial and protective post-breach measures to safeguard their information, like cancelling their credit cards. These interests are currently being protected by the Federal Trade Commission (FTC), whose mission is to protect consumers from unfair or deceptive business practices.[16] The Third Circuit recently held that the FTC may bring a claim that a company’s allegedly inadequate data security practices constitute “unfair” business practices in violation of Section 5 of the Federal Trade Commission Act.[17] Furthermore, many states have recognized the need for adequate consumer protection by enacting consumer breach notification disclosure statutes, but consumers are afforded this protection in only three-fourths of states.[18]Companies often perceive that keeping a hack quiet is in their best interest. This allows the company to “save face”[19] and prevent indirect costs of “business lost”[20] from wary consumers, while, in the interim, trying to discover precisely what information was hacked and why. But companies also limit disclosures to avoid “provid[ing] a roadmap for hackers as to where they are vulnerable.”[21] For these same reasons, a company might fear that making a breach public would cause potential investors to shy away from the company.[22] Add to this list of concerns the looming fear of class action lawsuits for consumers who were harmed by the breach,[23] and it is easy to see why companies’ interests are best served when they have all the time in the world (or at least as long as they want) to disclose a breach.These concerns leave investors’ interest in being notified of a data breach ignored under current SEC regulations. Investors care about data breaches being withheld because of the impact it could have on their investment’s stock price. Announcing publicly that a database of consumer information has been hacked would intuitively cause the breached company’s stock price to decrease for a number of reasons: loss of faith in the company’s ability to safeguard sensitive materials, impending liability costs to remedy such breach, including implementing new safeguards to assure breaches become less likely to occur, and costs of future lawsuits, to name just a few. The current regulations, or lack thereof, allow companies to be guided solely by industry standards when it comes to what and when to disclose post-breach.[24]However, announcements of a data breach need not assuredly signal impending doom for a company’s stock price.[25] A few companies have successfully navigated such announcements.[26] Target and Home Depot both faced security breaches but chose to handle the situation differently.[27] Target delayed notifying customers of the breach and its stock dropped nearly 20% while Home Depot’s prompt notification to their larger affected consumer base was viewed as reassuring to the public and did not adversely affect the company’s stock price.[28]These types of positive consumer responses to a breach could in turn be just the kind of uptick that investors would want to know about most. Patrick Malcolm, a digital forensics and security expert commenting on the Ashley Madison leaks, noted the way the breach’s publicity could work in the company’s favor, explaining how a consumer told Malcolm that he was joining Ashley Madison “because it was more secure now.”[29] However, Malcolm explained, “there’s no evidence the company has actually changed its protocols.”[30] On the other hand, notifying the public that a company has been hacked could signal that the company has not been responsible with consumer information they pledged to keep safe.[31] Several companies have lost CEOs following breaches that uncovered corporate irresponsibility, poor business practices, disconcerting management, and the company’s inability to protect consumer data.[32] Regardless of whether the breach indicates a change in consumer confidence in the company or a reflection of poor management, the overall perception of a company post-breach can affect how investors view their investments and thus should fall within the SEC’s realm of regulations.The SEC does play a role, albeit a mildly passive one thus far, in regulating data breaches. The SEC only began specifically addressing cyber breaches in 2011, when it published guidance on disclosure obligations. Unfortunately these guidelines gave no timeline for making disclosures and only mandated that disclosures are required for “material” information.[33] In 2014, the SEC held a roundtable where industry leaders considered making more regulations on disclosures.[34] Political leaders, such as Senator John D. Rockefeller, in his role as Chairman of the Committee on Commerce, are even “urging” the SEC to take more extensive action, noting concerns “about inconsistencies in disclosures, investor confusion, and the fact that many corporate leaders [do] not fully recognize the relationship between their companies’ cybersecurity measures and financial success.”[35] SEC Commissioner Luis A. Aguilar gave a speech at the New York Stock Exchange urging companies to take more steps and encouraging “more public reporting of cyberattacks.”[36] But the SEC has not taken any steps since the roundtable, simply continuing to encourage companies to follow the 2011 guidance, leaving investor interests and protections back-seated when it comes to breach notification.

II. The Problem: How Companies Can Work Around the Current Regulations

The SEC’s purpose is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation,”[37] resting on the foundation that “only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.”[38] Thus, the SEC is charged with regulating and monitoring disclosures made by publicly traded companies to ensure investors have equal access to information. This is done by not only imposing a duty on companies to disclose “material” events, but also by imposing strict timelines under which the disclosures must be made. Under the SEC’s definition, “material”[39] means any information that has a substantial likelihood of being considered important to a reasonable investor when making an investment decision.[40] Because a breach could be of concern to investors, these disclosure mandates would assumedly include notifications when a publicly traded company has been hacked.[41]Although the materiality test dictates an objective standard, companies still have room to deem a data breach “immaterial.”[42] If a company can twist the breach as immaterial, it can completely avoid disclosure, meaning that investors would not be notified even though the breach could influence their investment decisions.[43] SEC guidance has cautioned “a cyber-attack could be material if it causes a company to significantly increase what it spends to defend its systems or when intellectual property is stolen.”[44] This allows management to usurp the SEC’s role of deciding what investors need to know. If the breach results in only “minor intrusions” of consumer data, it likely does not need to be disclosed, whereas confirmed breaches of determinable consumer information definitely need to be disclosed.[45] For everything in between these two categories, management decides if the breach is important enough to warrant disclosing it to investors under the circumstances.[46]Because certain circumstances already require public disclosure, the SEC could address these concerns by utilizing current provisions, including rules 10b-5[47] and 14a-9,[48] which regulate fraud in connection with the purchase and sale of securities and fraud in the solicitation of proxies. Rule 10b-5 prohibits the use of any manipulative or deceptive device in the buying and selling of securities, requiring disclosure of material information or abstention from trading.[49] This includes an obligation to disclose private information when necessary under the circumstances to prevent publicly known information from being misleading by the omission.[50]Rule 10b-5 could potentially be applicable when a company has been the victim of a cyber-attack and serve to safeguard the interest of investors, but only for instances in which securities, such as the company’s stock, are being sold or purchased.>[51] Thus, this regulation does not always mandate a disclosure or require a trader to abstain from the market to ensure that the integrity of the marketplace is maintained if no securities are being exchanged. Under rule 10b-5, as long as the company itself is not buying or selling securities while withholding information regarding a data breach, no duty arises to disclose such a breach to the general public (i.e. investors).[52] Instead, the only duty the company has is to keep their insiders from trading in the market.[53]Even though companies do not have a duty to disclose a breach under rule 10b-5, they could still be required to make these types of disclosures in their annual 10-K forms.[54] However, these reports require companies to only report “the cybersecurity risks that could affect the business or its registrants materially;”[55] they do not require the company to report actual incidents or breaches. The SEC’s 2011 guidance encouraged companies to determine if “the costs or other consequences associated with one or more incidents or the risks of potential incidents [of cyber breaches] represent a material event, trend, or uncertainty that is reasonably likely to have a material effect on the registrant’s results of operations, liquidity, or financial condition or would cause reported financial information not to be necessarily indicative of future operating results or financial condition,” and report this in the Management & Discussion Analysis (MD&A) section of the company’s annual reports.[56] The decision as to whether or not to disclose is complicated by a timing issue: even if companies do disclose a breach in their annual reports, investors are only deemed to have been notified at the end of the year when those reports are filed.[57] Thus, the breach’s impact could affect investment decisions to buy, sell, or trade far sooner than when the year-end report filings roll around.In addition to annual and quarterly reports, public companies must report “certain material corporate events” in an 8-K report to announce major happenings of which shareholders should be aware.[58] Companies are given four days to file these disclosures.[59] Although cyber breaches are not specifically listed as items to be reported on an 8-K, registrants can use section 8 of the form to “report events that are not specifically called for by Form 8-K that the registrant considers to be of importance to security holders.”[60] Guidance has been given that:

… once the facts are gathered, a special filing may be warranted. . . . If the event or incident is a significant one or if it is one that a reasonable investor would expect to hear about outside the cycle of the normal disclosure of risk, it is prudent to do a special filing.[61]

This form alone, however, does not require a cyber breach disclosure to be made, and even if companies choose to disclose under this rule, there is once again an opportunity for work-around regarding the timing of the disclosure. Although the regulations governing 8-K filings mandate a four-day deadline for certain events falling under Sections 1-6 and 9 (covering standard business occurrences), filings regarding cyber breaches, which fall under Section 8’s “other events,” are not given this same four-day deadline, or even any specific deadline.[62]Due to the SEC’s slow response in regulating disclosure, the only real pressure companies feel is to ensure they stay at least somewhat within the shadows of others in their industry.[63] This is currently the best and only standard against which a company can be judged.[64] Choosing to file an 8-K could be in the company’s best interest, especially if that is how others in the industry are treating the incident. However, because these measures are not strict regulations, they allow companies to interpret and set their own standards. This can lead to unequal dissemination of information and inefficient markets, as investors in A corporation could be notified of a breach more quickly than investors in B corporation. Although industry standards could be used to set strict demands for companies, the current standards are so lax as to allow companies to consider their own interests over that of their investors.Piecing together all of this information shows that avoiding breach disclosures may be easier for companies than investors would like. If the SEC set disclosure notification timelines for publicly traded companies, it would communicate to companies that data breach disclosures are not only material and required, but would also remove the uncertainty management faces in determining a breach’s materiality.

III. The Solution: Regulating the Regulators

The SEC should mandate stricter data breach notification requirements and set a rigid timeline to give companies direction when handling a data breach. Tighter regulations will encourage companies to create response plans so that they can act quickly in the face of a breach. Regulations will also incentivize companies to put in place adequate safeguards, such as technological safety measures to protect consumer data, helping prevent breaches in the first place. This, in turn, benefits investors, as a breach would be less likely to have a detrimental effect if handled well.[65] A definite timeline will also move publicly traded companies to uniform and clear guidelines, clarifying the current vague industry standards set by the companies that have already been breached. These standards could also help set guidelines for small and non-public companies in the future.The SEC should not set a flexible rule, such as “companies should disclose data breaches timely,”[66] because this type of rule would not solve the disclosure problem. This standard is no clearer than the current ambiguous guidance and would leave companies uncertain about how such a vague standard would be interpreted. Instead, it would only facilitate the current problems caused by industry standards, which allow companies to set their own disclosure timeframes based on what they believe is the most effective response time, focusing more on their own primary interests rather than their investors’. This type of standard would also allow for workarounds, opening the door to fraudulent practices and delay tactics for each company’s specific situation, avoiding the primary objectives of the SEC — to protect investors by keeping them equally informed and ensuring that they “are provided with material information in order to make informed investment decisions”[67] and to “maintain fair, orderly, and efficient markets.”[68] While a company may have unique circumstances that require a delayed notification timeline, the investor’s interest remains consistent in needing to be timely informed of incidents affecting their investments.The SEC’s data breach notification regulations, enacted primarily to serve investors, would also provide an ancillary benefit of protecting consumers in states that do not afford them any protection through consumer notification laws.[69] Roughly one-fourth of states do not have consumer notification laws on their books.[70] Kentucky, for example, requires only that disclosures be made “in the most expedient time possible and without unreasonable delay.”[71] This type of standard sets no more of a specific deadline than mandating no timeframe at all, but at least requires that companies must eventually disclose the breach to consumers. Even Delaware, the capital of business governance,[72] offers no more of a specific timeline than “the most expedient time possible and without unreasonable delay.”[73]In deciding precisely how long to make the notification timeline, the SEC could look to state consumer notification laws.[74] Ohio, for example, says “in the most expedient time possible but not later than forty-five days.”[75] Florida law is even stricter, saying “as expeditiously as practicable, but no later than 30 days after.”[76] By explicitly regulating notification deadlines, the SEC would integrate consumer and investor interests in building market integrity and in devising a comprehensive system that considers the competing interests of the marketplace as a whole, as SEC Commissioner Aguilar urged back in 2014.[77]Alternatively, because investor concerns can vary widely based on industry, the SEC could consider setting a sliding scale timeline across different industries. For example, investors could need to know right away that a financial services company like American Express has been hacked of consumer credit card information. Consumers may place greater trust in a financial company to protect their sensitive information, and profitability would likely decline as a result of class action litigation costs and loss of customer loyalty. Investors would thus need to know of a breach almost immediately to anticipate how these market effects would impact their investments. Contrast this with a company that has been breached of consumer loyalty information, like Kroger, whose “Kroger Plus Card” records customer’s shopping trends but not financial information.[78] In this case, consumers do not have high expectations for maintaining the integrity of this information nor a cause of action when these types of non-sensitive reports are hacked.[79] Because certain industries are targeted more frequently and seriously, and the consequences of a breach are more detrimental to the health of the company, the SEC could, in considering these fluctuating concerns, create a sliding scale for data breach notifications for different industries.

Conclusion

Data breaches are becoming more frequent and more expensive, and they can have detrimental consequences for companies.[80] Consumers need to know as quickly as possible that an unauthorized access of their sensitive financial information has occurred in order to take proper safeguarding measures. But because the current norms are set by the industry, management is free to allow company-related concerns, such as the potential damage to its reputation and the subsequent effect on stock price, to guide its decision on when to notify the public of a data breach. This leaves investors’ interests unaddressed. A data breach can have a multitude of investment-related consequences, such as fluctuating stock prices, an increase in the company’s liabilities from class action law suits or increased cyber insurance costs, or a downturn in the company’s overall health and public perception.The current state of data breach notification regulations for publicly traded companies allow companies to benefit from not having to disclose a breach to their investors. Without a specific timeline mandating when companies must disclose a breach, companies are free to follow either their state’s notification law, assuming there is one, which even then may be just as ambiguous as the current SEC guidelines, or the industry standards set by similar companies that have responded to data breaches. And if the company is in an industry that has not had many breaches, it would be free to set its own standard. None of these standards provide uniform or efficient markets, strengthen investor security, or ensure equally disseminated information, all of which the SEC is most concerned with promoting.[81] Because the SEC’s utmost objective is that of protecting investors, the regulatory body should set a specific and strict timeline under which companies are required to abide by after a data breach.

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[1] J.D. Candidate 2017. The author would like to specially thank Lisa E. Underwood, Andrew K. Woods, Rutheford B. Campbell, Jr., and Gardner Bell for their help in the brainstorming process and mentoring of this Note.

[2] Elena Kvochko & Rajiv Pant, Why Data Breaches Don’t Hurt Stock Prices, Harv. Bus. Rev. (Mar. 31, 2015), https://hbr.org/2015/03/why-data-breaches-dont-hurt-stock-prices.

[3] Nicole Perlroth, Ashley Madison Chief Steps Down After Data Breach, N.Y. Times (Aug. 28, 2015), http://www.nytimes.com/2015/08/29/technology/ashley-madison-ceo-steps-down-after-data-hack.html?_r=0 (quoting Larry Ponemon, founder of the Ponemon Institute, whose firm found that “the cost of mega-breaches now averages $23 to $25 per exposed record, which includes the costs of lawsuits.”).

[4] Andria Cheng, Two Months After Damaging Data Breach, Target Stock Has its Best Day in 5 Years, Market Watch (Feb 26, 2014, 2:11 PM), http://blogs.marketwatch.com/behindthestorefront/2014/02/26/two-months-after-damaging-data-breach-target-stock-has-its-best-day-in-5-years.

[5] CF Disclosure Guidance: Topic No. 2, Cybersecurity, U.S. SEC. & Exch. Comm’n (Oct. 13, 2011) [hereinafter SEC Disclosure Guidance], https://www.sec.gov/divisions/corpfin/guidance/cfguidance-topic2.htm.

[6] Andrew Ackerman, U.S. Chamber Warns Cyberattack Disclosures Could Hurt Corporate Profits, Wall Street J. (Oct. 29, 2014, 3:00 PM), http://www.wsj.com/articles/u-s-chamber-warns-cyberattack-discosures-could-hurt-corporate-profits-1414609209 (saying companies should disclose attacks to give customers a heads up because it’s the right thing to do in order for customers to protect themselves, even if no material adverse impact on the company itself results).

[7] Cory Bennett, SEC Weighs Cybersecurity Disclosure Rules, The Hill (Jan. 14, 2015, 6:00 AM), http://thehill.com/policy/cybersecurity/229431-sec-weighs-cybersecurity-disclosure-rules.

[8] See generally Robert Hackett, What to Know About the Ashley Madison Hack, Fortune (Aug. 26, 2015, 7:24 AM), http://fortune.com/2015/08/26/ashley-madison-hack.

[9] See generally Cheng, supra note 4.

[10] Nate Lord, The History of Data Breaches, Digital Guardian (Oct. 6, 2016), https://digitalguardian.com/blog/history-data-breaches.

[11] SEC Disclosure Guidance, supra note 5, at n. 3 (“Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision or if the information would significantly alter the total mix of information made available”); See also Dave Michaels, Hacked Companies Face SEC Scrutiny Over SEC Disclosure, Bloomberg (July 7, 2014, 11:28 AM), http://www.bloomberg.com/news/articles/2014-07-02/hacked-companies-face-sec-scrutiny-over-disclosure (“In guidance issued three years ago, the SEC said a cyber-attack could be material if it causes a company to significantly increase what it spends to defend its systems or when intellectual property is stolen. . . . Materiality is very open to interpretation[.]”).

[12] See Cybersecurity Roundtable, U.S. Sec. & Exch. Comm’n (Mar. 26, 2014), http://www.sec.gov/spotlight/cybersecurity-roundtable.shtml.

[13] Id.; See SEC Disclosure Guidance, supra note 5; See also Rick M. Robinson, Stock Price May Not Tell the Whole Story About Security Breaches, Security Intelligence (Aug. 13, 2015), https://securityintelligence.com/stock-price-may-not-tell-the-whole-story-about-security-breaches (“A further complication for stockholders and their advisers is that reporting of breaches is often delayed, and existing SEC regulation leaves leeway for public companies as to when to disclose cyber incidents.”).

[14]See generally Robinson, supra note 13 (“A company may be able to time the announcement so that it is followed swiftly by corrective action.”).

[15] See What We Do, U.S. Sec. & Exch. Comm’n, https://www.sec.gov/about/whatwedo.shtml (last modified June 10, 2013) (“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”).

[16] See generally, About the FTC, U.S. Fed. Trade Comm’n, https://www.ftc.gov/about-ftc (last visited Oct. 11, 2016) (describing mission as “[t]o prevent business practices that are anticompetitive or deceptive or unfair to consumers”).

[17] See FTC v. Wyndham Worldwide Corp., 799 F.3d 236 (3rd Cir. 2015); See also Michael S. Dicke and Catherine Kevane, Return of the Cyborg—FTC and SEC Oversight of Cybersecurity Ramps Up, Mondaq (Sept. 21, 2015), http://www.mondaq.com/unitedstates/x/428214/Securities/Return+of+the+CyborgFTC+and+SEC+Oversight+of+Cybersecurity+Ramps+Up.

[18] See Summary of U.S. State Data Breach Notification Statutes, Davis Wright Tremaine, LLP, http://www.dwt.com/statedatabreachstatutes (last visited Oct. 11, 2016).

[19] See Robinson, supra note 13 (“Public news of a data breach can generate negative publicity, but a company may be able to time the announcement so that it is followed swiftly by corrective action.”).

[20] Bill Rigby, Cost of Data Breaches Increasing to Average of $3.8 Million, Study Says, Reuters, (May 27, 2015, 6:03 AM), http://www.reuters.com/article/2015/05/27/us-cybersecurity-ibm-idUSKBN0OC0ZE20150527.

[21] See Amy Terry Sheehan, Meeting Expectations for SEC Disclosure of Cybersecurity Risks and Incidents, Cybersecurity L. Rep., Aug. 12, 2015, at 1. http://www.davispolk.com/sites/default/files/agesser.Cybersecurity.Law_.Report.aug15.pdf.

[22] See Kvochko & Pant, supra note 2.

[23] Class action liability can flow from breach of contract liability. For example, after the Ashley Madison breach many users of the company’s service are suing for breach of contract because the company charged customers $19 to delete their actions without actually deleting the accounts. Perlroth, supra note 3.

[24] See infra, Part II; See also Ben Dipietro, The Morning Risk Report: Cybersecurity Disclosures Are Risky Business, Wall St. J.: Risk & Compliance J. (June 8, 2015, 7:25 AM), http://blogs.wsj.com/riskandcompliance/2015/06/08/the-morning-risk-report-cybersecurity-disclosures-are-risky-business-newsletter-draft (“[C]ompanies that have had breaches are in some respects setting the bar for companies that have not, as far as how to approach what to disclose. Best practices for disclosure are based on industry. . . .”).

[25] Because nearly all companies have been or are eventually breached these days, one source posits that shareholders hardly flinch at the news of data breaches anymore. See Kvochko & Pant, supra note 2 (saying that “[i]ndustry analysts have inferred that shareholders are numb to news of data breaches.”).

[26] See Sean Mason, Impact on Company Stock Following Data Breaches, InfoSec Insights (July 21, 2014), http://seanmason.com/2014/07/21/impact-on-company-stock-following-data-breaches; See also Sean Mason, Impact on Stock Following a Data Breach – Feb 2015 Edition, InfoSec Insights (Feb. 26, 2015), http://seanmason.com/2015/02/26/impact-on-stock-following-a-data-breach-feb-2015 (updating research). To see how many “incidents” versus actual breaches occur, see Verizon, 2015 Data Breach Investigations Report 3 (2015), https://www.arxan.com/wp-content/uploads/2015/05/rp_data-breach-investigation-report-2015_en_xg.pdf.

[27] Nathan Layne, In Wake of Target, Home Depot Tight with Info in Breach Response, Reuters (Sept. 8, 2014 1:28 PM), http://www.reuters.com/article/us-home-depot-dataprotection-disclosure-idUSKBN0H31UC20140908.

[28] See Catey Hill, Home Depot’s Data Breach Is Worse Than Target’s, So Where’s the Outrage? MarketWatch (Sept. 25, 2014 11:28 AM), http://www.marketwatch.com/story/yawn-who-cares-about-home-depots-data-breach-2014-09-24; Customer Data Breach Hits CVS Health Photo Site, Investopedia (July 21, 2015, 1:45 PM), http://www.investopedia.com/stock-analysis/072115/customer-data-breach-hits-cvs-health-photo-site-cvs-cost-hd-tgt-wmt.aspx (explaining that “Target is still recovering from the loss of customer trust that resulted from that breach, but much of the backlash was the result of how it had handled the affair, delaying the notification of customers that a breach had occurred. Companies seemed to have learned from that experience. Home Depot had more customers affected by a hack attack that occurred last year, but it notified consumers right away”).

[29]Paola Loriggio, Ashley Madison Hack Fails to Spur Cybersecurity Overhaul, CBC News (Dec. 25, 2015, 5:00 AM), http://www.cbc.ca/news/business/ashleymadison-hack-web-security-1.3380372 (Malcolm went on to say that “[m]aybe they’ve tightened up a few practices, but again, this is the kind of thing that receives attention only when it’s a screaming baby. After the baby’s not making any noise, everybody goes back to what they were doing.”).

[30] Id.

[31] See generally Data Breach FAQ, Target, https://corporate.target.com/about/shopping-experience/payment-card-issue-faq (last visited Sept. 27, 2016) (stating that Target is “sorry” for the breach).

[32] Perlroth, supra note 3 (reporting that Ashley Madison’s CEO stepped down from his position after the company’s hack, just as Sony Pictures Entertainment’s co-chairwoman and the CEO of Target stepped down after similar network breaches) (“Those ousters have made security a priority among executives. According to a survey . . . which tracks data breaches, only 13 percent of senior management said their concern about a data breach was extremely high before the breach at Target. That jumped to 55 percent after the incident . . . . [The founder of company that tracks data breaches stated,] ‘[t]he board is more concerned now than it has ever been with preserving the reputation of a company after a data breach. If the C.E.O. has to leave the company as a result, that’s the cost of doing business.’”).

[33] SEC Disclosure Guidance, supra note 5.

[34] See Cybersecurity Roundtable, supra note 12.

[35] Craig Calle, Disclosing the SEC’s Cybersecurity Disclosure Guidance, Source Callé (Aug. 10, 2015), http://sourcecalle.com/blog/2015/8/10/disclosing-the-secs-cybersecurity-disclosure-requirements.

[36] See Michaels, supra note 11; Luis Aguilar, Commissioner, Sec. & Exch. Comm’n, Board of Directors, Corporate Governance and Cyber-Risks: Sharpening the Focus (June 10, 2014), https://www.sec.gov/News/Speech/Detail/Speech/1370542057946.

[37] See What We Do, supra note 15.

[38] Id.

[39] “Material” is defined by the SEC in two primary cases: Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988) and TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976).

[40] SEC Disclosure Guidance, supra note 5, at n. 3 (This also includes instances where “the information would significantly alter the total mix of information made available.”).

[41] See supra Part I.

[42] Michaels, supra note 11 (statement of Thomas Sporkin, a former SEC enforcement lawyer) (“Materiality is very open to interpretation.”).

[43] See Joel Schectman, When to Disclose a Data Breach: How About Never?, Wall Street J.: Risk and Compliance Report (Mar. 27, 2014 12:41 PM), http://blogs.wsj.com/riskandcompliance/2014/03/27/when-to-disclose-a-data-breach-how-about-never/ (describing different companies’ response to similar hacks).

[44] Michaels, supra note 11.

[45] See Sheehan, supra note 21, at 3.

[46] Id.

[47] See Securities Exchange Act of 1934, 17 C.F.R. § 240.10b-5 (2016).

[48] See id. § 240.14a-9.

[49] 17 C.F.R. § 240.10b-5. The scope of this note is too limited to warrant a discussion of fraud in the solicitation of proxy statements.

[50] See id.

[51] The definition of a security, as given by the Howey test, involves only “investment contracts” in which money is invested in a common enterprise with the expectation of profits derived solely from the efforts of a third party promoter. See SEC v. W.J. Howey Co., 328 U.S. 293, 298-299 (1946).

[52] See Chiarella v. United States, 445 U.S. 222, 234 (1980); Dirks v. SEC, 463 U.S. 646, 655 (1983); United States v. O’Hagan, 521 U.S. 642, 678 (1997).

[53] 17 C.F.R. 240 §§ 240.10(b), 10b-5 (describing antifraud provisions of the federal securities laws, which apply to statements and omissions both inside and outside of Commission filings).

[54] See Fast Answers for Form 10-K U.S. Sec. & Exchange Comm’n, https://www.sec.gov/answers/form10k.htm (last modified June 26, 2009).

[55] Dipietro, supra note 24 (emphasis added). See Kobi Kastiel, What’s New in 2015: Cybersecurity, Financial Reporting and Disclosure Challenges, Harv. L. Sch. F. on Corp. Governance and Fin, Reg. (Feb. 18, 2015), http://corpgov.law.harvard.edu/2015/02/18/whats-new-in-2015-cybersecurity-financial-reporting-and-disclosure-challenges.

[56] Kastiel, supra note 55.

[57] See generally Researching Public Companies Through EDGAR: A Guide for Investors U.S. Sec. & Exchange Comm’n, (July 18, 2007), https://www.sec.gov/investor/pubs/edgarguide.htm (describing information contained in the annual 10-K filing).

[58] Fast Answers for Form 8-K, supra note 54.

[59] Form 8-K, U.S. Sec. & Exchange Comm’n, https://www.sec.gov/about/forms/form8-k.pdf, §B(1).

[60] See Fast Answers for 8-K, supra note 54 at Item 8.01.

[61] Sheehan, supra note 21. Information given in the SEC’s disclosure guidance is “intended to assist registrants in preparing disclosure required in registration statements” but this does not limit registrants; instead, they should also consider “whether it is necessary to file reports on . . . Form 8-K to disclose the costs and other consequences of material cyber incidents.” SEC Disclosure Guidance, supra note 5, at n. 2.

[62] See Fast Answers for 8-K, supra note 54. See also Form 8-K, supra note 59 at §B(1), (“When considering current reporting on this form, particularly of other events of material importance pursuant to Item 7.01 (Regulation FD Disclosure) and Item 8.01 (Other Events), registrants should have due regard for the accuracy, completeness and currency of the information in registration statements filed under the Securities Act which incorporate by reference information in reports filed pursuant to the Exchange Act, including reports on this form.”).

[63] See Sheehan, supra note 21.

[64] See Dipietro, supra note 24 (quoting Jay Knight, a former SEC staffer and head of his law firm’s capital markets practice group).

[65] See generally Customer Data Breach Hits CVS Health Photo Site, Investopedia (July 21, 2015, 1:45 PM), http://www.investopedia.com/stock-analysis/072115/customer-data-breach-hits-cvs-health-photo-site-cvs-cost-hd-tgt-wmt.aspx (explaining how stores like Wal-Mart, CVS, and Costco have been upfront with their customers about breaches and how this honesty prevents a meltdown in consumer trust and protects investors).

[66] Language such as this can be found in state consumer notification laws. For example, Oregon (Or. Rev. Stat. Ann. § 646A.604(1)(a) (West, LEXIS through 2016 Sess.)) and South Carolina (S.C. Code Ann. § 39-1-90(a) (LEXIS through 2016 Sess.)) provide for the most expedient time possible and without unreasonable delay. Many states, including Pennsylvania (73 Pa. Cons. Stat. and Cons. Ann. § 2303(a) (West, Westlaw through 2016 Sess.)), Mississippi (Miss. Code Ann. § 75-24-29(3) (West, Westlaw through 2016 Sess.), and Missouri (Mo. Rev. Stat. § 407.1500(2)(1)(a)(LEXIS through 2016 Sess.)) say only “without unreasonable delay.” For more state laws, see Summary of U.S. State Data Breach Notification Statutes, supra note 18.

[67] Calle, supra note 35.

[68]What We Do, supra note 15.

[69] See Summary of U.S. State Data Breach Notification Statutes, supra note 18.

[70] See id.

[71] Ky. Rev. Stat. Ann. § 365.732 (Lexis Nexis, LEXIS through 2016 Sess.).

[72] See Why Incorporate in Delaware or Nevada?, BizFilings, http://www.bizfilings.com/learn/incorporate-delaware-nevada.aspx (Sept. 23, 2016).

[73]Del. Code Ann. tit. 6, § 12B-102(a) (LEXIS through 80 Del. Laws ch 399).

[74] See generally Summary of U.S. State Data Breach Notification Statutes, supra note 18 (showing a map of the United States and giving the online user the ability to click on each state and see their particular data breach notification statutes).

[75] Ohio Rev. Code Ann. § 1349.19(B)(2) (LexisNexis, LEXIS through file 123 (HB 483)).

[76] Fla. Stat. Ann. § 501.171(3)(a) (West, Westlaw through 2016 second regular sess.). Of the other states that have consumer notification laws, only these additional states have rigid timelines: Washington (Wash. Rev. Code Ann. § 19.255.010(16) (LexisNexis, LEXIS through 2016 1st Special Sess.) and Vermont (Vt. Stat. Ann. tit. 9, § 2435(b)(1) (LEXIS through 2015 adjourned sess. (2016))) mandate disclosure be made in the “most expedient time possible and without unreasonable delay,” no more than 45 days; Wisconsin (Wis. Stat. Ann. § 134.98(3)(a) (West, LEXIS through Acts of the 2015-2016 legislative sess.) mandates disclosures to consumers be made “within a reasonable time not greater than 45 days.”

[77] See Michaels, supra note 11 (urging firms to increase public reporting and weigh impact on consumers).

[78] Mike Lennon, Kroger Notifies Customers of Data Breach Stemming from Third-Party Email Vendor, Security Week (Apr. 1, 2011), http://www.securityweek.com/kroger-notifies-customers-data-breach-stemming-third-party-email-vendor; see Hayley Peterson & Ashley Lutz, Why Kroger is America’s Most Underrated Grocery Store, Business Insider (Mar. 6, 2015, 10:54 AM), http://www.businessinsider.com/why-people-love-kroger-2015-3 (“Nine out of 10 purchases at Kroger are made with the chain’s popular ‘Kroger Plus Card,’” [which makes] customers eligible for discounts, including fuel savings [and] gives Kroger unprecedented access into the behavior of its customers, and allows it to tailor promotions to individual shoppers.”).

[79] See generally Verizon, supra note 26 at page 3 (noting that the top three industries targeted and affected by security incidents are public, information, and financial services).

[80] Rigby, supra note 20.

[81] See What We Do, supra note 15 (“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”).

Meriting Consolidation: Why Criminal Pattern Jury Instructions Should Consolidate Federal Bribery Statutes

Article | 104 KY. L. J. ONLINE 75 | April 14, 2016

Kierston Eastham Rosen1

Introduction

Bribery in the federal system is notorious for its incoherence.2 Multiple bribery statutes exist with very similar elements, and a defendant can be prosecuted under any and all of these statutes.3 Because of this, the federal crime of bribery continues to confuse and perplex even the most seasoned attorneys.4 While confusion among attorneys helps illustrate the problem with federal bribery, attorneys are not the main focus of pattern jury instructions. Pattern jury instructions serve to educate lay jurors during federal trials, instructing them as to both the law and its application in a given case. It is imperative that these instructions are as clear and concise as possible, and currently, pattern instructions do not meet this standard. Therefore, federal bribery law and its corresponding pattern instructions need to be clarified.Instead of using a separate instruction for each bribery statute, these similar instructions should be consolidated into one general “Bribery” instruction, analogous to the United States Sentencing Commission’s Federal Sentencing Guidelines’ approach of placing related bribery crimes within the same section.5 This process could easily be duplicated, and should be repeated within each United States Circuit Court of Appeals’ Criminal Pattern Jury Instructions. The instruction would include the common elements from these bribery statutes – which are largely the same6 – and could be modified as necessary through Use Notes, adding or deleting an element when necessary. The existing bribery instructions and statutes are already largely cross-referencing one another, making it impractical to separate them statute-by-statute.7Section I provides background information pertaining to the development of federal bribery law, and its connection to pattern jury instructions and the United States Sentencing Guidelines. Section II details the main federal bribery statute, 18 U.S.C. § 201, which reaches federal public officials and continues to be the foundation for all other federal bribery statutes. Section III examines the Hobbs Act, 18 U.S.C. § 1951, which reaches public officials through extortion under color of official right. Section IV analyzes the development of honest services fraud, and its evolution into a federal bribery statute. Finally, Section V concludes that each circuit’s pattern jury instructions should reflect the vast similarities within federal bribery statutes by creating one “Bribery” instruction.8

I. The Development of Federal Bribery Law, Pattern Jury Instructions, and the United States Sentencing Guidelines’ Approach to Bribery

A. Federal Bribery Law

What is bribery? Courts tend to differ on an exact definition.9 The clearest articulation is that bribery is a form of public corruption, “which involves the offer and receipt of something of value for the purpose of influencing the exercise of authority.”10 Federal bribery statutes share the following common elements: (1) A public official accepted, received, or agreed to accept or receive a (2) thing of value (3) in exchange for official action (the quid pro quo).11 A quid pro quo, meaning “what for what,”12 denotes “a specific intent to give or receive something of value in exchange for an official act.”13 While this notion originated within § 201, a quid pro quo element is now contained within multiple federal bribery statutes, including the Hobbs Act and the mail fraud and wire fraud statutes.14 However, “fulfillment of the quid pro quo is not an element of the offense.”15 While the quid pro quo element provides a boundary for the crime of bribery, it has still not eliminated the uncertainty within this area of the law due to bribery’s vast “grey areas.”16

Bribery has been considered a serious offense since the United States’ inception.17 According to Henning and Radek, “among the first laws adopted after the ratification of the Constitution was a provision making it a federal crime to bribe customs officers and federal judges.”18 Some have even gone so far as to describe it as a “crime akin to treason.”19 Public corruption erodes the citizenry’s faith in its government, which in turn harms the government’s legitimacy.20 Bribery also serves to exploit public power for personal gain by using public leverage to receive a personal benefit.21 For these reasons, the federal government has a substantial interest in an honest government, necessitating the battle against public corruption.22Public corruption prosecutions became a significant priority for the Department of Justice in the 1970s after the Watergate scandal.23 In 1975, President Gerald Ford directed federal prosecutors to target state and local corruption,24 and in 1976, the Public Integrity Section of the Department of Justice was formed. 25 Indeed, Watergate created a “volcano of change in the world of public corruption” and indirectly led to the development of the Public Integrity Section itself.26 Throughout the 1970s, state and local public corruption prosecutions remained a high priority due to the fear that its effects would undermine the ability of the United States government to properly function.27 This emphasis on public corruption continued through the 1980s, and its prevention was a stated DOJ policy goal for the fiscal year 1987.28 Beginning in the mid-1980s, however, federal prosecutors began to focus more on public officials at the federal level, rather than state and local public officials.29Influencing a public official remains a serious offense within the federal system; a defendant receives a four-level increase to his offense level under the federal sentencing guidelines if the payment in question was for the purpose of influencing an official act.30 The maximum statutory sentences under each of the federal bribery statutes are by no means diminutive; the statutory maximum under § 201(b) (Bribery of a public official) is fifteen years,31 and under the Hobbs Act and honest services mail fraud and/or wire fraud, the penalty is twenty years.32 The penalties under honest services mail fraud and wire fraud may even be increased to a thirty-year maximum sentence under certain circumstances.33While there is a bribery statute specifically prescribed for prosecuting federal officials,34 the prosecution of state and local officials is, at best, a patchwork approach.35 Several similar bribery statutes exist that could apply to a given public corruption case, and a public official can be charged under more than one of these statutes.36 This hodgepodge approach to bribery is the source of its surrounding confusion and is why it must be remedied via pattern jury instructions.It is unlikely that Congress will remedy the situation by amending or consolidating its existing bribery statutes. Therefore the task is left to the drafting committees of pattern jury instructions to paint a clearer picture of bribery law.

B. Pattern Jury Instructions

Jury instructions serve as each circuit’s attempted consolidation and explanation of the law to be used by juries in federal criminal trials, and they are essential in properly instructing lay-juries on complex legal issues.37 By eliminating legal jargon and simplifying the law, pattern instructions can also serve as a helpful guide for practitioners. Pattern instructions provide jurors with this knowledge by explaining the crime and its elements in terms that a layperson can understand,38 bridging the gap between the law and the layperson.39 By putting difficult legal concepts into more straightforward terms, pattern instructions can also serve as a useful tool for lawyers trying to decipher a particularly confusing area of the law, such as federal bribery.

Pattern jury instructions are generally composed of an explanation of the statute or section’s elements, Use Notes, and/or Committee Commentary.40 Use Notes are interchangeable and are employed by the court to tailor the instructions to a given case. Committee Commentary, on the other hand, provides authority and a more in-depth explanation of the circuits’ applicable law for the statute, and essentially functions as a mini-treatise.41 This structure makes pattern jury instructions the ideal tool not only for practitioners looking to learn an area of the law, but as a way of definitively stating just what the law is. If federal bribery law is a jigsaw puzzle, pattern jury instructions can serve as the means to finally put the pieces together.Most circuits’ pattern jury instructions currently use one instruction for each and every bribery statute and offense, as illustrated by the Fifth Circuit. This circuit has drafted an instruction for receiving a bribe by a public official under § 201, as well as an instruction for extortion under color of official right and for honest services fraud, which all encompass bribery.42 Although each instruction has slightly different elements, their core elements are essentially the same, which will be further illustrated below. While the Sixth Circuit does not yet have any bribery offense instructions,43 Hobbs Act extortion under color of official right and honest services fraud instructions are currently being drafted.

C. United States Sentencing Guidelines

The bribery offenses discussed within this note are all found within § 2C1.1 of the Federal Sentencing Guidelines Manual: Offering, Giving, Soliciting, or Receiving a Bribe (§ 201); Extortion Under Color of Official Right (Hobbs Act); Fraud Involving the Deprivation of the Intangible Right to Honest Services of Public Officials (§ 1346).44 The Commission consolidated its sentencing guidelines by acknowledging the similarities among bribery statutes and placed honest services fraud (§ 201) and extortion under color of official right within the same base offense level and section.45 In doing so, the United States Sentencing Guidelines have implicitly recognized that the statute-by-statute approach is, in fact, not the most logical method. If consolidation can be achieved within a scheme as complex as the sentencing guidelines, it can—and should—be done within each circuit’s pattern jury instructions.

18 U.S.C. § 201—Receiving a Bribe by a Public Official

The federal bribery statute was enacted in 1962 as a part of a set of anti-corruption statutes targeting federal public officials. Various scattered anti-corruption provisions were streamlined into one set of laws with the Necessary and Proper Clause serving as Congress’s authority to enact the statute.46 Now, the main federal bribery statute, § 201, prohibits both bribery and unlawful gratuities given to and received by federal public officials.47 For purposes of this note, § 201(b)(2) is the primary focus: a public official seeking, receiving, accepting, or agreeing to accept a thing of value in return for being influenced in the performance of an official act.48 Although the statute primarily targets federal officials, it may reach local officials who administer federal programs and have some degree of official responsibility.49The key case that details § 201 is United States v. Sun-Diamond Growers of California.50 The circumstances leading up the decision are simple: a trade association engaged in lobbying activities on behalf of its member cooperatives made illegal gifts to then-Secretary of Agriculture Michael Espy.51 The Supreme Court examined the bribery-gratuity distinction under the statute and found that “[b]ribery requires intent ‘to influence’ an official act, or ‘to be influenced’ in an official act” and there must be a quid pro quo between the payment and official government action.52 Gifts that are only given to “build a reservoir of goodwill” with a public official are not sufficient.53 Only a bribe requires proof of a quid pro quo, while the separate crime of gratuities under § 201 does not.54The elements for receiving a bribe by a public official under 18 U.S.C. § 201(b)(2) according to most criminal pattern jury instructions are: (1) a public official demanded, sought, or received a (2) thing of value (3) corruptly (4) in return for being influenced in the performance of an official act (the quid pro quo element).55 The “corruptly” element should be eliminated, however, because it adds nothing to the statute and is more confusing than helpful. The Supreme Court has concluded that the word “corruptly” is “normally associated with wrongful, immoral, depraved, or evil.”56 This wrongfulness is captured by the quid pro quo, making the corruptly element obsolete. While some argue that the corruptly element differentiates lawful influence of an official act and an unlawful influence;57 the quid pro quo captures this distinction.Courts are beginning to read “corruptly” out of § 201, defining the element in terms of the quid pro quo.58 The Model Penal Code also disfavors the use of “corruptly.” Its commentary states that the element “provides virtually no guidance as to the intended scope of the law,”59 and that in its place, “the issues with which it deals should be addressed more particularly.”60 The corruptly element was not included within later bribery statutes, undoubtedly because the quid pro quo defines the issue of bribery more particularly than corruptly. “Corruptly” should, therefore, be eliminated within the proposed bribery instruction.As the remainder of this note will show, the foundational elements of § 201 are largely shared across various federal bribery crimes. Section 201 laid the groundwork for federal bribery law, therefore these elements served as a template for the bribery statutes and instructions that followed.

18 U.S.C. § 1951—The Hobbs Act (Extortion Under Color of Official Right)

Although § 201 covered bribery at the federal level, prosecutors were left without any method of prosecuting state and local officials involved in public corruption. In order to remedy this problem, prosecutors began to utilize more general statutes such as the mail and wire fraud statutes and the Hobbs Act in order to prosecute lower-level bribery.61 Specifically, the Hobbs Act’s jurisdictional element is very broad, which also allowed expansive prosecutorial discretion in order to combat public corruption.62The Hobbs Act was not originally designed to target public officials, but criminal organizations.63 Federal prosecutors began to use the statute to target public officials during the anti-corruption era of the 1970s, and first successfully used the statute in 1972 in United States v. Kenny.64 In Kenny, defendants involved with Jersey City, New Jersey’s “Democratic political-machine” were charged with color of official right extortion under the Hobbs Act, the first time the statute had been used to prosecute public corruption.65 Beginning with Kenny, the Hobbs Act and § 201 began to merge together.66 Although extortion under color of official right is used to prosecute state and local officials, it also covers bribery, and its elements are similar to those found in instructions that cover § 201.While the Hobbs Act does not explicitly mention bribery, the Supreme Court in Evans v. United States recognized that a defendant who has committed extortion under color of official right has effectively taken a bribe.67 In Evans, the petitioner was an elected commissioner of a county in Georgia who accepted payment to vote in favor of a rezoning application.68 Although petitioner argued that passive acceptance of a payment did not constitute extortion and that some form of inducement was required on his part, the Court was not convinced.69 Under Evans, even passive acceptance of a thing of value qualifies as a bribe, so long as the official knows that the payment is in exchange for official acts.70 The Court also held that the quid pro quo element was satisfied as soon as payment was accepted, because “fulfillment of the quid pro quo is not an element of the offense.”71After Evans, the elements of bribery of a federal public official under § 201 and Hobbs Act extortion under color of official right are basically the same. According to Professor Lindgren, the “traditional ‘color of office’ language links the two offenses” of bribery and extortion under color of official right,72 because the focus is on the person’s status as a public official. Some argue that the two crimes should be distinguished due to official right extortion’s one-sided nature.73 However, these arguments are outside the scope of this note, which is focused solely on the conduct of the public official.The United States Sentencing Guidelines originally used only the term “bribe” in the original version of § 2C1.1, but this term was amended to “payment” in order to allow the applicability of extortion under color of official right.74 Even § 2C1.1’s commentary was amended to harmonize bribery and this type of extortion, deleting exclusive “bribe” language and adding “extortion.”75 The Commission’s rationale for consolidating these bribery provisions is not articulated within the amendment, but it becomes abundantly clear after examining its Report, published two years later. The Report admits that the elements of various public corruption crimes are “similar,” and that because some of these offenses are comparable, they may merit consolidation.76Perhaps most importantly, the Report states that “no substantial distinction appears to exist between extortion under color of official right and the acceptance of bribes by a public official,” citing Evans for its proposition.77 It also recognizes that both crimes require a quid pro quo and specific intent.78 For these reasons, the crimes are now within the same sentencing guideline79 and receive the same base offense level (a ranking of seriousness based on conviction under a certain statute80), because “bribery of a public official is as serious a crime as extortion under color of official right.”81This consolidation of bribery under § 201 and Hobbs Act extortion under color of official right could easily be duplicated within each circuit’s pattern jury instructions. Substantial overlap exists between the crimes’ elements, as well as existing pattern instructions for each crime. The elements for extortion under color of official right within most pattern instructions are as follows: (1) a public official obtains, accepts, or agrees to accept a (2) thing of value that the public official was not entitled to receive (3) knowing the payment was made in return for official acts (the quid pro quo) and (4) interstate commerce was affected.82Comparing these instructions to those written for § 201,83 both the instructions for bribery of a federal public official and Hobbs Act color of official right extortion include common elements of (1) a public official, (2) a thing of value, and (3) a quid pro quo. While the “corruptly” element found among § 201 instructions is missing from the Hobbs Act—and likewise the Hobbs Act’s necessary jurisdictional element of an effect on interstate commerce is missing from § 201—these instructions are, at their core, the same. A simple Use Note could modify one “Bribery” instruction to easily reflect these elements when necessary.

18 U.S.C. § 1346—Honest Services Fraud (Bribery Theory)

A. The Development of the Honest Services Theory and Skilling v. United States

The honest services theory was officially codified in 1988 within 18 U.S.C. § 1346, providing another avenue of mail fraud and wire fraud prosecution under 18 U.S.C. § 1341 and § 1343.84 While the intangible right to honest services theory is found within § 1346, it is an alternate theory of a “scheme or artifice to defraud” under the federal mail and wire fraud statutes. Section 1346 does not create a new crime, but adds to the breadth of the mail and wire fraud.85 Now, prosecutors may choose to prosecute under one of two theories of a “scheme or artifice to defraud”: the deprivation of honest services, or the deprivation of money and/or property.86

At first glance, § 1346 does not appear to cover bribery. But in Skilling v. United States, the Supreme Court explicitly limited the scope of honest services fraud to those cases involving bribery or kickbacks.87 In Skilling, the Court considered whether an Enron executive had been improperly convicted of conspiracy to commit wire fraud under the honest services theory.88 Skilling’s alleged conduct included artificially inflating Enron’s stock prices by misrepresenting the corporation’s fiscal health in order to sell his stock and obtain a net profit of $89 million.89 Although Skilling was not a public official, he had previously served as Enron’s Chief Executive Officer before he resigned.90Skilling challenged § 1346 on the basis that the statute was void for vagueness, requiring the majority to limit its construction.91 The Court determined that the majority of honest services precedent applied to bribery and kickback schemes92 and concluded that Congress must have intended the statute to at least reach these two types of schemes.93 Thus, the Court held that § 1346 was limited to cover only bribery and kickbacks, not undisclosed self-dealing.94 Skilling’s conduct only amounted to the latter, making it impossible for him to have committed honest services fraud.95According to the Skilling majority, “the honest-services doctrine had its genesis in prosecutions involving bribery allegations.”96 In order to define this particular type of bribery, the Court referenced “federal statutes proscribing—and defining—similar crimes,” including § 201.97 By limiting conduct under § 1346 to only bribes and kickbacks, bribery was once again recriminalized, providing prosecutors with another method of punishing public officials involved in bribery.98Interestingly, the sentencing guidelines recognized the similarities between honest services fraud under § 1356, the Hobbs Act, and § 201 even before the Supreme Court’s decision in Skilling. Six years before the Court decided Skilling, the separate sentencing guideline dealing with honest services fraud was deleted and consolidated with § 2C1.1, which includes receiving a bribe under § 201 and extortion under color of official right.99 Originally several guidelines covered bribery and extortion offenses, but they were consolidated as of November 2004.100 Now, each of these offenses are found together, which is the approach that drafting committees of pattern jury instructions should adopt.Comparing § 201, the Hobbs Act, and honest services fraud, common elements exist among the three statutes. The elements for honest services fraud found within pattern jury instructions are: (1) a public official (2) in a scheme or plan to defraud (3) accepts a bribe or kickback (thing of value) (4) in exchange for official action (the quid pro quo) and (5) violated his duty of honest services to the public by using the United States Postal Service or an interstate carrier in order to carry out the scheme.101 Again, the three common core bribery elements—a public official, thing of value, and the quid pro quo—are all present. In order to define bribery, pattern instructions for honest services fraud generally refer the reader to its instructions for § 201.102 If these instructions are already referring the reader to § 201, it seems that it would be much simpler to merge the instructions, and have all pertinent information readily accessible within one instruction. It also reflects the similarity between the crimes; one of the purposes of § 1356 is to punish the type of bribery already covered under § 201. “While they do not explicitly contain the word ‘corruptly,’ the Hobbs Act [and] honest services fraud . . . have swallowed 201 . . . .”103 If the statutes are already merging into one another, so too should their pattern instructions.

B. Offered Solution

The proposed Bribery instruction would include the following elements: (1) A public official accepted, received, or agreed to accept or receive a (2) thing of value (3) in exchange for official action (the quid pro quo). Although multiple forms of bribery exist via different statutes such as the Hobbs Act, § 201, and § 1346, each statute essentially punishes the same conduct. Through Use Notes, the instructions could be modified for each crime, adding an element when necessary. Committee Commentary would also explain the controlling law, each relevant statute, and the statutes’ intersection with one another. This unified Bribery instruction would not only be easier to understand, but would render federal bribery more coherent. A consolidated Bribery instruction would serve as a backdoor method to achieve the goal of the failed Revised Federal Criminal Code, which intended to remedy federal criminal law’s piecemeal approach. Thus, pattern jury instructions could serve as the glue to piece the puzzle that is federal bribery law back together.

This consolidation would be similar to the United States Sentencing Commission’s Federal Sentencing Guidelines’ approach of placing similar bribery crimes within the same section.104 The Commission has acknowledged federal bribery statutes’ similarities, as should drafters of pattern jury instructions. The Guidelines’ approach demonstrates the feasibility of consolidation, and should be repeated within each United States Circuit Courts of Appeals’ Criminal Pattern Jury Instructions.

Bribery is currently a deeply confusing area with unnecessary overlap between statutes, which is why drafting committees of pattern jury instructions should lead the charge to effectively consolidate these statutes through pattern jury instructions. Not only will a consolidated, more streamlined instruction help to avoid jury confusion, but it will aid both practitioners in understanding and applying federal bribery law to the facts of a given case, and judges in conducting the trial. Because the elements for the aforementioned statutes are largely the same, there is simply no rationale for separate pattern jury instructions. Instead, bribery crimes should be consolidated into one cohesive “Bribery” instruction.

---

1 J.D. Candidate, 2016.

2 See Charles N. Whitaker, Federal Prosecution of State and Local Bribery: Inappropriate Tools and the Need for a Structured Approach, 78 Va. L. Rev. 1617, 1619-21 (1992) (discussing the variation in interpretation of federal bribery laws and lack of consensus on the definition of bribery).

3Peter J. Henning & Lee J. Radek, The Prosecution and Defense of Public Corruption: The Law and Legal Strategies 3 (2011).

4 See Vince Ventimiglia, et. al., Report of the Public Corruption Working Group 20-21 (1993), http://www.src-project.org/wp-content/uploads/2009/08/ussc_report_publiccorruption_19930908.pdf.

5 U.S. Sentencing Guidelines Manual § 2C1.1 (U.S. Sentencing Comm'n 2015).

6 See 18 U.S.C. § 201 (2011); 18 U.S.C. § 1951 (2010); 18 U.S.C. § 1346 (2010).

7 See, e.g., District Judges Association, Fifth Circuit Pattern Jury Instructions (Criminal Cases) (2015) (hereinafter Fifth Circuit) (referring the reader to 18 U.S.C. § 201(b) in order to define bribery within the context of honest services fraud).

8 The decision not to include 18 U.S.C. § 666 (theft or bribery concerning programs receiving federal funds) was due to its unique jurisdictional bases, but the proposed general bribery statute could apply to § 666 as well.

9 Daniel Hays Lowenstein, Political Bribery and the Intermediate Theory of Politics, 32 UCLA L. Rev. 784, 785-87 (1985).

10 Peter J. Henning, Federalism and the Federal Prosecution of State and Local Corruption, 92 Ky. L.J. 75, 94 (2003).

11 See, e.g., Fifth Circuit, supra note 7, §§ 2.09B, 2.56, 2.57, 2.73B.

12 Henning & Radek, supra note 3, at 15.

13 United States v. Sun-Diamond Growers of Cal., 526 U.S. 398, 404-05 (1999).

14 See Evans v. United States, 504 U.S. 255, 256 (1992); see also Skilling v. United States, 561 U.S. 358, 412-13 (2010).

15 Evans, 504 U.S. at 268.

16 Lowenstein, supra note 9, at 786.

17 U.S. Const. art. II, § 4 (describing only two crimes as specific bases for impeachment, one of which is bribery).

18 Henning & Radek, supra note 3.

19 State ex rel. Brady v. Bates, 102 Minn. 104, 110 (1907) (Start, C.J., concurring).

20 Adam H. Kurland, The Guarantee Clause as a Basis for Federal Prosecutions of State and Local Officials, 62 S. Cal. L. Rev. 367, 377 (1989).

21 James Lindgren, The Theory, History, and Practice of the Bribery-Extortion Distinction, 141 U. Pa. L. Rev. 1695, 1705 (1993).

22 Kurland, supra note 20, at 376-77.

23 Geraldine Szott Moohr, Mail Fraud and the Intangible Rights Doctrine: Someone to Watch over Us, 31 Harv. J. on Legis. 153, 164 n.40 (1993).

24 Id.

25 Kurland, supra note 20, at n.26.

26 Reid Weingarten, Volcano of Change, 51 Hastings L.J. 693, 693-94 (2000).

27 Kurland, supra note 20, at n.26.

28 Id.

29 Moohr, supra note 23.

30 U. S. Sentencing Guidelines Manual § 2C1.1(b)(3) (U.S. Sentencing Comm’n 2015).

31 18 U.S.C. § 201(b) (4) (2011).

32 18 U.S.C. §§ 1341, 1951(a) (2010).

33 18 U.S.C. § 1341 (2010), 18 U.S.C. § 1343 (2011).

34 18 U.S.C. § 201 (2011).

35 John S. Gawey, The Hobbs Leviathan: The Dangerous Breadth of the Hobbs Act and Other Corruption Statutes, 87 Notre Dame L. Rev. 383, 418 (2011).

36 Henning & Radek, supra note 3.

37 See Luther C. Hames, Jr., Pattern Jury Instructions, 27 Mercer L. Rev. 291, 291-92 (1975).

38 See generally Fifth Circuit, supra note 7 (providing examples of jury instructions).

39 See Bethany K. Dumas, Jury Trials: Lay Jurors, Pattern Jury Instructions, and Comprehension Issues, 67 Tenn. L. Rev. 701, 708 (2000).

40 There is some variation among the judicial circuits, but each circuit has at least Use Notes or Committee Commentary, and some include both.

41 See, e.g., The Sixth Circuit Committee on Criminal Pattern Jury Instructions, Pattern Criminal Jury Instructions § 10.01 Committee Comment. (2015) [hereinafter Sixth Circuit].

42 Fifth Circuit, supra note 7, §§ 2.09B, 2.56, 2.57, 2.73B.

43 See Sixth Circuit, supra note 41, at Table of Contents.

44 U.S. Sentencing Guidelines Manual § 2C1.1 (U.S. Sentencing Comm’n 2015).

45 See id.

46 Henning, supra note 10, at 95-96.

47 18 U.S.C. § 201 (2011).

48 Id.

49 Dixson v. United States, 465 U.S. 482, 499-500 (1984).

50 526 U.S. 398 (1999).

51 Id. at 401-02.

52 Id. at 404-05.

53 Id. at 405.

54 Id.

55 See, e.g., Fifth Circuit, supra note 7, § 2.09B.

56 Arthur Andersen LLP v. United States, 544 U.S. 696, 705 (2005).

57 Eric J. Tamashasky, The Lewis Carroll Offense: The Ever-Changing Meaning of “Corruptly” within the Federal Criminal Law, 31 J. Legis. 129, 136 n.55 (2004).

58 See, e.g., United States v. Alfisi, 308 F.3d 144 (2d. Cir. 2002) (finding that evidence of a quid pro quo satisfied the corruptly element).

59 Model Penal Code § 240.1 cmt. 2 (Am. Law Inst., Official Draft and Revised Comments 1980).

60 Id. § 240.1 cmt. 1.

61 Henning, supra note 10, at 136-37.

62 Id. at 133.

63 Henning & Radek, supra note 3, at 107.

64 Id. at 108; United States v. Kenny, 462 F.2d 1205 (3d Cir. 1972).

65 See Gawey, supra note 35, at 397-99.

66 Id. at 398.

67 See Evans v. United States, 504 U.S. 255, 268 (1992) (“We hold today that the Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts.”). But see Steven J. Mulroy, Official Explanation: Defining Official Capacity and Related Color of Office Phrases in Bribery and Extortion Law, 38 U. Mem. L. Rev. 587, 598 (2008) (arguing that bribery and extortion remain distinct crimes).

68 Evans, 504 U.S. at 257.

69 Id. at 268.

70 Id.; Judicial Committee On Model Jury Instructions for the Eighth Circuit, Eighth Circuit Model Jury Instructions (2014) § 6.18.1951 cmt. (2014) (“Because threats or coercion are not required, the facts of some cases will be fairly similar to the facts of a bribery case . . . .”).

71 Evans, 504 U.S. at 268.

72 Lindgren, supra note 21, at 1728.

73 Gawey, supra note 35, at 394-95 (“The difference between bribery of a public official and official right extortion is that bribery covers both sides of a reciprocity. Whereas official right extortion reaches only the public official who receives a bribe, bribery reaches both the public official and the briber.”).

74 U. S. Sentencing Guidelines Manual § 2C1.1 app. C, vol. I (U.S. Sentencing Comm’n 2015).

75 Id.

76 Ventimiglia, et. al., supra note 4, at v.

77 Id. at 13.

78 Id. at 11, 13.

79 See id. at 2.

80 See Frank O. Bowman, III, Beyond Band-Aids: A Proposal for Reconfiguring Federal Sentencing After Booker, 2005 Chi. Legal F. 149, 156 (2005).

81 Ventimiglia, et. al., supra note 4, at 2.

82 See, e.g., Fifth Circuit, supra note 7, § 2.73B.

83 Id. §§2.12–13.

84 18 U.S.C. § 1346 (2010).

85 Henning & Radek, supra note 3, at 155-56.

86 See 18 U.S.C. § 1341 (2010); 18 U.S.C. § 1343 (2011); 18 U.S.C § 1346. Mail fraud involves fraudulently obtaining money or property through use of the Postal Service or any private or commercial interstate carrier; wire fraud involves the same conduct, but instead utilizes wire, radio, or television communication.

87 Skilling v. United States, 561 U.S. 358, 409 (2010).

88 Id. at 367.

89 Id. at 413.

90 Id. at 368.

91 See id. at 402.

92 Id. at 405, 407.

93 Id. at 408.

94 Id. at 409-410.

95 Id. at 413.

96 Id. at 408.

97 Id. at 412.

98 See Sarah Kelly & Megan Jeans, Honest Services Fraud: The Trial Courts’ Turn, 46 New Eng. L. Rev. on Remand 79, 83 (2012).

99 U.S. Sentencing Guidelines Manual app. C, vol. 111, amend. 666 (U.S. Sentencing Comm'n 2015); id. § 2C1.1.

100 Id. at app. C, vol. 111, amend. 666.

101 See, e.g., Fifth Circuit, supra note 7, §§ 2.56, 2.57.

102 See, e.g., id. § 257 (referring the reader to 18 U.S.C. § 201(b) in order to define bribery within the context of honest services fraud).

103 Gawey, supra note 35, at 419.

104 See U.S. Sentencing Guidelines Manual § 2C1.1 (U.S. Sentencing Comm'n 2015).

Money for Nothing and Your Facts for Free: An Exploration of Political Spending and a Proposal for Combatting Big Money Interests

Article | 104 KY. L. J. ONLINE 54 | January 11, 2016

Chris K. Stewart[1]

Introduction

Each election since 1998 has cost more than the one before it.[2] Total spending for the 2014 midterm was $3.77 billion.[3] Some estimates project spending on the 2016 presidential election alone may exceed six billion dollars.[4] While this consistent uptick in spending is a powerful testament to the ever-increasing role of money in politics, two other statistics are even more disturbing. First, in 2014 House races, the candidate who outspent the opposition claimed victory 94.2% of the time.[5] Second, in the 2014 midterm election, nationwide voter turnout dropped to its lowest level since 1942.[6] The dramatic uptick in spending coupled with historically low voter turnout paint a grim picture of the future of American elections.Since Citizens United v. Federal Election Commission,[7] scholars have offered numerous legal arguments hoping to convince the Supreme Court to reconsider its position on the Bipartisan Campaign Reform Act (BCRA). However, in the wake of American Tradition Partnership v. Bullock[8] and, most recently, McCutcheon v. Federal Election Commission,[9] the genie is decidedly out of the bottle, and the current Court is unlikely to reverse the trend. Thus, attempting to litigate the matter head-on is fruitless.This note will explore the political history that has brought us to this point. It will then propose two solutions, one of them legal and the other non-legal. The focus will be on the Commonwealth of Kentucky, though many arguments apply to other states as well.The first proposal is to parry the increase in spending with an increase in voter access via early voting. Early voting allows registered voters to cast an in-person vote during a defined period before Election Day. Kentucky does not currently have an early voting scheme, and this note argues that early voting facilitates increased voter access across a broad spectrum of potential voters. When casting a ballot is as easy as possible for all eligible voters, the influence of money in politics can be minimized. Moreover, the Sixth Circuit Court of Appeals outlined the constitutional importance of early voting by applying heightened scrutiny to Ohio's early voting law in Obama for America v. Husted.[10]The second proposal involves the increased presence of nonpartisan, fact-checking services. For younger voters, these organizations should step up their social media presence. Platforms such as Facebook, Twitter, and Instagram should offer free ad space to permit easy-to-understand explanations of misleading campaign ads. For older voters, local television stations should adopt, as part of their campaign coverage, a weekly segment that offers a non-partisan, fact-based assessment of the most recent ads for local elections of interest.Ultimately, the goal of election reform should be to allow as many eligible voters as possible to exercise the franchise, armed with reliable information that enables them to cast a vote reflective of their personal beliefs. As Louis Brandeis famously noted, "Sunlight is said to be the best of disinfectants; electric light the most efficient policeman."[11]

I. Corruption and Concealment: A Historical Overview of Campaign Finance Law

A. The Early Years

American politics has always carried the stigma of corruption. Originally, officials feared that candidates might corrupt voters or the voting process through bribes or other means. George Washington may have been unable to tell a lie, but when he ran for the Virginia House of Burgesses in 1758, that didn't stop him from spending thirty-nine pounds, six shillings on purchasing for voters "‘a hogshead and a barrel of punch, thirty-five gallons of wine, forty-three gallons of strong beer, cider, and dinner for his friends.’"[12] Washington's election agent provided about a half-gallon of booze for each voter.[13] This process was affectionately known as "swilling the planters with bumbo."[14]At the end of the nineteenth century, America saw the rise of the career politician.[15] These politicians often were not independently wealthy and therefore relied heavily on contributions from others to run a campaign.[16] With this trend came modern, more expensive campaigns, and the script was flipped: new fears emerged that contributors would exercise undue influence on governance, rather than the original concern, maintaining the integrity of the electorate.[17]Early campaign finance legislation enjoyed bipartisan support, with Republican president Theodore Roosevelt giving fervent speeches to Congress calling for limitations on the influence of special interests and increases in disclosure requirements.[18] This led to the passage of the first federal campaign finance disclosure law, the Publicity of Political Contributions Act of 1910 (Publicity Act).[19] The Publicity Act required congressional candidates to submit disclosure statements regarding the identity of their donors before the general election.[20] The Act did not, however, apply to candidates for the presidency, a weakness that would become fully apparent during the Teapot Dome Scandal where Interior Department Officials were bribed in exchange for oil drilling rights.[21] The scandal prompted Congress to amend the Publicity Act with the Federal Corrupt Practices Act in 1925,[22] which would serve as the principal campaign finance law for nearly five decades.[23]

B. Calls for Reform as Spending Ramps Up

By the late 1960's, an explosion in campaign spending coupled with a nearly universal evasion of the prohibition against corporate expenditures and disclosures, "which was ‘honored more in the breach than in the observance,’" provided the impetus for reform.[24] Congress passed and President Nixon signed the Federal Election Campaign Act of 1971 (FECA).[25] FECA limited the total amount candidates could spend on advertising.[26] It also limited the amounts candidates and their families could spend on their own campaigns and provided for the reporting of sources and uses of campaign funds.[27] According to a statement released upon signing the bill, President Nixon hoped that "this legislation will guard against campaign abuses and will work to build public confidence in the integrity of the electoral process.[28] The irony of this statement cannot be ignored, given the laundry list of Nixon's FECA violations that would come to light over the next two years.[29] These would include, among many others, a $2 million donation from American Milk Producers, Inc. divided into $2500 contributions from hundreds of shell committees given in exchange for federal price supports.[30]Outrage over Watergate led Congress to amend FECA in 1974. Challenges to the amendments appeared almost immediately. In 1976, the Supreme Court issued its first ruling on FECA in Buckley v. Valeo.[31] The Court upheld as constitutional the right of Congress to limit individual contributions, finding that corruption or the appearance of corruption was sufficient justification to limit these donations.[32] On the other hand, the Court struck down FECA's limitations on individual expenditures, meaning moneys spent in support of an individual candidate but not given directly to the campaign.[33] Buckley thus left some room for campaign finance regulation, but future legislation and subsequent First Amendment challenges would erode such laws far beyond the Buckley Court's wildest dreams.

C. Soft Money, the Bipartisan Campaign Reform Act, and the Maelstrom That Followed

The Buckley Court narrowly construed FECA's disclosure requirements to only apply to acts of express advocacy. "Magic Words" such as "vote for" or "reject" had to be present before candidates were required to disclose sponsors of the ads.[34] Not surprisingly, candidates, donors, and any number of interest groups, corporations, and unions began to circumvent the disclosure through soft money advertising.[35] These groups were not subject to disclosure requirements and could therefore spend unlimited amounts on what came to be known as sham issue ads.[36] Typically, these ads would feature an issue of the day followed by a description of the candidate’s position on that issue.[37] Viewers would then hear a message such as "call up this candidate and say thank you for her commitment to this issue."[38] Because there was no express call for anyone to vote for the candidate in question, no one need report the sources or costs of these advertisements.[39]Eventually, Congress amended FECA with the Bipartisan Campaign Reform Act of 2002 (BCRA). This placed a ban on soft money and addressed the problem of express versus issue advocacy by creating a category of speech it termed electioneering communication.[40] Congress defined electioneering communications to include "any broadcast, cable, or satellite communication" that "refers to a clearly identified candidate for federal office," is made within 60 days of a general election or 30 days of a primary or convention, and "is targeted to the relevant electorate."[41]BCRA even included what appears to be a backup definition of electioneering communication. In the event the original is found constitutionally deficient, BCRA provides that an electioneering communication is:

any broadcast, cable, or satellite communication which promotes or supports a candidate for that office, or attacks or opposes a candidate for that office (regardless of whether the communication expressly advocates a vote for or against a candidate) and which also is suggestive of no plausible meaning other than an exhortation to vote for or against a specific candidate.[42]

Within days of the passage of BCRA, eleven lawsuits emerged challenging the new law.[43] Eighty-four plaintiffs, later reduced to seventy-seven, spanned the political gamut from the National Rifle Association and Republican National Committee to the California Democratic Party and the AFL-CIO.[44] But the lead plaintiff was Senator Mitch McConnell of Kentucky.[45] After an exhaustive fact-finding process, followed by nine hours of oral arguments featuring twenty-three lawyers, the district court issued its opinion, which upheld much of BCRA.[46] The Supreme Court granted certiorari, and the oral argument was an unusually long four hours with eight attorneys.[47] On December 10, 2003, eight of nine justices voted to uphold the electioneering communications portion of BCRA.[48] Perhaps more importantly given the subsequent history in Citizens United, the Court voted to uphold the prohibition of the use of corporate and labor treasury funds in electioneering communications.[49] The Court reasoned that corporations and labor unions could adequately influence the political process through their political action committees, and the restrictions on the use of general funds acted as a regulation, not a restriction.[50] Moreover, the Court killed the magic words test from Buckley, recognizing that using it as the measure of express advocacy "is functionally meaningless."[51]The McConnell Court left open the possibility for as-applied challenges to the electioneering communications disclosure requirements, and it was only a matter of time before new litigation cropped up to test the limits of BCRA.[52] In 2007, Wisconsin Right to Life challenged the FEC, arguing that the prohibition against corporate and union funds for ads that are not express advocacy or their functional equivalent was unconstitutional.[53] The Supreme Court agreed, and corporations and unions were suddenly free to open their coffers for independent expenditures on issue advertisements.This sudden shift in campaign finance jurisprudence in just four short years seems baffling on its face but makes much more sense in the light of one other important change. Justice O'Connor, author of the 5-4 opinion in McConnell, retired in 2005[54] and was replaced by the conservative Justice Alito.[55]Finally, in 2010, the Court held by a 5-4 margin in Citizens United v. FEC that the government's previous justification for regulating corporate expenditures, preventing corruption or the appearance of corruption, no longer passed constitutional muster.[56] Justice Kennedy narrowed the definition of corruption to encompass only situations where there is clear evidence of a quid pro quo exchange between candidate and donor, not merely signs of ingratiation or access.[57] This ruling signaled the removal of a final obstacle, and corporations and unions could subsequently spend directly from their treasuries on express advertisements on behalf of candidates.The response to Citizens United was immediate and overwhelming. The Brennan Center for Justice has compiled data from U.S. Senate races since 2010.[58] Senate races are a particularly effective measure of outside influence on elections because the balance of power in the Senate has been a genuine issue in all three elections since 2010.[59] Outside spending on candidates has more than doubled since Citizens United. This is a conservative estimate, which does not include the innumerable sham issue ads, which still carry no disclosure requirements.[60] While some hoped that state laws might be able to combat the effect of Citizens United, the Supreme Court made it clear that its decision was not simply made on the facts of that case, but was controlling precedent until otherwise stated.[61]

II. Moving Forward

Given the clear trend in campaign finance jurisprudence toward allowing greater contributions with minimal disclosure, attempting to combat big money influence in politics through the FEC and federal judiciary seems, at least for the time being, a fool's errand. Another approach is needed, and it should happen at the state and local level through a combination of insuring access to the polls through early voting as well as providing citizens with nonpartisan perspectives on the frequently misleading advertisements promulgated by both parties.

A. An Overview of Early Voting

There will likely continue to be attempts by some state legislatures to rein in political spending. However, as these laws will undoubtedly face lengthy, expensive, and almost certainly successful First Amendment challenges, opponents of big money spending should take a more pragmatic, grassroots approach. By turning their attention away from litigation and toward efforts to expand access to the polls, opponents of political spending will encounter a new path to their goal while simultaneously swelling support for voter access. Early voting is one obvious way to expand the franchise, thus insuring that voting is as easy as possible for as many citizens regardless of the flood of political spending.While in person early voting is a relatively new phenomenon, researchers are beginning to collect enough empirical data to answer some questions. In assessing the efficacy of electoral reforms, researchers typically weigh at least two considerations.[62] First, researchers ask whether the reform increases the level of participation.[63] Second, the researchers ask whether, and to what extent, the reform affects the quality of voter participation.[64]Enough empirical evidence has accumulated to answer the first question. In general, early voting schemes do not serve to bring new voters into the system. However, the data suggest that early voting does encourage voters to participate in lower-intensity contests that they would otherwise skip.[65] As for the second question, the data are as of yet too sparse to assess whether early voting impacts the quality of democratic decision making.[66] However, regardless of what future analysis reveals as election cycles pass and more data are gathered, the impact of early voting on the quality of the electorate is secondary to its objective ability to increase voter access.A second effect of early voting schemes is how they may impact the political calculus that candidates use to structure their campaigns. In American presidential elections, recent history reveals a clear pattern. Campaigns become extremely active around Labor Day, followed by candidate debates in September and October, and a final push near November and Election Day.[67] Early voting can impact this cycle. In districts with early voting, candidates could hypothetically find themselves flooding the market with expensive advertising, unintentionally targeting citizens who have already voted.[68] Of course, this could simply cause campaigns to pull back at an earlier point in the campaign and flood the market during the early voting window. However, this strategy could potentially create marketing overkill and lessen the impact of the advertisements, thereby depriving money interests of some measure of influence.

B. The Equitable Case for Early Voting

Not everyone can manage to make it to the polls on Election Day. Consider the following hypothetical. A registered nurse lives in the East end of Jefferson County, Kentucky, and works on the far west end of Jefferson County. This nurse works twelve-hour shifts. He must clock in at 7:00 AM, and he clocks out at 7:00 PM. His commute is, on average, forty-five minutes. In order to clock in on time, he leaves his home each morning at 6:00 AM.Kentucky polls open at 6:00 AM.[69] The Kentucky Constitution provides that the legislature should fashion a law requiring employers to give employees leave to vote during the work day.[70] While this law is on the books,[71] the reality of our hypothetical nurse is that he works in an underserved area, performing emergency services. Leaving work for him could cause him to choose between a person's physical wellbeing and his right to exercise the franchise. Moreover, because polls require all voters to be in line at 6:00 PM,[72] our nurse cannot vote after his shift, which ends at 7:00 PM.This hypothetical paints a picture of an able-bodied, educated person for whom voting could be nearly impossible during the statutorily-defined polling hours. However, it is worth noting that voting on Election Day can create substantial burdens for many other groups. It goes without saying that physically accessing the polls creates additional barriers for the physically disabled. Additionally, single working parents, the poor, and African Americans have been shown to take advantage of early voting at a rate disproportional to others.[73] For these early voters, the democratic calculus extends beyond simply weighing issues, candidate qualifications, or special interests. Rather, these voters face a host of systemic barriers and must further ask how they will get to the polls, whether they can spare the time and potential lost income, and in many cases, who will watch the kids.[74] Because of scenarios such as these, thirty-three states and the District of Columbia have adopted some form of early voting.[75]

C. The Constitutional Significance of Early Voting

It is clear from the previous section that early voting is a useful tool to facilitate voter access. However, there is an additional compelling reason for Kentucky to adopt early voting as well. The Sixth Circuit Court of Appeals has underscored the importance of early voting by applying heightened scrutiny to Ohio's early voting scheme in Obama for America v. Husted.[76]On July 17, 2012, Obama for America, the Democratic National Committee, and the Ohio Democratic Party filed suit in district court against John Husted in his official capacity as the Attorney General of Ohio.[77] At issue in the case was an Ohio statute that imposed a deadline of 6:00 PM for in person early voting, while allowing military and overseas voters to cast votes through the weekend.[78] The plaintiffs alleged that the statute imposed an undue burden on the fundamental right to vote, and that this burden was not supported by a sufficiently weighty state interest.[79] The state argued that the need for providing military voters with extra time, coupled with the burden on local election boards of facilitating the additional time for non-military voters was a sufficient need to allow for the disparate cutoff times.[80]The district court held a hearing and considered a wealth of demographic information, legislative history, and depositions of military officers and voting experts.[81] After considering the evidence, the district court granted the plaintiff's motion for a preliminary injunction and ordered that early voting in Ohio be available to all voters regardless of military status.[82] The State and various interveners appealed.[83]Ohio originally implemented its early voting scheme after the 2004 election, when long lines kept polls open—in some cases, into the early hours of the morning after Election Day.[84] Many Ohio residents took advantage of the new opportunity, and in 2008, 20.7% of registered voters cast early ballots, which represented 29.7% of total votes cast.[85]Before drawing its legal conclusions, the court considered several demographic factors in the evidentiary process.[86] Expert testimony revealed a number of truths concerning the demographics of citizens who chose to vote early.[87] Those who took advantage of the option were “more likely than election-day voters to be women, older, and of lower income and educational attainment."[88] Moreover, statistics from Cuyahoga and Franklin County, the homes of Cleveland and Columbus respectively, suggested that early voters were disproportionately African American.[89] Regardless of the overall impact on turnout, these statistics confirm what people on the ground know intuitively: making it to the polls on Election Day is much more difficult for the poor, elderly, and disabled.The legal analysis follows the demographic assessment.[90] The court recognized that voting is one of our most precious fundamental rights, and that equal protection applies not only to the granting of the franchise, but also in the manner of its exercise.[91] Moreover, the court added that heightened scrutiny under the Equal Protection clause is invoked when different groups of voters are treated differently.[92] This distinction was an important signal of which way the subsequent analysis would go given that the Ohio law clearly created different groups of military and non-military voters.The court then went on to determine which level of scrutiny to apply to the Ohio early voting law.[93] A general grievance by a plaintiff that she is being treated differently from another person in a similarly-situated class will not receive more than a rational basis review unless she can identify a corresponding burden to the franchise.[94] The level of scrutiny will depend on the severity of the burden.[95] Where the burden is severe, strict scrutiny will apply, but most cases fall under the flexible balancing test outlined in Anderson v. Celebrezze and Burdick v. Takushi.[96] The court outlined the standard as follows:

A court considering a challenge to a state election law must weigh “the character and magnitude of the asserted injury to the rights protected by the First and Fourteenth Amendments that the plaintiff seeks to vindicate” against “the precise interests put forward by the State as justifications for the burden imposed by its rule,” taking into consideration “the extent to which those interests make it necessary to burden the plaintiffs’ rights.”[97]

The State and interveners urged the court in Obama for America to apply a rational basis standard, arguing that a straight-forward equal protection claim required a straight-forward equal protection analysis.[98] But the court wrote, "However, when a state regulation is found to treat voters differently in a way that burdens the fundamental right to vote, the Anderson-Burdick standard applies."[99] Notably, this language clearly indicates that the court was affording early voting the same constitutional weight as an in-person vote cast on Election Day.The State further based its claim on McDonald v. Board of Election Commissioners, where the Supreme Court applied rational basis review to an Illinois law denying un-sentenced inmates absentee ballots.[100] The McDonald court found no fundamental right to receive an absentee ballot, particularly where the regulation did not discriminate on the basis of race or wealth, and there were no other signs that the state had otherwise restricted the inmate’s right to vote.[101] However, the court in Obama for America disagreed and created an important distinction. Opponents to early voting may argue that, because in-person voting is still available regardless of early voting, any changes to the early voting laws do not fundamentally affect a citizen's right to vote.The Obama for America court held that the plaintiffs need not be legally prohibited from voting, only that they present a showing that their right to vote was burdened, and they had few other alternatives to access the ballot.[102] The court pointed to statistical sampling that suggested that some one hundred thousand Ohio voters planned to vote in the three days in dispute, and these voters were disproportionately female, older, and of lower education levels.[103] By shortening the early voting window after initiating the system, the state of Ohio created enough of a burden on the right to vote to require justification under the Anderson-Burdick standard.[104]Ohio needed to offer justifications both for why it was restricting voting rights as well as why it treated non-military voters differently from military voters.[105] As for the first, Ohio claimed that local election boards were too busy in the days leading up to Election Day to accommodate early voters.[106] The State justified disparate treatment of voters with the need to accommodate military voters and their families.[107] Ohio argued that, because military voters can be called away at a moment's notice, the State was justified in extending early voting privileges to these voters while denying it to others.[108]The court weighed the magnitude of the plaintiff's injury against Ohio's proffered justifications.[109] As for the contention that election boards needed the window to prepare for Election Day, the court cited evidence that, in fact, early voting may alleviate Election Day problems by eliminating long lines and the need for extended polling hours.[110] Moreover, the court noted that "Ohio’s statutory scheme is not generally applicable to all voters, nor is the State’s justification sufficiently 'important' to excuse the discriminatory burden it has placed on some but not all Ohio voters."[111]The court similarly rejected Ohio's second justification, that military voters require special accommodations because of the risk of being suddenly called away. Here, the court points out that the Equal Protection Clause does not forbid classifications, it merely prohibits treating groups of individuals differently who are otherwise similarly situated.[112] In this case, while military voters are distinct for certain aspects of the voting process, like the need for more liberal rules for obtaining and submitting absentee ballots,[113] the court does not accept Ohio's justification for the purposes of early voting.[114] The court reasons, "[A]ny voter could be suddenly called away and prevented from voting on Election Day. At any time, personal contingencies like medical emergencies or sudden business trips could arise, and police officers, firefighters and other first responders could be suddenly called to serve at a moment’s notice."[115] Therefore, while Ohio has a justification for offering military voters more time to vote, there is not a corresponding justification for offering other voters less time, and shortening the window of early voting for some, and not all voters, represents an unconstitutional burden on the right to vote.[116]In this case, the level of scrutiny and the reliance on equal protection are clear indications that the court intentionally analyzed early voting in Ohio as a fundamental right on par with in-person voting on Election Day.[117] This suggests that, barring further clarification from additional litigation resulting in a resolution of the issue by the Supreme Court, early voting will from now on receive heightened scrutiny in the Sixth Circuit. The implications for Kentucky are two-fold. First, given the reasons outlined in part A) of this section, Kentucky should adopt a system of early voting to expand access to the polls. And, second, in order to implement a constitutional early voting scheme, the system should be comprehensive and should not make any efforts to classify similarly situated voters.[118]

D. Nonpartisan Fact-Checking

There is a second solution, which exists independent of any courtroom or legislative chamber. This solution involves increasing the quality of voter participation by insuring that voters arrive at the polls on Election Day having chosen their candidates based on good information, not corrupted by misleading advertising. The neatest way to accomplish this is through the promotion of fact-checking services. If fact-checkers occupy a more visible platform and broadcast as widely as possible, opponents of the explosion in political spending may eventually feel satisfied that, at the very least, voters of all demographics possess the requisite tools for making an informed decision on Election Day.As previously stated, much of the money in political campaigns is dedicated to advertising, and much of these advertisements are, at best, variations on the truth, and at worst, misleading, false, and potentially defamatory statements.[119] For example, when Mitt Romney kicked off his campaign, one of his first ads featured a sound bite of President Obama saying, "if we keep talking about the economy, we're going to lose."[120] This commercial stands as a prime example of a misleading ad because, while President Obama did utter those words, the Romney camp truncated the quotation so badly that it ignored one crucial fact, when President Obama made the statement, he was directly quoting Senator John McCain, his Republican opponent in the previous election.[121] The reductio ad absurdum of this technique would be a commercial with President Obama saying "Vote for Romney," while leaving off the first half of the statement, "Republicans contend you should . . ."The website PolitiFact.com rated this advertisement "Pants on Fire," its most excoriating rebuke of the truthfulness of a statement.[122] However, given the relatively limited scope of PolitiFact when compared with the Romney campaign, the effect of the "Pants on Fire" rating did less than one might think to impact the efficacy of the advertisement. In reality, the die was cast. Potential voters heard the message and turned their attention toward the economy, focusing on Obama's policies in the process.[123]In 2009, PolitiFact won a Pulitzer Prize for journalism for their coverage of the 2008 presidential election.[124] The website sifted through over 750 political claims made during the 2008 campaign.[125] Since then, PolitiFact has increased the breadth of its coverage, regularly fact-checking the Sunday news shows in a series called PunditFact,[126] and even live-tweeting the primary debates in the run up to the 2016 presidential election.[127] PolitiFact used Twitter to solicit questions from debate viewers, and relied on its extensive body of work to provide up-to-the-minute assessments of candidate's veracity.[128] This information can combat misleading political advertisement, but the average voter needs greater access to this information.One method to increase the influence of fact-checking websites is to amplify their broadcast power. The reach of misleading political ads is enormous. Justice Brandeis famously noted, "If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the processes of education, the remedy to be applied is more speech, not enforced silence."[129] If this is so, then perhaps it would benefit voters to hear the messages of fact-checkers as frequently as they hear misleading radio and television ads. Concerned citizens should consider, rather than donating to a super PAC, using their political capital to support non-partisan fact-checking. Presently, effective advertisement would expansively target social media platforms. Social media is an effective means of reaching millennial voters, but television and radio advertising still garners the bulk of political spending.[130] Given this, local news broadcasts should adopt a nonpartisan, fact-checking segment in the period approaching the election. The news, traditionally a source of objective reporting, will make a strong ally in the effort to create an informed electorate.To clarify, all of these efforts must be accomplished without governmental involvement. The state is a poor arbiter of truth. The government cannot, therefore, serve as the fact-checker. At least one state supreme court has held truth in advertisement laws to be unconstitutional because they placed the burden on the government of proving truth or falsity.[131] However, some claims, as PolitiFact has proven, are simply false, and as many of these should be brought to light by non-partisan, not for profit fact-checkers as possible.

Conclusion

While the recent explosion in political spending is unlikely to slow down any time soon, implementing an early voting program and promoting robust fact-checking will insure that, on Election Day, the roar of political spending does not drown out the voice of the most important political speakers, the voters. Additionally, these steps can insure that the voice with which the electorate speaks is informed and reflective of the people's will. By allowing early voting, the Kentucky legislature would signal that, no matter how partisan political issues may be, voters can trust that, during election season, their representatives and hopeful representatives are as concerned with providing a government that reflects the will of the constituency as they are with electoral success. The heightened scrutiny applied to early voting laws in the Sixth Circuit underscores the constitutional significance of early voting programs.Second, the tidal wave of political advertisements can be met with truth and nonpartisan fact-checking on a national, state, and local level. Increasing the visibility of these important organizations will serve to offer a populist response to the shifting control of political spending from individual contributors to a few donors with outsized financial resources.As more people realize the futility of further litigation against the money interests in light of the current Supreme Court's ideological composition, there is no doubt that additional grassroots ideas will crop up to combat the influence of money in politics. Some will be more successful than others, but advocates for voting rights and campaign finance reform should openly welcome new ideas, allowing each to succeed or fail on its own merits. At the end of the day, the goal for everyone should be an open, honest, and fair political process.

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[1] I want to extend my sincerest thanks to the Kentucky Law Journal, Professor Josh Douglas of the UK College of Law, my wife Emily, and my guide dog Baron for their immeasurable contributions to my achievements in law school.

[2] Russ Choma, Money Won on Tuesday, but Rules of the Game Changed, OpenSecrets: Blog (Nov. 5, 2014), http://www.opensecrets.org/news/2014/11/money-won-on-tuesday-but-rules-of-the-game-changed/.

[3] Russ Choma, Final Tally: 2014’s Midterm Was Most Expensive, with Fewer Donors, OpenSecrets: Blog (Feb. 18, 2015), http://www.opensecrets.org/news/2015/02/final-tally-2014s-midterm-was-most-expensive-with-fewer-donors/.

[4] See e.g. Meg James, Political Ad Spending Estimated at $6 Billion in 2016, L.A. Times (Nov. 18, 2015), http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-political-ad-spending-6-billion-dollars-in-2016-20151117-story.html.

[5] Id.

[6] Doug Mataconis, Voter Turnout in 2014 Midterms Hit Lowest Point Since 1942, Outside the Beltway (Nov. 15, 2014), http://www.outsidethebeltway.com/voter-turnout-in-2014-midterms-hit-lowest-point-since-1942/.

[7] 558 U.S. 310 (2009).

[8] 132 S. Ct. 2490 (2012).

[9] 134 S. Ct. 1434 (2014).

[10] 697 F.3d 423, 430 (6th Cir. 2012).

[11] Louis D. Brandeis, Other People’s Money – Chapter V, Louis D. Brandeis School of Law Library, https://louisville.edu/law/library/special-collections/the-louis-d.-brandeis-collection/other-peoples-money-chapter-v (last visited Dec. 28, 2015).

[12] Mary V. Thompson, Beer. George Washington's Mount Vernon, Mount Vernon Estate & Gardens, available at http://www.mountvernon.org/research-collections/digital-encyclopedia/article/beer/ (last visited Jan. 3, 2016).

[13] Lisa Bramen, Swilling the Planters with Bumbo: When Booze Bought Elections, Smithsonian.com (Oct. 20, 2010), http://www.smithsonianmag.com/arts-culture/swilling-the-planters-with-bumbo-when-booze-bought-elections-102758236/?no-ist.

[14] Id.

[15] Trevor Potter & Bryson B. Morgan, The History of Undisclosed Spending in U.S. Elections & How 2012 Became the “Dark Money” Election, 27 Notre Dame J.L. Ethics & Pub. Pol'y 383, 400 (2013).

[16] Id.

[17] Id.

[18] Id. at 385-86.

[19] Id. at 386.

[20] Id.

[21] See generally M. R. Werner & John Starr, Teapot Dome (1959).

[22] Potter & Morgan, supra note 15, at 404-05.

[23] Id. at 405.

[24] Id. at 411-12 (noting that campaign spending nearly doubled between 1956 and 1968 from $155 million to nearly $300 million).

[25] Id. at 412.

[26] See id.

[27] Id. at 412-13.

[28] Leon Friedman & William F. Levantrosser, Richard M. Nixon: Politician, President, Administrator 301 (1991).

[29] See id. at 414.

[30] Id.

[31] Buckley v. Valeo, 424 U.S. 1 (1976)

[32] Id. at 27.

[33] Id. at 143.

[34] Id. at 44 n.52.

[35] Potter & Morgan, supra note 15, at 428.

[36] Commentary: The Campaign Finance Page, The Free Expression Policy Project, http://www.fepproject.org/commentaries/campaignfinance.html#three (last updated Jan. 22,2010).

[37] Id.

[38] Id.

[39] See Buckley v. Valeo, 424 U.S. 1, 44 (1976).

[40] 52 U.S.C. § 30104(f)(1)-(2) (West, Westlaw current through P.L. 114-93 (excluding P.L. 114-74 and 114-92) approved Nov. 25, 2015).

[41] 52 U.S.C. § 30104(f)(A)(i)(I)-(III) (West, Westlaw current through P.L. 114-93 (excluding P.L. 114-74 and 114-92) approved Nov. 25, 2015).

[42] 52 U.S.C. § 30104(f)(3)(A)(ii) (West, Westlaw current through P.L. 114-93 (excluding P.L. 114-74 and 114-92) approved Nov. 25, 2015).

[43] Commentary: The Campaign Finance Page, supra note 36.

[44] Id.

[45] Id.

[46] Id.

[47] Id.

[48] McConnell v. FEC, 540 U.S. 93, 110, 196 (2003) (upholding BCRA § 201); see also id. at 321 (Kennedy, J., joined by Rehnquist, C.J. and Scalia, J.) (voting to uphold § 201).

[49] Id. at 104.

[50] Id.

[51] Id. at 193.

[52] See James Bopp, Jr. & Richard E. Coleson, The First Amendment is Still Not a Loophole Examining McConnell's Exception to Buckley's General Rule Protecting Issue Advocacy, 31 N. Ky. L. Rev. 289, 325 (2004).

[53] See FEC v. Wis. Right to Life, Inc. 551 U.S. 449, 449-50 (2007).

[54] William Branigin, Fred Barbash & Daniela Deane, Supreme Court Justice O'Connor Resigns, Wash. Post (July 1, 2005, 7:11 PM) http://www.washingtonpost.com/wp-dyn/content/article/2005/07/01/AR2005070100653.html.

[55] David Stout, Alito Is Sworn in After 58-42 Vote to Confirm Him, N.Y. Times (Jan. 31, 2006) http://www.nytimes.com/2006/01/31/politics/politicsspecial1/31cnd-alito.html?_r=0.

[56] Citizens United v. FEC, 558 U.S. 310, 312, 317 (2010).

[57] Id. at 909-10.

[58] Ian Vandewalker & Eric Petry, Election Spending 2014: Outside Spending in Senate Races Since Citizens United, Brennan Ctr. For Justice (Jan. 13, 2015), http://www.brennancenter.org/publication/election-spending-2014-outside-spending-senate-races-citizens-united.

[59] Id.

[60] Id.

[61] Am. Tradition P'ship, Inc. v. Bullock, 132 S. Ct. 2490, 2491 (2012).

[62] Paul Gronke, Early Voting Reforms and American Elections, 17 Wm. & Mary Bill Rts. J. 423, 432 (2008).

[63] Id.

[64] Id.

[65] Id.

[66] Id.

[67] Id. at 434.

[68] See id.

[69] Ky. Const. § 148.

[70] Id.

[71] Ky. Rev. Stat. Ann. § 118.035(2) (West, Westlaw current through the end of the 2015 regular session).

[72] Ky. Rev. Stat. Ann. § 118.035(1) (West, Westlaw current through the end of the 2015 regular session).

[73] Badger, Emily, Why Early Voting Is About So Much More Than Convenience, Wash. Post (Sept. 30, 2014), http://www.washingtonpost.com/blogs/wonkblog/wp/2014/09/30/why-early-voting-is-about-so-much-more-than-convenience/.

[74] Id.

[75] Nat'l Conference of State Legislatures, Absentee and Early Voting, (Feb. 11, 2015), http://www.ncsl.org/research/elections-and-campaigns/absentee-and-early-voting.aspx.

[76] Obama for America v. Husted, 697 F.3d 423, 429-30 (2012).

[77] Id. at 425.

[78] Id.

[79] Id.

[80] Id. at 427.

[81] Id. at 426.

[82] Id. at 423.

[83] Id. at 425.

[84] Id. at 426.

[85] Id.

[86] Id. at 426-27.

[87] Id.

[88] Id.

[89] Id. at 427.

[90] See id. at 428-37.

[91] Id. at 428 (quoting Harper v. Va. State Bd. of Elections, 383 U.S. 663, 670 (1966); League of Women Voters v. Brunner, 548 F.3d 463, 477 (6th Cir. 2008)).

[92] Id. at 429 (citing McDonald v. Bd. of Election Comm’rs, 394 U.S. 802, 807-09 (1969); quoting Burdick v. Takushi, 504 U.S. 428, 434 (1992)).

[93] Id.at 429-30.

[94] Id. at 429 (citing McDonald, 394 U.S. at 807-09).

[95] Id. (quoting Burdick, 504 U.S. at 434).

[96] Id.; Anderson v. Celebrezze, 460 U.S. 780 (1983); Burdick, 504 U.S. at 428-50.

[97] Obama for America, 697 F.3d at 429 (quoting Burdick, 504 U.S. at 434).

[98] Id. at 430.

[99] Id. (citing Hunter v. Hamilton Cnty. Bd. of Elections, 635 F.3d 219, (6th Cir. 2011)).

[100] Id.; McDonald, 394 U.S. at 803.

[101] Obama for America, 697 F.3d at 431 (citing McDonald, 394 U.S. at 807).

[102] Id. at 431 (quoting Citizens for Legislative Choice v. Miller, 144 F.3d 916, 921 (6th Cir. 1998)).

[103] Id.

[104] Id.

[105] Id. at 431-32.

[106] Id. at 432.

[107] Id.

[108] Id. at 434.

[109] Id. at 433.

[110] See id. at 433.

[111] Id. at 434.

[112] Id. at 435.

[113] Id. at 434.

[114] Id.

[115] Id. at 435.

[116] Id.

[117] See id.

[118] The Kentucky legislature has already attempted to create separate classes of voters. Ky. Rev. Stat. Ann. § 117.088 (West, Westlaw current through 2015 regular session). This statute allows cities of a certain size to authorize in-person early voting for blind and visually impaired voters. While the existence of this statute likely does not create an affirmative duty for the legislature to enact early voting for everyone, it is likely that the statute is unconstitutional under Obama for America.

[119] See Michael Cooper, Fact-Checkers Howl, but Campaigns Seem Attached to Dishonest Ads, N.Y. Times, Sept. 1, 2012, at A14, http://www.nytimes.com/2012/09/01/us/politics/fact-checkers-howl-but-both-sides-cling-to-false-ads.html?_r=0.

[120] Id.

[121] Id.

[122] Id.

[123] Id.

[124] Bill Adaire, PolitiFact Wins Pulitzer, PolitiFact.com (Apr. 20, 2009, 6:29 PM), http://www.politifact.com/truth-o-meter/article/2009/apr/20/politifact-wins-pulitzer/.

[125] Id.

[126] PunditFact, PolitiFact.com, http://www.politifact.com/punditfact/article/ (last updated Nov. 15, 2015).

[127] Amy Gahran, Debates, Facts and Live Tweeting: How Politifact and NPR Do It, Poynter (Oct. 8, 2008, 2:10 PM) http://www.poynter.org/news/91955/debates-facts-and-live-tweeting-how-politifact-and-npr-do-it/.

[128] Id.

[129] Whitney v. California, 274 U.S. 357, 377 (1927) (Brandeis, J., concurring).

[130] E. Ill. Univ., Presidential Campaigns: Packaging the Presidents, http://www.eiu.edu/eiutps/campaigns.php (last visited Mar. 22, 2015).

[131] Rickert v. State Pub. Disclosure Comm'n, 168 P.3d 826, 831-32 (Wash. 2007).

On a Path to Autonomy: Death With Dignity Paves the Way

Article | 104 KY. L. J. ONLINE 35 | November 12, 2015

Joseph J. Sherman [1]

Introduction

In early October 2014, Brittany Maynard made headlines when she announced her intention to end her own life in response to her cancer diagnosis.[2] Maynard was a California woman who was diagnosed with terminal glioblastoma,[3] which is a type of highly malignant brain tumor.[4] But because California prohibits physician-assisted death (“PAD”), she and her family made the difficult decision to move to Oregon, where she could legally seek such medical care.[5] On November 1, 2014, Maynard carried out her plan to end her own life by taking a lethal dose of barbiturates prescribed by her doctor.[6] Her choice to end her own life, rather than to let her illness take its natural course, has generated a great deal of controversy.[7] Is it beneficent to promote an early death for the terminally ill to prevent pain and suffering? Do we overextend our role in medicine when death becomes a prescription? What implications does PAD have on the future of end-of-life care?This controversy may be partially fueled by a misunderstanding of the legal framework surrounding PAD. “Physician-assisted [death] occurs when a physician facilitates a patient’s death by providing the necessary means and/or information to enable the patient to perform the life-ending act . . . .”[8] This definition is distinct from the refusal of life-saving medical care, which the United States Supreme Court has recognized as a liberty interest protected by the Constitution.[9] The Court has declined to recognize suicide as a liberty interest, holding state bans on PAD to be constitutional as long as they neither infringe on citizens’ fundamental rights nor involve suspect classifications under the Equal Protection Clause of the Fourteenth Amendment.[10]Jurisprudence around the issue of PAD has left the states to decide for themselves whether to legalize the practice. However, many people, even medical experts, do not have a clear enough grasp of jurisprudence on this subject to make an informed argument in favor of or against legalization of PAD. This note elucidates the major jurisprudence surrounding the right to refuse medical treatment, physician-assisted death, and the Oregon Death With Dignity Act. First, it will provide background on Supreme Court rulings on end-of-life issues, noting the contrived distinction between the Court’s understanding of refusal of medical treatment and its understanding of PAD. Second, it will discuss the different paths some states have taken to legalize PAD and objections others have had to its application. Third, it will analyze annually collected data on the Oregon Death With Dignity Act and demonstrate that both the Supreme Court’s analysis and other popular criticisms of PAD are misguided. Finally, this note will conclude by suggesting ways the states could encourage development in this area of the law.

I. Supreme Court Foundation: the Right to Refuse Medical Treatment and Physician-Assisted Death

There is a significant difference between the Supreme Court’s discussion of the right to refuse medical treatment and its discussion of PAD. Broadly speaking, in the case of the right to refuse medical treatment, the patient is allowed to die of whatever disease from which they suffer; medicine is not the cause of death. However, in the case of PAD, the medicine is actually the cause of death. In grappling with the distinction the Court draws, it will become clear that the distinction lacks coherence.

A. SCOTUS and the Right to Refuse Medical Treatment

The Supreme Court began addressing the right to refuse medical treatment in 1905 when it decided Jacobson v. Massachusetts.[11] In that case, a man challenged a Cambridge ordinance that mandated vaccination against smallpox in response to the growing threat of epidemic.[12] He argued that the ordinance violated his Fourteenth Amendment liberty interest.[13] The Supreme Court held that the ordinance fell within the state’s police power to protect public health.[14]The most significant decision on the right to refuse medical treatment came in 1990 in Cruzan v. Director, Missouri Department of Health.[15] The case involved a young woman, Nancy Cruzan, whose brain was without oxygen for twelve to fourteen minutes while she waited for paramedics after an automobile accident.[16] She entered a persistent vegetative state, and it soon became clear that she would never regain full mental capacity.[17] Cruzan’s family sought to have the feeding and hydration procedures terminated, but hospital employees would not honor their request without a court order.[18] The trial court granted their request on the basis that Cruzan had a fundamental right to refuse the withdrawal of “death prolonging procedures.”[19] However, the Missouri Attorney General appealed the decision, and the Missouri Supreme Court reversed the trial court decision, denying the family’s request.[20] The court required Cruzan’s family to show by “clear and convincing evidence” that removal of feeding and hydration procedures would have been consistent with Cruzan’s wishes.[21] On appeal to the U.S. Supreme Court, the issue was whether the Constitution forbade Missouri from imposing the “clear and convincing evidence” standard.[22] Because Cruzan was an incompetent patient,[23] the Court was comfortable affirming the Missouri Supreme Court’s requirement of clear and convincing evidence that Nancy Cruzan would have wished to cease medical treatment.[24] A living will or even testimony as to conversations the patient has had about end-of-life care can suffice to establish clear and convincing evidence.[25] This requirement is a way of ensuring individual autonomy, an aspect of respect for persons embodied in the set of medical standards known as the Belmont Report.[26]Ironically, the notion of autonomy undergirding the Court’s ultimate position on the right to refuse medical treatment is undermined in states that do not allow a path for some patients to seek physician-assisted death.[27] This result will be explored in Part III.

B. Physician-Assisted Death

Since Cruzan, the Supreme Court has had the chance to hear cases on PAD. Recall that the American Medical Association said “[p]hysician-assisted [death] occurs when a physician facilitates a patient’s death by providing the necessary means and/or information to enable the patient to perform the life-ending act . . . .”[28] This concept is slightly different from the issue in Cruzan, because it involves actually providing the patient with the substance that causes death, rather than removing medical treatment and allowing the patient to die naturally.[29]In Washington v. Glucksberg, the Supreme Court addressed a general Washington statute that prohibited anyone from “knowingly caus[ing] or aid[ing] another person to attempt suicide.”[30] The statute also had the effect of preventing physicians from assisting three terminally ill patients in ending their lives.[31] The patients and physicians were challenging the statute on the grounds that it violated the Due Process Clause of the Fourteenth Amendment.[32] However, the Supreme Court held that the statute did not violate the Constitution.[33] The case was inextricably tied to suicide, and although the Court acknowledged that it assumed a right of competent patients to refuse medical treatment, it was uncomfortable with the idea of granting constitutional protection to suicide under any circumstance.[34] Chief Justice Rehnquist articulated several state interests in opposition to a policy recognizing a right to suicide:

These interests include . . . preserving human life; preventing the serious public-health problem of suicide, especially among [vulnerable populations]; protecting the medical profession’s integrity and ethics and maintaining physicians’ role as their patients’ healers; protecting [vulnerable populations] from indifference, prejudice, and psychological and financial pressure to end their lives; and avoiding a possible slide toward voluntary and perhaps even involuntary euthanasia.[35]

However, this decision does not mean that PAD is unconstitutional. By refusing to strike down Washington’s ban on this practice, this decision recognizes suicide as a public health concern but provides states with the discretion to determine how to address PAD.[36]In Vacco v. Quill, the Supreme Court addressed a New York statute that made it illegal to aid a person in committing suicide or attempting to commit suicide.[37] A group of patients challenged the statute on the grounds that it violated the Equal Protection Clause of the Fourteenth Amendment.[38] They argued that the statute banning assisted suicide had the effect of classifying people into two groups with unequal protection under the law.[39] The Second Circuit found that patients who were attached to life support machines had the option to refuse additional medical treatment to end their lives, while patients who were not attached to life support machines lacked the option to end their lives.[40] The Supreme Court ruled that the classification they described was not suspect, and that it deserved rational basis review.[41] Applying that standard, the Court held that there was a legitimate interest in distinguishing between suicide and refusal of medical treatment.[42] That distinction was based on the causal factor: does the patient die from the disease or the medicine?[43] This decision protects the integrity of the medical profession, one of the state interests mentioned in Glucksberg as well.[44]In upholding two state bans on PAD, the Supreme Court did not decide that the practice was unconstitutional. It merely left the question open for states to decide for themselves whether to ban PAD or to legalize it. Now that the Supreme Court has made these distinctions, states must ask themselves where to go from here.

II. Different Paths to the Same Destination: Legalizing PAD

A. States That Have Legalized PAD

There are two states that legalized PAD through voter initiatives. In 1994, Oregon voters passed an initiative, the Oregon Death With Dignity Act (“ODWDA”), making it the first state in the United States to legalize PAD.[45] In 2008, Washington became the second state to endorse PAD by voter initiative.[46] The ODWDA has a number of safeguards in place to protect against abuse. Those who use the law must be at least eighteen years old;[47] they must be terminally ill, which means they have less than six months to live;[48] they must be capable of communication;[49] and they must not be suffering from any psychiatric disorder, including depression.[50] In addition, they must meet residency requirements.[51] Notably, they must also be able to administer and swallow the lethal medication themselves.[52] The physician is not permitted to administer the medication.[53] At the time of Brittany Maynard’s decision, only one state had legalized PAD by legislative act: in 2013, the Vermont legislature passed a bill to protect patient choices at the end of life.[54]In addition, two states have legalized PAD by court ruling. In the 2009 case of Baxter v. Montana, the Montana Supreme Court heard the case of a truck driver with leukemia who wanted a prescription for medication that would end his life.[55] Montana’s homicide statute forbade “knowingly caus[ing] the death of another human being,” and there was concern that the physician would be implicated for knowing the patient would use the medication for the purpose of ending his life.[56] However, Montana also has a consent statute on the books that allows the use of a consent defense if the victim consented to whatever the charged offense may be.[57] The court ruled that the consent statute should apply rather than permitting an exception to the consent statute on the basis that PAD ran afoul of public policy concerns.[58] Montana’s road to legalizing PAD was unique; not every state could arrive there in the same manner.Finally, a New Mexico state court recently issued an injunction preventing the prosecution of physicians who facilitate the end of life in competent, terminally ill patients.[59] The court based its decision on a state constitutional provision guaranteeing its citizens the rights of “enjoying . . . life and liberty . . . and of seeking and obtaining safety and happiness.”[60] The court “[could not] envision a right more fundamental, more private or more integral to the liberty, safety and happiness of . . . New Mexican[s] than the right of a competent, terminally ill patient to choose aid in dying.”[61] After declaring aid in dying a fundamental right under the state constitution, the court subjected the statutory ban on assisted suicide to strict scrutiny, ultimately striking it down.[62]

B. SCOTUS Inadvertently Provides a Shield Against Popular Criticisms

Shortly after the Glucksberg and Vacco cases, and after the passage of the ODWDA, a flurry of law review articles were written criticizing autonomy as a justification for allowing physicians to assist the terminally ill in dying.[63] In essence, they argued (1) that Americans were so invested in the value of individual autonomy that no state could ever hope to regulate PAD,[64] (2) that physicians and family members would coerce the vulnerable populations into availing themselves of Death With Dignity laws,[65] and (3) that those vulnerable populations would disproportionately avail themselves of Death With Dignity laws because of inadequate medical care, in addition to many other pressures.[66]The American Medical Association expressly disapproves of PAD, arguing that it is “fundamentally incompatible with the physician’s role as healer . . . .”[67] But the physician’s role as a healer is ethically complex. The basic ethical principles of respect for persons,[68] beneficence,[69] and justice[70] articulated in the Belmont Report are not blackletter legal rules, but abstract concepts that bend and conflict with one another. Some medical professionals argue that the Death With Dignity movement is a “slippery slope,” pointing to other developed nations where they say the movement has gone awry.[71] In Holland and Belgium, for example, certain organizations apparently provide euthanasia to patients with clinical depression and no terminal physical illness.[72]It is erroneous to suggest that outright euthanasia programs could exist in the legal framework of the United States. The Supreme Court has time and again recognized the interest of states in preserving human life.[73] When weighing a citizen’s liberty interests, courts are also likely to recognize a state’s “legitimate interest[] in . . . protecting vulnerable persons.”[74] These government interests can only be overcome when there is a terminal illness and medical care is futile. The United States has only been willing to allow PAD in cases where death is already imminent, and that reality is unlikely to change soon. Fears of a slippery slope associated with legalizing PAD may be keeping states from joining the company of Oregon, Washington, and Vermont. Americans sometimes have extremely negative reactions to depression-related suicide.[75] The prospect of a state law unintentionally leading to depression-related PAD might sound like playing with political fire, but those fears are unfounded.

III. Experimenting with State Policies

A. Can Refusal of Treatment and PAD Be Addressed at the Federal Level?

Amici curiae in the Glucksberg and Vacco cases argued fervently against the Supreme Court’s ultimate decision. A plethora of arguments was given. One such argument was that terminally ill patients denied the choice of physician-assisted dying may be forced to endure horrific pain and suffering and loss of dignity.[76] Another argument was that terminally ill patients denied the option of physician-assisted dying are sometimes forced to experience a violent, lonely, at times gruesome death.[77] This was the basic situation facing Brittany Maynard after her diagnosis with terminal glioblastoma. She faced painful treatments that would have destroyed her quality of life.[78] Since she was young and healthy, she also faced the prospect that her body would linger on while her glioblastoma destroyed her mind, and her family would have to watch that happen.[79] Amici for respondents in Glucksberg and Vacco also argued that terminally ill patients denied the option of physician-assisted dying may be forced to rely on family members to assist in hastening death.[80] In addition, amici were concerned that terminally ill patients denied the option of physician-assisted dying sometimes fail in their attempts to hasten death, with tragic results.[81] Maynard’s family found an alternative, though not painless, solution. To show respect for Maynard’s autonomy, they uprooted themselves from their California home and navigated an unfamiliar state legal system to secure the care Maynard needed, all the while grappling with Maynard’s prognosis.[82]Amici also argued that the distinction between refusal of medical treatment and PAD was without meaning and irrational.[83] They pointed to the Second Circuit’s reasoning on the matter:

Withdrawal of life support requires physicians or those acting at their direction physically to remove equipment and, often, to administer palliative drugs which may themselves contribute to death. The ending of life by these means is nothing more nor less than assisted suicide. It simply cannot be said that those mentally competent, terminally-ill persons who seek to hasten death but whose treatment does not include life support are treated equally.[84]

In this passage, Judge Calabresi emphasizes the deliberate actions a physician must take in order to carry out a patient’s wishes to remove life-sustaining medical treatment. At best, the argument that removal of treatment allows a patient’s condition to cause death, and thus, that the physician has nothing to do with the patient’s death, is very weak. Indeed, the Supreme Court proposes that a physician is not acting to bring about the death of the patient in the case of refusal of life-saving treatment, and that only the patient’s condition actually causes death. “[D]eath which occurs after the removal of life sustaining systems is from natural causes . . . .”[85] But is a causation-based distinction between these two doctrines a good distinction to make? Are there other ways to conceive of the distinction? If so, do we have enough information to do it?The Supreme Court’s distinction between these two doctrines is based on causation. It places importance on the fact that refusal of medical treatment places cause of death by the patient’s disease, but PAD makes the physician’s act the cause of death.[86] However, the Court could have chosen to place larger emphasis on the issue of certainty. Based on the annual report published by the Oregon Public Health Division, it appears that, while death by disease is certain to occur when terminal patients on life support choose to remove life support, death by medication is not certain to occur when doctors prescribe lethal medication to terminal patients.[87]It remains unclear exactly what the Supreme Court would do with PAD jurisprudence if it abandoned the distinction between PAD and the right to refuse medical treatment. Indeed, doing away with the distinction might actually prove unfavorable to PAD advocates. Recall what Judge Calabresi said about the two practices: “[t]he ending of life by these means is nothing more nor less than assisted suicide.”[88] If the Supreme Court conceived of both practices as suicide, its prior precedents suggest that it would find no constitutionally protected interest even in the right to refuse medical treatment. However, that would only be true if the Supreme Court also continued to use a rather broad conception of “suicide” as well.A Gallup poll indicates that Americans’ conception of PAD changes drastically depending on the language used to discuss it.[89] When described as “[a]ssist[ing] the patient to commit suicide,” only 51% of Americans think it should be allowed, and 45% of Americans think it should not be allowed.[90] However, when described as “[e]nd[ing] the patient’s life by some painless means,” 70% of Americans think it should be allowed.[91] The lenses we use to view the concept of PAD, including the lens of language, drastically affect the way we perceive this issue, and the Justices of the Supreme Court are no exception. Something about our conception of “suicide” has to change if the Supreme Court can become capable of addressing the issue in a more nuanced way. Blackletter rules make for a brute force approach to nuanced problems. But, it seems unlikely that the Supreme Court would be willing to revise its approach on these issues anytime soon. The Court’s concerns about coercion against vulnerable populations are not going anywhere, and the Court is probably also concerned about appearing brazen on the matter. In effect, the PAD issue really has been left to the states, and the states must look to one another for guidance. They would be well advised to look to Oregon.

B. Policy Indicators in Oregon

Courts have expressed some concern that PAD will lead to unseemly results for vulnerable populations, including the elderly and the disabled.[92] The ODWDA has been on the books for seventeen years,[93] which is enough time for some meaningful things to begin to be drawn from a policy analysis on the law. The Oregon Public Health Division (“OPHD”) compiles an annual report about the administration of the law,[94] and some of its findings can directly address the concerns that courts continue to articulate. While the OPHD would do well to collect more information on patient vulnerability, such as the patient's disability status, relationships, medical care, and whether someone has to make medical decisions on behalf of the patient, the OPHD has collected data on a number of factors that demonstrate what kind of patients avail themselves of the ODWDA.[95] The majority of people using the ODWDA law reported end-of-life concerns such as loss of autonomy (91.5%), being less able to engage in activities that make life enjoyable (88.7%), and loss of dignity (79.3%).[96] Fewer people reported concerns about being a burden on family (40.0%), and very few reported concerns about the financial implications of treatment (only 3.2%).[97] These data do not seem to be representative of an exploited population. Most of the people who seem to avail themselves of the ODWDA are well educated, not undereducated.[98] It is also persuasive that, out of the 1327 people who have used the ODWDA, only 859, or 64.7%, have ended their lives using the prescribed medication.[99] This may be one of the more unintuitive results of ODWDA: the number of people who have actually used barbiturates to end their lives under the ODWDA represent a surprisingly low percentage of the law’s beneficiaries. It decreases the credibility of the suggestion that PAD entails physicians causing the death of their patients.With these statistics in mind, the concerns legal scholars had about PAD in 1998 no longer pose much cause for concern. Vulnerable populations did not disproportionately avail themselves of the ODWDA; rather, the exact opposite happened.[100] Since vulnerable populations did not disproportionately avail themselves of the ODWDA, the argument that physicians and family members will coerce vulnerable populations into utilizing the ODWDA also seems less convincing.[101] Critics also argued that Americans’ preference for individual autonomy would make it impossible to regulate PAD in any meaningful way.[102] To the contrary, Oregon has been doing it successfully for more than a decade.The Supreme Court reasons that PAD cases are distinguishable from cases about refusing medical treatment because when patients refuse life-saving treatment, their disease kills them, but when a physician prescribes medication to assist patients in committing suicide, prescribed medication kills them. Yet, in more than one-third of Oregon cases, when a physician prescribes lethal medication to a patient, the patient’s disease is still the cause of death. This result is illustrative of a realization that the American justice system contemplates end-of-life issues in fundamentally the wrong way.When terminally ill patients seek a prescription of lethal medication, they are not merely receiving the assurance of a peaceful end of life. Rather, these patients are being given something precious that they lost when they were first diagnosed with their terminal illness—their autonomy. In their amicus brief in Vacco, Americans for Death With Dignity and the Death With Dignity Education Center said, “When we enter a hospital for the last time, we may have the strength, and technically, the legal right to end our lives if we wish. But once in the medical system, we often lose the ability to help ourselves.”[103]

C. Lessons Learned in California

California’s absence of Death With Dignity laws led to Brittany Maynard’s difficult choice to leave her home state and resettle in Oregon.[104] After international attention was focused on the process she underwent to end her life in the manner she chose, California appears to have learned its lesson. A bill originating in the California Senate, called the End of Life Option Act,[105] reached the desk of Gov. Jerry Brown and was signed on October 5, 2015.[106] In his letter to the members of the California legislature, he invoked Brittany Maynard’s memory.[107] He also noted that, in making his decision to sign the bill into law, he considered “heartfelt pleas” from Maynard’s family and Archbishop Desmond Tutu, as well as advice from a Catholic Bishop, two of his own doctors, former classmates, and friends.[108] Clearly, PAD is an uncomfortable issue to think about deeply, but we can make the right decision as a community when we have sufficient information at our disposal.

Conclusion

The Supreme Court is not impervious to a simple shortage of available information. Everyday Americans are not the only ones confused about the legal issues surrounding end-of-life care. For now, the Supreme Court has drawn a causation-based distinction between the refusal of medical treatment and PAD, which has the effect of allowing patients who rely on life-sustaining care to die, but barring terminally ill patients from doing the same, even when they are in great pain. However, statistical information about the utilization of PAD across different states might provide invaluable quantitative information about causation. If Oregonians are not unique, and the rest of the country presents a similar pattern with regard to patient choices, the Supreme Court may have to revisit its distinction between PAD and refusal of medical treatment. In cases involving the removal of life-sustaining care, the Supreme Court has emphasized autonomy. The next time a PAD case reaches the Supreme Court, we should hope that there is enough quantitative evidence to show that the same emphasis on autonomy is due for the terminally ill. In the wake of Brittany Maynard’s decision, states would be wise to reconsider the benefits of PAD. Currently, most states inadvertently send a grim message to their terminally ill residents: “leave or you will suffer the consequences.” California has learned the hard way that no state should send that message.

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[1] J.D. Candidate 2016, University of Kentucky College of Law. Joseph Sherman also serves on the Kentucky Law Journal Editorial Board as the Online Content Editor.

[2] See, e.g., Brandon Griggs, Dying Young: Why Brittany Maynard’s Story Resonates, CNN (Oct. 14, 2014, 4:28 PM), http://www.cnn.com/2014/10/08/living/death-dignity-brittany-maynard/.

[3] Id.; Nicole Weisensee Egan, Terminally Ill Woman Brittany Maynard Has Ended Her Own Life, People (Nov. 2, 2014, 7:35 PM), http://www.people.com/article/brittany-maynard-died-terminal-brain-cancer.

[4] Brain Tumor Information, Am. Brain Tumor Ass’n, http://www.abta.org/brain-tumor-information/types-of-tumors/glioblastoma.html (last visited Mar. 20, 2015).

[5] Video: Brittany Maynard’s Legacy: One Year Later, The Brittany Maynard Fund, http://www.thebrittanyfund.org/.

[6] Egan, supra note 3; Eyder Peralta, As Planned, Right-to-Die Advocate Brittany Maynard Ends Her Life, NPR: The Two-Way (Nov. 3, 2014, 8:27 AM), http://www.npr.org/blogs/thetwo-way/2014/11/03/361094919/as-planned-right-to-die-advocate-brittany-maynard-ends-her-life.

[7] See Egan, supra note 3; Peralta, supra note 6.

[8] AMA Council on Ethical and Judicial Affairs, Formal Op. 2.211 (1994), http://www.ama-assn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion2211.page (discussing Physician-Assisted Death).

[9] See Cruzan v. Dir., Mo. Dep’t of Health, 497 U.S. 261, 279 (1990).

[10] Vacco v. Quill, 521 U.S. 793, 799 (1997); Washington v. Glucksberg, 521 U.S. 702, 728 (1997).

[11] See Jacobson v. Massachusetts, 197 U.S. 11, 26 (1905).

[12] Id. at 12-14.

[13] Id. at 14.

[14] Id. at 35, 39.

[15] See Cruzan v. Dir., Mo. Dep’t of Health, 497 U.S. 261, 279 (1990).

[16] See id. at 266.

[17] Id. at 266-67. At this point, the Cruzan’s situation could be referred to as a case of “scientific futility”: treatment cannot achieve the medical result expected by the family, which is a full recovery. See Barbara A. Noah, Politicizing the End of Life: Lessons from the Schiavo Controversy, 59 U. Miami L. Rev. 107, 128 (2004). “Ethical futility” occurs when treatment actually no longer serves the underlying interests of the patient. The latter of these situations is more difficult to identify and address when the patient in incompetent. Id. For a discussion of the differences between scientific and ethical futility in the case of end-of-life case for Terry Schiavo, see id. at 126-31 (2004).

[18] Cruzan, 497 U.S. at 267.

[19] Id. at 268 (internal quotation marks omitted).

[20] See id. at 261, 268, 336.

[21] Id. at 285.

[22] Id. at 269.

[23] Id. at 265. The Supreme Court assumed without deciding that there was a constitutionally protected liberty interest in the refusal of medical treatment in cases involving competent patients. Id. at 279. However, the Court did not decide that incompetent patients had a similar unqualified right. Because the wishes of incompetent patients cannot readily be determined absent some outside evidence, it is difficult to respect the autonomy of an incompetent patient.

[24] See id. at 282.

[25] See id. at 268-69.

[26] See Nat’l Comm’n for the Prot. of Human Subjects of Biomedical and Behavioral Research, The Belmont Report: Ethical Principles and Guidelines for the Protection of Human Subjects of Research 4 (1978) (finding that respect for a person’s autonomy is a basic ethical conviction), http://videocast.nih.gov/pdf/ohrp_belmont_report.pdf [hereinafter “The Belmont Report”]. The Belmont Report was developed in 1974 by the National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research to identify basic ethical principles that should guide the conduct of research involving human subjects. Mary Bernadette Ott & Gary Yingling, Guide to Good Clinical Practice ¶ 840 (2013), Westlaw CLINPRAC. It relied, in part, on the Nuremberg Code, which was written by Nuremberg Trial judges after World War II in response to Nazi atrocities committed during the war. See id. Although the Belmont Report was written to address ethical principles with respect to research on human subjects, modern medical practitioners hold its ethical principles dear even in general practice, even where practice might not connote “research” in the minds of most laypersons. Perhaps this is because the federal definition of “research” is quite broad. According to the Code of Federal Regulations, “[r]esearch means a systematic investigation, including research development, testing and evaluation, designed to develop or contribute to generalizable knowledge.” 45 C.F.R. § 46.102(d) (2015). “Activities which meet this definition constitute research for purposes of this policy, whether or not they are conducted or supported under a program which is considered research for other purposes. For example, some demonstration and service programs may include research activities.” Id. Indeed, regardless of whether the American Medical Association considers general practice to be “research,” it clearly and explicitly respects the concept of informed consent, which is an aspect of respect for persons, one of the three ethical principles articulated in the Belmont Report. See Ott & Yingling, supra. The Belmont Report is not blackletter law, but rather is a set of professional standards, originally intended only for research, but given broader application professionally. See id.

[27] See The Belmont Report, supra note 26, at 4-6.; infra Part III.B.

[28] AMA Council on Ethical and Judicial Affairs, Formal Op. 2.211 (1994), http://www.ama-assn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion2211.page.

[29] Compare id., with Cruzan v. Dir., Mo. Dep’t of Health, 497 U.S. 261, 279 (1990).

[30] Washington v. Glucksberg, 521 U.S. 702, 706-07 (1997).

[31] Id. at 707.

[32] Id. at 708-09.

[33] Id. at 709.

[34] See id. at 723 (citing Cruzan, 497 U.S. at 279).

[35] Glucksberg, 521 U.S. at 703-704. Vulnerable populations in this case include “the young, the elderly, and those suffering from untreated pain or from depression or other mental disorders,” as well as “the poor, . . . disabled persons, [and] the terminally ill . . . .” Id.

[36] See id. at 730, 735.

[37] Vacco v. Quill, 521 U.S. 793, 796 (1997).

[38] Id. at 793.

[39] See id. at 798, 800.

[40] Id. at 798.

[41] Id. at 800-01.

[42] Id.

[43] Id. at 801.

[44] Id. at 808-09 (citing Washington v. Glucksberg, 521 U.S. 702, 703-04 (1997)).

[45] See Or. Rev. Stat. §§ 127.800-890, 127.895, 127.897 (Westlaw, current with 2015 Reg. Sess. legislation effective through Oct. 5, 2015), https://public.health.oregon.gov/ProviderPartnerResources/EvaluationResearch/DeathwithDignityAct/Pages/ors.aspx.

[46] Wash. Rev. Code Ann. §§ 70.245.010-220, 70.245.901-904 (Westlaw, current with all laws from the 2015 Regular Session and 2015 1st, 2nd, and 3rd Special Sessions), http://apps.leg.wa.gov/rcw/default.aspx?cite=70.245&full=true. Washington’s Death With Dignity statute was written to be substantially similar to the ODWDA. Anne Marie Su, Physician Assisted Suicide: Debunking the Myths Surrounding the Elderly, Poor, and Disabled, 10 Hastings Race & Poverty L.J. 145, 155-56 (2013).

[47] Or. Rev. Stat. § 127.805.

[48] Id. at § 127.800-805.

[49] Id. Communication does not necessarily entail speaking. As long as the patients can communicate in some way, the law is satisfied. Id.

[50] Id. at § 127.825.

[51] Id. at § 127.860. Only Oregon residents can avail themselves of the ODWDA. Residency does not require living in Oregon for any particular duration but does entail verification by driver’s license, lease of apartment or proof of home ownership, voter registration, or payment of taxes. Id.

[52] See id. at §§ 127.815, 127.880.

[53] Id. at § 127.880.

[54] Vt. Stat. Ann. tit. 18, §§ 5281-92 (Westlaw, current through the First Session of the 2015-2016 Vermont General Assembly), http://legislature.vermont.gov/assets/Documents/2014/Docs/BILLS/S-0077/S-0077%20As%20Passed%20by%20Both%20House%20and%20Senate%20(Unofficial).pdf. The bill was signed into law on May 20, 2013, but many substantive portions of the law will not take effect until July 1, 2016. Id. Vermont’s PAD law was also written to be similar to the ODWDA; however, its statutory mandates are set to expire after three years, leaving in their place professional medical standards. Kathryn L. Tucker, Vermont’s Patient Choice at End of Life Act: A Historic “Next Generation” Law Governing Aid in Dying, 38 Vt. L. Rev. 687, 688 (2014). California has now also legalized PAD by legislative act. See infra Part III.C.

[55] Baxter v. Montana, 224 P.3d 1211, 1214 (Mont. 2009).

[56] Id. at 1215 (quoting Mont. Code Ann. § 45-5-102 (Westlaw, current through chapters effective July 1, 2015, 2015 session)).

[57] Id.

[58] Id. at 1218-22. Although the majority opinion based its decision on statutory interpretation, the concurrence also made an argument based on a state constitutional law provision that respects the right of all humans to individual dignity. Id. at 1227-33 (Nelson, J., concurring).

[59] Morris v. Brandenberg, 2014 N.M. Dist. Ct. 2909U, ¶ PP, http://agoodgoodbye.com/wp-content/uploads/2014/01/199446010-Physician-aid-in-dying-Ruling.pdf; see also Phil Milford, Right to Die with Doctor’s Help Affirmed in New Mexico, Bloomberg Business (Jan. 14, 2014, 1:33 PM), http://www.bloomberg.com/news/articles/2014-01-14/right-to-die-with-doctor-s-help-affirmed-in-new-mexico.

[60] Morris, 2014 N.M. Dist. Ct., ¶ EE.

[61] Id. ¶ HH.

[62] Id. ¶¶ KK, NN, PP.

[63] See, e.g., Patrick M. Curran, Jr., Note, Regulating Death: Oregon’s Death With Dignity Act and the Legalization of Physician-Assisted Suicide, 86 Geo. L.J. 725, 725 (1998).

[64] Id. at 734-36.

[65] Id. at 739-41.

[66] Id. at 741-42.

[67] AMA Council on Ethical and Judicial Affairs, supra note 8.

[68] The Belmont Report, supra note 26, at 4-6.

[69] Id. at 6-8.

[70] Id. at 8-10.

[71] See, e.g., Ira Byock, Doctor-Assisted Suicide Is Unethical and Dangerous, N.Y. Times: Room for Debate (Sept. 4, 2015, 2:25 PM), http://www.nytimes.com/roomfordebate/2014/10/06/expanding-the-right-to-die/doctor-assisted-suicide-is-unethical-and-dangerous.

[72] Id.

[73] E.g., Cruzan v. Dir., Mo. Dep’t of Health, 497 U.S. 261, 280 (1990); Gonzales v. Carhart, 550 U.S. 124, 146 (2007) (reaffirming the state’s interest in the preservation of fetal life articulated in Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833, 838 (1992), and Roe v. Wade, 410 U.S. 113, 163-64 (1973)).

[74] E.g., Vacco, 521 U.S. at 798. The Supreme Court has found that individuals in this class include the elderly or the mentally or physically disabled. Washington v. Glucksberg, 521 U.S. 702, 704 (1997).

[75] See, e.g., Henry Rollins, Henry Rollins: Fuck Suicide, L.A. Weekly Music (Aug. 21, 2014), http://www.laweekly.com/music/henry-rollins-fuck-suicide-5016770. (responding to the suicide death of Robin Williams).

[76] Brief for Surviving Family Members in Support of Physician-Assisted Dying as Amici Curiae Supporting Respondents at 9-11, Washington v. Glucksberg, 521 U.S. 702 (1997) (Nos. 96-110, 95-1858), 1996 WL 722032.

[77] Id. at 12-15.

[78] Brittany Maynard, My Right to Death With Dignity at 29, CNN Opinion (Nov. 2, 2014, 10:44 PM), http://www.cnn.com/2014/10/07/opinion/maynard-assisted-suicide-cancer-dignity/.

[79] Id.

[80] Brief for Surviving Family Members in Support of Physician-Assisted Dying, supra note 77, at 16-22.

[81] Id. at 22-24.

[82] See About Brittany Maynard, The Brittany Maynard Fund, http://www.thebrittanyfund.org/about/ (last visited Mar. 23, 2015).

[83] Brief for Surviving Family Members in Support of Physician-Assisted Dying, supra note 77, at 28-29.

[84] Quill v. Vacco, 80 F.3d 716, 729 (2d Cir. 1996), rev’d, 521 U.S. 793 (1997) (emphasis added).

[85] Vacco, 521 U.S. at 801 (quoting In re Colyer, 660 P.2d 738, 743 (Wash. 1983)).

[86] Physicians are not allowed to help patients take the lethal medication. Patients must be capable of doing it themselves. See infra, Part III.B.

[87] See infra, Part III.B.

[88] Vacco, 80 F.3d at 729.

[89] Lydia Saad, U.S. Support for Euthanasia Hinges on How It’s Described, Gallup: Politics (May 29, 2013), http://www.gallup.com/poll/162815/support-euthanasia-hinges-described.aspx.

[90] Id.

[91] Id.

[92] See, e.g., Washington v. Glucksberg, 521 U.S. 702, 731-32 (1997).

[93] Or. Pub. Health Div., Oregon’s Death With Dignity Act--2014 (2015), https://public.health.oregon.gov/ProviderPartnerResources/EvaluationResearch/DeathwithDignityAct/Documents/year17.pdf.

[94] Id.

[95] See generally Or. Pub. Health Div., supra note 94. In 2014, 105 people ended their lives using the ODWDA. Id. at 1. Of those people, 95.2% were white, 45.7% were married at their time of death, and 47.6% had a baccalaureate degree or higher, compared with 5.7% who had less than a high school diploma. Id. at 4. Since ODWDA was enacted, 859 people ended their lives using the law. Id. at 2. Of those people, 97.1% were white and 46.1% were married at their time of death. Id. at 4. Moreover, 45.9% had a baccalaureate degree or higher, compared with 6.0% who had less than a high school diploma, and 72.1% had at least some college education. See id. These demographics do not seem to disproportionately represent a vulnerable population. In fact, the demographics seems to indicate a certain degree of affluence among those availing themselves of the law.

[96] Id. at 5.

[97] Id.

[98] See id. (reporting that, since the ODWDA went into effect, of the patients who used the law, 45.9% had a baccalaureate degree or higher, compared with 6.0% who had less than a high school diploma, and 72.1% had at least some college education.).

[99] See id. at 2.

[100] Compare Curran, supra note 64, at 741-42 (expressing concern that the ODWDA would disproportionately impact minorities, the disabled, and women), with Or. Pub. Health Div., supra note 94, at 4-5 (suggesting that the majority of those taking advantage of the law are well-educated and white).

[101] See Curran, supra note 64, at 739-40.

[102] Id. at 734-36.

[103] Brief for Americans for Death With Dignity and the Death With Dignity Education Center as Amici Curiae Supporting Respondents at 18-19, Vacco v. Quill, 521 U.S. 793 (1997) (No. 95-1858, 96-110), 1996 WL 709335.

[104] About Brittany Maynard, supra note 83.

[105] S.B. 128, 2015 Gen. Assemb., Reg. Sess. (Cal. 2015), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB128.

[106] See Letter from Edmund G. Brown, Jr., Governor of Cal., to the Members of the Cal. State Assemb. (Oct. 5, 2015), https://www.gov.ca.gov/docs/ABX2_15_Signing_Message.pdf.

[107] Id.

[108] Id.

A Fare Deal: The Reasonable Regulation of Ridesharing

Note | 104 KY. L. J. ONLINE 17 | Sept. 28, 2015

Dylan Merrill[1]

Introduction

On New Year’s Eve 2013, Sayad Muzzafar was driving for the ridesharing company Uber when he struck a mother and her two children while they were crossing the street. That night, one of the children, a six year-old girl, died from her injuries.[2] The Liu family later sued the company, but Uber distanced itself from the accident, arguing it was not liable because Mr. Muzzafar did not have an Uber passenger in his vehicle when he struck the pedestrians.[3] At the time of the accident, policymakers had not implemented regulations for the new rideshare industry, further frustrating the goal of determining who in fact is liable in these circumstances.[4]This sad situation is only one example of how legal grey areas are cloaking ridesharing in uncertainty, creating a dire need for legal and regulatory certainty. However, since the law has historically struggled to keep pace with technological advances, these kinds of legal grey areas and the problems they pose are not anything new. For example, in 1863, the Supreme Court of the United States was faced with the issue of how to regulate steam engines and railroads according to laws that were passed long before the inventions became ubiquitous.[5] Justice Samuel Freeman Miller, writing for the majority, marveled at the complexity of bringing new technologies into the fold:Perhaps the most remarkable invention of modern times, in the influence which it has had, and is yet to have, on the affairs of the world . . . is the railroad system. It is not strange, then, that when we are called to construe a statute relating to this class of subjects, passed before a steam engine or railroad was thought of . . . we should be met by difficulties of the gravest character.[6]Implicit in the Court’s opinion is an insight into the dilemma posed by the creation of transformative technologies. On one hand, technological innovations carry an enormous promise: the potential to transform society for the better. At the same time, even the most promising inventions can bring with them serious threats to the safety of the community. Therefore, there is danger in not regulating a new technology to ensure its safe operation, just as there is danger in regulating it so much that the regulation restricts economic growth.While this language was written decades before the invention of the automobile, the words still ring true today. In the ridesharing context, there are two weighty public policy interests at play. First and foremost, as demonstrated above, there are legitimate public safety concerns inherent in a transportation service like ridesharing. Yet, this must be viewed through an economic lens as well. After all, ridesharing companies offer an innovative service that helps distribute scarce resources by providing a low-cost alternative to traditional taxis. This service benefits customers, and it also creates jobs. Therefore, the fairest and most effective regulatory scheme will carefully balance these two competing policy objectives.This balancing, however, is not easily done. Should ridesharing companies like Uber and Lyft be subject to the same standards as taxicab companies, such as Yellow Cab? How can regulators and legislators put in place rules that promote public safety without undermining the competitive advantage enjoyed by ridesharing? This Note proposes an answer to these difficult questions. Part I asks the question of whether ridesharing should be regulated, and submits that doing so would not only better protect the public, but also shore up the ridesharing business model. Part II lays out the regulatory landscape of ridesharing, focusing on the pressing issue of insurance liability. Ultimately, Part III proposes a roadmap for regulating ridesharing services—one that is fair, practical, and tailored to fit the needs of ridesharing companies, its customers, and the general public.

I. The Need for Ridesharing Regulation

Ridesharing closely resembles the services provided by traditional taxicab companies, although there are important distinctions between the two services. At its most basic, the ridesharing routine is the same as with taxicabs: a customer requests a ride, the driver takes the customer to the destination, and the customer pays for the ride.[7] However, unlike traditional cab services, ridesharing companies do not dispatch drivers, nor do they own the vehicles used to give rides.[8] Furthermore, companies like Uber and Lyft do not employ their drivers or dictate their work schedules, allowing drivers to choose to provide rides as frequently or infrequently as they wish.[9] In essence, these companies self-identify as smartphone application developers that merely license their technology to independent drivers.[10]But the question remains as to whether ridesharing poses risks to consumers and the general public, and if so, how to ensure regulation does not restrict the economic potential of ridesharing. To determine whether ridesharing companies should be regulated, it is useful to examine the impact of such companies, both positive and negative. The foremost benefit such companies provide is a dependable, convenient, and low-cost alternative to traditional taxicabs.[11] Although the competitive advantage of ridesharing has led, at least in part, to a decline in the taxicab industry, ridesharing undeniably gives consumers access to more transportation options.[12] Furthermore, ridesharing has the potential to benefit the general public by combatting widespread transportation and environmental issues such as traffic congestion and pollution.[13]But these economic and social improvements must be considered in light of the potentially harmful effect ridesharing could have on consumers and the general public.[14] Several public policy problems stem from the regulation—or lack thereof—of ridesharing companies, including but not limited to taxation, worker’s rights, licensing, background checks, distracted driving and other safety issues.[15] But perhaps the most pressing issue concerns insurance coverage. There is significant ambiguity regarding who is liable when an accident occurs—the driver or the ridesharing company.[16] If companies like Uber and Lyft are merely smartphone application providers and truly have an indirect involvement in the provision of ridesharing, then their liability for their drivers’ accidents should be minimal.[17] Jurisdictions that have not regulated ridesharing tacitly agree with this argument by allowing ridesharing companies to determine how much insurance—if any—they wish to provide for their drivers. The result is that ridesharing drivers’ liability in the event of an accident depends largely on the whims of their affiliated ridesharing company rather than a standardized and enforceable framework.This regulatory vacuum is dangerous, particularly in the insurance context. A ridesharing company’s commercial insurance covers a driver when the driver’s smartphone application is turned on and there is a customer in the vehicle.[18] However, its insurance does not cover a driver when the application is turned off.[19] In that situation, ridesharing companies argue that the driver is supposed to be covered by his or her personal car insurance.[20] Insurance providers, however, tend to disagree.[21] They consider ridesharing drivers to be involved in commercial activity and thus refuse to let ridesharing drivers use their personal insurance to cover accidents that happen on the job.[22] Insurers have clearly stated that “vehicles used for transporting passengers for a charge” are not covered by personal car insurance policies.[23] Consequently, some insurance providers have actually canceled the policies of customers who drive for Uber and Lyft.[24] And in some instances, insurers have even denied insurance applications based on an applicant’s intent to drive for a ridesharing company.[25] Thus, although ridesharing companies maintain that their drivers are covered by personal car insurance when their smart phone application is turned off, that is often not true.Furthermore, ridesharing drivers run the risk of liability even when their smartphone application is activated.[26] As noted above, drivers are covered by commercial insurance when their smart phone application is on and they are driving customers, but they are not covered by the commercial policy when the application is on and they are not carrying any passengers.[27] Therefore, since personal car insurance does not cover such commercial activity, drivers who are merely seeking customers run the risk of falling into an “insurance gap” in the event of an accident. Such was the case of Syad Muzzafar, the Uber driver who struck and killed Sophia Liu in San Francisco.[28] At the time, the driver was in between passengers but had not yet picked up another customer.[29] As a result, the driver’s insurance policy only provided a maximum of $15,000 to the victim’s family.[30] The company denied any liability for the accident, stating that “[t]he driver in question was not providing services on the Uber system during the time of the accident.”[31] This is only one example of the dire need for insurance standards in the ridesharing industry.Instituting such standards would protect drivers, passengers, and the general public as a whole, and it also has the potential to actually improve the bottom line of ridesharing businesses like Uber and Lyft. The enactment of ridesharing standards will provide regulatory certainty for ridesharing companies, allowing them to continue to grow their companies with less fear of how the government might intervene in the future.[32] This incentive had been demonstrated when ridesharing companies welcome the opportunity to work with local governments toward the regulation of their industry.[33] In turn, such third-party oversight will in theory inspire greater consumer confidence in the safety of ridesharing services.[34] Therefore, the prospect of a win-win-win outcome will incentivize regulators to promptly put in place standards that protect ridesharing companies and those affected by them.

II. Potential Regulatory Frameworks: California and Colorado Case Studies

The law has struggled to keep pace with rapid advance of the ridesharing economy. One reason for this is ridesharing is difficult to regulate, as it exists in a legal gray area.[35] As mentioned above, ridesharing providers are situated somewhere between traditional taxicab companies and smartphone application developers, and thus they have tended to disregard existing laws that are not specifically tailored to ridesharing.[36] Moreover, ridesharing services defy categorization into traditional regulatory frameworks, preventing many governments from developing tailored policy approaches to ridesharing.[37]Some states and municipalities, nevertheless, have begun regulating ridesharing companies. Although Congress has yet to legislate on the issue, some state and local governments have passed legislation or promulgated rules regarding services like Uber and Lyft.[38] The approaches differ greatly. For instance, some jurisdictions have banned most ridesharing services outright.[39] In the Commonwealth of Virginia, for example, ridesharing companies until recently were subject to civil penalties if they continued operating there.[40] In doing so, the state was adhering to its law that requires state authorization for passenger vehicles that are for-hire and it issued cease-and-desist orders to ridesharing companies that continued operations in Virginia.[41] The Department of Motor Vehicles found that, since drivers for companies like Uber get compensation for their services, they are more than just casual carpoolers.[42] Similarly, other state and local governments have suspended the operation of ridesharing services while they devise an appropriate regulatory framework.[43] Several states on the forefront, however, have taken the initiative and passed legislation regulating ridesharing services.[44]

A. California

In 2013, California became the first jurisdiction to legalize ridesharing.[45] Before regulations were put in place, the policy of the California Public Utilities Commission ("CPUC") was to issue fines and cease-and-desist letters to ridesharing companies, but it later allowed the companies to operate on an interim basis while draft regulations were considered.[46] The CPUC ruled that ridesharing services did not accord with any of the three existing regulatory categories: taxicab companies, charter-party carrier services (i.e., livery vehicles), or passenger-stage companies (e.g., airport shuttles).[47] Nevertheless, standards regulating the ridesharing industry were put in place, but they were promulgated under a completely new classification of transportation services called “Transportation Network Companies” (or “TNCs”).[48] According to the CPUC, this new category of services consists of “companies that provide prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.”[49] Ridesharing companies like Uber and Lyft fall under this definition, but traditional taxis and casual carpoolers do not.[50]Under California law, TNCs are subject to five key insurance-related provisions in the new regulations.[51] Perhaps the most important is the requirement that ridesharing companies provide insurance from the moment a driver turns on his or her smartphone application.[52] As noted above, this cuts against the general practice of ridesharing companies, which is to cover their drivers with commercial insurance only when their application is in use and there are passengers in the car.[53] In addition to being responsible for closing this insurance gap, TNCs are required to provide, at a minimum, $1 million in coverage.[54] This requirement lasts from the time a customer is picked up until the passenger has left the vehicle.[55] Drivers for TNCs, however, are also subject to additional insurance regulations. Drivers are responsible for maintaining primary commercial liability insurance coverage of at least $50,000 per person and $100,000 per occurrence of death and personal injury, as well as $30,000 for property damage.[56] In addition, drivers are also required to carry proof of their personal and commercial insurance coverage, and they must be at least twenty-one years of age a year or more of driving experience.[57] Lastly, the regulations call for the expedited review of new insurance policies that are tailored to the needs of TNC drivers.[58] Enforcement of these new regulations was delayed for one year and became subject to review by the CPUC after they were in place for the first year.[59] Although not all ridesharing companies were initially supportive of such regulations, the tide has begun to turn.[60] Notably, ridesharing companies have formed a coalition with insurance providers and government regulators, in order to collaborate on how to best comply with the new ridesharing rules.[61]

B. Colorado

Additionally, the State of Colorado has passed legislation enacting insurance regulations for ridesharing companies.[62] Like the California rules, the legislation puts in place new provisions that are unique to ridesharing companies and also classifies the provisions as “Transportation Network Companies.”[63] The Colorado legislation, however, defined TNCs differently than California’s regulations. Under the Colorado statute, a TNC is a company that “uses a digital network to connect riders to transportation network company drivers for the purpose of providing transportation” and “does not provide taxi service, transportation service arranged through a transportation broker, ridesharing arrangements, . . . or any transportation service over fixed routes at regular intervals.”[64] This definition nevertheless still subjects companies like Uber and Lyft to TNC rules and regulations. At the same time, the legislation exempts TNCs from the regulations imposed on common carriers, contract carriers, and motor carriers.[65] TNCs are also exempt from much of the Colorado Public Utilities Commission’s authority, including its ability to regulate rates.[66] The new legislation, however, does put in place a key regulation: it closes the insurance gap by requiring TNCs to provide commercial insurance coverage once the application is turned on, regardless of whether the driver is carrying a passenger.[67] This emphasis on commercial insurance rather than the driver’s personal policy is notable because, absent such a requirement, insurers would have had to raise rates for all vehicle policies in the state, regardless of whether they were used for ridesharing services.[68]Like California, Colorado requires TNCs to provide a minimum of $1 million in liability coverage.[69] Notably, Uber voluntarily provides $1 million in liability coverage beginning when a driver accepts a trip request.[70] Colorado’s legislation, however, goes further. It requires such coverage whenever the smartphone application is activated, irrespective of whether the driver has been matched with a passenger or is in route to pick one up.[71] This covers a larger portion of the insurance gap than either California’s insurance requirement or Uber’s voluntary commitment, neither of which mandate liability coverage until a passenger is assigned to the driver.[72] In addition, in Colorado, personal insurance policies must cover at least $50,000 per person and $100,000 per occurrence of death and personal injury, as well as $30,000 for property damage.[73] This amount, however, will be the subject of a required state agency study and could be increased in the future.[74] The ridesharing industry reaction to the passage of the legislation was overwhelmingly positive.[75]Although there are differences between California and Colorado’s insurance regulations, both have reclassified ridesharing as a wholly unique service, treating it differently from traditional taxicab providers. Furthermore, both regulatory frameworks agree that ridesharing companies should be responsible for closing the insurance gap. This consensus should not be overlooked as policymakers in other jurisdictions contemplate putting in place ridesharing regulations.

III. Which Regulations Work Best For Ridesharing?

As discussed above, the need for ridesharing standards is clear. Regulation not only protects drivers, passengers, and the general public as a whole, but it also has the potential to actually help the bottom line of ridesharing companies. The more difficult determination is what these regulations should look like.Effective regulation requires legally classifying ridesharing companies as their own unique category of transportation. As understood by states like California and Colorado, it does not make sense to try to regulate ridesharing drivers as if they were taxicabs or livery vehicles.[76] This square-peg-round-hole problem is best solved by developing a completely new classification (i.e., “Transportation Network Companies”) for ridesharing. The definition of a TNC should emphasize that TNCs are neither taxicab companies nor involved in traditional/informal ridesharing, as the Colorado legislature has specifically stated.[77]Furthermore, regulators must close the insurance gap for ridesharing drivers. The surest way of doing so entails, for one, requiring TNCs to provide a minimum amount of $1 million in liability coverage for their drivers.[78] Crucially, this coverage should mirror Colorado’s framework and kick in whenever the smartphone application is activated, irrespective of whether the driver has been matched with a passenger or is in route to pick one up. This will prevent drivers from having to shoulder too much financial risk. Furthermore, by placing more responsibility on TNCs (and therefore less on drivers’ personal policies), it prevents insurers from raising rates for all vehicle policies, regardless of whether they were used for ridesharing services.[79] That said, this arrangement does not work without baseline requirements for ridesharing drivers’ personal insurance policies. State and local governments should follow California’s example and hold drivers responsible for maintaining substantial primary liability insurance coverage.[80] Regulators can help ridesharing drivers comply with this requirement by ensuring expedited review of new insurance policies that are tailored to the needs of TNC drivers.[81] In sum, these insurance fixes will help create a more even distribution of financial risk among ridesharing companies and their drivers. More importantly, these regulations will help ensure that claimants in ridesharing-related actions have a better chance of obtaining full recovery.

IV. Conclusion

By expanding consumer choice and providing an efficient, dependable, and inexpensive alternative to other modes of transportation, ridesharing companies provide a net-benefit to society. At the same time, there are nevertheless dangers that come along with the rise of ridesharing. Governments, then, should not only put in place new ridesharing standards, but also ensure that such regulation does not come at the expense of the viability of the industry. To help achieve this goal, legislators and regulators should focus their efforts on solving pressing policy problems. As a first step, the ridesharing should be classified as a unique service and treated differently than traditional taxicab companies. Other jurisdictions should strongly consider California’s definition of Transportation Network Companies: companies “that provide[] prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.”[82] Furthermore, minimum insurance coverage baselines for companies and their drivers will provide a stronger safety net for those involved in ridesharing-related accidents. Specifically, states should require TNCs to provide at least $1 million in liability coverage for their drivers, and drivers should also need substantial primary liability insurance coverage—at least $50,000 per person and $100,000 per occurrence of death and personal injury. Lastly, ridesharing companies must be required to provide insurance coverage from the moment the smartphone application is turned on so that drivers and accident victims have much fuller legal and financial protection in the event of an accident. With these vital protections in place, we can help the ridesharing industry continue to provide its innovative services while also ensuring they shoulder a fair share of the risk they create. Legislators and policymakers would be wise to adopt this approach as a first—but crucial—step toward the reasonable regulation of ridesharing.

---

[1] J.D. expected, May 2016, University of Kentucky College of Law.

[2] Josh Constine, Uber’s Denial of Liability in Girl’s Death Raises Accident Accountability Question, TechCrunch (Jan. 2, 2014), http://techcrunch.com/2014/01/02/should-car-services-provide-insurance-whenever-their-driver-app-is-open/.

[3] Patrick Hoge, California May Expand Insurance Rules for Uber, Lyft et al., San Francisco Business Times (Mar. 25, 2014, 10:38 AM), http://www.bizjournals.com/sanfrancisco/blog/2014/03/california-insurance-rules-uber-lyft.html?page=all.

[4] Id.

[5] Bridge Proprietors v. Hoboken Co., 68 U.S. 116, 118 (1864).

[6] Id. at 146-47.

[7] Odette Yousef, Ridesharing vs. Taxicabs: The Inside Story, WBEZ (June 5, 2014), http://www.wbez.org/news/rideshare-vs-taxicabs-inside-story-110296.

[8] Id.

[9] Id.

[10] Adam Cecilon, The Insurance Secret that Uber Doesn’t Want You to Know, PolicyGenius Blog (Oct. 8, 2014), http://www.policygenius.com/blog/insurance-secret-uber-doesnt-want-know/.

[11] Peter Schworm, Passengers in the Middle of Ride-sharing Dispute, Boston Globe (Dec. 2, 2014), http://www.bostonglobe.com/metro/2014/12/02/city-council-hearing-discuss-potential-uber-lyft-regulation/a02o5C5DmnSc2LOarCpC9N/story.html.

[12] See, e.g., Megan Garber, After Uber, San Francisco Has Seen a 65% Decline in Cab Use, The Atlantic (Sept. 17, 2014), http://www.theatlantic.com/technology/archive/2014/09/what-uber-is-doing-to-cabs-in-san-francisco-in-1-crazy-chart/380378/.

[13] The Power of Connection: Peer-to-Peer Businesses: Hearing Before H. Comm. On Small Bus., 113th Cong. 6 (2014) (“Th[e] adoption of ride-sharing has the potential to produce large-scale public benefits, including easing traffic congestion and the strain on existing infrastructure, reducing pollution, and fostering a sense of community, all while providing car owners an opportunity to offset the cost of car ownership.”). These benefits are generated simply by people riding together who would otherwise be in separate vehicles. But ridesharing companies also augment these benefits, especially in the context of traffic congestion. For example, Uber developed a smartphone application that draws on a wealth of traffic-related data to help drivers find the most efficient route. Ryan Lawler, Uber Adds Turn-By-Turn Directions to Its Driver App, TechCrunch (Aug. 13, 2014), http://techcrunch.com/2014/08/13/uber-turn-by-turn-directions/.

[14] See generally Molly Cohen & Corey Zehngebot, What’s Old Becomes New: Regulating the Sharing Economy, 58 Boston Bar J. 34 (2014).

[15] Id.; Cecilon, supra note 10.

[16] Cecilon, supra note 10.

[17] Id.

[18] See, e.g., Nairi Hourdajian, Insurance for UberX with Ridesharing, Uber Blog (Feb. 10, 2014), http://blog.uber.com/ridesharinginsurance (detailing Uber’s insurance policy).

[19] Id.

[20] Id.

[21] Cecilon, supra note 10.

[22] Id.

[23] Jon Brooks, Confusion Over Insurance For “Ride-Sharing” Drivers, KQED.org: News Fix (Nov. 19. 2013), http://ww2.kqed.org/news/2013/11/14/who-pays-when-ride-share-driver-crashes.

[24] Jon Brooks, How Many Ride-Share Drivers Are Hiding Status From Insurers?, KQED.org: News Fix (Jan. 21, 2014), http://ww2.kqed.org/news/2014/01/20/ride-sharing-insurance-lyft-uberx-sidecar/.

[25] Id.

[26] Cecilon, supra note 10.

[27] Id.

[28] Marcus Wohlsen, Why Uber’s Fate Could Hinge on This Tragic Accident, Wired.com (Jan. 29, 2014, 6:30 AM), http://wired.com/2014/01/uber-wrongful-death. Uber and Sophia Liu’s family have since settled the lawsuit. Zach Miners, Uber Settles Suit over Girl Killed by Driver, PC World (July 14, 2015, 5:50 PM), http://www.pcworld.com/article/2948492/uber-settles-suit-over-girl-killed-by-driver.html.

[29] Id.

[30] Alexa Vaughn, Uber, Lyft Expanding Driver Insurance Coverage, Seattle Times (Mar. 14, 2014, 3:00 AM), http://seattletimes.com/html/localnews/2023125386_uberinsurancexml.html.

[31] Wohlson, supra note 28.

[32] The Power of Connection: Peer-to-Peer Businesses, supra note 13 at 6.

[33] Johana Bhuiyan, Here Is Where Uber and Lyft Are Facing Regulation Battles in the United States, BuzzFeed, (Dec. 15, 2014, 4:29 PM), http://www.buzzfeed.com/johanabhuiyan/here-is-where-uber-and-lyft-are-facing-regulation-battles-in#.ftEkba0vVA.

[34] Deven R. Desai, The New Steam: On Digitization, Decentralization, and Disruption, 65 Hastings L.J. 1469, 1477-80 (2013).

[35] Cohen & Zehngebot, supra note 14.

[36] Desai, supra note 34, at 1478.

[37] Id.

[38] Curtis Skinner, New Orleans Authorizes Uber—But Not UberX, Business Insider (Sept. 5, 2014, 8:02 AM), http://www.businessinsider.com/r-new-orleans-council-clears-uber-others-to-offer-luxury-online-taxi-service-2014-9.

[39] Sam Frizell, 5 Places Where Uber Is Fighting for Its Life Right Now, Time.com (Dec. 8, 2014), http://time.com/3623241/uber-battles (discussing locales which have banned or severely constrained Uber operations, including Portland, Oregon, and the State of Nevada).

[40] Paul Frisman, Uber's On-demand Car Service, Conn. Office of Legislative Research 4 (June 19, 2014), http://cga.ct.gov/2014/rpt/pdf/2014-R-0173.pdf (discussing different state approaches, including Virginia). Virginia legalized ridesharing earlier this year. Luz Lazo, Uber and Lyft Are Now Legal in Virginia, Washington Post (Feb. 18, 2015), http://www.washingtonpost.com/blogs/dr-gridlock/wp/2015/02/18/uber-and-lyft-are-now-legal-in-virginia/.

[41] Paul Frisman, Uber's On-demand Car Service, Conn. Office of Legislative Research 4 (June 19, 2014), http://cga.ct.gov/2014/rpt/pdf/2014-R-0173.pdf; Lazo, supra note 40.

[42] Paul Frisman, Uber's On-demand Car Service, Conn. Office of Legislative Research 4 (June 19, 2014), http://cga.ct.gov/2014/rpt/pdf/2014-R-0173.pdf.

[43] Paul Frisman, Uber's On-demand Car Service, Conn. Office of Legislative Research 4 (June 19, 2014), http://cga.ct.gov/2014/rpt/pdf/2014-R-0173.pdf; Lazo, supra note 40.

[44] Josh Richman, Uber, Lyft, Sidecar: New Insurance Requirements Approved by California Legislature (Aug. 28, 2014, 6:55 PM PDT), http://www.mercurynews.com/california/ci_26428057/california-senate-approves-new-insurance-requirements-uber-lyft; Andy Vuong, Colorado First to Authorize Lyft and Uber’s Ridesharing Services, Denver Post (June 5, 2014, 5:06:32 PM MDT), http://www.denverpost.com/business/ci_25907057/colorado-first-authorize-lyft-and-ubers-ridesharing-services?source=infinite.

[45] Tomio Geron, California Becomes First State to Regulate Ridesharing Services Lyft, Sidecar, Uber, Forbes (Sept. 19, 2013, 3:40 PM), http://www.forbes.com/sites/tomiogeron/2013/09/19/california-becomes-first-state-to-regulate-ridesharing-services-lyft-sidecar-uberx/.

[46] Id.

[47] Decision 13-09-045 Adopting Rules and Regulations to Protect Safety While Allowing New Entrants to the Transportation Industry, Cal. Pub. Utilities Comm’n 11 (Sept. 23, 2013), http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M077/K192/77192335.PDF.

[48] Geron, supra note 45.

[49] Press Release, California Public Utilities Commission, CPUC Establishes Rules For Transportation Network Companies (Sept. 19, 2013), http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M077/K132/77132276.PDF.

[50] Geron, supra note 45.

[51] Assemb. B. 2293, 2013-2014 Assemb., Reg. Sess. (Cal. 2014), available at http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB2293.

[52] See id.

[54] Id.

[55] Id.

[56] Assemb. 2293 §5433(c)(1), 2013-2014 Assemb., Reg. Sess. (Cal. 2014), available at http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB2293.

[57] Decision 13-09-045 Adopting Rules and Regulations to Protect Safety While Allowing New Entrants to the Transportation Industry, Cal. Pub. Utilities Comm’n 26-27 (Sept. 23, 2013), http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M077/K192/77192335.PDF.

[58] Id. § 5438.

[59] Geron, supra note 45.

[60] California Welcomes Insurance Coalition for Ride Sharing, Uber Joins In, GovTech.com, (Feb. 10, 2014), http://www.govtech.com/state/California-Welcomes-Insurance-Coalition-for-Ride-Sharing-Uber-Joins-In.html.

[61] Id.

[62] S.B. 14-125, 69th Gen. Assemb., Reg. Sess. (Colo. 2014), available at http://www.leg.state.co.us/clics/clics2014a/csl.nsf/fsbillcont2/70364091166B28FC87257C4300636F6B/$FILE/125_01.pdf.

[63] Id. at 2, 6.

[64] Id. at 6.

[65] Id. at 2.

[66] Id.

[67] Niraj Chokshi, Colorado Passes Nation’s First Law Regulating UberX, Lyft, Washington Post (June 6, 2014), http://www.washingtonpost.com/blogs/govbeat/wp/2014/06/06/colorado-passes-nations-first-law-regulating-uberx-lyft/.

[68] See Vuong, supra note 44.

[69] Kelli Kelty, Colo. Legislative Counsel Staff, Transportation Network Companies, Gen. Assemb. 14-07, Reg. Sess. (2014), available at http://cdn.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1252019169757&ssbinary=true.

[70] Nairi Hourdajian, Eliminating Ridesharing Insurance Ambiguity, Ins. Note (Mar. 14, 2014), http://insurancenote.net/warranty-entitling-the-holder-to-care-at-home/eliminating-ridesharing-insurance-ambiguity/.

[71] Norma B. Levy & Louis H. Kozloff, Ridesharing Presents Challenges and Opportunities for Insurers, Property Casualty 360º, (Oct. 21, 2014), http://www.propertycasualty360.com/2014/10/21/ridesharing-presents-challenges-and-opportunities?page=2.

[72] See id.

[73]Insurance Designed with Uber in Mind, Uber, http://uberxcolorado.com/drive/?page_id=483 (last visited Sept. 17, 2015).

[74] Chokshi, supra note 67.

[75] See Colorado Makes Uber History, Uber Newsroom, (June 5, 2014), available at http://newsroom.uber.com/denver/2014/06/colorado-makes-uber-history-2/ (Uber calling the regulations “stringent” yet “sensible.”). Kathleen Lavine, Colorado Passes Bill Legalizing UberX, Lyft, Denver Bus. J. (Apr. 29, 2014, 5:46 PM MDT), available at http://www.bizjournals.com/denver/blog/boosters_bits/2014/04/colorado-passes-bill-legalizing-uberx-lyft.html (Lyft saying were “thrilled” by the “rigorous set of safety standards.”).

[76] See Decision 13-09-045 Adopting Rules and Regulations to Protect Safety While Allowing New Entrants to the Transportation Industry, Cal. Pub. Utilities Comm’n 2 (Sept. 23, 2013), http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M077/K192/77192335.PDF.

[77] S.B. 14-125, 69th Gen. Assemb., Reg. Sess. (Colo. 2014), http://www.leg.state.co.us/clics/clics2014a/csl.nsf/fsbillcont2/70364091166B28FC87257C4300636F6B/$FILE/125_01.pdf.

[78] Hourdajian, supra note 70.

[79] Andy Vuong, Colorado Lawmakers Still Wrangling Insurance for Lyft, UberX, Denver Post (Apr. 2, 2014, 6:41:13 PM MDT), http://www.denverpost.com/business/ci_25480333/colorado-lawmakers-still-wrangling-insurance-lyft-uberx.

[80] See Assemb. B. 2293 § 5433, 2013-2014 Assemb., Reg. Sess. (Cal. 2014), available at http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB2293.

[81] See id. § 5438.

[82] See Decision 13-09-045 Adopting Rules and Regulations to Protect Safety While Allowing New Entrants to the Transportation Industry, Cal. Pub. Utilities Comm’n 2 (Sept. 23, 2013), http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M077/K192/77192335.PDF.

More Coverage, More Problems: No Private Remedies for Kentuckians Hurt by HIPAA Violations After Adoption of the Affordable Care Act

Note | 103 KY. L. J. ONLINE 7 | Aug. 7, 2015

Chelsea N. Hayes[1]

Introduction

Kentucky is leading the way in America’s first state-based exchange to implement the Affordable Care Act (hereinafter “ACA”).[2] While this presumably will assist the one in six Kentuckians who are uninsured,[3] doctors and medical facilities may mistakenly disclose private documents with the high influx of new patients. Therefore, Kentucky citizens may question how to resolve violations of privacy mandated by the Health Insurance Portability and Accountability Act (hereinafter “HIPAA”).[4]HIPAA does not create a state-based private cause of action for violations of its privacy provisions.[5] Kentucky also has no state statute or common law right allowing state private causes of action for HIPAA violations.[6] While Kentucky has legislated a statute allowing private causes of action for other state statute violations, this right does not extend to federal statutes (e.g. HIPAA), regulations, or local ordinances.[7] Because HIPAA does not provide a plaintiff a federal private cause of action,[8] Kentucky refuses to infer a right where Congress has not.[9] Currently, the only way a person may pursue HIPAA violations is by filing a complaint with the Federal Office of Civil Rights (hereinafter “OCR”),[10] yet the individual receives no personal compensation.This note will first explore the interplay between the ACA and HIPAA in Section I, elaborating on Kentucky’s adoption of the ACA and expansion of its medical landscape. Section II explains existing precedent regarding state remedies for HIPAA violations and emphasizes aggrieved Kentuckians’ lack of recovery. Section III illuminates how Kentucky’s medical landscape is not unique from other states’, which allow state based causes of action. As a result, Kentucky should enact a statutory private cause of action to develop its medical landscape alongside the expansion of healthcare similar to West Virginia’s legislative scheme.

I. Background: Interaction between The Affordable Care Act and HIPAA

The implementation of the ACA allows millions of Americans the opportunity to receive affordable healthcare. Kentucky quickly adopted the ACA on a state level to provide statewide coverage and accessibility to Kentuckians.[11] As the number of individuals accessing healthcare increases, providers may become overwhelmed, and some protected health information may be unintentionally disclosed to the public. HIPAA governs these disclosures via regulations, violations, fines, and incarcerations,[12] incentivizing doctors and other health professionals to proceed carefully and diligently with the influx of patients. HIPAA alone, however, is insufficient to adequately address privacy because enforcement wavers at best, and individuals cannot receive adequate compensation because no federal private cause of action exists.

A. The Affordable Care Act

The ACA, enacted in 2010, employed a patient’s “Bill of Rights,” allowing “the American people the stability and flexibility [needed] to make informed decisions about their health.”[13] As of January 1, 2014, an estimated 14 million Americans will gain health insurance coverage via the Medicaid expansion or individual and/or small business tax reimbursements to lower healthcare costs via the federal and participating state exchanges.[14]These implementations provide individuals minimum health coverage that was once too costly to afford. More particularly, the Medicaid expansion[15] allows more vulnerable individuals 65 years or younger with an annual income below 133 percent of the federal poverty line to gain coverage despite pre-existing conditions or the inability to pay.[16] This means great benefits for the 7.8 million rural Americans who the United States Department of Health and Human Services (hereinafter “HHS”) predicts gained access to medical coverage under the ACA expansion.[17] Kentuckians are among these Americans who will benefit greatly.

B. Kentucky’s Adoption of the ACA

In 2013, 640,000 Kentuckians were uninsured, entailing approximately 15 percent of the state’s population.[18] Prompted by the ACA, Kentucky created Kynect, its state healthcare exchange.[19] According to the Washington Post, “56,422 [Kentuckians] have signed up for new health-care coverage, with 45,622 of them enrolled in Medicaid and the rest in private health plans, according to figures released by the governor’s office . . . .”[20]Of the estimated 640,000 Kentuckians covered, 308,000 could become insured after expansion of the Medicaid eligibility guidelines in accordance with the ACA.[21] This number forecasts that many Kentuckians can seek once unobtainable medical care for untreated conditions stemming from smoking, cancer, preventable hospitalizations, heart disease, etc.[22]When Kentucky welcomed the ACA, however, officials may not have anticipated increasing HIPAA violations. Healthcare reform has allowed Kentuckians to seek healthcare with lower financial cost, but a potentially more significant one: possible loss of personal privacy with no compensation. According to the HHS, “[a]s of December 31, 2013, [the Office of Civil Rights] had 258 open complaints and compliance reviews” for HIPAA violations.[23] While this is a national statistic, one can only imagine the increase in complaints upon adoption of the ACA within Kentucky. Each of the 258 disclosures represents a person, who if he or she lived in Kentucky, would have no private cause of action to recover despite federal legislation.

C. HIPAA Governs Personal Health Information Leaks

Congress enacted HIPAA on August 21, 1996.[24] HIPAA’s main purpose is to encourage uniform standards and requirements for storing protected health information (hereinafter “PHI”) and to reduce clerical burdens on all involved parties.[25] Accordingly, those who maintain PHIs adopt “administrative, technical, and physical safeguards . . . to ensure the integrity and confidentiality of the information, to protect against any reasonably anticipated threats or hazards to the security or integrity of the information and unauthorized uses or disclosures of the information, and otherwise to ensure compliance with this part by the officers and employees of such person.”[26]HIPAA forms are the norm in all offices handling PHI because legislation covers health care providers, health care clearing houses, and health plans (all considered “covered entities”).[27] In 2009, the Health Information Technology for Economic and Clinical Health Act[28] (hereinafter “HITECH”) required modification and strengthening of the HIPAA’s rules by mandating the inclusion of business associates[29] in conjunction with covered entities. HITECH also added levels of culpability for PHI violations.[30]A covered entity breaches HIPAA when it discloses PHI without permission or for an inappropriate purpose.[31] This violation does not have to be intentional, but instead may be inadvertent.[32] In order to seek redress for a suspected HIPPA violation, an individual must file a complaint with the Secretary of the HHS.[33] The OCR, a subdivision under the HHS, manages and investigates violation complaints or suspicion of HIPAA violations.[34] After a covered entity violates HIPAA, the OCR allows a time frame in which the covered entity may take a “satisfactory” action to correct the breach and mitigate the damages.[35] If corrective action is taken, the OCR will simply fine the covered entity via civil penalties,[36] and if the violation is criminal in nature, the OCR may instruct the Department of Justice to investigate.[37]When civil monetary damages are sought for HIPAA violations, complainants or aggrieved persons themselves do not receive money compensation.[38] Instead, recoveries are deposited into the U.S. Treasury to further assist HIPAA investigations.[39] The aggrieved person merely receives notifications regarding the resolution of the violations.[40] While HIPAA clearly defines what constitutes a violation, the Act omits any express private cause of action for individuals to seek compensation for the dissemination of their PHI.[41] Consequently, complainants are merely left with filing a complaint to the OCR, with few states providing additional redress.[42]

II. Case Law: Few State Causes of Action for HIPAA Violations

HIPAA violations have increased throughout the years, but aggrieved persons are left with no federal remedies because HIPAA does not generate a private cause of action.[43] Some states, however, allow recovery in state court via common law tort claims and/or statutory recoveries.[44] States such as West Virginia recognize both, whereas Kentucky recognizes neither.[45]

A. Aggrieved Persons Harmed by HIPAA Violations Cannot Recover in Federal Court

The Supreme Court iterated in 1979 that despite a person violating a federal statute and harming another individual, a violation does not automatically prompt a private cause of action.[46] As a result, harmed persons do not individually benefit from HIPAA protections.[47] In fact, the Supreme Court in 2001 stated that HIPAA will never provide a cause of action for wronged individuals unless amended with the intent to establish that right.[48] This results in summary judgment for the defendant covered entity,[49] and the OCR provides the singular remedy.[50]

B. States Allowing HIPAA Violations to Establish the Standard of Care in Tort Claims

Recently few states have allowed HIPAA guidelines to provide the standard of care for common law claims in state court litigation. In these jurisdictions, HIPAA rules supply the baseline for what a medical professional should do regarding privacy and security of PHI in negligence claims. This allows plaintiffs to claim that the covered entity was negligent according to the statutory regulations of HIPAA without need for expert testimony, establishing negligence per se.[51] A negligence per se claim statutorily establishes the standard of care[52] and permits aggrieved individuals to recover tort damages where no compensatory remedy is available through the OCR.[53] Additionally, this method allows plaintiffs to stand in court without immediately granting the defendant summary judgment.[54] The small number of state cases, indicates that this recovery has not yet picked up steam, but serves as a reminder that states surrounding Kentucky have implemented repercussions for breaches of HIPAA whether through negligence per se or other common law torts.[55]

C. State Statutory Recoveries for HIPAA Violations

Apart from common law tort claims, fourteen states have created a statutory cause of action for HIPAA violations.[56] For example, West Virginia is a model state to explore the effect of both common law and statutory recoveries for HIPAA violations,[57] and will provide the exemplars for this discussion.[58] The West Virginia statute was enacted in 1983,[59] and the state’s highest court further elaborated on this statute by reaffirming a patient’s ongoing right to sue over a HIPAA violation because both a well-recognized common law and statutory right existed under state law.[60] As a result, these states[61] protect privacy by allowing individuals a private cause of action as long as the statute mandates more privacy provisions than HIPAA to avoid federal preemption issues. HIPAA contains a preemption provision mandating that HIPAA supersede any contrary provision of state law.[62] Some courts have grappled with the idea of HIPAA preemption if the states were to create common law or statutory causes of action.West Virginia’s highest court has led the way in litigation and explanation of HIPAA preemption, iterating that HIPPA does not preempt state statutory causes of action for the wrongful disclosure of PHI.[63] In order for HIPAA to preempt any state statute, the state law must be contrary to HIPAA.[64] A law is not contrary if the state law is more stringent than a HIPAA standard, requirement, or implementation.[65] In R.K. v. St. Mary’s Medical Center, Inc., the West Virginia court held “such state-law claims compliment [sic] HIPAA by enhancing the penalties for its violation and thereby encouraging HIPAA compliance.”[66] The plaintiff, R.K., filed state law claims after disclosing otherwise-undisclosed personal information to hospital employees in order to seek treatment.[67] While hospitalized, hospital employees accessed R.K.’s record without permission and relayed PHI to his estranged wife and her divorce lawyer.[68] R.K. initiated state law claims including, but not limited to, breach of confidentiality and invasion of privacy.[69]While the circuit court stated HIPAA preempted these claims, [70] the higher court disagreed, analyzing Yath v. Fairview Clinics, N.P.,[71] involving a state statutory cause of action. Here, the defendant’s clinic tested the plaintiff, Yath, for a sexually-transmitted disease.[72] A clinic assistant accessed his records and disclosed the information to Yath’s husband. Yath sued for wrongful disclosure of medical information in violation of the Minnesota statute by improperly releasing PHI.[73] While lower courts determined HIPAA preempted the state statute, the Minnesota Court of Appeals held that the statute was not preempted because it is not “contrary” to HIPAA.[74] The defendants could comply with both HIPAA and the statute since both laws are “complementary,” not “contradictory” as the laws obtained the same goal of safeguarding patient PHI.[75] The West Virginia Supreme Court of Appeals elaborates that though the remedies in Minnesota Statute § 144.335 and HIPAA are not identical, [76] the differences are merely functional. [77] Both statutes primarily prohibit mishandling of PHI, but HIPAA focuses on criminal liability and civil fines while § 144.335 permits compensatory damages. As such, states like West Virginia allow HIPAA to establish the privacy protection floor, and states may enforce more stringent laws without preemption.As a result, states like West Virginia approve both complementary statutory and common law claims for HIPAA breaches. At the end of the day, however, each individual state must make this decision. “Raising up causes of action where a statute has not created them may be a proper function for common-law courts, but not for federal tribunals.”[78]

D. Kentucky Does Not Recognize a State Common Law or Statutory Cause of Action for HIPAA Violations

Kentucky has yet to recognize any common law private cause of action for HIPAA violations using HIPAA regulations as the standard of care.[79] Alternatively, Kentucky appears to statutorily provide recovery for individuals injured by violations of any statute via KRS § 446.070.[80] This statute allows an aggrieved party to recover for a violation of another statute if that particular statute provides no civil remedy, and the aggrieved person is within the class of persons the statute is meant to protect.[81]In Yeager v. Dickerson, the court addresses whether the plaintiff has a cause of action via KRS § 446.070 against her attorneys for disclosure of medical information.[82] Yeager, executrix of her daughter’s estate, alleged a violation of HIPAA when her daughter died from a drug overdose after release of her PHI at her child’s custody hearing.[83] Because Congress has not expressly intended a private right under HIPAA, the Kentucky Court of Appeals held that KRS § 446.070 does not confer a private civil remedy for such violations.[84] According to the court, the “any statute” language appearing in KRS § 446.070 is limited to state statutes only and exempts federal statutes in which Congress has not intended a remedy to be conferred.[85] The court further stated that even if the General Assembly had intended a right under the state statute where Congress had not, HIPAA would preempt Kentucky state law.[86] The court also has not recognized any common law tort claims for plaintiffs since the claims are grounded in HIPPA.[87] This leaves Kentuckians wondering what rights they can exercise after a HIPAA violation occurs.

III. Solution: Kentucky Should Implement a State Statutory Cause of Action for HIPAA Violations

As it exists, Kentucky provides no private cause of action through KRS § 446.070 for persons harmed by PHI disclosure.[88] This legislative void can only be fully remedied by the Kentucky Legislature enacting a statute specifically allowing a private cause of action for HIPAA violations. For guidance, Kentucky should look to neighboring states, particularly West Virginia, due to similarities between the two states’ medical landscapes. Although Kentucky is more populous and has had different jurisprudence on the subject than West Virginia, these should not stand in the way of Kentucky’s recognition of privacy rights.

A. Proposed Legislation for Recovery under a Kentucky State Statute

Private litigation on a federal scale might overwhelm the effectiveness of HIPAA, but other states have taken charge of regulating medical privacy. In fact, prior to HIPAA, states were the primary regulators of privacy concerns via the common law, statutes, and regulations.[89] The Yeager Court rationalized correctly that even if a private right of action existed, it would be preempted.[90] This is accurate because HIPAA establishes the floor for privacy protection and Kentucky has not yet expanded it further.[91] To circumvent preemption and better protect Kentuckians, legislators must be willing to enact “strong health privacy laws”[92] to redress those harmed.Even after HIPAA’s adoption, HHS explained, “[w]e believed then, and still believe, that there is an urgent need for legislation to establish comprehensive privacy standards for all those who pay and provide for health care, and those who receive information from them.”[93] This concept illuminates the idea that all fifty states should enact legislation to heighten privacy laws to better protect citizens rather than wholly relying on HIPAA to restore justice to aggrieved plaintiffs.[94]This is an alarming problem after the ACA because persons may already distrust the healthcare system due to previously limited access.[95] By enacting a state statutory provision in which KRS § 446.070 will allow recovery, rural Kentuckians may be more apt to trust and seek out healthcare they once could not afford. These persons must not live in fear of Kentucky forgoing individual privacy protection because redress is unavailable.While Kentucky courts have rebuked a private cause of action,[96] implementing a state statute would allow the courts to analyze it as a matter of first impression and partake in shaping the common law associated with the statute. Kentucky can look to West Virginia, its neighbor, for guidance since West Virginia implemented higher safeguards to protect its residents.[97] Little case law exists in Kentucky and West Virginia regarding state rights of action for HIPAA violations. However, in the available case law, Kentucky and West Virginia rationalize the subject comparably.[98] In fact, the only difference between the two states is solely the existing precedent, as the two states have strikingly similar medical landscapes. Precedent is the only barrier that stands between Kentucky and a state private cause of action—a barrier that the ACA will inevitably break down.

B. Comparison: The Kentucky and West Virginia Courts Rationalize Similarly

In Kentucky, Yeager held that the state statute regarding privacy for health care recipients did not confer a private right of action for HIPAA violations.[99] Authority in neighboring West Virginia from the Supreme Court of Appeals, however, is contrary to the Kentucky holding.[100] The courts’ rationale is quite similar, but the respective precedent is distinctive: West Virginia reaffirmed a patient’s ongoing right to sue where Kentucky has not yet initially recognized a patient’s right to sue.First, both courts recognize that HIPAA does not create a federal private right of action for aggrieved persons.[101] Second, neither Kentucky nor West Virginia specifically held that HIPAA preempts a state from recognizing a cause of action for disclosure of PHI.[102] Instead, the courts address whether HIPAA preempts particular statutes. As discussed in West Virginia, HIPAA would preempt state law, including statutory and common law, only if the state law would disallow compliance with both state and federal requirements or if the state law is contrary[103] and stands as an obstacle to HIPAA’s execution.[104]If the courts have already rationalized similarly, Kentucky should consider consulting other jurisdictions in at least allowing a statutory right of recovery in combination with KRS § 446.070 for aggrieved individuals. Preemption would also not be an obstacle, despite Kentucky courts’ rationale, because it is entirely possible for both the OCR to enforce HIPAA through civil and criminal fines and Kentucky to recognize a private cause of action focusing on individual recovery. Both proceedings could occur autonomously without affecting the other. Further, a state right of action would complement HIPAA’s floor by assisting and strengthening incentives to protect PHI with the expansion of the ACA.As one court stated, “[i]t is, to say the least, difficult to believe that Congress would, without comment, remove all means of judicial recourse for those injured by illegal conduct.”[105] While Kentucky has already taken strides to protect its own residents through adoption of the first state-based exchange for the ACA, it has fallen behind West Virginia and other states that have recognized a common law cause of action and others with statutory causes of action due to the toothless fear of preemption and outdated precedent in the time of the ACA.

C. Comparison: Kentucky and West Virginia have Comparable Medical Landscapes

Similar medical landscapes are important when advocating for one state government to adopt another’s remedies. This section statistically compares West Virginia and Kentucky to illustrate few differences exist between them. Kentucky conclusively has more uninsured individuals and more Medicaid recipients yet has no state cause of action like West Virginia. These statistics support Kentucky adopting West Virginia’s approach to redressing breaches.The implementation of the ACA has the potential to extend coverage to as many as 285,931 uninsured West Virginians.[106] West Virginia’s estimated 2013 population was 1,854,304, with 714,605 of those individuals living in rural areas.[107] Through the ACA Marketplace, 42% of adults (about 112,000) and 11% of children (roughly 30,000) will receive Medicaid, 23% of individuals will be eligible for tax credits (62,000), and 23% may gain coverage without financial assistance.[108] Of those uninsured individuals eligible for coverage, 259,000 (91%) are White, 16,461 (6%) are African-American, 2,850 (1%) are Latino or Hispanic, and 1,208 (0.4%) are Asian American or Pacific Islander.[109] At least 799,000 non-elderly individuals, including 91,098 children, have pre-existing health conditions who may now receive healthcare because of the ACA.[110]In comparison, Kentucky, with 647,000 uninsured, was the first state to adopt a state-based exchange for the ACA.[111] As of 2013, Kentucky had an estimated population of 4,395,295, of which 1,837,294 living in rural areas.[112] Through the ACA Marketplace, 45% of adults (about 291,000) and 9% of children (roughly 59,000) will receive Medicaid, 22% of individuals will be eligible for tax credits (145,000), and 24% may gain coverage without financial assistance.[113] Of those uninsured individuals eligible for coverage, 513,688 (83%) are White, 77,280 (12%) are African American, 18,272 (3%) are Latino or Hispanic, and 4,158 (1%) are Asian American or Pacific Islander.[114] At least 1,894,874 non-elderly Kentuckians, including 241,403 children, have pre-existing conditions.[115]The above statistics illuminate that Kentucky has more individuals, more uninsured, and a greater number of Medicaid expansion recipients than West Virginia. Both have high rural populations where poverty can be a perpetual cycle and healthcare a commodity. The majority of uninsured are Caucasian, suggesting this is not a racial discrepancy, but rather a rampant, non-discriminatory issue. This prompts the question why Kentucky has not led the way in protecting Kentuckians from privacy violations like its very similar neighbor, West Virginia? After West Virginia’s adoption of both a common law and statutory cause of action protecting its citizens, Kentucky has few arguments for first implementing the ACA yet refusing to fully protect Kentuckians from HIPAA violations that may increase due to the state’s adoption of the ACA.

IV. Conclusion

While Kentucky is an advocate for providing healthcare via the ACA, Kentucky continues to ignore each person’s individual privacy rights within the medical sphere by providing no redress to Kentuckians hurt by PHI disclosures. As a result, Kentucky lacks the self-interest to fully protect its citizens because citizens desire redress when Kentucky recognizes no right. Neighboring state courts have begun utilizing HIPAA as evidence of the standard of care for other common law torts while others allow statutory causes of actions for HIPAA violations. Kentucky offers neither. This note advocates for Kentucky to implement legislation to strengthen HIPAA regulations by allowing a state private cause of action for Kentuckians hurt or affected by PHI disclosures. Kentucky should look to other states with private causes of action, such as West Virginia, for guidance. This private cause of action will more uniformly protect and guarantee Kentuckians’ privacy via state redress.

[1] J.D., May 2015, University of Kentucky College of Law.

[2] See Mary Branham, State Success & Federal Missteps, The Council of State Governments, http://www.csg.org/pubs/capitolideas/2014_jan_feb/healthcareexchanges.aspx (last visited Jan. 19, 2014). For information regarding the exchange, see Patient Protection and Affordable Care Act (ACA), Pub. L. No. 111-148, 124 Stat. 119 (2010).

[3] Steve Beshear, My State Needs ObamaCare. Now., Ny Times (Sept. 26, 2013), http://www.nytimes.com/2013/09/27/opinion/my-state-needs-obamacare-now.html.

[4] Health Insurance Portability and Accountability Act (HIPAA), Pub. L. No. 104-191, 110 Stat. 1936 (codified as scattered sections of 18, 26, 29, 42 U.S.C. (2000)).

[5] McMillen v. Ky. Dep’t. of Corr., 233 S.W.3d 203, 205 (Ky. Ct. App. 2007).

[6] Young v. Carran, 289 S.W.3d 586, 589 (Ky. Ct. App. 2008) (articulating Kentucky’s lack of common law or statutory private cause of action for HIPAA violations).

[7] See Ky. Rev. Stat. Ann. § 446.070 (2013); T & M Jewelry, Inc. v. Hicks ex rel. Hicks, 189 S.W.3d 526, 530 (Ky. 2006); Alderman v. Bradley, 957 S.W.2d 264, 266-67 (Ky. 1997); Yeager v. Dickerson, 391 S.W.3d 388, 393 (Ky. Ct. App. 2013).

[8] See Alexander v. Sandoval, 532 U.S. 275, 275 (2001) (holding that there is no private right of action to enforce disparate-impact regulations promulgated under Title VI of Civil Rights Act of 1964.”); Acara v. Banks, 470 F.3d 569, 571 (5th Cir. 2006) (holding no private cause of action for disclosure of PHI during a deposition); Johnson v. Quander, 370 F. Supp. 2d 79, 100 (D.D.C. 2005) (holding that a convicted robber had no private cause of action under HIPAA when challenging the DNA Act because the Secretary of HHS only had that right); Univ. of Colo. Hosp. v. Denver Pub. Co., 340 F. Supp. 2d 1142, 1145 (D. Colo. 2004) (finding no HIPAA private cause of action because the statute created enforcement means for aggrieved persons); O'Donnell v. Blue Cross Blue Shield of Wyo., 173 F. Supp. 2d 1176, 1179-80 (D. Wyo. 2001) (holding no express or implied private cause of action exists in HIPAA).

[9] Yeager, 391 S.W.3d at 394.

[10] Bob Herman, HIPAA May Form Basis for State Law Private Cause of Action, Becker’s Hosp. Review (June 24, 2011), http://www.beckershospitalreview.com/healthcare-information-technology/hipaa-may-form-basis-for-state-law-private-cause-of-action.html.

[11] Beshear, supra note 2.

[12] See supra notes 18-23 and accompanying text.

[13] About the Law, U.S. Dep’t of Health and Human Serv., http://www.hhs.gov/healthcare/rights/ (last visited Jan. 20, 2014).

[14] Individual Health Insurance Coverage, AHIP Coverage (Oct. 12, 2010), http://www.ahipcoverage.com/2010/10/12/individual-health-insurance-coverage/; Small Business Health Care Tax Credit for Small Employers, IRS (Dec. 19, 2013), http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers.

[15] While tax reimbursement participants will also comprise a large number of individuals the ACA will help, this paper will primarily focus on Medicaid recipients as this individuals are most likely gaining access for the first time.

[16] Nat'l Fed'n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2575, (2012); Key Features of the Affordable Care Act by Year, U.S. Dep’t of Health and Human Serv., http://www.hhs.gov/healthcare/facts/timeline/timeline-text.html (last visited Jan. 20, 2014).

[17] See The Affordable Care Act-What It Means in Rural America, U.S. Dep’t of Health and Human Serv., http://www.hhs.gov/healthcare/facts/factsheets/2013/09/rural09202013.html (last visited Jan. 20, 2014).

[18] A Healthier Kentucky: Health Insurance Coverage for Every Kentuckian, Governor of Kentucky Steve Beshear, http://governor.ky.gov/healthierky/Pages/default.aspx (last visited Jan. 20, 2014) [hereinafter A Healthier Kentucky].

[19] Id.

[20] Stephanie McCrummen, In Rural Kentucky, Health-Care Debate Takes Back Seat as the Long-Uninsured Line Up, The Washington Post, (Nov. 23, 2013), http://www.washingtonpost.com/national/in-rural-kentucky-health-care-debate-takes-back-seat-as-people-sign-up-for-insurance/2013/11/23/449dc6e0-5465-11e3-9e2c-e1d01116fd98_story.html. Furthermore, as of March 20, 2014, 321,932 Kentuckians had enrolled through Kynect and 257,477 of these individuals qualified under the Medicaid expansion. More than 321,000 Now Enrolled Through Kynect as March 31 Deadline Approaches, Kentucky.gov (Mar. 21, 2014), http://kentucky.gov/Pages/Activity-Stream.aspx?viewMode=ViewDetailInNewPage&eventID=&activityType=PressRelease.

[21] Beshear, supra note 2.

[22] Id. (“[Kentucky] ranks among the worst, if not the worst, in almost every major health category, including smoking, cancer deaths, preventable hospitalizations, premature death, heart disease and diabetes.”).

[23] Enforcement Highlights, U.S. Dep’t of Health and Human Serv. (Dec. 31, 2013), http://www.hhs.gov/ocr/privacy/hipaa/enforcement/highlights/12312013.html.

[24] HIPAA, Pub. L. No. 104-191, 110 Stat. 1936 (codified as scattered sections of 18, 26, 29, 42 U.S.C. (2000)).

[25] See id. § 261.

[26] 42 U.S.C. § 1320d-2(d)(2)(A-C) (2014).

[27] See 45 C.F.R. § 160.103(4)(iv)(1-3) (2014).

[28] American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111-5, 123 Stat. 226 (Feb. 17, 2009), codified at 42 U.S.C. §§300jj et seq.; §17901 et seq.

[29] Business associate: (1) Except as provided in paragraph (4) of this definition, business associate means, with respect to a covered entity, a person who: (i) On behalf of such covered entity or of an organized health care arrangement (as defined in § 164.501 of this subchapter) in which the covered entity participates, but other than in the capacity of a member of the workforce of such covered entity or arrangement, performs, or assists in the performance of: (A) a function or activity regulated by this subchapter, including claims processing or administration, data analysis, processing or administration, utilization review, quality assurance, patient safety activities listed at 42 CFR 3.20, billing, benefit management, practice management, and repricing; or (B) Any other function or activity regulated by this subchapter; or (ii) Provides, other than in the capacity of a member of the workforce of such covered entity, legal, actuarial, accounting, consulting, data aggregation (as defined in § 164.501 of this subchapter), management, administrative, accreditation, or financial services to or for such covered entity, or to or for an organized health care arrangement in which the covered entity participates, where the provision of the service involves the disclosure of protected health information from such covered entity or arrangement, or from another business associate of such covered entity or arrangement, to the person. 45 C.F.R. § 160.103(1)(i-ii) (2014).

[30] It also expanded the maximum fine to $50,000 per violation depending on the culpability level, capping maximum amounts for repeated offenses at $1,500,000 per year for aggregate violations. See HIPAA Enforcement after the Recovery Act, Hall, Render, Killian, Heath & Lyman (March 30, 2009), http://www.hallrender.com/library/articles/1085/033009___Enforcement_after_the_Recovery_Act.pdf. However, HIPAA allows an exception to fines if the violation was due to reasonable cause. 42 USC § 1320d-5(a)(1)(B) (2014). HITECH also proposed allowing individuals to share a percentage of recovery or settlement; HHS had until 2012 to issue the regulation, but this does not appear to have occurred yet. Chris Dimick, HIPAA Violation? Sue me, J. of AHIMA (Mar. 1, 2011), http://journal.ahima.org/2011/03/01/hipaa-violation-sue-me/.

[31] See 45 C.F.R. § 164.502(a) (2014) (explaining general rules on violations and permitted uses of PHI). A “breach” is defined by HHS as “an impermissible use or disclosure under the Privacy Rule that compromises the security or privacy of the protected health information.” Breach Notification Rule, U.S. Dep’t of Health and Human Serv., http://www.hhs.gov/ocr/privacy/hipaa/administrative/breachnotificationrule/index.html (last visited Mar. 19, 2014).

[32] See, e.g., 42 U.S.C. § 1320d-5(a)(1)(A), (B) (2014).

[33] How OCR Enforces the HIPAA Privacy & Security Rules, U.S. Dep’t of Health and Human Serv., http://www.hhs.gov/ocr/privacy/hipaa/enforcement/process/howocrenforces.html (last visited Jan. 17, 2014) [hereinafter How OCR Enforces].

[34] See 42 U.S.C. § 1320d-5(c)(2) (2014); How OCR Enforces, supra note 32.

[35] How OCR Enforces, supra note 32.

[36] 42 U.S.C. § 1320d-5(a)(2)-(3) (2014).

[37] Id. § 1320d-6; How OCR Enforces, supra note 32.

[38] How OCR Enforces, supra note 32.

[39] Id.

[40] Id. Further, in 2012, HHS reported that 10,454 individuals filed complaints to the OCR, indicating that complaints are not at a minimum. See Health Information Privacy Complaints Received by Calendar Year, U.S. Dep’t of Health and Human Serv., http://www.hhs.gov/ocr/privacy/hipaa/enforcement/data/complaintsyear.html (last visited Jan. 17, 2014) [hereinafter Privacy Complaints] (providing a bar graph to show increasing numbers of HIPAA complaints each year).

[41] Instead, Congress limited enforcement to the Secretary of Health and Human Services, which indicates it did not intend to create private rights of action in individuals aggrieved by HIPAA breaches. Social Security Act, § 1171, 42 U.S.C. § 1320d); Acara v. Banks, 470 F.3d 569, 571 (5th Cir. 2006).

[42] After the HITECH expansion, state attorney generals are now allowed to bring civil damage claims against entities that breach HIPAA, but this does not affect an individual’s right to sue. Dimick, supra note 29. Even then, the attorney generals may be overwhelmed as well and only choose to take the most devastating and detrimental cases.

[43] See, e.g., Acara, 470 F.3d at 569.

[44] See infra Sections II.B-C.

[45] See Individual Right of Action for Medical Records Access: 50 State Comparison, Robert Wood Johnson Found. (Jan. 20, 2014), http://www.healthinfolaw.org/comparative-analysis/individual-right-action-medical-records-access-50-state-comparison [hereinafter 50 State Comparison].

[46] Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1979) (citation omitted).

[47] See Alexander v. Sandoval, 532 U.S. 275, 275 (2001) (holding that there is no private right of action to enforce disparate-impact regulations promulgated under Title VI of Civil Rights Act of 1964.”); Acara, 470 F.3d at 570 (holding no private cause of action for disclosure of PHI during a deposition); Johnson v. Quander, 370 F. Supp. 2d 79, 100 (D.D.C. 2005) (holding that a convicted robber had no private cause of action under HIPAA when challenging the DNA Act because the Secretary of HHS only had that right); Univ. of Colo. Hosp. v. Denver Pub. Co., 340 F. Supp. 2d 1142, 1145 (D. Colo. 2004) (finding no HIPAA private cause of action because the statute created enforcement means for aggrieved persons); O'Donnell v. Blue Cross Blue Shield of Wyo., 173 F. Supp. 2d 1176, 1179-80 (D. Wyo. 2001) (holding no express or implied private cause of action exists in HIPAA).

[48] Alexander, 532 U.S. at 286-87 ("Without [statutory intent], a cause of action does not exist and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute.").

[49] See Acara, 470 F.3d at 572.

[50] HIPAA enforcement has consistently been at a minimum. For example, between 2003 and 2011, the OCR received over 25,000 complaints, but only imposed a formal civil fine in one of these cases. The OCR settled six of these cases. HHS referred 495 cases to the Department of Justice, resulting in only sixteen prosecutions. Rachel Grunberger, Senate Hearings Focus on Lack of HIPAA Enforcement, Final HITECH Rule, Inside Privacy (Dec. 22, 2011), http://www.insideprivacy.com/senate-hearings-focus-on-lack-of-hipaa-enforcement-final-hitech-rule/.

[51] See, e.g., Byrne v. Avery Ctr. for Obstetrics & Gynecology, P.C., 102 A.3d 32, 42 (Conn. Super. Ct. 2014) (holding HIPAA may be used as the standard of care for a negligence claim and HIPAA does not preempt this type of claim); Doe 1631 v. Quest Diagnostics, Inc., 395 S.W.3d 8, 18-19 (Mo. 2013) (allowing a breach of fiduciary claim against defendant after its phlebotomist faxed HIV results without the patient’s permission); R.K. v. St. Mary's Med. Ctr., Inc., 735 S.E.2d 715, 723 (W. Va. 2012) (holding HIPAA may be used as the standard of care for a negligence claim); Sorensen v. Barbuto, 143 P.3d 295, 299 n.2 (Utah Ct. App. 2006) (holding plaintiff established an action for negligent breach of confidentiality by relying on standards within HIPAA); I.S. v. Washington Univ., No. 4:11CV235SNLJ, 2011 WL 2433585, at *2 (E.D. Mo. June 14, 2011) (“[T]he Court finds that Count III may stand as a state claim for negligence per se despite its exclusive reliance upon HIPAA.”); K.V. v. Women's Healthcare Network, LLC, 07-0228-CV-W-DW, 2007 WL 1655734, at *1 (W.D. Mo. June 6, 2007) (explaining that the negligence per se claim based on HIPAA violation was a state-law claim); Acosta v. Byrum, 638 S.E.2d 246, 253 (N.C. Ct. App. 2006) (allowing plaintiff to reference HIPAA as baseline evidence of appropriate medical standard of care needed as an element of negligence); Harmon v. Maury Cnty., Tenn., No. 1:05 CV 0026, 2005 WL 2133697, at *3 (M.D. Tenn. Aug. 31, 2005).

[52] Young v. Carran, 289 S.W.3d 586, 588-89 (Ky. Ct. App. 2008) (citation omitted).

[53] State supreme courts wrote two of these notable decisions, demonstrating that at least two states’ highest courts have recognized HIPAA as proof of the standard of care for common law tort claims. See, e.g., Sorensen, 143 P.3d at 299 n.2; R.K., 735 S.E.2d at 723.

[54] It appears that plaintiffs must still prove damages proximately caused by the defendant’s actions, and damages must be legally cognizable. See Alagia, Day, Trautwein & Smith v. Broadbent, 882 S.W.2d 121, 126 (Ky. 1994).

[55] For example, Ohio’s Supreme Court in 1999 held that “an independent tort exists for the unauthorized, unprivileged disclosure to a third party of nonpublic medical information that a physician or hospital has learned within a physician-patient relationship" and "a third party can be held liable for inducing the unauthorized, unprivileged disclosure.” Biddle v. Warren Gen. Hosp., 715 N.E.2d 518, 523, 528 (Ohio 1999). This tort only applied to the confidential relationship between the physician and the patient, however. Recognizing the shortcomings of this tort and the growing problem of inadvertent disclosure with other entities before HITECH, the same court created a separate tort solely related to medical records that applies to a broader range of persons not limited to physicians. See Hageman v. Sw. Gen. Health Ctr., 893 N.E.2d 153, 157-58 (Ohio 2008).

[56] See 50 State Comparison, supra note 44 (illustrating California, Delaware, Illinois, Louisiana, Maryland, Massachusetts, Montana, New Hampshire, New York, Tennessee, Washington, West Virginia, Wisconsin, and Wyoming have private causes of action).

[57] See R.K., 735 S.E.2d at 715.

[58] See infra notes 83-109 and accompanying text (explaining the similarities between West Virginia and Kentucky).

[59] The statute explains that “[t]he provisions of this article may be enforced by a patient, authorized agent or authorized representative, and any health care provider found to be in violation of this article shall pay any attorney fees and costs, including court costs incurred in the course of such enforcement.” W. Va. Code § 16-29-1(d) (2011 & Supp. 2014); W. Va. Code § 29B-1-6 (2012) (“Any custodian of any public records who willfully violates the provisions of this article is guilty of a misdemeanor and, upon conviction thereof, shall be fined not less than two hundred dollars nor more than one thousand dollars, or be imprisoned in the county jail for not more than twenty days, or, in the discretion of the court, by both fine and imprisonment.”).

[60] See R.K., 735 S.E.2d at 724.

[61] See 50 State Comparison, supra note 44.[62] 42 U.S.C. § 1320d-7 (2014), which states in part: (1) General rule, Except as provided in paragraph (2), a provision or requirement under this part, or a standard or implementation specification adopted or established under sections 1320d-1 through 1320d-3 of this title, shall supersede any contrary provision of State law, including a provision of State law that requires medical or health plan records (including billing information) to be maintained or transmitted in written rather than electronic form. (2) Exceptions, A provision or requirement under this part, or a standard or implementation specification adopted or established under sections 1320d-1 through 1320d-3 of this title, shall not supersede a contrary provision of State law, if the provision of State law... (B) subject to section 264(c)(2) of the Health Insurance Portability and Accountability Act of 1996 [42 USCS § 1320d-2 note], relates to the privacy of individually identifiable health information (emphasis added).

[63] See R.K., 735 S.E.2d at 724.

[64] See 45 C.F.R. § 160.203(a) (2014).

[65] See id. § 160.203(b).

[66] R.K., 735 S.E.2d at 724.

[67] Id. at 717.

[68] Id.

[69] Id. at 718 (iterating claims for outrageous conduct, intentional infliction of emotional distress, negligent infliction of emotional distress, negligent entrustment, breach of confidentiality, invasion of privacy, and punitive damages).

[70] Id. at 719.

[71] 767 N.W.2d 34 (Minn. Ct. App. 2009).

[72] Id. at 38.

[73] Minn. Stat. § 144.335 (2006) (repealed 2007), available at https://www.revisor.mn.gov/statutes/?year=2006&id=144.335 (providing for a private cause of action for the wrongful disclosure of an individual’s medical records); Yath v. Fairview Clinics, 767 N.W.2d 34, 39 (Minn. Ct. App. 2009).

[74] 45 C.F.R § 160.202 (2014); R.K. v. St. Mary's Med. Ctr., Inc., 735 S.E.2d 715, 721 (W. Va. 2012) (“Just because a distinction exists does not make [a state statute] ‘contrary’ to HIPAA. A state law is ‘contrary’ to HIPAA if a health care provider ‘would find it impossible to comply with both the State and federal requirements’ or if the state law is ‘an obstacle to the accomplishment and execution of the full purposes’ of HIPAA.’”).

[75] R.K., 735 S.E.2d at 722-23 (“The stated purpose of HIPAA is to improve the Medicare and Medicaid programs and ‘the efficiency and effectiveness of the health care system, by encouraging the development of a health information system through the establishment of standards and requirements for the electronic transmission of certain health information.’ . . . Rather than creating an ‘obstacle’ to HIPAA, [Minn. Stat. § 144.334] supports at least one of HIPAA’s goals by establishing another disincentive to wrongfully disclose a patient’s health care record.”).

[76] See 45 U.S.C. §1320d-5 (2014) (imposing criminal penalties); Minn. Stat. § 144.335(3a(e)) (2006) (imposing compensatory damages in a civil action).

[77] See R.K., 735 S.E.2d at 722 (“The difference in remedy is functional only, in that a HIPAA violation subjects a person to criminal penalties.”).

[78] Lampf v. Gilbertson, 501 U.S. 350, 365 (1991) (Scalia, J., concurring in part and concurring in judgment).

[79] See, e.g., Young v. Carran, 289 S.W.3d 586, 589 (Ky. Ct. App. 2008).

[80] See Ky. Rev. Stat. Ann. § 446.070 (2013).

[81] See Yeager v. Dickerson, 391 S.W.3d 388, 393 (Ky. Ct. App. 2013).

[82] Id. at 390.

[83] Id. at 391.

[84] Id. at 394.

[85] Id. “[T]he General Assembly did not intend [KRS § 466.070] ‘to embrace the whole of federal laws and the laws of other states and thereby confer a private civil remedy for such a vast array of violations.’” (citation omitted).

[86] Id.

[87] 50 State Comparison, supra note 44 (utilizing a nationwide map to explain Kentucky has not allowed tort claims).

[88] See supra notes 78-86 and accompanying text.

[89] See Joy L. Pritts, Altered States: State Health Privacy Laws and the Impact of the Federal Health Privacy Rule, 2 Yale J. Health Pol’y L. & Ethics 327(2002) [hereinafter Altered States]. Further, “there is still room for states to protect their own citizens by retaining or enacting health privacy protections that mirror and improve upon those in the [federal legislation].” Id. at 328.

[90] See Yeager v. Dickerson, 391 S.W.3d 388, 394 (Ky. Ct. App. 2013).

[91] See generally id. at 388 (articulating no private recovery for plaintiffs in Kentucky).

[92] Altered States, supra note 88, at 345.

[93] Standards for Privacy of Individually Identifiable Health Information, 64 Fed. Reg. 59,923 (Nov. 3, 1999) (to be codified at 45 C.F.R. pts. 160-64).

[94] Altered States, supra note 88, at 347 (“This approach, endorsed by the Privacy Protection Study Commission in the 1970s, ensures that the states will be able to enforce the law and protect their citizens.”) (citing Personal Privacy in an Information Society: The Report of the Privacy Protection Study Commission, U.S. Privacy Prot. Study Comm’n 276-90 (July 1977), available at http://epic.org/privacy/ppsc1977report).

[95] As an example, distrust for the state was so extreme that some rural Kentuckians thought that enrolling in the state-health insurance coverage involved implanting microchips into their arms. McCrummen, supra note 19.

[96] See generally Yeager, 391 S.W.3d at 388 (illustrating Kentucky case law against a private cause of action).

[97] See supra section II.C (articulating West Virginia common law and statutory scheme allowing individuals rights of recovery for disclosures of PHI).

[98] See Yeager, 391 S.W.3d at 388; R.K. v. St. Mary's Med. Ctr., Inc., 735 S.E.2d 715 (W. Va. 2012).

[99] See Yeager, 391 S.W.3d. at 394.

[100] See R.K., 735 S.E.2d at 724.

[101] Id. at 718; Yeager, 391 S.W.3d at 393.

[102] See R.K., 735 S.E.2d at 721; Yeager, 391 S.W.3d at 394.

[103] See 45 C.F.R § 160.202-.203 (2013).

[104] See R.K., 735 S.E.2d at 721-24 (discussing HIPAA preempting contrary state laws and disallowing any laws impeding HIPAA enforcement).

[105] Wash. Mut. Bank v. Superior Court, 75 Cal. App. 4th 773, 783 (1999) (citation omitted).

[106] The Uninsured in West Virginia, Addiction Tech. Transfer Ctr. Network, http://attcnetwork.org/regcenters/generalContent.asp?rcid=2&content=PARTCUSTOM (last visited Jan 20, 2014) [hereinafter The Uninsured in West Virginia].

[107] Living in rural areas increased the possibilities of being uninsured. See West Virginia, Rural Assistance Ctr. (Dec. 29, 2014), http://www.raconline.org/states/west-virginia.

[108] See How Will the Uninsured in West Virginia Fare Under the Affordable Care Act?, Kaiser Family Found., http://kff.org/health-reform/fact-sheet/state-profiles-uninsured-under-aca-west-virginia/ (last visited Jan. 20, 2014); Interactive: A State-by-State Look at How the Uninsured Fare Under the ACA, Kaiser Family Found., http://kff.org/interactive/uninsured-gap/ (last visited Jan. 19, 2014) (hereinafter Interactive).

[109] The Uninsured in West Virginia, supra note 105.

[110] 5 Years Later: How the Affordable Care Act is Working for West Virginia, U.S. DEP’T OF HEALTH AND HUMAN SERV., http://www.hhs.gov/healthcare/facts/bystate/wv.html (last visited Jan. 20, 2014).

[111] How Will the Uninsured in Kentucky Fare Under the Affordable Care Act?, Kaiser Family Foundation, http://kff.org/health-reform/fact-sheet/state-profiles-uninsured-under-aca-kentucky/ (last visited Jan. 19, 2014) (hereinafter Kaiser Kentucky).

[112] Kentucky, Rural Assistance Ctr. (Sept. 12, 2014), http://www.raconline.org/states/kentucky.

[113] Kaiser Kentucky, supra note 110; Interactive, supra note 107.

[114] How the Health Care Law is Making a Difference for the People in Kentucky, KY and Appalachia Public Health Training Ctr., http://www.uky.edu/kaphtc/resources/policy-development-and-program-planning/how-health-care-law-making-difference-people (last visited Jan. 20, 2014).

[115] 5 Years Later: How the Affordable Care Act is Working for Kentucky, U.S. DEP’T OF HEALTH AND HUMAN SERV., http://www.hhs.gov/healthcare/facts/bystate/wv.html (last visited Jan. 20, 2014).

Eldred & the New Rationality

This Online Original is available for download (PDF) here.

Article | 104 KY. L. J. ONLINE 1 | July 17, 2015

Brian L. Frye[1]

Abstract

Historically, the rational basis test has been a constitutional rubber stamp. In Eldred v. Ashcroft and Golan v. Holder, the Supreme Court applied the rational basis test and respectively held that Congress could extend the copyright term of existing works and restore copyright protection of public domain works, despite evidence that Congress intended to benefit copyright owners at the expense of the public.But in Lawrence v. Texas and United States v. Windsor, the Supreme Court seems to have applied the rational basis test and held that state and federal laws were unconstitutional because they were motivated by animosity, and in Obergefell v. Hodges, it held that states must license marriages between two people of the same sex, because there is no legitimate basis to refuse.This essay argues that Lawrence, Windsor, and Obergefell may reflect the emergence of a “new rationality” that authorizes courts to consider legislative intent when evaluating the constitutionality of legislation. If so, perhaps the Court should reconsider Eldred and Golan.

Introduction

Rational basis review is famously forgiving. It provides that most legislation is constitutional, so long as it is conceivably related to any legitimate government interest, even if that interest did not actually motivate the legislation.[2] Accordingly, in Eldred v. Ashcroft (2003), the Court applied rational basis review and held that Congress could constitutionally extend the copyright term of existing works of authorship, because it could have believed that doing so would promote their creation and dissemination.[3]But rational basis review seems to have changed since Eldred. In Lawrence v. Texas (2003), the Court seemingly applied rational basis review and held that a Texas law prohibiting homosexual conduct was unconstitutional because it was motivated by animosity toward homosexuals.[4] In United States v. Windsor (2013), it held that a federal law prohibiting the recognition of same-sex marriages was unconstitutional for the same reason.[5] And, most recently, in Obergefell v. Hodges (2015), it held that the Fourteenth Amendment requires states to license marriages between two people of the same sex, apparently because there is no legitimate basis to refuse.[6] So, this “new rationality” apparently provides that legislation cannot be motivated by animosity, even if it is conceivably related to a legitimate government interest.This change in rational basis review presents an obvious question: Can Eldred survive Lawrence, Windsor, Obergefell and the new rationality? In practice, of course, the answer is obviously “yes.” The Court has long adhered to the maxim that “foolish consistency is the hobgoblin of little minds.”[7] Or rather, as Justice Holmes more gently observed, “The life of the law has not been logic; it has been experience.”[8]In fact, it already has. In Golan v. Holder (2012), the Supreme Court relied on Eldred to hold that Congress could constitutionally restore the copyright in certain works that had fallen into the public domain, because it could rationally believe that doing so could “encourage the dissemination of existing and future works” and induce “greater investment in the creative process.”[9]But the more interesting question is whether Eldred, Golan, and other cases decided under the rational basis test should survive the new rationality. If the standard of review has changed, why has it changed, why is that change legitimate, and how should it affect the way the court reviews cases under the rational basis test, if at all?

A Potted History of Constitutional Review

The Court has always assumed its authority to review the constitutionality of federal and state legislation.[10] Most famously, in Marbury v. Madison (1803), it held that a federal law was unconstitutional.[11] But the antebellum Court was reluctant to exercise the power of judicial review.[12] While it occasionally held that state laws were unconstitutional, it did not hold another federal law unconstitutional until Dred Scott v. Sandford (1857).[13]Notably, the antebellum Court held that its authority to review the constitutionality of state legislation was limited, especially in the case of legislation affecting individual rights. In Barron v. Baltimore (1833), it held that the Bill of Rights did not apply to the states.[14] And it assumed that it lacked the authority to review the constitutionality of state legislation based on the state “police power” to promote health, safety, morals, and general welfare.The ratification of the Fourteenth Amendment in 1868 changed the scope of judicial review. Initially, the Court was reluctant to expand its authority.[15] But eventually, it held that it was authorized to review the constitutionality of all legislation, state and federal, based on the police power.[16] And it assumed that its authority to review the constitutionality of legislation extended to economic legislation.[17]The stringency of the Court’s constitutional review of economic legislation reached its zenith in Lochner v. New York (1905), in which it held that the New York Bakeshop Act, which prohibited most bakery employees from working more than ten hours per day or sixty hours per week, was unconstitutional because it impeded the liberty of contract without a legitimate purpose.[18] Specifically, the Court held that a police power claim cannot be “a mere pretext,” and concluded that the Bakeshop Act was not a valid exercise of the state police power because its “real object and purpose were simply to regulate the hours of labor . . . in a private business, not dangerous in any degree to morals, or in any real and substantial degree to the health of the employees.”[19] In other words, the Court held that constitutional review obligated it to consider whether legislation was intended to achieve a legitimate purpose, and likely to actually achieve that purpose: “When assertions such as we have adverted to become necessary in order to give, if possible, a plausible foundation for the contention that the law is a ‘health law,’ it gives rise to at least a suspicion that there was some other motive dominating the legislature than the purpose to subserve the public health or welfare.”[20]Lochner immediately became the bete noire of progressives, who argued that courts should defer to legislators, especially in the case of economic legislation. Eventually, it became synonymous with judicial overreaching.[21] Commentators even coined the term “Lochnering” to describe illegitimate judicial review of economic legislation.[22] Notably, Lochner was initially an outlier, although the Court eventually began to apply its strict standard of review in other cases.[23]In any case, Lochner didn’t last long. In Nebbia v. New York (1934), the Court held that a New York law creating a Milk Control Board to establish the retail price of milk was constitutional because the liberty of contract was not “absolute” and could be regulated in order to promote the general welfare, so long as the regulations were not “unreasonable, arbitrary, or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained.”[24] And in West Coast Hotel Co. v. Parrish (1937), the Court held that a Washington minimum wage law was constitutional because Washington “was entitled to adopt measures to reduce the evils of the 'sweating system,'” and “had the right to consider that its minimum wage requirements would be an important aid in carrying out its policy of protection.”[25]Finally, in United States v. Carolene Products Company (1938), the Court held that a federal law prohibiting the “shipment in interstate commerce” of skimmed milk compounded with “any fat or oil other than milk fat” was constitutional because Congress could rationally believe that it was “‘an adulterated article of food, injurious to the public health.’"[26] Specifically, the Court held:

[T]he existence of facts supporting the legislative judgment is to be presumed, for regulatory legislation affecting ordinary commercial transactions is not to be pronounced unconstitutional unless in the light of the facts made known or generally assumed it is of such a character as to preclude the assumption that it rests upon some rational basis within the knowledge and experience of the legislators.[27]

And then, in the most famous footnote in constitutional history, the Court noted that this “presumption of constitutionality” may not apply to fundamental rights protected by the Constitution, or to laws that affect minority groups:

There may be narrower scope for operation of the presumption of constitutionality when legislation appears on its face to be within a specific prohibition of the Constitution, such as those of the first ten Amendments, which are deemed equally specific when held to be embraced within the Fourteenth. . . .

It is unnecessary to consider now whether legislation which restricts those political processes which can ordinarily be expected to bring about repeal of undesirable legislation, is to be subjected to more exacting judicial scrutiny under the general prohibitions of the Fourteenth Amendment than are most other types of legislation. . . .

Nor need we enquire whether similar considerations enter into the review of statutes directed at particular religious . . . or national . . . or racial minorities . . . : whether prejudice against discrete and insular minorities may be a special condition, which tends seriously to curtail the operation of those political processes ordinarily to be relied upon to protect minorities, and which may call for a correspondingly more searching judicial inquiry.[28]

Footnote four of Carolene Products eventually became the basis for modern constitutional review, which requires courts to apply three levels of judicial scrutiny when reviewing the constitutionality of government action, depending on the nature of the claim: strict scrutiny, intermediate scrutiny, and rational basis.[29]Strict scrutiny review applies to government action that affects fundamental rights and certain “suspect classes,” like race, religion, and national origin.[30] In order to survive strict scrutiny review, a government action must be justified by a compelling governmental interest, narrowly tailored to achieve that goal or interest, and the least restrictive means for achieving that interest.[31] It has become a truism that strict scrutiny is “‘strict’ in theory and fatal in fact,” because government action subject to strict scrutiny review is almost always held unconstitutional.[32]Intermediate scrutiny review applies to government action that affects other “suspect classes,” including gender. In order to survive intermediate scrutiny review, a government action must be “substantially related” to the achievement of “important governmental objectives.”[33] Scholars have argued that the Court developed intermediate scrutiny in order to protect groups that lack power in the political process.[34] In any case, while intermediate scrutiny is theoretically less stringent than strict scrutiny, it tends to produce similar results.Rational basis review applies to government action that does not affect a fundamental right or suspect class. In order to survive rational basis review, a government action must only be “rationally related” to a “legitimate government interest.”[35] Rational basis review is famously lenient. Any conceivable reason for the action is deemed rational, even if it is not the government’s actual reason for the action, and any conceivable interest is deemed legitimate, even if it is not the government’s actual interest.[36] Under rational basis review, courts must assume that the government’s motives are legitimate, even in the face of evidence to the contrary.[37] Scholars have long observed that rational basis review is “virtually none in fact.”[38]For example, in Williamson v. Lee Optical, the Court applied rational basis review to an Oklahoma statute that, inter alia, prohibited the manufacture of eyeglasses without a prescription and held that the statute did not violate due process or equal protection, because the legislature could have had a legitimate reason for enacting it. Moreover, the Court explicitly stated:

The day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought. . . . For protection against abuses by legislatures the people must resort to the polls, not to the courts.[39]

As a consequence, challenging the constitutionality of economic legislation on due process or equal protection grounds soon became seen as quixotic, at best. For example, the Onion Futures Act of 1958 prohibited the sale of futures contracts in onions.[40] Initially, the Chicago Mercantile Exchange filed an action arguing that the Act was unconstitutional and requesting an injunction prohibiting its enforcement.[41] But when the district court applied the rational basis test and upheld the constitutionality of the Act, the Chicago Mercantile Exchange did not appeal because it considered the action hopeless.[42]

Eldred v. Ashcroft

The Court has also applied the rational basis test to actions challenging the constitutionality of copyright legislation. For example, the Sonny Bono Copyright Term Extension Act (“CTEA”) extended the copyright term of existing works of authorship by twenty years.[43]In Eldred v. Ashcroft (2003), petitioners argued, inter alia, that this retroactive extension exceeded Congress’s authority under the Intellectual Property Clause, because extending the copyright term of existing works does not and cannot “promote the Progress of Science.”[44] The Court has uniformly held that the purpose of copyright is to encourage the production of works of authorship.[45] Petitioners argued that extending the copyright term of an existing work cannot encourage its production.[46]The Court applied the rational basis test and unsurprisingly held that the CTEA was constitutional. Writing for the majority, Justice Ginsburg stated, “The CTEA reflects judgments of a kind Congress typically makes, judgments we cannot dismiss as outside the Legislature's domain.”[47] She observed that Congress intended the CTEA to “ensure that American authors would receive the same copyright protection in Europe as their European counterparts,” “provide greater incentive for American and other authors to create and disseminate their work in the United States,” and “encourage copyright holders to invest in the restoration and public distribution of their works.”[48] And she concluded, “In sum, we find that the CTEA is a rational enactment; we are not at liberty to second-guess congressional determinations and policy judgments of this order, however debatable or arguably unwise they may be.”[49]However, as Justices Stevens and Breyer pointed out in their dissents, the justifications provided by Congress are not credible and almost certainly pretextual. As Justice Stevens observed, the retroactive extension of the copyright term “will not even arguably promote any new works by authors or inventors,” and equitable concerns are “a classic non sequitur” because the “reason for increasing the inducement to create something new simply does not apply to an already-created work.”[50] Moreover, as Justice Breyer observed, “no one could reasonably conclude that copyright's traditional economic rationale applies here,” because the value of the copyright extension is too small to affect the incentives of marginal authors.[51] The claim that retroactive copyright extension provides incentives to republish and redistribute existing works is totally inconsistent with both the purpose of copyright and actual experience, which shows that public domain works are more readily available at lower prices than copyrighted works.[52]Finally, Justice Breyer pointed out that the actual reason that Congress retroactively extended the copyright term, as reflected in the legislative history of the CTEA, was to provide financial assistance to the entertainment industry, a purpose that is not consistent with the justification for copyright protection:

I can find nothing in the Copyright Clause that would authorize Congress to enhance the copyright grant's monopoly power, likely leading to higher prices both at home and abroad, solely in order to produce higher foreign earnings. That objective is not a copyright objective. Nor, standing alone, is it related to any other objective more closely tied to the Clause itself. Neither can higher corporate profits alone justify the grant's enhancement. The Clause seeks public, not private, benefits.[53]

Indeed, as many scholars have observed, the true purpose of the CTEA was to prevent certain iconic copyrighted works from falling into the public domain, and thereby enable their owners to continue to collect monopoly rents on their use.[54] As a result, the CTEA is often pejoratively referred to as the “Mickey Mouse Protection Act.”[55] In fact, a scholarly consensus has emerged that rent-seeking legislation of this kind is improper and ought to be unconstitutional.[56] However, this position is obviously inconsistent with traditional rational basis review of economic legislation.[57] As the Court implicitly observed in Eldred, if rational basis review does not permit examination of the actual motives for a government action, then any conceivably legitimate motive will do, no matter how implausible. 

The “New Rationality”

Under traditional rational basis review, Eldred was a foregone conclusion. But what if rational basis review changed to permit consideration of the actual motives for a government action? Can Eldred survive more searching review? And should it?It appears that rational basis review may have undergone just such a change. In Lawrence v. Texas (2003),[58] United States v. Windsor (2013),[59] and Obergefell v. Hodges (2015), the Court seems to have applied rational basis review, but considered the actual motive for a government action or omission, rather than searching for a conceivably legitimate motive.[60]In Lawrence v. Texas, the Court held that a Texas law prohibiting homosexual conduct was unconstitutional, because it violated due process.[61] The basis for the Court’s ruling is surprisingly unclear, because it did not specify the standard of constitutional review.[62] However, Lawrence explicitly overruled Bowers v. Hardwick (1986), which applied rational basis review to hold that “the presumed belief of a majority of the electorate in Georgia that homosexual sodomy is immoral and unacceptable” was a legitimate government interest.[63] In Romer v. Evans (1996), the Court applied rational basis review to hold that an amendment to the Colorado Constitution violated equal protection, because it was “born of animosity toward the class of persons affected,” which is not a legitimate government interest.[64] The Lawrence Court relied on Romer, holding that there is no legitimate government interest in prohibiting homosexual conduct: “The Texas statute furthers no legitimate state interest which can justify its intrusion into the personal and private life of the individual.”[65]Moreover, Justice O’Connor’s concurrence explicitly applied rational basis review and concluded that the Texas law violated equal protection because it was intended to harm homosexuals, and “some objectives, such as a bare desire to harm a politically unpopular group, are not legitimate state interests.”[66] And Justice Scalia’s dissent explicitly pointed out that the majority can only be applying rational basis review:

I turn now to the ground on which the Court squarely rests its holding: the contention that there is no rational basis for the law here under attack. This proposition is so out of accord with our jurisprudence—indeed, with the jurisprudence of any society we know—that it requires little discussion.[67]

Accordingly, it appears that the Lawrence Court applied rational basis review and held that the Texas law was unconstitutional because animosity toward a politically unpopular group is not a legitimate government interest: “[T]he fact that the governing majority in a State has traditionally viewed a particular practice as immoral is not a sufficient reason for upholding a law prohibiting the practice.”[68]Then, in United States v. Windsor, the Court held that a federal law prohibiting the federal recognition of same-sex marriages was unconstitutional because it violated the Equal Protection clause of the Fourteenth Amendment.[69] As in Lawrence, the basis for the Court’s ruling in Windsor is unclear, because it did not specify the standard of constitutional review. However, it seems that the Court once again applied rational basis review and held that the federal law failed to advance a legitimate public interest because it was motivated by animosity:

The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity. By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment.[70]

Moreover, in his dissent, Justice Scalia once again observed that the majority must have been applying rational basis review, albeit of a form considerably more stringent than historically applied:

In accord with my previously expressed skepticism about the Court's “tiers of scrutiny” approach, I would review this classification only for its rationality. As nearly as I can tell, the Court agrees with that; its opinion does not apply strict scrutiny, and its central propositions are taken from rational-basis cases like Moreno. But the Court certainly does not apply anything that resembles that deferential framework.[71]

Finally, in Obergefell v. Hodges, the Court held that the Fourteenth Amendment requires states to license marriages between two people of the same sex.[72] Again, the basis for the Court’s holding is unclear, because it did not specify the standard of constitutional review. But it appears to have applied rational basis review, and held that there is no legitimate basis to refuse to license marriages between two people of the same sex. The Court did not hold that gay people are a suspect class, which would have required the application of strict scrutiny. Instead, it observed that marriage is fundamental right protected by due process, and held that the refusal to license marriages between two people of the same sex violates equal protection by preventing gays and lesbians from exercising that right:

It is now clear that the challenged laws burden the liberty of same-sex couples, and it must be further acknowledged that they abridge central precepts of equality. Here the marriage laws enforced by the respondents are in essence unequal: same-sex couples are denied all the benefits afforded to opposite-sex couples and are barred from exercising a fundamental right. Especially against a long history of disapproval of their relationships, this denial to same-sex couples of the right to marry works a grave and continuing harm. The imposition of this disability on gays and lesbians serves to disrespect and subordinate them. And the Equal Protection Clause, like the Due Process Clause, prohibits this unjustified infringement of the fundamental right to marry.[73]

Indeed, Chief Justice Roberts’s dissent explicitly accused the majority of “Lochnering,” or constitutionalizing its policy preferences: “Ultimately, only one precedent offers any support for the majority’s methodology: Lochner v. New York, 198 U.S. 45.”[74] Roberts argued that the fundamental right of marriage provides only a right to marry “as traditionally defined,” which has never included a right to marry a person of the same sex, and that the majority’s decision was based only on its own policy preferences:

The truth is that today’s decision rests on nothing more than the majority’s own conviction that same-sex couples should be allowed to marry because they want to, and that “it would disparage their choices and diminish their personhood to deny them this right.” . . . Whatever force that belief may have as a matter of moral philosophy, it has no more basis in the Constitution than did the naked policy preferences adopted in Lochner.[75]

So, it appears that Lawrence, Windsor, and Obergefell may all have applied a new form of rational basis review, based on Romer and other cases, under which courts must consider the actual motivation for a government action in determining whether it advances a legitimate state interest, which cannot include animosity. Many commentators have argued that this development should be understood as the gradual emergence of a new level of judicial scrutiny, “rational basis review with bite,” which is limited to government actions that affect particular suspect classes.[76] Curiously, this new level of scrutiny seems indistinguishable in practice from intermediate scrutiny.[77] Others have argued that the Court actually created, sub silentio, a fundamental right to engage in homosexual conduct.[78] And some federal courts have agreed with this reading.[79]But why not take Lawrence, Windsor, and Obergefell at face value and assume that the Court actually intended to change rational basis review, by authorizing courts to consider the actual motivation for government action when determining whether it was intended to advance a legitimate government interest? I will refer to this apparent change in the application of the rational basis test as the “new rationality.” But the terms of the new rationality remain unclear.If the new rationality requires courts applying the rational basis doctrine to consider the actual motives for a government action, rather than hunting for any conceivably legitimate motive, which motives are legitimate and which are not? In Lawrence, Windsor, and Obergefell, the court held that animosity is not a legitimate motive, and explicitly rejected religious justifications for legislative decisions. That stands to reason, although as Justice White observed in Bowers, “if all laws representing essentially moral choices are to be invalidated under the Due Process Clause, the courts will be very busy indeed.”[80]Are any other motives illegitimate under the rational basis test? Several scholars have argued that the new rationality should also extend to rational basis review of economic legislation. For example, David Bernstein has argued that Lawrence and other substantive due process cases reflect a gradual return to the form of judicial review applied in Lochner.[81] And Randy Barnett has argued that Lawrence reflects the wholesale importation of libertarian values into constitutional review.[82]Some federal judges seem to agree. Several courts have held that economic legislation failed the rational basis test because its actual purpose was economic protectionism. For example, in Craigmiles v. Giles (2002), the Sixth Circuit held that rational basis review does not require courts to accept pretextual justifications for government actions, and that economic protectionism is not a legitimate government interest.[83] In Merrifield v. Lockyer (2008), the Ninth Circuit held that rational basis review does not require courts to accept irrational justifications, and that economic protectionism is not a legitimate government interest.[84] In St. Joseph Abbey v. Castille (2013), the Fifth Circuit held that rational basis review requires courts to identify an actual rational basis for believing that a government action would advance a legitimate government interest, and that economic protectionism is not legitimate.[85] And in Wildcat Moving v. Zawacki (2013), the United States District Court for the Eastern District of Kentucky applied Craigmiles and held that a Kentucky law regulating intrastate moving failed the rational basis test because its sole purpose was “to protect existing moving companies from outside economic competition.”[86]Of course, these cases appear to be facially inconsistent with Supreme Court precedent. Specifically, in New Orleans v. Dukes (1976), the Supreme Court held that a New Orleans ordinance prohibiting pushcart food vendors in the French Quarter, with a “grandfather clause” that provided an exception for certain long-time vendors, passed the rational basis test, because:

The city could reasonably decide that newer businesses were less likely to have built up substantial reliance interests in continued operation in the Vieux Carre and that the two vendors who qualified under the "grandfather clause"—both of whom had operated in the area for over 20 years rather than only eight—had themselves become part of the distinctive character and charm that distinguishes the Vieux Carre. We cannot say that these judgments so lack rationality that they constitute a constitutionally impermissible denial of equal protection.[87]

Essentially, the Dukes Court held that courts should not question the rationality of economic legislation explicitly overruling Morey v. Doud (1957), the last case in which it had overruled economic legislation as irrational.[88]And yet, the Supreme Court seems newly concerned by government action based on economic protectionism. For example, in North Carolina Board of Dental Examiners v. Federal Trade Commission (2015), the Court held that the North Carolina State Board of Dental Examiners was not entitled to state-action antitrust immunity because it was not actively supervised by the state.[89] The Board of Dental Examiners was a state regulatory body composed primarily of practicing dentists, which prohibited non-dentists from offering teeth-whitening services that do not require medical skill. The FTC argued that the Board’s action violated federal antitrust law, but the Board responded that it was entitled to state-action antitrust immunity. While the Court did not actually apply the rational basis test, it was clearly concerned about the legitimacy of the Board’s action. Indeed, Justice Alito’s dissent explicitly argued that the majority’s opinion was motivated by opposition to economic protectionism:

When the Court asks whether market participants control the North Carolina Board, the Court in essence is asking whether this regulatory body has been captured by the entities that it is supposed to regulate. Regulatory capture can occur in many ways. So why ask only whether the members of a board are active market participants? The answer may be that determining when regulatory capture has occurred is no simple task. That answer provides a reason for relieving courts from the obligation to make such determinations at all. It does not explain why it is appropriate for the Court to adopt the rather crude test for capture that constitutes the holding of today's decision.[90]

Eldred & the New Rationality

If the new rationality prohibits economic protectionism—or rather, corruption—an Eldred survive the new rationality? In practice, of course it can. The Court can do whatever it likes, and it is perfectly capable of turning a blind eye to corruption, if it so chooses. In fact, Eldred has already survived the new rationality. In Golan v. Holder (2012), it relied on Eldred to hold that Congress could restore copyright protection of works that had fallen into the public domain.[91] In particular, the Court held that the Copyright Clause empowers Congress to grant copyright protection in order to promote both the creation of new works and the dissemination of existing works, and Congress could have believed that restoring copyright protection of existing works could encourage their dissemination.[92] In other words, the Court applied the traditional rational basis test, rather than the new rationality.The more interesting question is, should Eldred and Golan survive the new rationality? And that is a question that has been percolating for quite some time. Ever since Eldred was decided, scholars have recognized that requiring courts to consider the actual motives for copyright legislation would inevitably invoke the spectre of Lochner.[93] As a consequence, they have argued that courts should defer to Congress when reviewing copyright legislation, and by extension, that courts should defer to legislatures when reviewing economic legislation.[94]And yet, perhaps they overstate their case. The traditional reason for rejecting Lochner and its more stringent review of economic legislation is that courts should respect the democratic process, even if it results in government action unlikely to achieve welfare-maximizing ends.[95] Or rather, as Justice Holmes put it, “if my fellow citizens want to go to Hell I will help them. It’s my job.”[96]But what if economic legislation is not the result of the democratic process? What if it is the result of corruption? Should courts defer to all economic legislation, even in the face of evidence of corruption? The justification for judicial deference is that courts should respect government actions based on majority opinion. As Justice Stevens observed:

I think it appropriate to emphasize the distinction between constitutionality and wise policy . . . [A]s I recall my esteemed former colleague, Thurgood Marshall, remarking on numerous occasions: “The Constitution does not prohibit legislatures from enacting stupid laws.”[97]

But Lawrence, Windsor, and Obergefell held that courts should not respect government actions based on animosity, because animosity is not a legitimate basis for government action. Neither should courts respect government actions based on corruption, because it is not even an expression of majority opinion, it is just a means of rent-seeking. As other commentators have noted, “[w]ith the appearance in the circuits of a new series of cases applying ‘rational basis with bite,’ one might ask whether underlying them is another normative change, one of growing public disapproval of rent-seeking and special-interest legislation.”[98]In other words, perhaps the “new rationality” should be understood to provide that courts may consider legislative intent, but not legislative wisdom. Of course, legislative intent may be diffuse and difficult to discern. And yet, courts routinely consider the intent of non-economic legislation. Indeed, the purpose of strict and intermediate scrutiny is essentially to enable courts to review the intentions motivating government action that affects fundamental rights and minority groups. While the stakes are high, because the protecting fundamental rights and minority groups is of paramount importance, there is also room for legitimate disagreement on normative grounds as to what counts as a fundamental right and how minority groups ought to be protected. By contrast, corruption and rent-seeking are considerably easier to identify.So, perhaps the new rationality provides that government action can be foolish, but cannot have improper motives, like animosity or corruption. Courts can and do review the motives for government action. There is no reason for them not to review for both animosity and corruption. And there is no reason to believe that the public will object. In fact, it is far more likely that the public will object to invalidation of government action based on animosity than that it will object to the invalidation of government action based on corruption.It goes without saying that Eldred and Golan would not fare well under this “new rationality.” No one seriously believes that the CTEA was intended to do anything but benefit the owners of valuable copyrights that were nearing the end of their term. Any degree of scrutiny more searching than the Court’s credulous acceptance of Congress’s absurd justifications would require reversal. But it remains to be seen whether the Court will follow this new line of doctrine to its logical conclusion.

---

[1] Assistant Professor of Law, University of Kentucky College of Law. J.D., New York University School of Law, 2005; M.F.A., San Francisco Art Institute, 1997; B.A., University of California, Berkeley, 1995. Thanks to Paul Salamanca for his helpful comments.

[2] See Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 487-88 (1955).

[3] See generally Eldred v. Ashcroft, 537 U.S. 186 (2003).

[4] Lawrence v. Texas, 539 U.S. 558, 583 (2003).

[5] United States v. Windsor, 133 S.Ct. 2675, 2696 (2013).

[6] Obergefell v. Hodges, Nos. 14–556, 14–562, 14–571, 14–574, 2015 WL 2473451 (U.S. June 26, 2015).

[7] Ralph Waldo Emerson, Self-Reliance, in Essays by Ralph Waldo Emerson: First and Second Series Complete in One Volume 31, 41 (Thomas Y. Crowell Company, Inc. 1951) (1926). Also available at http://en.wikisource.org/wiki/Essays:_First_Series/Self-Reliance.

[8] Oliver Wendell Holmes, Jr., The Common Law 1 (1881).

[9] Golan v. Holder, 132 S. Ct. 873, 876 (2012).

[10] See generally Hylton v. United States, 3 U.S. (3 Dall.) 171 (1796) (reviewing the constitutionality of a federal tax under the Taxation Clause); Fletcher v. Peck, 10 U.S. (6 Cranch) 87 (1810) (reviewing the constitutionality of a state law under the Contract Clause).

[11] Marbury v. Madison, 5 U.S. (1 Cranch) 137, 138 (1803).

[12] See, e.g., Ogden v. Saunders, 25 U.S. (12 Wheat.) 213, 270 (1827) (“It is but a decent respect due to the wisdom, the integrity, and the patriotism of the legislative body, by which any law is passed, to presume in favour of its validity, until its violation of the constitution is proved beyond all reasonable doubt.”).

[13] Dred Scott v. Sandford, 60 U.S. (19 How.) 393, 395-96 (1857).

[14] Barron v. Baltimore, 32 U.S. (7 Pet.) 243, 248 (1833).

[15] See generally The Civil Rights Cases, 109 U.S. 3 (1883); The Slaughterhouse Cases, 83 U.S. (16 Wall.) 36, (1873).

[16] Mugler v. Kansas, 8 S. Ct. 273, 291-92 (1887).

[17] See generally Allgeyer v. Louisiana, 165 U.S. 578 (1897) (holding unconstitutional under the Fourteenth Amendment's guarantee of liberty a Louisiana law which penalized a citizen of that state for contracting for insurance in New York).

[18] Lochner v. New York, 198 U.S. 45, 64 (1905).

[19] Id. at 56, 64.

[20] Id. at 62-63.

[21] David E. Bernstein, Lochner's Legacy's Legacy, 82 Tex. L. Rev. 1, 2 n.4 (2003).

[22] See generally Cass R. Sunstein, Reply—Lochnering, 82 Tex. L. Rev. 65 (2003) (discussing judicial and scholarly treatment of the regulation of economic legislation).

[23] Bernstein, supra note 21.

[24] Nebbia v. New York, 291 U.S. 502, 525 (1934).

[25] W. Coast Hotel v. Parrish, 300 U.S. 379, 398-99 (1937).

[26] United States v. Carolene Prods. Co., 304 U.S. 144, at 146, 146 n.1 (1938).

[27] Id. at 152.

[28] Id. at 152 n.4.

[29] See Adam Winkler, Fatal in Theory and Strict in Fact: An Empirical Analysis of Strict Scrutiny in the Federal Courts, 59 Vand. L. Rev. 793, 798 (2006) (“As a mode of judicial review in constitutional law cases, the strict scrutiny standard was first suggested by implication in the famous footnote four of United States v. Carolene Products.”).

[30] See Skinner v. Okla. ex rel. Williamson, 316 U.S. 535, 541 (1942) (“We mention these matters not to reexamine the scope of the police power of the States. We advert to them merely in emphasis of our view that strict scrutiny of the classification which a State makes in a sterilization law is essential, lest unwittingly or otherwise invidious discriminations are made against groups or types of individuals in violation of the constitutional guaranty of just and equal laws.”).

[31] E.g., Winkler, supra note 29, at 800-01.

[32] Gerald Gunther, The Supreme Court, 1971 Term - Foreword: In Search of Evolving Doctrine on a Changing Court: A Model for a Newer Equal Protection, 86 Harv. L. Rev. 1, 8 (1972). But see Adarand Constructors v. Pena, 515 U.S. 200, 237 (1995) (expressing the “wish to dispel the notion that strict scrutiny is ‘strict in theory, but fatal in fact’”). See also Winkler, supra note 29, at 796 (observing that “30 percent of all applications of strict scrutiny--nearly one in three--result in the challenged law being upheld”).

[33] Craig v. Boren, 429 U.S. 190, 197 (1976).

[34] Gayle Lynn Pettinga, Rational Basis with Bite: Intermediate Scrutiny by Any Other Name, 62 Ind. L. J. 779, 784 (1987).

[36] See, e.g., Williamson v. Lee Optical, 348 U.S. at 487-88 (“But the law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.”).

[37] See, e.g., City of New Orleans v. Dukes, 427 U.S. 297, 303-04 (1976) (“When local economic regulation is challenged solely as violating the Equal Protection Clause, this Court consistently defers to legislative determinations as to the desirability of particular statutory discriminations. . . . Unless a classification trammels fundamental personal rights or is drawn upon inherently suspect distinctions such as race, religion, or alienage, our decisions presume the constitutionality of the statutory discriminations and require only that the classification challenged be rationally related to a legitimate state interest. States are accorded wide latitude in the regulation of their local economies under their police powers, and rational distinctions may be made with substantially less than mathematical exactitude. Legislatures may implement their program step by step . . . , in such economic areas, adopting regulations that only partially ameliorate a perceived evil and deferring complete elimination of the evil to future regulations. . . . In short, the judiciary may not sit as a superlegislature to judge the wisdom or desirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines . . . in the local economic sphere, it is only the invidious discrimination, the wholly arbitrary act, which cannot stand consistently with the Fourteenth Amendment.”).

[38] Gunther, supra at note 32, at 8.

[39] Williamson v. Lee Optical, 348 U.S. at 488-89.

[40] 7 U.S.C.A. § 13-1(a) (West, current through P.L. 114-9 approved Apr. 7, 2015).

[41] Chicago Mercantile Exch. v. Tieken, 178 F. Supp. 779, 780 (N.D. Ill. 1959).

[42] See Russell Wasendorf, Sr., Interview with Leo Melamed, Innovation Deserves More Than 15 Minutes of Fame, SFO Magazine, June 2003, at 20, 22.

[43] Pub. L. 105-298, §102(b), (d), 112 Stat. 2827-28 (codified as amended in scattered sections of 17 U.S.C.). Under the Copyright Act of 1976, the copyright term was the life of the author plus fifty years. The CTEA extended the copyright term to the life of the author plus seventy years. See id.; 17 U.S.C. 302(a) (West, current through P.L. 114-25 (excluding P.L. 114-18) approved June 15, 2015).

[44] U.S. Const. art. I, § 8, cl. 8; Eldred v. Ashcroft, 537 U.S. 186, 189 (2003). Petitioners also argued that the extension of the copyright term violated the “limited Times” requirement of the Intellectual Property Clause and the First Amendment, but these claims were not decided under the rational basis test. Eldred, 537 U.S. at 199-204.

[45] See, e.g., Mazer v. Stein, 347 U.S. 201, 219 (1954) (“The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in ‘Science and useful Arts.’”). See also Fox Film Corp. v. Doyal, 286 U.S. 123, 127-28 (1932). (“The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors. A copyright, like a patent, is at once the equivalent given by the public for benefits bestowed by the genius and meditations and skill of individuals, and the incentive to further efforts for the same important objects.”) (internal quotations omitted).

[46] Eldred, 537 U.S. at 196 n.3.

[47] Id. at 205-08.

[48] Id. at 205-207.

[49] Id. at 208.

[50] Id. at 239-40 (Stevens, J., dissenting).

[51] Id. at 254-55 (Breyer, J., dissenting) (“Using assumptions about the time value of money provided us by a group of economists (including five Nobel prize winners), it seems fair to say that, for example, a 1% likelihood of earning $100 annually for 20 years, starting 75 years into the future, is worth less than seven cents today.”) (citation omitted); id. at 267 (estimating “the economic value of 1998 Act copyrights relative to the economic value of a perpetual copyright, as well as the incremental value of a 20–year extension of a 75–year term”) (citation omitted).

[52] Eldred, 537 U.S. at 261 (Breyer, J., dissenting) (“[N]ew, cheaper editions can be expected when works come out of copyright”) (quoting Edward Rappaport, Cong. Research Serv., Copyright Term Extension: Estimating the Economic Values 3 (1998)).

[53] Id. at 262-63.

[54] Paul M. Schwartz & William Michael Treanor, Eldred and Lochner: Copyright Term Extension and Intellectual Property As Constitutional Property, 112 Yale L. J. 2331, 2333 (2003) (“At the time of the statute's passage, a number of iconic works were on the cusp of entering the public domain, the most prominent being early films starring Mickey Mouse.”).

[55] Lawrence Lessig, Copyright's First Amendment, 48 UCLA L. Rev. 1057, 1065 (2001).

[56] Schwartz & Treanor, supra note 54, at 2332 (“With striking unanimity, scholars have called for aggressive judicial review of the constitutionality of congressional legislation in this area.”).

[57] Id. at 2332-34.

[58] See generally 539 U.S. 558 (2003) (appearing to apply rational basis to Texas’ actual interest in promoting morality).

[59] See generally 133 S. Ct. 2675 (2013) (appearing to apply rational basis to the Texas’ actual interest in promoting morality).

[60] E.g., Lawrence, 539 U.S. at 582 (O’Connor, J., concurring) (“Texas attempts to justify its law, and the effects of the law, by arguing that the statute satisfies rational basis review because it furthers the legitimate governmental interest of the promotion of morality.”); Windsor, 133 S. Ct. at 2693 (“The House concluded that DOMA expresses ‘both moral disapproval of homosexuality, and a moral conviction that heterosexuality better comports with traditional (especially Judeo–Christian) morality.’”) (quoting H.R. Rep. No. 104-664, 12-13 (1996)).

[61] Lawrence, 539 U.S. at 578-79.

[62] See, e.g., Cass R. Sunstein, What Did Lawrence Hold? Of Autonomy, Desuetude, Sexuality, and Marriage, 55 Sup. Ct. Rev. 27, 45 (2003) (“Was Lawrence based on rational basis review, or instead on something else? It is astonishing but true that this question is exceedingly difficult to answer.”).

[63] Bowers v. Hardwick, 478 U.S. 186, 196 (1986), overruled by Lawrence, 539 U.S. at 560.

[64] 517 U.S. 620, 634 (1996).

[65] Lawrence, 539 U.S. at 559-60.

[66] Id. at 580 (O’Connor, J., concurring) (internal quotation marks omitted).

[67] Id. at 599 (Scalia, J., dissenting).

[68] Id. at 560 (quoting Bowers v. Hardwick, 478 U.S. at 216 (Stevens, J., dissenting)).

[69] United States v. Windsor, 133 S. Ct. 2675, 2696 (2013).

[70] Id. at 2696.

[71] Id. at 2706 (Scalia, J., dissenting) (citation omitted).

[72] Obergefell v. Hodges, Nos. 14–556, 14–562, 14–571, 14–574, 2015 WL 2473451 (U.S. June 26, 2015).

[73] Id.

[74] Id. (Roberts, C.J., dissenting). See John Hart Ely, The Wages of Crying Wolf: A Comment on Roe v. Wade, 82 Yale L. J. 920, 944 (1973) (coining the term “Lochnering” to describe the constitutionalization of judicial policy preferences).

[75] Obergefell, 2015 WL 2473451 (Roberts, C.J., dissenting).

[76] See, e.g., Ian Bartrum, The Ninth Circuit's Treatment of Sexual Orientation: Defining "Rational Basis Review with Bite," 112 Mich. L. Rev. First Impressions 142, 145-46 (2014). See also Gunther, supra at note 32, at 18-19 (arguing that several “minimal scrutiny” cases applied a standard with “bite”).

[77] See Pettinga, supra note 34, at 779-80.

[78] Laurence H. Tribe, Lawrence v. Texas: The "Fundamental Right" That Dare Not Speak Its Name, 117 Harv. L. Rev. 1893 (2004).

[79] See, e.g., Witt v. Dep't of Air Force, 527 F.3d 806, 816 (9th Cir. 2008) (“We cannot reconcile what the Supreme Court did in Lawrence with the minimal protections afforded by traditional rational basis review.”).

[80] Bowers v. Hardwick, 478 U.S. 186, 196 (1986), overruled by Lawrence v. Texas, 539 U.S. 558 (2003).

[81] David E. Bernstein, Lochner Era Revisionism, Revised: Lochner and the Origins of Fundamental Rights Constitutionalism, 92 Geo. L. J. 1, 52 (2003).

[82] Randy E. Barnett, Justice Kennedy's Libertarian Revolution: Lawrence v. Texas, 2003 Cato Sup. Ct. Rev. 21 (2002-2003). See also Joseph F. Morrissey, Lochner, Lawrence, and Liberty, 27 Ga. St. U. L. Rev. 609, 652 (2011).

[83] Craigmiles v. Giles, 312 F.3d 220, 229 (6th Cir. 2002) (“No sophisticated economic analysis is required to see the pretextual nature of the state's proffered explanations for the 1972 amendment. We are not imposing our view of a well-functioning market on the people of Tennessee. Instead, we invalidate only the General Assembly's naked attempt to raise a fortress protecting the monopoly rents that funeral directors extract from consumers. This measure to privilege certain businessmen over others at the expense of consumers is not animated by a legitimate governmental purpose and cannot survive even rational basis review.”).

[84] Merrifield v. Lockyer, 547 F.3d 978, 991 (9th Cir. 2008) (“Indeed, the record highlights that the irrational singling out of three types of vertebrate pests from all other vertebrate animals was designed to favor economically certain constituents at the expense of others similarly situated, such as Merrifield.”).

[85] St. Joseph Abbey v. Castille, 712 F.3d 215, 223 (5th Cir. 2013), cert. denied, 134 S. Ct. 423, (2013) (“Mindful that a hypothetical rationale, even post hoc, cannot be fantasy, and that the State Board's chosen means must rationally relate to the state interests it articulates, we turn to the State Board's proffered rational bases for the challenged law. Our analysis does not proceed with abstraction for hypothesized ends and means do not include post hoc hypothesized facts.”).

[86] Bruner v. Zawacki, No. 3:12-57-DCR, 2013 WL 2903241 (E.D. Ky. June 13, 2013).

[87] New Orleans v. Dukes, 427 U.S. 297, 305 (1976).

[88] Id. at 306 (“Actually, the reliance on the statute's potential irrationality in Morey v. Doud, as the dissenters in that case correctly pointed out, . . . was a needlessly intrusive judicial infringement on the State's legislative powers, and we have concluded that the equal protection analysis employed in that opinion should no longer be followed. Morey was the only case in the last half century to invalidate a wholly economic regulation solely on equal protection grounds, and we are now satisfied that the decision was erroneous. Morey is, as appellee and the Court of Appeals properly recognized, essentially indistinguishable from this case, but the decision so far departs from proper equal protection analysis in cases of exclusively economic regulation that it should be, and it is, overruled.”) (citing Morey v. Doud, 354 U.S. 457, 474-75 (1957) (citation omitted)).

[89] N. Carolina State Bd. of Dental Exam’rs v. F.T.C., 135 S. Ct. 1101, 1104 (2015).

[90] Id. at 1123.

[91] Golan v. Holder, 132 S. Ct. 873, 875 (2012).

[92] Id.

[93] See generally Schwartz & Treanor, supra note 54.

[94] Id.

[95] See, e.g., Cass R. Sunstein, Lochner's Legacy, 87 Colum. L. Rev. 873, 874 (1987) (“The received wisdom is that Lochner was wrong because it involved ‘judicial activism’: an illegitimate intrusion by the courts into a realm properly reserved to the political branches of government.”).

[96] Letter from Oliver Wendell Holmes, Jr., to Harold J. Laski (Mar. 4, 1920), in 1 Holmes-Laski Letters: The Correspondence of Mr. Justice Holmes and Harold J. Laski 1916-1935, 248, 249 (Mark DeWolfe Howe ed., Harvard University Press 1953).

[97] N.Y. State Bd. of Elections v. Lopez Torres, 552 U.S. 196, 209 (2008) (Stevens, J., concurring).

[98] Steven Menashi & Douglas H. Ginsburg, Rational Basis With Economic Bite, 8 N.Y.U. J. L. & Liberty 1055, 1086 (2014).

Will Kentucky Fall Victim to the EPA's War on Coal? Examining the Commonwealth's Options Under the Newest Power Plant Emission Standards

Note | 103 KY. L. J. ONLINE 6 | Apr. 28, 2015

Matthew Hlinka[1]

Introduction

Coal continues to play an integral part in the development of modern society. Coal keeps our families warm, fuels our trains, and provides electricity for our homes, factories, and cities.[2] The United States is currently the second largest consumer of electricity in the world.[3] In order to satisfy this veracious demand for energy, the United States has long relied on its extensive coal reserves, the largest in the world.[4] In fact, approximately half of the electricity generated in the United States over the last fifty years has come from coal.[5]

[Coal’s benefits, however, are accompanied by several serious drawbacks. For instance, the list of undesirable pollutants released by the burning of coal includes mercury, sulfur dioxide, particulate matter, and carbon dioxide.[6] Balancing these issues has been a constant challenge for the industry.The most recent attempt to balance came from the Environmental Protection Agency (EPA), who at the urging of President Barrack Obama, published its two newest proposed regulations for power plant emissions in 2014.[7] These regulations would cap the emissions of carbon dioxide for new coal-fired power plants at 1,100 pounds per megawatt-hour (MW-h),[8] while also reducing the emissions from existing plants by 30% by 2030.[9] Observers speculate that these new emission standards will be so stringent as to render new coal-fired power plants financially impractical to build.[10]Additionally, these new regulations will have a profound impact on the coal industry in Kentucky. A nationwide decrease in demand for coal will directly harm an industry that employs thousands of people. Without the cheap energy that Kentucky residents currently enjoy from coal, it will be difficult to attract new manufacturing employers, indirectly curtailing the economic prosperity of hundreds of thousands of Kentuckians. This is a serious problem because Kentucky’s coal producing counties are already financially depressed.[11] Severe restraints on the coal industry could cripple those areas beyond repair.This note seeks to address the issues caused by the new regulations. Section I of this Note analyzes the history of the Clean Air Act and the EPA’s proposed regulations for new and existing emission sources. Section II examines Kentucky’s political, legal, and technological options in dealing with these regulations in both the short and long term. Section III argues that Kentucky must fight the standards through a combined approach of using both legal and political channels in order to buy the state additional time for researching and implementing new technologies.

I. Background

A. History of the Clean Air Act

In response to growing concerns over poor air quality in industrial areas, Congress passed the Clean Air Act of 1963, the first federal legislation concerning air pollution control.[12] This version of the Act provided funding for air pollution research and cleanup but did not set up a federal regulating authority.[13] Seeking more federal oversight, Congress passed a much stronger version in 1970 creating the EPA and giving it the primary authority in carrying out the Clean Air Act.[14]The 1970 amendments to the Clean Air Act required the EPA to identify air pollutants, determine air pollution criteria, and issue air pollution goals to the states.[15] The EPA must also issue recommended techniques for the states to meet those goals.[16] After receiving the EPA’s national recommendations, each state is required to create and adopt a plan to meet the EPA’s standards by certain statutory deadlines.[17]One exception to this national-state arrangement is that the EPA was required to create federal standards to regulate “new sources.”[18] The statute defines new sources as “any stationary source, the construction or modification of which is commenced after the publication of regulations.”[19] In addition to dividing up the regulatory power over stationary sources among federal and state governments, this exception effectively creates newer, stricter requirements for new plants while allowing existing sources to remain “grandfathered in” and subject to less restrictive standards.[20] In doing so, Congress recognized that it is cheaper to incorporate new technology into the design and construction of new units than to squeeze more efficiency out of existing units. Additionally, industrial facilities do not last forever. As units become obsolete and are replaced, new units will automatically increase in efficiency as they meet the new standards.However, when the grandfathering policy was created, Congress was operating under an erroneous assumption that coal-fired power plants would have a usable life of only thirty years.[21] Yet as statistics show, 74% of coal power plants in existence in 2012 were already more than thirty years old.[22] Some states and environmental groups have criticized the grandfathering policy, arguing that it encourages owners of older, obsolete plants to continue their plants’ operation well beyond their normal lifetimes in order to avoid meeting the stricter requirements.[23]As the pollution standards for coal plants become more and more restrictive, it becomes even less enticing for owners to shut down existing plants and sink large amounts of capital into new, expensive power plants that must meet the New Source benchmarks. This stubborn refusal to submit to the plant turnover once thought to be inevitable has kept the New Source regulations from being as effective as many had hoped. With environmental issues like air pollution and global climate change receiving increased attention from the public, lawmakers have been forced to balance the advantages of having access to an economical, abundant energy source independent of foreign government’s control against coal’s environmental drawbacks.

B. President Obama’s Climate Action Plan

In 2013, President Obama’s announced his Climate Action Plan.[24] One of the goals of the Climate Action plan was to reduce power plant pollution.[25] Power plants account for roughly one-third of all greenhouse gas emissions in the United States, the largest source of emissions in the country.[26]In line with the president’s directive, the EPA proposed new carbon pollution standards for new power plants under 42 U.S.C. § 7411(b) on September 20, 2013.[27] Existing coal-fired power plants currently emit, on average, 1768 pounds of carbon dioxide per MW-h.[28] Under these proposed rules, large natural gas-fired turbines must emit less than 1,000 pounds of carbon dioxide per MW-h, while new, small natural gas-fired turbines must emit less than 1,100 pounds of carbon dioxide per MW-h.[29] New coal-fired units must emit less than 1,100 pounds of carbon dioxide per MW-h or, to provide plants the flexibility and time to optimize technologies, between 1,000 and 1,050 pounds of carbon dioxide per MW-h on average over eighty-four months of operation.[30] If met, these new standards would constitute a massive improvement over current pollution levels.However, critics question whether it is possible to meet these standards with existing coal technology.[31] In order to reach these New Source requirements, utilities would most likely have to utilize carbon capture and sequestration technology, a process in which a portion of the carbon dioxide emitted is captured and stored underground in deep-lying geological layers.[32] Under the right temperature and pressure, the carbon dioxide is maintained in the liquid phase and can be isolated from the Earth’s atmosphere for an extend period of time.[33] Nonetheless, carbon capture technology has not yet advanced to the point where it is commercially feasible and development of this technology has slowed in recent years.[34] Many advocates for coal believe this attempt by Congress to force new plants to use technology that is not feasible is designed to halt new coal plant construction altogether.[35]On June 2, 2014, the EPA unveiled the Clean Power Plan, a proposed regulation intended to cut nationwide carbon emissions by existing power plants 30% by 2030.[36] Rather than achieve this goal through a uniform standard, the EPA issued state-specific targets allowing each state considerable flexibility in determining how they will reach this objective.[37] States that rely significantly on coal, such as Kentucky, are not required to reduce their emission rates as much as the other states. For example, Kentucky would need to reduce its carbon emissions from 2,158 pounds of carbon dioxide per MW-h in 2012 to 1,763 pounds per MW-h in 2030, a decrease of approximately 18%.[38] This goal may not be as difficult to reach as many have feared. State officials estimate that Kentucky has already decreased its emissions to 1,951 pounds per MW-h in 2014, which would put Kentucky slightly more than halfway to meeting its target.[39]

II. Kentucky’s Options

With poverty levels in coal country already at high levels,[40] changes in the coal industry regulations may be overwhelming. Kentucky does, however, have a few options. Kentucky’s first option is to fight, through the political and legal systems, to keep the regulatory standards from being adopted. If the largest coal-producing states can get the proposed regulations weakened or delay the propagation of the regulations until a more coal-friendly administration is in place, the damage could be mitigated. The second option is to focus on researching cleaner energy sources. This includes examining alternative energy sources and searching for technological breakthroughs that would allow coal-fired power plants to meet the EPA standards while remaining economically feasible. Regardless of the choice, Kentucky must act quickly to position itself for long-term success.

A. Fighting the Standards Through the Adequate Technology Requirement

If Kentucky chooses to fight the EPA’s standards, they can make a strong argument that existing technology is not adequate to reach the proposed limits. Under the Clean Air Act, the EPA is required to impose regulations that are achievable based on current technology.[41] If the Administrator does not believe that the standards can be reached with technology that has been “adequately demonstrated,” she can promulgate an alternative that has been adequately demonstrated to be both economically and technically feasible.[42]In the proposed regulation published in January 2014, the EPA references a state-of-the-art coal power plant being built in Kemper County, Mississippi to support the feasibility of carbon capture and sequestration technology.[43] This reference is not without flaws. Although the Kemper County plant is scheduled to begin operations later this year, construction has been repeatedly delayed and the project is already projected to be $2 billion over budget.[44] One could make a strong argument that a plant that is not even generating electricity yet cannot adequately demonstrate the technology. Additionally, even if the plant is able to perform as planned, that does not demonstrate that the technology is feasible nationwide, as the Kemper County plant has certain advantages that other locations may not enjoy, such as a local oil field that can be used for storing the captured carbon.[45]There is evidence that even some internal factions of the EPA feel the agency is going too far. In November 2013, shortly after the proposed standards for existing power plants were released, the EPA’s Science Advisory Board (SAB), whose principle mission is to advise the EPA on scientific and technical matters,[46]released a memorandum discussing the proposal.[47] In that memorandum, the SAB challenges the adequacy of the EPA’s research on the matter calling the studies relied on by the EPA “inadequate” and stating that the “scientific and technical basis for carbon storage provisions is new science and the rulemaking would benefit from additional review.”[48]Interestingly enough, the SAB reversed course on this recommendation two months later in a subsequent memorandum.[49] Citing a fact-finding teleconference, the SAB recommended that it should not review the scientific basis for the proposed rule because the rule does not explicitly require carbon capture and sequestration technology and allows for utilities to reach the standards through other means, if they can.[50] This statement is baseless. In the published proposed standards themselves, the EPA discusses three ways for coal-fired power plants to meet the requirements.[51] Two of these alternatives involve carbon capture and sequestration, and the third involves super-critical or ultra-critical boilers or Integrated Gasification Combined Cycle units.[52] Moreover, the EPA essentially writes off this last option a few sentences later because “they do not provide meaningful reductions in CO2 emissions.”[53] By stating this, the EPA is essentially saying that it has no idea how power plants are going to meet these new standards and little desire to find out. Thus, a strong case can be made that the EPA is failing to meet the Clean Air Act’s “current technology” requirement.

B. Federal Authority to Regulate Existing Sources

Kentucky can also argue that the federal government does not have the power to directly regulate existing power plants under the Clean Air Act. The Clean Air Act only authorizes the EPA to promulgate standards for new emission sources.[54] While the Clean Air Act does allow the EPA to require states to issue standards for existing power plants, the EPA is only allowed to guide states procedurally in the endeavor, such as requiring states to apply the factors under 42 U.S.C. § 7411(a)(1).[55] Furthermore, § 7411(d) does not give the EPA the authority to reject a state plan that contains a standard of performance as defined by the statute.[56] States have the ultimate authority to define the substantive standards.Although the June 2014 Clean Power Plan gives more deference to the states than most anticipated, the EPA may have still overstepped its bounds under the Clean Air Act. An argument can be made that its actions violate public policy and the principles of cooperative federalism clearly defined by § 7411(d). Intuitively, the states are generally in a better position to determine the feasibility of any proposed changes and can more accurately measure how those changes will affect local communities.The EPA’s failure to follow the Clean Air Act’s requirements for issuing standards based on existing technology and allowing states to promulgate regulations for existing emission sources can be challenged in court. A lawsuit can be expected whenever a more concrete proposal is in place. In fact, the attorneys general of seventeen states, including Kentucky, submitted a letter to the EPA in September of 2013 detailing their concerns with the EPA’s actions.[57] This letter contends that the “EPA, if left unchecked, will continue to implement regulations which far exceed its statutory authority to the detriment of the states, in whom Congress has vested authority under the Clean Air Act, and whose citizenry and industries will ultimately pay the price of these costly and ineffective regulations.”[58] This letter is clearly an announcement that the states will challenge the EPA’s authority.Locally, United States Senator Mitch McConnell (R-Ky.) has already taken steps to challenge the EPA standards. After the EPA published its rule for new power plants in January, 2014, McConnell announced his plans to force a vote to stop the regulations.[59] McConnell aims to stop the regulations through the Congressional Review Act, which allows Congress to review new federal regulations issued by agencies and overrule them through a joint regulation.[60] Although the Review Act can usually only be applied to final rules, McConnell argues that the mere publication of the new rules are enough to immediately impact any plans for the construction of new power plants and, therefore, the Review Act can be utilized now.[61]Regardless of the outcome of these attempts to impede the EPA’s regulations, it is encouraging to see Kentucky’s leaders at the forefront of the effort. At the very least, these efforts at slowing down the rulemaking process buys the state time. Considering the large differences in policy between the Bush administration and the Obama administration in regards to coal, Kentucky’s solution may be as simple as stalling until the 2016 presidential election in hopes that a more coal-friendly candidate is elected. Alternatively, if the states succeed in their argument that the EPA does not have the authority to regulate existing power plants under the Clean Air Act, the states can procrastinate issuing their own standards in hopes that either a technological breakthrough is made or the EPA decides to soften their stance on coal. For these reasons, Kentucky’s current plan of action appears to be a step in the right direction for the short term. However, with the current political focus on global climate change, stricter emission standards are inevitable. To best position itself for the future, Kentucky needs to investigate both technological improvements in clean-coal usage and alternative energy sources.

III. Kentucky’s Best Approach

As the EPA finalizes its carbon regulations for existing and new emission sources, Kentucky must be proactive in seeking solutions to Kentucky’s future energy issues. Although fighting the proposed standards in court and through the political and rulemaking processes is a short-term strategy that should be pursued in order to buy the state time, it has become abundantly clear that large emitters of greenhouse gases are becoming less and less politically acceptable. It is only a matter of time before existing coal technology is no longer feasible in this country. Kentucky needs to prepare itself for that day.Kentucky’s immediate short-term strategy should be to fight the standards in court. There are at least two main arguments that can be used to attack the EPA’s actions. The first is the “adequately demonstrated” technology requirement. As it currently stands, carbon capture and sequestration is the only way that coal plants can meet these emissions standards, but that technology is not yet feasible and may not be for decades.[62] The EPA is presenting the Kemper County plant as a model of carbon capture and sequestration technology, but that project is extremely over budget, still under construction, and that technology may not even be compatible with Kentucky’s natural geographical and geological characteristics.[63] Thus, Kentucky should argue that the EPA must be forced to follow the statutory requirements of § 7411 so that Kentucky has a fighting chance to succeed.Kentucky’s second legal option is to attack the EPA’s attempts to directly regulate existing sources because this power belongs to the states. Although this argument will not help Kentucky deal with the New Sources requirements that have already been published, attempting to retrofit existing coal plants or being forced to shut down non-compliant plants altogether may be catastrophically expensive and burdensome. The EPA must be forced to operate within the limits of its statutory authority.Regardless of whether coal remains a feasible source of electricity, Kentucky needs to start moving towards alternative energy sources. If the EPA’s standards are successful, this shift will be out of necessity, but even if the EPA’s standards are not allowed in their current form this time around, it certainly appears that it is only a matter of time before a major crackdown on carbon emissions is promulgated. Considering the political climate, it is too risky to continue depending on coal for over 90% of the state’s electricity.

IV. Conclusion

This Note has explored the effect that the EPA’s proposed New Source emission requirements, and its forthcoming existing source emission requirements, will have on Kentucky. These standards have the potential to devastate Kentucky’s coal mining industry and the affordable electricity rates Kentuckians currently enjoy.This Note proposes that Kentucky’s leadership continue to fight the EPA’s standards politically and legally. It is in Kentucky’s best interests to do everything possible to keep the standard from being adopted or, at the very least, delay their implementation for as long as possible in order to give the state more time to prepare. This Note advocates for Kentucky’s vigilance in seeking out viable alternative energy sources. It is unwise to be so heavily reliant on coal in this current political climate and Kentucky must work to reduce this dependence. Natural gas is the most attractive option in the short term, but it may be only a matter of time before carbon emission standards strangle that option as well. Kentucky would be wise to maintain a diverse energy portfolio, fully examining the local feasibility of nuclear, biomass, and solar energy resource.

---

[1] University of Kentucky College of Law, J.D. May 2015.

[2] Roberta Mann, Another Day Older and Deeper in Debt: How Tax Incentives Encourage Burning Coal and the Consequences for Global Warming, 20 Pac. McGeorge Global Bus. & Dev. L.J. 111, 111 (2007).

[3] The United States ranks second only to China. CIA, The World Factbook: Country Comparison: Electricity – Consumption, CIA, https://www.cia.gov/library/publications/the-world-factbook/rankorder/22… (last visited April 14, 2015).

[4] See Coal Proved Reserves by end of 2011, Europe’s Energy Portal, http://www.energy.eu/stats/energy-coal-proved-reserves-total.html (last visited April 14, 2015).

[5] Approximately 46% of all electricity nationwide in 1970 was generated from coal. See U.S. Energy Info. Admin., Monthly Energy Review: Electricity Net Generation, (March 2015), available at http://www.eia.gov/totalenergy/data/monthly/pdf/sec7_5.pdf. This number rose to 57% in 1985, and 52% in 2000. Id.

[6] Patricia Glick, The Toll from Coal: Power Plants, Emissions, Wildlife, and Human Health, 21 Bull. of Sci., Tech. & Soc’y 482, 482 (2001); Thomas O. McGarity, When Strong Enforcement Works Better Than Weak Regulation: The EPA/DOJ New Source Review Enforcement Initiative, 72 Md. L. Rev. 1204, 1209–10 (2013).

[7] See Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 34, 830 (June 18, 2014) (to be codified at 40 C.F.R. pt. 60); Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 1430 (Jan. 8, 2014) (to be codified at 40 C.F.R. pt. 60).

[8] Standards of Performance, 79 Fed. Reg. at 1448.

[9] Press Release, EPA, EPA Proposes First Guidelines to Cut Carbon Pollution from Existing Power Plants (June 2, 2014), available at http://yosemite.epa.gov/opa/admpress.nsf/bd4379a92ceceeac8525735900400c2.

[10] Keith Johnson & Tennille Tracy, EPA Plan to Curb New Coal-Fired Power Plants, Wall St. J. (Sept. 11, 2013, 9:00 PM), http://online.wsj.com/article/SB1000142412788732386460457906955091602126.

[11] Office of Press Secretary, Fact Sheet, The White House (Jan. 8, 2014), https://www.whitehouse.gov/the-press-office/2014/01/08/fact-sheet-presid.

[12] EPA, Understanding the Clean Air Act, EPA.gov, http://www.epa.gov/airquality/peg_caa/understand.html (last updated Oct. 28, 2014).

[13] Id.

[14] Id.

[15] 42 U.S.C. § 7408 (2013).

[16] Id.

[17] Id. § 7410 (2013).

[18] Id. § 7411(b) (2013).

[19] Id. § 7411(a)(2).

[20] Jonathan R. Nash & Richard L. Revesz, Grandfathering and Environmental Regulation: The Law and Economics of New Source Review, 101 Nw. U. L. Rev. 1677, 1678 (2007).

[21] Shi-Ling Hsu, Reducing Emissions from the Electricity Generation Industry: Can We Finally Do It?, 14 Tul. Envtl. L.J. 427, 435 (2001).

[22] Todd Woody, Hitting the Gas: Most coal-fired power plants in the US are nearing retirement age, Quartz (Mar. 12, 2013), http://qz.com/61423.

[23] Nash & Revesz, supra note 20, at 1678.

[24] Executive Office of the President, The President’s Climate Action Plan (2013), available at http://www.whitehouse.gov/sites/default/files/image/president27sclimatea.

[25] Id. at 6.

[26] Id.

[27] Jeff Postelwait, Gina McCarthy Introduces EPA’s Revised Rules for New Power Plants, Electric Lights & Power (Sept. 20, 2013), http://www.elp.com/articles/2013/09/gina-mccarthy-introduces-epa-s-revis…].

[28] Id.

[29] Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 1430, 1446 (Jan. 8, 2014) (to be codified at 40 C.F.R. pt. 60).

[30] Id. at 1448.

[31] See Joanna M. Foster, EPA Publishes First Rule Limiting Carbon Pollution From New Power Plants, Think Progress (Jan. 9, 2014, 12:48 PM), http://thinkprogress.org/climate/2014/01/09/3139921/epa-carbon-rule-powe.

[32] Id. The three main types of geological formations that are being considered for carbon sequestration include: oil and gas reserves, deep saline reservoirs, and unmineable coal seams. Peter Folger, Cong. Research Serv., Carbon Capture and Sequestration (CCS): A Primer 4 (2013), available at https://www.fas.org/sgp/crs/misc/R42532.pdf. It is also theoretically possible to store large amounts of carbon deep beneath the ocean’s surface. Id. at 13. Deep ocean sequestration involves injecting the captured carbon dioxide at depths around 3000 meters. Id. At these depths, carbon dioxide is a liquid denser than seawater, so the injected carbon dioxide would remain at the bottom. Id. However, there are a number of environmental concerns associated with deep ocean sequestration because large-scale implementation could cause the ocean to become more acidic. Id. at 14.

[33] In Clean Coal We Trust – or Do We?, ParisTech Rev. (Oct. 15, 2013), http://www.paristechreview.com/2013/10/15/clean-coal-trust.

[34] Matthew L. Wald, Despite Climate Concern, Global Study Finds Fewer Carbon Capture Projects, N.Y. Times (Oct. 10, 2013), http://www.nytimes.com/2013/10/11/science/earth/study-finds-setbacks-in-.

[35] Foster, supra note 31.

[36] The 30% reduction is from 2005 levels. Using 2005 as the baseline is beneficial for carbon emitters, as the EPA’s proposal is actually only a 17% decrease from 2012 levels. David Doniger & Derek Murrow, The Clean Power Plan: NRDC’s Initial Analysis of EPA’s Landmark Proposal to Curb Carbon Pollution from the Nation’s Power Plants, Switchboard (June 7, 2014), http://switchboard.nrdc.org/blogs/ddoniger/the_clean_power_plan_nrdcs_in.

[37] Press Release, EPA, supra note 9.

[38] James Bruggers, Kentucky, Indiana Get Head Start on Global Warming Regs, Courier J. (June 13, 2014, 4:55 AM), http://www.courier-journal.com/story/tech/science/environment/2014/06/12…. Some environmentalists had been pushing for a 45% decrease in Kentucky’s carbon dioxide emission rate. Id. Other states face much larger reductions. Washington state, for example, has been called upon to reduce reductions by 84% by 2030. Coral Davenport & Peter Baker, Taking Page From Health Care Act, Obama Climate Plan Relies on States, N.Y. Times (June 2, 2014), http://www.nytimes.com/2014/06/03/us/politics/obama-epa-rule-coal-carbon.

[39] Bruggars, supra note 38.

[40] Annie Lowrey, What’s the Matter with Eastern Kentucky?, N.Y. Times Mag. (June 26, 2014), http://www.nytimes.com/2014/06/29/magazine/whats-the-matter-with-eastern.

[41] See 42 U.S.C. § 7411(h) (2013).

[42] Id.

[43] Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 1430, 1435 (Jan. 8, 2014) (to be codified at 40 C.F.R. pt. 60).

[44] Reality vs. EPA’s Carbon Capture Dreams, Inst. for Energy Research (Jan. 8, 2014), http://www.instituteforenergyresearch.org/2014/01/08/reality-vs-epas-car.

[45] Southern Cautions on Kemper Coal Unit as EPA Carbon Model, Reuters (Sept. 20, 2013, 5:01 PM), http://www.reuters.com/article/2013/09/20/us-usa-energy-emissions-kemper.

[46] EPA Science Advisory Board (SAB), EPA.gov, http://yosemite.epa.gov/sab/sabpeople.nsf/webcommittees/BOARD (last visited Aug. 21, 2014).

[47] Memorandum from James R. Mihelcic, Chair, SAB Work Group on EPA Planned Actions for SAB Consideration of the Underlying Science, (Nov. 12, 2013), available at http://yosemite.epa.gov/sab/sabproduct.nsf/18B19D36D88DDA1685257C220067A…$File/SAB+Wk+GRP+Memo+Spring+2013+Reg+Rev+131213.pdf.

[48] Id. at 3.

[49] See Memorandum from James R. Mihelcic, Chair, SAB Work Group on EPA Planned Actions for SAB Consideration of the Underlying Science (Jan. 7, 2014), available at http://yosemite.epa.gov/sab/sabproduct.nsf/F43D89070E89893485257C5A007AF…$File/SAB+work+grp+memo+w+attach+20140107.pdf.

[50] Id. at 2–3.

[51] Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 1430, 1435 (Jan. 8, 2014) (to be codified at 40 C.F.R. pt. 60).

[52] Id.

[53] Id.

[54] 42 U.S.C. § 7411(b) (2013).

[55] Id. § 7411(d). One of the main reasons that Congress made this distinction between new and existing sources was to protect states that were ahead of the curve in enacting stringent pollution controls. See H.R. Rep. No. 95-294, at 184 (1977), reprinted in U.S.C.C.A.N. 1079, 1263. Congress was concerned that industries would avoid the states with stricter standards and primarily build new plants in states that are more lenient or take longer to implement new standards. Id. By giving the EPA the authority to enact uniform national standards for new plants, this concern was significantly mitigated. See id. However, because industry has fewer incentives to leave a state where a plant has already been constructed, and in some cases fully capitalized, the states retained the power to regulate existing sources. See id.

[56] Id. § 7411(d).

[57] Letter from Jon Bruning, Attorney Gen., Neb., to Gina McCarthy, Adm’r, EPA 1, 12 (Sept. 11, 2013), available at http://energycommerce.house.gov/sites/republicans.energycommerce.house.g.

[58] Id. at 1.

[59] Laura Barron-Lopez, McConnell to Force Vote on EPA Carbon Regs, The Hill (Jan. 16, 2014, 11:19 AM), http://thehill.com/blogs/e2-wire/e2-wire/195669-mcconnell-to-push-vote-b.

[60] Id.

[61] Id.

[62] See Standards of Performance for Greenhouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units, 79 Fed. Reg. 1430, 1435 (Jan. 8, 2014) (to be codified at 40 C.F.R. pt. 60); Southern Cautions on Kemper Coal Unit as EPA Carbon Model, supra note 45.

[63] Reality vs. EPA’s Carbon Capture Dreams, supra note 44; Southern Cautions on Kemper Coal Unit as EPA Carbon Model, supra note 45.

Knowledge is Power: Understanding Kentucky's Human Trafficking Laws

Note | 103 KY. L. J. ONLINE 5 | Apr. 24, 2015

Katie Smith[1]

Introduction

“Human trafficking”—these two words are increasingly onthe radar of political leaders, celebrities, and average citizens across the nation. Over the past decade and a half, leaders and activist groups have begun to decry this “modern day slavery” as a growing evil that must be stopped; however, celebrities who speak out against trafficking or legislatures that unanimously push to pass bills condemning the practice often do little, in reality, to actually prosecute traffickers or to aid victims.[2] The state of Kentucky, however, is somewhat unique. Although it remains unrecognized by many, human trafficking does, in fact, exist in the Commonwealth. Instead of settling for mediocre laws that condemn the evil of trafficking but do little to combat it, the Kentucky legislature has passed some of the strongest legislation in the country to actually take a stand against sex and labor trafficking within our state’s borders.[3]In the spring of 2013, the Kentucky General Assembly successfully passed House Bill 3, the Human Trafficking Victims Rights Act (“HTVRA”).[4] The HTVRA builds upon Kentucky’s existing human trafficking legislation[5] and provides for increased protections for trafficking victims, stronger penalties and prison sentences for traffickers, training for law enforcement, and funding to help victims.[6] The HTVRA passed unanimously through both the Kentucky House and Senate, and its provisions are admirably proactive.[7] In fact, certain provisions of the law are among the most proactive in the country.[8] The passage of legislation, however, is just the beginning. Two years later, the HTVRA continues to be implemented on the ground level throughout the state, and, after early success, leaders expect the law’s effects to continue to be felt in the months and years ahead.[9]Although trafficking victims are often hidden in plain sight, anyone can identify a trafficking victim.[10] Therefore, as law enforcement officers, prosecutors, judges, and the like become increasingly equipped to handle human trafficking cases, it is crucial that all Kentuckians—both lawyers and non-attorneys alike—also become familiar with the protections available to victims, as well as the penalties in place for perpetrators. In the fight against human trafficking, knowledge is power; this brief note, then, seeks to inform both practitioners and the general Commonwealth population of the state of human trafficking in Kentucky, so that everyone can stay informed and help the implementation of the HTVRA continue to succeed.Part I of this note will offer a brief explanation of the global problem of human trafficking and the current federal law on the issue. Part II will describe the trafficking problem specifically in Kentucky. Part III will then explain the recently implemented Kentucky law on human trafficking, walking through key provisions of the Human Trafficking Victims Rights Act, explaining how these new provisions improve upon pre-existing Kentucky law, and describing why Kentucky’s law is unique among the legislation of other states. While much anti-trafficking legislation is toothless, expressive legislation unable to accomplish its goals,[11] Kentucky’s law has some real strengths. We, the lawyers and citizens of the Commonwealth, should now do our part in the fight against human trafficking, arming ourselves with knowledge and awareness and pushing for the continued implementation and support of the HTVRA.

Part I: The Human Trafficking Problem on the Global and Federal Levels

A. What is Human Trafficking?

Human trafficking, or trafficking in persons, essentially refers to the exploitation of an individual through the use of force, fraud, or coercion for the purposes of either commercial sex or labor.[12] Sex trafficking is statutorily defined as “trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such an act has not attained 18 years of age,” while labor trafficking is defined as “the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.”[13]Accurate statistics, as well as a thorough understanding of the extent of the human trafficking problem across the globe, are elusive. Many organizations report that both sex and labor trafficking are increasing dramatically; other scholars note that this may not exactly be the case.[14] Regardless of the exact number of victims throughout the nation or the world, however, it is clear that human trafficking does exist, just about everywhere, in some capacity. And where it does exist, it can be extremely difficult to detect. There is a unique, largely psychological nature to the crime, and traffickers frequently—arguably, primarily—take advantage of vulnerable populations.[15] Many victims from these vulnerable populations are resistant to help from authorities, making it difficult for authorities to obtain information about the trafficking scheme that would aid prosecution and to provide victims with needed assistance and rehabilitation.[16]

B. Trafficking Law at the Federal Level

The United States is considered a Tier I country by the U.S. Department of State because our government fully complies with federally delineated minimum standards for human trafficking elimination.[17] Despite its Tier I status, the United States remains a source, transit, and destination country for both labor and sex trafficking.[18] One national advocacy group suggests that an estimated 100,000 children are victims of sex trafficking in the United States each year and that the aggregate number of child and adult sex and labor trafficking victims reaches well into the hundreds of thousands.[19]The main federal law on human trafficking is the Trafficking Victims Protection Act (“TVPA”), which was passed in 2000.[20] Through the passage of the TVPA, Congress sought to combat trafficking in persons, to ensure punishment of traffickers, and to protect victims.[21] Congress updated and expanded the protections of the TVPA through the 2008 William Wilberforce Trafficking Victims Reauthorization Act.[22] This federal legislation is crucial, but not all-sufficient, in the fight against trafficking. Federal trafficking legislation has often proved ineffective, or at least limited, at the local level, and the federal government itself has called upon states to act to fill in the gaps of existing federal efforts.[23]States have responded to the federal government’s call, but the success of state anti-trafficking efforts has not been immediate. After the passage of the 2000 TVPA, many states— including Kentucky—jumped at the chance to pass emotionally charged, bipartisan legislation that would criminalize and condemn trafficking.[24] These early state efforts were admirable; however, ample evidence shows that these bipartisan acts tended to be merely expressive legislation that were rarely as effective as hoped.[25] Since the 2008 William Wilberforce Trafficking Victims Reauthorization Act, proactive states across the nation are in the process of updating their trafficking laws to make them more effective. Kentucky is one of those states that has passed a second round of legislation.

Part II: The Human Trafficking Problem in Kentucky

Just like the United States on the whole, Kentucky is described by government reports to be a source, transit, and destination state for human trafficking.[26] Throughout Kentucky, there is no single face of a trafficker. Kentucky traffickers to date include, among others, a woman forcing another to work as her maid;[27] parents selling their two daughters for sex;[28] and pimps setting up prostitution rings during Keeneland meets and the Kentucky Derby, advertising women and possibly children as “fillies” for men to pay to sleep with.[29] Similarly, there is no single face of a Kentucky trafficking victim. While some victims are trafficked in to Kentucky from surrounding states or other countries,[30] trafficking does not always involve transportation across a border.[31] Recent statistics indicate that 35% of victims in Kentucky were identified as foreign nationals, with 64% domestic victims. 59% of victims were identified as children and 41% adults, with 86% of all victims being female and 14% male.[32] Trafficking may seem like an evil that only exists far away or in the shadows, but average Kentuckians can easily encounter it. A quick Google search for “escorts in Eastern Kentucky” reveals numerous websites advertising women all over the state; any woman advertised as twenty-four or younger is likely a minor and a trafficking victim.[33] Further, traffickers consistently target vulnerable populations, and the demographics of the Commonwealth suggest that many Kentucky citizens themselves are at risk for becoming trafficking victims.[34]Compiling accurate information about the extent of human trafficking is a problem on the global, domestic, and state levels, so quantifying the number of human trafficking cases in Kentucky has been no small task.[35] A crucial starting step in understanding the extent of human trafficking in Kentucky came in 2007 thanks to Dr. TK Logan, a University of Kentucky professor.[36] Logan’s study, released in July 2007, provided Kentucky with one of the first quantitative measures of its human trafficking problem.[37]In response to growing awareness of existing trafficking problems, Kentucky adopted its first human trafficking legislation in 2007.[38] Kentucky was the twenty-eighth state in the nation to pass an anti-trafficking law.[39] This legislation, Senate Bill 43, made participation in human trafficking a felony offense and provided certain protections for trafficking victims, such as freedom from incarceration, the right to counseling, and the right to an interpreter.[40] Passage of the 2007 legislation was a success. However, Kentucky legislators soon realized the law lacked the teeth needed to actually combat trafficking. Many people claimed that, among other problems, law enforcement lacked adequate training to handle the crimes the 2007 legislation set out to establish.[41] Overall, the 2007 legislation helped get human trafficking on the Commonwealth’s radar but remained little more than expressive legislation. Legal changes were clearly needed for Kentucky to actually combat the sex and labor trafficking within our state.In response to the recognized shortcomings of the 2007 legislation, human trafficking victims’ rights advocates and legislators joined together to push for the passage of House Bill 3, the Human Trafficking Victims Rights Act, in the spring of 2013.[42] The HTVRA successfully passed both the House and the Senate and was signed into law by Governor Beshear that March.[43] The HTVRA saw early success and continues to be implemented on the ground level throughout the state.[44] To keep up this positive trajectory, each and every Kentuckian should be informed on the basic structure of the state’s human trafficking law, particularly on a few key provisions of the HTVRA.

Part III: Understanding the Human Trafficking Victims Rights Act

While the HTVRA made various changes to existing civil and criminal statutes and has a wide range of implications for human trafficking law in Kentucky, the Act can essentially be described as having four main components. The Act (1) mandates human trafficking education for law enforcement and prosecutors likely to encounter trafficking; (2) calls for trauma-informed care for victims and establishes a specific victim’s assistance fund; (3) creates new financial disincentives for traffickers; and (4) establishes a uniquely comprehensive safe harbor law to ensure victims are given treatment rather than jail time.[45] Having a basic grasp on these four provisions and continuing to push for their implementation can help us as the collective Commonwealth of Kentucky see a decrease in the evils of human trafficking throughout our state.

A. Training and Education for Trafficking Identifiers

A first key provision of the HTVRA focuses on increased education about the existence of human trafficking and victim identification. The HTVRA requires that those most likely to encounter trafficking cases and victims be given specific training regarding trafficking.[46] Prior to the HTVRA, Kentucky law enforcement officials already received specific training for situations involving abuse against the elderly, domestic violence and child abuse, HIV/AIDS, and bias-related crime.[47] Now after the HTVRA, law enforcement officers will be given specific training regarding the characteristics and dynamics of human trafficking and will be instructed in both state and federal trafficking law.[48] Law enforcement will also be trained to investigate potential trafficking cases, with instruction regarding how to screen potential trafficking victims and what resources are available to those victims.[49] The HTVRA further calls for the Attorney General to provide similar training for Commonwealth’s attorneys, county attorneys, and their staffs.[50] These “educational provisions” are designed to ensure that those people in Kentucky most likely to encounter trafficking are able to successfully recognize the crime when they see it. Ideally, these provisions will contribute to an increase in positive identification of traffickers, so that they can be prosecuted for their crimes, and of victims, so that they can be treated according to their specific trauma and needs.

B. Trauma-Informed Care for Victims

Another main emphasis of the HTVRA is trauma-informed care for victims. Victims of human trafficking undergo particular psychological and emotional harm that is distinct from the harm many other crime victims experience.[51] Many believe that, in order to bring holistic healing to human trafficking victims, they must be treated specifically as trafficking victims rather than victims of other forms of abuse or neglect.[52] Accordingly, the HTVRA establishes the Human Trafficking Victims Fund to provide better trauma-informed care. The Fund is to be comprised in part of monies from grants, contributions, and donations.[53] It will also be made up of monies collected as a result of successful state trafficking prosecutions—a portion of all assets seized and forfeited from traffickers will go to the Fund,[54] as well as a $10,000 fee that all trafficking convicts must now pay into the Fund.[55] Often, anti-trafficking legislation does not provide any financial support for achieving its desired outcomes;[56] the HTVRA, however, does provide a mechanism for financially achieving the goal of treating victims—and treating them in the ways they need to be treated—through this Victims Fund.[57]

C. Financial Disincentives for Traffickers

A third emphasis of the HTVRA is the financial disincentives it creates for traffickers through its newly imposed $10,000 fine and asset forfeiture provision. The HTVRA allows law enforcement to seize the assets of traffickers used in connection with the trafficking offense. All property used in connection with or acquired from trafficking will be seized, forfeited, and distributed among the Human Trafficking Victims Fund, the related law enforcement agency, and the attorney’s office responsible for handling the forfeiture.[58] Also, all convicted traffickers must now automatically pay $10,000 into the Victims Fund, regardless of any other charges or fines involved with their convictions.[59]Ideally, these provisions will be a financial disincentive for traffickers above and beyond the disincentive of potential convictions. The $10,000 fee that traffickers must pay into the victims’ assistance fund upon conviction is no small sum. This fee may be little deterrence to a powerful pimp leading multiple, well-established prostitution rings, but it may deter an individual who engages in trafficking simply for a little extra cash.[60] The asset seizure provision, on the other hand, should deter both the small-scale and the large-scale trafficker. Individuals with no history of trafficking who operate out of their homes may not want to risk their homes, and traffickers exploiting on a larger scale would, in turn, have larger amounts of property subject to seizure and forfeiture. The value of forfeitable property – defined as “all property used in connection with or acquired as a result of . . .” the trafficking – could be quite large for any one trafficker, making this HTVRA provision a notable financial disincentive for all potential traffickers.[61]Importantly, these financial disincentive provisions will also help maintain the Human Trafficking Victims Fund, so that victims can receive the trauma-informed treatment that they need.[62]

D. Safe Harbor Protection for Minors

While the HTVRA involves various additional changes to Kentucky law,[63] a final and particularly crucial piece of the legislation is its safe harbor provision, designed to ensure that human trafficking victims are in fact treated as victims rather than criminals. While federal law recognizes the prostitution of a child as human trafficking, many states still do not have legal protections for minor victims; in such states, child victims are often treated as “criminals or delinquents.”[64] Leading anti-trafficking advocates recognize this as an important problem and have called on states to pass so-called “safe harbor” bills, legislation protecting minor victims from criminal charges.[65] Kentucky’s HTVRA includes a comprehensive safe harbor provision. The law prohibits prosecution of anyone under the age of eighteen for prostitution or loitering for prostitution.[66] The law also ensures that victims will not be charged with any status offenses, such as runaway or truancy, related to their trafficking.[67] At the time of its passage, this provision was the most protective safe harbor law of any state in the United States.[68]

Part IV: Conclusion

Although determining the extent of sex and labor trafficking throughout Kentucky is difficult, human trafficking clearly exists throughout the Commonwealth, sometimes in the shadows of a private household[69] and sometimes right in the midst of the public spotlight at Keeneland or at Churchill Downs.[70] Kentucky is in a good place, however, in the global fight against human trafficking. Where Kentucky’s original anti-trafficking legislation was too weak to effectuate actual results, the HTVRA contains comprehensive provisions and fundraising mechanisms that bode well for the law’s continued success. Both lawyers and non-lawyers alike throughout the Commonwealth help ensure the success of the law by staying informed. Understanding some general information about trafficking in Kentucky as well as the key provisions of the HTVRA is one small step we can take to help protect all people within our state’s borders from sex and labor slavery.

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[1] University of Kentucky College of Law, J.D. May 2015.

[2] See Dina Haynes, When Human Trafficking Becomes a Cause Celebre, Open Democracy (Oct. 6, 2014), https://www.opendemocracy.net/beyondslavery/dina-haynes/when-human-traff… (explaining the drawbacks of celebrity trafficking activism); Priscila A. Rocha, Our Backyard Slave Trade: The Result of Ohio’s Failure to Enact Comprehensive State-Level Human Sex-Trafficking Legislation, 25 J.L. & Health 381, 407 (2012) (explaining how human-rights legislation that is quickly and emotionally passed with bipartisan support often succeeds in criminalizing a particular abuse but lacks a real plan for funding and implementation).

[3] Polaris Project, 2013 Analysis of State Human Trafficking Laws 1-3 (2013), available at http://www.polarisproject.org/storage/2013-Analysis-Category-6-Safe-Harb… (noting that Kentucky is one of twelve states that comply with the full recommendations for the safe harbor and that Kentucky also has a funding provision in place, allowing it to serve as a model for other states).

[4] Human Trafficking Victims Rights Act, 2013 Ky. Acts 25, available at http://www.lrc.ky.gov/record/13rs/HB3.htm.

[5] See Ky. Justice & Safety Ctr., Human Trafficking in the Commonwealth of Kentucky 8 (2007), available athttp://justice.ky.gov/Documents/Statistical%20Analysis/HumanTrafficking2.

[6] See, e.g., Press Release, Governor Steve Beshear’s Commc’ns Office, Governor Beshear Signs Human Trafficking Bill (Mar. 26, 2013), available athttp://migration.kentucky.gov/newsroom/governor/20130326hb3.htm.

[7] See Human Trafficking Victims Rights Act, 2013 Ky. Acts 25.

[8] See Analysis of State Human Trafficking Laws, supra note 3, at 1-3. See also discussion of the HTVRA’s safe harbor, infra Part III.B.

[9] See Rescue & Restore, Module 003 LAW, https://vimeo.com/99576107.

[10] Ky. Rescue & Restore Coal., Identifying Victims of Human Trafficking Fact Sheet 1 (“Everyone can play a role in identifying victims of human trafficking . . . One chance encounter could be a victim’s best hope for rescue.”), available at http://www.rescueandrestoreky.org/wp-content/uploads/2014/06/KY-Rescue-R.

[11] For an explanation of the problem of expressive human trafficking legislation, see Mark Sidel, Richard B. Lillich Memorial Lecture: New Directions in the Struggle Against Human Trafficking, 17 J. Transnat’l L. & Pol’y 187, 201-03 (2008); Rocha, supra note 2, at 440.

[12] Gretchen M. Hunt, Human Trafficking: A Primer for Kentucky Lawyers, Bench & Bar, July 2009, at 17.

[13] Trafficking Victims Protection Act of 2000, 18 U.S.C. §§ 1589-1594, 22 U.S.C. §§ 7101-7110 (West, Westlaw through P.L. 113-182). See also U.S. Dep’t of State, Trafficking in Persons Report 8 (2013) (Introductory Material) [hereinafter “Trafficking Report Introductory Material”], available athttp://www.state.gov/documents/organization/210737.pdf.

[14] See Ronald Weitzer, Sex Trafficking and the Sex Industry: The Need for Evidence-Based Theory and Legislation, 101 J. Crim. L. & Criminology 1337, 1347-1356 (2012).

[15] See, e.g., Rescue & Restore, Module 003 LAW, https://vimeo.com/99576107.

[16] Trafficking Report Introductory Material, supra note 13, at 8-9.

[17] The Trafficking Victims Protection Act, supra note 13, sets forth federal standards for the elimination of human trafficking. The United States meets Tier I standards, but trafficking throughout the country still exists. U.S. Dept. of State, Trafficking in Persons Report 44, 381 (2013) (Country Narratives T-Z) [hereinafter “Trafficking Report Country Narratives”], available at http://www.state.gov/documents/organization/210742.pdf.

[18] Id. at 381.

[19] Polaris Project, Human Trafficking, http://www.polarisproject.org/human-trafficking/overview (last visited Apr. 16, 2015). But see Weitzer, supra note 14 (explaining that many advocacy organizations’ statistics appear inflated).

[20] Polaris Project, Human Trafficking Cheat Sheet 1 (2012); Trafficking Victims Protection Act of 2000, 18 U.S.C. §§ 1589-1594, 22 U.S.C. §§ 7101-7110 (West, Westlaw through P.L. 113-182).

[21] 22 U.S.C. § 7101 (West, Westlaw through P.L. 113-296).

[22] William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008, Pub. L. No. 110-457, 122 Stat. 5044 (codified as amended in scattered sections of 22 U.S.C.).

[23] Rocha, supra note 2, at 428-30. See also Stephanie L. Mariconda, Breaking the Chains: Combating Trafficking at the State Level, 29 B.C. Third World L.J. 151, 174-77 (2009).

[24] Rocha, supra note 2, at 441.

[25] Mark Sidel, Richard B. Lillich Memorial Lecture: New Directions in the Struggle Against Human Trafficking, 17 J. Transnat’l L. & Pol’y 187, 201-03 (2008).

[26] Trafficking Report Country Narratives, supra note 17, at 381; Ky. Justice & Safety Ctr., supra note 5, at 10.

[27] Maria Castellanos & Gretchen Hunt, Family Court Presentation: Human Trafficking in Kentucky 45 (2013).

[28] Castellanos & Hunt, supra note 27, at 49.

[29] Joe Arnold, LMPD: Prostitution Triples, Sex Trafficking a Concern at Derby Time, WHAS11 Louisville (Apr. 29, 2013, 11:11 PM EDT), http://www.whas11.com/story/news/local/2014/10/14/15755392/.

[30] Kentucky Rescue & Restore Coalition, Victims of Human Trafficking March 2014 Fact Sheet 1 (2014) [hereinafter March 2014 Fact Sheet], available athttp://www.rescueandrestoreky.org/wp-content/uploads/2014/06/KY-Rescue-R.

[31] Polaris Project, Human Trafficking Cheat Sheet 1 (2012). Human trafficking and human smuggling are two different things. Smuggling involves an individual paying a fee to willingly be transported illegally across the United States border. Human trafficking may begin with a smuggling situation; an individual may pay to be transported into the United States, and, upon arrival, the smuggler may hold the individual captive or require him to work. But human trafficking does not require that an individual cross a border or that any movement take place at all. Hunt, supra note 12, at 18.

[32] March 2014 Fact Sheet, supra note 30, at 1.

[33] See Jack Latta, Conference on Human Trafficking Opens Eyes, The Floyd County Times, (July 18, 2013, 7:19 PM), http://www.floydcountytimes.com/view/full_story/20762482/article-confere.

[34] Castellanos & Hunt, supra note 27, at 10. For general information about poverty in Kentucky, see Valarie Honeycutt Spears & Linda J. Johnson, Kentucky’s 2012 Poverty Rate Increased to 19.4 Percent, Lexington Herald-Leader (Sept. 19, 2013), http://www.kentucky.com/2013/09/19/2831627/kentuckys-2012-poverty-rate-i…. The Commonwealth’s overall poverty rate increased from 17.6% in 2011 to 18.3 in 2012, and child poverty increased from 23.5% in 2008 to 26.5% in 2012.

[35] Human trafficking can be extremely difficult to detect, largely because of the unique nature of the crime. Traffickers constantly adapt their tactics and take advantage of excluded, vulnerable populations. Many victims from these vulnerable populations are resistant to help from authorities, making it difficult for authorities to provide victims with needed assistance and rehabilitation and also difficult to obtain information about the trafficking scheme that could be useful for identification and prosecution. See Trafficking Report Introductory Material, supra note 13, at 8-9.

[36] See generally TK Logan, Human Trafficking in Kentucky (2007), available at http://www.cdar.uky.edu/coercivecontrol/docs/hands%20presentation%20fina…) (describing the existence of human trafficking in Kentucky via PowerPoint presentation on June 2007).

[37] Ky. Justice & Safety Ctr., supra note 5, at 12 (2007).

[38] Id. at 8.

[39] Id.

[40] Id.

[41] Rae Hodge, Human Trafficking by the Numbers, Louisville Cardinal (Jan. 23, 2013), http://www.louisvillecardinal.com/2013/01/human-trafficking-numbers-kent.

[42] Human Trafficking Victims Rights Act, 2013 Ky. Acts 25.

[43] See, e.g., Press Release, Governor Steve Beshear’s Commc’n Office, Governor Beshear Signs Human Trafficking Bill (Mar. 26, 2013), available athttp://migration.kentucky.gov/newsroom/governor/20130326hb3.htm.

[44] See, e.g., Rescue & Restore, Module 003 LAW (July 2014), https://vimeo.com/99576107; Valarie Honeycutt Spears, Report: Kentucky Authorities Investigated 20 Allegations of Child Human Trafficking, Lexington Herald-Leader (Dec. 8, 2013), http://www.kentucky.com/2013/12/08/2978313_report-kentucky-authorities-i.

[45] Human Trafficking Victims Rights Act, 2013 Ky. Acts 25.

[46] Id.

[47] Ky. Rev. Stat. Ann. § 15.334(1)(a)-(d) (West, Westlaw through 2014 legislation).

[48] Ky. Rev. Stat. Ann. § 15.334(1)(e) (West, Westlaw through 2014 legislation).

[49] Id.

[50] Ky. Rev. Stat. Ann. § 15.718(1) (West, Westlaw through 2014 legislation).

[51] Ky. Rescue & Restore Coal., Identifying Victims of Human Trafficking Fact Sheet 2.

[52] See Polaris Project, Human Trafficking Legislative Issue Brief: Sex Trafficking of Minors and “Safe Harbor” 1, available athttp://www.polarisproject.org/storage/documents/policy_documents/model%2… (last visited Apr.. 17, 2015) (“Experienced practitioners have found that mainstream programs of the child abuse and neglect system routinely fail these children. The law should require specialized protection and recovery programs for child victims . . . .”).

[53] Ky. Rev. Stat. Ann. § 529.140(2) (West, Westlaw through 2014 legislation).

[54] Id. See also Ky Rev. Stat. Ann. § 529.150(1) (West, Westlaw through 2014 legislation) (articulating asset seizure and forfeiture). The HTVRA’s asset forfeiture provision will be explained in greater detail below. See infra Part III.C.

[55] Ky. Rev. Stat. Ann. § 529.130 (West, Westlaw through 2014 legislation).

[56] See Rocha, supra note 2, at 406-07.

[57] Because Kentucky’s anti-trafficking legislation has a funding mechanism, the Polaris Project advocacy group has indicated that Kentucky’s legislation serves as a good model for other states. See Analysis of State Human Trafficking Laws, supra note 3, at 1-3.

[58] Ky. Rev. Stat. Ann. § 529.150(2)(a)-(c) (West, Westlaw through 2014 legislation).

[59] Ky. Rev. Stat. Ann. § 529.130 (West, Westlaw through 2014 legislation).

[60] In Hodgenville, Kentucky, in December 2010, a woman sold her fifteen year old foster daughter to a man “in exchange for money, and buying items for her house.” The case involved two human trafficking indictments that were later amended down. Castellanos & Hunt, supra note 27, at 48.

[61] Ky. Rev. Stat. Ann. § 529.150(1) (West, Westlaw through 2014 legislation).

[62] Ky. Rev. Stat. Ann. § 529.150(2)(a) (West, Westlaw through 2014 legislation).

[63] For a more detailed summary of the HTVRA, see Kentucky Association of Sexual Assault Programs, Summary of HB 3 Human Trafficking Victims Rights Act (2013), available at http://www.kasap.org/images/files/News/HouseBill%203_KentuckyHumanTraffi…. For a complete understanding of the 2013 legislation’s amendments to previous human trafficking law, see the legislation itself. Human Trafficking Victims Rights Act, 2013 Ky. Acts 25.

[64] Human Trafficking Legislative Issue Brief: Sex Trafficking of Minors and “Safe Harbor”, supra note 52 at 1.

[65] Id.

[66] Ky Rev. Stat. Ann. § 29.120(1) (West, Westlaw through 2014 legislation); Castellanos & Hunt, supra note 27, at 27.

[67] Ky Rev. Stat. Ann. § 630.125 (West, Westlaw through 2014 legislation).

[68] New York was the first state to enact a safe harbor law in 2008. New York’s original watershed law guaranteed there could be no prosecution of anyone under the age of sixteen for prostitution; Kentucky’s law goes further to raise the age to eighteen and to prohibit prosecution for status offenses in addition to prostitution. SeeKaren Wigle Weiss, End Child Prostitution And Trafficking USA, A Review of the New York State Safe Harbor Law 2 (2013), available athttps://d2jug8yyubo3yl.cloudfront.net/26999B2F-7C10-4962-918C-E964709E74…. “Kentucky is the only state to ensure that all child victims of human trafficking are not charged with prostitution or status offenses committed in connection to being trafficked.” Commonwealth of KY. Cabinet for Health and Family Serv., Annual Report of Kentucky Child Victims of Human Trafficking 5 (2013), available at http://chfs.ky.gov/NR/rdonlyres/E5D47613-6922-44C6-8B14-0668374ADD93/0/H.

[69] Castellanos & Hunt, supra note 27, at 45.

[70] Arnold, supra note 29.

Who Will Watch the Watchers?: Derivative Actions in Nonprofit Corporations

Article | 103 KY. L. J. ONLINE 4 | Apr. 22, 2015

Thomas E. Rutledge[1]

Introduction

Quis custodiet ipsos custodes?

- Juvenal, Satire VI, lines 347–8(“Who will watch the watchers?”)

Unlike the Kentucky statutes governing business corporations, limited partnerships and statutory trusts, both the Kentucky Limited Liability Company Act[2] and the Kentucky Nonprofit Corporation Acts[3] are silent as to the requirements for “derivative actions”[4] brought on behalf of the LLC or corporation by a member or other constituent thereof.[5] Some have suggested that this absence indicates that derivative actions do not exist in those organizational forms, positing, it would seem, that it is the statute governing derivative actions that gives rise to the actions. This assessment is incorrect, and, presumably, arises out of a misunderstanding of the basis for derivative actions. In fact, the derivative action is a question of equitable standing that was later, in certain contexts, reduced to statute. It does not follow, therefore, that there are not derivative actions in LLCs and nonprofit corporations consequent to the failure of the statute to provide for them.[6] Rather, equity will provide the rules applicable when the organizational statute does not specify the rules governing derivative actions.[7]While the analysis here explicated is equally applicable in the context of any business entity organizational statute lacking an express derivative action enabling statute, this presentation will focus upon the nonprofit corporation. That said, there appears to be implicit acceptance in Kentucky of LLC derivative actions.[8]This article will begin by reviewing a New York Court of Appeals case which held that derivative actions exists with respect to LLCs organized in New York notwithstanding the silence of the state’s LLC Act as to derivative actions. This article will then turn to a series of Kentucky decisions as to derivative actions in corporations at a time when the related corporate statutes were silent as to derivative actions. Collectively, these decisions stand for the proposition that derivative actions both pre-exist and exist independently of a statute authorizing derivative actions. From there, the article will discuss a pair of issues as to the necessity of affording derivative actions even where statutes are silent. The first of these is the necessity of a mechanism by which the venture’s rights may be enforced over the contrary actions of those then exercising control over it. Second, as a federal court in diversity may entertain a derivative action pursuant to its equitable jurisdiction, the point is made that it would be curious to deprive those who cannot act on a derivative basis the same rights. The next portion of the article will review a number of decisions of foreign courts that have considered the question of derivative actions in nonprofit corporations absent a statute thereon. The discussion will then review seriatim various aspects of derivative actions as they now exist in statute and ascertain whether or not similar requirements exists under Kentucky’s equity-based derivative action precedents. Last, this article considers who may exercise equitable standing in nonprofit corporations to initiate a derivative action.

The Equity Basis of the “Derivative Action”

The ability to enforce fiduciary obligations (and to recover damages for failure in their discharge) has its roots in trust law and the later treatment of the assets of a venture as a cestui que trust for the benefit of the owners.[9] As such, the ability to enforce fiduciary obligations has its basis in equity rather than in positive statutory law.[10] A derivative action recognizes that persons other than the entity have standing to initiate an investigation of management and the propriety of its actions, an important mechanism of enforcement of fiduciary duties. The Connecticut Supreme Court described this mechanism, stating that:

[i]f the duties of care and loyalty which directors owe to their corporations could be enforced only in suits by the corporation, many wrongs done by directors would never be remedied.[11]

As such, the derivative action serves an important policing function in providing a mechanism by which those charged with management and control of a venture may be called upon to demonstrate that they are in fact discharging the obligations they have voluntarily undertaken. Ergo, in response to Juvenal’s famous query, “Who will watch the watchers?,”[12] it will be the court acting at the instigation of those with a relationship with the venture other than through control.The New York Court of Appeals decision in Tzolis v. Wolff, before considering whether a derivative action may be brought in a New York organized LLC notwithstanding that a derivative action provision had been deleted from that state’s draft LLC Act, addressed the history of the derivative action:

The derivative suit has been part of the general corporate law of this state at least since 1832. It was not created by statute, but by case law. Chancellor Walworth recognized the remedy in Robinson v Smith, because he thought it essential for shareholders to have recourse when those in control of a corporation betrayed their duty. Chancellor Walworth applied to a joint stock corporation — then a fairly new kind of entity — a familiar principle of the law of trusts: that a beneficiary (or “cestui que trust”) could bring suit on behalf of a trust when a faithless trustee refused to do so. Ruling that shareholders could sue on behalf of a corporation under similar circumstances, the Chancellor explained:

“The directors are the trustees or managing partners, and the stockholders are the cestui que trusts, and have a joint interest in all the property and effects of the corporation. . . . And no injury the stockholders may sustain by a fraudulent breach of trust, can, upon the general principles of equity, be suffered to pass without a remedy. In the language of Lord Hardwicke, in a similar case [Charitable Corp. v. Sutton], ‘I will never determine that a court of equity cannot lay hold of every such breach of trust. I will never determine that frauds of this kind are out of the reach of courts of law or equity; for an intolerable grievance would follow from such a determination.’”

Eventually, the rule that derivative suits could be brought on behalf of ordinary business corporations was codified by statute. But until relatively recently, no similar statutory provision was made for another kind of entity, the limited partnership; again, the absence of a statute did not prevent courts from recognizing the remedy. In Klebanow v. New York Produce Exch., the Second Circuit Court of Appeals held that limited partners could sue on a partnership’s behalf. For the Second Circuit, the absence of a statutory provision was not decisive because the court found no “clear mandate againstlimited partners’ capacity to bring an action like this.” We agreed with the holding of Klebanow in Riviera Congress Assoc. v. Yassky, relying, as had Chancellor Walworth long before, on an analogy with the law of trusts:

“There can be no question that a managing or general partner of a limited partnership is bound in a fiduciary relationship with the limited partners . . . and the latter are, therefore, cestuis que trustent. . . . It is fundamental to the law of trusts that cestuis have the right, ‘upon the general principles of equity’ and ‘independently of [statutory] provisions,’ to sue for the benefit of the trust on a cause of action which belongs to the trust if ‘the trustees refuse to perform their duty in that respect.’”

After Klebanow and Riviera were decided, the Partnership Law was amended to provide for derivative actions by limited partners (see Partnership Law § 115-a [1]).[13]

From this foundation, the Court of Appeals found that derivative actions exist in New York LLCs notwithstanding the deletion of the derivative action provisions from the draft New York LLC Act.[14]A similar basis for the derivative action, although sadly not so direct, can be found in Kentucky law. At least a quartet of cases, all decided when there was no “derivative action” statute in the law of corporations, demonstrate that the courts of equity would entertain such an action.[15] In Jones v. Johnson, responding to an effort by certain shareholders, in their individual capacity, to bring suit against corporate officers for malfeasance, the court rejected those actions, requiring rather that the shareholders proceed in equity on the corporation’s behalf, stating that:

The error in this view consists, as we think, in regarding the injuries complained of as done to the shareholders and not to the corporation. The funds lost did not belong to the shareholders, but to the ideal person called “The Traders’ Bank and Warehouse Company.” It was the sufferer of the losses sustained; and as every actionable wrong gives to the person injured a cause of action, the right to sue these officers was primarily in the corporation. If the corporation or its assignee had sued, the shareholders could not have maintained either a joint or separate action; but the corporation being still under the control of the alleged unfaithful officers, it would be unreasonable to expect them to sue themselves; and the trustee who might have sued them as the representative of the corporation having refused to do so, the shareholders, as the beneficiaries of the assets of the company, have a right in equity to sue in its name and stead. And we here remark that, suing as they do as a substitute for the injured corporation, they can only sue in equity, because their rights are in this respect equitable only. It does not matter if the action be founded upon a tort; the shareholders, not having a legal right to sue, must either come into equity or they will be without remedy.[16]

In Collier v. Deering Camp Ground Ass’n, addressing an effort by a shareholder to recover rents on lands owned by the corporation, the court wrote:

The pleadings admit that the title to the land was in the Washington Mining and Manufacturing Company, and never in the appellant. The interest of appellant in the land was only that of a stockholder in the corporation. He had no right or title in the land that he could sell or convey. Nor was he entitled to rents for its use. Under the facts stated, recovery for rents would be by the Washington Company; and if that company, after proper demand refuses to sue, appellant might maintain an action for the benefit of the corporation.[17]

Next in this quartet of cases is Pittsburg, C., C. & St. L. Ry. Co. v. Dodd, in which the court addressed contracts between corporations with overlapping directors but dissimilar shareholders:

It will not be questioned that if the bridge company directors, through a fraudulent purpose, refused to bring the suit against the Louisville & Nashville Railroad Company to enforce its liability under the contract, the minority stockholders of the bridge company might maintain the suit on its behalf, although the Louisville & Nashville Railroad Company was not a part to the fraud.[18]

Expanding, so it would seem, on Collier’s requirement that suit on the cooperation’s behalf is predicated on a demand upon the corporation to so act, in Reinecke v. Bailey the court directed: “[t]here being no averment that the corporation declined to institute the action, the right to institute it was in the corporations, and not appellant, who was merely a stockholder.”[19]Clearly the shareholders of a corporation have long enjoyed, even absent a statute, the capacity, on the corporation’s behalf, to initiate a derivative action. It follows that a member, even in the absence of a statute to that effect, on behalf and in the name of an LLC, has the capacity, after demand is made on management,[20] to initiate an action to address an injury to the LLC.[21] Likewise, a member (and perhaps other constituents) of a nonprofit corporation has the capacity, after demand, to initiate a derivative action by which there may be addressed a potential an injury to the corporation. This right, arising out of equity, exists independently of any statutory authorization to do so. Therefore:

• statutes such KRS §§ 271B.7-400 and 362.511 et seq., while serving to both confirm and supplement the equitable right to bring derivative action, cannot be identified as the basis of the right to bring a derivative action;[22] and

• with respect to those organizational forms that do not provide by statute for derivative actions, the right to bring such action exists in equity.[23]

For Every Injury There is a Remedy

A principal of equity is that for every wrong there is a provided remedy.[24] The Kentucky Nonprofit Corporation Acts specifies in great detail the fiduciary obligations of corporate directors and officers.[25] The Act specifies to whom these obligations are owed, namely the corporation.[26] When these obligations are violated, the entity has a claim for damages to remedy the injury it has suffered.[27] The corporation may, through its board of directors, determine to bring suit to seek recompense for the injury suffered.[28] At times, however, due to any number of factors, the board may elect to not pursue redress for the injury suffered by the corporation. In that situation the corporation has been doubly injured in that it has suffered both the initial injury and the failure of the board to protect its legal rights.A derivative action protects the corporation from this latter circumstance, namely not being able to pursue recourse for its injury. For example, while claims against the directors for breach of duty may be tolled while those directors remain in control of the corporation, claims against non-directors (e.g. the embezzling bookkeeper) may be lost if not promptly brought.[29] Even as to claims that are not time barred until a new majority of the board is seated and able to make, on the corporation’s behalf, a disinterested judgment, by then evidence may be stale or lost. There is even the possibility the culpable parties will be deceased. Absent the ability of someone other than those in control of the corporation to initiate an action to vindicate its rights, the express fiduciary duties undertaken by the directors are a toothless tiger that are in effect only aspirational and lack the likelihood of effective enforcement. Furthermore, it would indeed be curious that the members of a nonprofit corporation are afforded a nearly unlimited right to inspect the corporation’s books and records but then may not use that information to vindicate the corporation’s rights nor seek remedy for the wrongs it has suffered.[30]

The Federal Loophole

As a practical matter, if derivate actions may not be brought absent an affirmative statute to that effect, that limitation would apply only in suits brought in state court; they could still be brought in federal court. Under Federal Rule of Civil Procedure 23.1, a derivative action may be entertained in federal court on the basis of diversity jurisdiction.[31] A constituent of a nonprofit corporation who is not a citizen of the state where the corporation has its principal place of business or where the corporation is incorporated may initiate the action.[32] The federal court’s jurisdiction over the matter is not subject to the substantive law of the jurisdiction of organization.[33]As observed in Berg, in reviewing a derivative action brought in federal court on the basis of diversity jurisdiction, “a Federal District Court may, under its general equity powers independently of state statute, entertain a bill of a stockholder for the appointment of at least a temporary receiver to prevent diversion or loss of assets through gross fraud and mismanagement of its officers.”[34] If a derivative action may not be initiated by a corporate constituent in the jurisdiction of organization because of the view that the organic organizational law does not authorize such a suit (for reasons already reviewed as false conclusion), it could be brought by a constituent domiciled in a foreign jurisdiction pursuant to the federal court’s diversity jurisdiction.[35] It would indeed be a strange circumstance if a constituent domiciled in the jurisdiction of organization did not have the capacity to bring a derivative action by which to protect the corporation from potentially disloyal directors even as a constituent domiciled in a foreign jurisdiction could do so.

“Shareholder” Status is NOT a Sine Qua Non to Bringing a Derivative Action

The suggestion that there are not derivative actions in either LLC's or nonprofit corporations on the basis that neither has “shareholders” is, for all intents and purposes, an infantile position. This argument proceeds from the flawed syllogism that derivative actions are brought by shareholders, nonprofit corporations and LLCs do not have shareholders, and therefore there cannot be derivative actions in either nonprofit corporations or LLCs. In the business corporation context, “shareholders” are specifically authorized to bring derivative actions.[36] This does not define, however, the maximum reach of the universe of persons enabled to bring derivative actions. For example, limited partners, who clearly are not “shareholders,” may bring derivative actions.[37] To provide another example, members, who are clearly not “shareholders,” in a limited cooperative association may bring derivative actions.[38] Likewise, in a statutory trust, a beneficial owner, who is not a “shareholder,” may bring a derivative action.[39] Although not yet clearly addressed in Kentucky law, it has been recognized that a creditor may bring a derivative action with respect to a corporation, a capacity that exists irrespective of the fact that the creditor is not a “shareholder.”[40] In Bernfield v. Kurilenko, the widow and heir of a shareholder in a professional corporation in which she could not be a shareholder[41] was permitted to maintain a derivative action on behalf of the corporation in which her husband had been a shareholder.[42] Partners in a general partnership have been permitted to bring a derivative action.[43] The assertion that only “shareholders” may bring derivative actions does not stand up to even minimal scrutiny.Slightly (but only barely so) more sophisticated is the assertion that shareholder or similar “ownership” status, i.e., the capacity to receive interim or liquidating distributions, is a necessary precondition to the capacity to bring a derivative action as only a person with such an interest has an interest to protect through the derivative action. This assertion fails on its own terms. A derivative action exists not to enforce a right of a shareholder or other potential participant in the economics of the venture, but rather to protect the venture’s interest in its own assets. For this reason various actions seeking only injunctive (and no monetary) relief are structured as derivative actions. For example, an action to compel the corporation to produce records or hold a meeting is derivative in nature. Regardless, “shareholder” status is not a sine qua non to bringing a derivative action.

Numerous Courts That Have Expressly Considered the Question Have Found There to Be Derivative Actions Absent a Statute

In addition to the decision rendered by the New York Court of Appeals in Tzolis v. Wolff,[44] although decided in the context of an LLC,[45] numerous courts have squarely addressed the question of whether, ab initio, derivative actions exist in a nonprofit corporation absent a statute to the effect.Addressing who should have standing to bring a derivative action in a nonprofit organization, the Arkansas Court of Appeals, in Morgan v. Robertson, observed:

It should be recognized, however, that Morgan's standing to bring this suit need not rest alone on his status as a member of the Foundation, as he professes to be an officer and a director of the Foundation and assuming that to be so, he has the necessary standing to complain against the sort of acts charged in the complaint. We believe an officer, director and a member of a non-profit corporation is not without standing to question the management and conduct of other officers and directors which are alleged to be in violation of the By-Laws and Articles and against the purposes of the corporation. If such an individual lacks standing, who would have it? We regard the public as having a clear interest in non-profit corporations from the standpoint of the faithful administration of the affairs of the corporation. The standing of one or more directors of non-profit corporations to act derivatively in behalf of the corporation does not seem open to question.[46]

In Kirtley v. McClelland, the court addressed the question of whether, in the context of a nonprofit corporation organized under a statute that did not address derivative actions, could such an action be brought.[47] The court held that it could:

Nonetheless, we are convinced that equitable redress would have been available at common law for members of a nonprofit corporation or an incorporated voluntary association had such plaintiffs sought to utilize it.

First, there is nothing about the remedy itself which warrants distinctive treatment based upon corporate purpose, for a derivative action by nature has as its aim the non-pecuniary benefit of the corporation, not the individual stockholder or member. A stockholder is permitted to sue on behalf of the corporation, not because his rights have been violated, but simply as a means of setting in motion the judicial machinery of the court. The stockholder commences the action and prosecutes it, but in every other respect the action is brought by the corporation; it is maintained directly for the benefit of the corporation and final relief when obtained belongs to the corporation. . . .

The absence of a statutory procedure for initiating a derivative action by a not-for-profit corporation when one has been affirmatively provided for for-profit corporations does not require the conclusion that statutory authorization is a necessity either. A court of general jurisdiction has inherent equitable power unless a statute either explicitly or by necessary implication provides otherwise. The Not-for-Profit Corporation Act does not expressly bar derivative actions by members of a nonprofit corporation.[48]

In the Tennessee case of Bourne v. Williams, it was held that a derivative action could be brought on behalf of a nonprofit corporation notwithstanding statutory language that could be read to restrict derivative actions to for-profit ventures.[49] In the course of its decision, the Bourne Court cited with approval Fletcher’s Cyclopedia for the proposition: “[t]he right of a stockholder to sue is not affected by the nature or kind of the corporation, and the law pertaining to derivative suits applies to a non-profit corporation exactly the same as if it were a business corporation….”[50] Explaining the need for derivative actions in nonprofit corporations, the court wrote:

[i]t would be unconscionable for this Court to say, that in a case such as this, simply because the corporate entity was organized as a corporation not for profit as opposed to a corporation for profit, that there would be no forum available to members of the corporation who believe that the Corporation was being harmed and damaged by alleged illegal and unauthorized acts by its officers and/or directors.

But for being members of a corporation not for profit, as opposed to being stock-holders of a corporation for profit, the plaintiffs have stated a cause of action in their complaint.[51]

A decision of a Florida intermediate appellate court, Fox v. Professional Wrecker Operators of Florida, Inc., addressed the question of derivative actions in a nonprofit corporation where the statute was silent as to the issue.[52] Prior to 1993 the Florida Nonprofit Corporation Act incorporated by reference the Florida Business Corporation Act, the latter providing for derivative actions, but in a 1993 amendment that linkage was eliminated.[53] In this decision the court determined that notwithstanding the severing of the linkage to the business corporation act and its provisions on derivative actions, there is no basis for depriving members in a nonprofit corporation of standing to protect its rights through a derivative action.[54] A similar ruling was issued in Larsen v. Island Developers, Ltd., where the court noted that the derivative action exists “as relief from ‘faithless directors and managers,’” that arose in equity “long before the legislature countenanced such suits by inclusion of statutory references to derivative actions.”[55]The only contrary holding in Kentucky is that rendered in Porter v. Shelbyville Cemetery Co., wherein a former trustee was denied the right, as a trustee, to on behalf of a de facto (but not de jure) corporation, bring a derivative action challenging certain actions alleged to be ultra vires.[56] For a variety of reasons this decision should not be followed. Initially, it is unpublished and therefore by its terms without precedential value. Second, it deals with a former corporation that had forfeited its charter for failure to satisfy express legal requirements imposed at the time the new constitution was adopted, rather than with a nonprofit corporation incorporated under KRS chapter 273.[57] Third, the de facto trustee (i.e., director) who sought to bring the action had been removed from that office prior to bringing the action, eliminating application of the rule that directors are at times permitted to initiate derivative actions.[58] Fourth and most telling, notwithstanding excellent briefing to the court, neither side identified to it the express provisions of the Nonprofit Corporation Acts to the effect that any other variety of persons affiliated with a nonprofit corporation may bring an action to preclude to from engaging in ultra vires conduct.[59] Fifth, the Kentucky Court of Appeals, in Fenley v. Kamp Kaintuck, Inc., clearly thought the questions of derivative actions in nonprofit corporations to be open even as it applied derivative action rules.[60] Simply put, the Porter v. Shelbyville Cemetery decision is in conflict with the current statute governing nonprofit corporations. Alternatively, if Shelbyville Cemetery was at most a de facto corporation or some other extra-statutory form, then the decision is not about nonprofit corporations. Either way, this decision does not merit being afforded precedential value.

The Equity Requirements of the Demand and Contemporaneous Ownership Requirements

In Hawes v. City of Oakland, the U.S. Supreme Court required that the plaintiff in a derivative action have sought redress through direct action by the corporation (the “demand requirement”) and have owned the shares in the corporation at the time of the asserted injury (“or that [the] shares had since devolved [to him or her] since by operation of law”).[61] This contemporaneous ownership requirement has been repeated in Kentucky, both in statutory and case law,[62] but the existence of the requirement long predated its reduction to statute.[63] It has well been applied in the context of Kentucky nonprofit corporations. In Fernley v. Kamp Kaintuck, Inc., a derivative complaint brought by former members of a nonprofit corporation was dismissed on the basis that the plaintiffs were not current members.[64]In a derivative action brought on behalf of a nonprofit corporation, the plaintiff must be expected to either make a demand or plead futility. If it is a membership organization, the plaintiff must also plead that they are a member and are able to represent the interests of similarity situated members in representing the interests of the corporation. Other possible positions granting appropriate standing are discussed below.[65]

The Direct vs. Derivative Distinction

Kentucky courts are vigilant in preserving the direct versus derivative distinction, thereby preserving for the corporation any damages that flow from the breach of duty to the corporation and precluding an individual shareholder from directly receiving that recovery. In doing so, the courts have shown no inclination to adopt the rule set forth in section 7.01(d) of the ALI Principles of Corporate Governance.[66]To place a pair of bookends on a consistent string of rulings, begin with the 1908 decision rendered in Reinecke v. Bailey.[67] In that case, one of the company’s three shareholders embezzled a significant amount of money.[68] The majority shareholder sought to settle the claim on terms that included the embezzling shareholder transferring to the majority shareholder his shares in the corporation.[69] In response to the argument that due to the few number of shareholders it should be permissible to settle the matter between them, the court wrote:

But this argument is not sound, nor is it supported by any authority. There is no escape from the proposition that the wrong, if any, committed by appellee, was against the corporations; that the money he embezzled, if any, was the property of the corporation. This seems conclusive of the question that any settlement concerning the wrongful acts of appellee upon which an action could be maintained must have been made by and with the corporations, and that a suit to enforce the settlement must be in the name of the corporations. No matter how many shares of stock Reinecke and Bailey owned, they were merely shareholders in the corporation. . .

This controversy is not an individual matter between Reinecke and Bailey. Nor does the fact that Reinecke owns the principal interest in the stock of the corporations confer upon him the right to make the corporate business a personal matter. . .

It is well settled that an action to recover corporate property must be brought in the name of the corporation, and that such an action cannot be maintained by one or more stockholders unless it….[70]Thus there is a dual nature of the stockholder’s action: first the plaintiff’s right to sue on behalf of the corporation and, second, the merits of the corporation’s claim itself.[71]Of more recent vintage is Sahni v. Hock, a 2010 decision of the Court of Appeals.[72] That dispute involved allegations by a minority shareholder that the majority shareholder, through his domination of the Board of Directors, caused the company to engage in certain transactions that had the net effect of reducing the value of her shares.[73] Ultimately, even if true, the effect of the allegedly improper conduct was to divert funds from the corporation, only indirectly reducing the value of each shareholder’s stock. Since the corporation was the only entity to suffer direct injury, the claim was derivative, and therefore the plaintiff’s efforts to bring the claim individually were rejected.[74]Typically, the direct versus derivative distinction will not be as complicated an issue in the nonprofit realm as it is in the for-profit ventures. That is not to say, however, that it will be absent. While in a traditional charity there is no expectation of personal inurement, many organizations do not have such strict limits. A person who purchases a membership in a country club has obvious (and entirely proper) expectations as to the use of the facilities; deprivation of that use may raise mixed direct and derivative claims.

Alignment

Any recovery in a derivative action will be for the benefit of the venture on whose behalf the action is brought; it is its rights that are being vindicated. Even so, as the action is brought against the wishes of those with management control of the venture, typically it will be aligned as a defendant in the action.[75] As observed by the U.S. Supreme Court in Ross v. Bernhard, “[t]he corporation is a necessary party to the action; without it the case cannot proceed. Although named a defendant, it is the real party in interest, the stockholder being at best the nominal plaintiff.”[76]

A Jury Trial for Derivative Actions

Notwithstanding that the derivative action arose in equity, the Supreme Court has held that derivative actions may be tried by a jury.[77] While the ability of the shareholder to initiate the action on the corporation’s behalf may have arisen in equity, the corporation’s claim for redress is legal in nature – hence, a jury trial.

Settlement Requires Court Approval

Settlement of a derivative action requires court approval, even if not mandated by statute.[78] For example, in Denicke v. Anglo California Nat. Bank of San Francisco, it was observed that the task of the shareholder initiating a derivative action is to “set in motion the judicial machinery of the court”[79] to the effect that: “his position in the litigation is assimilated to that of a guardian ad litem with power in the court, not in the stockholder, to compromise the rights of the real party in interest, which is the corporation itself.”[80]Predating this decision by almost forty years is a Kentucky decision utilizing similar language. In Louisville Bridge Co. v. Dodd,[81] the court addressed the respective roles of the plaintiff minority shareholders and the court:

[The plaintiff shareholders are] always subject to the control of the court. It is at last the judgment of the latter, in the application of principles of equity, that obtains in lieu of the discretion of the board of directors. The minority stockholder merely sets in motion the action, and presents the facts upon which the court can act.[82]

Recovery of Attorney Fees by a Successful Plaintiff

As noted above, Louisville Bridge Co. was decided at a time when Kentucky’s corporate law did not address or authorize derivative actions. As such, statutes were silent concerning the ability of the shareholder plaintiff to recover attorney fees. With respect to that capacity, the Louisville Bridge Court wrote: “[a] necessary incident of the power and right to maintain such an action is the power to employ counsel to prosecute it, and to incur other necessary expenses in the litigation.”[83]From there, the court explained that plaintiff’s counsel’s fee should be paid by the corporation: “[s]o far as the causes of action set up in this suit have succeeded, counsel representing the plaintiffs are to be deemed as representing the corporation, upon like principles as the plaintiffs themselves are deemed its representatives.”[84]Consequently, while the right of a plaintiff to recover attorney fees expended on behalf of the corporation has in Kentucky been often reduced to statute,[85] the right exists even absent a statute.[86]

Recovery of Attorney Fees from an Unsuccessful Plaintiff

It does not appear, based upon a review of Kentucky law, that the entity and other defendants have a right in common law to seek recovery of attorney fees from a plaintiff whose claim is unsuccessful.[87] As such, while the directors named as defendants may have rights of advancement and indemnification from the corporation’s assets,[88] the corporation appears to lack a basis for making a claim against the persons that on the corporation’s basis initiated the suit.[89]

Special Litigation Committee

It does not appear, based upon a review of Kentucky law, that the entity and the other defendants have the right in common law to appoint a special litigation committee and to thereby effect a dismissal of the action. Therefore, a special litigation committee may not be available unless provided for by statute or in the organic documents such as the Articles of Incorporation and Bylaws.[90]

Non-Profit Status is Not a Bar to Derivative Actions, But it Raises Questions of Standing

Some may assert that non-profit status should preclude derivative actions as there is no pecuniary interest to protect. There are at least two failures in this proposition. First, it fails to account for the broad range of activities undertaken by nonprofit organizations. Second, it ignores the fact that a derivative action exists not to protect the plaintiff’s interest in the organization, but rather the organization’s interest in the proper application of its assets.The range of activities undertaken in nonprofit organizations[91] is broad and includes charitable ventures such as the United Way,[92] the American Red Cross[93]and USA Harvest,[94] benevolent organizations such as the Elks,[95] religious organizations such as the Little Sisters of the Poor[96] and the Abbey of Gethsemani,[97] athletic organizations,[98] residential condominium associations,[99] and private country clubs.[100] It is beyond contravention that each of these classes of organizations serves different constituencies and none of these classes of organizations are exempt from the ravages of poor management. It is likewise true that some or all of these organizations are subject to pressures that may limit or preclude the bringing of suit in order to make the corporation whole for losses suffered at the hands of those in management.[101] While some may lament and caterwaul that bringing to light breakdowns in oversight in nonprofit organizations will reduce if not eliminate the likelihood of further support,[102] it must be acknowledged that such organizations should not be supported and that the public who invests in nonprofit organizations through the contribution of time and money (irrespective of charitable status) should be made aware that those particular bodies are not good stewards. Furthermore, publication of failures serves to advise other organizations of the need to police their inner workings as a means of protecting their respective reputational bonds.[103]While federal tax law may impose limitations that address certain violations of fiduciary duties,[104] these penalties cannot be seen as the exclusive means of policing fiduciary conduct in the nonprofit realm. First, many nonprofit organizations, such as benevolent and athletic organizations, are not within the scope of Code section 501(c)(3) and are therefore not subject to those limitations. Second, the limitations imposed by the federal tax law are not co-extensive with the fiduciary obligations imposed by state law upon those who agree to manage nonprofit organizations. For example, while it may be questioned whether the board of a corporation that has suffered systematic embezzlement has satisfied its duty to act in good faith as exemplified by the Caremark decision,[105] limitations imposed by the federal tax law on self-dealing, excess personal benefit and similar transactions do not address or provide a means of remedying that failure.All of which explain why derivative actions are necessary in nonprofit corporations, but without addressing who should have the capacity to initiate such an action. In light of the many ways in which a nonprofit corporation may be structured, courts should be afforded significant leeway in determining that particular actors have a sufficient interest in the venture to initiate the court’s investigation of management’s discharge of its obligations. Clearly, ab initio members of a membership corporation should be afforded the capacity to initiate a derivative action.[106] As observed by leading commentators in the field of corporate governance:

Nonprofits do not have shareholders, but there may still be constituencies who arguably should be able to bring derivative suits. For example, in a membership nonprofit, the ability to bring a derivative suit could be conferred on members. Directors, as members of the governing board, could also be given the ability to sue derivatively on the organization’s behalf.[107]

Also, irrespective of whether the corporation has members, individual directors should be able to initiate a derivative action.[108] Often directors will have the most immediate knowledge of the need to bring a derivative action and they are therefore in the best position to protect the corporation’s interest. The ability of a director to initiate a derivative action on the corporation’s behalf has precedent in the law of trusts wherein a co-trustee may bring suit against another trustee to challenge the latter’s conduct violating the trust’s terms.[109]While some may lament that such an open policy to bringing derivative actions invites ill-conceived and even abusive suits, the protections of the demand rule will remain in place, as does the ability of the court to determine that a constituent seeking to initiate a suit does not adequately represent the corporation’s interests. Simply put, the absence of a significant member of nonprofit derivative actions even in those states where they are expressly recognized by statute evidence that fears of abuse are unjustified. Likewise, the rarity of nonprofit derivative suits even where they are by statute expressly allowed demonstrates the fallacy of the argument that they may limit the pool of available directors. At the same time, it should be acknowledged that the risk of enforcement of the fiduciary duties undertaken by directors of nonprofit corporations[110] serves to focus attention and enhances the possibility of real oversight. Simply put, individuals who are not willing to become informed as to the activities of a nonprofit corporation and who are not willing to attend and actively participate in board oversight[111] should not stand for election to boards. In that manner, fiduciary exposure is ab initio avoided.Persons who would lament the very existence of derivative actions in a nonprofit corporation and the potential diversion of assets away from charitable purposes towards the defense of perhaps ill-conceived derivative suits should recognize the capability, by statute, of minimizing such possible disruption. As observed in Fletcher’s Cyclopedia:

A nonprofit corporation statue may impose more stringent standards for bringing a derivative proceeding [in the context of a nonprofit corporation] than those imposed in the context of a for profit corporation, such as requiring the action be supported by a stated minimum percentage of the corporation's members. The purpose of such a requirement is to prevent a nonprofit corporation from having to incur legal expenses when there is not a showing at a minimum number of members support the suit.[112]

Again, these limitations must arise by affirmative statute; they do not exist at common law. At the same time, the barriers to bringing a derivative action and thereby bringing to light potential misconduct by those in control of the venture should not be set so high as to preclude the likelihood of appropriate policing of fiduciary obligations.

Conclusion

Derivative actions provide a powerful tool for ensuring that those charged with control of a venture properly see to its management. Answering the question of “who will watch the watchers?,” the derivative action provides a means by which the discharge of the managerial function may be policed, giving true effect to the fiduciary and other obligations imposed on (and voluntarily undertaken by) those entrusted with oversight and control of the venture.Where the statute governing an organizational form lacks an express provision addressing derivative actions, equity will supply the rules for actions in that context. There is no justification for the view that in the absence of a statute on derivative actions they do not exist, just as there is no justification for the view that the capacity to bring a derivative action is dependent upon shareholder status.For purposes of clarity, assuming there can be agreement as to the terms thereof, it would be of benefit that all organizational forms expressly address the requirements for derivative actions; there exists as well the question as to whether a single statutory provision common to all organizational forms would be the best means of addressing the question. Until that day, where the statute is silent, reference needs to be made to equity to ascertain the mechanism by which the watchers will be watched.

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[1] Thomas E. Rutledge is a member of Stoll Keenon Ogden PLLC resident in the Louisville, Kentucky, office. A frequent speaker and writer on business organization law, he has published in journals including The Business Lawyer, the Delaware Journal of Corporate Law, the American Business Law Journal and the Journal of Taxation, and is an elected member of the American Law Institute.

[2] Ky. Rev. Stat. Ann. §§ 275.001–.540 (West, Westlaw through 2014 Legislation).

[3] Id. §§ 273.161–.390 (West, Westlaw through 2014 Legislation).

[4] A “derivative action” is subject to at least two definitions. The first is that it is an action brought in the name and for the benefit of a business entity, other than by the business entity, to enforce its rights. The second, that it is an action brought in the name and for the benefit of a business entity against the wishes of those otherwise in control of the entity, in the name and for the benefit of the entity to enforce its rights.

[5] Derivative actions are provided for in Ky. Rev. Stat. Ann. § 271B.7–400 (West, Westlaw through 2014 Legislation) (relating to business corporations); id. §§ 362.511 to .517, 362.2-932 to -935 (relating to limited partnerships); Ky. Rev. Stat. Ann. § 386A.6-110(2) (relating to statutory trusts). See also id. §§ 272A.13-010 to -050 (relating to derivative actions in limited cooperative associations). The first Kentucky statute recognizing the right to bring some form of derivative action was not adopted until 1946, significantly subsequent to the clear appearance of the “derivative action” in Kentucky law. See Act of March 21, 1946, ch. 141 §§ 381, 425, 1946 Ky. Acts, repealed by Act of March 17, 1972, ch. 274 §§ 1195, 1308, 1972 Ky. Acts.

[6] Ky. Rev. Stat. Ann. §§ 275.001–.540 (West, Westlaw through 2014 Legislation); id. §§ 273.161–.390. The statement that the Kentucky Nonprofit Corporation Acts is silent as to “derivative actions” sould be clarified. While the label “derivative” is not therein employed, and while the statute does not have a detailed procedural provision equivalent to that found in other acts, see, e.g., id. §§ 272A.13-010 to -050, suits on behalf of the entity initiated by other than the board of directors are clearly contemplated. In response to actions that may be ultra vires, the statute contemplates “a proceeding by a member or a director against the corporation to enjoin” the improper action. Id. § 273.173(1). Further, the statute contemplates a “proceeding by the corporation” acting “through members in a representative suit, against the officers or directors of the corporation for exceeding their authority.” Id. § 273.173(2). Working from the supposition that actions of the board of directors that do not satisfy the aspirational standard of conduct fall within “exceeding their authority,” then the Kentucky Nonprofit Corporation Acts does by statute authorize derivative actions on behalf of a nonprofit corporation. Furthermore, Ky. Rev. Stat. Ann. § 273.215(6) refers to a “person bringing an action for monetary damages” based upon a director’s failure to discharge their fiduciary obligations. Accord id. § 273.229(6) (detailing an equivalent provision as to officers of a nonprofit corporation). In neither instance is “the person” bringing an action to vindicate the rights of the corporation (and bearing the defined burden of proof) restricted to the corporate entity itself. See also id. § 273.161(14) (defining a person as including an individual and an entity). Further, it is provided that each director consents to the jurisdiction of the Kentucky courts with respect to “any action by, in the name of, or on behalf of the corporation.” Id. § 273.211(5). A suit “in the name” or “on behalf” of the corporation in which a director is named as a defendant is clearly derivative in nature. See also Thomas E. Rutledge, The 2012 Amendments to Kentucky’s Business Entity Statutes, 101 Ky. L.J. Online 1, 7 (2012) (describing the provision as applying “when a derivative action is filed against [a] director.”).

[7] See also Ky. Rev. Stat. Ann. § 275.003(1) (West, Westlaw through 2014 Legislation).

[8] See, e.g., Pixler v. Huff, No. 3:11-CF-00207-JHM, 2012 WL 3109492, *3 (W.D. Ky. July 31, 2012) (applying in the context of an LLC the test traditionally applied in corporations as to the direct versus derivative distinction and determined whether certain claims brought by a member could be brought only on a derivative basis); id. (“Therefore, Plaintiff may maintain her claims against the Defendants only where she has suffered an injury that is separate and distinct from that which would be suffered by other members or the LLC as an entity.”); R.C. Tway Co. v. High Tech Performance Trailers, LLC, No. 3:12-CV-122, 2013 WL 842577, *3 (W.D. Ky. Mar. 6, 2013) (“Each of the claims identified above clearly alleges that High Tech or Hanusosky violated some duty it owed directly to [Performance Trailers], thus causing [Performance Trailers] injury. As [Performance Trailers] is the allegedly injured party for each of these claims, it is the one that is entitled to enforce the rights granted by substantive law. Accordingly, [Performance Trailers] is not a nominal party, but instead is a real party in interest as to those claims.”); Chou v. Chilton, Nos. 2009-CA-002198-MR, 2009-CA-002284-MR, 2014 WL 2154087, *4 (Ky. Ct. App. May 23, 2014) (“[The LLC] and not Chou himself would benefit from any recovery for the misappropriation of funds and opportunities. . . . While Chou may or may not receive funds from [the LLC] on dissolution of that company, any wrongs for misappropriation perpetrated by any of the [defendants] would be wrongs against [the LLC] and not Chou individually.”); Turner v. Andrews, 413 S.W.3d 272, 277–78 (Ky. 2013) (rejecting effort by the sole member of an LLC to bring a claim for lost profits on his own behalf rather than on behalf of the LLC.). See also Carter G. Bishop & Daniel S. Kleinberger, Limited Liability Companies: Tax and Business Law ¶ 10.07[2] (2012 and 2014–2 cum. supp.) (“Many LLC statutes expressly authorize derivative actions, but some do not. This distinction should make little difference. Derivative litigation began in the corporate context over 150 years ago without the benefit of statutes, and remains essentially equitable in nature.”) (citation omitted).

[9] See James B. Ames, The Origin of Uses and Trusts, 21 Harv. L. Rev. 261, 265 (1908). While the trust, the separation of legal and beneficial title, may have had its structural genesis in German law, the advance of the English courts of equity was to convert the “‘trustee’s’ obligations from those based upon honor to those enforceable in equity.” See generally Joseph Willard, Illustrations on the Origin of Cy Pres, 8 Harv. L. Rev. 10 (1894). As to the treatment under Kentucky law of the assets of a firm as a “trust fund to be used for the benefit of creditors and shareholders,” see Metropolitan Fire Ins. Co. v. Middendorf, 188 S.W. 790, 794 (Ky. 1916) (citation omitted). The first recognition of the derivative action in American law has been traced to the decision rendered by Chancellor Kent in Attorney General v. Utica Ins. Co., 2 Johns. Ch. *371, *389–90 (N.Y. Ch. 1817), namely:

[b]ut, at the same time, I admit, that the persons who, from time to time, exercise the corporate powers, may, in their character of trustees, be accountable to this Court for a fraudulent breach of trust; and to this plain and ordinary head of equity, the jurisdiction of this Court over corporations ought to be confined.

***

Nor does the case, as charged, amount to a breach of trust, of which I am to take notice. There is no complaint, on the part of the stockholders, of misconduct, nor is the information founded on anything of that kind. If there had been a prosecution instituted for a breach of trust, it would have been by bill, and against individuals by name, calling them to account for the use and benefit of the company at large.

See also Bert S. Prunty, Jr., The Shareholders’ Derivative Suit: Notes on its Derivation, 32 N.Y.U. L. Rev. 980, 987 (1957).

[10] See, e.g., Tzolis v. Wolff, 884 N.E.2d 1005, 1006 (2008) (“[The derivative action] was not created by statute, but by case law.”); Ross v. Bernhard, 396 U.S. 531, 534 (1970) (“The remedy made available in equity was the derivative suit, viewed in this country as a suit to enforce a corporate cause of action against officers, directors, and third parties.”) (emphasis in original). See Prunty, supra note 9, for a further review of the parallel development of the derivative action in English and American law.

[11] Barrett v. S. Conn. Gas Co., 374 A.2d 1051, 1055 (Conn. 1977) (citation omitted).

[12] Juvenal, Satire IX, lines 347–48.

[13] Tzolis, 884 N.E.2d at 1006–07 (citations omitted) (emphasis in original).

[14] See also Weber v. King, 110 F. Supp. 2d 124, 131 (E.D. N.Y. 2000).

[15] While it is certainly difficult to prove a statutory negative, the absence of derivative action provisions in the corporate statute of this era can be confirmed. See generally Gardner K. Byers, Byers on Kentucky Corporations (The W.H. Anderson Company) (1923).

[16] Jones v. Johnson, 73 Ky. (10 Bush) 649, 660 (Ky. 1874).

[17] Collier v. Deering Camp Ground Ass’n., 66 S.W. 183, 183 (Ky. 1902); see also Gregory v. Bryan-Hunt Co., 174 S.W.2d 510, 512–13 (Ky. 1943) (holding that a 50% shareholder could not for himself bring an action based upon injury to corporation and its property).

[18] Pittsburg, C., C. & St. L. Ry. Co. v. Dodd, 72 S.W. 822, 828 (Ky. 1903) (citation omitted).

[19] Reinecke v. Bailey, 112 S.W. 569, 570 (Ky. 1908). The court went on to state that:

It is well settled that an action to recover corporate property must be brought in the name of the corporation, and such an action cannot be maintained by one or more stockholders unless it should be shown that the corporation or its directors declined to bring the action, and that the interests of the stockholders may it necessary that one should be instituted. When this state of case is presented, and action to recover corporate property or to protect the interests of the corporation may be brought by the stockholders.

Id. at 571 (citation omitted). See also Shawhan v. Zinn, 79 Ky. 300, 304 (Ky. 1881); Gilman v. German Lithographic Stone Co., 153 S.W. 996, 997 (Ky. 1913) (setting forth the demand requirement). The futility defense to not having made a demand was seen as early as 1913. See Chilton v. Bell County Coke & Improvement Co., 156 S.W. 889, 890 (Ky. 1913); Lebus v. Stansifer, 157 S.W. 727, 729 (Ky. 1913). In Butler Tobacco Co. v. Vest, the court stated:

The demand may be dispensed with, if the officers have such relations to the acts complained of, or bear such relations to the adversary party, as to show their interests to be antagonistic to the corporation, or that it would be improper for the action to proceed in the name of the corporation while it should remain under their control, in which state of circumstances an action may be maintained or a defense made for the corporation by a stockholder.

178 S.W. 1102, 1105 (Ky. 1915).

[20] Butler Tobacco Co., 178 S.W. at 1104; Lebus, 157 S.W. at 729; Chilton, 156 S.W. at 890; Gilman, 153 S.W. at 997 (demonstrating the requirement in equity to have made demand or be able to plead the futility hereof).

[21] See Ky. Rev. Stat. Ann. § 273.187(2) (West, Westlaw through 2014 Legislation); id. § 275.150(1); id. § 275.240(1) (showing that both the LLC and the nonprofit corporation utilize the same rules of affirmative and negative asset partitioning as does the business corporation, rules that create the cestui que trust equivalency that initially gave rise to the derivative action.).

[22] See also Charles Kerr, Responsibilities of Officers and Directors of Private Corporations, Proceedings of the 11th Annual Meeting of the Kentucky State Bar Association, 136, 139–40 (1912), reprinted in Charles Kerr, Responsibilities of Officers and Directors of Private Corporations, 47 Am. L. Rev. 561, 563–64 (1913).

[23] Examples include LLCs, nonprofit corporations, limited partnerships governed by the pre-1970 law, and limited partnerships governed by the 1970 limited partnership act. See Act of March 20, 1970, ch. 97 §§ 1-27, 1970 Ky. Acts. While it is entirely accurate that much of the law of corporations and other business organizations has been reduced to statute, and for that reason the first reference needs to be to the organizational act, see Pannell v. Shannon, 56 S.W.3d 58, 79 (Ky. 2014), it remains true that not every rule governing business organizations has been reduced to statute. For example, while it is uncontroverted that corporate directors may not vote by proxy, that rule is not set forth in the Kentucky statutes governing corporations. See, e.g., Haldeman v. Haldeman, 197 S.W. 376, 381 (Ky. 1917); 2 Arthur W. Machen, Jr., A Treatise on the Modern Law of Corporations §§ 1455, 1458 (Little, Brown & Co. 1908).

[24] See, e.g., Marbury v. Madison, 5 U.S. 137, 163 (1803); Leo Feist, Inc. v. Young, 138 F.2d 972, 974 (7th Cir. 1943); see also 1 Fred E. Lawrence, A Treatise as to the Substantive Law of Equity Jurisprudence § 38 (1929).

[25] See Ky. Rev. Stat. Ann. § 273.215 (West, Westlaw through 2014 legislation) (regarding directors); id. § 273.227 (regarding officers). Of themselves these standards are the same as those applied to directors and officers of business corporations. See id. §§ 271B.8-300, -420. All of those provisions were adopted in 1988. See Act of April 15, 1988, ch. 23 §§ 85, 89–90, 133, 149, 1988 Ky. Acts. Likewise the LLC Act specifies the fiduciary obligation of the members, if the LLC is member managed, and of the managers, if the LLC is manager managed. See Ky. Rev. Stat. Ann. §§ 275.170(1)-(2), (4).

[26] Ky. Rev. Stat. Ann. § 273.215(1)(c) (West, Westlaw through 2014 legislation); Ballard v. 1400 Willow Council of Co-Owners, Inc., 430 S.W.3d 229, 241 (Ky. 2013) (stating that fiduciary duties of directors are owed to the corporation and not to the individual members thereof). In the context of the LLC the duty of care is owed to the LLC and the other members while the duty of loyalty is owed only to the LLC. See Ky. Rev. Stat. Ann. § 275.170(1)–(2). See also Thomas E. Rutledge, Limited Liability Company Operations, Limited Liability Companies in Kentucky 1, 48–67 (2014-1 Supp.), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=212920. [hereinafter Limited Liability Company Operations].

[27] Ky. Rev. Stat. Ann § 273.215(5) (West, Westlaw through 2014 legislation).

[28] See id. § 273.207 (West, Westlaw through 2014 legislation) (“The affairs of a corporation shall be managed by a board of directors.”). The management structure of an LLC is determined by private ordering in the operating agreement. Even where the LLC is managed by managers, there is a statutory option by which the members may cause the LLC to initiate a legal action, including against a manager. See id. § 275.335(1). Such a suit is not, however, a derivative action. Limited Liability Company Operations, supra note 26, at 109.

[29] See Wilson v. Payne, 288 S.W.3d 284 (Ky. 2009); see also Mary C. Garris, “Adverse Domination” – Tolling the Statute of Limitations in Kentucky Business Organizations, 99 Ky. L. J. Online 36 (2011).

[30] See Ky. Rev. Stat. Ann. § 273.233 (West, Westlaw through 2014 Legislation) (“All books and records of a corporation may be inspected and copied by any member . . . for any proper purpose at any reasonable time.”). In American Saddlebred Horse Association, Inc. v. Bennett, No. 09-CI-5292, at *5–7 (Ky. Cir. Ct. Dec. 2, 2010), Judge Ishmael of the Fayette Circuit Court held that this statute should be read broadly, and that the “All books and records” would not be limited to the list enumerated in the preceding sentence of the statute.

[31] Fed. R. Civ. P. 23.1.

[32] 28 U.S.C. § 1332(c)(1) (West, Westlaw through 2014 Legislation) (stating that a corporation is a citizen of its jurisdiction of incorporation and that in which it maintains its principal place of business).

[33] See, e.g., Berg v. Cincinnati, Newport & Covington Ry. Co., 56 F. Supp. 842, 847 (E.D. Ky. 1944).

[34] Id. at 846–47.

[35] 28 U.S.C. § 1332(a)(4).

[36] Model Bus. Corp. Act § 7.41 (2002); Ky. Rev. Stat. Ann. § 271B.7-400(1) (West, Westlaw through 2014 Legislation).

[37] See, e.g., Ky. Rev. Stat. Ann. §§ 362.511–.517. (West, Westlaw through 2014 Legislation); id. §§ 362.2-932– .935; Revised Unif. Ltd. P’ship Act §§ 1001–04 (amended 1985), 6B U.L.A. 370–85 (Supp. 2008); Unif. Ltd. P’ship Act §§ 1002–05, 6A U.L.A. 500–02.

[38] See Ky. Rev. Stat. Ann. § 272A.13-010 (West, Westlaw through 2014 Legislation); Unif. Ltd. Coop. Ass’n Act §§ 1301–05, 6A U.L.A. 295–98 (Supp. 2008).

[39] Ky. Rev. Stat. Ann. § 386A.6-110(2) (West, Westlaw through 2014 Legislation).

[40] See, e.g., N. Am. Catholic Educ. Programming Found., Inc. v. Gheewalla, 930 A.2d 92, 101 (Del. 2007); In re Trailer Source, Inc., 555 F.3d 231, 240 (6th Cir. 2009); Sanford v. Waugh & Co., Inc., 328 S.W.3d 836, 839 (Tenn. 2010).

[41] See N.Y. Bus. Corp. Law § 1507 (McKinney 2014).

[42] Bernfield v. Kurilenko, 937 N.Y.S.2d 314, 314 (N.Y. App. Div. 2012).

[43] See, e.g., George Wasserman & Janice Wasserman Goldsten Family L.L.C. v. Kay, 14 A.3d 1197, 1215–16 (Md. Ct. Spec. App. 2011) (stating the partner’s “ability to act on behalf of the partnership” may be ineffective when those with the controlling interests are unwilling to cause the partnership to sue those in control for alleged misconduct, in which case the “partnership claim may be enforced by all of the disinterested partners.”) (emphasis supplied); Cates v. Int’l Tel. & Tel. Corp., 756 F.2d 1161, 1179 (5th Cir. 1985) (“[w]here the controlling partners, for improper, ulterior motives and not because of what they in good faith believe to be the best interests of the partnership, decline to sue on a valid, valuable partnership cause of action which it is advantageous to the partnership to pursue.” the minority partners must have a right to initiate the action).

[44] See supra notes 10–12 and accompanying text.

[45] Tzolis v. Wolff, 884 N.E.2d 1005, 1006 (N.Y. Ct. App. 2008).

[46] Morgan v. Robertson, 609 S.W.2d 662, 664–65 (Ark. Ct. App. 1980).

[47] Kirtley v. McClelland, 562 N.E.2d 27, 29 (Ind. Ct. App. 1990) (identifying the issue raised on appeal as “[w]hether the court erred in denying defendant’s motion to dismiss the second amended complaint where no Indiana statutory or common law authority exists for a shareholder’s derivative suit against a non-profit corporation.”). See also id. (“The directors emphasize the absence of express statutory authorization in the Indiana Not-for-Profit Corporation Act of 1971 . . . and case law addressing use of the derivative remedy by members of nonprofit corporation.”).

[48] Id. at 30-31 (citation omitted); see also Brenner v. Powers, 584 N.E.2d 569, 574 (Ind. Ct. App. 1992).

[49] Bourne v. Williams, 633 S.W.2d 469, 471–72 (Tenn. Ct. App. 1981).

[50] Id. at 472 (citation omitted). Since then, the source the court relied on has been rewritten and now provides: “[t]he preconditions for a derivative proceeding may not be affected by the kind of corporation; the procedural requirements governing such actions may apply to a nonprofit corporation exactly as if it were a business corporation.” 13 William Meade Fletcher, et al., Fletcher’s Cyclopedia of the Law of Private Corporations § 5972.60 (2004) (citation omitted). In Leeds v. Harrison, the court stated that:

[u]nlike most corporations for profit, a corporation not for pecuniary profit normally has no stockholders, but in place thereof it has members. The same rights and liabilities exist between the trustees of a non-profit corporation and the members as exist between the directors and stockholders of a corporation for profit. The suit here brought may be likened to a derivative or representative suit brought in connection with a stock corporation. The law applicable to such suits is, so far as is here pertinent, applicable to this suit.

72 A.2d 371, 377 (N.J. Super. Ct. Ch. Div. 1950).

[51] Bourne, 633 S.W.2d at 473.

[52] Fox v. Prof’l Wrecker Operators of Fla., 801 So. 2d 175, 179 (Fla. Dist. Ct. App. 2001).

[53] Id.

[54] Id. at 180.

[55] Larsen v. Island Developers, Ltd., 769 So. 2d 1071, 1072 (Fla. Dist. Ct. App. 2000) (citation omitted); see also Nonprofit Corporation Act Task Force, Official Commentary to the Revised Oregon Nonprofit Corporation Act, 71 Or. L. Rev. (Special Issue) 1, 69 (1992) (“While Oregon has no general statutory provision for members’ derivative actions in a nonprofit corporation, a court would likely recognize such an action.”). Further, the article stated that:

[c]ommentators recommend extending the remedy of a derivative action to members of nonprofit corporations. They indicate that while statutes may regulate and occasionally preempt the common law action, a statute has never been thought necessary in order to authorize a derivative action. Indeed, the derivative suit predated derivative suit statutes.

Id. at 70.

[56] Porter v. Shelbyville Cemetery Co., No. 2007-CA-002545-MR, 2009 WL 722995, at *4 (Ky. Ct. App. Mar. 20, 2009).

[57] Id. at *1 (“Grove Hill failed to comply with any of the requirements of Chapter 32 and accordingly suffered the revocation of its corporate charter in 1897.”).

[58] Id. at * 2–3.

[59] See Ky. Rev. Stat. Ann. § 273.173 (West, Westlaw through 2014 Legislation). See also supra textual discussion in note 6.

[60] Fenley v. Kamp Kaintuck, Inc., No. 2010-CA-001926-MR, 2011 WL 5443440, at * 3 (Ky. Ct. App. Nov. 10, 2011). Further, in Ballard v. 1400 Willow Council of Co-Owners, Inc., 430 S.W.3d 229, 243–45 (Ky. 2013) Justice Noble’s dissent (joined by Justice Scott) discussed claims that may be brought only on a derivative basis. 1400 Willow was a nonprofit corporation. Id.

[61] Hawes v. City of Oakland, 104 U.S. 450, 460–61 (1882). The court describes this procedure in the following passage:

[H]e [the shareholder] should show to the satisfaction of the court that he has exhausted all the means within his reach to obtain, within the corporation itself, the redress of his grievances, or action in conformity to his wishes. He must make an earnest, not a simulated effort, with the managing body of the corporation, to induce remedial action on their part, and this must be made apparent to the court. If time permits or has permitted, he must show, if he fails with the directors, that he has made an honest effort to obtain action by the stockholders as a body, in the matter of which he complains. And he must show a case, if this is not done, where it could not be done, or it was not reasonable to require it.

The efforts to induce such action as complainant desires on the part of the directors, and of the shareholders when that is necessary, and the cause of failure in these efforts should be stated with particularity, and an allegation that complainant was a shareholder at the time of the transactions of which he complains, or that his shares have devolved on him since by operation of law, and that the suit is not a collusive one to confer on a court of the United States jurisdiction in a case of which it could otherwise have no cognizance, should be in the bill, which should be verified by affidavit.

Id.

[62] See, e.g., Ky. Rev. Stat. Ann. § 271B.7-400(1) (West, Westlaw through 2014 Legislation); id. § 362.513 (West 2007); id. § 362.2-933; id. § 386A.6-110(3); Bacigalupe v. Kohlhopp, 240 S.W.3d 155, 157 (Ky. Ct. App. 2007).

[63] See, e.g., Collier v. Deering Camp Ground Ass’n, 66 S.W. 183, 183 (Ky. 1902) (“and if the company, after proper demand refuses to sue, appellant might maintain an action for the benefit of the corporation.”); Reinecke v. Bailey, 112 S.W. 569, 571 (Ky. 1908). See also Flint v. Jackson, No. 2014-CA-000426-MR, 2014 WL 7206835, at *1, *4 (Ky. App. Dec. 19, 2014) (derivative action dismissed on the basis that shareholder had not plead demand made upon the board and failure to adequately represent the “interests of the similarly situated shareholders in representing the rights of the corporation. . .”).

[64] Fernley v. Kamp Kaintuck, Inc., No. 2010-CA-001926-MR, 2011 WL 5443440, at *3 (Ky. App. Nov. 10, 2011) at *3 (“We are convinced that continuing membership in a nonprofit corporation is an absolute requisite to maintaining a derivative action.”). Curiously, at footnote 2, the Court of Appeals expressly reserved the question of whether a member in good standing may on behalf of a nonprofit corporation bring a derivative action, characterizing the question as moot in light of its resolution of the dispute. See id. at n.2. This explanation is curious in that the claims were dismissed based upon the application of the law of derivative actions. If the derivative action does not exist in the context of a nonprofit corporation, how could the rules of that type of action be applied? One is reminded of the disclaimer for South Park: “All characters and events in this show – even those based on real people – are entirely fictional.”

[65] See infra text accompanying notes 109–112.

[66] See Snyder v. Baumgardner, No. 09-CI-04445, at *3 (Ky. Cir. Ct. Aug. 15, 2010) (rejecting the suggestion that pursuant to Section 7.01(d) of the Principles of Corporate Governance, the plaintiffs be permitted to proceed on an individual, rather than a derivative basis, writing that the Principles had not been adopted by Kentucky courts).

[67] Reinecke v. Bailey, 112 S.W. 569 (Ky. 1908).

[68] Id. at 570.

[69] Id.

[70] Id. at 570–71.

[71] See id. at 571.

[72] Sahni v. Hock, 369 S.W.3d 39 (Ky. Ct. App. 2010).

[73] See id. at 42–44.

[74] Id. at 47. See also NBD Bank, N.A. v. Fulmer, 109 F.3d 229, 229 (6th Cir. 1997); Vinson v. Koerner, No. 2000-CA-001217-MR, at 6 (Ky. Ct. App. Nov. 9, 2001), available at http://law.justia.com/cases/kentucky/court-of-appeals/2001/2000-ca-00121.

[75] See, e.g., Smith v. Sparling, 354 U.S. 91, 92–97 (1957); Doctor v. Harrington, 196 U.S. 579, 585–587 (1905); Gabriel v. Pruble, 396 F.3d 10, 13 (1st Cir. 2005). See also 7C Charles Alan Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure § 1822 (3d. ed. 2007); 19 Am. Jur 2d. Corporations § 2071.

[76] Ross v. Bernhard, 396 U.S. 531, 538 (1970).

[77] See id. at 542–543. See also Right to Jury Trial in Shareholder Derivative Suits, 1970 Duke L.J. 1015, 1031 (1970).

[78] See, e.g., Ky. Rev. Stat. Ann. § 271B.7-400(3) (West, Westlaw through 2014 Legislation); id. § 386A.6-110(6); id. § 272A.13-040.

[79] Denicke v. Anglo California Nat. Bank of San Francisco, 141 F.2d 285, 288 (9th Cir. 1944) (quoting Whitten v. Dabney, 154 P. 312, 316 (Cal. 1915)) (citation omitted).

[80] Id. at 288 (citations omitted). See also Morgan v. Robertson, 609 S.W.2d 662, 663 (Tenn. Ct. App. 1980) (“in derivative suits the corporation is the real party in interest, although the real parties in litigation were the stockholders.”) (citing Breswick & Co. v. O Henry Briggs, 135 F. Supp. 397 (S.D.N.Y. 1955)).

[81] Louisville Bridge Co. v. Dodd, 85 S.W. 683 (Ky. 1905).

[82] Id. at 684; see also Burley Tobacco Co. v. Vest, 178 S.W. 1102, 1105 (Ky. 1915).

[83] Louisville Bridge Co., 85 S.W. at 684.

[84] Id.

[85] See, e.g., Ky. Rev. Stat. Ann. §§ 362.517 & 362.2-935 (West, Westlaw through 2014 Legislation); id. § 386A.6-110(9)(6); id. § 272A.13-050(2)(6). No equivalent provision exists in the Business Corporation Act, although the ability of the prevailing plaintiff to recover attorney fees is not contested.

[86] See Ky. Rev. Stat. Ann. § 412.070 (West, Westlaw through 2014 Legislation); see also Ky. State Bank v. AG Services, Inc., 663 S.W.2d 754, 755 (Ky. Ct. App. 1984) (acknowledging the common fund doctrine).

[87] Compare Ky. Rev. Stat. Ann. § 271B.7-400(4) (West, Westlaw through 2014 Legislation) (subjecting plaintiff to liability for defendant’s attorney fees if the “proceeding was commenced without reasonable cause”), with id. § 386A.6-110(9)(a) (subjecting plaintiff to liability for defendant’s expense and reasonable attorney fees if the “proceeding or any portion thereof was commenced without reasonable cause or for an improper purpose.”). See also id. § 272A.13-050(2)(a). The limited partnership acts are silent as to fee-shifting against the plaintiff.

[88] See Ky. Rev. Stat. Ann. § 273.171(14) (West, Westlaw through 2014 Legislation) (power to indemnify directors and officers). Often corporations will purchase directors and officers insurance as a mechanism of satisfying these obligations. Care needs to be taken to ensure sure that the coverage is effective. See, e.g., Lake Cumberland Report Cmty. Ass’n, Inc. v. Auto Owners Ins. Co., No. 2010-CA-001725-MR, 2012 WL 1758108, at *3 (Ky. Ct. App. May 18, 2012) (finding that coverage should be denied on the basis that the corporation had agreed to indemnify directors from claims asserted).

[89] Rule 11 sanctions will serve to protect the corporation from truly frivolous claims. See Flint v. Jackson, No. 2014-CA-000426-MR, 2014 WL 7206835, at *5–6 (Ky. Ct. App. Dec. 19, 2014) (concurring opinion); see also Sahni v. Hock, 369 S.W.3d 39, 48 (Ky. Ct. App. 2010).

[90] But see Janssen v. Best & Flanigan, 662 N.W.2d 876, 887–88 (Minn. 2003) (allowing use of special litigation committee in context of derivative action brought on behalf of nonprofit corporation). In an LLC, it should be possible to provide for a special litigation committee in the operating agreement.

[91] See generally Ky. Rev. Stat. Ann. § 273.167 (West, Westlaw through 2014 Legislation).

[92] See Deborah A. DeMott, Self-Dealing Transactions in Nonprofit Corporations, 59 Brook. L. Rev. 131, 133 (1993) (“Highly-publicized incidents of self-dealing by directors and executive officers have afflicted several well-known nonprofits in recent years. In the most visible incident, the United Way of America lent $2.1 million in 1990 to a for-profit spinoff headed by the son of United Way's executive director. With the board’s support, the executive director, who received $463,000 annually in compensation, had previously created three for-profit spinoffs that performed services for the United Way and staffed them with friends and family members.”) (citation omitted).

[93] See Kathryn Varn, Police: Woman Embezzled $200k from Red Cross, The Independent Fla. Alligator (Nov. 1, 2013), http://www.alligator.org/news/crime/article_89b2c264-42ac-11e3-8232-001a... see also Former New York Red Cross Financial Director Sentenced for Stealing More than $274,000 from the Humanitarian Organization, N.Y. Daily News (Feb. 27, 2013), http://www.nydailynews.com/new-york/ny-red-cross-worker-sentenced-theft-.

[94] See Andrew Wolfson, Louisville Man Sentenced for Theft from his Charity, The Courier-Journal (Sept, 5, 2014), http://www.cincinnati.com/story/news/2014/09/05/usa-harvest-stan-curtis-sentenced/15136199/.

[95] See Man Accused of Embezzling Money from Elks Lodge, WIVB (June 16, 2014), http://wivb.com/2014/06/16/man-accused-of-embezzling-money-from-elks-lod... see also Thomas Dimopoulos, Saratoga-Wilton Elks Club Fraud Amount Continues to Rise, PostStar.com (Feb. 3, 2011), http://poststar.com/news/local/saratoga-wilton-elks-club-fraud-amount-co.

[96] See Women Pleads Guilty to Embezzling $360,000 from Nuns, N.Y. Daily News (April 3, 2012), available at http://www.nydailynews.com/news/national/women-pleads-guilty-embezzling-... Chicagoan Charged with Stealing from Nuns, Chicago Tribune (April 17, 2010), available at http://articles.chicagotribune.com/2010-04-17/news/ct-met-little-sisters.

[97] See Women Pleads Guilty to Embezzling $360,000 from Nuns, N.Y. Daily News (April 3, 2012), available at http://www.nydailynews.com/news/national/women-pleads-guilty-embezzling-... Chicagoan Charged with Stealing from Nuns, Chicago Tribune (April 17, 2010), available at http://articles.chicagotribune.com/2010-04-17/news/ct-met-little-sisters.

[98] See Christina Hall & Olivia Lewis, Ex-Treasurer Accused of Stealing $300K from Clinton Twp. Little League, Detroit Free Press (Sept. 10, 2014, 8:37 PM), http://www.freep.com/story/news/local/michigan/macomb/2014/09/10/woman-a... Rex Hall Jr., Former Three Rivers Little League President Charged with Embezzling Thousands, MLive (Nov. 27, 2012, 2:26 PM), http://www.mlive.com/news/kalamazoo/index.ssf/2012/11/little_league_pres.

[99] See Ky. Rev. Stat. Ann. § 381.9165 (West, Westlaw through 2014 Legislation) (explaining that condominium associations may be organized as nonprofit corporations); McMillan v. Ryan Jackson Properties, LLC, 753 S.E.2d 373, 375 (N.C. Ct. App. 2014) (derivative action brought on behalf of condominium association organized as a nonprofit corporation); Marucci v. Southwark Realty Co., 2002 Ct. Com. Pl., at *1 (Pa. C.P. Phila. Cnty. May 15, 2002) (on file with author) (derivative action brought on behalf of nonprofit corporation); George Gombossy, Milford Resident Admits Embezzling from Ct Condo Associations, Ct Condo News (May 18, 2014), http://www.ctcondonews.com/2014/05/18/milford-resident-admits-embezzling... Aleese Kopf, Ex-Condo Association President, 82, Arrested on Embezzlement Charges in West Palm Beach, PalmBeachPost.com (July 11, 2014, 6:28 PM), http://www.palmbeachpost.com/news/news/crime-law/former-condo-assn-presi.

[100] John Jimison, Woman Accused of Embezzling from Country Club, The Wilson Times (Dec. 16, 2014, 3:23 PM), http://www.wilsontimes.com/News/Feature/Story/embezzlement-story; Press Release, supra note 29.

[101] See, e.g., Paul L. Davies, The Board of Directors: Composition, Structure, Duties and Powers, Organization for Economic Co-operation and Development, at *6 (Dec. 7–8, 2000), http://www.oecd.org/corporate/ca/corporategovernanceprinciples/1857291.pdf (pointing out that in the absence of strong shareholders, boards are likely to be “captured” by management and become “expressions” of their will even as they are unaccountable to shareholders); see also Richard P. Chait, William P. Ryan & Barbara E. Taylor, Governance as Leadership: Reframing the work of Nonprofit Boards 3 (2005) (discussing capture of management by CEO with board abdication of oversight).

[102] See, e.g., Peter Pitegoff & Dan Boxer, Maine Voices: Lack of Oversight Will Cost Midcoast Charity, Portland Press Herald (Oct. 19, 2014), http://www.pressherald.com/2014/10/19/maine-voices-lack-of-oversight-wil.

[103] See, e.g., Evelyn Brody, Agents Without Principals: The Economic Convergence of the Nonprofit and For-Profit Organizational Forms, 40 N.Y.L. Sch. L. Rev. 457, 461 (1996) (“In the end, the same economic force motivates nonprofit firms as for-profit firms: the desire for a reputation as a worthy recipient of future trade, be it donations, purchase of services, government contracts, or labor.”).

[104] See generally Carter G. Bishop, The Deontological Significance of Nonprofit Corporate Governance Standards: A Fiduciary Duty of Care Without a Remedy, 57 Cath. U. L. Rev. 701, 757–75 (2008) (explaining the policing of the fiduciary duties of loyalty and care through federal tax governance of nonprofit self-dealing and excess transactions).

[105] See In re Caremark Int'l Inc., 698 A.2d 959, 967 (Del. Ch. 1996); see also David B. Shaev Profit Sharing Account v. Armstrong, No. Civ. A. 1449-N, 2006 WL 391931, at *5 (Del. Ch. Feb. 13, 2006); Guttman v. Huang, 823 A.2d 492, 505–06 (Del. Ch. 2003).

[106] Under current Kentucky law, the default is that a nonprofit corporation has members; the absence of members requires an affirmative statement in the articles of incorporation or the bylaws. See Ky. Rev. Stat. Ann. § 273.187(1) (West, Westlaw through 2014 Legislation).

[107] Thomas Lee Hazen & Lisa Love Hazen, Punctilios and Nonprofit Corporate Governance—A Comprehensive Look at Nonprofit Directors’ Fiduciary Duties, 14 U. Pa. J. Bus. L. 347, 411 (2012); see generally Howard L. Oleck & Martha E. Stewart, Derivative Actions and Class Actions, in Nonprofit Corporations, Organizations, & Associations 1364, 1364–67 (6th ed. 1994) (discussing derivative actions in nonprofit corporations, including standing, and offering no suggestion that such actions are improper).

[108] See Fletcher, supra note 50, § 5972.60 (2004) (“Members or directors of nonprofit corporations may have standing to bring derivative proceedings. The plaintiff does not lose standing even though the plaintiff's voting rights may be restricted.”).

[109] See Restatement (Second) of Trusts § 200, cmt. e (1959) (“If there are several trustees, one or more of them can maintain a suit against another to compel him to perform his duties under the trust, or to enjoin him from committing a breach of trust, or to compel him to redress a breach of trust committed by him.”); see also Holt v. Coll. of Osteopathic Physicians and Surgeons, 394 P.2d 932, 937 (Cal. 1964); 19 Am. Jur. 2d Corporations § 2007 (“in the case of membership or nonprofit corporations, a member, may maintain a corporate derivative suit.”); accord Restatement (Third) of Trusts § 94 (2012).

[110] See generally Ky. Rev. Stat. Ann. § 273.215 (West, Westlaw through 2014 Legislation).

[111] See Chait, supra note 101, at 13 (“[Board members] are faulted for not knowing what is going on in their organizations and not demonstrating much desire to find out. Attendance at board meetings is often spotty and participation perfunctory.”).

[112] Fletcher, supra note 50, § 5972.60 (citations omitted); see also, e.g., Minn. Stat. Ann. § 317A.467 (West, Westlaw through 2014 Legislation). The statute states that:

If a corporation or an officer or director of the corporation violates this chapter, a court in this state, in an action brought by at least 50 members with voting rights or ten percent of the members with voting rights, whichever is less, or by the attorney general, may grant equitable relief it considers just and reasonable in the circumstances and award expenses, including attorney fees and disbursements, to the members.

Id.; Wyo. Stat. Ann. § 17-19-630 (“A proceeding may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor by: (i) Any member or members having five percent (5%) or more of the voting power or by fifty (50) members, whichever is less . . .”); Model Nonprofit Corp. Act (Second) § 6.3 (1997); Model Nonprofit Corp. Act (Third) § 13.02 (2008); accord Principles of the Law of Charitable Nonprofit Organizations §§ 550, 560 (Tentative Draft No. 4, 2013).

Not for Human Consumption: How Inept Legislative Policy Proliferates the Synthetic Drug Problem

Note | 103 KY. L. J. ONLINE 3 | Feb. 22, 2015

Todd J. Weatherholt[1]

The "war on drugs"[2] is facing a new opponent, one that is sophisticated and dynamic, but unfortunately whose dangers go widely undocumented.[3] As if there were not enough problems with other classes of drugs for authorities, a new "underappreciated" category - synthetic drugs - has gained tremendous momentum within the last few years in the United States and around the world.[4] These substances, although widely eradicated in neighborhood gas stations and head shops, remain easily obtainable over the internet.[5] The industry, which targets drug-naïve teenagers and young adults through the combination of shiny packaging with familiar cartoon characters and vibrant names such as Ivory Wave, Spice, and Cloud Nine, generates an estimated $5 billion dollars annually.[6] Unfortunately, the synthetic drug enigma facing our nation is not merely the result of these products’ accessibility, but likewise due to their easily manipulative characteristics, which help manufacturers circumvent existing laws.[7] As authorities identify specific chemical components to outlaw, rudimentary chemists simply modify existing drug compositions slightly to escape the law.[8]This note focuses on the two-tier problem of controlling synthetic drugs, from the existing loophole in the federal drug policy, to the difficulty of prosecuting synthetic drug offenders. Synthetic drugs pose an increasingly severe threat in need of an updated 21st century drug policy, instead of a continued reliance on deficient existing laws based on regulating opium, heroin, and cocaine from plants.[9] Part I of this Note discusses two common types of synthetic drugs and the current overall drug policy landscape in the United States. Part II focuses on the rise in popularity of these substances and their potentially disastrous effects on users. Part III, utilizing a recent federal court case and textual uncertainties of the statute, identifies the difficulties surrounding prosecuting manufacturers of synthetic drugs under the existing drug policy. Lastly, Part IV advocates for two promising bills and provides additional modifications that will further assist in improving the synthetic drug problem facing our nation.

I. Background: the Composition, Existing Policy, and Recent Trends of Synthetic Drugs

A. Categories of Synthetic Drugs

In terms of regulation, synthetic drugs fall into two prohibited categories: Cannabinoids and Cathinoes.[10] Although different in effects and chemical formations, problems with these synthetic drugs are similar; therefore, after an initial discussion of each, these categories are synthesized for purposes of this Note. The first category, Synthetic Cannabinoids, initially detected in the U.S. in 2008,[11] are chemicals that mimic the effects of delta-9-tetrahydrocannabinol (THC), the primary psychoactive active ingredient in marijuana.[12] The popularity of these substances was fueled by not only their desired effects, but also the mistaken assumption that they were "legal,"[13] yet the composition of these drugs may be anywhere from two to more than 500 times stronger than regular THC.[14] The second category, Synthetic Cathinoes, commonly referred to as "bath salts" have also risen in popularity in American culture and are dangerous for consumers of the drugs, as well as the authorities regulating their use.[15] Most of these stimulants contain the chemical compounds MDPV (3, 4-methylenedioxypyrovalerone), mephedrone (4-methylmethcathinone), or methylone (3, 4-methylenedioxymethcathinone),[16] which mimic the effects of cocaine, LSD, and methamphetamine.[17] Both synthetic substances can have severe adverse effects, including panic attacks, agitation, tachycardia, elevated blood pressure, anxiety, pallor, numbness and tingling, vomiting, hallucinations, and even death.[18] At least in part, both categories of "designer drugs" remain obtainable in today’s global marketplace.[19] These substances mimic the effects of perceived "harder drugs," yet their effects go widely undocumented due to their manipulative characteristics.[20] For example, the pharmacology, toxicology, and safety knowledge of the compounds used to form synthetic marijuana are practically unknown.[21] Recent studies suggest that components of bath salts are even more addictive than methamphetamine.[22]

B. Existing Drug Policy

1. Scheduling of Drugs-- Under the Controlled Substance Act of 1970 (CSA), drugs and certain chemicals that are considered to be controlled substances are divided into categories of scheduling.[23] In order to determine the placement of a controlled substance, a number of factors are considered including: its actual or relative potential for abuse, pharmacological effects, history and current pattern for abuse, risks to the public health, dependence issues, and whether it is an immediate precursor of a substance already controlled.[24] The CSA recognizes five schedules, with Schedule I being the most restrictive.[25] Considered the most dangerous class of drugs, a controlled substance placed into Schedule I has no acceptable medical usage and possesses a high potential for abuse and dependence.[26] Examples of Schedule I substances are LSD, Heroin, and Ecstasy.[27] On the other hand, a Schedule V substance has a lower potential for abuse.[28] Once scheduled, it is illegal "to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance."[29] However, as authorities soon discovered, slightly modifying a substance, even by a couple of molecules, theoretically circumvents the scheduling process altogether because it creates a new substance with different properties and effects.[30]2. Federal Analogue Act-- In 1986, Congress enacted the Controlled Substance Analogue Enforcement Act ("Analogue Act")[31] in response to drug manufacturer’s ability to produce and distribute designer drugs.[32] This Act amended part of the CSA which failed to account for minor alterations to the molecular structure of controlled substances – by outlawing their analogues.[33] However, by incorporating imprecise and overly broad standards, this law created confusion for prosecutors and presented many unnecessary challenges.[34] Unfortunately, as cases and textual discussion will show, this law has presented interpretive and evidentiary problems causing divisions throughout the courts. Revisions to this Act are necessary to enable prosecutors to successfully put procedures in place that combat the proliferating synthetic drug problem.3. Synthetic Drug Abuse Prevention Act-- Due to newfound synthetic drug popularity and ineffective solutions, President Barack Obama signed the Synthetic Drug Abuse Prevention Act (SDAPA) into law on July 9, 2013, as part of the Food and Drug Administration Safety and Innovation Act.[35] Although this law permanently placed twenty-six types of synthetic drugs into Schedule I of the CSA, expanded the timeframe of temporary scheduling, and, in theory, banned substances containing "any quantity of cannabimimetic agents,"[36] it was far too narrow to have any meaningful impact. Like other inept drug policies, this law anticipates that all substances will be "cannabimimetic agents" of scheduled substances. However, this presumption is erroneous due to the rapid evolution of synthetic drugs. As it stands now, synthetic drug production is a never-ending game of cat and mouse – where manufacturers make, and purchasers consume, substances that mimic the effects of a Schedule I or II drug, lawmakers ban the specific substance, and manufacturers slightly modify its chemical structure in order to circumvent the law.[37] In essence, the SDAPA and other similarly worded statutes banning specific chemical substances are, and will always be, one-step behind the chemists who create these menacing substances, until the necessary changes in policy and legislation occur.

II. The Menace of Synthetic Drugs

Synthetic drugs have exploded onto the scene in recent years, with new chemically altered forms arriving practically on a daily basis.[38] According to the American Association of Poison Control Centers, in the last four years alone over 27,500 cases of human exposure to forms of synthetic drugs have been reported.[39] These substances are extremely tempting for those who want to try marijuana or other banned substances, but are afraid of the related legal consequences.[40] Yet, as these next few stories illustrate, synthetic drugs are anything but safe, and their effects can lead to dangerous situations, including death. Even in states that have enacted tough legislative policies on synthetic drugs, manufacturers are still reaching their targeted audiences. In Florida, where a severe crackdown on synthetic drugs has occurred,[41] one story in particular exhibits the potentially severe side effects of bath salts. One night, Mr. Dubois and his friends snorted bath salts in an effort to experience a legal "trip".[42] However, their decision went terribly wrong – ending in a fatality and an eight-year prison sentence. When police showed up to Mr. Dubois’ house, they saw one "young man in the front yard reaching for objects in the air that weren't there, grunting, convulsing, and seemed to be in a zombie state of mind," while another person was found wrapped up so tightly in a cord that she could not move and was convulsing.[43] This situation is one of many that law enforcement agents have encountered over the past few years in response to incidents involving synthetic drugs. Two other separate, yet extreme examples display that any number of absurd events are possible after using synthetic drugs. In each case, the individual is believed to have ingested a type of synthetic substance and then exhibited zombie-like actions: one man ate his forty-pound dog[44] and another chewed the face off of a homeless man.[45] While these tales of terror seem to make daily headlines, the fact remains that existing drug policies impede efforts to prosecute synthetic drug manufacturers, allowing their products to remain available.

III. Textual and Case Analysis Highlighting the Difficulties of Prosecuting Under the Analogue Act

A. Analogue Act Textual Uncertainties

The Analogue Act was intended to fix the problems associated with the rule-based CSA, but, instead, has become an obstacle for prosecutors. Typically, drug convictions are procured through lab reports that show the purported substance is scheduled.[46] But, as recent years have shown, simply altering one molecule of a controlled substance moves it out of the dominion of the CSA and into the purview of the analogue statute.[47] The Analogue Act at first blush seems to provide a reliable solution for the manipulation of controlled substances through the implementation of standard-based methods defining a controlled substances analogue as:

(i) the chemical structure of which is substantially similar to the chemical structure of a controlled substance in schedule I or II;

(ii) which has a stimulant, depressant, or hallucinogenic effect on the central nervous system that is substantially similar to or greater than the stimulant, depressant, or hallucinogenic effect on the central nervous system of a controlled substance in schedule I or II; or

(iii) with respect to a particular person, which such person represents or intends to have a stimulant, depressant, or hallucinogenic effect on the central nervous system that is substantially similar to or greater than the stimulant, depressant, or hallucinogenic effect on the central nervous system of a controlled substance in schedule I or II.[48]

But, as the Court of Appeals for the Seventh Circuit stated in United States v. Turcotte, "the devil is in the details — the relevant detail here being the single word ‘or’ between clauses (ii) and (iii) of the definition," allowing for a disjunctive or conjunctive reading of the statute.[49] Under the disjunctive approach, "a substance that satisfies any one" of the clauses "qualifies as a controlled substances analogue."[50] Alternately, in the conjunctive approach, clause I is required, while either clause II or clause III must also be present.[51] Although this language of the statute seems ambiguous, a majority of courts have adopted the conjunctive approach, reasoning that ridiculous results might arise under the disjunctive approach.[52] If the disjunctive versus conjunctive reading was the only uncertainty of the statute, it would seem salvageable, but other imprecisions and broad terminology show the inherit flaws of the Analogue Act. The definition of a controlled substance analogue states in clause I that the substance’s chemical structure must be "substantially similar" to that of a controlled substance,[53] begging the question, what does "substantially similar" actually mean? Courts have wrestled with how much similarity must be present; some requiring either a "core arrangement of atoms,"[54] similar pharmacological effects on the central nervous system,[55] or looking at the overall chain of the structure.[56] This discrepancy in how courts approach what constitutes "substantially similar", along with the inexcusable continued reliance on the phrase "not for human consumption" from § 813,[57] displays the problems associated with the text of the statute that must be corrected.

B. Prosecutorial Impediments Involved During Analogue Cases

In addition to textual imperfections, prosecutors can also have a difficult time establishing expert testimony in analogue cases. In the recent case United States v. Nasir, the defendant was charged with possession with intent to distribute synthetic marijuana containing the chemical AM 2201, an alleged analogue of JWH-018, a scheduled substance.[58] The prosecution offered expert testimony from Dr. Michelle Walker, a DEA pharmacologist, who assessed several studies to conclude "AM 2201 was substantially similar pharmacologically and in physiological effect to JWH-018."[59] The defense attacked her conclusion using their own expert testimony which stated that the comparisons between AM 2201 and JWH-018 had not been properly peer-reviewed and were conducted on rodents, not humans.[60] The court, noting its gatekeeping authority, stated that it was the jury’s responsibility to determine the weight of this evidence, and that the court merely determined the admissibility of the evidence.[61] The court concluded that the expert’s findings were admissible, stating that "[p]ublication in a peer-reviewed journal is not required,"[62] and criticisms of the reliance on studies performed on rodents were not sufficient to warrant the exclusion of Dr. Walker’s testimony.[63] Other courts have not been so receptive to offered expert testimony on the issue,[64] partly due to the limited scientific knowledge available to establish concrete evidence of analogues, as well as the textual imprecisions of the statute, which leaves prosecutors fighting a losing battle.

IV. Bringing Drug Policy Into the 21st century

A. Proposed Bills and Lingering Problems

This past year, two proposed bills, the Synthetic Abuse and Labeling of Toxic Substances Act of 2013 (SALTS Act)[65] and Protecting Our Youth from Dangerous Synthetic Drugs Act of 2013,[66] took progressive steps towards controlling the synthetic drug problem facing our nation. These bills examine the overly broad and imprecise language of the CSA, striking and adding portions of the existing law, in essence closing the loophole for synthetic drug manufacturers. However, these two bills are analogous to merely warning shots against the synthetic drug industry and further reform is necessary. In its definition section, the CSA specifically states that a controlled substance analogue of a scheduled drug does not include any substances that are "not intended for human consumption."[67] As expected, synthetic drugs intentionally are mislabeled with a warning that they are not for human consumption, sidestepping the law, even though all parties involved know the intended purpose of these products is for human consumption. The proposed SALTS Act amends this portion, making it clear that evidence of a product not being marketed, advertised, or labeled for human consumption, by itself, is not sufficient to establish that the substance was not intended for human consumption.[68] Additionally, the bill mentions several factors that should be considered in determining whether an analogue was intended for human consumption.[69] The SALTS Act’s sister bill, the Protecting Our Youth from Dangerous Synthetic Drugs Act of 2013, likewise would re-work portions of the CSA.[70] This bill proposes creating a Controlled Substance Analogue Committee (CSAC) comprised of a panel of scientists headed by the Administrator of the DEA, including experts from multiple health and drug agencies,[71] bearing the responsibility to compile and maintain a list of all emerging synthetic drugs and designate substances as analogues.[72] This bill also implores the U.S. Sentencing Commission to review current federal sentencing guidelines and to amend them appropriately by providing adequate penalties for offenses related to controlled substance analogues.[73] Utilizing appropriate care and foresight, these remedial bills provide an important step in the fight against synthetic drugs, yet further efforts are needed to tackle other glaring issues of existing drug policy. Even if conclusive evidence is produced that a synthetic drug was intended for human consumption, a prosecutor still must prove that the chemical and pharmacological characteristics of the analogue are "substantially similar" to that of a controlled substance.[74] If prosecutors can only bring cases on substances that the CSAC has already identified as "substantially similar" to a scheduled substance, this will severely limit their ability to bring cases on unknown or untested substances. A clear and concise definition of what exactly "substantially similar" means is vital, considering the interpretational vagueness of the CSA, not only for prosecutors’ sake, but also for jurors who are expected to understand cases involving complex synthetic drugs without sufficient guidance from the law. Courts have struggled to determine what exactly "substantially similar" means, having applied different definitions across jurisdictions.[75] Additionally, as one expert stated in Brown, "the definition of ‘similar chemical structure’ depends on the judgment of a chemist," and if "six chemists were asked . . . then six different answers may be offered."[76] In dealing with this peculiar term, the court in Washam offered an important point, stating that:

The term "substantially similar," as used in the statute, does not mean "exactly the same." There obviously will be differences in chemical structures between an "analogue" chemical and a schedule I or II chemical. If two chemicals' structures are exactly the same, the chemical in question would no longer be an "analogue," but, instead, it would be the same chemical as the listed chemical. Thus, some level of difference is acceptable between an analogue's chemical structure and a proscribed chemical's structure.[77]

The specific meaning of the definition appears unanswered by the courts, with at least one court believing that "’substantially similar’ is flexible enough to change with the circumstances."[78] However, the most promising and best-suited definition looks not at the visual assessment of chemical structures – such as with a chain or assortment of atoms - but, rather, at the actual effects of the substance on the central nervous system.[79] As the court in Fisher described, to ingest a substance considered an analogue would have a detrimental and visible effect on the central nervous system and "[p]eople of ordinary intelligence would easily be able to determine" if such a substance met "the definition of a controlled substance analogue."[80] This definition makes sense considering manufacturers want to reproduce the effects of desired scheduled substances without facing the legal consequences. Prosecutors of synthetic drug cases, not to mention jurors, need a concise definition of "substantially similar." They should look no further than a substance’s effects on the central nervous system instead of a substance’s atomic structure, which explains little on how substances are related. These recommendations would not single-handedly remove every hurdle prosecutors face in synthetic drug cases because expert testimony is often limited by the amount of scientific literature available on the composition of a synthetic drug. It is therefore imperative that lax standards for expert testimony be allowed due to the highly sensitive and dynamic characteristics associated with these cases. In Daubert, the United States Supreme Court gave a non-exhaustive list of factors a judge may consider in determining the reliability of an expert witness’ testimony that includes, but is not limited to:

(1) whether the theory or technique in question can be and has been tested;

(2) whether the theory or technique has been subjected to peer review and publication;

(3) in the case of a particular scientific technique, ... the known or potential rate of error;

(4) the existence and maintenance of standards controlling its operation; and

(5) whether the theory or technique has attracted widespread acceptance within a relevant scientific community.[81]

Given the flexibility of the Daubert test and the inability to conduct studies on the effects on humans of these chemical substances, courts should move to establish precedence that in synthetic drug cases, expert witnesses should be given the benefit of the doubt when reviewing non-conflicting, yet limited supporting material, in order to allow the experts to make generalized findings due to time restraints, cost associated with, and availability of testing procedures.

Conclusion

Synthetic drugs are a complex topic that legislators must respond to in a comprehensive way. Ultimately, as with any category of narcotics, authorities cannot completely eradicate the use of synthetic drugs; however, minimizing their impact is attainable with appropriate policy modifications. An updated twenty-first century drug policy is necessary, which must define the terms and provisions of the CSA more precisely to enable prosecutors to bring these types of cases more easily. Existing drug law is flawed and continuing down this same path will almost certainly allow manufacturers to continue to circumvent the law through molecular modifications.

[1] J.D. May 2015, University of Kentucky College of Law.[2] President Richard Nixon originally coined this term during June of 1971, increasing the size and presence of federal drug control agencies. A Brief History of the Drug War, Drug Policy Alliance, http://www.drugpolicy.org/new-solutions-drug-policy/brief-history-drug-war (last visited March 3, 2014).[3] See generally Lisa N. Sacco & Kristin Finklea, Cong. Research Serv., R42066, Synthetic Drugs: Overview and Issues for Congress 1 (Sept. 16, 2013), available at http://fas.org/sgp/crs/misc/R42066.pdf (explaining the recent trend to document dangers stemming from drug use especially in younger populations).[4] Synthetic Drugs (a.k.a. K2, Spice, Bath Salts, etc.), Office of Nat’l Drug Control Pol’y, http://www.whitehouse.gov/ondcp/ondcp-fact-sheets/synthetic-drugs-k2-spice-bath-salts (last visited March 3, 2014) [hereinafter Synthetic Drugs].[5] Stephen Stock & David Paredes, The Law has Trouble Keeping Up with Synthetic Drugs, NBC Bay Area (Feb. 15, 2014, 10:33 PM), http://www.nbcbayarea.com/investigations/The-Law-Cant-Keep-Up-with-Synthetic-Drugs-244805391.html; Synthetic Drugs: Myths, Facts, and Strategies: A Symposium, Substance Abuse Treatment and Mental Health Services Integration Taskforce 9-10 (Feb. 19, 2013), http://cjcc.dc.gov/sites/default/files/dc/sites/cjcc/page_content/attachments/SD-MFS%20Symposium%20Materials_Part1.pdf [hereinafter Symposium].[6] See Spice, Salvia, and Bath Salts, Nat’l Inst. on Drug Abuse, http://teens.drugabuse.gov/facts-drugs/spice-salvia-and-bath-salts (last visited March 3, 2014); See also Ben Paynter, The Big Business of Synthetic Highs, Bloomberg Bus. Week (June 16, 2011), http://www.businessweek.com/magazine/content/11_26/b4234058348635.htm (noting that the sale of "incense" generates close to $5 billion annually as based on self-reported statistics from members of the North American Herbal Incense Trade Association).[7] See, e.g., Sacco & Finklea, supra note 3, at 1.[8] Id. [9] Howard B. Owens, From China White to Bath Salts, Designer Drugs Ongoing Public Safety Challenge, Batavian (July 24, 2012, 9:59 AM), http://thebatavian.com/howard-owens/china-white-bath-salts-designer-drugs-ongoing-public-safety-challenge/32950.[10] Synthetic Drug Threats, Nat'l Conference of State Legislatures, http://www.ncsl.org/research/civil-and-criminal-justice/synthetic-drug-threats.aspx (last updated Nov. 28, 2012).[11] Synthetic Drugs, supra note 4.[12] Sacco & Finklea, supra note 3, at 5.[13] See Stock & Paredes, supra note 5.[14] Paynter, supra note 6.[15] See Melanie Haiken, ‘Bath Salts’ A Deadly New Drug with a Deceptively Innocent Name, Forbes (June 4, 2012, 4:13 PM), http://www.forbes.com/sites/melaniehaiken/2012/06/04/bath-salts-a-deadly-new-drug-with-a-deceptively-innocent-name/ (discussing the danger bath salts pose and highlighting stories of individual’s psychotic episodes after ingesting the substance).[16] Id.; Drugs of Abuse, U.S. Dept. of Justice. , Drug Enforcement Admin. 74 (2011), available at http://www.justice.gov/dea/pr/multimedia-library/publications/drug_of_abuse.pdf. [hereinafter Drugs of Abuse]; Haiken, supra note 15. .[17] Drugs of Abuse, supra note 16, at 75.[18] DrugFacts: Spice (Synthetic Marijuana), Nat’l Inst. of Drug Abuse, http://www.drugabuse.gov/publications/drugfacts/spice-synthetic-marijuana (last modified Dec. 2012); Drugs of Abuse, supra note 16, at 75; Use of Synthetic Cannabinoid Products by Teens and Young Adults Increasing, U.S. Dept. of Justice Nat’l Drug Intelligence Ctr. (May 18, 2010), http://www.justice.gov/archive/ndic/pubs41/41193/sw0006p.pdf[19] See Nicolas Christin, Traveling the Silk Road: A Measurement Analysis of a Large Anonymous Online Marketplace 2 (Carnegie Mellon INI/Cylab, Working Paper, 2012), available at http://www.andrew.cmu.edu/user/nicolasc/publications/TR-CMU-CyLab-12-018.pdf (noting that sites such as Black Market Reloaded, the Armory, and the General Store are online marketplaces for synthetic drugs).[20] See Dangerous Synthetic Drugs: Testimony Before the Caucus on Int’l Narcotics Control, U.S. Senate, 113th Cong. 1 (2013) (statement by Dr. Nora D. Volkow, Director National Institute on Drug Abuse), available at http://www.drugcaucus.senate.gov/hearing-9-25-13/AMV075-NIH%20synthetic%20testimony%20gl%20gjd%20final.pdf.[21] See Liana Fattore & Walter Fratta, Beyond THC: The New Generation of Cannabinoid Designer Drugs, 5 Frontiers in Behavioral Neuroscience 3, 5 (Sept. 2011), available at http://www.frontiersin.org/behavioral_neuroscience/10.3389/fnbeh.2011.00060/full.[22] Ruth Brown, Bath Salts: More Addictive than Meth, Newser (July 14, 2013, 5:05 PM), http://www.newser.com/story/170924/bath-salts-more-addictive-than-meth.html.[23] Controlled Substance Act, 21 U.S.C. § 812(a) (2012). See also Controlled Substance Schedules, U.S. Dept. of Justice Drug Enforcement Admin., Office of Diversion Control, http://www.deadiversion.usdoj.gov/schedules/#list (last visited Mar. 7, 2014) (identifying a list of currently scheduled drugs).[24] 21 U.S.C. § 811(c) (2012).[25] See id. § 812(b). See also Drug Scheduling, U.S. Drug Enforcement Admin., http://www.justice.gov/dea/druginfo/ds.shtml (last visited Mar. 7, 2014) [hereinafter Drug Scheduling].[26] Drug Scheduling, supra note 25.[27] Id.[28] Id.[29] 21 U.S.C. § 841(a)(1) (2012). See also 21 U.S.C. § 811(h) (2012) (noting that the Attorney General may temporary schedule substances as a Schedule I if is "necessary to avoid an imminent hazard to the public safety").[30] Andreas Digens, A Young Chemist Explains How Legal Highs Work, Vice Canada (Oct. 6, 2014), http://www.vice.com/en_ca/read/research-drugs-and-the-grey-market.[31]Controlled Substance Analogue Enforcement Act of 1986, Pub. L. No. 99-570, §§1201-1204, 100 Stat. 3207, 3207-13 to 3207-14 (codified as amended in scattered sections of §21 U.S.C.).[32] See e.g., United States v. Nasir, No. 5:12–CR–102—JMH, 2013 WL 5373619, at *1 (E.D. Ky. Sept. 25, 2013) (citing United States v. Washam, 312 F.3d 926, 933 (8th Cir. 2002)).[33] Controlled Substance Analogue Act, §1202, 100 Stat. at 3207-13. .[34] See, e.g., Dangerous Synthetic Drugs: Caucus on Int’l Narcotics Control U.S. Senate, 113th Cong. 2–4 (2013) (statement by Timothy J. Heaphy, U.S. Attorney for the Western District of Virginia), available at http://www.drugcaucus.senate.gov/hearing-9-25-13/Heaphy_Dangerous%20Synthetic%20Drugs%20Testimony%20(SCINC).pdf[35] Synthetic Drug Abuse Prevention Act of 2012, Pub. L. No. 112-44, §§ 1152-1153, 126 Stat. 1130, 1130–32 (2012) (to be codified at 21 U.S.C. § 811-12).[36] Id. at § 1152(d)(1).[37] See Stock & Paredes, supra note 5 ("[I]t takes a chemist in Asia only a couple of week to change a molecule and get new synthetic drugs on our streets, starting the entire cycle, all over again.").[38] See Symposium, supra note 5, at 43, 48, 53 (noting that since Jan. 31, 2013, law enforcement agents have identified over 150 synthetic compounds – while in nearly two-thirds of all states, including Kentucky, there have been over 400 reports of Synthetic Cathinones and Cannabinoids compounds). See also Stock & Paredes, supra note 5 (according to the DEA five new synthetic drug compounds are introduced into the U.S. markets every month).[39] See Bath Salts Data, Am. Ass’n of Poison Control Centers 1 (Nov. 30, 2013), available at https://aapcc.s3.amazonaws.com/files/library/Bath_Salts_Web_Data_through_Nov2013.pdf; Synthetic Marijuana Data, Am. Ass’n of Poison Control Centers 1 (Nov. 30, 2013), available at https://aapcc.s3.amazonaws.com/files/library/Synthetic_Marijuana_Web_Data_through_11.2013.pdf.[40] In a recent Gallup poll, 58% of Americans supported the legalization of marijuana. See Art Swift, For First Time, Americans Favor Legalizing Marijuana, Gallup (Oct. 22, 2013), http://www.gallup.com/poll/165539/first-time-americans-favor-legalizing-marijuana.aspx; see also Stock & Paredes, supra note 5 (according to the DEA’s Bruce Goldberg "[k]ids are playing Russian roulette with their lives by ingesting things they are not aware of how dangerous they are.").[41] See Susannah Bryan, Florida Synthetic Drug Ban Mostly Successful, Experts Say, Huffington Post (Aug. 5, 2013, 2:50 AM), http://www.huffingtonpost.com/2013/08/05/synthetic-drugs-florida_n_3705519.html.[42] Amy Pavuk, Man Sentenced to Prison for Drugs After Several Overdosed on Bath Salts, Orlando Sentinel (Feb. 19, 2014), http://articles.orlandosentinel.com/2014-02-19/news/os-bath-salts-death-drugs-in-house-sentence-20140219_1_bath-salts-synthetic-drugs-krystopher-sansone.[43] Id. [44] Michael Daniel Accused of Killing, Eating Dog on K-2-Fueled Rampage, Huffington Post (June 26, 2012, 1:18 PM), http://www.huffingtonpost.com/2012/06/26/michael-daniel-eating-dog_n_1627786.html.[45] Seni Tienabeso, Face-Eating Attack Possibly Prompted by 'Bath Salts,' Authorities Suspect, ABC News (May 29, 2012), http://abcnews.go.com/US/face-eating-attack-possibly-linked-bath-salts-miami/story?id=16451452. But see Rudy Eugene: No Bath Salts, Only Marijuana Found in Face-Eater Toxicology Tests, Huffington Post (June 27, 2012, 4:47 PM), http://www.huffingtonpost.com/2012/06/27/rudy-eugene-face-marijuana-medical-examiner-results_n_1632253.html (noting that within the limits of current technology by both laboratories, marijuana was the only drug identified in the body of the attacker). This presents an interesting point which previously has not been discussed that "[a]lthough tests exist to detect synthetic drugs, they are costly and are not widely available. As with legislation, changes to the composition of synthetic drugs are currently outpacing advances in detection." Symposium, supra note 5, at 11.[46] See Nat’l Forensic Sci. Tech. Ctr., A Simplified Guide to Drug Chemistry, available at http://www.crime-scene-investigator.net/SimplifiedGuideDrugChemistry.pdf[47] See 21 U.S.C. § 813 (2012); see also 21 U.S.C. § 842 (2012).[48] U.S.C. § 802(32)(A) (2012).[49] United States v. Turcotte, 405 F.3d 515, 521 (7th Cir. 2005).[50] Id. at 521.[51] Id. [52] See Turcotte, 405 F.3d at 522–23; see also United States v. Hodge, 321 F.3d 429, 436 (3d Cir. 2003) (analyzing the plain meaning and legislative history of § 802(32)(A)); United States v. Klecker, 348 F.3d 69, 71 (4th Cir. 2003) (adopting the conjunctive approach); United States v. Washam, 312 F.3d 926, 930 n.2 (8th Cir. 2002) (same); United States v. McKinney, 79 F.3d 105, 107–08 (8th Cir. 1996) (discussing the conjunctive approach), vacated on other grounds, 520 U.S. 1226 (1997); United States v. Brown, 279 F. Supp. 2d 1238, 1240 (S.D. Ala. 2003) (adopting the conjunctive reading of statute); United States v. Vickery, 199 F. Supp. 2d 1363, 1371 (N.D. Ga. 2002) (same); United States v. Clifford, 197 F. Supp. 2d 516, 522 (E.D. Va. 2002) (same); United States v. Forbes, 806 F. Supp. 232, 235-36 (D. Colo. 1992) (reviewing the Act's legislative history and asserting that the conjunctive approach is required in order to prevent absurd results); but see United States v. Fedida, 942 F. Supp. 2d 1270, 1275-76 (M.D. Fla. 2013) (concluding that the statute is ambiguous, but applying the rule of leniency requires the court to read the definition in the conjunctive).[53] 21 U.S.C. § 802(32)(A)(i) (2012).[54] Kleckler, 348 F.3d at 73.[55] United States v. Fisher, 289 F.3d 1329, 1338–39 (11th Cir. 2002).[56] Fedida, 942 F. Supp. 2d at 1277-79.[57] 21 U.S.C. § 813 (1988).[58] United States v. Nasir, No. 5:12-CR-102-JMH, 2013 WL 5373619, at *1 (E.D. Ky. Sept. 25, 2013).[59] Id.[60] Id. at *2.[61] Id. at *3.[62]Id. In performing this function, the court focuses only on the "principles and methodology, not on the conclusions that they generate." (quoting United States v. Daubert, 509 U.S. 579, 595 (1993)).[63] Id.[64]See e.g., United States v. Fedida, 942 F. Supp. 2d 1270, 1281 (stating that it was "not inclined to permit an expert to testify to a jury where the basis of his opinions rests only on broad scientific principles" supported by minimum scientific literature, not subjected to peer review, and potential error rate unknown).[65] Synthetic Abuse and Labeling of Toxic Substances Act of 2013, S. 1322, 113th Cong. (2013) [hereinafter SALTS Act].[66] Protecting Our Youth from Dangerous Synthetic Drugs Act of 2013, S. 1323, 113th Cong. (2013).[67] 21 U.S.C. § 802(32)(C)(iv) (2012).[68] SALTS Act, S. 1322 § 2.[69] Id.[70] S. 1323 § 2(a)(1).[71] Id. § 2(a)(2).[72] Id.[73] Id. § 4.[74] 21 U.S.C. § 802(32(A)(i) (2012).[75] See supra notes 54–56 and accompanying text.[76] United States v. Brown, 279 F. Supp. 2d 1238, 1245 (S.D. Ala. 2003).[77] United States v. Washam, 312 F.3d 926, 930-31 (8th Cir. 2002).[78] Brown, 279 F Supp. 2d. at 1243.[79] United States v. Fisher, 289 F.3d 1329, 1338–39 (11th Cir. 2002) (emphasis added).[80] Id.[81] Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 592–94 (1993).

Limits to the Class Action Device: The Kentucky Wages and Hours Act Does Not Permit a Class Action

Article | 103 KY. L. J. ONLINE 2 | July 17, 2015

Jeffrey A. Savarise and Timothy J. Weatherholt[1]

I. Introduction

Class action claims for unpaid wages have become pervasive in both state and federal courts. Plaintiff employment attorneys and the ever burgeoning class action law firms are filing these cases throughout the country, including in Kentucky. A wage and hour class action can be extremely lucrative from a financial standpoint for plaintiffs’ counsel. Many of these classes include hundreds, if not thousands, of class members. Assuming a one-third contingency fee, a plaintiff counsel who settles a typical wage and hour class action could easily earn a seven-figure fee.The federal wage and hour law, the Fair Labor Standards Act (“FLSA”), provides for a class mechanism for wage claims – collective actions. However, individuals must “opt in” to the “class,” as opposed to the more traditional “opt out” class actions. Under 29 U.S.C. § 216(b) of the FLSA, a member of the class who is not named in the complaint is not a party unless he or she affirmatively “opts in” by filing a written consent-to-join with the court.[2] This has the obvious effect of limiting the recovery pool. Recent statistics show only around fifteen percent of litigants in federal collective actions actually “opt in” to the litigation.[3] The incentive for a plaintiff counsel to proceed in a state law class action – as opposed to a collective action under the federal law that requires litigants to affirmatively “opt in” to the case – is extremely high.Fortunately, for many members of the plaintiffs’ bar who practice wage and hour cases, most states supplement the basic protections of the FLSA with their own wage and hour laws. Some, but not all of these state laws, permit the class action device. For instance, several state wage and hour statutes explicitly permit an action to be brought on behalf of others.[4] The wage and hour statutes in other states provide more general language that does not authorize, nor preclude, the use of the class action device.[5] In this situation, state courts will typically approve of the class action device.[6] In those cases, plaintiffs are basically limited to the remedy provided under the FLSA.While this issue is settled in practically every state, either by clear statutory text or case law, the question of whether a Kentucky plaintiff can pursue a class action under Kentucky’s Wages and Hours Act (the “Kentucky Act”) remains unresolved.[7] The Kentucky Act is unique in that, on its face, for the reasons explained below, it does not appear to permit class actions. Yet, until recently, courts have taken no issue with plaintiffs pursuing class actions under the Kentucky Act.[8] In fact, it appears no employer/defendant had ever raised the issue prior to the authors of this note. This issue has serious potential consequences, not only due to the differences between “opt in” and “opt out” actions, but also because the statute of limitations under the Kentucky Act is five years[9] and the statute of limitations under the FLSA is only two years for non-willful violations.[10]This note argues Kentucky courts should adhere to the plain language and other extrinsic sources that support the position that class actions are not viable under the Kentucky Act. In Part II, this note will discuss the brief history of KRS 337.385 of the Kentucky Act and a few of the relevant cases discussing how wage and hour claims may proceed. The note will then review the Kentucky Act’s plain language and compare Kentucky’s statutory language to language in similar, but distinct statutes – the FLSA and Kentucky’s statutes prohibiting wage discrimination based on sex. The note will then discuss the opposing view for why the Kentucky Act might not bar class actions. In Part III, this note will discuss the recent decision by the Kentucky Court of Appeals in which it stated, albeit in dicta, the Kentucky Act precludes class actions. In Part IV, the note will discuss why the Court of Appeals was correct, but why a more comprehensive opinion is needed. In Part V, the note will highlight another opinion which provides a roadmap for how this dispute can be resolved. The note will conclude by discussing how the Kentucky General Assembly, not the courts, provides the best opportunity to enable the plaintiffs’ bar to bring class actions under the Kentucky Act.

II. The Kentucky Act: Its History and Text, As Well As Its Similarities and Differences as Compared to Like Statutes

A.The Language of KRS 337.385 Has Remained Remarkably Consistent Over Time

KRS 337.385(1) was first adopted in 1974 and has changed remarkably little over time. The 1974 version provided as follows:

(1) Any employer who pays any employee less than wages and overtime compensation to which such employee is entitled under or by virtue of this Act shall be liable to such employee affected for the full amount of such wages and overtime compensation, less any amount actually paid to such employee by the employer, for an additional equal amount as liquidated damages, and for costs and such reasonable attorney’s fees as may be allowed by the court. Provided, that if, in any action commenced to recover such unpaid wages or liquidated damages, the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of this Act, the court may, in its sound discretion, award no liquidated damages, or award any amount thereof not to exceed the amount specified in this section. Any agreement between such employee and the employer to work for less than the applicable wage rate shall be no defense to such action. Such action may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves.[11]

In 1978, KRS 337.385(1) was revised to read:

(1) Any employer who pays any employee less than wages and overtime compensation to which such employee is entitled under or by virtue of KRS 337.020 to [337.275 and] 337.285 shall be liable to such employee affected for the full amount of such wages and overtime compensation, less any amount actually paid to such employee by the employer, for an additional equal amount as liquidated damages, and for costs and such reasonable attorney’s fees as may be allowed by the court. Provided, that if, in any action commenced to recover such unpaid wages or liquidated damages, the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of KRS 337.020 to [337.275 and] 337.385, the court may, in its sound discretion, award no liquidated damages, or award any amount thereof not to exceed the amount specified in this section. Any agreement between such employee and the employer to work for less than the applicable wage rate shall be no defense to such action. Such action may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves.[12]

In 2010, the language was modified to be gender neutral:

(1) Any employer who pays any employee less than wages and overtime compensation to which such employee is entitled under or by virtue of KRS 337.020 to 337.285 shall be liable to such employee affected for the full amount of such wages and overtime compensation, less any amount actually paid to such employee by the employer, for an additional equal amount as liquidated damages, and for costs and such reasonable attorney’s fees as may be allowed by the court. Provided, that if, in any action commenced to recover such unpaid wages or liquidated damages, the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he or she had reasonable grounds for believing that his or her act or omission was not a violation of KRS 337.020 to 337.285, the court may, in its sound discretion, award no liquidated damages, or award any amount thereof not to exceed the amount specified in this section. Any agreement between such employee and the employer to work for less than the applicable wage rate shall be no defense to such action. Such action may be maintained in any court of competent jurisdiction by any one (1) or more employees for and in behalf of himself, herself, or themselves.[13]

Finally, in 2013, KRS 337.385 was again revised, primarily to address forced labor, and subsection (1) was split into two sections:

(1) Except as provided in subsection (3) of this section, any employer who pays any employee less than wages and overtime compensation to which such employee is entitled under or by virtue of KRS 337.020 to 337.285 shall be liable to such employee affected for the full amount of such wages and overtime compensation, less any amount actually paid to such employee by the employer, for an additional equal amount as liquidated damages, and for costs and such reasonable attorney's fees as may be allowed by the court.

(2) If, in any action commenced to recover such unpaid wages or liquidated damages, the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he or she had reasonable grounds for believing that his or her act or omission was not a violation of KRS 337.020 to 337.285, the court may, in its sound discretion, award no liquidated damages, or award any amount thereof not to exceed the amount specified in this section. Any agreement between such employee and the employer to work for less than the applicable wage rate shall be no defense to such action. Such action may be maintained in any court of competent jurisdiction by any one (1) or more employees for and in behalf of himself, herself, or themselves.[14]

Throughout these revisions, the essential substance of the last sentence – which now reads, “[s]uch action may be maintained in any court of competent jurisdiction by any one (1) or more employees for and in behalf of himself, herself, or themselves” – remained the same.Between 1974 and 1986, there were only a few occasions where putative class actions reached the appellate level in published decisions. In Orms v. City of Louisville,[15] the issue on appeal concerned the application of Kentucky’s overtime compensation statute, KRS 337.285, to a City of Louisville policy that required its police officers to report fifteen minutes before they began their daily tour of duty.[16] The police officers sought to recover, in a class action, compensation for this time.[17] The Jefferson Circuit Court entered summary judgment for the City, and the Court of Appeals agreed, finding that the collective bargaining agreement at issue was controlling.[18]In City of Louisville v. Gnagie,[19] the plaintiffs/employers, individually and as representatives of the Louisville Firefighters’ Association, sought compensation in a class action suit against the City, pursuant to KRS 337.285, for their fifteen-minute “roll call” prior to each shift.[20 ]Both the City and the employees moved for summary judgment in Jefferson Circuit Court on the issue of liability.[21] The trial court entered summary judgment for the City, holding that the “roll call” period was de minimis,[22] and therefore, non-compensable, but the Court of Appeals reversed the Jefferson Circuit Court and remanded the case for an evidentiary hearing to resolve perceived factual disputes regarding the nature of the work performed during “roll call” and to determine whether the firefighters were customarily released from duty prior to the end of their shifts to compensate for the “roll call” period.[23] The Kentucky Supreme Court reversed the Court of Appeals and affirmed the trial court.[24]Given the procedural postures of Orms and Gnagie, each presented obvious issues tailor-made for the City of Louisville’s attempt at a swift resolution. While the City could have raised the argument that class actions are not viable under the Kentucky Act, it clearly had even stronger arguments at its disposal. Unfortunately for the advancement of the law, a pair of Kentucky Court of Appeals cases decided around the same time as Orms and Gnagie obviated the need to address the statutory language. Collectively, Early v. Campbell Fiscal Court[25] and Noel v. Season-Sash, Inc.[26] stand for the general proposition that the Kentucky Labor Cabinet had original and exclusive jurisdiction over claims brought for the recovery of minimum wage and overtime payments, i.e., there was no right to an original action in the circuit court.[27] The Supreme Court did not overrule these cases until 20 years later in Parts Depot, Inc. v. Beiswenger.[28] Only then were litigants permitted to pursue their wage claims either at the Kentucky Labor Cabinet or in a circuit court.[29]Subsequent to the Supreme Court’s decision in Parts Depot, plaintiffs have brought class actions under the Kentucky Act in a number of cases.[30] This note contends that they lack the authority to do so, and defense practitioners, and to a lesser extent the courts, have missed the mark (at least, that is, until November 2013)[31] in failing to properly consider the meaning of the statutory language.

B. An Analysis Of The Plain Language Of KRS 337.385

1. How Kentucky Courts Analyze Statutes

The Kentucky Supreme Court has set forth the following rubric for how statutory language should be reviewed:

The seminal duty of a court in construing a statute is to effectuate the intent of the legislature. A fundamental canon of statutory construction is that, unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning. Thus, we are “to ascertain the intention of the legislature for words used in enacting statutes rather than surmising what may have been intended but was not expressed.

Thus, if a statute is clear and unambiguous and expresses the legislature’s intent, the statute must be applied as written. And absent an ambiguity, there is no need to resort to the rules of statutory construction in interpreting it. Statutes, of course, must be read as a whole and in context with other parts of the law.[32]

In Revenue Cabinet v. O’Daniel,[33] the Supreme Court similarly noted, ‘“[t]he plain meaning of the statutory language is presumed to be what the legislature intended, and if the meaning is plain, then the court cannot base its interpretation on any other method or source.”’[34] Furthermore, in Lichtenstein v. Barbanel,[35] the Supreme Court remarked, “[i]f the statutory language is ambiguous, we will look to other sources to ascertain the legislature’s meaning, including legislative history.”[36]

2. Is KRS 337.385(1) of The Kentucky Act Ambiguous?

KRS 337.385 now provides that an employee or employees may sue “for and in behalf of himself, herself, or themselves.”[37] On its face, this language permits multiple individuals to pursue their claims in one proceeding, but not in a representative capacity – an employee or employees may sue only “for and in behalf of himself, herself, or themselves.”[38] The pronouns “himself,” “herself,” and “themselves” are reflexive pronouns, which always refer to, and are identical with, the subject of the sentence or clause.The subject of the statutory text at issue is the “one (1) or more employees” who are maintaining an action in court.[39] The pronouns “himself,” “herself,” and “themselves” refer to the “one (1) or more employees” who are maintaining such an action. A grammatical reading of the passage is:

(i) any one employee may maintain an action for and in behalf of himself;

(ii) any one employee may maintain an action for and in behalf of herself; and

(iii) any two or more employees may maintain an action for and in behalf of themselves.

Of course, it is fair to wonder why the General Assembly chose this particular language. After all, the General Assembly could have simply said something akin to “class actions are not permitted under this statute.” The General Assembly’s choice of words makes sense, however, in light of the federal statute on which it was modeled.

C. A Comparison To Like Statutes

1. The FLSA’s Remedy Mechanism

Kentucky courts have recognized the similarities between the remedy mechanism of the Kentucky Act and that of the FLSA.[40] The Kentucky Act’s remedy mechanism is similar to that of the FLSA, but with one major distinction, as noted below:

(Kentucky Act):

“Such action may be maintained in any court of competent jurisdiction by any one (1) or more employees for and in behalf of himself, herself, or themselves.”[41]

(FLSA):

“An action . . . may be maintained against any employer . . . by any one or more employees for and in behalf of himself or themselves and other employees similarly situated.”[42]

2. Kentucky’s Wage Discrimination Because Of Sex Statute

In addition to the FLSA inference, there is an infrequently utilized section in KRS Chapter 337 that addresses wage discrimination based on sex.[43] In principal part, the anti-discrimination provision provides, “[n]o employer shall discriminate between employees in the same establishment on the basis of sex, by paying wages to any employee in any occupation in this state at a rate less than the rate at which he or she pays any employee of the opposite sex for comparable work on jobs which have comparable requirements relating to skill, effort and responsibility.”[44] The anti-discrimination provision is enforced by a subsequent provision providing, “[a]ction to recover the liability may be maintained in any court of competent jurisdiction by any one (1) or more employees for and in behalf of himself, herself, or themselves and other employees similarly situated.”[45]

D. The Opposing View

Perhaps the most potent argument is that the language of the statute does not, in ordinary words, preclude class relief, e.g., “class actions may not be maintained under this section.” In Califano v. Yamasaki,[46] the U.S. Supreme Court considered whether a statute that provided, “[a]ny individual, after any final decision of the Secretary made after a hearing to which he was a party . . . may obtain a review of such decision by a civil action . . . .”[47] The court found the use of the ambiguous phrase “any individual” did not express the clear congressional intent to preclude class actions.[48]Another argument focused on the potential interplay between Kentucky Rule of Civil Procedure Rule (CR) 1 and 23. Rule 1 provides that the civil rules “govern procedure and practice in all actions of a civil nature . . . .”[49] In other words, there is a potential conflict between the judiciary’s adoption of civil rules permitting class actions and the legislature’s enactment of a statute that takes away the right to class actions. A number of other states have similar civil rules yet practically every state legislature, including Kentucky’s, has placed some form of a substantive restriction on the class action device.[50]Finally, the fact that a number of Kentucky courts, primarily Kentucky federal courts, have considered claims under the Act without taking issue with the ability to pursue a class action under the Act lends support, however small, to the position that the Act permits class actions.[51]

III. The Kentucky Court of Appeals Weighs in, Albeit in Dicta

In 2013, the Kentucky Court of Appeals had occasion to consider the argument that the Kentucky Act precludes class actions.[52] It did so in the context of litigation that had spanned fifteen years between Toyota Motor Manufacturing, Inc. (”TMMK”), represented by the authors of this piece,[53] and employees/former employees of its paint and bumper paint departments who claimed they were not compensated for time spent putting on and taking off a paint suit and walking to and from their work processes.[54] The Plaintiffs pursued their case as a class action, and millions of dollars in damages were potentially at issue given that the class could number over 1,000 members of TMMK’s paint and bumper paint departments.[55] This potential exposure only increased in 2007 when the Scott Circuit Court reopened the judicial case that had been final since 2003, in light of Parts Depot.[56]After a lengthy appellate process, the case returned to the Scott Circuit Court.[57] There, TMMK asserted the argument that the Kentucky Act does not provide for class actions, and, after the Scott Circuit Court denied its motion to dismiss on those grounds, re-asserted the argument in opposition to the Plaintiffs’ motion for class certification.[58] Once Plaintiffs’ motion was granted, TMMK was able to avail itself of a recent change in the civil rules that permitted litigants to make an interlocutory appeal of a grant or denial of class certification.[59]The Kentucky Court of Appeals primarily addressed the point that it agreed with TMMK that the Scott Circuit Court should not have reopened the case.[60] In dicta, though, the Court of Appeals stated:

However, were we to reach the merits of this argument, we would agree with TMMK that the text of KRS 337.385(1) provides a clear expression of intent that class actions are not permitted . . . The statute permits more than one person to bring a cause of action under KRS 337.385(1) in the same case, but they may not do so in a representative capacity. Further, the effect of the “for and in behalf of” language is to limit the individuals who may participate in an action under the Act to those who actually bring the action. Thus, even if the trial court had properly reopened the case under CR 60.02(f), KRS 337.385(1) does not permit class actions and the trial court improperly certified a class.[61]

The very next month, the Jefferson Circuit Court likewise found in favor of Humana Inc., also represented by Fisher & Phillips, who argued the same position regarding the statutory language.[62] That opinion, however, is not binding on any other Kentucky court and did not substantively address the arguments outlined above.

IV. The Kentucky Court of Appeals Was Correct, But a More Comprehensive Opinion is Needed

While the opinions of the Court of Appeals and the Jefferson Circuit Court reached the correct result, neither opinion thoroughly reviewed all of the arguments supporting the position that the Kentucky Act does not permit class actions. The most critical argument is, of course, the plain text. None of the readings of KRS 337.385(1) outlined above supports a conclusion that employees may sue for and in behalf of anyone else, that is, for and in behalf of anyone who has not also commenced an “action” to assert his or her own rights under the Act. While more than one person may bring a cause of action under the Kentucky Act, the language of KRS 337.385(1), on its face, bars them from doing so in a representative capacity. Given Kentucky law holding that the plain text controls absent ambiguity, this should resolve the issue.But given the support from extrinsic sources, it makes sense for a court to consider those sources as well. The Kentucky Act’s phrasing negating the class action device makes perfect sense when read in conjunction with the FLSA. Moreover, the Kentucky General Assembly adopted KRS 337.427, a section of the Kentucky Wage Discrimination Because of Sex statute, in 1966, eight years prior to its adoption of KRS 337.385.[63] Thus, it cannot be said the Kentucky General Assembly was unaware of the “for and in behalf of” language when it adopted KRS 337.385(1) in 1974.It is fair to wonder, however, whether the 1974 General Assembly somehow inadvertently omitted the “and other employees similarly situated” language included in the FLSA. Of course, Kentucky has long-recognized the “primary rule of statutory construction that the enumeration of particular things excludes the idea of something else not mentioned.”[64] In Fox v. Grayson,[65] the Kentucky Supreme Court noted, “[w]e cannot dismiss the notable omission of language . . . as a mere accidental oversight. It is well settled law that a court may not add language to the written law to achieve a desired result.”[66] Similarly, in Rue v. Ky. Ret. Sys.,[67] the Kentucky Court of Appeals stated, “[w]e are not free to add words to statutory enactments in order to enlarge their scope beyond that which can be gleaned from a reading of the words used by the legislature.”[68]The Kentucky Supreme Court has a history of adhering to the slight differences in language in related statutes – a point that could easily be highlighted in any opinion on the Kentucky Act. In Kentucky Department of Corrections v. McCullough,[69] the Kentucky Supreme Court considered two different provisions of the Kentucky Civil Rights Act. At issue was the availability of punitive damages, specified in one provision but not the other:

(Kentucky Civil Rights Act – Employment Discrimination):

In the employment discrimination context, permitting recovery for “actual damages sustained.”[70]

(Kentucky Civil Rights Act – Housing Discrimination):

In the housing discrimination context, permitting recovery for “punitive damages.”[71]

When faced with this obvious disparity in language, the Kentucky Supreme Court rejected the Court of Appeals’ “policy-oriented approach,” which allowed for recovery of punitive damages under the employment discrimination remedy provision of KRS 344.[72] Instead, the Court reversed and found, inter alia, that “in construing statutes it must be presumed that the Legislature intended something by what it attempted to do.”[73]A more recent case provides another compelling example of the power of precise statutory language. In Griffin v. Rice,[74] the issue was who would receive the deceased’s estate, his mother or his wife.[75] The answer turned on the Kentucky Supreme Court’s interpretation of KRS 392.090(2), which provided that a spouse who voluntarily leaves the other and “lives in adultery” forfeits his or her right to an interest in the other’s estate of property.[76] The proof at trial showed that the deceased’s wife engaged in one act of sexual intercourse with another man, which happened to be the night prior to the deceased’s death.[77]In concluding that the phrase “lives in adultery” requires proof of more than one sexual act, the Court noted Kentucky’s former fault-based divorce statute contained different phrasing depending upon the party seeking the divorce.[78] According to the prior statute – which while concededly dated and sexist is nevertheless instructive for this limited purpose – a husband or a wife could obtain a divorce on the grounds that the other was “living in adultery with another man or woman,” but, according to another provision, a husband could also obtain a divorce on the grounds of “adultery by the wife.”[79] In finding for the wife, Griffin focused on the difference in language and stated:

Had the General Assembly considered one instance of adultery sufficient to bar a husband or wife from his or her interest in the other spouse’s estate and property, it would have made this clear by employing different wording in the statute, such as “commits adultery” or “engages in adultery.” Another statute, in effect at the same time as the statute at issue, indicates the General Assembly was aware of the import of its phrasing and knew exactly how to distinguish between one adulterous act and multiple acts of adultery. . . . The language chosen by the General Assembly in the contemporaneous divorce statute makes clear the legislature was aware of the significance of its phrasing and was able, had it meant to do so, to employ language that indicated one act of adultery would be sufficient to bar a husband or wife from his or her interest in the other spouse’s estate and property.[80]

Taken together, McCullough and Griffin stand for the proposition that different word choices in closely related statutes must be given effect. The General Assembly clearly understands the import of even slight word changes, and the Supreme Court has read those words literally, regardless of the outcome. In Griffin, that approach arguably had real and negative consequences – rewarding the unfaithful wife at the expense of the deceased’s mother.By contrast, there are no such negative consequences to the General Assembly’s choice to omit the critical and dispositive phrase “and other employees similarly situated.” Any individual who wants to pursue a claim under the Kentucky Act may do so, regardless of whether class actions are permitted. That has been, and will always be, the case. Employees simply will be unable to do so in any type of representative action.In other words, the only individuals truly harmed by this argument are the plaintiffs’ bar. Ultimately, though, the plaintiffs’ bar could have the opportunity to alter this outcome, despite the plain language of the Kentucky Act.

V. The Court of Appeals Provided a Roadmap for How This Issue Should Be Resolved in an Earlier Case

In 2005, the Court of Appeals in City of Somerset v. Bell[81] correctly read a statute as providing for class actions, and later that same year, the General Assembly, disagreeing with that conclusion, amended the statute. In City of Somerset, the Court of Appeals cited a line of precedent spanning more than 70 years which interpreted the statute at issue in that case, KRS 134.590(6), and its predecessor statute, as not allowing for class relief because it provided “[n]o refund shall be made unless application is made in each case within two (2) years from the date payment was made.”[82]City of Somerset noted that line of precedent was called into question due to a 1996 statutory amendment to KRS 134.590(6) which deleted the words “in each case.”[83] This amendment allowed the plaintiff taxpayers to argue the statute now permitted class actions.[84] The Court agreed with the taxpayers, citing Kentucky law providing, “[w]here a statute is amended or re-enacted in different language, it will not be presumed that the difference between the two statutes was due to oversight or inadvertence on the part of the Legislature. On the contrary, it will be presumed that the language was intentionally changed for the purpose of effecting a change in the law itself.”[85] Given this guidance, the court concluded:

Considering the historical significance of that phrase [in each case], beginning in the Swiss Oil case, we must conclude that the intent of the legislature was to amend that portion of the statute limiting refunds for ad valorem taxes to individual claims. Even if the change was unintentional, its effect was to alter key language of a statute, which, for some seventy years before the amendment, had been interpreted by the courts to limit tax refunds to individual claims.[86]

The General Assembly became aware of this result, and, later that very same year (2005), enacted new language to make clear its intent that class actions are not permissible.[87] The statute now reads, “[n]o refund shall be made unless each taxpayer individually applies . . .”[88]City of Somerset provides a model for how statutes should be reviewed. The absence of the phrase “in each case” was critical and dispositive in that case. It would have been more than a little odd for the Court to deny the availability of the class action mechanism to the taxpayers in 2005, given how the statute read at that time. But the General Assembly did not want taxpayers to be able to proceed as a class, so it took away that ability through an amendment to the statute’s text. If the General Assembly believes class actions are appropriate under the Kentucky Act, it will presumably do likewise here, once a Kentucky court definitively decides this issue. Absent that, it would be inappropriate for the judiciary to read into the Kentucky Act what is not there – either by consideration of the plain language or from the context of similar statutes.

[1] Jeff Savarise and Tim Weatherholt are partners in the Louisville office of Fisher & Phillips LLP, a national labor and employment law firm representing employers. Jeff is a 1982 graduate of John Carroll University and a 1985 graduate of the University of Akron School of Law. Tim is a 2001 graduate of Transylvania University and a 2004 graduate of Vanderbilt Law School.[2] Kinney Shoe Corp. v. Vorhes, 564 F.2d 859, 862 (9th Cir. 1977); 29 U.S.C. § 216(b) (2008).[3] See, e.g., Andrew C. Brunsden, Hybrid Class Actions, Dual Certification, and Wage Law Enforcement in the Federal Courts, 29 Berkeley J. Emp. & Lab. L. 269, 292–94 (2008).[4] See, e.g., Alaska Stat. § 23.10.110(b) (2012) (“An action to recover from the employer the wages and damages for which the employer is liable may be maintained in a competent court by an employee personally and for other employees similarly situated, or an employee may individually designate in writing an agent or representative to maintain an action for the employee.”); Haw. Rev. Stat. § 387-12(c) (2008) (“Action to recover such liability may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of oneself or themselves and other employees similarly situated, or the employee or employees may designate an agent or representative to maintain action for and in behalf of all employees similarly situated.”); N.H. Rev. Stat. Ann. 275:53(1) (2008) (“Action by an employee to recover unpaid wages and/or liquidated damages may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf or himself, or themselves, or such employee or employees may designate an agent or representative to maintain such action.”).[5] See, e.g., Minn. Stat. § 177.27(8) (2006) (“An employee may bring a civil action seeking redress . . . .”).[6] See, e.g., Braun v. Wal-Mart, Inc., No. 19-CO-01-9790, 2003 WL 22990114, at *3 (D. Minn. 2003) (certifying class in connection with working off the clock and through break and meal periods on breach of contract and other theories).[7] The Kentucky Act provides in pertinent part: “Such action may be maintained in any court of competent jurisdiction by any one (1) or more employees for and in behalf of himself, herself, or themselves.” Ky. Rev. Stat. Ann. § 337.385(2) (West Supp. 2014).[8] See. e.g., Whitlock v. FSL Mgt., LLC, No. 3:10CV-00562-JHM, 2012 WL 3274973, at *14 (W.D. Ky. 2012), Hughes, v. UPS Supply Chain Solutions, Inc., Nos. 2012-CA-001353-ME, 2012-CA-001757-ME, 2013 WL 4779746, at *7 (Ky. Ct. App. 2013); England v. Adv. Stores Co., Inc., 263 F.R.D. 423, 458 (W.D. Ky. 2009); Barker v. Family Dollar, Inc., No. 3:10-CV-00170-H, 2012 WL 5305335, at *1 (W.D. Ky. 2012); McCauley v. Family Dollar, Inc., No. 3:10-CV-363-S, 2010 WL 3221880, at *1 (W.D. Ky. 2010).[9] Ky. Rev. Stat. Ann. § 413.120(2) (2006).[10] 29 U.S.C. § 255 (2011).[11] Ky. Rev. Stat. Ann. § 337.385 (1974) (current version at Ky. Rev. Stat. Ann. § 337.385 (West Supp. 2014)).[12] Ky. Rev. Stat. Ann. § 337.385 (1978) (current version at Ky. Rev. Stat. Ann. § 337.385 (West Supp. 2014)).[13] Ky. Rev. Stat. Ann. § 337.385 (2010) (current version at Ky. Rev. Stat. Ann. § 337.385 (West Supp. 2014)).[14] Ky. Rev. Stat. Ann. § 337.385 (West Supp. 2014).[15] Orms v. City of Louisville, 686 S.W.2d 464 (Ky. Ct. App. 1984).[16] Id. at 465.[17] Id.[18 ] Id.[19] City of Louisville v. Gnagie, 716 S.W.2d 236 (Ky. 1986).[20] Id. at 237.[21] Id. at 236–37.[22] De minimis is a Latin expression meaning about minimal things. It is commonly used by courts as a basis to not count certain small increments of time and the beginning and end of a workday that may otherwise be compensable.[23] Gnagie, 716 S.W.2d at 237.[24] Id.[25 ]Early v. Campbell Cnty. Fiscal Court, 690 S.W.2d 398 (Ky. Ct. App. 1985).[26] Noel v. Season-Sash, Inc., 722 S.W.2d 901 (Ky. Ct. App. 1986).[27] See id. at 903 (To reiterate, the Commissioner of Labor has original jurisdiction, as held in the Early case, only in those wage and hour disputes in which the duty to provide the benefits sought by the claimant derives solely from the statute . . . .”).[28] Parts Depot, Inc. v. Beiswenger, 170 S.W.3d 354, 356 (Ky. 2005).[29] See id. at 361–62.[30] See, e.g., Barker v. Family Dollar, Inc., No. 3:10-CV-00170-H, 2012 WL 5305335, at *1 (W.D. Ky. Oct. 25, 2012); Whitlock v. FSL Mgmt., LLC, No. 3:10-CV-00562-JHM, 2012 WL 3274973, at *1 (W.D. Ky. Aug. 10, 2012); McCauley v. Family Dollar, Inc., No. 3:10-CV-363-S, 2010 WL 3221880, at *1 (W.D. Ky. Aug. 12, 2010); England v. Advance Stores Co., 263 F.R.D. 423 (W.D. Ky. 2009); Hughes v. UPS Supply Chain Solutions, Inc., Nos. 2012-CA-001353-ME, 2012-CA-001757-ME, 2013 WL 4779746, at *1 (Ky. Ct. App. Sept. 6, 2013).[31] See infra notes 52–63 and accompanying text.[32 ]Hall v. Hospitality Res., 276 S.W.3d 775, 784 (Ky. 2008) (citations omitted).[33] Revenue Cabinet v. O’Daniel, 153 S.W.3d 815 (Ky. 2005).[34] Id. at 819 (citing Ronald Benton Brown & Sharon Jacobs Brown, Statutory Interpretation: The Search for Legislative Intent § 4.2, at 38 (2002)).[35] Lichtenstein v. Barbanel, 322 S.W.3d 27 (Ky. 2010).[36] Id. at 34–35 (citing MPM Financial Group Inc. v. Morton, 289 S.W.3d 193, 198 (Ky. 2009)).[37] Ky. Rev. Stat. Ann. § 337.385 (West Supp. 2014).[38] Id.[39] Id.[40] See Parts Depot, Inc. v. Beiswenger, 170 S.W.3d 354, 358 (Ky. 2005).[41] Ky. Rev. Stat. Ann. § 337.385 (West 2014).[42] 29 U.S.C. § 216 (2012) (emphasis added).[43] Kentucky’s Wage Discrimination Because of Sex provisions are located at Ky. Rev. Stat. Ann §§ 337.420—337.433 (West 2014).[44] Ky. Rev. Stat. Ann §§ 337.423(1) (West 2014).[45] Ky. Rev. Stat. Ann §§ 337.427(2) (West 2014) (emphasis added).[46] Califano v. Yamasaki, 442 U.S. 682 (1979).[47] Id. at 698 n. 12.[48] Id. at 700.[49] Ky. R. Civ. P. 1(2).[50] (Class Action not permitted—31 states) See, e.g., Ala. Code § 8-19-10(f) (2014); Ariz. Rev. Stat. Ann. § 33-712(C) (2014); Ark. Code Ann. § 4-87-103 (West 2014); Conn. Gen. Stat. § 36a-740 (West 2014); Fla. Stat. § 624.155(6) (West 2014); Ga. Code. Ann. § 7-4-21 (West 2014); Haw. Rev. Stat. § 477E-4(b) (West 2014); Idaho Code Ann. § 28-45-201(1) and (3) (West 2014); 740 Ill. Comp. Stat. 10/7(2) (West 2014); Iowa Code § 537.5203(1) (West 2014); Kan. Stat. Ann. § 50-634(b) (West 2014); Ky. Rev. Stat. 134.590(6) (West 2014); La. Rev. Stat. Ann. § 51:1409(A) (2014); Mich. Comp. Laws § 445.1611(1) (2014); Minn. Stat. § 325M.07 (2014); Miss. Code Ann. § 75-24-15(4) (West 2014); Mont. Code Ann. § 30-14-133(1) (West 2013); Neb. Rev. Stat. § 77-2793(1) (2014); N.H. Rev. Stat. Ann. § 359-H:4 (2014); N.J. Stat. Ann. § 46:10B-29(a)(2) (West 2014); N.C. Gen. Stat. § 75C-5 (2014); Okla. Stat. tit. 36 § 6595; Or. Rev. Stat. § 238.362(4)(a) (2014); 73 Pa. Cons. Stat. § 2208(d) (2014); R.I. Gen Laws § 15-7.2-5(b) (2014); S.C. Code Ann. § 40-39-160(1) (2013); S.D. Codified Laws § 10-47B-131.2 (2014); Tenn. Code Ann. § 56-47-108(a)(2) (West 2014); Tex. Bus. & Com. Code Ann. § 605.005 (West 2013); Utah Code Ann. § 13-37-203(3) (West 2014); Wash. Rev. Code § 63.60.070(3) (2014). (Class Action Limited – 15 states) See, e.g., Cal. Civ. Code § 1787.3(b) (West 2014); Col. Rev. Stat. § 6-1-113(2) (2014); Ind. Code 9-32-12-4(c) (2014); Me. Rev. Stat. tit. 32, § 11054(c)(2) (2014); Md. Code Ann. § 12-707(c) (West 2014); Mass. Gen. Laws ch. 140D, § 32(a)(2)(b) (2014); Mo. Rev. Stat. § 71.675(2) (2014); Nev. Rev. Stat. § 38.255(3)(b) (2014); N.M. Stat. Ann. § 58-16-15(B) (West 2014); N.Y. Gen. Oblig. Law § 5-702(a)(2) (McKinney 2014); Ohio Rev. Code Ann. § 1351.08(A)(2)(b)(ii) (West 2014); Va. Code Ann. § 8.01-316(A)(2) (West 2014); W. Va. Code § 6C-2-3(e)(2) (2014); Wis. Stat. § 426.110(3) (2013); Wyo. Stat. Ann. § 40-19-119(a)(iii) (2014).[51] See Ky. Rev. Stat. Ann. § 413.120(2) (West 2014).[52] Toyota Motor Mfg, Kentucky, Inc. v. Kelley, et al., No. 2012-CA-001508-ME, 2013 WL 6046079 (Ky. Ct. App. Nov. 15, 2013).[53] As co-author Jeff Savarise tells the story, he locked himself in his office, determined to develop an argument that would allow TMMK to prevail in this case. When he emerged, he posited the heretofore novel theory that that Kentucky Act does not permit class actions. Just as in Orms and Gnagie, there were other arguments to present on appeal, but this novel argument provided an extra layer of security in the correctness of our position.[54] TMMK, 2013 WL 6046079, at *1.[55] Id.[56] Id. at *2.[57] Id. at *2.[58] Id. at *3–4.[59] Ky. R. Civ. P. 23.06, which became effective on January 1, 2011, provides, “[a]n order granting or denying class action certification is appealable within 10 days after the order is entered. . .”[60] TMMK, 2013 WL 6046079, at *8–9.[61] Id. at *9.[62] See Brown v. Humana Inc. and Humana Ins. Co., No. 13-CI-002422 (Ky. Cir. Ct. Dec. 5, 2013).[63] Ky. Rev. Stat. Ann. § 337.427 (West 1966).[64] Smith v. Wedding, 303 S.W.2d 322, 323 (Ky. 1957) (citation omitted).[65] Fox v. Grayson, 317 S.W.3d 1 (Ky. 2010).[66] Id. at 8.[67] Rue v. Ky. Ret. Sys., 32 S.W.3d 87 (Ky. Ct. App. 2000).[68] Id. at 89.[69] Kentucky Department of Corrections v. McCullough, 123 S.W.3d 130 (Ky. 2003).[70] Ky. Rev. Stat. Ann. § 344.450 (West 1974).[71] Ky. Rev. Stat. Ann. § 344.660 (West 1991); Ky. Rev. Stat. Ann. § 344.665 (West 1992).[72] McCullough, 123 S.W.3d at 139.[73] Id. at 140 (emphasis added).[74] Griffin v. Rice, 381 S.W.3d 198 (Ky. 2012).[75] Id.at 200.[76] Id. at 201.[77] Id. at 199.[78] Id. at 202–03.[79] Id. at 202.[80] Id. at 202–03.[81] City of Somerset v. Bell, 156 S.W.3d 321 (Ky. Ct. App. 2005).[82] Id. at 326 (citing Swiss Oil Corp. v. Shanks, 270 S.W. 478 (Ky. 1925); Bd. of Educ. of Fayette County v. Taulbee, 706 S.W.2d 827 (Ky. 1986); Bischoff v. City of Newport, 733 S.W.2d 762 (Ky. Ct. App. 1987)) (emphasis in original).[83] Id. at 326.[84] Id. [85] Id. at 327 (citing Eversole v. Eversole, 185 S.W. 487, 489 (1916)).[86] Id. at 326–27.[87] Ky. Rev. Stat. Ann. § 134.590(6) (West 1992).[88] Id. (Emphasis added).

United States v. Kentucky Bar Association: In a Case Drawing National Attention, the Kentucky Supreme Court Addresses the Ethics of Waivers of Ineffective Assistance of Counsel in Plea Bargains

Article | 103 KY. L. J. ONLINE 1 | Feb 2, 2015

B. Scott West1

I.  Introduction 

In an opinion that is creating ripples throughout the country with respect to the ethics of criminal plea bargaining, the Kentucky Supreme Court in United States v. Kentucky Bar Association2 affirmed Kentucky Bar Association (“KBA”) Advisory Ethics Opinion E-4353 to be a correct statement of the Kentucky Rules of Professional Conduct.4 That advisory opinion stated that it was a concurrent conflict of interest for a criminal defense attorney to advise a client whether to accept a plea bargain which contained a prospective waiver of a claim of ineffective assistance of counsel (IAC) against that attorney, and that likewise it was a violation of the rules for a prosecutor to induce or assist an attorney to violate the Rules of Professional Conduct by including such a waiver in an offer on a plea of guilty.5The outcome of the case is significant, given the events of the last couple of decades, where federal substantive law on the validity of waivers of constitutional rights found itself juxtaposed against the ethical requirements placed upon the attorneys involved in the plea bargain, the prosecutor and the criminal defense attorney. Specifically, the substance of KBA E-435 arguably conflicted with the federal circuit courts that had one by one applied traditional waiver analysis to the issue of IAC claims and had affirmed their validity. As more circuit courts affirmed the constitutional validity of the waivers, they began to become more prevalent in plea bargains on both state and federal levels. And as the use of such waivers became more popular with prosecutors, so grew the opportunities for various state bar ethics authorities to address the issue of the ethics of including such waivers in plea bargains. Almost as quickly as the circuit courts were affirming waivers, the vast majority of state ethics authorities found the inclusion of an IAC waiver into a plea offer to place the criminal defense attorney into an irreconcilable conflict of interest. The question necessarily arose, which interpretation takes precedence: the federal circuits that have found such waivers to be valid, or the ethics opinions that proscribe the inclusion of such waivers into plea bargains?It was against this backdrop that KBA E-435 originated. With its publication by the Kentucky Board of Governors, and a state supreme court rule which allows any person “aggrieved” by an ethics opinion to challenge the opinion directly in the Kentucky Supreme Court,6 a forum was presented with which to have the issue decided. For the first time a court would decide on the merits of whether a state ethics rule would take precedence over circuit court waiver analysis. While a Kentucky opinion would not be binding on other states’ courts or United States federal courts outside of Kentucky, the outcome would nevertheless be persuasive.This past August, the Kentucky Supreme Court became the first court to pronounce that prospective IAC waivers included within plea bargains did, in fact, present a conflict of interest for the criminal defense attorney.7 In so doing, the Court drew a sharp line of distinction between federal substantive law, which had discussed in a vacuum the issue of whether the right to file an IAC was waivable, and the behavior of the attorneys involved in advising a client about a waiver or conditioning an offer on entry of a waiver. Shortly after the issuance of the opinion, federal prosecutors indicated that they “no longer will ask criminal defendants who plead guilty to waive their right to appeal over bad legal advice,”8 and as expected, Attorney General Eric Holder officially announced this development on October 14, 2014.9 This change signals an about-face of a practice that has been prevalent within the federal court system for the last decade or so—the reversal of a position to which the United States had steadfastly clung even as late as a year ago, when the United States decided to challenge the validity of KBA E-435. More importantly, the case stands as a beacon of continuing hope to those who plead guilty to a crime due to the ineffective advice of their attorneys, only later to find out that they should not have accepted their plea bargains, or even pled guilty at all.

II.  Ineffective Assistance of Counsel Claims and the Proliferation of Waivers

Any discussion about the ethical propriety of advising a client whether to waive a potential IAC claim necessarily must start with a description of the claim being waived. An IAC claim is essentially a claim filed in the trial court10 urging the court to vacate the conviction on the ground that the client’s Sixth Amendment Right to counsel has been abrogated.11 The right to counsel has been construed to mean the right to effective assistance of counsel,12 and in Strickland v. Washington,13 the Supreme Court expounded that effective counsel means that counsel’s performance meets “an objective standard of reasonableness.”14 This effectiveness extends to an attorney’s role in advising a client whether to plead guilty pursuant to a plea bargain.15 However, “[j]udicial scrutiny of counsel’s performance must be highly deferential.”16 In order to establish ineffective assistance of counsel:

First, the defendant must show that counsel's performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as the “counsel” guaranteed the defendant by the Sixth Amendment. Second, the defendant must show that the deficient performance prejudiced the defense. This requires showing that counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable. Unless a defendant makes both showings, it cannot be said that the conviction or death sentence resulted from a breakdown in the adversary process that renders the result unreliable.17

This standard can prove to be a difficult one for a claimant to meet, and in fact, has been criticized as being too deferential of attorneys’ performances, leading to courts not finding deficient performances often enough.18 According to a paper published by The Innocence Project, relying on a study by the National Center for State Courts, IAC claims are the “most commonly raised issues,” being raised in nearly half of all state post-conviction appeals, with only about eight percent of them being successful.19 On the other hand, it is true also that many post-conviction IAC claims are not well grounded in fact, and are often just another step in the appeal process and part of the job of being a criminal defense lawyer. “Attorneys who try criminal cases should not be surprised by challenges to their competency and integrity, for the claim of ineffective assistance of counsel is often a last appeal for the disappointed client.”20No wonder, then, that federal prosecutors – out of honorable desires of promoting finality of decisions, deterring waste of court resources, and avoiding having to respond to spurious IAC claims21 – began to require waivers of IAC claims in cases where the plea bargain being offered was exceptionally good, at least in the eyes of the prosecutors. Whereas before, prosecutors have required waivers of the right to direct appeal of convictions and sentences during plea colloquies, “increasingly . . . prosecutors have enlarged the scope of such waivers to include waiving all constitutional and procedural errors, even unknown ineffective assistance of counsel claims . . . .”22 At some point, however, the insertion of IAC waivers into federal plea bargains became routine.23 One study looked at the “boilerplate” plea agreements used in every federal jurisdiction – 114 in all, including at least one plea agreement from each of the 94 federal districts – and concluded that roughly a quarter of them contain language that waives all forms of collateral attacks, including claims of ineffective assistance of counsel.24Challenges to the validity of the waivers themselves arose in virtually every circuit, and in turn, between 1991 and 2005 virtually every circuit applied traditional waiver analysis and came to the conclusion that prospective waivers of IAC could be valid.25 As the Sixth Circuit Court of Appeals observed in Davila v. United States, “[w]hen a defendant knowingly, intelligently, and voluntarily waives the right to collaterally attack his or her sentence, he or she is precluded from bringing a claim of ineffective assistance of counsel . . . .”26 However, none of the circuits up to this point addressed the issue of the ethics involved when a client waives a potential IAC against the very defense attorney advising the client on the plea agreement in which the waiver was contained. Simply put, the issue before the courts was only about whether the right to file an IAC – a right grounded in the Sixth Amendment right to counsel – was waivable.

III. State Bar Ethics Committees – Including Kentucky – Address the Ethics of IAC Waivers, and a Trend Starts Reversing 

Almost co-incident with the publication of the circuit opinions approving the validity of IAC waivers in plea bargains, various state bar ethics committees began to address the issue of whether it was a violation of the rules of professional conduct for a defense attorney to advise his or her client to enter a plea bargain which contained a waiver of future potential IAC claims against the attorney.27 The earliest states to consider the issue were North Carolina,28 Tennessee,29 Vermont,30 Arizona,31 and Ohio,32 which decided the issues between 1993 and 2001. North Carolina, who had adopted a version of the Model Rules of Professional Responsibility, opined that “the waiver of rights arising from the ineffective assistance of counsel . . . appears to be, and shall prospectively be deemed to be, in conflict with the ethical duties expressed or implied in the rules.”33 Tennessee, Vermont, and Ohio all referenced their state’s versions of the Model Code of Professional Responsibility’s Disciplinary Rule 6-102, which generally provide that “[a] lawyer shall not attempt to exonerate himself from or limit his liability to his client for personal malpractice.”34 Only Arizona, which also was decided under the Model Code of Professional Responsibility, failed to find an ethical breach, finding instead that there was a distinction between a malpractice claim and an IAC, and therefore, the Code did not prohibit the activity.35Then, between 2006 and 2013 – perhaps due to what Ellis and Bussert refer to as a “tide of postconviction waivers” appearing routinely in federal plea agreements36 – seven other states, including Kentucky, began to address the issue.In 2006, Texas interpreted Rule 1.7 of the Texas Disciplinary Rules of Professional Conduct, which is worded substantively differently from the version contained in the ABA’s Model Rules of Professional Conduct (RPC), to read that no conflict of interest is created when an attorney recommends a waiver of a potential IAC claim unless the attorney’s representation reasonably appears to be or becomes adversely limited.37 In short, the Texas rule appears to focus not on a risk of limitation of representation, as is true in the versions of Model Rules decided by the other states, but on something closer to actual limitation.Missouri,38 Alabama,39 Nevada,40 Virginia,41 Florida,42 and Kentucky43 decided the issue under their respective, but substantively similar, versions of the RPC and came to substantially identical conclusions. The opinions relied principally upon interpretations of RPC 1.7, 1.8(h), 8.4(a)44 and in the case of Kentucky, 3.8(b).45Kentucky’s KBA E-435’s opinion arose, as do all Kentucky informal ethics opinion, as a response to a request of a practitioner who raises an issue that the Committee believes is pertinent to attorneys in general.  After the committee agrees to address a question via an opinion, a member drafts the opinion (in this case, the KBA Ethics Committee Chair Grace M. Giesel),46 who – after robust discussion and vetting by the other members of the Committee – edits the opinion and submits it to the Kentucky Bar Board of Governors for their own discussion and subsequent approval or disapproval. If approved, the advisory opinion is ordered officially published in Kentucky Bench & Bar. KBA E-43547 was approved, and is summarized as follows:

• RPC 1.7 prohibits an attorney from advising a client about a plea agreement which contains a waiver of a prospective IAC against that attorney because there is a concurrent conflict of interest with the client.48 RPC 1.7(a) provides in pertinent part that:

Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: . . . (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.49

KBA E-435 opined that “[t]he lawyer has a clear interest in not having his or her representation of the client challenged on the basis of ineffective assistance of counsel. The lawyer certainly has a personal interest in not having his or her representation of the client found to be constitutionally ineffective.”50

• By analogy to RPC 1.8(h), which limits prospective waivers of malpractice but which is not directly applicable to IAC’s, a lawyer cannot ethically advise a client about an IAC waiver because it is the attorney’s own professional conduct which stands as the underlying basis for the claim.51 In fact, comment 14 to Rule 1.8 provides:

Agreements prospectively limiting a lawyer’s liability for malpractice are prohibited unless the client is independently represented in making the agreement because they are likely to undermine competent and diligent representation. Also, many clients are unable to evaluate the desirability of making such an agreement before a dispute has arisen, particularly if they are then represented by the lawyer seeking the agreement.52

• RPC 3.8(b) provides that a prosecutor must “make reasonable efforts to assure that the accused has been advised of the right to, and the procedure for obtaining, counsel and has been given reasonable opportunity to obtain counsel.”53 Comment 1 to RPC 3.8 states that “[a] prosecutor has the responsibility of a minister of justice and not simply that of an advocate. This responsibility carries with it specific obligations to see that the defendant is accorded procedural justice . . . .”54

KBA E-435 opined that it was “inconsistent with the prosecutor’s role as a minister of justice and the spirit of SCR(3.8(b)) for a prosecutor to propose a plea agreement that requires the individual to waive his or her right to pursue a claim of ineffective assistance of counsel.”55

• Finally, RPC 8.4(a) provides that “[i]t is professional misconduct for a lawyer to: (a) violate or attempt to violate the Rules of Professional conduct, knowingly assist or induce another to do so, or do so through the acts of another.”56 KBA E-435 opined that “[i]n making such a proposal, a prosecutor is assisting or inducing another lawyer, defense counsel, to violate the Rules of Professional Conduct, conduct proscribed by Rule 8.4(a).”57

With the adoption of KBA E-435 by the Kentucky Board of Governors, and its publication in Kentucky Bench & Bar magazine, Kentucky in 2013 joined the growing list of jurisdictions that found the practice of inclusion of IAC waivers to be unethical. It was a trend that did not escape the notice of at least one circuit court, which only a decade earlier had approved the validity of IAC waivers.58In Watson, the Eighth Circuit Court of Appeals revisited the issue of IAC waivers when a defendant brought an action pursuant to 28 U.S.C. § 2255 to vacate a sentence he received for pleading guilty to a drug conspiracy charge.59  The district court had denied the motion because his plea agreement contained a waiver of ineffective assistance of counsel claims.60 The Court of Appeals stated that the “[d]ismissal of a section 2255 motion on the basis of a waiver in the plea agreement is appropriate when the defendant’s claims of ineffective assistance relate to the negotiation of, and entry into, the plea agreement and waiver.”61However, the Court then noted that in a previous decision, it had been suggested that DeRoo should be refined to mean that a general waiver of the right to bring post-conviction claims under 28 U.S.C. § 2255 would not be sufficient to waive such a claim of ineffective assistance of counsel, absent an explicit waiver of the Sixth Amendment right to counsel which explained the concept of ineffective assistance of counsel.62 Such a waiver would be considered “knowing and voluntary” under the law of that Circuit provided that such a waiver of the Sixth Amendment right to counsel did not result in a “miscarriage of justice.”63 However, Chesney did not adopt such a refinement of DeRoo, since in that case the defendant’s waiver did not specifically mention the Sixth Amendment.64Then, the Court declined to adopt the Chesney refinement of DeRoo in the Watson case, and it did so for a very interesting reason:

We are not inclined to decide whether to adopt Chesney's refinement of DeRoo in this particular case, however, because the parties failed to address an issue we find difficult to ignore in determining whether Watson knowingly and voluntarily waived his right to bring an ineffective assistance claim with respect to matters directly related to the plea agreement. Ethics opinions from various states have addressed whether a defendant's attorney labors under a conflict of interest when advising a client to waive an ineffective assistance of counsel claim, with conflicting results. Watson does not claim his counsel labored under a conflict of interest when advising him to enter the plea agreement, and the parties did not brief this issue. We therefore believe it prudent to forego the issue of whether DeRoo should be refined by Chesney's suggestions until this related issue on a potential conflict of interest is fully aired by the adversarial process.

Instead, we accept the government's invitation to determine whether the district court should be affirmed in any event because Watson's ineffective assistance claim fails on the merits.65

Thereafter, persuaded by Watson, the Eastern District of Pennsylvania, in United States v. Deluca, decided against enforcement of a waiver of an IAC contained in the plea bargain before it.66 In Deluca, the court took note of state ethics opinions from the various states:

Although the Pennsylvania Bar has not addressed this issue,67 there appears to be an emerging trend among state bar ethics committees to recognize a criminal defense lawyer's personal interest in avoiding ineffective assistance of counsel claims may create a conflict of interest for the lawyer in advising his client regarding a plea agreement that would waive such claims. These ethics opinions do not purport to address the legality or enforceability of waivers of ineffective assistance of counsel claims, in some instances recognizing these issues are for the courts . . . . Although the Government urges this Court to likewise hold any conflict of interest in this case was merely speculative, the weight of ethics opinions to the contrary gives this Court pause in doing so.68

If nothing else, Watson and Deluca signaled that federal courts were no longer going to merely consider the validity of IAC waivers contained in plea agreements in a vacuum; the growing trend of ethics opinions denouncing the behavior of including such waivers in plea agreements were sufficient to give pause in enforcing the waivers. Both the Watson and Deluca courts declined to enforce the waivers, instead deciding the IAC issues on their merits.69 Nevertheless, the courts stopped short of addressing the ethical implications of inclusion of IAC waivers in plea agreements, in the case of Watson, because the parties had not addressed the issue in the briefing,70 and in the case of Deluca, because the Pennsylvania Bar had not opined on the ethics.71Something had to give; either the practice of placing waivers of IAC claims into plea agreements would have to be curtailed for ethical reasons (at least in those cases where the state’s ethic authorities found the practice to be barred under the state’s ethical code or rules), or, alternatively, at least in the federal courts, state ethical decisions would have to be subordinate to federal circuit case decisions which found such waivers to be valid after applying traditional waiver analysis. It was in this environment that the United States, acting through its United States Attorneys for both Eastern and Western Districts of Kentucky, filed suit against the Kentucky Bar Association,72 urging the Kentucky Supreme Court to strike down KBA E-435 either as violating federal law under the supremacy clause,73 or as misinterpreting the Kentucky Rules of Professional Conduct.

IV.  United States v. Kentucky Bar Association 

Pursuant to Kentucky Supreme Court Rule 3.530(12), any party or entity aggrieved or affected by a formal opinion of the Kentucky Board of Governors may file within thirty days of the opinion’s publication in Kentucky Bench & Bar magazine for a review of the opinion by the Kentucky Supreme Court.74 Thereafter, the Director of the Kentucky Bar Association may file a response within thirty days.75On April 29, 2013, the United States petitioned the Kentucky Supreme Court for review. The United States urged the court to vacate KBA E-435, arguing that the advisory opinion conflicted with controlling federal law,76 and that “[s]imply, the Board lack[ed] ‘the power, in the guise of regulating ethics, to impose strictures that are inconsistent with federal law.’”77 The United States also argued that the KBA “wrongfully conclude[d] that an ineffective assistance of counsel waiver creates an automatic conflict of interest for defense counsel that cannot be waived and that a prosecutor who makes a plea offer containing such a waiver violates the Rules of Professional Conduct.”78 The government explained: “If lawyers are presumed to provide competent representation and, by the time of the plea, a defense attorney is not aware of, or has not otherwise been accused of providing, ineffective representation, there is no ‘significant risk’ that counsel’s plea representation will be materially compromised by the possibility that, sometime in the future, counsel’s representation might be deemed ineffective.”79The impact of a holding in favor of the United States’ arguments would be clear: ineffective assistance of counsel claims could be waived out of existence, at least in the state of Kentucky. While not every plea bargain currently contains an IAC waiver, a Kentucky Supreme Court opinion upholding the practice of including and advising about such waivers could inevitably lead to a proliferation of their use. Moreover, with Kentucky being the first state to address the issues of “waiver v. ethics” on the merits, the case drew national attention.80 The National Association of Criminal Defense Attorneys81 (along with eighteen Legal Ethics Professors82 and sixteen Legal Ethics Practitioners83 located throughout the country) filed an amicus brief 84 in favor of the respondent, Kentucky Bar Association, as did Western Kentucky Community Defender, Inc.85 in Louisville, Kentucky, and the Innocence Network.86While the case was pending, the American Bar Association Criminal Justice Section proposed Resolution 113E. The resolution was introduced by George Washington University Law School’s Stephen A. Saltzburg and unanimously adopted by the ABA House of Delegates at their annual meeting on August 12-13, 2013.87 The resolution stated that the ABA opposed “plea or sentencing agreements that waive a criminal defendant’s post-conviction claims addressing ineffective assistance of counsel, prosecutorial misconduct or destruction of evidence unless based upon past instances of such conduct that that are specifically identified in the plea or sentencing agreement or transcript of the proceeding.”88In August 2014, the Kentucky Supreme Court handed down its opinion, addressing all of the issues raised by the United States, the KBA, and the Amicus parties.89 In a unanimous opinion authored by Chief Justice John D. Minton, Jr., the Court held that there was no conflict between Kentucky’s ethics rules and federal law, and that KBA E-435 accurately stated Kentucky’s ethical rules.90

A.  KBA E-435 Held Not to Violate the Supremacy Clause or Conflict with Federal Law

The court first addressed what it called an “issue of weighty concern,” that the ethics opinion violated the Supremacy Clause “because it stands in direct conflict with federal case law, statutes, and regulations.”91 The court recognized that to accept this argument, it would be “compelled to vacate E-435 as applied to the United States.”92 However, the court declined to agree with what it referred to as the United States’ “remarkable" notion.93First, the court noted that 28 U.S.C. § 530B provided that all government attorneys are bound by ‘“[s]tate laws and rules, and local Federal court rules, governing attorneys in each State where such attorney engages in that attorney’s duties, to the same extent and in the same manner as other attorneys in that State.’”94 Clarifying the previous statute, the Attorney General issued 28 C.F.R § 77.1(b), requiring ‘“[d]epartment attorneys to comply with state and local federal rules of professional responsibility.’”95However, the court stated that “[28 U.S.C. § 530B] should not ‘be construed in any way to alter federal substantive, procedural, or evidentiary law.’”96 The primary issue(s) before the court, then, was the “perplexing question whether Congress has precluded state action or by the choice of selective regulatory measures has left the police power of the States undisturbed except as the state and federal regulations collide,”97 and whether “the Supremacy Clause demands E-435’s lurking constitutional concerns be resolved.”98 In a footnote, the court found that “[i]n this particular case, the perplexity is increased by the fact that the Executive Branch, through the Office of Attorney General, is attempting to dictate to the Judicial Branch the standards for which attorneys, i.e., officers of the courts, should uphold.”99The court acknowledged that the vast majority of federal circuit courts had upheld the validity of IAC waivers in plea agreements, but then firmly drew the line between the waivers themselves and the acts of the attorneys involved:

We concede that federal jurisprudential support for the waivers at issue here is nearly unanimous. Our research indicates that every federal circuit to consider the validity of an IAC waiver—ten out of twelve—has explicitly permitted defendants to plead guilty and waive collateral review, including IAC. Undoubtedly, this case law is substantial and persuasive, if we were deciding, on its merits, whether a defendant could waive an IAC claim. But we are not deciding that issue. The obligations of attorneys are the real focus of this appeal. The KBA Ethics Committee, in any event, is without jurisdiction to issue opinions on such questions of law. So this Court's review of an IAC waiver's validity in the context of a plea agreement waits for another day.100

In our view, E-435 survives scrutiny under § 530B and the Supremacy Clause because it is simply an ethical rule and does not affect federal substantive, procedural, or evidentiary law. There is no subterfuge in E-435. It is not a procedural or substantive rule disguised as an ethics rule. E-435 also survives because, as we mention below, there is no contrary federal law.101

Thereafter, the court discussed why there was no other controlling federal law that would mandate vacation of E-435 under the Supremacy Clause.102

B.  KBA E-435 Held to be the Correct Interpretation of Kentucky’s Rules of Professional Conduct

Having decided that KBA E-435 was not precluded by the Supremacy Clause – and therefore, if accurate, binding upon all attorneys practicing within state and federal courts within Kentucky – the court turned its attention to whether the ethics opinion accurately articulated the ethical concerns associated with allowing IAC waivers in plea agreements.103 The court recognized that E-435 did “not express a novel position,”104 and that it was “align[ed] with the vast majority of state ethics decisions.”105 Further, the court stated that, “[t]he soundness of E-435’s reasoning aside, as former Justice Robert Jackson famously remarked, ‘the mere fact that a path is a beaten one is a persuasive reason for following it.’ We choose the beaten path today.”106Point by point, the court affirmed the reasoning of E-435.

• RPC 1.7: With regard to whether waivers present a conflict of interest for the defense attorney, the court found that:

The goal of [RPC 1.7] is to lessen the possibility of a ‘lawyer’s own interests . . . hav[ing] an adverse effect on [the] representation of a client. . . .’107 When defense counsel is forced, through the introduction of an IAC waiver in a plea agreement, to advise a client on the attorney's own conduct, a personal interest certainly exists. An IAC claim is time consuming for an attorney, may tarnish the attorney's professional reputation, may subject the attorney to discipline by the bar or courts, and may even have serious financial consequences for the attorney's practice.108

The court rejected the United States’ notion that an attorney’s personal interest will not “ordinarily” create a significant risk that a client’s representation will be materially limited.109 “This leaves open the possibility that ethical violations may occur and clients’ interests may be compromised. Instead of reactive, our ethics rules are intended to be proactive and operate preventively.”110

• RPC 1.8(h), to which E-435 had analogized and which the United States had argued was irrelevant and inapplicable to an IAC waiver, was found to be more than an analogy by the court. The court found a link between an IAC claim and a potential claim for malpractice.111 “In Kentucky, to claim malpractice in a criminal case, just the same as a civil case, a defendant must show proximate cause. . . . [S]uffice it to say that without having his conviction overturned, a defendant's attempt at proving proximate cause becomes extraordinarily difficult, virtually impossible.”112

[P]ublic policy supports our conclusion that advising on an IAC waiver in a plea agreement is prohibited under [RPC] 1.8(h). Criminal defendants, of course, seldom bring malpractice actions.  Instead, the usual course of action is via an action under [RCr] 11.42 or, federally speaking, a writ of habeas corpus under 28 U.S.C. § 2255. “[C]riminal defendants should not suffer from lesser protections simply because they usually seek habeas corpus relief rather than malpractice damage[s.]"113

• RPC 3.8(b) was held to be applicable to prosecutors who would impose a waiver of an IAC claim as a condition of a plea offer:

Despite any notion of horse trading, plea agreements are often essentially contracts of adhesion. Indeed, in the context of appellate waivers, they have been labeled as such. The plea agreement often comes with a take-it-or-leave-it tone. And defense counsel is forced to deal with the provision if offered. Because the prosecutor is aware of our ethical rules, we see little reason why offering a contract of adhesion that requires a fellow attorney to perform unethically in order to comply with other ethical or constitutional obligations would not be "influencing or persuading" a fellow attorney to violate our ethical rules.114

• Finally, the Supreme Court agreed with E-435 that plea bargains conditioned upon IAC waivers violate the spirit of RPC 3.8, which describe a prosecutor’s role to be a “minister of justice.”115 A prosecutor is charged with “‘see[ing] that the defendant is accorded procedural justice,’ and we simply do not believe the use of IAC waivers lives up to that lofty expectation.”116

The Kentucky Supreme Court concluded its opinion succinctly and firmly:

We are duty-bound to regulate the legal profession within our borders. Today, we are proactive in that role. Attorneys practicing in this Commonwealth, whether state or federal, must comply with our ethics rules. Accordingly, either defense counsel or prosecutors inserting into plea agreements waivers of collateral attack, including IAC, violates our Rules of Professional Conduct.117

V.  What Happens Next? 

Immediately following the issuance of United States v. Kentucky Bar Association, the opinion was applauded as being the first to address the merits of whether a state ethics rule prohibiting waivers would take precedence over the established federal practice of allowing IAC waivers in plea bargains. John Wesley Hall, who argued the case on behalf of amicus participant NACDL and the ethics professors and practitioners, stated “[n]ow we have an appellate court, in a lengthy and compelling opinion, joining many ethics opinions on the subject.”118 Daniel Goyette, Executive Director of the Louisville-Jefferson County Public Defender Corporation, stated “[t]he much anticipated decision by the Supreme Court of Kentucky is certain to have a broad national impact on the practice of criminal cases, both in terms of law and ethics.”119As previously stated, Attorney General Eric Holder issued a shift in policy under which United States Attorneys “should no longer seek in plea agreements to have a defendant waive claims of ineffective assistance of counsel.”120 The memorandum to federal prosecutors stated that, while a “majority of United States Attorney’s offices do not seek a waiver,” the Department of Justice has a “strong interest in ensuring that individuals facing criminal charges receive effective assistance of counsel.”121 Further, while a majority of prosecutors “do not seek a waiver,” the Department was interested in bringing “consistency” in the practice of making plea bargains, and in supporting the “underlying Sixth Amendment right.”122It is unknown whether the Attorney General’s decision was based, in part, on the decision in United States v. Kentucky Bar Association; the memorandum stated that the Department was “confident” that a waiver of ineffective assistance of counsel was both legal and ethical.123 Nevertheless, as can be inferred from the Wall Street Journal Online article, the timing of the issuance of the memorandum announcing the policy change suggests that the outcome of the opinion may have had some persuasive value.124 In this sense, the United States Attorneys who brought the challenge to the Kentucky Supreme Court should be commended for courageously bringing to a head an issue that perhaps ought to have been decided by some court, somewhere, a long time ago. By appealing E-435, the long-standing tension between federal court decisions which have upheld waivers of IAC claims, and the ethics decisions of most of the state bars who have decided the issue, are resolved.

1 B. Scott West is the General Counsel of the Kentucky Department of Public Advocacy, and a member of the KBA Ethics Committee. He, along with KBA Executive Director John Downing Meyers and KBA Bar Counsel Thomas H. Glover, represented the KBA in U.S. v. Ky. Bar Ass’n. Thanks to Thomas H. Glover for his editing and insight of this article prior to submission. Thanks also to Edward C. Monahan, Kentucky’s Public Advocate, for allowing his General Counsel to participate and represent the KBA in this case and to write this article.

2 U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014).3 Ky. Bar Ass’n, Advisory Op. KBA E-435 (2012) (As found in Bench and Bar, March 2013, at 34–35).4 Ky. Rev. Stat. Ann. S. Ct. Rule 3.130 (West 2014) [hereinafter SCR].5 Ky. Bar Ass'n, supra note 3.6 SCR 3.520(12) (West 2014). In the event of an inquiry of the Kentucky Bar Association, under the interpretation of KBA E-435 a United States Attorney could possibly be found to be in violation of the Rules of Professional Conduct by including waivers in plea agreements. Thus, the United States would be an “aggrieved” person for purposes of a challenge.7 See U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014); Joe Palazzolo, Government Rethinks Waivers With Guilty Pleas: Defense Lawyers Say Giving Up Right to Appeal Presents Conflicts of Interest, Wall St. J. (Sept. 26, 2014, 12:19 PM), http://online.wsj.com/articles/u-s-government-seeks-to-curb-appeals-over-bad-legal-advice-1411745218.8 Palazzolo, supra note 7.9 Eric Tucker, US Sets New Policy on Ineffective Lawyer Claims, Associated Press (Oct. 14, 2014 4:39 PM), http://hosted.ap.org/dynamic/stories/U/US_JUSTICE_INEFFECTIVE_COUNSEL?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-10-14-13-31-40.10 In Kentucky state courts, the procedure for asserting ineffective assistance of counsel is codified in Ky. R. Crim. P. 11.42. In the federal system, the procedure is codified at 28 U.S.C. § 2255 (2008) .11 The Sixth Amendment of the Constitution of the United States provides in pertinent part that “In all criminal prosecutions, the accused shall enjoy the right . . . to have the Assistance of Counsel for his defense.” U.S. Const. amend. VI.12 McMann v. Richardson, 397 U. S. 759, 771, n.14 (1970) (emphasis added).13 Strickland v. Washington, 466 U.S. 668, 688 (1984).14 Id.15 See, e.g., Padilla v. Kentucky, 559 U.S. 356, 364 (2010) (“Before deciding whether to plead guilty, a defendant is entitled to ‘the effective assistance of competent counsel.’”).16 Strickland, at 689.17 Id. at 687.18 See, e.g., Conference Addresses Inadequate Counsel for Poor, Equal Justice Initiative, (Nov. 15, 2007), www.eji.org/node/96.19 Dr. Emily M. West, Director of Research, Court Findings of Ineffective Assistance of Counsel Claims in Post-Conviction Appeals Among the First 255 DNA Exoneration Cases, The Innocence Project 1  (Sept. 2010), www.innocenceproject.org/docs/Innocence_Project_IAC_Report.pdf (citing Brandon Garrett, Judging Innocence, 108 Colum. L. Rev. 107 (2008); Victor E. Flango, Habeas Corpus in State and Federal Courts, NCJRS 45 (1994) , https://www.ncjrs.gov/pdffiles1/Digitization/149658-149664NCJRS.pdf.  Dr. West is no relation to the author.20 Richard H. Underwood & William H. Fortune, Trial Ethics 383 (1988).21 Allan Ellis & Todd Bussert, Stemming the Tide of Postconviction Waivers, 25 CRIMINAL JUSTICE 1 (2010) (“While we recognize there exists a systemic interest in finality and minimizing meritless claims, the appeal and post-conviction waivers that have crept into the federal plea negotiation process require diligent attention.” Mr. Ellis is a past president of the National Association of Criminal Defense Lawyers and a contributing editor to Criminal Justice magazine . Mr. Bussert is a past chair of the ABA Criminal Justice Section’s Corrections & Sentencing Committee.22 Peter A. Joy & Rodney J. Uphoff, Systemic Barriers to Effective Assistance of Counsel in Plea Bargaining, 99 Iowa L. Rev. 2103, 2106 (2014), reprinted in Washington University in St. Louis School of Law Legal Studies Research Paper Series, Paper No. 14-08-03 (Aug. 2014) . Mr. Joy is the Henry Hitchcock Professor of Law and the Director of the Criminal Justice Clinic at Washington University School of Law in St. Louis; Mr. Uphoff is the Elwood Thomas Missouri Endowed Professor of Law at the University of Missouri School of Law.23 Ellis & Bussert, supra note 21.24 Susan R. Klein et al., Waiving the Criminal Justice System: An Empirical and Constitutional Analysis 18 (University of Texas Sch. of Law, Pub. Law & Legal Theory Working Paper No.556, 2014), available at http://ssrn.com/abstract=2422545. The study found that sixty-seven and a half percent (67.5) of the form agreements contain a waiver of collateral attack, and of these, sixty-four percent (64%) accepted IAC claims from waiver . Applying the math, this means that twenty-four and three-tenths percent (24.3%) contained waivers of collateral attacks which included IACs.25 United States v. Lemaster, 403 F.3d 216, 220 (4th Cir. 2005); Williams v. United States, 396 F.3d 1340, 1341–42 (11th Cir. 2005); United States v. White, 307 F.3d 336, 343-44 (5th Cir. 2002); Davila v. United States, 258 F.3d 448, 451 (6th Cir. 2001); United States v. Cockerham, 237 F.3d 1179, 1190–91 (10th Cir. 2001); DeRoo v. United States, 223 F.3d 919, 923 (8th Cir. 2000); Jones v. United States, 167 F.3d 1142, 1145 (7th Cir. 1999); Watson v. United States, 165 F.3d 486, 489 (6th Cir. 1999); United States v. Rosa, 123 F.3d 94, 101 (2nd Cir. 1997); United States v. Wilkes, 20 F.3d 651, 653 (5th Cir. 1994); United States v. Abarca, 985 F.2d 1012, 1014 (9th Cir. 1993).26 Davila, 258 F.3d at 451.27 Every state bar ethics authority that considered this issue had adopted some version of the ABA’s Model Rules of Professional Conduct, with the exception of Ohio, Tennessee and Vermont, whose ethics at the time of decision were governed by the Ethical Canons and Disciplinary Rules of the Model Code of Professional Responsibility. See infra notes 28–45 and accompanying text.28 N.C. State Bar Ethics Comm’n., Formal Op. RPC 129 (2d revision)(1993).29 Tenn. Bd. Prof’l Resp., Advisory Op. 94-A-549 (1994).  30 Vt. Bar Ass’n. Advisory Ethics Op. 95-04 (1995) .31 Ariz. State Bar Comm. on the Rules of Professional Conduct, Op. 95-08 (1995).32 Ohio Bd. of Comm’rs on Grievances and Discipline, Op. 2001-6 (2001).33 N.C. State Bar Ethics Comm’n, supra note 26.34 Ohio Bd. of Comm’rs on Grievances and Discipline, supra note 32, at 1; Tenn. Bd. Prof’l Responsibility, supra note 29; Vt. Bar Ass’n, supra note 30, at 1.35 Ariz. State Bar Comm., supra note 31.36 Ellis & Bussert, supra note 21.37 Supreme Court of Tex. Prof’l Ethics Comm., Op. 571 (2006).38 Advisory Comm. of the Supreme Court of Mo., Formal Op. 126 (2009).39 Ala. State Bar, Formal Ethics Op. 2011-02 (2011).40 State Bar of Nev. Standing Comm. on Ethics and Prof’l Responsibility, Formal Op. 48 (2011).41 Va. State Bar, Op. 1857 (2011).42 Prof’l Ethics of the Fla. Bar, Op.12-1 (2013).43 Ky. Bar Ass'n, supra note 3.44 See Ala. State Bar, supra note 39; Prof'l Ethics of the Florida Bar, supra note 42; Advisory Comm. of the Supreme Court of Mo., supra note 38; State Bar of Nev. Standing Comm. on Ethics and Prof'l Responsibility, supra note 40; Va. State Bar, supra note 41.45 See Ky. Bar Ass'n, supra note 3.46 Grace M. Giesel is the Bernard Flexner Professor at the University of Louisville Louis D. Brandeis School of Law where she teaches ethics courses to law students. Grace M. Giesel, University of Louisville Brandeis School of Law, http://www.law.louisville.edu/faculty/grace_giesel (last visited Oct. 14, 2014).47 Ky. Bar Ass’n, supra note 3.48 Id. (citing SCR 3.130(1.7) (West 2014)49 SCR 3.130(1.7(a)) (West 2014).50 Ky. Bar Ass'n, supra note 3.51 Id. (citing SCR 3.130(1.8(h)) (West 2014)).52 SCR 3.130(1.8) cmt. 14 (West 2014).53 SCR 3.130(3.8(b)) (West 2014).54 SCR 3.130(3.8) cmt. 1 (West 2014).55 Ky. Bar Ass’n, supra note 3.56 SCR 3.130(8.4(a)) (West 2014).57 Ky. Bar Ass’n, supra note 3.58 See Watson v. United States, 682 F.3d 740 (8th Cir. 2012); DeRoo v. United States, 223 F.3d 919 (8th Cir. 2000).59 See generally Watson, 682 F.3d at 740.60 Id. at 741.61 Watson, 682 F.3d at 743 (citing DeRoo, 223 F.3d at 924).62 Chesney v. United States, 367 F.3d 1055, 1058 (8th Cir. 2004).63 Watson, 682 F.3d at 744.64 Id. (citing Chesney, 367 F.3d at 1059).65 Id. at 744–45 (emphasis added) (citation omitted).66 See United States v. Deluca, No. 08-108, 2012 WL 5902555 (E.D. Pa. 2012).67 While the Pennsylvania Bar had not addressed the issue at the time of the Deluca opinion, it did so in 2014 in Pa. Bar Ass’n. Formal Ethics Op. 2014-100, and it concluded that IAC waivers in plea agreements are unethical. Josh J.T. Byrne, Roundup of Bar Associations’ Ethics Advisory Opinions, The Legal Intelligencer (Aug. 25, 2014), http://www.thelegalintelligencer.com/id=1202667804874/Roundup-of-Bar-Associations-Ethics-Advisory-Opinions.68 Deluca, No. 08-108, 2012 WL 5902555, at *10 (E.D. Pa. 2012) (emphasis added).69 Watson, 682 F.3d at 744–45; Deluca, 2012 WL 5902555, at *10.70 Watson, 682 F.3d at 744.71 Deluca, 2012 WL 5902555, at *10.72 Brief of U.S. in Support of Motion for Review of Ethics Opinion at 1–2, U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014).73 U.S. Const. art. VI, cl. 2 (“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”).74 SCR 3.530(12).75 Id.76 Brief of the U.S. in Support of Motion for Review of Ethics Opinion, at 1, U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014).77 Id. at 9 (citing Stern v. U.S. Dist. Ct., 214 F.3d 4, 20 (1st Cir. 2000)).78 Id. at 1.79 Id. at 13.80 See, e.g., Palazzolo, supra note 7.81 “[The] NACDL, organized in 1958, is the preeminent bar association for criminal defense lawyers in the United States, representing 9,500 direct members and 32,000 members through its 85 affiliate organizations.” Brief for Nat’l Ass’n of Crim. Def. Lawyers et al. as Amici Curiae Supporting Respondent, at i, U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014).82 Professor Janet Ainsworth, Seattle University School of Law, Seattle, Washington; Professor Gabriel J. Chin, University of California, Davis School of Law, Davis, California; Professor Liz Ryan Cole, Vermont Law School, S. Royalton, Vermont; Associate Professor Tigran Eldred, New England School of Law, Boston, Massachusetts; Professor Andrew Guthrie Ferguson, David A. Clarke School of Law, University of the District of Columbia, Washington, D.C.; Professor Lawrence Fox, Yale Law School, New Haven, Connecticut; Professor Monroe Freedman, Hofstra University School of Law, Hempstead, New York; Professor Babe Howell, CUNY School of Law, Long Island City, New York; Professor Peter Joy, Washington University School of Law, St. Louis, Missouri; Professor Susan Klein, University of Texas Law School, Austin, Texas; Professor Carol Langford, University of San Francisco Law School, San Francisco, California; Professor Richard A. Leo, University of San Francisco, San Francisco, California; Professor Michael J. Zydney Mannheimer, Salmon P. Chase College of Law, Highland Heights, Kentucky; Professor Milan Markovic, Texas Wesleyan University School of LaFayette, Fort Worth, Texas; Professor Kevin Mohr, Western State College of Law, Fullerton, California; Professor Ellen Podgor, Stetson University College of Law, Gulfport, Florida; Associate Professor Keith Swisher, Phoenix School of Law, Phoenix, Arizona; and, Professor Richard Zitrin, Hastings College of the Law, San Francisco, California. Id. at iv.83 James Ellis Arden, Law Offices of James Ellis Arden, North Hollywood, California; David M. Bigeleisen, San Franscisco, California; James Bolan, Brecher, Wyner, Simons, Fox and Bolan, LLP, Boston, Massachusetts; Darren R. Cantor, Darren R. Cantor, P.C., Denver, Colorado; David J. Chapman, DJ Chapman Law, P.C., Fargo, North Dakota; Edward X. Clinton, Jr., The Clinton Law Firm, Chicago, Illinois; Richard A. Greenberg, Rumberger, Kirk & Caldwell, P.A., Tallahassee, Florida; Harry H. Harkins, Jr., Atlanta, Georgia; Williams Hodes, The William Hodes Law Firm, Indianapolis, Indiana; John J. Mueller, John J. Mueller LLC, Cincinnati, Ohio; Arden Olson, Harrang Long Gary Rudnick P.C., Eugene, Oregon; Seth Rosner, Saratoga Springs, New York; Evan Shirley, Shirley and Associates, Honolulu, Hawaii; Neal R. Sonnett, Neal R. Sonnett, P.A., Miami, Florida; Brian Tannenbaum, Tannenbaum Weiss, P.L., Miami, Florida; and, Donald Wilson, Jr., Broening Oberg Woods & Wilson, Phoenix, Arizona. Id. at vi.84 Counsel on the brief for all amicus parties (NACDL, Legal Ethics Professors, and Legal Ethics Practitioners) were Jerry Cox, Mount Vernon, KY, then-president and now past-president of NACDL, and Chair of the Kentucky Public Advocacy Commission; John Wesley Hall, Little Rock, AR, counsel of record; J. Vincent Aprile II, Lynch, Cox, Gilman & Goodman, P.S.C., Louisville, KY, counsel of record; Ellen Yaroshefsky, Cardozo School of Law, Yeshiva University New York, NY; and David Eldridge, Eldridge & Blakney, PC, Knoxville, TN. Id. All amicus briefs can be searched and found on the Kentucky Court of Justice website at http://apps.courts.ky.gov/supreme/sc_dockets.shtm, case number 2013-SC-000270.85 “Western Kentucky Federal Community Defender, Inc. . . . is the designated Federal Community Defender Organization for the United States District Court for the Western District of Kentucky pursuant to [the Criminal Justice Act,] 18 U.S.C. §3006A(g)(B).” In such capacity, the organization “represents the majority of defendants charged with felony and misdemeanor offenses in the United States District Court for the Western District of Kentucky.” Counsel on the brief were Scott T. Wendelsdorf and Frank W. Heft, Jr., Office of the Federal Defender, Louisville, KY. Brief for W. Ky. Cmty. Defender, Inc. as Amici Curiae Supporting Respondent, at i, U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014).86 “The Innocence Network is an association of organizations dedicated to providing pro bono legal and investigative services to prisoners for whom post-conviction evidence can provide conclusive proof of innocence. The 63 current members of the Innocence Network represent hundreds of prisoners with innocence claims in all 50 states and the District of Columbia, as well as Canada, the United Kingdom, Australia, and New Zealand.” Counsel on the brief were Larry D. Simon, Louisville, KY, Thomas H. Golden, James C. Dugan and Jill K. Grant, Wiillkie Farr & Gallagher LLP, New York, NY, and Barry Scheck, Co-Director, The Innocence Project, Benjamin N. Cardozo School of Law, New York, NY. Brief of The Innocence Network as Amici Curiae Supporting Respondent, at 2. U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014).87 ABA Resolution 113E, Adopted by the House of Delegates (Aug. 12-13, 2013), available at http://www.americanbar.org/groups/criminal_justice/policy/annual_2013.html.88 Id. Resolution 113E also contained an eight page report submitted by Criminal Justice Chair William Shepherd, which described and explained the history and purpose of the ABA’s adoption of this resolution. Resolution 113E and the attached report of the ABA Criminal Justice Section were filed by the KBA in the case as supplemental authority.89 See generally U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136 (Ky. 2014).90 See id.91 Id. at 141.92 Id.93 Id. at 142. (borrowing the term “remarkable” from Arizonans for Official English v. Ariz., 520 U.S. 43, 58 n.11 (1997)).94 Id.95 Id.96 Id. at 143 (citing 28 C.F.R. § 77.1(b)).97 Id.  (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230–31 (1947)).98 Id.99 Id. at 143 n.27 (emphasis in original).100 Id. at 144 (emphasis in original).101 Id. at 146.102 See id. at 146–51.103 Id. at 151.104 Id.105 Id.106 Id. (citing Robert H. Jackson, Full Faith and Credit—The Lawyer's Clause of the Constitution, 45 Colum. L. Rev. 1 (1945), available at http://www.roberthjackson.org/the-man/speeches-articles/speeches/speeches-by-robert-h-jackson/full-faith-and-credit//.107 Id. at 152 (quoting SCR 3.130-1.7 Cmt. 10).108 Id. (citations omitted).109 Id. at 151.110 Id. at 152 (emphasis in original). In so holding, the Supreme Court remained consistent with its earlier holding in Am. Ins. Ass’n v. Ky. Bar Ass’n, 917 S.W.2d 568, 573 (Ky. 1996), another case where a KBA advisory opinion was challenged. In that case, the court upheld KBA E-368 and stated that “the mere appearance of impropriety is just as egregious as any actual or real conflict.” Id. KBA E-368 advised that a lawyer may not ethically enter into a contract with a liability insurer in which the lawyer agrees to do all of the insurer’s defense work for a set fee. Ky. Bar Ass’n, Advisory Op. KBA E-368 (1994). KBA E-368 and the rules it interpreted acted as a “prophylactic device to eliminate the potential for a conflict of interest or the compromise of an attorney’s ethical and professional duties.” Am. Ins. Ass’n, 917 S.W.2d at 573. Am. Ins. Ass’n v. Ky. Bar Ass’n was decided after adoption of Kentucky’s version of the Model Rules of Professional Conduct (1990); therefore, “appearance of impropriety,” which was a bastion concept within the Model Code of Professional Responsibility, remains a valid ethical concern.111 See U.S., ex rel. U.S. Attorneys for the E. & W. Dists. of Ky. v. Ky. Bar Ass’n,, 439 S.W.3d 136, 155 (Ky. 2014).112 Id. at 156. (citation omitted).113 Id. (quoting J. Peter Voloski, Bargain for Justice or Face the Prison of Privileges? The Ethical Dilemma in Plea Bargain Waivers of Collateral Relief , 86 Temp. L. Rev. 429, 447 (2014).114 Id. at 157 (citation omitted).115 Id.116 Id. (citation omitted).117 Id. at 157–58.118 Lance Rogers, Court Decisions: Federal Prosecutors Bound by Ethics Rule Forbidding IAC Waivers in Plea Agreements, 95 Crim. L. Rep. (BNA) 613, (U.S. Aug. 27, 2014).119 Daniel Goyette, Kentucky Supreme Court Upholds Ethics Opinion that Prohibits Waiver of IAC as a Condition in Plea Agreements, Ky. Ass’n of Crim. Def. Lawyers Newsletter (KACDL), Sept. 2014, reprinted in National Association for Public Defense (NAPD) website, available at http://www.publicdefenders.us/?q=node/512.120 The policy change was announced via a “Memorandum for all Federal Prosecutors” issued on October 14, 2014 from James M. Cole, Deputy Attorney General. James M. Cole, Memorandum for All Federal Prosecutors, Wall St. J. (2014), http://online.wsj.com/public/resources/documents/IACmemo.pdf.121 Id.122 Id.123 Id.124 See Joe Palazzolo, Government Rethinks Waivers With Guilty Pleas: Defense Lawyers Say Giving Up Right to Appeal Presents Conflicts of Interest, Wall St. J. (Sept. 26, 2014, 12:19 PM), http://online.wsj.com/articles/u-s-government-seeks-to-curb-appeals-over-bad-legal-advice-1411745218.

Equal Protection of Grocery Stores in the Sale of Alcoholic Beverages

This Online Original is available for download (PDF) here.

Article | 102 KY. L. J. ONLINE 7 | June 9, 2014

Thomas E. Rutledge[1] and Stacy C. Kula[2]

The United States alcoholic beverage industry is unique as it is the only industry for which two amendments to the Federal Constitution have been passed. The first of those amendments, the ill-fated Eighteenth, enacted nationwide Prohibition.[3] After the complete failure of that “Noble Experiment,”[4] the Twenty-First Amendment was enacted, ending Prohibition and vesting in the various states the power to regulate the manufacture, purchase and sale of alcoholic beverages.[5]Since the passage of the Twenty-First Amendment there have been questions as to its relationship to the balance of the Constitution. Essentially, is the Twenty-First Amendment plenary, removing all aspects of the regulation of the alcoholic beverage industry from oversight by the balance of the provisions of the Constitution or, in the alternative, must state regulation accord with other constitutional requirements? In the early years after the passage of the Twenty-First Amendment, the trend was to view it as controlling over other constitutional provisions.[6] More recently, the trend has been to require regulation under the Twenty-First Amendment to comport with other constitutional limitations.[7] As such, while the states are afforded particular authority with respect to the regulation of the alcoholic beverage industry, that authority must be balanced with other constitutional requirements. To that end, a state may not (i) treat men and women differently with respect to the legal age of drinking[8] or impose differentials between men and women in serving and consuming alcoholic beverages,[9] (ii) impose price affirmation obligations in a state that have the effect of limiting price flexibility in foreign jurisdictions,[10] (iii) enact a tax system that grants preferential treatment to locally manufactured products,[11] (iv) afford a religious institution a veto over the granting of a liquor license,[12] or (v) grant preferential treatment to wine manufactured in a particular jurisdiction while not granting similar treatment to wine manufactured out-of-state.[13]While these various battles, particularly those involving the Commerce Clause, will no doubt continue, there has of late been litigation involving the inter-relationship of state alcoholic beverage regulation and the Equal Protection Clause.[14] This article will focus upon the decision of the Sixth Circuit Court of Appeals rendered in Maxwell’s Pic-Pac, Inc. v. Dehner, wherein the Sixth Circuit reversed a determination by the trial court[15] that a Kentucky statute permitting, inter alia, the sale of wine and liquor by pharmacies while not affording a similar opportunity to grocery and convenience stores violated the equal protection rights of the latter category of stores.[16]Through this article, we explore the history of the limitations imposed in Kentucky with respect to the retail sale of wine and spirits, highlighting the contrast between those retailers who are classified as grocery stores versus those retailers classified as pharmacies, the challenge to that distinction brought by Maxwell’s Pic-Pac, the arguments of the grocers, the drugstores, and the free-standing liquor retailers, Judge Heyburn’s decision holding the statutory distinction to be invalid under equal protection principles, and finally the decision of the Sixth Circuit reversing that determination.

I. The Macro Structure of the Alcoholic Beverage Industry

Since the end of Prohibition, the various states have enacted a bewildering array of rules and regulations intended, inter alia, to militate against the perceived evils of alcohol consumption. To that end, save with respect to those “control states” jurisdictions in which retail sales are made through state agencies with the state acting as its own wholesaler, the industry is divided into three tiers. At the top are the various manufacturers of beer, wine, and spirits. Generally speaking, these manufacturers are not permitted to sell either to consumers or to retailers. Rather, they are restricted to making sales to licensed wholesalers and distributors. The wholesaler/distributor segment, the middle tier, purchases from the various manufacturers and re-sells to individual retail licensees.Individual retail outlets, whether package stores or bars/restaurants selling by the drink, are the bottom tier and are obligated to acquire all of their alcohol from a licensed wholesaler or distributor.[17] In turn, it is usually only from such a retail licensee that an ultimate consumer may purchase alcoholic beverages.[18] A myriad of state-specific limitations have been imposed upon various retailers, some positively comical in nature. For example, until a state constitutional amendment in 2005, South Carolina required that all sales by the drink be done by means of miniature bottles actually presented to the patrons, allowing them to pour the drink and thereby assuring they received the full amount of spirits purchased.[19] And in Utah, restaurants’ mixed drinks have to be prepared out of sight of the patron, typically behind a “Zion curtain.”[20]

II. Kentucky’s Differentiation of Pharmacies and Grocers, Convenience Stores and Gas Stations in the Sale of Alcoholic Beverages

Kentucky’s peculiar law allowing the sale of wine and spirits in drugstores while precluding grocery stores and gas stations from making similar sales[21] can be traced to a seldomly discussed aspect of Prohibition.[22] During the pendency of the Eighteenth Amendment and notwithstanding Prohibition, in addition to the availability of wine for sacramental purposes, alcohol could be prescribed for “medicinal purposes.”[23] By 1932, the last full year of Prohibition, some 11 million prescriptions were issued nationwide. This alcohol, prescribed by physicians, was in turn dispensed from pharmacies. With the repeal of Prohibition, even as other avenues for retail sales were being discussed and implemented, sales by pharmacies were already accepted and operational.[24] Ultimately, grocery and convenience stores were barred from holding the license required to sell either liquor or wine because of the limitations triggered by the sale of either staple food products or gasoline.[25] It is important to keep in mind the nature of the distinction drawn by this statute. It does not provide that, aside from pharmacies, wine and spirits may be sold only in establishments dedicated to that purpose. Rather, the statute provides, in effect, that any retailer may hold a license to sell wine and spirits unless the establishment is otherwise primarily in the business of the sale of either staple groceries or of gasoline and lubricating oil.[26]This regulatory scheme was challenged in 2011 by Maxwell’s Pic-Pac, as well as the Wine With Food Coalition, who argued that that the distinction grossly drawn between pharmacies on the one hand, and convenience and grocery stores and gas stations on the other, lacks a rational basis and, as such, violates equal protection rights.[27]

III. Judge Heyburn’s Analysis

In an August 14, 2012 opinion, Judge John G. Heyburn II of the Western District of Kentucky found for Maxwell’s Pic-Pac on cross-motions for summary judgment. After disposing of standing[28] and statute of limitations[29] challenges, he began the substance of his opinion by noting that the statutes at issue must be upheld if they had a rational basis.[30]The trial court identified six factors that could constitute a legitimate governmental interest that might support the deferential treatment of groceries and gas stations from other retailers, namely:

Stricter regulation of more potent alcoholic beverages; Curbing potential abuse by limiting access to the products; Keeping pricing among merchants competitive, but not so low as to promote excessive consumption; Limiting the potential for underage access; Limiting alcohol sales to premises where personal observation of the purchase occurs; and Balancing the availability of a controversial product between those who want to purchase it and those who seek to ban it.[31]

Seriatim, the Court addressed and rejected each of the proffered justifications for the distinction.Acknowledging that the state may have a legitimate interest in restricting the availability of spirits and wine as contrasted with beer on the basis of the former’s “higher potencies,”[32] Judge Heyburn stated that the argument failed to show how this benefit was achieved by restricting sales by grocers and convenience stores but allowing them in “a grocery-selling drugstore like Walgreens.”[33] Additionally, Heyburn explained that while maintaining appropriate levels of price competition may be a legitimate state objective, there was no showing that restricting spirits and wine sales from grocery and convenience stores would influence pricing.[34] In response to the claim that the statute is an effort to reduce underage access to alcohol, Judge Heyburn found that the distinction drawn against grocery and convenience stores lacked a rational basis.Of course, reducing the number of wine and liquor retailers could also diminish underage access. Kentucky is free to reduce the number of outlets for wine and liquor sales, as it does through its statutory quota system, see Ky. Rev. Stat. Ann. § 241.065, but may not do so in an arbitrary and discriminatory manner. The Statute’s classification regulates the type, not the number, of premises that can receive a license. There must be a rational basis for excluding grocery stores from wine and liquor sales, but including other retailers.The State argues that “[l]imiting the package sale of spirits and wine to liquor stores whose primary business is the sale of spirits and wine ... is an increased control measure [that] is rationally related to controlling access to distilled spirits and beverages.” Def.’s Mot. Summ. J. 4. True, limiting alcohol sales to stores that disallow underage persons on the premises would rationally relate to Kentucky’s interest in reducing underage access to wine and liquor. See Ky. Rev. Stat. Ann. § 244.085(8) (barring persons under the age of twenty-one from premises that sell packaged alcohol, unless “the usual and customary business of the establishment is a convenience store, grocery store, drugstore, or similar establishment”). And it would also limit the sale of package wine and liquor only in places where persons disposed to temperance would have no occasion to frequent. See infra Part IV.D.The fallacy of this argument is that it completely mischaracterizes the Statute. Quite simply, the Statute does not limit package sales of spirits and wine to stores whose primary business is the sale of those products. Instead, it allows package liquor licenses to stores whose primary business is anything other than groceries or gas. The primary business of stores like Walgreens and CVS is not spirits and wine, yet they are free to hold package liquor licenses. Thus, the rational bases for limiting package liquor licenses to traditional package liquor stores are irrelevant here because the Statute does not make this classification. They have no bearing whatsoever on treating gas and grocery retailers differently than all other retailers for the purpose of applying for package liquor licenses.[35]From there, Heyburn addressed the argument that because some grocery stores use self-checkout, there is less protection in those facilities against underage access. This argument failed for two reasons. First, the statutory distinction is not based on the use of self-checkout facilities, and drug stores today are permitted to use self-checkout machines, regardless of whether they actually do. Second, self-scan checkout machine technology did not exist when the statutory scheme at issue was first put in place in 1938. Hence, it could not provide the rational basis for the legislative distinction because the legislature could not have had it in mind at that time.[36]Last, the State asserted that the distinction is meant to balance the interests of those who believe they should have access to alcoholic beverages versus those who would seek its prohibition. To that end, it was suggested that grocery stores are “community gathering centers” in which conflicts between teetotalers and imbibers should be avoided. This argument was ultimately rejected on the basis that:If grocery stores are community gathering centers in some places, they are so presumably because they sell staple groceries and other necessities that attract the wider community. However, this attribute does not distinguish them from stores currently selling wine and liquor, like Walgreens, CVS, and Rite-Aid. Nor does it seem plausible that a rural grocery store is more or less of a community gathering place than a rural drugstore. Drugstores also sell both staple groceries and other necessities that undoubtedly draw bibbers and teetotalers alike. Like grocers, they do not specialize in the sale of alcoholic beverages that would attract only customers for that product.[37]Judge Heyburn declined to decide whether Kentucky’s equal protection guarantee, in this specific case, would afford a higher level of protection compared to its federal equivalent.[38] Instead, he held that as the statute violated the low standard of rational basis review it necessarily violated state equal protection law.[39]In a pyrrhic victory, the plaintiff’s challenge based on excessive legislative delegation to the Alcohol Beverage Control Board to define “substantial part” and “staple groceries” as used in the statute was rejected.[40] The plaintiffs argued that this regulation involved excessive delegation of the legislative function to the executive branch agency so as to justify a separation of powers challenge under the Fourteenth Amendment.[41] The Court determined that the term “substantial” did imply a limiting standard and thus was not too vague and that the discretion exercised by the Alcohol Beverage Control Board was no different from that exercised by other agencies.[42]Judge Heyburn granted the defendants request for a stay pending appeal to the Sixth Circuit. In determining whether the stay was appropriate, the Court balanced the following four factors:

(1) whether the stay applicant has made a strong showing that [it] is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.[43]

As to the first factor, the Court noted that the defendants were unlikely to be successful on appeal and that defendant’s failure to specifically discuss the Twenty-First Amendment was not reversible error.[44] As to the other three factors, the Court found that neither party’s interest would be damaged irreparably or substantially by a stay, even if some retail establishments were precluded from obtaining a quota retail package license, and that, “neither interest trumps the public’s interest in a fair and final result without unnecessary regulatory confusion.”[45] In drawing its conclusion, the Court viewed the question of a stay in a broader context than just the parties’ immediate interests.[46] Notably, the Court expressly stated that it did not decide that the plaintiffs had a right to sell package liquor, only that the current statutory scheme regulating the licensing of package liquor and wine sales violates the Equal Protection Clause, and suggested that the legislature could enact legislation to avoid the default result of the decision.[47]In response to Judge Heyburn’s ruling and the stay, proponents of the current law introduced House Bill 310 to the 2013 General Assembly, which would have made the ruling a moot point. Under this so-called grocery store bill, grocery stores and newly-built drugstores could sell wine and liquor only if they had a separate entrance to an adjoined structure, which is essentially what grocery stores are currently required to build if they want to sell spirits and wine under the current statute. Existing drugstores that already sold wine and liquor would be “grandfathered in” and could continue to sell alcohol without building a separate entrance and adjoining structure. Supporters of the bill argued that Judge Heyburn’s decision would allow any retailer, including the most unlikely of sorts, like pawn shops, to receive a license to sell alcohol and the availability of licenses would quickly diminish. Although an interesting concept, that ideology failed to acknowledge that many of the businesses, with the right qualifications, would be entitled to receive a quota retail package license regardless of whether HB 310 was enacted into law. Ultimately, the bill did not pass.It is questionable, had HB 310 passed, whether it would have been sufficient to resolve the question. While it at best would have precluded the issuance of new wine and spirits licenses to pharmacies without separate entrances, it would have continued to prohibit most groceries and convenience stores from even holding such a license. Essentially “freezing” the existing fact pattern would not address the determination that the equal protection rights of groceries and convenience stores were, vis-à-vis license holding pharmacies, being violated.

IV. The Arguments to the Sixth Circuit

The various briefs presented to the Sixth Circuit were the expected arguments, but with a few interesting points. The plaintiffs (now the appellees) emphasized that not only must the differential treatment of grocery and convenience stores from pharmacies have satisfied equal protection at the time of its enactment in 1938, but it must also do so today.[48] The defendants (now the appellants) argued, in effect, for Twenty-First Amendment primacy[49] and that Judge Heyburn failed to consider the various arguments in favor of the statue on a cumulative, rather than only an individual basis.[50] The Intervening Plaintiff made the specious argument that KRS § 244.230(7) actually discriminates against package stores by precluding them from being able to generate more than 10% of their gross sales from staple groceries and gasoline.[51]At the oral argument, the intervenors sought to portray a world in which not only would convenience stores be selling liquor and wine by the package but potentially also by the drink.[52] In contrast, the Commonwealth focused its argument on challenging Heyburn’s determination that grocery and drugstores are substantially equivalent[53] in that most people are in a grocery store at least weekly (some daily) while pharmacy visits are less frequent.[54] Based upon this pattern of visitation, it was argued that the General Assembly could have drawn a distinction restricting wine and liquor sales, implicitly characterizing them as more problematic than beer sales, to forums less frequented by those who may not approve of alcoholic beverages. The Commonwealth also argued for an equal protection analytic paradigm in which any debatability over the propriety of a legislatively drawn distinction would indicate it to be a valid balancing.[55]

V. The Sixth Circuit’s Analysis

On January 15, 2014, the Sixth Circuit Court of Appeals issued its decision reversing Judge Heyburn’s determination that the limitations imposed upon alcoholic beverage sales by grocery stores and gas stations violate equal protection while affirming his determination that the distinctions drawn do not violate separation of powers principles through excessive delegation of authority to alcoholic beverage control regulators.The Sixth Circuit’s determination that equal protection was satisfied based upon a variety of factual assumptions. Initially, the Court of Appeals found that the distinctions drawn between grocery stores and gas stations, on the one hand, and other retailers on the other, conceivably serve a legitimate function in that they “reduce access to high-alcohol products.”[56]Second, precluding gas stations and grocery stores from selling wine and spirits benefits those persons who have moral objections to alcoholic beverages from being exposed thereto.[57]Third, the Court explained that the current distinction is rationally related to decreasing minors’ access to alcohol. It reasoned that more minors work at grocery stores and gas stations than other establishments and that the larger size of grocery stores could allow minors to more easily steal wine or liquor.[58]Last, the Court noted that since many gas stations are located “near highways” there is a “greater danger” in allowing alcohol sales.[59]The Court reasoned that:

[the] legislature “chose to prohibit the sale in those places where all in the community must come together.” We conclude that reasonably conceivable facts support the contention that grocery stores and gas stations pose a greater risk of exposing citizens to alcohol than do other retailers. A legislature could rationally believe that average citizens spend more time in grocery stores and gas stations than in other establishments; people typically need to buy staple groceries (for sustenance) and gas (for transportation) more often than items from retailers that specialize in other, less-frequently-used products. Consider the district court’s pharmacy example. Kentucky could believe that its citizenry visits grocery stores and gas stations more often than pharmacies -- people can survive without ever visiting a pharmacy given that many grocery stores fill prescriptions. On the other hand, most people who object to confronting wine and liquor conceivably cannot avoid grocery stores and gas stations. Though some modern pharmacies sell staple groceries, grocery stores may remain the go-to place for life’s essentials. And though Kentucky otherwise reduces access to wine and liquor by capping the number of places that supply it, the state can also reduce access by limiting the types of places that supply it -- just as a parent can reduce a child’s access to liquor by keeping smaller amounts in the house and by locking it in the liquor cabinet.

Our conclusion also rings true regarding minors. According to a plausible set of facts, more minors work at grocery stores and gas stations than other retailers; after all, grocery stores and gas stations conceivably provide more low-skilled and low experience jobs, including clerks, baggers, and stockers. Kentucky could also believe that grocery stores typically outweigh other retailers in size and traffic, allowing minors to more easily steal wine or liquor. Regarding gas stations, their convenience and prevalence near highways suggest an even greater danger in allowing alcohol sales.[60]

The Sixth Circuit affirmed Judge Heyburn’s determination that the delegation of authority to determine what does and does not constitute “a substantial part” of sales of groceries and gasoline did not involve an excessive delegation of legislative powers by the General Assembly to the executive branch. Rather, in that the General Assembly must have help in rule-making, and parameters were provided, the delegation was appropriate[61]

VI. A Critique of the Sixth Circuit’s Decision

Especially when contrasted with the decision rendered by Judge Heyburn, the decision of the Sixth Circuit Court of Appeals is unsatisfactory in several respects, including its lack of critical assessment of the required standard for satisfaction of equal protection, its failure to examine the question presented both at the time of the initial statutory enactment and under today’s factual circumstances, and the failure to explicate how the various factual assumptions assumed of themselves either are valid or satisfy equal protection. Rather than being the explication of an analytic process, the ruling of the Sixth Circuit is best characterized as the recitation of a conclusion.An immediately obvious failing of the decision of the Sixth Circuit is its failure to recite the requirements of a rational basis equal protection analysis. This is in contrast to the detailed explanation provided by Judge Heyburn.[62] In consequence, the reader of the decision of the Sixth Circuit is unaware of what is being required by the Sixth Circuit, and it is likewise unclear whether the Sixth Circuit agreed or disagreed with Judge Heyburn’s analytic framework.On a related point, Judge Heyburn had made clear that the equal protection analysis with respect to the distinction drawn, namely between those retailers whose sales were comprised of more than 10% of staple groceries of gasoline/oil products and those whose sales were not so comprised, must have been rational at the time of enactment shortly after the end of Prohibition and must be rational today. The Court of Appeals in no manner either endorsed or rejected that two-prong path.Having initially failed to set forth an analytic framework, the Court of Appeals recited a series of possible explanations, but without placing them in the context of the statute as related to sales of staple groceries and gasoline. The Sixth Circuit found that “the state indisputably maintains a legitimate interest in reducing access to products with high alcohol content,” relying upon a 1933 alcohol study,[63] and that “[p]roducts with high alcohol content exacerbate the problems caused by alcohol, including drunken driving.”[64] As noted above,[65] the law does not currently restrict supposed “low potency” beer to grocery and convenience stores. Rather, these stores are permitted to sell “high potency” beers that approach or exceed the alcoholic content of wine and spirits. To repeat a point hopefully already clear, the statutory distinction is based upon the degree to which the retailer’s sales are comprised of staple groceries or gasoline/lubricating oil. Assuming segregation of alcoholic beverage products based upon potency is a legitimate state interest, the Sixth Circuit entirely failed to explain how the statutory distinction with respect to staple grocers/gasoline-lubricating oil furthers the state interest. Simply stating that the state has an interest is not enough for equal protection; it is necessary that the interest is rationally furthered by the subject statute and the distinctions it draws. Judge Heyburn found there to be no such linkage;[66] the Sixth Circuit failed to explain how that determination was erroneous.The Sixth Circuit also relied upon the notion that certain market segments should be free of alcoholic beverages in order that those having moral objections thereto may engage in necessary commerce without exposure to alcoholic beverages.[67] This argument fails for a variety of reasons.Initially, it is stated as a conclusion that the state has an interest in protecting “abstinent citizens” from “exposure” to “alcohol.”[68] No authority is cited in support of this proposition. This argument begs an interesting question, namely whether in a wet territory the state has a legitimate interest in shielding a minority from the consequences of a majority vote.[69] To the extent that objections to exposure to alcohol are religious in nature, the General Assembly’s drawing of distinctions based thereon may violate Establishment Clause[70] limitations.[71] Further, if that is the objective of the statute, it fails. The statute precludes a retailer whose sales are 10% or more of staple groceries or gasoline/lubricating oil from selling wine or spirits; those retailers may and often do sell beer, and beer contains alcohol. Note here that the Sixth Circuit moved from alleged distinctions based upon potency to one simply against beverage alcohol in general.[72] If the statutory construct is intended to create a zone of necessary retailers that includes grocery stores, especially those with pharmacies and gas stations in which those who object to alcohol exposure may shop, [73] the state has absolutely failed and the statutory distinction lacks a rational basis.Furthermore, the Court failed to acknowledge that a growing number of malt beverages now have alcohol content as high as, or higher than, some wines and distilled spirits. Consequently, the “minors, inexperienced and impressionable,”[74] as well as the abstinent, can and likely will nevertheless be exposed to high alcohol content beverages in the community gathering place if a licensee chooses to carry those malt beverages. And why would it not? Kentucky law does not define malt beverage by its alcohol content; instead, it is defined as “any fermented undistilled alcoholic beverage of any name or description, manufactured from malt wholly or in part, or from any substitute for malt.”[75]Furthermore, the Sixth Circuit’s distinction between grocery stores without wine/spirits but with pharmacies and pharmacies selling wine and spirits fails as it is based upon a fact pattern that may exist today but was apparently not present in 1938 when the distinction was initially drawn.[76] There was no reference to a record demonstrating that in 1938 there existed grocers with pharmacies where those objecting to either alcohol or the wine/spirits varieties thereof could have their prescriptions filled. Rather, the combination grocery/pharmacy dates to the 1980’s – it is not a feature of post-Prohibition Kentucky that any more than self-scan checkout machines could have been contemplated by the 1938 General Assembly.[77]The distinctions drawn by the Sixth Circuit as to the supposed employee characteristics and the possibility of theft are likewise unavailing. To continue flogging a deceased equine, the statute places on one side of the divide stores in which sales are less than 10% comprised of staple groceries or gas/lubricating oil and those in which staple groceries or gas/lubricating oil are more than 10% of sales.[78] A big box home improvement center likely sells lubricating oil, but it will not amount to 10% or more of its total sales and, in consequence, the store may apply for and conceivably receive a license to sell wine and spirits. In the same vein, a liquor store may install gas pumps and sell gas so long as those sales do not constitute more than 10% of its total sales.As to employee ages, and assuming the Sixth Circuit’s supposition that a significant portion of the typical grocer’s employees are minors, it never explained: (i) whether that distinction existed at the time of the statute’s adoption; (ii) how this differentiates grocers from pharmacies selling wine and spirits; (iii) how the distinction relates to other potential retailers of wine and spirits; or (iv) how exposure to beer in groceries and convenience stores is for purposes of equal protection analysis acceptable while exposure to wine and spirits is problematic. Specifically, in the current environment, where is the comparison of grocery employees who are under 21 with employees of wine/spirits selling pharmacies who are under 21? Further, where is the comparison of the minor employees of grocery or convenience stores against all other establishments that might apply for a wine/spirits retail package license? If the statute’s rational basis for a distinction between A and B is based upon a characteristic X of A, there is no rational basis for the distinction until the X of B is likewise known. Once known, where are the similar comparisons from 1938 and the original enactment of the statute? Last is that the distinction between licenses is not based upon high versus low potency alcoholic beverages: a distinction premised upon segregating certain portions of the public, in this instance minor employees of the retailer, from allegedly high proof wine and spirits while allowing them to be in proximity to beer must fail.[79] The supposed “low potency” versus “high potency” distinction is itself simply not valid, and it is not the distinction drawn by the statute. [80]As for greater risk of theft, with due respect to the Sixth Circuit, that is at best a red herring. In an age in which party megastores are a ubiquitous feature of the landscape, the suggestion that increased size[81] increases the risk of theft simply challenges credulity. As to proximity to highways increasing the danger of alcohol sales, the Sixth Circuit did not explain whether its concern was with theft, underage access, or driving while intoxicated. Regardless, stand-alone liquor stores, party megastores, pharmacies selling wine and spirits, and grocery stores with separate wine/spirits sections are already in proximity to highways, as are those with on-premise permits.[82] Further, the danger of drunk-driving is neither increased nor otherwise affected by the degree to which the retailer’s sales are or are not comprised of staple groceries or gasoline/lubricating oil.

VII. Conclusion

The hangover from Prohibition continues to torment licensees and consumers alike. While the nationwide experiment at Prohibition resoundingly failed, many individuals wished it remained, at least in part, in effect. State legislatures attempt to balance on a three-legged stool comprised of those who favor Prohibition, those in support of free access to a legal product and the state’s desire for the tax revenues derived from alcoholic beverage sales.[83] At the same time the industry’s regulatory structure, particularly at the wholesaler and retailer levels, is rife with cartel conduct as evidenced by the fact that it was a package store already licensed to sell wine and spirits that intervened as a defendant in this action, thereby hoping to preclude grocery and convenience stores from selling those same products.With Judge Heyburn’s decision in Maxwell’s Pic-Pac, it appeared a significant step was being taken in rationalizing the retail structure, eliminating a distinction tied to a low threshold of staple groceries or gas/lubricating oil sales, distinctions which he concluded lacked any rational basis in support of a legitimate state interest in controlling alcoholic beverage sales. While no doubt some would challenge the ultimate factual determinations he made, the structure and depth of the analysis undertaken cannot be criticized.Unfortunately, as is detailed above, the decision of the Sixth Circuit Court of Appeals reversing Judge Heyburn cannot be so characterized. Rather than setting forth an analytic paradigm, the decision leaps to a conclusion that equal protection was satisfied by the statutory distinction even though that conclusion is not supported by an explication of equal protection analysis or reference to a factual underpinning existing both at the time of the statute’s enactment and today. That said, absent a decision in the future in which the matter is reconsidered,[84] the ruling of the Sixth Circuit that the distinctions drawn by KRS § 243.230(7) satisfy equal protection will stand.

[1] Thomas E. Rutledge is a member of Stoll Keenon Ogden PLLC resident in the Louisville, Kentucky office. A frequent speaker and writer on business organization law, he has published in journals including The Business Lawyer, the Delaware Journal of Corporate Law, the American Business Law Journal and the Journal of Taxation, and is an elected member of the American Law Institute.[2] Stacy C. Kula is Of Counsel with Stoll Keenon Ogden PLLC resident in the Lexington, Kentucky office where her practice is substantially devoted to the unique issues of the alcoholic beverage industry. She was an active participant in the Governor’s Task Force that recommended changes to Kentucky’s alcohol beverage control laws that resulted in S.B. 13, which was approved by the 2013 Kentucky General Assembly.[3] The Eighteenth Amendment was affected by the National Prohibition (Volstead) Act, 27 U.S.C. §§ 1-94 (repealed 1935). The Eighteenth Amendment provided:

Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

U.S. Const. amend. XVIII (repealed 1933). The Eighteenth Amendment is unique in that it alone aimed to deprive persons of a previously existing right. Rhode Island had the good sense to not approve the amendment. Rhode Island Defeats Prohibition, N.Y. Times, Mar. 13, 1918, at 5. Prohibition was to remain in force “thirteen years, ten months, eighteen days and a few hours.” Final Action by Utah, N.Y. Times, Dec. 5, 1933, at 1. As observed by H.L. Mencken:

Prohibition went into effect on January 16, 1920, and blew up at last on December 5, 1933 – an elapsed time of twelve years, ten months and nineteen days. It seemed almost a geologic epoch while it was going on, and the human suffering that it entailed must have been a fair match for that of the Black Death or the Thirty Years’ War.

H. L. Mencken, The Noble Experiment, in A Choice of Days 307, 307 (1980). The different descriptions of Prohibition’s term being 12 or 13 years depends on how one counts the one year phase in period of Section 1 of the Eighteenth Amendment.[4] The moniker the “Noble Experiment” has been long ascribed to President Herbert Hoover. See Loretto Winery Ltd. v. Gazzara, 601 F. Supp. 850, 856 n.7 (S.D.N.Y. 1985) (“President Herbert Hoover, who had some difficulty in deciding whether he was a Wet or Dry, coined this expression for National Prohibition.”).[5] The Twenty-First Amendment of the United States Constitution provides:

Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed.

Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

U.S. Const. amend. XXI. The Twenty-First Amendment was proposed to the States on February 20, 1933, and was approved on December 5, 1933. Kentucky approved the Amendment on November 27, 1933. See Everett Somerville Brown, Ratification of the Twenty-First Amendment to the Constitution of the United States 166-79 (1938). See also Robert E. Dundon, Kentucky Seeking High Whisky Taxes, N.Y Times, Aug. 27, 1933) at E6. The Amendment was rejected by South Carolina on December 4, 1933 and was never subsequently approved. See Brown, supra, at 375-378.[6] See, e.g., Mahoney v. Joseph Triner Corp., 304 U.S. 401, 403 (1938); State Bd. of Equalization v. Young’s Market Co., 299 U.S. 59, 60-61 (1936). See also McCanless v. Klein, 188 S.W.2d 745, 748 (Tenn. 1945).[7] See, e.g., Granholm v. Heald, 544 U.S. 460, 486 (2005) (explaining the Twenty-First Amendment “does not supersede other provision of the Constitution”); 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516 (1996) (finding state law ban on advertising prices, other than at the point of sale, violated the First Amendment).[8] Craig v. Boren, 429 U.S. 190, 210 (1976).[9] See, e.g., Kentucky Alcoholic Beverage Control Bd. v. Burke, 481 S.W.2d 52, 54 (1972) (striking down, on equal protection grounds and applying an intermediate standard of review, state laws prohibiting women from being bartenders and from drinking liquor at a bar).[10] See Healy v. Beer Inst., 491 U.S. 324, 343 (1989); Brown-Forman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 585 (1986); see also Thomas E. Rutledge, The Questionable Viability of the Des Moines Warranty in Light of Brown-Forman Corp. v. New York, 78 Ky. L.J. 209 (1989-90).[11] Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 276 (1984).[12] Larkin v. Grendel’s Den, Inc., 459 U.S. 116, 127 (1982).[13] See, e.g., Cherry Hill Vineyards, LLC v. Lilly, 553 F.3d 423, 435 (6th Cir. 2008); Granholm, 544 U.S. 460, 493; see also Thomas E. Rutledge & Micah C. Daniels, Who’s Selling the Next Round: Wines, State Lines, the Twenty-First Amendment and the Commerce Clause, 33 N. Ky. L. Rev. 1 (2006).[14] Although not the topic of this article, Southern Wine and Spirits of Am., Inc. v. Division of Alcohol and Tobacco Control was another case in the vein of equal protection challenges to liquor regulation. 731 F.3d 799 (8th Cir. 2013). In that case, a challenge was brought by Southern Wine and Spirits, a Florida corporation with its principal place of business in Florida, after it was denied a license to operate as a liquor wholesaler in Missouri on the basis of a Missouri statute that requires that all wholesalers be incorporated in that jurisdiction and that all directors be resident in Missouri. Notwithstanding precedent from the Fifth Circuit Court of Appeals to the effect that such limitations violate the Commerce Clause, the Eighth Circuit determined that Missouri’s interest in regulating wholesalers was sufficient to trump any equal protection rights; it does not appear a Commerce Clause argument was made. Contrast Cooper v. McBeath, 11 F.3d 547, 555 (5th Cir. 1994). While a discussion for another day, one of the authors (Rutledge) believes that decision of the Eighth Circuit to be normatively incorrect.[15] Maxwell’s Pic-Pac, Inc. v. Dehner, 887 F. Supp. 2d 733 (W.D. Ky. 2012). Neither author was involved as counsel to any party in this litigation.[16] Maxwell's Pic-Pac, Inc. v. Dehner, 739 F.3d 936, 943 (6th Cir. 2014).[17] See, e.g., Ky. Rev. Stat. §§ 243.250, 243.084(2), 243.088(2)(b). There are multiple small volume exceptions to this general statement. For example, in certain jurisdictions a patron is permitted to bring a bottle of wine to a restaurant to be consumed there. See, e.g., N.Y. Alco. Bev. Cont. Law § 64B. The restaurant may, in turn, charge the patron a “corkage” fee to, at least in part, make up for the lost markup on a bottle of wine not otherwise sold. In other instances, including in a number of Kentucky’s “dry” counties, there are “bottle clubs” in which, while the facility does not have a license to distribute alcoholic beverages, individual patrons may store bottles, typically of liquor, for personal consumption. See, e.g., Ky. Rev. Stat. § 242.230; Ky. Op. Atty. Gen. 389; 84-185; Ky. Op. Atty. Gen. 79-389; Ky. Op. Atty. Gen. 74-574; Ky. Op. Atty. Gen. 74-313; Ky. Op. Atty. Gen. 73-820; Ky. Op. Atty. Gen. 70-831.[18] See, e.g., Ky. Rev. Stat. § 243.240 (“A quota retail package . . . licensee shall purchase distilled spirits and wine in retail packages only and only from licensed wholesalers.”). It also falls upon these retailers to police various end user alcoholic limitations such as minimum age requirements and the avoidance of sales to persons who are intoxicated. Although a controversial topic for an entirely separate article, the trend of granting certain rights and privileges traditionally reserved to retailers to manufacturers are perceived by some as eroding the three-tier system. For example, in Kentucky, a distiller located in wet territory, along with the holders of a quota retail drink license, a quota retail package license and an NQ2 license, are allowed to also hold a sampling license, which allows that licensee to offer limited free samples to its visitors under certain circumstances. See Ky. Rev. Stat. § 244.050.Furthermore, with the changes passed by the 2013 Kentucky General Assembly, distillers located in wet territory are now automatically granted the right to sell limited amounts of packaged alcohol from their gift shops, and breweries located in wet territory may provide complimentary samples of malt beverages produced at the brewery in an amount not to exceed 16 ounces per visitor per day. See Ky. Rev. Stat. § 243.0305; Stacy C. Kula & Steve Humphress, Lifting the Spirits of Kentucky: How the 2013 Legislative Changes Impact the Alcohol Industry, Ky. Bench & Bar, Nov. 2013, at 8; Ky. Rev. Stat. § 243.150(3). Microbreweries, to some degree, operate at all three tiers by engaging in the business of a brewer but limited to producing 25,000 barrels in one year, serve on the premises complimentary samples of malt beverages in an amount not to exceed 16 ounces per patron per day if located in wet territory, and sell malt beverages on its premises for both on premises and off premises consumption, so long as certain criteria is met. Ky. Rev. Stat. § 243.157. It bears noting that while the three-tier system may be constitutionally permissible, it is not constitutionally required. See North Dakota v. United States, 495 U.S. 423, 432 (1990). What some might characterize as an undesirable erosion of the three-tier system is equally subject to characterization as desirable rationalization of an archaic, inefficient system that is rife with cartel behavior.[19] S.C. Const. art. VIII-A, §1. Free pours became legal in South Carolina on January 1, 2006. See, e.g., Jeffrey Collins, Free Pour Liquor Rings in New Year in South Carolina, Spartanburg Herald-Journal, Jan 1, 2006, at B1.[20] See, e.g., Michael Cooper, Utah Liquor Laws, as Mixed Up as Some Drinks, N.Y. Times, July 19, 2011, at A1; Annie Knox, Utah Liquor Bill Aims to Take Down ‘Zion Curtains’, Wash. Times, Feb. 27, 2013 (http://www.washingtontimes.com/news/2013/feb/27/utah-liquor-bill-aims-take-down-zion-curtains).[21] This is not to suggest that Kentucky is unique in having such a law. For example, under the Colorado law, drugstores may sell wine and spirits, while grocery stores may not. See Colo. Rev. Stat. §§ 12-47-408, -407(1).[22] It appears similar malt beverage products have been allowed to be sold by Kentucky grocery stores since at least 1938. See Ky. Stat. § 2554b-200, enacted 1938 Ky. Acts, ch. 2, § 99 (creating retail beer license). While grocery stores and gas stations were precluded from holding a retail package or retail drink license (Ky. Stat. § 2554b-154(8), enacted 1938 Ky. Acts, ch. 2, § 54(8)), no similar statute limited them from holding a retail beer license.[23] Ky. Stat. §§ 2554b-17, -18, -27 (1936).[24] See, e.g., Maxwell’s Pic-Pac, Inc. v. Dehner, 887 F. Supp. 2d 733 (W.D. Ky. 2012) (“Perhaps the General Assembly sought to extend the status quo under which drugstores which had sold alcohol ostensibly only for medicinal purposes throughout Prohibition.”); Amicus Curiae Brief of American Beverage Licensees in Support of Defendants-Appellants, et al., for Reversal, Maxwell’s Pic-Pac, Inc. v. Dehner, 887 F. Supp. 2d 733 (W.D. Ky. 2012) (No. 12-6056), 2013 WL 588470, at 5 (“This is because during the preceding era of National Prohibition pharmacies had been permitted to sell medicinal [alcohol] [sic], while neither grocery stores nor gasoline stores had that experience.”):

So when the Kentucky Legislature determined in 1938 to allow pharmacies to sell spirits and wine it was clearly engaging in rational line drawing, given that pharmacies had been allowed to fill prescriptions for medicinal alcohol even during National Prohibition. In 1938 pharmacies were not similarly situated to groceries and gasoline stations since neither had been allowed to sell beverage alcohol during National Prohibition.

Id. at 12. Ignored in this recognition of Prohibition era pharmacy sales is the appreciation that post-Prohibition the intervening acts of the pharmacists were absent. During Prohibition a pharmacist filled a prescription for alcoholic beverages. Post-Prohibition, at least at the current time, wine and spirits are on the shelves and customers self-select what they want; no pharmacist is involved. Further, if the pharmacy is the relevant factor, why are wine and spirits sales permitted when the pharmacy is closed?[25] Ky. Rev. Stat. § 243.230(7) provides:

No quota retail package license or quota retail drink license for the sale of distilled spirits or wine shall be issued for any premises used as or in connection with the operation of any business in which a substantial part of the commercial transaction consists of selling at retail staple groceries or gasoline and lubricating oil.

This statute is the successor to Ky. Stat. § 2554b-129, -154, enacted 1938 Ky. Acts ch. 2, § 31½, 54. Following therefrom, in 1992 the Alcoholic Beverage Control Board promulgated a regulation defining what constitutes the “substantial part of a commercial transaction,” defining it to mean 10% or greater of gross receipts measured on a monthly basis, and “staple groceries,” defined as food intended for human consumption but excluding alcoholic beverages, tobacco, soft drinks, candy, hot food and food intended for immediate consumption. 802 Ky. Admin. Regs. 4:270. It should be recognized that this statute does draw its distinction between those who do or do not derive 10% or more of their monthly gross sales from staple groceries and gasoline from those who do not. A combination bookstore/liquor store can derive 50% of its gross sales from books without violating Ky. Rev. Stat. § 243.230(7); books are neither staple groceries nor gasoline.[26] See also Maxwell’s Pic-Pac, 887 F. Supp. 2d at 749 (“Quite simply, the Statute does not limit sales of spirits and wine to stores whose primary business is the sale of those products. Instead, it allows package liquor licenses to stores whose primary business is anything other than groceries and gas.”). There is a Louisville consignment home furniture and accessories dealer named Highlands Furniture and Decor that is also licensed to sell wine and spirits by the package.[27] U.S. Const. amend. XIV, § 1 (“[N]or deny to any person within its jurisdiction the equal protection of the laws.”).[28] The defendants asserted that plaintiff Food With Wine Coalition lacked standing and that the lawsuit dealt with the question of whether grocery and convenience stores could sell both liquor and wine while the plaintiff’s associational focus was upon wine sales only. After considering associational standing as set forth in Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333 (1977), the district court noted that the license at issue related to sales of both wine and liquor. 432 U.S. 333 (1977). As such, while the Association and its members might not be focused upon liquor sales, they were equally negatively impacted by the distinction drawn against grocery and convenience store sales of wine as they are by the similar prohibition against sales of liquor by those establishments. Maxwell’s Pic-Pac, 887 F. Supp. 2d at 742.[29] The defendants asserted that the plaintiffs were untimely in bringing the claim in that the initial injury they had suffered predated the applicable statute of limitations of one year. Judge Heyburn rejected this assertion, finding that the injury suffered was ongoing, and as such no statute of limitations had yet begun to run. Maxwell’s Pic-Pac, 887 F. Supp. 2d at 742-3.[30] Equal protection analysis is divided into three categories. The first, identified as “strict scrutiny,” is applied with respect to, for example, legal distinctions based upon race. See, e.g., 37712, Inc. v. Ohio Dep’t of Liquor Control, 113 F.3d 614, 618, 621 (6th Cir. 1997). The second, identified as “intermediate scrutiny,” is applied with respect to distinctions based upon gender. Id. at 621. The third, identified as “rational basis,” is imposed upon all distinctions not subject to strict or intermediate scrutiny. Applying a rational basis, a statute will be held constitutional “so long as it bears a rational relation to some legitimate end.” Maxwell’s Pic-Pac, 887 F. Supp. 2d at 744 (quoting Romer v. Evans, 517 U.S. 620, 631 (1996). The court as well cited F.C.C. v. Beach Commc’ns, Inc., 508 U.S. 307, 313-14 (1993).[31] See Maxwell’s Pic-Pac, 887 F. Supp. 2d at 747. The Court noted that protecting current liquor and wine retailers from further economic competition does not constitute a legitimate purpose, citing Craigmiles v. Giles, 312 F.3d 220, 224 (6th Cir. 2002).[32] Maxwell’s Pic-Pac, 887 F. Supp. 2d at 748. The suggestion that spirits and wine are more “potent” than beer is of significant currency, although it is without scientific support. See, e.g., David J. Hanson, Alcoholic Content of Beer, Wine & Distilled Spirits, Alcohol Problems and Solutions, http://www2.potsdam.edu/hansondj/Controversies/1107281458.html, (last visited Mar. 9, 2014) (“A glass of white or red wine, a bottle of beer, and a shot of whiskey or other distilled spirits all contain equivalent amounts of alcohol and are the same to a Breathalyzer.”); Facts and Fictions of Alcohol, AlcoMeters, http://www.breathalyzeralcoholtester.com/alcohol-facts-and-fiction/, (last visited Nov. 18, 2013) (“A glass of white or red wine, a bottle of beer, and a shot of whiskey or other distilled spirits all contain equivalent amounts of alcohol and are the same to a Breathalyzer. A standard drink is: a 12-ounce bottle or can of regular beer; a 5-ounce glass of wine; a one and 1/2 ounce of 80 proof distilled spirits (either straight or in a mixed drink).”); Alcohol Impaired Driving, Insurance Institute for Highway Safety (Mar. 2014), http://www.iihs.org/iihs/topics/t/alcohol-impaired-driving/qandah (“Impairment is not determined by the type of drink but rather by the amount of alcohol ingested over a specific period of time. There is a similar amount of alcohol in such standard drinks as a 12-ounce glass of beer, a 4-ounce glass of wine, and 1.25 ounces of 80-proof liquor.”). Further, the suggested distinction between “low potency” beer and allegedly “high potency” wine and spirits entirely fails when one considers what must be acknowledged to be high proof, and therefore “high potency,” beers such as Armageddon (164 proof) that are available.[33] Maxwell’s Pic-Pac, 887 F. Supp. 2d at 748.[34] Id. at 748 (“The Court cannot conceive how the degree to which a business sells non-grocery items more than it sells grocery items bears on liquor and wine prices in any manner.”). Kentucky law otherwise forbids sales of alcoholic beverages below wholesale cost. See Ky. Rev. Stat. Ann. § 242.050(1).[35] Maxwell’s Pic-Pac, 887 F. Supp. 2d at 748-49.[36] Id. at 749-50. With respect to this point, Judge Heyburn wrote:

Although the asserted rational basis need not have been the legislator’s actual motivation, it must have least been conceivable or possible. Nordlinger v. Hahn, 505 U.S. 1, 15 (1992) (rational review “does require that a purpose may conceivably or ‘may reasonably have been the policy’ of the relevant governmental decision maker.”) (quoting Allied Stores of Ohio, Inc. v Bowers, 358 U.S. 522, 528-29 (1959)).

Id. at 49; see also Nashville, Chattanooga & St. Louis. Ry. v. Walters, 294 U.S. 405, 415 (1935) (“[A] statute valid when enacted may become invalid by a change in the conditions to which it is applied.”). The Court did not mention, although it is a path worthy of pursuit, that as grocery stores often use self-checkout equipment, and as grocery stores already sell beer and other malt beverages, self-checkout of itself must not be a significant contributor to underage access.[37] Maxwell’s Pic-Pac, 887 F. Supp. 2d at 750.[38] Id. at 752.[39] Id.[40] See supra note 25.[41] Maxwell’s Pic-Pac, 887 F. Supp. 2d at 752-54.[42] Id.[43] Id. at 754 (quoting Hilton v. Braunskill, 481 U.S. 770, 776, (1987)).[44] Id. at 754.[45] Id. at 755.[46] Id. at 754-55.[47] Id. at 755.[48] Principal and Response Brief of Appellees/Cross Appellants Maxwell’s Pic-Pac, Inc. and Food with Wine Coal., Inc. at 28-32, Maxwell’s Pic-Pac, Inc. v. Dehner, No. 3:11-CV-18-H, 739 F.3d 936 (6th Cir. Feb. 6, 2013) (Nos. 12-6056, 12-6057, 12-6182); id. at 29 (“Nevertheless, assuming the differences between drug stores in [sic] grocery stores in 1938 provided a rational basis for KRS 243.230(5)’s classifications when the law was passed, those differences have since evaporated, meaning that the (unarticulated) rational basis for the classification evaporated as well.”)[49] Principal Brief of the Intervening Defendant/Appellant/Cross-Appellee Liquor Outlet, LLC d/b/a the Party Source at 20-26, Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936 (6th Cir. 2014) (Nos. 12-6056, 12-6057, 12-6182); Principal Brief on Behalf of Tony Dehner and Danny Reed Defendants – Appellants Cross-Apellees at 7-8, Maxwell’s Pic-Pac, Inc. v. Dehner, No. 3:11-CV-18-H, 739 F.3d 936 (6th Cir. 2014) (Nos. 12-6056, 12-6057, 12-6182).[50] See Principal Brief on Behalf of Dehner and Reed, supra note 49 at 14 (“The District Court analyzed each of these interests in a vacuum and concluded they did not provide a rational basis for the statute…. The District Court also failed to consider the relationship between the combination of some or all of these interests and the challenged classification.”) (emphasis in original). One wonders how this argument could lead to reversal of the trial court’s decision. Judge Heyburn found that none of the six proffered bases had any validity. The accumulation of ineffective theories will not create an effective theory. Zero, multiplied by anything, equals zero, and the addition of zero to any sum does not alter the sum. How these theories could cumulatively have more value than they did individually is not clear.[51] See Principal Brief of the Intervening Defendant/Appellant/Cross-Appellee Liquor Outlet, LLC d/b/a the Party Source at 53-55, Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936 (6th Cir. 2014) (Nos. 12-6056, 12-6057, 12-6182).[52] On closer examination the Intervenors’ lamentations are unjustified. Today a package retailer can also hold a sampling license and a quota retail drink license. See Ky. Rev. Stat. Ann. § 244.050(2) (West 2013); Ky. Rev. Stat. Ann.§ 243.110(2) (West 2013). The suggestion that it is inappropriate to combine on-premise and package sales has already been considered and rejected. There is, as well, the analogous statute that permits a restaurant patron to leave with the unconsumed portion of a bottle of wine purchased with a meal. Ky. Rev. Stat. Ann. § 243.115 (West 2013). While not regulated as a package, but rather an on-premise by-the-drink sale, from the perspective of the consumer, there likely is little, if any, distinction.[53] See supra notes 35 and 37and accompanying text.[54] See Transcript of Oral Argument at 2, Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936 (6th Cir. 2014) (Nos. 12-6056, 12-6057, 12-6182) (“The premise remains the same that the primary place that people have to go weekly if not daily is the grocery store so that that is where your exposure is the greatest and it supports the, the hypothesis at least that prohibiting the sale there limits some of the ills intended to be avoided by the statute.”). See also id. at 2 (“Well, I think the difference is in terms of the quota licenses, that person makes a choice to go make the purchase at any venue that offers it for sale, but in Kentucky, at least, where you’re trying to sustain a political balance between those who would prohibit it altogether and those who would put it on every corner, that’s the reason why it needs to be limited in groceries because that’s where everyone in the community has to go and that’s the way I would draw that distinction Judge.”).[55] See Transcript of Oral Argument at 12, Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936 (6th Cir. 2014) (Nos. 12-6056, 12-6057, 12-6182) (“…the fact that they are attempted to be balanced demonstrates the debatability of the issue and because the question is debatable, we satisfy the rational basis test. That there is a debatable hypothesis at all defeats the grocer’s challenge in this case. That’s all that’s required under the rational basis test.”).[56] Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936, 938 (6th Cir. 2014). See also id. at 940 (“The state indisputably maintains a legitimate interest in reducing access to products with high alcohol content.”).[57] See id. at 940-941 (“grocery stores and gas stations pose a greater risk of exposing citizens to alcohol than do other retailers…. On the other hand, most people who object to confronting wine and liquor conceivably cannot avoid grocery stores and gas stations.”).[58] Id. at 941.[59] Id.[60] Id. at 940-941.[61] Id. at 942.[62] Maxwell’s Pic-Pac, Inc. v. Dehner, 887 F. Supp. 2d 733, 749-50 (W.D. Ky. 2012). See also supra note 33 and accompanying text.[63] Maxwell’s Pic-Pac, 739 F.3d at 940.[64] Id. A distinction drawn between easier access to “low potency” beer versus “high potency” wine and spirits as a means of reducing drunk driving fails in that most drunk driving is consequent to consumption of beer. See, e.g., Drunk Drivers More Likely to Drink Beer, Discovery News (Dec. 30, 2011) http://news.discovery.com/human/drunk-drivers-drink-beer-111230.htm (last visited Jan. 30, 2014); Naimi et al, What Do Binge Drinkers Drink? Implications for Alcohol Control Policy, 33 American Journal of Preventive Medicine 188-93 (Sept. 2007) (binge drinkers consume primarily beer); Jeffrey W. Runge, MD, Administrator, National Highway Traffic Safety Administration, Impaired Driving in the U.S.: Progress and Research Notes (drivers arrested for DUI report 80% having been drinking beer while 20% report having been drinking wine or spirits).[65] See supra note 32 and accompanying text.[66] See supra note 35 and accompanying text.[67] Maxwell’s Pic-Pac, 749 F.3d at 140 (“And the state’s interest applies to abstinent citizens who, morally or practically objecting to alcohol exposure, wish to avoid retailers that sell such drinks.”).[68] See id.[69] Cf. Educ. Media Co. at Va. Tech, Inc. v. Insley, 731 F.3d 291, 301 (4th Cir. 2013) (holding that a law forbidding advertisement of alcoholic beverages in college newspapers is unconstitutional).[70] U.S. Const., amend. I (“Congress shall make no law respecting an establishment of religion”).[71] See, e.g., Larkin v. Grendel’s Den, 459 U.S. 116, 127 (1982); Corp. of Presiding Bishops v. Amos, 483 U.S. 327, 349, 107 S. Ct. 2862, 2875 (1987) (O’Connor, J., concurring) (questioning whether exemption of religious corporation’s for-profit activities constitutes a violation of the Establishment Clause); Larson v. Valente, 456 U.S. 228, 244 (1982) (“The clearest command of the Establishment Clause is that one religious denomination cannot be officially preferred over another.”).[72] The authors will concede that some persons may have an objection to wine and spirits but not beer, but as the alcohol in all is indistinguishable that is not a rational distinction. Regardless, the Sixth Circuit did not indicate it was relying upon such a distinction.[73] Maxwell’s Pic-Pac, 739 F.3d at 941.[74] See Maxwell’s Pic-Pac, 739 F.3d at 940.[75] Ky. Rev. Stat. Ann. § 241.010(32).[76] See Maxwell’s Pic-Pac, 739 F.3d at 941 (“Kentucky could believe that its citizenry visits grocery stores and gas stations more often than pharmacies—people can survive without ever visiting a pharmacy given that many grocery stores fill prescriptions. On the other hand, most people who object to confronting wine and liquor conceivably cannot avoid grocery stores and gas stations. Though some modern pharmacies sell staple groceries, grocery stores may remain the go-to place for life’s essentials.”) (emphasis in original).[77] Kroger, ubiquitous throughout Kentucky, did not install a pharmacy in a grocery store until 1983, that store in Richmond, Kentucky. E-mail from Tim McGurk, Public Relations Manager, Kroger, Louisville Div. to author (Jan. 28, 2014) (on file with author). See also supra note 37 and accompanying text; Principal Brief of Intervening Defendant, supra note 51 at 39 (“Historically, and certainly in 1938, there was a clear divide between the business of a drug store and the business of a grocery store.”).[78] See Ky. Rev. Stat. Ann. § 243.230(7).[79] Kentucky law permits minors to be employed in retailers selling “high potency” wine and spirits. See Ky. Rev. Stat. Ann. § 244.090(1)(c)(3)(b).[80] See also supra note 32 and accompanying text.[81] Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936, 941 (6th Cir. 2014).[82] Any argument that the statute reduces the likelihood of drunk driving by preventing gas stations/convenience stores from selling wine and spirits does not stand up to even cursory scrutiny. For example, under Romer v. Evans, 517 U.S. 620, 632 (1996), rational basis review obligates the court to “insist on knowing the relation between the classification adopted and the object to be attained.” Gas stations and convenience stores already sell beer. See supra note 82. There is no statute which provides, inter alia, that wine and spirits may not be sold in proximity to sales of gasoline. It is not uncommon to see a convenience store selling gasoline located adjacent to either a package or on-premise retailer. Also, since grocers can open a wine and spirits retail establishment so long as the establishment has a separate entrance from the grocery store, and as more and more grocers also sell gasoline, there is a close physical relationship of the sales, sales which are made under the same retailer name.[83] In fiscal year 2011, Kentucky derived $113.3 million in excise and manufacturer and wholesaler sales taxes from the sale of alcoholic beverages. See Governor’s Office of Economic Analysis, Office of State Budget Director, Tax Expenditure Analysis, Fiscal Year 2012-2014 25 (2011).[84] Maxwell’s Pic-Pac sought rehearing and en banc reconsideration. See Petition for Rehearing and Rehearing En Banc, Maxwell’s Pic-Pac, Inc. v. Dehner, 739 F.3d 936 (6th Cir. 2014) (No. 12-6182) (filed by the plaintiffs/appellees on January 28, 2014). The request was denied on April 10, 2014.

Getting Jurors to Awesome

Article | 102 KY. L. J. ONLINE 6 | May 30, 2014

Cortney E. LollarFN1

A 2011 American Bar Association report on the death penalty in Kentucky revealed that a shocking two-thirds of the 78 peopleFN2 sentenced to death in Kentucky since reinstatement of the death penalty in 1976 have had their sentences overturned on appeal. Kentucky’s reversal rate is more than twice the national average, with a 31% reversal rate in capital cases and almost four times the 17% national reversal rate in all other case types.FN3 With a sentence as irreversible as death, troubling does not begin to describe the depth of concern many experience when viewing such a startling statistic. A closer look at the cases behind this extreme reversal rate reveals some surprising patterns. Two of the more consistent factors leading to the reversal of death sentences in Kentucky are prosecutorial comments, which lead the jury to feel a diminished sense of responsibility in their ultimate sentencing decision, and jury instruction error. This essay focuses on the former, the minimization of the jury’s sense of responsibility, a factor in 12% of reversals.FN4 However, jury instructions are intimately intertwined with how the jury navigates and perceives their role. Accordingly, this essay will also discuss how aggravating and mitigating jury instructions play a role in minimizing the jury’s function, as well. Furthermore, this essay explores whether the concerns related to the minimization of a juror’s role are confirmed by empirical evidence, and concludes by suggesting ways to help jurors acknowledge the full weight of their responsibility in the event the death penalty continues to be a punishment in Kentucky.

The Jury’s Discomfort with Its Role in Capital Sentencing

The jury’s role in sentencing is rooted in Supreme Court jurisprudence that re-establishes the constitutionality of the death penalty in the mid-1970s. Under the scheme permitted by the Supreme Court in Gregg v. Georgia, a case which led many states to reinstate the death penalty, the Court approved of a bifurcated trial where juries are given “guided discretion” in their decision at the penalty phase of a capital trial.FN5 Specifically, the framework authorized by the Court instructed the jury to look at certain statutory and non-statutory aggravating and mitigating factors in determining the appropriate punishment.FN6 The Court viewed the jury’s role as central to the decision, calling the jury a “significant and reliable objective index of contemporary values because it is so directly involved [in the proceedings].”FN7 Yet many jurors, both then and now, remain quite uncomfortable with the role delineated for them in Gregg. As one scholar has suggested, “many death penalty jurors who are confronted with the anguishing moral dilemma of a death sentencing decision seek to avoid the perception that they bear personal moral responsibility for making that decision.”FN8 In large part, this avoidance is likely because “[c]apital trials are unique in American jurisprudence and, indeed, in human experience. Under no other circumstance does a group of ordinary citizens calmly and rationally contemplate taking the life of another, all the while acting under color of law.”FN9 Generally, individuals seek to avoid being in a position to make the decision as to whether another person lives or dies. Yet, in this context, jurors are asked to put their normal aversion aside and decide the ultimate fate of another. In order to eliminate some of the uneasiness they may feel, jurors may try to distance themselves from the decision. It is therefore not surprising that attorneys trying to persuade a juror to sentence someone to death might identify and utilize this discomfort. After Gregg, prosecutors around the country, including those in Kentucky, often attempted to alleviate juror distress by convincing them that their decision was not the final one, thereby allowing them to be more comfortable imposing a death sentence. As indicated by the number of reversals in Kentucky on this ground, courts, including the Supreme Court, did not embrace this approach. In a 1985 case, Caldwell v. Mississippi, the Supreme Court found it “constitutionally impermissible to rest a death sentence on a determination made by a sentencer who [had] been led to believe that the responsibility for determining the appropriateness of the defendant’s death rests elsewhere.”FN10 In Caldwell, Bobby Caldwell was sentenced to death in Mississippi for shooting and killing the owner of a small grocery store during the course of robbing the store.FN11 During the initial sentencing proceeding, Caldwell’s attorney asked the jury to show mercy, saying: [E]very life is precious and as long as there’s life in the soul of a person, there is hope . . . . [D]eath is final. So I implore you to think deeply about this matter . . . . I’m sure [the prosecutor is] going to say to you that Bobby Caldwell is not a merciful person, but I say unto you he is a human being. That he has a life that rests in your hands. You can give him life or you can give him death. It’s going to be your decision . . . . You are the judges and you will have to decide his fate. It is an awesome responsibility, I know – an awesome responsibility.FN12 The prosecutor responded to defense counsel’s notion by minimizing the jury’s role in sentencing, stating: “[T]hey would have you believe that you’re going to kill this man and they know—they know that your decision is not the final decision. My God, how unfair can you be? Your job is reviewable . . . . [T]he decision you render is automatically reviewable by the Supreme Court. Automatically . . .”FN13 In rejecting the government’s argument, the Supreme Court confirmed its belief that capital juries would “view their task as the serious one of determining whether a specific human being should die at the hands of the State.”FN14 In fact, Caldwell’s counsel was echoing the precise words of Justice Harlan, who, in a previous case, identified the jury’s “awesome responsibility” in capital cases.FN15 In Caldwell, Justice Marshall embraced the idea that a sense of moral responsibility not only would affect, but also should affect a jury’s decision in deciding what sentence to impose.FN16 The Court envisioned this model of jury service as essential to the death penalty’s continued constitutionality under the Eighth Amendment.FN17 According to the Court, the jury should contemplate the individuality of a defendant and whether this particular individual should be given or denied mercy in making its sentencing decision.FN18 In fact, the Court premised its acceptance of capital punishment on jurors not evading the mantle of the responsibility vested in them.FN19 Although the Caldwell Court reiterated its confidence in jurors taking their role as life or death decision-maker quite seriously, it simultaneously acknowledged the real discomfort many capital jurors feel about making that ultimate decision. According to the Court, capital juries are “made up of individuals placed in a very unfamiliar situation and called on to make a very difficult and uncomfortable choice. They are confronted with evidence and argument on the issue of whether another should die, and they are asked to decide that issue on behalf of the community.”FN20 As a result, the Court continued, “[I]n the capital sentencing context there are specific reasons to fear substantial unreliability as well as bias in favor of death sentences,”FN21 especially when jurors are encouraged to view their role in determining someone’s fate as something less momentous than it actually is. Justice Marshall’s opinion recognizes how effortlessly jurors could abandon the weighty sense of moral responsibility, and rejects any attempts to keep the jury from being aware of the true consequences of its decision during the penalty process.

A Closer Look at the Assumptions Underlying Caldwell

The Caldwell Court’s endorsement of jurors as the moral compass for the community and admonition of the government for trying to minimize juror’s acceptance of this role, builds on a central, unexamined premise. The Court assumes a reduced sense of responsibility will affect a jury’s decision. More specifically, it presumes that minimizing a jury’s role will reduce the sense of responsibility the jury feels.FN22 If jurors are torn about imposing a death sentence, the Court reasons, the knowledge of judicial or appellate review might allow them to more readily invoke the death sentence. Jurors assume that a court will be the ultimate arbiter, with the result being a less reliable decision.FN23 Conversely, a sentencer who believes that she alone is responsible for the defendant’s fate will take her moral obligations more seriously, thus resulting in a more reliable decision. At the time Caldwell was decided, there was little evidence, empirical or otherwise, to support or refute the Court’s claim. As a result, notwithstanding the Court’s holding, questions remained as to whether a reduced sense of responsibility actually affected a jury’s decision. Additional questions remained as to whether comments suggesting that courts would review and revise a jury’s finding would reduce how a juror viewed their responsibility in imposing death. In light of the high reversal rate in capital cases in Kentucky on this minimization ground, both before and after Caldwell, these questions seem important to answer. The next section looks at both the empirical evidence and the theoretical underpinnings supporting the Court’s view.

Empirical Evidence on Minimization of the Jury’s Role

Since Caldwell, several empirical studies have examined the question of whether a reduced sense of responsibility affects a jury’s decision, separate from any comments by prosecutors or judges attempting to minimize the jury’s role. The results support Caldwell’s holding and the legitimacy of Kentucky’s reversals on this basis. Many former capital jurors who were interviewed indicated that they see the defendant, the law, or the court as primarily responsible for the outcome of a capital sentencingFN24 rather than acknowledging their own role in the decision.FN25 Numerous studies have shown that capital jurors believe the person most responsible for the punishment is the defendant himself, viewing it as the inevitable result of the defendant’s crime.FN26 These same jurors also tend to believe the law commands a particular sentence, making the decision one that is out of their hands.FN27 In fact, eight out of ten former capital jurors interviewed feel the defendant or the law is most responsible for a defendant’s punishment.FN28 Although these jurors consider “the law” to be what statutes command, studies also suggest that a majority of jurors believe the defendant’s fate is actually up to the judge and appeals court.FN29 Even without prosecutors giving their imprimatur to this view, jurors tend to take judicial review and ultimate decision-making as a given.FN30 Troublingly, only a small minority of capital jurors believes they, either individually or collectively as a jury, bear the responsibility for a defendant’s punishment.FN31 As a result, one study revealed that jurors in 75% of the capital trials reviewed found no need to deliberate in the penalty phase, indicating that the law took responsibility away from them.FN32[32] Although, technically speaking, the jury is solely tasked with recommending a sentence to the judge, the law on this issue is not quite so simple. It is true that under Kentucky law, jurors recommend a sentence to the judge,FN33 and indeed, state law requires Kentucky Supreme Court review of a capital sentence.FN34 In the strictest sense, then, neither prosecutors nor judges are misstating the law by telling jurors that their role is to “recommend” a sentence to a judge, who ultimately makes the final sentencing decision. Subsequent federal appellate decisions have confirmed that such a statement, in and of itself, is not error.FN35 Yet, that is not the whole story. Kentucky allows a judge to impose a death sentence only if the jury votes for death. The jury alone determines which aggravating circumstances authorize a death sentence.FN36 Of the thirty-two states with the death penalty, only three permit judges to override life verdicts issued by jury recommendation, and Kentucky is not one of them.FN37 Although it is difficult to get the numbers,FN38 evidence suggests that judges rarely override a death sentence in favor of a life sentence.FN39 In the instances when they do, “[b]y far the most common reason for judicial overrides of death recommendations is the defendant’s mental illness or mental retardation.”FN40 Additionally, judges seem to override jury death verdicts when there is a likelihood that the decision will get overturned on appeal.FN41 Thus, juries really do play the most critical role in determining whether a defendant receives a sentence of death, as it is almost always their recommendation that makes the ultimate call. Caldwell is still good law, and several Kentucky Supreme Court opinions have continued to give teeth to its holding, despite the statute’s use of the word “recommend.”FN42 In Bussell v. Commonwealth, for example, the Court remarked, “[t]his Court has repeatedly denounced the use of the term ‘recommend,’ despite the fact that it appears in the sentencing statute.”FN43 Similarly, in an unreported 2007 case, the Court admonished a prosecutor for telling the jury, “I’m the one who may have to recommend that he die. I’m the one who is responsible; well, you are not responsible.”FN44 Although the Court reversed the sentence on other grounds, it took pains to reiterate “any actions by the Commonwealth which would tend to lessen in the minds of the jury their awesome responsibility” must be discouraged and should not be repeated on retrial.FN45 The law in Kentucky continues to be what the Kentucky Supreme Court articulated in its 1988 Grooms v. Commonwealth opinion:

[T]he instructions on the penalty phase should require the jury to fix the punishment. As a matter of law, the punishment fixed by the jury shall be considered to be a recommendation by the jury to the trial judge, who will then have the ultimate responsibility of fixing the penalty as prescribed by statute.FN46

The standard jury instruction reflects this understanding, explaining to the jury: “[y]ou [have now received] additional evidence from which you shall determine whether there are mitigating or aggravating facts and circumstances bearing upon the question of punishment, following which you shall fix a sentence for the Defendant.”FN47 Thus, while the jury is solely tasked with recommending a sentence to the judge, because of the critical role jurors play in determining that sentence, jurors are to be told they are fixing the punishment. There are some scenarios where concern about capital jurors trying to avoid their responsibility for a defendant’s ultimate sentence arises more regularly. When jurors believe the defendant killed under the influence of extreme mental or emotional disturbance, they tend to assign a greater role to the judge in determining the penalty.FN48 Jurors also are less willing to accept responsibility when female defendants are sentenced than males.FN49 Jurors who are active in politics also tend to shift responsibility to the judge, where as those for whom religion influenced their sentencing decision tended to accept a greater share of responsibility.FN50 By way of contrast, there are other scenarios in which former capital jurors are more willing to be held accountable for their role in a defendant’s sentence. “Jurors report a greater sense of responsibility when the vicious or brutal nature of the killing played a role in their decision-making.”FN51 Similarly, “jurors accepted increased responsibility if they believed the defendant had planned or intended to kill the victim, even if [the defendant] was not the [person to actually commit the act].”FN52 At least one study has shown that a correlation exists between rejection of responsibility at capital sentencing and a decision to sentence a defendant to death.FN53 Believing the decision would ultimately be the court’s made it easier for jurors to impose the death penalty.FN54 In other words, jurors who assign sentencing responsibility elsewhere are somewhat more likely to impose death, just as the Caldwell Court presumed.

Jurors Seek to Minimize Their Role

Separate from jurors’ beliefs that the defendant, the law, or the court are the ultimate arbiter of a capital defendant’s fate, many jurors also seek other methods of downplaying their own significance. Numerous studies have shown that capital jurors distance themselves from responsibility from their sentencing decisions.FN55 Consistent with the Caldwell Court’s fears, capital jurors often “focus solely on the portion of the judge’s sentencing instructions that tells them they are only making a recommendation in order to absolve themselves of responsibility.”FN56 Again, such a result is not surprising. As one commentator noted, “jurors are predisposed to use almost any available information to downplay their responsibility for the death sentencing decision.”FN57

Common Juror Misinformation and Misunderstandings

Many jurors rely on common lore and misinformation learned outside the courtroom in making their decisions in a capital case. One common misperception is that if a jury does not vote for death, a dangerous defendant will be walking the streets in a short period of time. The possibility of parole in a case where the jury imposes death weighed heavily on jurors, and often was a major consideration in their decision to impose the death penalty.FN58 In a recent survey of former Kentucky capital jurors by Professor Marla Sandys, jurors erroneously believed that if they did not impose the death penalty, convicted defendants would be back on the street in ten years.FN59 A death sentence becomes insurance against the possibility of a return to society.FN60 Thus, these same jurors appear to assume that at least if they impose death, the offender will not be back in the community any time soon, even if the execution is not carried out. Jurors also have significant doubts that most death sentences will be carried out.FN61 As a result, jurors vote for death to “send a message,” in the words of the Caldwell Court,FN62 as to how serious and heinous they view the defendant’s crime. Confusing and unclear jury instructions also play a significant role in jurors’ capital decisions. Part of the expectation for jurors, as articulated in Caldwell, is that they will evaluate mitigating evidence that might justify exercising mercy as part of their moral responsibility in death penalty cases. But, it is not uncommon for courts to improperly instruct jurors on what is required for aggravation and mitigation or to give instructions that jurors find confusing.FN63 Because the instructions are not clear with respect to what is expected of jurors at the penalty phase of a capital trial, there is the very real possibility that jurors are imposing death because they do not understand how aggravation and mitigation actually work. Further, given their tendency to assume courts have the final word, they assume a court will review their decision and “fix it” if they make an error. Juror confusion over mitigation, unfortunately, is not unusual, both generally and in Kentucky. More than 79% of former Kentucky capital jurors did not understand that mitigation evidence does not have to be proven beyond a reasonable doubt or found by a unanimous jury, and an additional 15% did not know what the standard for mitigation was.FN64 At least two death sentences in Kentucky were reversed because of a failure to properly instruct the jury that mitigating factors do not have to be found unanimously by the jury.FN65 These numbers are consistent with national studies showing that, where jurors recognized the existence of mitigating factors, they did not know “what the law allows, or requires, them to do with such evidence.”FN66 Capital jurors in Kentucky also misunderstand aggravation. More than 15% of interviewed Kentucky capital jurors did not understand that aggravating circumstances have to be found beyond a reasonable doubt.FN67 Likewise, at least one jury was not told that all jurors have to agree on which aggravating factor counsels in favor of death.FN68 In interviews conducted in several states, a substantial number of capital jurors reported that the wording of judicial instructions misled them into believing that they must sentence the defendant to death once they found the presence of a statutory aggravating circumstance.FN69 In Kentucky, a recent study found that more than 40% of former capital jurors believed the law required them to impose the death penalty if evidence proved that the defendant’s conduct was heinous, vile, or depraved, or if they believed the defendant would be dangerous in the future.FN70 In other words, those jurors believe that the presence of such characteristics is sufficient in and of itself to require imposition of the death penalty.FN71 Aggravating and mitigating factors were nowhere in their decision-making process. Proof of a particularly gruesome act, in these jurors’ minds, meant the death penalty must be imposed. Part of the problem is poorly worded and confusing jury instructions. Analyzing Kentucky’s jury instructions for readability, Professor Sandys found that most of the jury instructions relevant to death sentencing require more than a college education to understand. Such a finding is striking in a state where approximately 20% of the population has a college degree.FN72 Similarly, Sandys found that ease of reading was revealingly low, usually ranging between 30 and 40, but going as low as 15 on a scale of 1-100, with 60-70 being the ideal.FN73 Yet, the Supreme Court has upheld similar instructions on two occasions. In a 1998 case reminiscent of Kentucky’s cases addressing the issue of mitigation, the state of Virginia had an instruction indicating that aggravating factors must be proven beyond a reasonable doubt before death could be imposed.FN74 But the instruction was silent on the subject of mitigating factors, and no other mitigation instruction was provided. The Supreme Court found that Virginia had no affirmative obligation to instruct on mitigation and that the mere absence of such an instruction was not error, or a denial of the authority to consider mitigating evidence.FN75 Even two years later when another Virginia jury sent a note to the trial judge expressing confusion over this instruction by inquiring whether a finding of guilt on one count made it their “duty as a jury to issue the death penalty,” the Court found the Constitution required “nothing more” than the judge repeat the instruction to the jury.FN76 Prosecutorial comments that draw on instructions telling the jury their sentencing decision is “only a recommendation” likely do play a role in helping jurors minimize their responsibility for their decision to impose death. In a study of Indiana jurors who were instructed by the judge that their verdict was “only a recommendation,” most jurors specifically remembered that portion of the judge’s instruction.FN77 In fact one juror took it so far as to deny having played any role in the defendant’s sentencing once the trial was over.FN78 The reality is that she recommended a death sentence, and the defendant received a death sentence from the trial judge.FN79 Other jurors used the idea that the jury’s sentence was just a recommendation to convince holdout jurors to make a decision.FN80 When jurors are confused about their basic role, it is easy for them to fall back on the presumption that “the law” requires whatever sentence they impose, and if they are wrong, a court will step in because their decision is only a suggestion that courts do not have to endorse. The presence of unclear and/or confusing jury instructions only exacerbates the problem.

The Difficulty in Humanizing Capital Defendants at a Bifurcated Hearing

Jurors struggle with aggravation and mitigation, causing them to further abdicate their role as decision-makers in capital trials. As one recent commentator noted, [D]ehumanization during the fact-finding phase within a capital trial is predominantly established through procedural instrumentalities that unleash negative emotions through expressions of fear and outrage. Often it acts as a bulwark against positive emotions of empathy and compassion that the defense attempts to introduce in the later phase of the trial to humanize the defendant. Thus, process instrumentalities of the death penalty may permanently disable the humanization process.FN81 During the trial proceedings, “the prosecutor must portray in a vivid and compelling way, the circumstances and nature of the killing.”FN82 A prosecutor who does her job well portrays the pain and violence of the event in a way that brings it emotionally home to jurors, and jurors have an obligation to view the graphic representations of such pain and violence or else they are abdicating their role as jurors.FN83 As such, the government starts creating moral outrage around a “story of monstrosity” before the trial so that by the time of sentencing, that individual is completely “devoid of personhood and stripped of humanity.”FN84 Against this backdrop, mitigation evidence can barely begin to enter into a juror’s consciousness.FN85 Empirical evidence backs up the social science. In a study of capital juries from Kentucky, a substantial proportion (about 66%) of jurors decided the sentence during the guilt phase, even before hearing evidence regarding aggravating and mitigating factors.FN86 Of those who had reached a sentencing preference prior to the penalty phase of the trial, 70% were “absolutely convinced” of their penalty preference before hearing any evidence as to the appropriate sentence, and an additional 25% were “pretty sure.”FN87 Substantially more of those jurors who had reached a decision on sentencing prior to the penalty phase were inclined to believe death was the appropriate penalty rather than life.FN88 Those jurors who ultimately changed their vote from death to life primarily did so out of a desire to avoid a retrial,FN89 and those who went from life to death expressed reluctance based on personal beliefs.FN90 Mitigating factors were not generally considered in either instance.FN91  As Professor Sandys, who has conducted numerous studies of Kentucky capital juries remarked upon reviewing this evidence, “If this is true, then the guilt phase of the trial tilts jurors’ penalty preferences toward death.”FN92 Such a result should not be surprising. The manner in which bifurcated capital trials operate makes the jury’s ability to consider mitigating evidence difficult, even if jurors are abundantly clear what the law requires. Due to the post-Gregg manifestation of the death penalty, most courts have adopted a scheme where the jury first considers the issue of guilt, and then, in a separate proceeding, the same jury considers the issue of punishment. Inevitably, for the jury to even be considering death at the penalty phase, the jury already has found an aggravating circumstance, as most aggravating circumstances mirror those the jury considers in determining whether the defendant is guilty of a capital crime.FN93 Even in the best of circumstances, humanizing a defendant to a jury who has just found the defendant guilty of a capital crime after hearing in excruciating detail about that crime is an uphill battle. Linking back to the issue of jury instructions, the structure of capital penalty hearings also means that, as a result of the jury finding statutory aggravating factors at the guilt phase, those being presented in the penalty phase are not being considered in a manner most would hope, and, at the very least, not consistent with Supreme Court precedent.FN94 Mitigating circumstances get very little deliberation. One study revealed that many former capital jurors could not recall the mitigating evidence that was presented in the penalty phase, even when prompted, and those that could believed that such evidence was irrelevant.FN95 Given the current set-up, even if jurors are clear as to what the law requires for mitigating and aggravating evidence, there is a significant question as to whether jurors could truly satisfy the expectations of the Caldwell Court. Evidence seems to support the view that undermining jurors’ sense of responsibility causes them to take their sentencing duty less seriously, and often results in them failing to carefully deliberate the evidence according to the law. The result is that “defendants may be getting sentenced to death without the benefit of a jury determination that they are, in fact, death-eligible.”FN96

How To Help Jurors Accept Moral Responsibility For Their Decisions

Since Caldwell, both Kentucky and federal courts appear to have modified their expectations of capital jurors, moving away from the focus on moral responsibility and particularized justice, and focusing, instead, on consistency.FN97 Increasingly, jurors seem to be simply lending facial legitimacy to the process.FN98 Showing mercy or even acknowledging a defendant’s humanity no longer appears to be our expectation or hope for capital jurors, and capital jurors likely are relieved to give up that role as the community conscience. This Essay highlights one reason to second guess that shift. The accumulated empirical evidence supports the assumptions on which the Caldwell decision was based. Jurors do, in fact, try to minimize their role in capital sentencing decisions, which does reduce their feeling of responsibility for that decision. Prosecutors and judges who highlight and try to downplay the jury’s influence on a capital defendant’s penalty encourage the jury to further abdicate their decision-making function, a problem that is only exacerbated by confusing and unclear instructions on evidence of mitigation and aggravation. The post-Gregg bifurcated trial process further removes jurors from the “awesome responsibility” of being the community’s moral compass. Many scholars have called on the Supreme Court to rethink the procedures meant to ensure that capital punishment is not imposed in an arbitrary and capricious manner. That chorus is joined here by another voice. Even if the Supreme Court does not advance such a move, the state legislature and/or the Kentucky Supreme Court could implement such changes. Swearing in a second jury to consider the penalty decision, separate and distinct from the guilt-phase jury, might be one way to alleviate the inherent bias that comes from a jury who has already decided aggravation and has made up its mind prior to even hearing evidence on aggravating and mitigating factors. Although it might add some clunkiness, as well as additional time and cost, to the proceedings, when a decision as weighty as someone’s life is on the line, the additional administrative burdens are quite minimal. Kentucky should also consider amending its statute so the jury’s decision is presumed to be reliable and a judge can change that decision only in certain extraordinary circumstances. Jurors minimize their role in part because the law is confusing; it tells jurors that they are only recommending a sentence, but also tells them they are to “fix” the sentence. At the same time, the law permits judges to impose a different sentence after the jury has fixed it. Although it is this author’s view that automatic state Supreme Court review of death penalty cases should remain, especially in light of the high error rate, the jury will only truly feel a sense of responsibility if everyone in the courtroom knows and believes that the jury plays that sentencing role. Prosecutors and judges would not be able to downplay juror’s roles, either explicitly or implicitly, if jurors truly are responsible for that decision. There also needs to be a way of communicating that juror fears of someone being out on the street shortly after receiving a life sentence are unrealistic. At the very least, voir dire should be encouraged on this topic and jury instructions amended to make sure the jury’s understandings are accurate. The Supreme Court has been clear that if the prosecution asks for execution based on a defendant’s future dangerousness, the judge must instruct the jurors that the defendant would not be eligible for parole if they authorize a life sentence.FN99 Rather than responding reactively, informing the jury of this fact up front might be one way of addressing the issue.

Conclusion

The Court’s death penalty jurisprudence fails to note one of the most basic reasons why jurors can relatively easily assign responsibility elsewhere: those who authorize the death penalty are inherently removed from the ultimate result. They are never the one to personally carry out, or even observe, the execution they authorize.FN100 Even in the best of scenarios, then, juries are inevitably distant from the repercussions of the most significant ramifications of their decision. The graphic reality of the pain inflicted through the execution process is never laid out before the jurors who are tasked with authorizing the death of another. Given this reality, if jurors are going to be tasked with the “awesome responsibility” of deciding another person’s fate, they need to have an intimate understanding of the full panoply of realities surrounding that decision. The level of discomfort jurors feel in making this decision, even without awareness of the granular details of actually putting someone to death, ultimately provides another reason to reconsider permitting such a punishment.

FN1. Assistant Professor, University of Kentucky College of Law.

FN2. Am. Bar Ass’n, Evaluating Fairness and Accuracy in State Death Penalty Systems: The Kentucky Death Penalty Assessment Report, at xii (2011), available at http://www.americanbar.org/content/dam/aba/administrative/death_penalty_moratorium/final_ky_report.authcheckdam.pdf.

FN3. Robert C. LaFoundation et al., Nat’l Ctr. for State Cts., Examining the Work of State Courts: An Analysis of 2008 State Court Caseloads 1 (2010), available at http://www.courtstatistics.org/other-pages/~/media/microsites/files/csp/ewsc-2008-online.ashx.  (last viewed Jan. 8, 2014).

FN4. See Thomas v. Commonwealth, 864 S.W.2d 252, 260–61 (Ky. 1993); Clark v. Commonwealth, 833 S.W.2d 793, 795–96 (Ky. 1991); Dean v. Commonwealth, 777 S.W.2d 900, 906–07 (Ky. 1989); Sanborn v. Commonwealth, 754 S.W.2d 534, 546 (Ky. 1988); Tamme v. Commonwealth, 759 S.W.2d 51, 52-53 (Ky. 1988); Holland v. Commonwealth, 703 S.W.2d 876, 880 (Ky. 1985); James v. Commonwealth, 703 S.W. 2d 876, 880 (Ky. 1985); Ward v. Commonwealth, 695 S.W.2d 404, 407–08 (Ky. 1985); Ice v. Commonwealth, 667 S.W.2d 671, 675 (Ky. 1984). But cf. McClellan v. Commonwealth, 715 S.W.2d 464, 472 (Ky. 1986) (finding no error as the idea of jury recommendation was not sufficiently prevalent to convey the message to the jury that their decision is not final, but is only a recommendation).

FN5. Gregg v. Georgia, 428 U.S. 153, 191–95 (1976).

FN6. Id. at 162–66.

FN7. Id. at 181.

FN8. Joseph L. Hoffmann, Where’s the Buck? – Juror Misperception of Sentencing Responsibility in Death Penalty Cases, 70 Ind. L.J. 1137, 1138 (1995).

FN9. Craig Haney et al., Deciding to Take a Life: Capital Juries, Sentencing Instructions, and the Jurisprudence of Death, J. Soc. Issues, Summer 1994, at 149, 149.

FN10. Caldwell v. Mississippi, 472 U.S. 320, 328–29 (1985).

FN11. Id. at 324 .

FN12. Id.

FN13. Id. at 325–26.

FN14. Id. at 329.

FN15. McGautha v. California, 402 U.S. 183, 208 (1971).

FN16. Caldwell, 472 U.S. at 329-30 (“[T[his Court’s Eighth Amendment jurisprudence has taken as a given that capital sentencers would view their task as a serious one of determining whether a specific human being should die at the hands of the State…. Belief in the truth of the assumption that sentencers treat their power to determine the appropriateness of death as an ‘awesome responsibility’ has allowed this Court to view sentence discretion as consistent with – and indeed indispinsible to – the Eighth Amendment[]….”).

FN17. Id.

FN18. Id. at 329. See also Jeffrey Abramson, Death-Is-Different Jurisprudence and the Role of the Capital Jury, 2 Ohio St. J. Crim. L. 117, 128–29 (2004).

FN19. Caldwell, 472 U.S. at 341.

FN20. Id. at 333.

FN21. Id. at 330.

FN22. Michael A. Mello, Taking Caldwell v. Mississippi Seriously: The Unconstitutionality of Capital Statutes that Divide Sentencing Responsibility Between Judge and Jury, 30 B.C. L. Rev. 283, 315 (1989).

FN23. Theodore Eisenberg et al., Jury Responsibility in Capital Sentencing: An Empirical Study, 44 Buff. L. Rev. 339, 342 (1996).

FN24. Id. at 341; Ross Kleinstuber, “Only a Recommendation”: How Delaware Capital Sentencing Law Subverts Meaningful Deliberations and Jurors’ Feelings of Responsibility, 19 Widener L. Rev. 321, 331 (2013).

FN25. William J. Bowers, The Capital Jury Project: Rationale, Design, and Preview of Early Findings, 70 Ind. L.J. 1043, 1093–95 (1995).

FN26. See e.g., Eisenberg et al., supra note 23, at 352, 356; Austin Sarat, Violence, Representation and Responsibility in Capital Trials: The View from the Jury, 70 Ind. L.J. 1103, 1130 (1995).

FN27. Eisenberg et al., supra note 23, at 358–59; Hoffmann, supra note 8, at 1152–56; William S. Geimer & Jonathan Amsterdam, Why Jurors Vote Life or Death: Operative Factors in Ten Florida Death Penalty Cases, 15 Am. J. Crim. L. 1, 41 (1988).

FN28. Bowers, supra note 25, at 1094.

FN29. Kleinstuber, supra note 24, at 332.

FN30. See Sarat, supra note 26, at 1130.

FN31. Bowers, supra note 25, at 1095.

FN32. Kleinstuber, supra note 24, at 334.

FN33. Ky. Rev. Stat. Ann. § 532.025(1)(b) (2012).

FN34. Ky. Rev. Stat. Ann. § 532.075 (2012) (“Whenever the death penalty is imposed for a capital offense, and upon the judgment becoming final in the Circuit Court, the sentence shall be reviewed on the record by the Supreme Court.”)

FN35. See, e.g., Romano v. Oklahoma, 512 U.S. 1, 8–9 (1994) (“[A] defendant necessarily must show that remarks to the jury improperly described the role assigned to the jury by local law”) (citation omitted); Slaughter v. Parker, 450 F.3d 224, 240–41 (6th Cir. 2006) (finding that a Kentucky judge who used, but did not make “profligate use” of, the word “recommend” in jury instructions did not err, as technical violations of Caldwell rule do not constitute reversible error).

FN36. Ky. Rev. Stat. Ann. § 532.025(3) (2012). This, of course, presumes the jury is the decision-maker at the penalty phase of trial. Some defendants waive their right to have a jury decide their fate, in which case a judge makes this determination.

FN37. Those states are Alabama, Florida and Delaware. Alabama’s override provision has been in the news recently after the Supreme Court denied certiorari in a case challenging this provision. See, e.g., Adam Liptak, Judges in Alabama Retain the Right to Override Their Juries in Capital Sentencing, N.Y. Times, A15 (Nov. 19, 2013), available at http://www.nytimes.com/2013/11/19/us/alabama-judges-retain-the-right-to-override-juries-in-capital-sentencing.html?_r=0. In Alabama, of the 111 times a judge has overridden a jury’s capital penalty verdict, 91% of the time, the judge has overridden a jury’s life sentence and imposed a death sentence. See Equal Justice Initiative, Updated List of Alabama Overrides, available at http://www.eji.org/ files/12-16-13%20Updated%20Override%20List_0.pdf (last updated Dec. 16, 2013). According to Justice Sotomayor’s opinion dissenting from the majority decision to deny certiorari, in 27 of 32 states with the death penalty, the jury’s decision to impose a life sentence cannot be disturbed by the trial judge. Woodward v. Alabama, 134 S. Ct. 405, 405 (No. 13-5380, Nov. 18, 2013) (Sotomayor, J. dissenting). Justice Sotomayor noted, “[i]n the last decade, Alabama has been the only State in which judges have imposed the death penalty in the face of contrary jury verdicts.” Id.

FN38. Michael L. Radelet, Overriding Jury Sentencing Recommendations in Florida Capital Cases: An Update and Possible Half-Requiem, 2011 Mich. St. L. Rev. 793, 812 (2011) (discussing the difficulty of getting information in these cases).

FN39. Since 1976, Alabama judges have overridden death sentences authorized by juries in favor of life sentences 10/111 times. See Equal Justice Initiative, supra note 37. Florida judges have overridden death to life sentences in ninety-one cases between 1972 and 2011, approximately two per year, and Indiana judges have changed death to life sentences in only nine cases since 1984. Radelet, supra note 38, at 818 tbl. 2, 820–21 tbl. 4 & 6, 822 tbl. 7.

FN40. Radelet, supra note 38, at 813.

FN41. Id. at 814.

FN42. Ky. Rev. Stat. Ann. § 532.025(1)(b) (2012).

FN43. E.g., Bussell v. Commonwealth, 882 S.W.2d 111, 114 (Ky. 1994).

FN44. Stark v. Commonwealth, No. 2005-SC-000332-MR, 2007 WL 2404453, at *8 (Ky. Aug. 23, 2007).

FN45. Id. (quoting Tamme v. Commonwealth, 759 S.W.2d 51, 52 (Ky. 1988)).

FN46. Grooms v. Commonwealth, 756 S.W.2d 131, 141–42 (Ky. 1988).

FN47. 1 W. Cooper & D. Cetrulo, Kentucky Instructions to Juries § 12.04A (5th ed. 2010).

FN48. Eisenberg et al., supra note 23, at 371.

FN49. Id. Kentucky has only had three women sentenced to death since 1976, when the death penalty was reinstated. Two of them had their death sentences overturned on appeal, See Caudill v. Commonwealth, 120 S.W. 3d 635, 648 (Ky. 2003) (affirming death sentence); Foster v. Commonwealth, 827 S.W.2d 670, 672, 683 (Ky. 1991) (reversing death sentence); O’Bryan v. Commonwealth, 634 S.W.2d 153, 154 (Ky. 1982) (same).

FN50. Eisenberg et al., supra note 23, at 371–72.

FN51. Id.; see also Stephen P. Garvey, Aggravation and Mitigation in Capital Cases: What Do Jurors Think?, 98 Colum. L. Rev. 1538, 1555 (1998).

FN52. Eisenberg et al., supra note 23, at 371.

FN53. See id. at 353, 377.

FN54. Sarat, supra note 26, at 1130.

FN55. See e.g., Kleinstuber, supra note 24, at 331 (footnote omitted); Bowers, supra note 25, at 1093–95; William J. Bowers & Wanda D. Foglia, Still Singularly Agonizing: Law’s Failure to Purge Arbitrariness from Capital Sentencing, 39 Crim. L. Bull. 51, 74–75 (2003).

FN56. Kleinstuber, supra note 24, at 331.

FN57. Hoffmann, supra note 8, at 1138 (emphasis in original).

FN58. Marla Sandys, Assoc. Prof., Dep’t of Crim. Just., Indiana Univ., Remarks at The Second Annual Forum on Criminal Law Reform in the Commonwealth of Kentucky: What Kentucky Capital Jurors Misunderstand (Nov. 15, 2013). See also Sarat, supra note 26, at 1131–32 (explaining that Georgia jurors in a capital case were “deeply concerned” with the possibility that defendant might someday be back on the streets, thus each voted for death out of fear that otherwise, he would be out threatening innocent people).

FN59. Sandys, supra note 58. Again, these results appear consistent with other state studies. See, e.g., Eisenberg, supra note 23, at 363 (explaining that 70% of former South Carolina capital jurors believe that “less than half” or “very few” death-sentenced defendants will ever be executed).

FN60. See Sarat, supra note 26, at 1132.

FN61. Eisenberg et al., supra note 23, at 341.

FN62. Caldwell, 472 U.S. at 331.

FN63. See, e.g., Abramson, supra note 18, at 135–36; Sandys, supra note 58.

FN64. Sandys, supra note 58. Sixty-eight percent of former capital jurors in Kentucky believed mitigation evidence needed to be proven beyond a reasonable doubt, despite the fact that the actual standard is preponderance of the evidence, and 11% thought the jury had to be unanimous in its decision as mitigating factors. Fifteen percent of jurors did not know the standards one way or the other.

FN65. See Woodall v. Commonwealth, No. 5:06CV-P216-R, 2009 WL 464939, at *14, *44 (W.D. Ky. Feb. 24, 2009); Smith v. Commonwealth, 845 S.W.2d 534, 540 (Ky. 1993). But see Gall v. Commonwealth, 607 S.W.2d 97, 113–14 (Ky. 1980) (not a basis for reversal).

FN66. Abramson, supra note 18, at 135 (quoting Ursula Bentele & William J. Bowers, How Jurors Decide on Death: Guilt is Overwhelming; Aggravation Requires Death; and Mitigation is No Excuse, 66 Brook. L. Rev. 1011, 1043 (2001)).

FN67. Bowers & Foglia, supra note 55, at 68.

FN68. See St. Clair v. Commonwealth, 319 S.W.3d 300, 303–04 (Ky. 2010).

FN69. Abramson, supra note 18, at 135; Bentele & Bowers, supra note 66, at 1031–38; Theodore Eisenberg & Martin T. Wells, Deadly Confusion: Juror Instructions in Capital Cases, 79 Cornell L. Rev. 1, 10 (1993).

FN70. Sandys, supra note 58. This finding has been replicated in a multi-state study. See Bowers, supra note 25, at 1091 tbl. 7.

FN71. A survey of former capital jurors in Delaware revealed similar findings. More than 91% indicated that if certain conditions are met, they believe the law requires a death sentence. Kleinstuber, supra note 24, at 332.

FN72. Sandys, supra note 58.

FN73. Id.

FN74. Buchanan v. Angelone, 522 U.S. 269, 272 n.1 (1998).

FN75. Id. at 277–79.

FN76. Weeks v. Angelone, 528 U.S. 225, 229, 234 (2000) (emphasis in original).

FN77. Hoffmann, supra note 8, at 1147.

FN78. Id.

FN79. Id.

FN80. Id. at 1150.

FN81. Dr. Saby Ghoshray, Capital Jury Decision Making: Looking Through the Prism of Social Conformity and Seduction to Symmetry, 67 U. Miami L. Rev. 477, 493–94 (2013).

FN82. Sarat, supra note 26, at 1122.

FN83. Id. at 1126.

FN84. Ghoshray, supra note 81, at 495.

FN85. Id. at 496.

FN86. Marla Sandys, Cross-Overs—Capital Jurors Who Change Their Minds About the Punishment: A Litmus Test for Sentencing Guidelines, 70 Ind. L.J. 1183, 1193 (1995). These findings are consistent with results found outside Kentucky, which showed that “a sizeable number of jurors recall that in deciding guilt, there was explicit discussion of what the defendant’s punishment would or should be.”. Bowers, supra note 25, at 1088.

FN87. Sandys, supra note 86, at 1194. A similar study of Delaware jurors found that 60% had made up their mind on punishment before the penalty phase began. Kleinstuber, supra note 24, at 331–32.

FN88. Sandys, supra note 86, at 1191–92.

FN89. Id. at 1207.

FN90. Id. at 1220.

FN91. Id. at 1207.

FN92. Id. at 1193.

FN93. Abramson, supra note 18, at 150–51. See also Kleinstuber, supra note 24, at 331 (seven of eight cases reviewed involved statutory aggravating factors that were found as a matter of law in the guilty phase).

FN94. Kleinstuber, supra note 24, at 331; Ring v. Arizona, 536 U.S. 584, (2002).

FN95. Kleinstuber, supra note 24, at 332.

FN96. Id. at 323.

FN97. Abramson, supra note 18, at 117, 120–21 (“[A]t one time, the Court’s jurisprudence sought to ensure that juries strive for moral consistency, while still exercising moral mercy when deciding who will be sentenced to death.”); Sarat, supra note 26, at 1115.

FN98. See, e.g., Abramson, supra note 18, at 117.

FN99. See, e.g., Kelly v. South Carolina, 534 U.S. 246, 248 (2002); Shafer v. South Carolina, 532 U.S. 36, 51 (2001).

FN100. Sarat, supra note 26, at 1119–20.

Who's Quashing Who?: The Battle Between Scholars and Subpoenas

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Note | 102 KY. L. J. ONLINE 5 | Feb. 7, 2014

Julie RosingFN1

Introduction

Last year the First Circuit’s decision in United States v. Moloney, requiring two scholars from Boston College to forcibly disclose their confidential research, shocked the academic world.FN2 This high-profile subpoena case brought the idea of a “scholar’s privilege” to the forefront of the legal arena once again. The outcome of the case—the forcible disclosure and the denial of the scholar’s motion to quash – was not, by itself, all that surprising.FN3 But the vague, general lack of analysis on which the First Circuit denied the assertion of a “scholar’s privilege” was indeed both shocking and inappropriate. There are two questions that must be answered to clear up ambiguities in this hybrid problem of evidentiary and constitutional law. The first is whether a scholar’s privilege does or should exist. The second is if the scholar’s privilege does exist, how can the courts uniformly apply the privilege? This note advocates that the scholar’s privilege should exist as a qualified privilege. This note further advocates that the circuits should reject their current arbitrary use of the privilege and instead apply a balancing test that accounts for the interests of both the academics attempts to protect their research and the party seeking disclosure. Although the Supreme Court of the United States denied certiorari to United States v. Moloney, the issue of the scholar’s privilege will not fall by the wayside. The time has come for a definitive, specific ruling on the issue. We must find a better way for scholars and subpoenas to co-exist.FN4

I. The Existence and Evolution of the Scholar’s Privilege

The scholar’s privilege stems from the long-standing and hotly debated concept of a “reporter’s privilege.” The Supreme Court struck down this privilege in Branzburg v. Hayes.FN5[5] In 1972, Branzburg held that there is no absolute reporter’s privilege available under the First Amendment for reporters to refuse to answer questions or be subpoenaed in a grand jury proceeding. Circuit courts have split for years over the correct interpretation of Branzburg.FN6 Some circuits, such as the Sixth circuit, apply Branzburg’s holding rigidly, allowing absolutely no reporter’s privilege in any circumstance. In other circuits, like the Third Circuit, Branzburg does not control. The First Circuit has restricted the Supreme Court’s decision to its facts, implying that “[i]t seems a moot point now to argue that there is no reporter’s privilege in the federal courts.”FN7 But, the First Circuit has also developed a vague balancing test to determine applicability of the privilege. Several other circuits have adopted their own variations of balancing tests—but no uniform standard has been propounded beyond Branzburg. The circuit split is not surprising when considering that Branzburg’s holding did not command a majority. Even more notable is Justice Powell’s concurrence and the dissenting opinion, stating “express support for recognizing a qualified newsman’s privilege,” which further bolstered the privilege’s strength.FN8 From the uncertainty of the application of a reporter’s privilege sprang further uncertainty when scholars began challenging subpoenas in the research context. The scholar’s privilege has not been as frequently litigated as the reporter’s privilege until recently.FN9 These cases vary factually, and scholars have only succeeded in quashing subpoenas in a few, narrowly construed factual anomalies. The dilemma of the scholar’s privilege spans two legal subjects: evidentiary law and constitutional law. Critics of recognizing reporters’ and scholars’ privileges take the evidentiary angle. These critics argue that because the privileges are not included in the Federal Rules of Evidence, the Supreme Court has rejected their existence and therefore, their application.FN10  Proponents fight for “the constitutional guarantees of free expression, privacy, and defendant’s rights,” which they believe justifies recognition of a testimonial privilege to protect the researcher-subject relationship.FN11 Further, although many parallels can be drawn between the reporter’s privilege that was denied in Branzburg and the idea of a scholar’s privilege, there is also at least one notable difference—reporters may have an additional route for protection via reporter shield laws.FN12 Markedly, no states have legislated to protect the researcher in a similar manner as reporter shield laws. Therefore the scholar’s privilege is essentially the only protection that scholars may have. The First Circuit has been confronted with the scholar’s privilege on a number of occasions, most notably is the In re Cusumano v. Microsoft Corporation case. Cusumano held that interview information collected by two scholars for a book was privileged from discovery.FN13 Although a scholar’s privilege is admittedly created in this case, the holding remains narrow: “[i]t would be extravagant to read the case as establishing any broad ‘scholar’s privilege.’”FN14 Through this ruling, research is clearly proven to be a special endeavor, deserving protection by at least a qualified privilege.FN15 However, the First Amendment balancing test applied in this case leaves much ambiguity, leading critics to the conclusion that Cusumano may have been a fluke decision. The traditional balancing test that the First Circuit has adopted requires a court to  “place those factors that relate to the movant’s needs for the information on one pan of the scales and those that reflect the objector’s interest in confidentiality and the potential injury to free flow of information that disclosure portends on the opposite pan.”FN16  Essentially the need for disclosure of the information is balanced with confidentiality and First Amendment guarantees. The factors to be used on both sides of the balancing test are not explicitly identified, creating room for varying interpretations and inconsistent decisions.

II. The Moloney Decision

Most recently, the First Circuit was again confronted with the issue of the scholar’s privilege and the incomplete balancing test in United States v. Moloney, when two researchers from Boston College were subpoenaed and required to disclose confidential interviews regarding their work on the Belfast Project.FN17 The Project consisted of taping oral interviews from recollections of members of the Provisional Irish Republican Army, the Provisional Sinn Fein, the Ulster Volunteer Force, and other paramilitary and political organizations involved in the "Troubles" in Northern Ireland from 1969 on. British authorities sought the interviews of Brendan Hughes and Dolours Price (former Irish Republican Army members) who were implicated in the 1971 abduction and execution of Jean McConville, a suspected British informant.FN18 The crux of the case lies in the fact that the Belfast Project scholars made explicit promises of confidentiality that the interview contents would be protected until the deaths of the interviewees. Since Hughes was dead at the time disclosure was requested, there were no problems with introducing his interview testimonial in court. The only issue was whether Price’s confidential testimonial could be disclosed because their confidentiality agreement had not ended at the time of the First Circuit decision. However, an interesting and surprising twist occurred while the case was wading in the uncertain cert-pool: Dolours Price was found dead in her home from an apparent drug overdose in January 2013. It is unclear as to whether this living vs. dead distinction affected the Supreme Court’s decision to deny certiorari in April. The application of the balancing test in Moloney is radically different than the application and outcome in Cusumano. First, the precedent from Cusumano deals with claims of non-disclosure privilege in civil cases involving private parties. Moloney is more similar to the Branzburg case, in that the matters in both cases concern disclosure in criminal proceedings.FN19 The US Government was seeking the interviews in Moloney pursuant to the Mutual Legal Assistance Treaty (MLAT) with England. Governmental and public interest seem to automatically have a higher stake in criminal proceedings, and especially where foreign treaty obligations are at issue.FN20 What is striking, regardless of the Supreme Court’s denial, is that the majority opinion of Moloney almost completely disregards the interests of the researchers. The majority does not include an analysis of the researcher’s interests other than to mention that “the fear…that disclosure might threaten their job security or personal safety or that it will simply result in dishonor or embarrassment” is insufficient to create enough of a scholar’s interest to tip the balancing scales in their favor. A balancing test is not a balancing test if one side is ignored. Justice Torruella appeared to be concerned with the majority opinion’s lack of consideration of the researcher’s First Amendment claims: It is one thing to say that the high court has considered competing interests and determined that the information gatherers (here, academic researchers) may not refuse to turn over material they acquired upon a premise of confidentiality when these are requested via government subpoena in criminal proceedings. It is entirely another to eagerly fail to recognize that the First Amendment affords the Appellants “a measure of protection…in order not to undermine their ability to gather and disseminate information.”FN21 Torruella concurred in the judgment of the opinion only, on alternate reasoning.

Justice Torruella’s astute observations in the Moloney concurrence call for a uniform application of the balancing test in order to fully protect the First Amendment rights of scholars, researchers, and academics. His opinion requires that the balancing test must actually perform balancing for a legitimate verdict to be reached.

III. Proposal for an Adequate Balancing Test

The balancing test that I propose is undoubtedly complex because it aims at protecting the interests of a variety of parties including: the subject, the researcher, the sponsor, the facilitator, the prosecutor, the state, and society.FN22 The test advocated here combines elements from the First Circuit balancing test from the Torruella concurrence in Moloney, and from various other circuits and lower courts, to propound a uniform standard that ultimately aims at recognizing and evaluating the interests of the scholars. I believe that this test fills gaps where the First Circuit majority in Moloney failed.

A.    The First Amendment Interest: Potential Harm to Free Flow of Information

1. Qualified Individuals

The first factor to consider is whether the individuals that are trying to prevent disclosure fall under the traditional protections of the First Amendment.FN23 Reporters and academic researchers alike fall into these protections because they perform a range of conduct relating to the gathering and dissemination of information.FN24 The fact that scholarly research “provides the public with historical and analytical perspective on issues of public concern in government” demonstrates its traditional information dissemination purpose.FN25 No traditional First Amendment protection equals no potential protection under the scholar’s privilege. Determining that scholars and researchers should receive qualified protection under the balancing test is fairly straightforward analysis from the First Amendment. Determining who qualifies as a “researcher” or a “scholar” is a more difficult inquiry. Beyond researchers and scholars, archivists should also fall into the traditional First Amendment protections. “Archivists have a professional duty to curate many types of materials, some of which contain confidential information.”FN26 However, researchers, scholars, and archivists should all be classified by their functions rather than their titles.FN27

2. Confidentiality

The next factor to consider is whether or not the information, subject to disclosure, is classified as confidential. Information available to the general public or which can be accessed through other means of discovery may not be classified as confidential. Researchers should always be careful to get express, signed confidentiality agreements from their participants with explicit statements of protection. Even if a researcher has not made an express guarantee of confidentiality to their informants, a court may be able to deny a request for discovery of raw data if it finds very strong privacy interests are present.FN28 One disturbing aspect of the balancing test as it stands currently is that even express indications of confidentiality, like confidentiality agreements between researchers and participants, may not be indicative of privilege.FN29 For instance, even though the need for confidentiality was a central and prominent aspect of the Belfast Project in Moloney, including written agreements requiring that access to the interview records be restricted until their death or upon written approval,FN30 the court still rejected the application of privilege because the researchers knew that Boston College could make no guarantees of the ability to refuse disclosure on a court order. The court cited to a failure of Moloney’s donation agreements, but referenced Branzburg to reassert that even promises of confidentiality made in express confidence do not create a privilege.FN31  Therefore, confidential information is necessary for the privilege, but cannot alone establish the privilege under the current test. This decision invalidating express confidentiality agreements is contrary to public policy. Because the court in Moloney already had possession of the tapes from reviewing them in camera, they were “making a sham of the scholar’s absolute assurances to their interview subjects that they would keep the tapes absolutely confidential until the death of each interviewee.”FN32  The notion that researchers can make promises of protection to their participants that can be struck down as unenforceable in court is disconcerting. “[I]f the government may subpoena confidential information subject to virtually no judicial scrutiny, the likely result will not be that the criminal justice system benefits, but that fewer people involved in potentially illegal conduct opt to speak to the press in the first place.”FN33 Under this balancing test, explicit confidentiality agreements must weigh in favor of applying the scholar’s privilege in all but the most extreme factual circumstances. In Moloney the confidential interviews were sought through the MLAT treaty to solve longstanding murder investigations, which might very well reach the extremity requirement. Other factors relating to the confidentiality of the material must be taken into account as well.FN34 For instance, researchers may fear that they will “[run] the well dry” if their information is forcefully disclosed through subpoenas.FN35 Voluntary revelations and bargained-for communications between a researcher and study participants are vital to a researcher’s work. Consequently, “[w]ithout these sources . . ., many researchers, . . . would lose valuable sources of information.”FN36 Study participants revealing personal or embarrassing information will be appropriately shielded here under the balancing test. The study participants in the Proctor & Gamble case were kept confidential because the information was highly personal in nature including medical history and sexual activity. The nature of this personal information could inhibit future studies if revealed due to a fear by participants of inevitable disclosure.FN37 Furthermore, First Amendment interests should not be discounted because a third party holds the confidential materials.FN38 Third parties typically destroy confidential researcher-client communications in testimonial privileges and sever the effect of confidentiality agreements. In Moloney, Boston College was in possession of the confidential interviews. Boston College did not bother to challenge the first subpoena issued, and even when challenging the second subpoena, the lawyers began the challenge by submitting the materials to the judge to be examined in camera.FN39 Ultimately, researchers must take responsibility in forming explicit agreements with their participants and keeping their agreements and communications as their property. But, since difficulties may arise for researchers in keeping their research out of the hands of third parties (especially in the institutional context), the court should weigh the researcher’s efforts to retain sole possession over the information instead of the actual result. Efforts sufficiently signify that the researchers valued the confidentiality interests of their participants enough to make a stand for them, which should weigh in their favor. In sum, confidentiality must be weighed by (1) whether a confidentiality agreement was reached between researchers and participants (2) whether personal privacy interests are present for participants (3) whether future research will be inhibited if there is disclosure and (4) efforts by the researchers to keep their research out of a third party’s hands.

3. The Extent of Protection Appropriate: Dangerous or Scandalous Information

If the information pending disclosure is found to be confidential—the next step is to determine the extent of protection that is appropriate for the confidential information. Determining the extent of protection likely must be satisfied through a case-by-case basis, through context evaluation of the confidentiality aspect. The highest demonstrations of confidentiality should be afforded the most protection and inadequate showings will not earn protection. Torruella’s view in Moloney found the interviews that the Belfast Project researchers conducted were confidential—due to the great lengths that the researchers went to prevent their unsanctioned disclosure.FN40 The Moloney case is a perfect example of information found to be confidential that was still not afforded the protection that the researchers wanted. There are a number of ways for the party seeking disclosure to deal with information that falls somewhere between highly confidential and inadequate including: limiting the subpoenas to only relevant claims, being willing to accept data with redacted confidential information, and helping to underwrite the costs of redaction and photocopying.FN41 Beyond confidentiality, the personal safety and potential dangers that disclosure will cause for the researchers must be weighed as well. Media in response to the disclosures in Moloney reported death threats against the Lead Researcher for the Belfast Project, Anthony McIntyre.FN42 Mr. McIntyre also stated in an affidavit that the home next door to his was smeared with excrement after the interviews were released. As mentioned earlier, the topics of many research projects are sensitive, highly personal, or controversial, and the safety of researchers and participants absolutely must be weighed with care. The issuance of the subpoenas in Moloney also “prompted broad news coverage and a minor international scandal.”FN43 Not only did the ACLU attempt to intervene, but Senator John Kerry and Secretary of State Hillary Clinton urged British authorities to revoke the subpoenas to encourage the peace process in Ireland. John Kerry has further argued alongside Moloney and McIntyre that “peace process stability considerations must take precedence over the tightly-written treaty obligations of the MLAT.”FN44 Subject matter that is more likely to create public condemnation should be afforded the most protection under the balancing test, while benign research on uncontroversial subjects will typically garner less protection. On a similar note, public curiosity or newsworthiness in the content of confidential research should not be valued in the balancing test. The Dolours Price interview garners large public interest, but most of the interest is not based on the confidentiality issues or the police misusing academic researchers for law and order purposes. Instead, the public really wants to know the “gory details of what they imagine are in these interviews,” which is driving and influencing much of the reporting.FN45  Once again, an inflamed public, or heightened social interest should have no bearing on the balancing test in these cases. The focus must be turned from the sensational, provoking subject matter, to the true issue of the case—which is solely the rights of the academic researchers. In sum, there are a myriad of factors that fall into the First Amendment interests including whether the individuals fall into traditional First Amendment protection, whether the information is confidential, and the extent of protection that the confidentiality requires. The key to evaluating each of these factors is thoroughness and reasonableness.

B.     The Opposing Interest: The Need for the Information

1. The Nature of the Proceedings

The nature of the proceedings, evinced by case law, primarily rests on whether the action is a criminal matter or civil matter. Branzburg flatly rejected the use of a reporter’s privilege in grand jury proceedings.FN46 Other than that, Branzburg did little to specify whether this type of privilege could be used elsewhere. This is where the circuit-split rears its ugly head. Some circuits have held that Branzburg forecloses First Amendment protection in all criminal cases.FN47 However other circuits have claimed there is no reason to distinguish between civil and criminal cases in application of the privilege.FN48 The majority in Moloney disavows the precedent of the First Circuit that permitted success and application of a scholar’s privilege simply on the basis that these were civil cases where the government and public’s strong interest in investigation of crime was not an issue.FN49 Case law evidences that the government’s presence as a party in criminal litigation makes a radical difference in the balancing test, as opposed to results obtained in private litigation.FN50 It seems that the government can more easily prove their need for the information by emphasizing interests of national security and public safety when criminal overtones are present.FN51 Essentially, when the Government is a party to the litigation, if they follow their own guidelines and use careful practice, there should be fewer problems with getting their subpoenas granted. In the Moloney case, the government was the party seeking disclosure of the information. The Government’s interest was clear through the UK-MLAT treaty in which the federal government of the United States assumed an obligation to assist the United Kingdom in its prosecution of domestic criminal matters.FN52 The current balancing test requires that for the party pursuing disclosure in civil litigation to defeat the scholar’s privilege, the research must be more than remotely related to the lawsuit. The relationship between the information sought and the academic research must be more than tenuous.FN53 For example, in one Second Circuit case, a student was working in a restaurant to gather information for his dissertation when a suspicious fire and explosion occurred in the restaurant.FN54 His journal and notes were subpoenaed. Although his journal entries were clearly “scholarly work product,” the relationship between the fire and the student’s academic research were remote and could not be classified as expertise. However, the question remains as to whether or not this binary distinction between civil and criminal cases is appropriate. The implication should be that civil cases will more likely be granted the privilege, but the type of case should not be a decisive factor. Criminal matters cannot be conceded to the government the way that they have been previously. Branzburg once again offers little guidance since the holding effectively only prevents a privilege in regard to grand jury proceedings. Therefore, the civil/criminal distinction should be considered when balancing the need for information, but should not preclude the government from being defeated if they are unable to prove that their need is legitimate.

2. Exhaustion of Alternative Sources

The second factor that must be addressed is whether the opposing party has exhausted alternative sources for accessing the information. Although this inquiry is not essential to defeating the privilege, it is still relevant in determining whether subpoenas seeking the confidential information are necessary.FN55 In Moloney, the information the government was seeking were interviews from one source who had passed away and one source that was still living. The government had no way of eliciting the information from the dead source, which makes their case even more compelling. However, the government could have contacted the living source, Dolours Price, to obtain the interview information. If Price were to refuse to surrender the information from her own memories and experiences, that would be  her prerogative. This conundrum is similar to  Cusumano, where the court permitted the scholar’s privilege, in which “Microsoft could have obtained that information directly from the sources revealed by the manuscript.”FN56 The one exception to living sources are cases where the alternative means of acquiring the information will create an undue delay or burden to the opposing party. In this case the factor should weigh in favor of the party seeking disclosure. At the time that the First Circuit opinion was issued, Dolours Price was an emotionally unstable woman. McIntyre speaks of Price as a sensitive woman who suffered mentally from the betrayal by those who shared culpability and by others who abdicated their responsibility.FN57 She would likely not have consented to an interview with the government in the way that she previously had with the Belfast Project researchers. In contrast, Price had built a relationship of trust with McIntyre; she attended his wedding and was the godmother of his son. These conditions on Price’s willingness to be interviewed may serve as an example of an undue burden to the opposing party seeking disclosure. But, once again, an unwillingness to perform other interviews should not constitute an undue burden unless all other alternatives to the information are inaccessible. The civil/criminal distinction may also come to bear on whether the information is accessible by other means. Case outcomes indicate that information sought in criminal cases will be more difficult to access from alternative sources.

Conclusion

There is no doubt that the scholar’s privilege argument will rear its head again soon, likely without the complications of an international treaty and a murder investigation allowing the courts to cruise past confidential researcher interests. At some point, the Supreme Court must clarify for lower courts to what extent parties asserting their First Amendment interests in challenging government subpoenas of confidential information should - consistent with Branzburg - have a Constitutionally guaranteed right to present evidence before the court for review. If not, scholars and researchers will continue to have their motions to dismiss disclosure quashed, which in turn will cause scholars and researchers to have their work, their passion, and their interest in sustaining oral and written history quashed. The time has come to stop quashing and start protecting.

FN1. University of Kentucky College of Law, J.D. candidate for May 2014.

FN2. Nicholas J. Wagner, Split Over Reporter’s Privilege Highlights Tension Between National Security and the First Amendment, Circuit Splits (July, 12, 2012, 5:27 AM) http://www.circuitsplits.com/2012/07/in-2010-before-an-audience-of-college-students-justice-sotomayor-remarked-that-the-supreme-court-is-likely-to-have-to-rule.html.

FN3. See United States v. Moloney, 685 F.3d 1, 16-20 (1st Cir. 2012); Will Havemann, Privilege and the Belfast Project, 65 Stan. L. Rev. Online 79, 79 (2012) http://www.stanfordlawreview.org/sites/default/files/online/articles/Havemann_65_SLRO_79.pdf.

FN4. See Robert M. O’Neil, A Researcher’s Privilege: Does Any Hope Remain? 59 Law & Contemp. Probs. 35, 36-37 (1996).

FN5. See Branzburg v. Hayes 408 U.S. 665, 690, 702-703 (1972).

FN6. See Wagner, supra note 2.

FN7. Kristina Spinneweber, Branzburg, Who? The Existence of a Reporter’s Privilege in Federal Courts, 44 Duq. L. Rev. 317, 334 (2006).

FN8. David A. Kaplan & Brian M. Cogan, The Case Against Recognition of a General Academic Privilege, 60 U. Det. J. Urb. L. 205, 221 (1982-1983).

FN9. See Howard Gray Curtis, Academic Researchers and the First Amendment: Constitutional Protection for their Confidential Sources, 14 San Diego L. Rev. 876, 877 (1976-1977) (explaining that the traditional disagreements have centered on journalists rather than academic researchers).

FN10. See Kaplan & Cogan supra note 8, at 215.

FN11. Paul Nejelski & Lindsey Miller Lerman, A Researcher-Subject Testimonial Privilege: What to do Before the Subpoena Arrives, 1971 Wis. L. Rev. 1085, 1134.

FN12. See Branzburg, 408 U.S. 665 at 689.

FN13. Cusumano v. Microsoft Corp., 162 F.3d 708, 714 (1st Cir. 1998).

FN14. Judith G. Shelling, A Scholar’s Privilege: In Re Cusumano, 40 Jurimetrics J. 517, 524 (2000).

FN15. See Rebecca Emily Rapp, In Re Cusumano and the Undue Burden of Using the Journalist Privilege as a Model for Protecting Researchers from Discovery, 29 J.L. Educ. 265, 268 (2000).

FN16. See Shelling, supra note 14, at 517.

FN17. United States v. Moloney, 685 F.3d 1, 16-20 (1st Cir. 2012).

FN18. Havemann, supra note 3 at 82.

FN19. Branzburg v. Hayes, 408 U.S. 665, 667-671 (1972); Moloney, 685 F.3d at 6.

FN20. Moloney, 685 F.3d at 18.

FN21. United States v. Moloney, 685 F.3d 1, 20 (1st Cir. 2012) (Torruella, J., concurring in the judgment only) (quoting Cusumano v. Microsoft Corp., 162 F.3d at 714 (1st Cir. 1998)).

FN22. Nejkelski & Lerman, supra note 11, at 1093.

FN23. U.S. Const. amend. I.

FN24. United States v. Moloney, 685 F.3d 1, 20 (1st Cir. 2012) (Torruella, J., concurring in the judgment only) (citing Glik v. Cunniffe, 655 F.3d 78, 82 (1st Cir. 2011)).

FN25. See Curtis, supra note 9, at 897.

FN26. Hannah Miller, Should a Legal Right to “Archival Privilege” be Established?, Due Process: Georgetown Law Library Blog, (February 26, 2013), http://www.law.georgetown.edu/library/blog/post.cfm/should-a-legal-right-to-archival-privilege-be-established.

FN27. Nejkelski & Lerman, supra note 11, at 1141.

FN28. See Eric M. Kraus & Arthur Palmieri, Investigating the Investigators: Balancing the Needs of Independent Researchers with Litigation Imperatives, Privacy & Data Security L. J. 659, 668 (2006).

FN29. United States v. Moloney, 685 F.3d 1, 4-6, 18-19 (1st Cir. 2012).

FN30. Petition for Writ of Certiorari, Moloney v. Holder, 2012 WL 5838450 at *7 (U.S.).

FN31. See Branzburg v. Hayes, 408 U.S. 665, 682 n. 21 (1972).

FN32. Harvey Silvergate, BC and the Belfast Project: A Scholar’s Privilege to Disobey, Forbes, (July 23, 2012, 11:48 AM), http://www.forbes.com/sites/harveysilverglate/2012/07/23/bc-and-the-belfast-project-a-scholars-privilege-to-disobey/.

FN33. Havemann, supra note 3.

FN34. O’Neil, supra note 4 at 36 (referring to the four concerns for protecting scholarly research).

FN35. Kraus & Palmieri, supra note 28 at 760.

FN36. Id. at 671.

FN37. See Farnsworth v. Proctor & Gamble Co., 758 F.2d 1545, 1546 (11th Cir. 1985)(preventing disclosure of questions regarding medical histories, sexual practices, contraceptive methods, pregnancy histories, menstrual activity, tampon usage, etc).

FN38. Brief for the Reporter’s Committee for Freedom of the Press as Amicus Curiae Supporting Petitioners at 3-5, Moloney v. Holder, No. 12-627, 2012 WL 6703006 (U.S.), at *4-*9.

FN39. See Silvergate, supra note 32.

FN40. United States v. Moloney, 685 F.3d 1, 20-21 (1st Cir. 2012) (Torruella, J., concurring in the judgment only).

FN41. See Kraus & Palmieri, supra note 28 at 674.

FN42. Katie Zezima, College Fights Subpoena of Interviews Tied to I.R.A., N.Y. Times, June 10, 2011, at A12.

FN43. Havemann, supra note 3 at 83.

FN44. Jim Dee, Death of Dolours could be a major game-changer, BelfastTelegraph.co.uk, Jan. 29, 2013, http://www.belfasttelegraph.co.uk/opinion/news-analysis/death-of-dolours-could-be-a-major-gamechanger-29041219.html.

FN45. Radio Free Eireann Interview with Anthony McInture and Ed Moloney: The Death of Dolours Price, Boston College Subpoena News (January 26, 2013), http://bostoncollegesubpoena.wordpress.com/2013/01/27/radio-free-eireann-interview-with-anthony-mcintyre-and-ed-moloney-the-death-of-dolours-price/.

FN46. Branzburg v. Hayes, 408 U.S. 665 at 707-08 (1972).

FN47. Petition for Writ of Certiorari, Moloney v. Holder, 2012 WL 5838450 (U.S.).

FN48. See Spinneweber, supra note 7 at 10-15.

FN49. United States v. Moloney, 685 F.3d 1, 18 (1st Cir. 2012) (distinguishing Cusumano v. Microsoft Corp., 162 F.3d 708 (1st Cir. 1998)); Bruno & Stillman, Inc. v. Globe Newspaper Co., 633 F.2d 583, 595-99 (1st Cir. 1980).

FN50. United States v. Burke, 700 F.2d 70, 77 (2d Cir. 1983).

FN51. Reporter’s Privilege Legislation: An Additional Investigation of Issues and Implications: Hearing Before the Committee on the Judiciary United States Senate; 109th Cong. 6 (2005) (statement of Hon. Chuck Rosenberg, U.S. Attorney for the S. D. of Tex.) (stating that the Governmental interest includes enforcing federal criminal law, protecting national security, protecting vital secrets, and protecting public safety).

FN52. United States v. Moloney, 685 F.3d 1, 21 (1st Cir. 2012) (Torruella, J., concurring in the judgment only) (citing UK-MLAT Technical Analysis, S. Exec. Rep. No. 104-23, at 11).

FN53. Bert Black, Research and Its Revelation: When Should Courts Compel Disclosure?, 59 Law & Contemp. Probs 169 at 179 (1996).

FN54. Id. (referencing In re Grand Jury Subpoena Dated January 4, 1984, 750 F.2d 223 (2d Cir. 1984)).

FN55. Curtis, supra note 9, at 888-889.

FN56. Cusumano v. Microsoft Corp., 162 F. 3d 708 at 712 (1st Cir. 1998).

FN57. See Radio Free Eireann Interview with Anthony McInture and Ed Moloney: The Death of Dolours Price, Boston College Subpoena News (January 26, 2013), http://bostoncollegesubpoena.wordpress.com/2013/01/27/radio-free-eireann-interview-with-anthony-mcintyre-and-ed-moloney-the-death-of-dolours-price/

"Friending" the NLRB: Applying Traditional Labor Rules to Social Media Cases

This Online Original is available for download (PDF) here.

Article | 102 KY. L. J. ONLINE 4 | Jan. 17, 2014

Lauren WeinerFN1

Dawnmarie Souza, an employee of American Medical Response of Connecticut, was terminated for referring to someone as a “17” in a Facebook status. While this may seem outlandish, the “someone” Souza was referring to was her boss and the “17” was company jargon for a mental patient. The status, wherein Souza also called her boss a “scumbag,” prompted numerous responses from other employees of the company who also shared their comments regarding the supervisor. Souza was suspended and subsequently terminated for her Facebook posts because they violated the Employer’s blogging and Internet policy.FN2 The Acting General Counsel (“AGC”) for the National Labor Relations Board (“NLRB”), in turn, filed an unfair labor practice charge against the Employer, finding that the discharge of the employee for the Facebook post was unlawful because it violated the employee’s right to engage in “concerted activity” under Section 7 of the National Labor Relations Act (“NLRA”).FN3 While the case was settled before it could be heard by the Board, it is only the tip of the iceberg in a slew of social media cases the Board will confront as a result of the popularity of networking sites like Facebook and Twitter. The NLRB has long protected the rights of employees to make negative remarks about working conditions and supervisors, recognizing that such activities are a facet of concerted activity. However, this precedent was developed prior to the onset of the social media frenzy, which has raised the question of what an employer may reprimand its employees for. May an employee disparage their employer on Facebook, possibly exposing the employer to liability, and argue that this is “concerted activity”? Lafe Solomon, the AGC of the NLRB, has said these social media posts are no different from those conversations taking place around the water cooler.FN4 However, this stance does not account for the pervasiveness of social media commentary. What was once an opinion shared at the lunch table amongst employees now has the potential to spread to hundreds of people, the majority of whom are presumably not employees, with a single mouse click. Originally enacted during the New Deal era to protect the rights of employees to unionize,FN5 the NLRA is thus far being applied arbitrarily to social media cases in a way that is too restrictive on employers. As union presence diminishes, some corporate officials assert that the NLRB is intervening in the social media context in an attempt to expand its power in the workplace.FN6 The popularity and universal accessibility to social media has changed the context of labor relations and this change should be considered when applying provisions of the NLRA to the 21st century workplace. This note will first address the framework of the NLRB. It will then address the traditional rules for protected concerted activity determinations, and subsequently examine the NLRB’s application of these traditional rules to the social media context. Next it will discuss inconsistencies and problems resulting from this application.  This note will conclude with a proposal for applying heightened scrutiny to find protected, concerted activity and a balancing test looking to the totality of the circumstances.

Framework of the National Labor Relations Board

The NLRB is an independent federal agency with exclusive jurisdiction over unfair labor practice charges under the NLRA. The NLRB “protects the rights of private sector employees to join together, with or without a union, to improve their wages and working conditions.”FN7 Among other undertakings, the NLRB “acts to prevent and remedy unfair labor practices committed by private sector employers and unions.”FN8 The Board of the NLRB (“the Board”) predominantly “acts as a quasi-judicial body in deciding cases on the basis of formal records in administrative proceedings.”FN9 The General Counsel is “independent from the Board and is responsible for the investigation and prosecution of unfair labor practice cases and for the general supervision of the NLRB field offices in the processing of cases.”FN10 Once an unfair labor practice charge is filed with a regional office, a field examiner investigates the charge and submits evidence to the Regional Director, who evaluates the findings and issues a formal complaint if he or she finds the evidence sufficient to support the charge. Once a formal complaint is issued, the NLRB prosecutes the complaint in front of an Administrative Law Judge (“ALJ”).FN11 If neither party files an exception to the ALJ’s decision within twenty days, the findings automatically become the decision and order of the Board; if exceptions are filed, the Board reviews the case.FN12

Protected Activity Under the National Labor Relations Act

An employer may fire an employee “for good cause, bad cause, or no cause at all, without violating the Act as long as his motivation is not anti-union discrimination and the discharge does not punish activities protected by the Act.”FN13 However, both union and non-union employers are at risk of facing unfair labor practice charges under Section 8 of the NLRA if they terminate or discipline an employee based on social media activity that the Board deems “protected concerted activity.” In pertinent part, Section 7 of the NLRA provides that “[e]mployees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”FN14 Section 8(a)(1) of the Act provides that it is an unfair labor practice for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in [section 7].”FN15 The discipline or discharge of an employee violates Section 8(a)(1) if the following four elements are established:(1) the activity engaged in by the employee was “concerted” within the meaning of Section 7 of the Act; (2) the employer knew of the concerted nature of the employee’s activity; (3) the concerted activity was protected by the Act; and (4) the discipline or discharge was motivated by the employee’s protected, concerted activity.FN16 “In order for employee conduct to fall within the ambit of Section 7, it must both be concerted and engaged in for the purpose of ‘mutual aid or protection.’”FN17 Under the Board’s test for concerted activity found in the Meyers cases, the activity must be “engaged in with or on the authority of other employees, and not solely by and on behalf of the employee himself.”FN18 Included in this definition are “those circumstances where individual employees seek to initiate or to induce or to prepare for group action, as well as individual employees bringing truly group complaints to the attention of management.”FN19 The Board and Third Circuit have held that: A conversation may constitute concerted activity although it involves only a speaker and a listener, but to qualify as such, it must appear at the very least that it was engaged in         with the object of initiating or inducing or preparing for group action or that it had some       relation to group action in the interest of employees.FN20 The Board has found that “efforts to invoke the protection of statutes benefiting employees are efforts engaged in for the purpose of ‘mutual aid or protection.’”FN21 Nevertheless, subject matter alone “is not enough to find concert.”FN22 However, protection of the Act is not absolute. An employee who is engaged in concerted protected activity and would otherwise “fall within the ambit of Section 7”FN23 can lose this protection. This loss occurs in two situations: when an employee has made public outbursts against a supervisor and when an employee has purportedly made negative remarks about an employer or its product to third parties.FN24 When an employee has made public outbursts against a supervisor, the Atlantic Steel standard is generally applied. In Atlantic Steel, the Board found that “even an employee who is engaged in concerted protected activity can, by opprobrious conduct, lose the protection of the Act.”FN25 When an employee “has made allegedly disparaging comments about an employer or its product in the context of appeals to outside or third parties,” the Jefferson Standard is generally applied.FN26

The Board’s Application of “Concerted Activity” Rules

Labeling social media as “the new water cooler” and acknowledging the historical protection federal law has afforded the rights of employees to discuss work-related matters, Board Chairman Mark Pearce stated the Board is merely “applying traditional rules to a new technology.”FN27 Thus far, the Board has only decided two unlawful discharge cases involving social media. In Knauz BMW, the Board ruled on its first unlawful discharge allegation involving Facebook posts. The Facebook posts in Knauz involved two separate incidents, the first of which contained pictures accompanied by sarcastic and critical remarks of the inexpensive food that was served at a marketing event for a new BMW model.FN28 The second incident took place at an adjacent dealership, also owned by the employer, where a customer’s child was sitting in the driver’s seat of a vehicle when the vehicle accelerated over the customer’s foot and into a pond. The employee posted pictures with mocking captions of the accident on his Facebook page. The Board agreed with the ALJ’s finding that the employee was discharged solely for his posts about the accident, adopted the holding that these posts did not amount to protected concerted activity, and thus held that the discharge was lawful.FN29 The Board declined to address whether the Facebook posts about the sales event were protected. In Hispanics United, Marianna Cole-Rivera and Lydia Cruz-Moore were employees at Hispanics United of Buffalo, Inc., a nonprofit where the co-workers assisted victims of domestic violence. After Cruz-Moore sent Cole-Riviera a text message indicating an intention to discuss her criticisms of employee performance with the Executive Director of the company, Cole-Rivera posted a Facebook status from her home computer that read, “Lydia Cruz, a coworker feels that we don’t help our clients enough at [Respondent]. I about had it! My fellow coworkers how do u feel?”FN30 Four off-duty employees commented on the status voicing their objection to Cruz-Moore’s criticism that their work performance was subpar. Cruz-Moore complained to the Executive Director that she had been defamed and slandered. Cole-Rivera and her four coworkers were subsequently discharged because their comments, deemed “bullying and harassment” of a coworker, were in violation of the company’s “zero tolerance” policy proscribing such conduct. The Board found that “although the employees’ mode of communicating their workplace concerns might be novel...the appropriate analytical framework for resolving their discharge allegations has long been settled under Meyers Industries and its progeny.”FN31 Applying Meyers, the Board held that the discharge of the five employees was an 8(a)(1) violation; by responding with comments of disapproval to Cole-Rivera’s solicitation, the coworkers “made common cause with her, and together their actions were concerted within the definition of Meyers I, because they were undertaken ‘with...other employees.’”FN32 The employees’ actions were also found concerted under Meyers II because they “were taking a first step towards taking group action to defend themselves against the accusations they could reasonably believe Cruz-Moore was going to make to management.”FN33 Although the status did not notify employees that Cruz-Moore was going to speak with the Executive Director, the Board reiterated that the “object or goal of initiating, inducing, or preparing for group action does not have to be stated explicitly when employees communicate” and that “even absent an express announcement about the object of an employee’s activity, ‘a concerted objective may be inferred from a variety of circumstances in which employees might discuss or seek to address concerns about working conditions.'”FN34

Cases Before the General Counsel

Because Hispanics United and Knauz BMW mark the Board’s only application of the NLRA to unlawful discharge cases involving social media, precedent is extremely limited. Although this limitation suggests uncertainty as to how the Board will decide future social media discharge cases, policy guidance reports issued by the AGC provide some insight. While the AGC’s decisions are not binding authority like those issued by the Board, recently decided cases indicate it is probable that the Board will subscribe to the AGC’s stance on social media cases. In his August 2011 report, AGC Lafe Solomon addressed in part “emerging issues concerning the protected and/or concerted nature of employees’ Facebook and Twitter postings.”FN35 This note will first address cases where the AGC found concerted activity and then cases where concerted activity was not found.

Concerted Activity Found

The AGC found that the Facebook discussion between employees in Hispanics United was a “textbook example of concerted activity” under the Meyers cases “even though it transpired on a social network platform.”FN36 Furthermore, the AGC made the broad assertion that “[t]his finding of protected activity does not change if employee statements were communicated via the internet” but did not offer a justification for this conclusion.FN37 The AGC also found protected concerted activity in American Medical Response of Connecticut (“AMR”), mentioned in the introduction of this note. In finding that Souza’s discussion of supervisory actions with coworkers in her Facebook post was protected activity, the AGC noted that “[i]t is well established that the protest of supervisory actions is protected conduct under Section 7.”FN38 Applying the Atlantic Steel standard, the AGC also determined that Souza did not lose the Act’s protection as a result of her comments. In his analysis of Knauz BMW, the AGC found that the photographs and commentary criticizing the sales event “were part of a course of protected, concerted conduct related to the employees’ concerns over commissions and were not disparaging of the Employer’s product or so ‘egregious’ as to lose the Act’s protection.”FN39 The Report stated that the employee took the photos to “capture his coworker’s frustration”, that when he posted them on Facebook he was expressing “the sentiment of the group,” and this activity was therefore “a direct outgrowth of the earlier discussion among the salespeople” after the meeting with management.FN40 In Triple Play Sports Bar (“Triple Play”), the ALJ found that an Employer’s discharge of employees who participated in a Facebook conversation regarding the Employer’s tax withholding practices was unlawful. After discovering that several employees owed state income taxes related to earnings at Triple Play Sports Bar, an employee requested to discuss the issue at an upcoming employee meeting. Subsequently, an employee “liked” the status of a former employee stating the employer could not do paperwork properly. Two other employees made similar comments; one stated she requested to discuss the issue at the next meeting, and another referred to one of the owners as “an ass hole.” The AGC found that the conversation related to a terms and condition of employment, namely the administration of tax withholdings, and that the conversation embodied “truly group complaints.”FN41

Concerted Activity Not Found

Arizona Daily Star involved a reporter who was discharged for posting unprofessional tweets from a work-related Twitter account that included offensive statements about homicides relating to his public safety beat, such as “What?!? No overnight homicide? WTF? You’re slacking Tucson.”FN42 The AGC found that this activity was not concerted or protected, as it did not involve terms and conditions of employment or attempt to involve other employees in employment issues. JT’s Porch Saloon & Eatery (“JT’s Saloon”) involved a bartender who was fired after posting a Facebook status about his Employer’s tipping policy; the employee also referred to the customers as “rednecks” and stated that he hoped they would choke on glass as they drove home drunk.FN43 Months prior to the posting, the terminated employee discussed the policy with a coworker, but neither complained to management. Though acknowledging that the status addressed the bartender’s terms and conditions of employment, the AGC held the activity was not concerted because no employees responded to the post, nor did the bartender discuss it with his coworkers. The AGC was unconvinced that the “conversation” grew out of the employee’s conversation with his coworker months prior.FN44 In Martin House, Inc., a recovery specialist at a residential facility for the homeless was fired after making callous remarks in a Facebook status about the residents, many of whom were mentally ill or had substance abuse problems. Finding this conduct was not protected concerted activity, the AGC emphasized that none of the employee’s coworkers responded to the status and that she was not seeking to induce group action.FN45 The AGC held in Rural Metro that an employee was not engaged in concerted activity where she posted messages on a Senator’s Facebook page that allegedly violated the Business Conduct policy of her employer. The employee worked as a dispatcher for a company that provided medical transportation and fire protection services. The employee’s post stated that Rural Metro was the “cheapest service in town” and paid its employees $2 less than the national average.FN46 Because the employee did not discuss the post with other employees, was not attempting to take employee complaints to management, and there had been no employee meeting or undertakings to start group action, the AGC found that this was not concerted activity.FN47 After being reprimanded by an Assistant Manager, the employee in Wal-Mart posted on his Facebook page, “Wuck Falmart! I swear if this tyranny doesn’t end in this store they are about to get a wakeup call because lots are about to quit!”FN48 One coworker responded with approval of this post and another made a supportive remark. The AGC did not find concerted activity because the posts did not suggest the employee “sought to initiate or induce coworkers to engage in group action; rather they express[ed] only his frustration regarding his individual dispute with the Assistant Manger” and were merely “an expression of an individual gripe.”FN49 The AGC found that the responses of coworkers did not indicate they had interpreted the posts as an attempt at inducing group action.

Differentiating Social Media From Traditional Labor Contexts

The traditional rules do not account for the characteristics of social media that differ greatly from other labor contexts; this disparity will likely increase an employer’s exposure to liability and result in arbitrary rulings, making it increasingly difficult for employers to know when they may lawfully terminate an employee for disparaging remarks made on social media websites. Inconsistent decisions will also create uncertainty amongst practitioners responsible for representing employees or employers. Contexts in which concerted activity has generally been found to occur, such as conversations among employees or at planned gatherings, vary drastically from communication via social media. Due to its accessibility, posts on social media sites are likely to permeate throughout the Internet, reaching a far wider audience than traditional forms of discussion. A Facebook status has the potential to be viewed by hundreds of online “friends” and even individuals an employee does not know, most of whom are unlikely to be coworkers. This reach is far different from a meeting or conversation among employees, in which the discussion is limited to those present. Even compared with hand billing or picketing situations, this expression does not have nearly the same potential to spread as extensively as discussion occurring online. Those who witness communication from picketing or hand billing do so in a more limited—and presumably more organized—context, in which it is likely easier to understand the dispute and the dispute receives more accurate information. Those who read a “status” or “tweet” are less likely to be apprised of all facts or circumstances of a situation and are susceptible to reading various responses to such posts, many from people who may not have knowledge of a given situation. Permanency is also a characteristic of online activity that distinguishes it from activity in a traditional labor context. Traditional gatherings are generally finite, while an online discussion does not dissipate; once a remark is posted online, it remains on the Internet unless it is deleted.

Repercussions Faced by Employers

As a result of the foregoing characteristics, employers are exposed to greater liability and risk of loss from employee social media activity. Such posts “may create liability for employers for security law violations, consumer law violations, infringement, discrimination, conspiracy, privacy violations, defamation, negligence, breach of contract, or other matters.”FN50 Due in part to the potential of online activity to reach far more people, a company also faces losing business to a greater extent from online “concerted activity” than it does from traditional forms of such activity. If the employees in Hispanics United worked for an insurance company rather than a nonprofit organization, their online activity could foreseeably result in lost business, as potential customers viewing the post would be unlikely to purchase insurance from a company whose employees are criticizing one another for offering substandard services. Concerted activity on Facebook is far more likely to attract the attention of potential or existing customers than a conversation at the water cooler, an occurrence unlikely to receive public attention.

Group Action or Griping?

Traditional rules do not consider the informal nature of social media, where it is commonplace for individuals to use the web as an outlet of expression. This difference has resulted in the Board finding that activity has been engaged in for “mutual aid or protection”, when it is likely mere griping. While traditional forms of concerted activity such as picketing often require some element of organization or planning, posting on a social media site can be done quickly with little thought or intent. To find that an employee is attempting to call his coworkers to group action, when in actuality he is complaining, is to impute a formality to social media sites that they do not possess. An employee who tweets that her boss is a jerk is not necessarily seeking to engage in concerted activity for “mutual aid and protection.” Nevertheless, when the employee is discharged because of her tweets, “concerted activity” presents a convenient defense or avenue for reinstatement. Application of the traditional rules in this context is likely to afford the protections of Section 7 to those who only sought to vent online. The Board and AGC have been too lax in finding “mutual aid and protection” in social media cases. That the subject matter of an online discussion is a condition of employment is not enough to find concert.FN51 Yet, under the current trend, the Board could foreseeably find any online conversation between employees to be protected so long as it relates to the interest of employees. In Hispanics United, the Board found that the employees were taking initial steps toward group action to defend themselves against possible accusations even though the employees were unaware of Cruz-Moore’s threats to bring her complaints to management. Similarly, there was nothing indicating that the employee in AMR posted the status with intent to engage in group action. Other comments by employees merely criticized the supervisor and no group action or defense was mentioned. AMR is also inconsistent with the holding in Wal-Mart, as the AGC found the post there to be merely an individual gripe with a supervisor.

Emphasis on Coworker Response

The Board and AGC place undue emphasis on whether coworkers respond to an employee’s post; this emphasis does not consider the ease with which a person can click the “like” button. A coworker that expresses agreement with the status of an employee simply by typing a few words in the “comment” box has unknowingly engaged in concerted group activity, whether he intended to or not. Current application ignores the informality of social networks and does not account for the actual intent of the employees. Did the employees in Triple Play intend to engage in concerted activity when they discussed their tax issues any more than the tip-deprived bartender in JT’s Saloon? It does not appear that they did. Additionally, the AGC’s heavy reliance on coworker response is too attenuated and leaves too much to chance. An employee who happens to post a Facebook status when five of her coworkers are online may fall within the ambit of Section 7 if her coworkers comment on the post, but if that same employee posted the status hours later and none of her coworkers were online, she may be out of luck. In Triple Play, discussion of taxes was concerted activity because two other employees participated in the Facebook conversation and an employee who happened to have recently mentioned the issue to her boss referenced it in the discussion. However, the bartender’s Facebook post about his Employer’s tipping policy in JT’s Saloon was not concerted activity, in part because no one responded to his status and his prior conversation with his coworker was not sufficiently recent. Would it have made a difference if his coworkers commented and indicated their agreement? Were his remarks that he wished his customers would “choke on glass” simply more offensive to the AGC than calling his boss “an ass hole” like the employee in Triple Play?

Modifying the Meyers Application

While the NLRB should continue to determine whether an employee has engaged in protected concerted activity under the Meyers line of cases, certain modifications should be made in applying the test in the social media context. The NLRB should adopt an approach that places less emphasis on whether co-workers of a “posting” employee respond to the post; it should also place greater weight on the circumstances outside of the online discussion. The NLRB should inquire further into whether the communication was truly intended to promote group action or whether it was simply “group griping.” Moreover, a heightened standard of scrutiny should be applied when determining whether or not online activity was for mutual aid and protection. Whether a coworker “likes” or responds to an employee’s post should not be dispositive of whether activity is concerted. The mere fact that many coworkers have responded to a post should not weigh heavily toward a finding that this was concerted activity. Alternatively, when an employee has posted something clearly designed to induce group action but his coworkers have not responded, it should not follow that this action is not protected. While many coworkers responding to a post expressing agreement or stating their own qualms may be concerted in that it is group activity, more should be required to be shown to prove that this was undertaken for “mutual aid and protection.” In conducting its investigation after a charge is filed, the field examiner should take extra caution to gather evidence and take affidavits regarding communication occurring outside of the online discussion. The NLRB should carefully scrutinize the occurrences and communication pertaining to the online discussion leading up to the posting. This attention to facts outside of the discussion will help protect the interests of those employees truly engaging in concerted activity while also protecting the interests of employers where an employee’s conduct is mere griping. Focus should be placed on whether communication occurring offline—in conjunction with that online—is seen as preparing for group action. Because of the great risk of liability an employer is exposed to from an employee’s posts online, the NLRB should apply heightened scrutiny to an employee’s claim that their online activity was for mutual aid and protection. Coworkers’ online expression should not be found to be protected simply because they have discussed the same complaints in the break room; evidence must be offered that conversations taking place around the online communication had the objective of preparing for group action. “There is a meaningful distinction between sharing a common viewpoint and joining in a common cause. Only the latter involves group action for mutual aid and protection.”FN52 Where there is no evidence that employees have at least discussed engaging in group activity or bringing their concerns to management prior to an online post, the activity should not be protected. The employee should be required to establish a strong nexus between the online discussion and group action. In determining whether or not protected concerted activity exists, the NLRB should look to the totality of the circumstances surrounding the online post, including the nature of the post; the extent of liability the employer could be potentially exposed to as a result of it; alternative means the employee could have used to promote group activity; and whether the posting employee has made efforts to clearly show that the online post was to promote group action.  These findings should be viewed in the light most favorable to the employer due to the great liability the employer could potentially face. While the employee also faces great repercussions in the possibility of losing their job and livelihood, the fact that it was the employee’s decision—and not the employer’s—to use an online public forum to express complaints instead of privately doing so, suggests placing a heavier burden on the employee. The NLRB should weigh the interests of the employer with that of the employee before deciding whether or not activity is protected.

Conclusion

It is imperative that the NLRB adapts its traditional rules regarding concerted activity to the realities of social media when wrongful discharge claims are brought after an employee is discharged for their online activities. A stricter application of the Meyers standard of concerted activity is likely the best avenue for such modification. This modification should weigh the interests of both employees and employers; particular attention should be paid to the significant increase in exposure to liability an employer faces as the result of employee conduct online. The Board should look more to the intention of the poster and facts leading up to the online activity, focusing less on how many likes or comments such activity elicits from coworkers. Society has changed significantly from the development of social media; the rules that govern this society in its labor relations should evolve with it.

FN1. Lauren Weiner is a J.D. candidate for May 2014 and Notes Editor for the Kentucky Law Journal.

FN2. See Am. Med. Response of Conn., NLRB Adv. Mem., Case No. 34-CA-12576 (Oct. 5, 2010) [hereinafter AMR Adv. Mem.].

FN3. See also Steven Greenhouse, Labor Board Says Rights Apply on Net, N.Y. Times, Nov. 9, 2010, at B1; Memorandum from Anne Purcell, Assoc. Gen. Counsel of the NLRB to All Reg’l Dirs., Officers-in-Charge, and Resident Officers, Report of the Acting Gen. Counsel Concerning Social Media Cases , 5-6 (Aug. 18, 2011) [hereinafter Report of AGC]. Souza was asked by her supervisor to prepare a report regarding a customer complaint about her work. She requested and was subsequently denied union representation. She posted the status from her home computer on her personal Facebook page, where she also referred to the supervisor as a “dick”. AMR Adv. Mem., at 3.

<FN4. Greenhouse, supra note 3, at B1.

FN5. See National Labor Relations Act, 29 U.S.C. § 151 (2006) (“It is hereby declared the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.”) The National Labor Relations Act was adopted in 1935. See National Labor Relations Act, Nat’l Labor Relations Bd., https://www.nlrb.gov/national-labor-relations-act (last visited July 6, 2013).

FN6. See Steven Greenhouse, Even if It Enrages Your Boss, Social Net Speech is Protected, N.Y. Times, Jan. 22, 2013, at A1.

<FN7. Who We Are, Nat’l Labor Relations Bd., https://www.nlrb.gov/who-we-are  (last visited July 6, 2013); see Rights We Protect, Nat’l Labor Relations Bd., https://www.nlrb.gov/rights-we-protect (last visited July 6, 2013).

FN8. What We Do, Nat’l Labor Relations Bd., https://www.nlrb.gov/what-we-do (last visited July 6, 2013).

FN9. Who We Are: The Board, Nat’l Labor Relations Bd., https://www.nlrb.gov/who-we-are/board (last visited July 6, 2013). The Board generally consists of five Members who are appointed by the President, with consent of the Senate, to five-year terms. Currently, the Board is only comprised of three members: Chairman Mark Gaston Pearce, Sharon Block, and Richard F. Griffin, Jr. Id.

FN10. Who We Are: The General Counsel, Nat’l Labor Relations Bd., https://www.nlrb.gov/who-we-are/general-counsel (last visited July 6, 2013).

FN11. James O. Castagnera, et al., Unfair Labor Practice Procedures, in 1 Termination of Employment §1:140 (2013). The NLRB has forty Administrative Law Judges (“ALJs”) that hear, settle, and decide unfair labor practice cases. Who We Are: Division of Judges, Nat’l Labor Relations Bd., https://www.nlrb.gov/who-we-are/division-judges (last visited July 6, 2013). After presiding over the trial, the ALJ files a decision suggesting either dismissal of the complaint or an order to cease and desist from the unfair labor practice and affirmative relief. Unfair Labor Practices Process Chart, Nat’l Labor Relations Bd., https://www.nlrb.gov/node/3947 (last visited July 6, 2013).

FN12. Castagnera, supra note 11; Unfair Labor Practices Process Chart, supra note 11. If exceptions are filed, the Board reviews the case and will either dismiss the complaint if it finds that an unfair labor practice was not committed; issue a remedial order if it finds an unfair labor practice was committed; or remand the case to the ALJ for further action. A party may seek judicial review of the Board’s order from the court of appeals; the court of appeals can then enforce, set aside, or remand all or part of the case. Unfair Labor Practices Process Chart, supra note 11; Castagnera, supra note 11.

FN13. L’Eggs Prods., Inc. v. NLRB, 619 F.2d 1337, 1341 (9th Cir. 1980).

FN14. National Labor Relations Act, 29 U.S.C. § 157 (2006).

FN15. National Labor Relations Act, 29 U.S.C. § 158(a)(1) (2006).

FN16. Meyers Indus., Inc. (Meyers I), 268 N.L.R.B. 493, 497 (1984).

FN17. Hollings Press, Inc., 343 N.L.R.B. 301, 302 (2004).

FN18. Meyers I, 343 N.L.R.B at 497.

FN19. Meyers Indus., Inc. (Meyers II), 281 N.L.R.B. 882, 887 (1986).

FN20. Adelphi Inst., Inc., 287 N.L.R.B. 1073, 1073 (1988) (quoting Mushroom Transp. Co. v. NLRB, 330 F.2d 683, 685 (3d Cir. 1964)).

FN21. Meyers II, 281 N.L.R.B. at 887.

FN22. Adelphi Inst., 287 N.L.R.B. at 1074.

FN23. Hollings Press, 343 N.L.R.B. at 302.

FN24. See generally NLRB v. Local Union No. 1229 (Jefferson Standard), 346 U.S. 464 (1953); Atlantic Steel Co., 245 N.L.R.B. 814 (1979); Report of AGC, supra note 3, at 9.

FN25. Atlantic Steel, 245 N.L.R.B. at 816 (citing Hawaiian Hauling Service, Ltd., 219 N.L.R.B. 765, 766 (1975)). In determining whether an employee has engaged in such conduct as to lose the Act’s protection, the Board or must carefully balance several factors: “(1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by an employer’s unfair labor practice.”

FN26. Where otherwise protected activity involves communications with a third party, such activity is protected if it meets a two-part test: “(1) the communication indicates to the third party that it is related to an ongoing dispute between an employer and employees; and (2) the communication itself is not ‘so disloyal, reckless, or maliciously untrue as to lose the Act’s protection.’” Five Star Transp., Inc. v. NLRB, 522 F.3d 46, 52 (1st  Cir. 2008) (quoting Am. Golf Corp. (Mountain Shadows), 330 N.L.R.B. 1238, 1240 (2000)). See also Jefferson Standard, 346 U.S. at 477-78; Report of AGC, supra note 3, at 9.

FN27. See Greenhouse, supra note 6, at A1.

FN28. Karl Knauz Motors, Inc. (Knauz BMW), 358 N.L.R.B. No. 164, slip. op. at 7 (2012). Hot dogs, chips, and bottled water were served at the event. The employee wrote, “I was happy to see that Knauz went “All Out” for the most important launch of a new BMW in years...the new 5 series. A car that will generate tens in millions of dollars in revenues for Knauz over the next few years. The small 8 oz bag of chips, and the $2.00 cookie plate from Sam’s Club, and the semi fresh apples and oranges were a nice touch...but to top it all off...the Hot Dog Cart. Where our clients could attain a over cooked wiener and a stale bun.” Id.

FN29. Id. at 1. The ALJ found that the post was solely the action of the employee, without any discussion with his co-workers, and had no connection to any of the employees’ terms and conditions of employment. Id. at 10-11.

FN30. Hispanics United of Buffalo, Inc., 359 N.L.R.B. No. 37, slip. op. at 1-2 (2012).

FN31. Id. at 1.

FN32. Id. at 2 (citing Meyers I, 268 NLRB at 497). See also Meyers I, 268 N.L.R.B. 493; Meyers II, 281 N.L.R.B. 882.

FN33. Id. (quoting the decision of Administrative Law Judge Arthur J. Amchan) (internal quotation marks omitted).

FN34. Id. at 3 (quoting Relco Locomotives, Inc., 358 N.L.R.B. 37, slip op. at 17 (2012)) (internal quotation marks omitted). In his dissent, Member Hayes contended that a group action defense was not intended because the employees were not told that Cruz-Moore was going to bring her criticisms to the Executive Director and thus the Facebook discussions were not undertaken for the purpose of mutual aid and protection. Id. at 4 (Member Hayes, dissenting).

FN35. Report of AGC, supra note 3, at 2. These cases were “decided upon a request for advice from a Regional Director.” Id.

FN36. Id. at 4. Congruent with the Board’s findings, the AGC determined that the postings “directly implicated terms and conditions of employment and were initiated in preparation for a meeting with the Employer to discuss matters related to these issues” and were thus concerted activity for “mutual aid and protection” under Section 7. Id. The AGC found that this activity was protected, relying on a prior Board decision where employee statements about staffing levels were found to be protected where it was clear from the context of the statements that they involved working conditions. Id. (citing Valley Hosp. Med. Ctr., 351 N.L.R.B. 1250, 1252-54 (2007)).

FN37. Id.

FN38. Id. at 5 (citing Datwyler Rubber and Plastics, Inc., 350 N.L.R.B. 669 (2007)); AMR Adv. Mem., supra note 2, at 9. This Advice Memo came out prior to settlement between the parties.

FN39. Report of AGC, supra note 3, at 6-7.

FN40. Id. at 8. Because the employees worked entirely on commission, the AGC found that their concern over the potential impact of refreshments on sales was clearly related to terms and conditions of employment. Id.

FN41. Three D, LLC (Triple Play), Admin. Law Judge Decision, Case No. 34-CA-12915 (Jan. 3, 2012); see Report of AGC, supra note 3, at 9-10. It is noteworthy that two customers of the Employer also commented on the status. Id. at 10. The ALJ also underscored the employee’s comment that she had requested to discuss the issue at a meeting, showing that the conversation “contemplated future group activity.” Id.

FN42. Lee Enter. Inc. (Ariz. Daily Star), NLRB Adv. Mem., Case No. 28-CA-23267 (Apr. 21, 2011); see Report of AGC, supra note 3, at 13. The tweets also included criticisms of the paper’s copy editors and negative remarks about an area television station. Supervisors requested the employee stop tweeting about certain subjects from the account numerous points during the course of these events. Id.

FN43. JT’s Porch Saloon & Eatery, NLRB Adv. Mem., Case No. 13-CA-46689 (July 7, 2011) [hereinafter JT’s Saloon, Adv. Mem.]; Report of AGC, supra note 3, at 14.

FN44. JT’s Saloon, Adv. Mem., supra note 43; Report of AGC, supra note 3, at 15.

FN45. Report of AGC, supra note 3, at 17; Martin House, Inc., NLRB Adv. Mem., Case No. 34-CA-12950 (July 19, 2011) [hereinafter Martin House, Adv. Mem.]. After a former client saw the status, she reported the employee. Martin House, Adv. Mem.

FN46. Rural Metro, NLRB Adv. Mem., Case No. 25-CA-31802 (July 18, 2011). The post also contained criticisms that the company only had two trucks for an entire county and detailed an incident where one of Rural Metro’s crews showed up to the scene of a cardiac arrest and did not know how to perform CPR. Id. at 2.

FN47. Id. at 3.

FN48. Wal-Mart, NLRB Adv. Mem., Case No. 17-CA-25030 (July 19, 2011). The employee also referred to the Assistant Manager as a “super mega puta!” and complained that he was being “chewed out” for misplaced merchandise. Id. at 2.

FN49. Id. at 3.

FN50. William E. Hartsfield, Blogs and Social Media, in 1 Investigating Employee Conduct § 6:42 (2013).

FN51. See Adelphi Inst., 287 N.L.R.B. at 1074.  See also Hispanics United, 395 NLRB at 4 (Member Hayes, dissenting) (“Not all shop talk among employees—whether in person, telephonic, or on the internet—is concerted within the meaning of Section 7, even if it focuses on a condition of employment.”).

FN52. Hispanics United, 395 NLRB at 4 (Member Hayes, dissenting).

Life and Death in Kentucky: Past, Present, and Future

This Online Original is available for download (PDF) here.

Article | 102 KY. L. J. ONLINE 3 | Nov. 10, 2013

Roberta M. HardingFN1

"All over the United States there is a growing sentiment to do away with capital punishment . . . . If their mood is reflected in the letters they write me daily, a large segment of the Kentucky people want capital punishment abolished, too."FN2 -Former Kentucky Governor Edward Breathitt, May 5, 1965

The first officially recorded execution in Kentucky was carried out in 1780, the year after Kentucky County became the District of Kentucky of the State of Virginia,FN3 when a man was hung for murder in Breckinridge County.FN4 The next four executions also were carried out during Kentucky’s tenure as the District of Kentucky.FN5 These condemned and their predecessor had an attribute in common that is extremely germane to how the death penalty has been administered in Kentucky: their gender, which is male.FN6 A prodigious gender bias, which disfavors male capital offenders, is evident in Kentucky’s historic and contemporary death penalty practice. Since the first execution in 1780FN7 and the last in 2008,FN8 the Commonwealth has executed 427 people.FN9  415 males and 12 females.FN10 The latter account for a paltry 3% of those executed by the Commonwealth, while men account for a whopping 97%! Amazingly the last time Kentucky executed a female capital offender was in the 19th century;FN11 while male capital offenders were executed for the remainder of the 19th century and in the 20th and 21st centuries.FN12 Contemporary capital sentencing statistics aptly convey how deeply entrenched this bias is in the operation of the death penalty. Since 1972, when the United States Supreme Court handed down its seminal decision in Furman v. Georgia,FN13 the Commonwealth has sentenced eighty-two people to death.FN14 96% were male and 4% were female.FN15 Incredibly, these percentages are almost identical to those based on more than two centuries of execution data.FN16 The existence of this bias, however, is not unique to Kentucky; nor has it gone unacknowledged.FN17 The first five people executed also represent another inveterate basis for discrimination found in Kentucky’s historic and modern use of capital punishment: race. Baysinger, the first person to be executed, was white and the quartet following him were African-American.FN18 Thus, 80% of those executed when Kentucky was still a District were of color. This specific bias, as well as its tenacity and pervasiveness, are easily understood when the quartet’s status is considered: All were slaves.FN19 The institution of chattel slavery in Kentucky greatly affected the “racialization” of the administration of capital punishment in the Commonwealth. “Slavery existed in Kentucky from its first days of settlement”FN20 and was an important issue at the Convention to draft Kentucky’s First Constitution.FN21  Kentucky’s strong pro-slavery sentiment was embodied in Article IX of the First Constitution, which prohibited “the passage of legislation which tended to abolish slavery in the state.”FN22 The Constitutions produced at the Second and Third Constitutional Conventions, held respectively in 1799 and 1849, reinforced this institution of inequality by codifying assurances to protect slavery from being abolished.FN23 “The prominent place given the institution [of slavery] in the first three constitutions”FN24 led noted Kentucky historian Thomas Clark to describe Kentucky’s “hold on slavery”FN25 as “tenacious,”FN26 but strangely, “[w]hen the Civil War began, Kentucky was one of four slave states that remained in the Union.”FN27 As the War progressed, however, more and more Kentuckians became outraged by what they perceived to be a federal government that was increasingly taking on the abolitionists’ cause: “[t]hey were fighting for the preservation of the Union, not the destruction of slavery.”FN28 The mere suggestion of emancipation sent some to the verge of apoplexy. This fervor is illustrated by one newspaper editor’s impassioned comments:[I]f the slaves were freed 200,000 soldiers would be required 'to retain Kentucky in the Union, and then the soldiers would be compelled to aid in exterminating the black race.' If the slaves were freed, he asserted, 'there is but one thing to be done with them; they must be wiped out-totally obliterated. It must be a merciless, savage extermination . . . . The two races . . . cannot exist in the same country, unless the black race is in slavery.FN29 Sentiments of this tenor were officially validated when the legislature passed a law permitting the enslavement of any African American entering Kentucky who stated they owed their freedom to the Emancipation Proclamation.FN30 Kentuckians’ anger escalated when President Lincoln decided to recruit African Americans to fight in the war because “it challenged the basic assumption that blacks were inherently inferior to whites.”FN31 While Kentucky did not end up seceding,FN32 the legislature did refuse to ratify the Thirteenth Amendment.FN33 Even after the Secretary of State announced the Amendment had been ratified, the Kentucky legislature “refused to change its stance”FN34 and again voted down ratifying the Amendment.FN35 By all indications, racial inequality had become indelibly ingrained in Kentucky’s social fabric, which adversely affected the workings of the state’s criminal justice system; especially when deciding who should live and who should die. As noted earlier, the Commonwealth has executed 427 people.FN36 Racially, the overwhelming majority of people executed were either African-American, accounting for 54%, or Caucasian, accounting for 42%.FN37 Even though female capital offenders benefit greatly from the death penalty’s gender bias,FN38 the group is responsible for generating one of the most remarkable race and the death penalty statistics: Kentucky has only executed one Caucasian female, while 83% of the females executed were African-American.FN39 Another astounding statistic from this category is that “no white man in Kentucky died on the gallows or in the electric chair for the rape of a black woman.”FN40 In Kentucky, more African-American men, 222,FN41 than Caucasian men, 177,FN42 lost their lives on the scaffold, in the electric chair, or on the gurney.FN43 Eight men belonging to the former group, however, lost their lives because of how a facially race neutral law was applied. Action taken by the legislature in the early twentieth century fostered some hope that the execution of Roger Warren, an African-American male, on May 25, 1911 would be the last execution carried out by hanging.FN44  The year before the legislature authorized switching the state’s sole method of execution from hanging to electrocution.FN45 In addition, executions were to “take place within the walls of the State penitentiary”FN46 away from the purview of the public.FN47 This hope was reinforced when eighteen year old James Buckner, African-American like his predecessor Roger Warren, christened Kentucky’s electric chair “Ole’ Sparky” on July 8, 1911.FN48 Nine years later the outcome in a capital case in Lexington involving an African American man accused of murdering and raping a ten year old white female would land a cruel blow to hopes about transforming the relationship between the rope and violence. In February 1920, twenty three year old Will Lockett confessed to murdering young Geneva Hardman.FN49 Given the circumstances, the sexual assault, the victim/defendant racial and gender paradigm: white female victim and black male defendant, and the girl’s tender age, the authorities “[f]ear[ed] a mob might storm the jail [so they]  . . . rushed [Lockett] to the state penitentiary in Frankfort.”FN50 The next day Lockett was indicted for murder and the judge vowed “there would be no delay . . . and that the trial would start . . . Monday, [February 9, 1920] only five days after the murder.”FN51 The Governor promised “Lexington officials that troops would be sent to protect Lockett on his return to the city.”FN52 The press did its best to  quell the public’s call for mob violence by assuring people that “Lockett’s trial would be quick and the outcome certain”FN53 and they were: in less than thirty minutes Lockett was convicted, though by pleading guilty he helped honor the pledge that justice would be swift,FN54 and “sentenced . . . to die in the electric chair.”FN55 “Although elated . . . a number of Lexington whites expressed the belief that . . . Lockett should have been made to suffer by dying at the end of a rope [in public for sexually assaulting Geneva].”FN56 The legislature’s response to this suggestion was extraordinarily fast and a week after Lockett died by electrocutionFN57the legislature approved an Act to amend section one of the execution by electrocution statute by adding the following: “Except in cases where the accused has been adjudged to suffer a death sentence for the crime of rape or attempted rape, in which event sentence shall be executed by hanging the condemned in the county in which the crime was committed.”FN58 The hanging was supposed to be done “within an enclosure”FN59 and before no more than “one hundred persons.”FN60 Although this law was race neutral, its application decidedly was not. Nine men were executed in accordance with this law and all were men of color.FN61 This law’s success, as well as securing death sentences against African American capital offenders in general, was greatly dependent upon having accommodating juries. This was best achieved by seating all white juries, which was easy to accomplish when African Americans were statutorily expressly barred from being jurors. In the late 19th century, however, the United States Supreme Court created two obstacles in an effort to end this long-standing discriminatory practice: it held that statutes expressly prohibiting African Americans from serving on juries, and racially neutral statutes applied in a manner that accomplishes the same result, violate the accused’s and the excluded potential jurors’ right to equal protection under the Fourteenth Amendment.FN62 As a result, a greater cost was attached to seating an all white jury: violating the defendant’s and potential jurors’ constitutional rights. Smith v. CommonwealthFN63 and Hale v. CommonwealthFN64 are representative of the problem. Smith, “a negro,”FN65 was indicted for murder by an all white grand jury and another all white jury found him guilty as charged and sentenced him to death. On appeal he contended his conviction was invalid because it was no accident that he, “a negro,” was indicted, tried, and convicted by all white juries. Smith apprised the Kentucky Court of Appeals that about twenty percent of the voters in Hardin County were African American and fifteen percent of them were eligible for jury service; yet, the jury commissioners, white men, never selected them.FN66 The court gave short shrift to Smith’s argument, “finding no error” and affirmed the judgment.FN67 Three decades later another ”negro,”FN68 Joe Hale, also convicted of murder and sentenced to death, revisited the issue with the Kentucky Court of Appeals. Hale had evidence to prove that “going back as far as 1906, no member of the African race had been summoned or served on a grand or a petit jury in McCracken county.”FN69 He argued:[T]he foregoing facts, when proved, show a long continued, unvarying and wholesale exclusion of negroes from jury service in this county on account of their race and color; that it has been systematic and arbitrary on the part of the officers and commissioners who select the names for jury service, for a period of fifty years or longer.FN70 The court detected problems with Hale’s proof, starting with his failure to include evidence in the record proving he “was a member of the African race,”FN71 but the court was forgiving of this evidentiary omission and conceded that “the court no doubt by observation knew that fact to be true.”FN72 The court’s greatest concern was about what it deemed Hale’s “failure to charge therein as grounds therefore, that such exclusion of members of the African race from service on juries was superinduced and occurred ‘solely because they were members’ of that race.”FN73  The United States Supreme Court, however, saw the evidence offered by Hale in an entirely different light: “We are of the opinion that the affidavits . . . sufficed to show a systematic and arbitrary exclusion of negroes from the jury lists solely because of their race or color, constituting a denial of the equal protection of the laws guaranteed to petitioner by the Fourteenth Amendment.”FN74 The Court reversed the judgment and remanded the case for “further proceedings not inconsistent with this opinion.”FN75 Unfortunately, Kentucky did not heed the Court’s admonishment that “proceedings not be inconsistent with that opinion” because in 1986, almost half a century later, the state found itself back in front of the Court for the same practice: excluding African Americans from being jurors.FN76 In this round, the state’s exclusionary strategy involved exercising peremptory challenges as a way to get rid of African AmericansFN77 [in order to seat an all white or as close to all white jury as possible]. Once again, the Court chided the Commonwealth for violating constitutional rights that are guaranteed to everyone, regardless of color, creed, gender or religion. Discriminatory practices continue to plague the administration of capital punishment in Kentucky,FN78 despite the fact the Commonwealth was at the vanguard with respect to following a recommendation made by the Supreme Court in 1987 that racial problems associated with the use of the death penalty be resolved through legislation.FN79 And in 1998, Kentucky became the first jurisdiction in the United States to enact a Racial Justice Act.FN80 Yet, there are lingering concerns about the Act’s effectiveness.FN81 The pervasiveness of gender discrimination is disheartening; especially when one remembers that the proportion of women and men sentenced to death in Kentucky during capital punishment’s modern era is almost the same as the proportion of the women and men executed over a period of time exceeding two centuries.FN82 Is history repeating itself? Or, is it simply that little has changed at the core in the use of the death penalty? If so, then perhaps now is the time to implement real tangible change. Certain considerations indicate change might be warranted. In 1962 Kelly Moss was executed.FN83 The following year the people of Kentucky elected Edward Breathitt to serve as the Commonwealth’s Chief Executive and he “brought an already strong aversion to capital punishment with him to the governorship.”FN84  “In the 1964 General Assembly he endorsed a bill abolishing the death penalty.”FN85 He also “announced a general stay of execution for all condemned state prisoners until he could place the measure before the legislature once again in 1966.”FN86 So, for several years, Kentucky could be considered a de facto abolitionist jurisdiction. Three decades passed before Kentucky carried out another execution.FN87 These thirty plus years include periods of time when Kentucky actually did not have capital punishmentFN88 and when Kentuckians decided to partially abolish the death penalty by forbidding it to be imposed on a segment of the population.FN89 Only two people have been executed since McQueen was in 1997 and both were volunteers.FN90 Therefore, it has been sixteen years since Kentucky has used its execution machinery on a non-volunteer. During what collectively amounts to a significant period of time, there was not nor has there been a public outcry when the death penalty has been absent, de jure or de facto, from the Commonwealth. Perhaps that means the time is ripe for changes to be made; specifically, those of the magnitude sufficient to stop Kentucky from going round and round and round on the death penalty wheel, continually repeating the longstanding problems associated with the state’s death penalty practice.

FN1. William T. Lafferty Professor of Law.   Harvard Law School, JD(1986); University of San Francisco, BSBA (1981). I would like to thank third year law students Daniela Erazo and Rachel Warf, my Research Assistants, for the valuable contributions, research and data compilation, they made to this article. I also greatly appreciate the exceptional assistance provided by Beau Steenken, Instructional Services Librarian & Instructor of Legal Research, and Tina Brooks, Electronic Services Librarian.  And a special thanks to Beau Steenken for sharing his immense knowledge of legal history. His mastery of English and colonial legal history made it much easier for me to think and write about certain topics in this article.

FN2. Edward T. Breathitt, Address at University of Louisville Law Day (May 5, 1965), in The Public Papers of The Governors of Kentucky, Papers of Edward T. Breathitt 468, 469 (Robert F. Sexton ed., 1984). Edward “Ned” Thompson Breathitt, a Democrat, served as the Commonwealth of Kentucky’s 51st Governor from December 10, 1963 – December 12, 1967. Kentucky Governor Edward Thompson Breathitt, National Governors Association, http://www.nga.org/cms/home/governors/past-governors-bios/page_kentucky/col2-content/main-content-list/title_breathitt_edward.html (last visited Nov. 5, 2013); List of Governors of Kentucky, http://en.wikipedia.org/w/index.php?title=List_of_Governors_of_Kentucky&oldid=566226955 (last visited Nov. 5, 2013). The two Governors of the Confederate State of Kentucky are excluded from the roster of Kentucky Governors. See Ron D. Bryant, The Confederate Governors of Kentucky, Kentucky Gazette, http://www.jkhg.org/kyconfgovs.htm (last visited Nov. 5, 2013). See infra at note 32 for information about the Confederate State of Kentucky.

FN3. On May 23, 1609, approximately two years after the founding of the British Colony of Virginia, King James of England and Scotland signed The Second Charter of Virginia. The Charter granted the Virginia Company “the land, throughout from sea to sea, west and northwest . . . .” The Second Charter of Virginia § VI (1609), reprinted in 1 Statutes at Large: A Collection of All the Laws of Virginia 80, 88 (William Waller Hening ed., 1823). “[A]s soon as it was apparent that the western country was to be settled,” Virginia created Fincastle County in 1772 from these lands to the west. Thomas D. Clark, A History of Kentucky 65 (The Jesse Stuart Foundation 1988) (1937). Four years later, on the last day of the year America declared her independence from England, Kentucky County was formed out of Fincastle County. Id. at 46, 66. According to noted Kentucky historian Thomas D. Clark, the first permanent settlement of what would be Kentucky County had been established almost two years earlier on March 15, 1775. Id. at 42. In 1779, the Virginia legislature passed an Act making the County of Kentucky the District of Kentucky of the State of Virginia. 1779 Va. Acts 92, ch. XII, § VIII.

FN4. See Kentucky Executions: 1780 – 1962, http://web.archive.org/web/20080617225325/users.bestweb.net/~rg/execution/KENTUCKY.htm (last visited Nov. 5, 2013) [hereinafter Kentucky Executions] (identifying the man’s surname as Baysinger); Executions in the U.S. 1608 – 2002: The ESPY File, Executions by State 120, http://www.deathpenaltyinfo.org/documents/ESPYstate.pdf (last visited Nov. 5, 2013) [hereinafter ESPY File].

FN5. See ESPY File, supra note 4, at 120 (stating that the second execution was in 1785, the third and fourth ones in 1787, and the fifth in 1791).

FN6. See Kentucky Executions, supra note 4. Five years after Kentucky’s first execution, Peter Vigo was hanged for theft-stealing in Jefferson County. Two years later, in 1787, Daniel Coleman was hanged in Monroe County for arson and Cato Watts’ life ended on the scaffold in Jefferson County for the crime of murder. The last execution carried out prior to Kentucky obtaining its statehood was in 1791 when twelve-year-old Bill James was hanged for murder in Woodford County. Id.

FN7. See id.

FN8. Marco Chapman, who died by lethal injection on November 21, 2008, was the last person, the 427,th executed by the Commonwealth. Marco Chapman, Death Penalty Information Center, http://www.deathpenaltyinfo.org/marco-chapman (last visited Nov. 5, 2013).

FN9. See ESPY File, supra note 4, at 120-131.

<FN10. Id.

FN11. See Kentucky Executions, supra note 4. When 13-year-old Susan mounted the scaffold in Henry County on February 7, 1868 she became the last female and the 135th person executed by the state. She also is the third, as well as the second youngest and only female, of the ten juvenile capital offenders the Commonwealth executed. Id. Two juvenile capital offenders have been sentenced to death during the modern era of Kentucky’s death penalty practice. See infra note 13 (discussing the commencement of the modern era of capital punishment in the United States). The first was Todd Ice, who was fifteen years old when he committed the offense for which he received a death sentence in 1980. American Bar Ass’n, Evaluating Fairness and Accuracy in State Death Penalty Systems: The Kentucky Death Penalty Assessment Report app. at C (2011), available at http://www.americanbar.org/content/dam/aba/administrative/death_penalty_moratorium/final_ky_report.authcheckdam.pdf. Two years later Kevin Stanford was sentenced to death for a capital offense committed when he was seventeen years old. Id. at E. In 1984 the Kentucky Supreme Court reversed Ice’s conviction when the case was there for mandatory review. See Ice v. Commonwealth, 667 S.W.2d 671, 680 (Ky. 1984). Ice was retried and convicted of a lesser offense and eventually served out his sentence. If, however, Ice had not received relief prior to June 29, 1988, his death sentence would have been invalidated that day by the United States Supreme Court’s opinion in Thompson v. Oklahoma, where Five Justices agreed society opposed imposing death sentences on capital offenders who were younger than sixteen years old at the time the crime was committed; consequently, the Eighth and Fourteenth Amendments rendered this practice unconstitutional. See Thompson v. Oklahoma, 487 U.S. 815, 838 (1988). Kevin Stanford was not as fortunate as Ice because the Kentucky Supreme Court affirmed his conviction and his death sentence. Stanford v. Commonwealth, 734 S.W.2d 781, 793 (Ky. 1987). And, despite its ruling the year before in Thompson, the United States Supreme Court was not persuaded by Stanford’s contention that the failure to exempt sixteen and seventeen year old capital offenders from the death penalty violated the Eighth and Fourteen Amendments. Stanford v. Kentucky, 492 U.S. 361, 380 (1989) (plurality opinion). Close to a decade and a half later, Stanford found relief in the government’s executive branch when former Kentucky Governor Paul Patton commuted his death sentence to life without the possibility of parole or pardon in 2003. See Commutations in Capital Cases on Humanitarian Grounds, Death Penalty Information Center, http://www.deathpenaltyinfo.org/clemency (last visited Nov. 5, 2013). Ice and Stanford are the only two juvenile capital offenders to have death sentences imposed in Kentucky during capital punishment’s modern era: 1971 to the present. See infra note 13.

FN12. See ESPY File, supra note 4, at 124-131.

FN13. Furman v. Georgia, 408 U.S. 238 (1972) (per curiam). The year before the United States Supreme Court had decided McGautha v. California. 402 U.S. 183(1971). The Court’s opinion in McGautha was featured in three of the four dissenting opinions in Furman,  Furman, 408 U.S. at 375 (Burger, J., dissenting); id. at 405 (Blackmun, J., dissenting); id. at 413 (Powell, J., dissenting), and since Furman invalidated death penalty legislation in 39 states, including Kentucky, id. at 417 (Powell, J., dissenting), McGautha played a significant role in the effort by states to fashion a capital sentencing remedy that would comply with Furman.  See, e.g., Ky. Rev. Stat. § 532.030(1) (1974); Woodson v. North Carolina, 428 U.S. 280 (1976); Roberts v. Louisiana, 428 U.S. 325 (1976). Even though McGautha and Crampton based their challenge to the total discretionary capital sentencing scheme on the Fourteenth Amendment’s Due Process Clause, and the same challenge by Furman, Jackson, and Branch was based on the Eighth and Fourteenth Amendments, for the reasons stated above, I consider  McGautha the case that ushered in the modern era of the practice of capital punishment in the United States. Although Furman v. Georgia, which imposed a four-year legal moratorium on executions, was on its heels,  and then five years later by Gregg v. Georgia, 428 U.S. 153 (1976), where the Court upheld the constitutionality of Georgia’s capital sentencing scheme.

FN14. Prior to the Court’s holding in Furman, Kentucky permitted the death penalty for multiple crimes, including murder, Ky. Rev. Stat. § 435.010 (1970), the rape of a child under the age of twelve, Ky. Rev. Stat. § 435.080(1) (1970), the rape of a female twelve or older, Ky. Rev. Stat. § 435.090 (1970), and lynching or mob violence, Ky. Rev. Stat. § 435.070(2) (1970). The penalty decision was left entirely to the discretion of the sentencing authority, typically a jury.  In Furman, however, five of the nine Justices concluded that “the imposition and carrying out of the death penalty in these cases constitute cruel and unusual punishments in violation of the Eighth and Fourteenth Amendments.” Furman v. Georgia, 408 U.S. at 240. For three of the Justices concurring in the judgment “the imposition . . . of the death penalty in these cases,” meant totally discretionary capital sentencing schemes. Id. at 240 (Douglas, J., concurring); id. at 306-07 (Stewart, J., concurring); id. at 310-14 (White, J., concurring). The other two concurring Justices, Brennan and Marshall, concluded the death penalty was per se unconstitutional. Id. at 257, 285, 305-06 (Brennan, J. concurring); id. at 314, 370-71 (Marshall, J. concurring). As a result, on June 29, 1972, the “capital punishment laws of no less than 39 States,” id. at 417 (Powell, J. dissenting), including Kentucky’s, were “nullified,” id., which also had the consequence of transforming all but one of the 50 states into abolitionist states. Id. at 417, note 2 (Rhode Island was the only remaining retentionist state because its sole capital statute called for a mandatory death sentence, which was beyond the purview of the Court’s holding). Two years after Furman Kentucky’s legislature enacted a new capital sentencing scheme, see  Ky. Rev. Stat. § 532.030(1) (1974), that went into effect January 1, 1975. This statute was used to impose death sentences on Wallace Boyd, Boyd v. Commonwealth, 550 S.W.2d 507 (Ky. 1977), Jimmy Self, Self v. Commonwealth, 550 S.W.2d 509 (Ky. 1977), and Ronnie Meadows, Meadows v. Commonwealth, 550 S.W.2d 511 (Ky. 1977): the first three people condemned in Kentucky during the post-Furman era. On July 2, 1976, however, the Kentucky legislature learned the Court decided that a mandatory capital sentencing scheme, the type Kentucky adopted, see Ky. Rev. Stat. § 532.030(1) (1974), was incompatible with the rights guaranteed by the Eighth and Fourteenth Amendments. See Woodson v. North Carolina, 428 U.S. 280 (1976). Consequently, Kentucky, once again, found itself as a state without capital punishment. That same year Kentucky’s legislature convened and enacted yet another post-Furman capital sentencing scheme. When the Court struck down mandatory death sentences, it upheld several guided discretion capital sentencing schemes, see Gregg v. Georgia, 428 U.S. 153) (1976) (joint opinion), Proffitt v. Florida, 428 U.S. 242 (1976), and Jurek v. Texas, 428 U.S. 262 (1976), and Kentucky’s egislature decided to enact a guided discretion capital sentencing scheme modeled after Georgia’s, see Ky. Rev. Stat. §§ 532.030(1), (4) (1976), Ky. Rev. Stat. § 532.025 (1976), and Ky. Rev. Stat. § 532.075 (1976), that went into effect December 22, 1976. Several months later the Kentucky Supreme Court reversed the death sentences imposed on Boyd, Self and Meadows and substituted terms of life imprisonment. See Boyd v. Commonwealth, 550 S.W.2d 507, 508-09 (Ky. 1977); Self v. Commonwealth, 550 S.W.2d 509, 510(Ky. 1977); Meadows v. Commonwealth, 550 S.W.2d 511, 513(Ky. 1977). Seventy-nine others in Kentucky were sentenced to death post-Furman. See American Bar Ass’n, supra note 10, at B-F. Their death sentences, however, were imposed in accordance with the guided discretion capital sentencing statutes, Ky. Rev. Stat. §§ 532.030(1),(4) (1976), Ky. Rev. Stat. § 532.025 (1976), and Ky. Rev. Stat. § 532.075(1976). Thus, between 1974 and 2011 the Commonwealth has condemned eighty-two people.

FN15. See supra note 13.

<FN16. See supra notes 8-10 and accompanying text.

FN17. In 1972, a year after the commencement of the modern era of capital punishment, see supra note 13, Justice Marshall identified gender as one of several forms of discrimination long associated with the administration of capital punishment in the United States. Justice Marshall succinctly described the situation as one with “overwhelming evidence that the death penalty is employed against men and not women. Only 32 women have been executed [nationally] since 1930, while 3,827 men have met a similar fate.” Furman v. Georgia, 408 U.S. at 365 (Marshall, J., concurring). The Justice goes on to note that since “[m]en kill between four and five times more frequently than women,” id. at note 154, some of the incongruity might be attributed to differences in socialization, “[h]ence, it would not be irregular to see four or five times as many men executed as women. The statistics show a startlingly greater disparity, however.” Id. Fifteen years later, the gender issue surfaced in an important case in the Court’s body of capital jurisprudence. See McCleskey v. Kemp, 481 U.S. 279 (1987). Here the Court not only acknowledged that gender plays a role in the sentencing authority’s decision to impose a death sentence, see id. at 315-17 & n.40, but also very likely the existence of this bias contributed toward the Court holding, despite statistical evidence of the racially discriminatory impact of the death penalty, findings the Court assumed were statistically valid, see id. at 291 n.7, Warren McCleskey, an African-American man, was not sentenced to death in a manner that violated either the Eighth or Fourteenth Amendments. Id. at 319.

FN18. ESPY File, supra note 4, at 120.

FN19. Kentucky Executions, supra note 4.

FN20. Lowell H. Harrison, Slavery in Kentucky: A Civil War Casualty, 5 Ky. Review 32, 32 (1983). Historian Thomas Clark notes “it was only natural that the early pioneers should transfer the institution [of chattel slavery] from Virginia to their farms west of the mountains.” Clark, supra note 3, at 192.

FN21. See Harrison, supra note 20, at 32. In 1789 Virginia passed an Act supporting the District of Kentucky’s quest to attain independent statehood status. 1789 Va. Acts 10, ch. XIV. Two years later the First United States Congress consented to the formation of a “new State . . . within the jurisdiction of the Commonwealth of Virginia,” Act of Feb. 4, 1791, ch. 4, 1 Stat. 189 ( 1791), and to the admission of this new state “into this Union, by the name of the State of Kentucky.” Id. Since the District of Kentucky was scheduled to be admitted into the Union by June 1, 1792, a constitution had to be drafted and approved before then. Clark, supra note 3, at 92. This deadline was met when Kentucky’s First Constitution was approved April 19, 1792. Ky. Const. of 1792. Subsequently, on June 1, 1792 the District of Kentucky became the State of Kentucky and the fifteenth member of the Union. Clark, supra note 3, at 92.

FN22. Clark, supra note 3, at 95. See also, Ky. Const. of 1792, art. IX.

FN23. Clark, supra note 3, at 113, 210-11, 305, 308, 310, 340; see also See Harrison, supra note 20, at 32 (“[T]he right of property is before and higher than any constitutional sanction, and the right of an owner of a slave to his property is the same and as inviolate as the right of an owner of any property whatsoever”) (quoting Ky. Const. of 1850, art. XII, § 3).

FN24. Clark, supra note 3, at 212.

FN25. Id.

FN26. Id.

FN27. Harrison, supra note 20, at 32.

FN28. Id. at 33.

FN29. Id. at 34; see also id. at 35-36.

FN30. Id. at 36.

FN31. Id. In fact, the “state protests were so violent that the order was suspended until February 1864.” Id.

FN32. Although, slightly more than six months after the Civil War began, a group of Confederate sympathizers held a secession convention in Russellville, Kentucky. On November 20, 1861 the unelected group proclaimed Kentucky’s secession from the Union and inaugurated George W. Johnson, who hailed from Scott County, as the first Governor of the Confederate State of Kentucky. Even though Jefferson Davis, President of the Confederate States of America, harbored doubts about the legality of Kentucky’s secession on December 10, 1861, the Commonwealth of Kentucky became the thirteenth state of the Confederate States of America. After Governor Johnson died in battle on April 8, 1862, Richard Hawes, a resident of Bourbon County, became the second Governor of the Confederate State of Kentucky. He retained the position until the fall of the Confederacy. The tenure of the Confederate State of Kentucky was short-lived and had no effect on the Commonwealth of Kentucky’s status as a member of the United States of America. See Bryant, supra note 2.

FN33. Harrison, supra note 20, at 39.

FN34. Id. at 40.

FN35. Id. See also George C. Wright, Racial Violence in Kentucky, 1865 – 1940, at 20 (1990).

FN36. See supra note 9 and accompanying text.

FN37. African-Americans and Caucasians account for 96% of the total. One Native American male was executed, see Kentucky Executions, supra note 4 (see execution 104), and the races of 16 people, 3.7 % of those executed, are unknown. ESPY File, supra note 4, at 120-31.

FN38. See supra notes 6-17 and accompanying text (identifying and discussing the gender bias inherent in the administration of the death penalty).

FN39. ESPY File, supra note 4, at 120-23. Kentucky has executed twelve females. One Caucasian female, one female whose race is unknown, and ten African-Americans. Id.

FN40. Wright, supra note 35, at 299.

FN41. ESPY File, supra note 4, at 120 – 131. This figure excludes extra-judicial lynchings. See generally Wright, supra note 35, at 1-11, 13-14, 61-107, 166, 307-323.

FN42. ESPY File, supra note 4, at 120 – 131. See also, Marco Chapman, supra note 8. Although separated by more than two centuries, the first person and the last the Commonwealth executed were Caucasian men. Id.; see also ESPY File, supra note 4, at 120.

FN43. In 1965 Kentuckians were officially put on notice about their racially skewed death penalty when then Governor Breathitt informed them that “[s]ince the electric chair was placed in operation at Eddyville State Penitentiary in 1911, some 162 men have been electrocuted. Of this number, approximately one-half have been Negroes.” Breathitt, supra note 2, at 469.

FN44. For 130 years, hanging was the state’s official method of execution. See ESPY File, supra note 4, at 127. Since rope was an item commonly used to lynch people, a sense of incongruity associated with the state’s “official” method of execution developed because it too called for a rope. In fact, in the context of lynching, someone aptly described the rope as a “white man’s death.” Wright, supra note 35, at 92. For example, one Christmas Day, the day before a black man’s murder trial was scheduled to start, even though “[t]he county judge and prosecuting attorney [were] . . . confident that the law would have punished [the man],” id. at 74 (emphasis added), a mob extracted him from the jail and “hanged him from a tree in the courthouse yard.” Id. (emphasis added). That same week, but in a different part of Kentucky, another black man was removed from the local jail and “carried to the courthouse yard and hanged.” Id. at 75 (emphasis added). Given this longstanding “connection” between hanging and lynching, the hope was that adopting a different method to use for state sanctioned killing would eventually check the strength of the rope’s ability to legitimize lethal violence.

FN45. See Act of March 15, 1910, ch. 38, §1, 1910 Ky. Acts 111.

FN46. Id.

<FN47. See Wright, supra note 35, at 255-56.

FN48. See Electric Chair Used in Kentucky, N.Y. Times, July 9, 1911. Wright, supra note 35, at 275 & n.27.

FN49. Wright, supra note 35, at 194.

FN50. Wright mentions Lockett might also have sexually assaulted little Geneva, but to expedite the process, Lexington officials decided to only indict Lockett on murder. Id. at 256. Documents containing information about the 427 people executed in Kentucky, however, list murder and rape as the capital crimes Lockett was found guilty of committing. ESPY File, supra note 4, at 127; Kentucky Executions, supra note 4.

FN51. Wright, supra note 35, at 195.

FN52. Id. (emphasis added).

FN53. Id. (emphasis added).

FN54. Id. at 195.

FN55. Id.

FN56. Id. at 256 (emphasis added).

FN57. Will Lockett was executed in the electric chair on March 11, 1920. See ESPY File, supra note 4, at 127.

FN58. See Act of March 17, 1920, ch. 163, §1, 1920 Ky. Acts 693; Kentucky Statutes § 1137-1 (1920).

FN59.  See Act of March 17, 1920, ch. 163, §1, 1920 Ky. Acts 693.

FN60. Id. at 693. George Wright recounts occasions when this provision was blatantly disregarded. See Wright, supra note 35, at 256-57. Rainey Bethea’s public hanging in Owensboro, Kentucky on August 14, 1936 attracted thousands of people. Id. at 257-58. It should also be noted that Kentucky was “the last state in which public hangings were conducted.” Id. at 258.

FN61. ESPY File, supra note 4, at 128-29. After the Rainey Bethea fiasco, it was decided John Montjoy and Harold Venison, the last two men who had their death sentences imposed under the 1920 amendment, should still die on the gallows but not in public venues. Wright, supra note 35, at 258. Even though legislation repealing this amendment to Kentucky Statute § 1137-1 was passed and approved in March 1938, see Act of March 12, 1938, ch.131, 1938 Ky. Acts 640, only a few months before Venison’s execution was scheduled, he still had to be executed by hanging, which was done on June 3, 1938. ESPY File, supra note 4 at 129. Electrocution was restored as Kentucky’s sole method of execution. See Kentucky Statutes § 1137-1 (1938). In 1998 Kentucky made lethal injection the state’s second method of execution. Ky. Rev. Stat. § 431.220. However, both methods are only available to people sentenced to death on or before March 31, 1998. Id.

FN62. Strauder v. West Virginia, 100 U.S. 303 (1879); Neal v. Delaware, 103 U.S. 307 (1880).

FN63. Smith v. Commonwealth, 91 S.W. 742 (Ky. 1906).

FN64. Hale v. Commonwealth, 108 S.W.2d 716 (Ky. 1937), rev’d, 303 U.S. 613 (1938) (per curiam).

FN65. Smith v. Commonwealth, 91 S.W. at 742.

FN66. Id.

FN67. Id.

FN68. Hale v. Commonwealth, 108 S.W.2d at 716.

FN69. Id. at 717.

FN70. Id. at 718 (emphasis added).

FN71. Id. at 717.

FN72. Id.

FN73. Id. at 718.

FN74. Hale v. Kentucky, 303 U.S. 613, 616 (1938) (per curiam).

FN75. Id.

FN76. Batson v. Kentucky, 476 U.S. 79 (1986).

FN77. Id. at 79-80.

FN78. See American Bar Ass’n, supra note 10, at 345-378.

FN79. McCleskey v. Kemp, 481 U.S. 279, 319 (1987).

FN81. The Racial Justice Act went into effect on July 15, 1998. Ky. Rev. Stat. § 532.300. More than a decade passed before another retentionist state followed Kentucky’s lead.  In August 2009, North Carolina became the second state to enact a Racial Justice Act for capital cases. See Race and the Death Penalty, Death Penalty Information Center, http://www.deathpenaltyinfo.org/race-and-death-penalty (last visited Nov. 5, 2013). For more information about Kentucky’s Racial Justice Act see Gennaro Vito, The Racial Justice Act in Kentucky, 37 N. Ky. L. Rev. 273, 276-78 (2010).

FN81. See, e.g., Vito, supra note 80, at 279-80; See American Bar Ass’n, supra note 11, at 345-378.

FN82. This is the period of time between the first execution in 1780 and the last one in 2008. See ESPY File, supra note 4, at 121; Marco Chapman, supra note 8.

FN83. Breathitt, supra note 2, at 471, n. 3; EPSY File, supra note 4, at 131. Moss was the last person the state executed prior to capital punishment’s modern era. See supra note 13.

FN84. Breathitt, supra note 2, at 471, n.3.

FN85. Id. The measure, however, was unsuccessful.

FN86. Id.

FN87. Harold McQueen was executed by electrocution on July 1, 1997. He was the first person the Commonwealth executed in more than thirty decades . ESPY File, supra note 4, at 131.

FN88. Kentucky was a non-retentionist state from June 29, 1972 until December 31, 1974 and from July 2, 1976 until December 21, 1976. See supra note 14.

FN89. In 1990 the people of the Commonwealth decided to abolish the death penalty for intellectually disabled individuals. See Ky. Rev. Stat. §§ 532.130, 532.135, 532.140. This is another instance where Kentucky was one of the first jurisdictions to dismantle part of its death penalty practice. See Penry v. Lynaugh, 492 U.S. 302, 334 (1989) (noting that in 1988 Georgia had partially abolished the death penalty in the same way and Maryland had but the law did not go into effect until July 1, 1989).

FN90. Edward Harper Jr. and Marco Chapman, respectively executed in 1999 and 2008, ESPY File, supra note 4, at 131, Marco Chapman, supra note 8, were volunteers, see Information on Defendants Who Were Executed Since 1976 and Designated as “Volunteers”, Death Penalty Information Center, http://www.deathpenaltyinfo.org/information-defendants-who-were-executed-1976-and-designated-volunteers (last visited Nov. 5, 2013), which in some cases is considered tantamount to “suicide by state.” See Michael Blume, Killing the Willing: “Volunteers,” Suicide and Competency,  Death Penalty Information Center, http://www.deathpenaltyinfo.org/documents/BlumeVolunteerArticle.pdf. Currently, Kentucky has 33 condemned inmates. All but one are male. See Kentucky Department of Corrections, Death Row Inmates, http://corrections.ky.gov/communityinfo/pages/deathrowinmates.aspx (last visited Nov. 5, 2013).

The Commonwealth's Response to Kentucky's Pill Mill Problem

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Article | 102 KY. L. J. ONLINE 2 | Oct. 27, 2013

Peter P. CohronFN1

Introduction

Prescription pain pill abuse and misuse is a substantial problem in Kentucky.FN2 In the Commonwealth, over one thousand deaths per year are attributable to drug overdoses.FN3 This figure is the sixth highest in the country and represents more deaths than those caused by automobile accidents. Additionally, Kentucky ranks as the fourth most medicated state in the United States, though it ranks twenty-sixth for population.FN4 Governor Steve Beshear has acknowledged the problem, “We have an epidemic in Kentucky that we cannot ignore….We are losing lives. We are losing families, and we’ve got to aggressively attack that problem.”FN5 Much of the state’s drug problem was the result of pain pill mills, alleged pain management clinics where patients were prescribed controlled substance (narcotic) prescription medication following either a cursory examination or no examination by the physician on site. The phrase “pill mill” is nomenclature used by local and state police investigators most often to describe a physician or clinic, and occasionally a pharmacy, that is prescribing or dispensing controlled substance narcotics inappropriately or for non-medical reasons.FN6 However, the Governor’s call to arms was not solely aimed at these so-called clinics. Governor Beshear sought comprehensive legislation that would address all of  the concerns regarding the prescribing and use of controlled substances including  properly organizing and running pain management facilities, properly training physicians prescribing these dangerous drugs, balancing the interests to provide a watchful but not overly intrusive eye on the patient consumer of these drugs, and providing authority for the proper administrative boards and the necessary police powers to act in cases of prescribing regulations. In a demonstration of the importance of this issue, Governor Beshear called a special session of the Kentucky Legislature to provide for a solution.

House Bill 1 (KRS 218A.172)

The Legislature responded with House Bill 1 (HB1).FN7 House Bill 1 recognized the necessity of having properly managed and maintained pain management clinics. Therefore rather than banning such facilities outright, HB1 sought to achieve quality care by instituting standards for opening and running such a clinic. The Legislature attempted to balance the need for regulation due to the prevalence of the misuse of these medications leading to dependence and violence with the privacy concerns of the prescription pill user. HB1 attempted to strike this balance by limiting scope of the bill to Schedule IIFN8 controlled substances and other controlled substances containing hydrocodone.FN9 However, in promulgating administrative regulations pursuant to this bill, under KRS 218A.172, which is also limited to these drugs, the Kentucky Board of Medical Licensure relied on KRS 218A.205, a statue regarding reports of improper, inappropriate, or illegal prescribing or dispensing of controlled substances. As a result, the regulation promulgatedFN10 was not limited to Schedule II controlled substances and controlled substances containing hydrocodone, but included all controlled substances except Schedule V.FN11 A primary issue addressed by the regulation is the physician’s decision to prescribe a controlled substance to a patient for pain. Under this regulation, in order to prescribe controlled substances, a physician must meet certain professional standards. Prior to prescribing, the physician must obtain an “appropriate medical history relevant to the medical complaint,”FN12 obtain a KASPER report on the patent,FN13 make a “deliberate decision” to prescribe a controlled substance after weighing the benefits of the drug against the risks,FN14 and counsel the patient regarding how to take the drug and when to stop the treatment.FN15 As many of the patients at pain management facilities, legitimate and otherwise, are chronic controlled substance users, the regulation sets forth additional standards for prescribing for this patient population. These standards apply to all patients over the age of sixteen who are being treated with controlled substances for longer than 3 months.FN16 Before prescribing and regularly afterwards, the prescribing physician must obtain a history of the illness or condition, a past medical history, including any relevant family history and any history of past substance abuse, and a psychosocial history.FN17 To ensure a first time face-to-face meeting between patient and physician, there must be an appropriate physical examination that supports the patient’s claim of chronic pain,FN18 and a baseline assessment that establishes starting measurements by which to gauge future progress or decline in the condition.FN19 If this screening indicates any propensity or indication of substance abuse, the physician is required to refer the patient to an appropriate treatment center or provider.FN20 If the patient shows an indication or risk of diverting the prescribed drugs, the physician shall employ the use of a prescribing agreement, or pain management contract.FN21 Where there is any indication of either behavior, prior to the prescribing of controlled substances, the physician must perform a baseline drug screen.FN22 Once a patient begins long term continuing treatment for pain, the physician must meet additional requirements. The patient must be re-evaluated on a monthly basis by the physician and then at appropriate intervals.FN23 If improvement is expected and does not occur, the physician must refer the patient to an appropriate physician for consultation.FN24 The patient is also required to have an annual physical examination.FN25 The physician also must obtain follow-up KASPER reports at least every 3 months.FN26 Frequently when pharmacies deny filling pain mill prescriptions these patients present in hospitals’ emergency departments complaining of pain. In order to deter this behavior, the regulation placed limits on emergency doctors’ ability to prescribe these medications. Under the new law, emergency doctors were prohibited from administering IV controlled substances,FN27 replacing a lost or stolen prescription for a controlled substance,FN28 replacing a methadone Subutex or Suboxone dose for a patient in a drug treatment program,FN29 prescribing controlled release products such as Oxycontin,FN30 or prescribing more than a 7 day supply of a controlled substance.FN31 For the treatment of other conditions (excluding pain), the same standards apply. In the case where the patient has a psychiatric complaint, an appropriate psychiatric examination must be performed prior to prescribing controlled substances.FN32 If the on-site physician is, or feels, unqualified to perform a psychiatric examination, the patient must be referred to an appropriate physician or facility.FN33 In seeking to establish its authority and determine its scope, HB1 defined a pain management facility as a facility where the majority of patients are treated for pain with controlled substances, and 1) the primary practice component is pain treatment, or 2) the clinic advertises any type of pain management services.FN34 HB1 regulated the ownership of such pain management facilities by requiring that only a fully licensed physician may own or have an investment interest in a pain clinic, though clinics in existence before July 20, 2012 were grandfathered in.FN35  Additionally, one physician owner must be on-site at least 50% of the time the facility is open and he must be engaged in the practice of medicine at the site.FN36 This physician must hold a current American Board of Medical Specialties (ABMS) subspecialty certification, American Osteopathic Association Bureau of Osteopathic Specialties (AOABOS) certification in pain management, or a current ABMS or AOABOS certification in hospice or palliative care, or hold board certification by the American Board of Pain Medicine or American Board of Interventional Pain Physicians, or have done a residency or fellowship in pain management.FN37 In another move to legitimize treatment for those truly in pain, HB1 addressed the issue of payment. Prior to enactment of HB1, unscrupulous physicians were preying on those in chronic pain by accepting cash as the only form of payment, thus obfuscating the facility’s records. HB1 required that pain management facilities accept private health insurance and payment only from the patient, responsible caregiver, and/or insurance.FN38 After HB1 was implemented with relevant administrative regulations physicians, while agreeing that prescription drug abuse was “an out of control issue in Kentucky” and a very serious problem, criticized HB1.FN39 The critics were not limited to physicians, as hospitals and patients also claimed that “HB 1 in its present form restricts too many drugs in too many clinical settings, needlessly complicating medical care.”FN40 Because of HB1, many patients incurred costs for drug testing that their insurance would not cover.FN41 For these reasons, the bill seemed to, in effect, punish the patient in more ways than it was aiding in the fight against pill mills.

House Bill 217

In response to these criticisms, Governor Beshear signed into law House Bill 217 (HB217) on March 5, 2013. This bill was designed to address and eliminate the problems created by HB1.FN42 The purpose of this new bill was to remove onerous requirements from both physician and patient, while continuing to address the widespread drug abuse problem in Kentucky and seeking to provide adequate medical care and treatment for those patients truly in pain, acute or chronic. The all-encompassing sweep of HB1 had previously required that every entity in the Commonwealth be covered by HB1. To remedy this scope issue, HB217 exempted hospitals, long term care facilities, hospices, and end-of-life care centers that prescribe controlled substances and research facilities from the reporting and prescribing requirements.FN43 These facilities and prescribers were determined to only contribute slightly to pain pill abuse and therefore their inclusion under HB1 was deemed unduly burdensome. HB217 also addressed HB1’s requirement that each facility whose primary function or business was pain management have some kind of certification in pain control or management. Critics argued that this requirement, though reasonable, was problematic as it forced the closure of businesses until their physicians could comply with the certification. HB217 amended this requirement to allow facilities without such certification to stay open if they were “making reasonable progress toward completing or holding, a certification.”FN44 Next, the bill revised the KASPER requirement of HB1. Under the previous bill, KASPER checks were not limited to a specific time period prior to treatment. Therefore, KASPER reports had to be sought as far back as obtainable. Critics argued that this was an unnecessary administrative burden and that it created an impediment to establishing effective treatment plans.FN45 Additionally, there was concern that patients who had successfully completed a drug addiction treatment program would be characterized incorrectly by reference to their past records. HB217 addresses these concerns by limiting the scope of the KASPER check to twelve months previous to the day of the examination or prescription for controlled substances.FN46  However, HB217 requires that if treatment extends beyond ninety days, then the KASPER query be repeated every three months.FN47 The major criticism from physicians of HB1 was that requiring a physical examination and a medical history review prior to prescribing a controlled substance was an undue burden, repetitive, and time-consuming. To attempt to balance all of the interests involved, HB217 removed the word “complete” from the legislation so that physicians, in the exercise of professional judgment, could limit the scope of the examination to those facets important to the medical complaint. Second, the requirement for an examination was changed and required now only when “appropriate to the patient’s medical complaint.”FN48 This requirement relieves the physician from completing a physical examination, especially in circumstances where the physician is already well acquainted with the patient’s condition, and additionally relieves the patient of the costs of unnecessary testing. Even with the changes implemented by HB217, critics continue to have concerns. Critics worry that physicians, faced with significant oversight, may treat pain too cautiously or not at all. The fear continues to be that legitimate patients in extreme pain will still have substantial obstacles to obtaining the medication that they need.FN49

Conclusion

The impact of the legislation was largely seen prior to the enactment of HB217. When HB1 had been in force for less than three months, ten pain management pill mills in the Commonwealth of Kentucky had closed. Prescriptions for the pill mill “cocktail”FN50 have dropped dramatically. The number of KASPER subscribers had tripled, and KASPER is handling, on average, more than 18,000 requests a day (of which over 90% are responded to in less than fifteen minutes).FN51 With the passage of HB1 and HB217, the Kentucky Legislature has taken a strong and serious step towards ending the epidemic of drug abuse widespread in the Commonwealth. The willingness of the Legislature to flexibly and quickly address issues with the initial bill emphasizes its concern for this issue. However, HB1 and HB217 merely address only one of the root causes of the drug problem in Kentucky. Therefore neither the citizenry nor the Legislature should celebrate the accomplishments made by these bills, but instead, they should swiftly seek out other effective ways to help significantly address and substantially eliminate the drug problem in Kentucky.

FN1. Peter P. Cohron is a graduate of the University of Kentucky colleges of Pharmacy and Law.  He practices in both professions, as a pharmacist for a major retail chain and as an attorney in private practice mainly dealing with pharmacy related issues.

FN2. The definition of drug or substance abuse is the use of a drug for a result unintended by the prescriber, e.g., getting high. Misuse is defined as the use of a drug for an intended result but taken in a manner or dose not prescribed. Abuse, The Free Dictionary.com, http://medical-dictionary.thefreedictionary.com/abuse (last visited September 15, 2013).

FN3. Stop Rx Abuse Before It Starts, Office of the Attorney General, http://ag.ky.gov/rxabuse/Pages/default.aspx (last visited Sept. 15, 2013).

FN4. Id.

FN5. Mike Wynn, Kentucky Senate Passes Pill Mill Legislation, Courier-Journal (Louisville), March 28, 2012, http://www.courier-journal.com/article/20120328/NEWS01/303280092/Kentucky-Senate-passes-pill-mill-legislation.

FN6. Id.

FN7. H.R. 1A, 2012 Gen. Assemb., 1st Spec. Sess. § 1(1)(A) (Ky. 2012) (hereinafter HB1).

FN8. Schedule II controlled substances are defined in Ky. Rev. Stat. §§ 218A.060–070 (LexisNexis 2013).

FN9. Hydrocodone is a Schedule III controlled substance, defined in Ky. Rev. Stat. §§ 218A.080–090 (LexisNexis 2013) and referenced as “dihydrocodeinone,” a synonym for hydrocodone that is marketed under such brand names as Lortab, Vicodin, and Norco.

FN10. Professional Standards for Prescribing and Dispensing Controlled Substances, 201 Ky. Admin. Reg. 9:260 (September 2013).

FN11. Id. at § 1(2)(g).

FN12. Id. at § 3(1).

FN13. Id. at § 3(2). KASPER, Kentucky All Security Prescription Electronic Record, is a monitoring system for all controlled substance prescriptions dispensed in the Commonwealth of Kentucky.

FN14. Id. at § 3(3).

FN15. Id. at §§ 3–5.

FN16. Id. at § 4(1).

FN17. Id. at § 4(2)(a).

FN18. Id. at § 4(2)(b).

FN19. Id. at § 4(2)(c).

FN20. Id. at § 4(2)(h)(2).

FN21. Id. at (4)(2)(h)(3). These agreements or contracts may limit who may prescribe controlled substances to the patient, state the pharmacy where the patient must fill his prescriptions, and/or require random pill counts and drug tests.

FN22. Id. at § (4)(2)(h)(4).

FN23. Id. at § (5)(2)(a)(1).

FN24. Id. at § (5)(2)(e).

FN25. Id. at § (5)(2)(h).

FN26. Id. at § (5)(2)(i).

FN27. Id. at § (6)(1).

FN28. Id. at § (6)(2).

FN29. Id. at § (6)(3).

FN30. Id. at § (6)(4).

FN31. Id. at § 7(1)(a).

FN32. Id. at § (6)(6).

FN33. Id. at § (7)(1)(a)(1)-(2).

FN34. H.R. 1A, 2012 Gen. Assemb., 1st Spec. Sess. § 1(1)(A) (Ky. 2012) (hereinafter HB1).

FN35. Id. at § 1(2).

FN36. Id. at § 1(3).

FN37. Id.

FN38. Id. at § 1(4).

FN39. Gregory A. Hood, Kentucky House Bill 1: Controlled Substance Regulations, Perhaps Nationally Next?, Weekend Call (July 21, 2012, 08:18 PM), http://boards.medscape.com/forums/?128@@.2a339438!comment=1.

FN40. John Cheves, Kentucky Lawmakers Expected to Alter Pill Mill Bill in Session That Starts Tuesday, Lexington Herald-Leader, January 5, 2013, http://www.kentucky.com/2013/01/05/2465788/ky-lawmakers-expected-to-alter.html.

FN41. Id.

FN42. Kentucky “Pill Mill Bill” Amended by House Bill 217, Frost Brown Todd (Mar. 6, 2013), http://www.frostbrowntodd.com/resources-1579.html.

FN43. H.R. 217, 2013 Gen. Assemb., Reg. Sess. § 1(4) (Ky. 2013) (hereinafter HB 217).

FN44. Id. at § 2(3)(f).

FN45. Kentucky “Pill Mill Bill” Amended by House Bill 217, supra note 41.

FN46. HB217 at § 1(1)(b).

FN47. Id. at § 1(2)(b)(1).

FN48. Id. at § 1(1)(a).

FN49. Gregory A. Hood, Kentucky House Bill 1: Controlled Substance Regulations, Perhaps Nationally Next?, Weekend Call (July 21, 2012, 08:18 PM), http://boards.medscape.com/forums/?128@@.2a339438!comment=1.

FN50. Usually a pain pill mill cocktail includes prescriptions for carisoprodol, alprazolam, and either hydrocodone or oxycodone-containing painkillers.

FN51. Press Release, Kentucky Office of the Attorney General, New Prescription Abuse Laws Driving Pill Mills Out of Business, Investigations of Overprescribers Launched (Oct. 17, 2012), available at http://migration.kentucky.gov/newsroom/ag/fewerpillmills.htm.

Sticks and Stones: A Needed Legislative Reform to Kentucky's Approach to Cyberbulling

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Article | 102 KY. L. J. ONLINE 1 | Sept. 22, 2013

Amanda East

Introduction

It can hardly be argued that…students…shed their constitutional rights to freedom of speech…at the schoolhouse gate.FN1

Reading, writing, and arithmetic are the “three r’s” used to describe the foundation of the typical American education. Another unspoken fixture of the American classroom is bullying. This longstanding practice has entered the new millennium, and technology has given bullies new ways to torment victims. Kameron Jacobsen was a high school freshman in New York who enjoyed spending time with his family and was constantly using Facebook, a social networking site, to interact with his classmates.FN2 This social forum became a nightmare when his peers used it to taunt and ridicule Kameron until he committed suicide.FN3 His family had no available recourse because, like most states, New York’s legislative and judicial branches are ill-prepared to address the emerging issue of cyberbullying.FN4 Perhaps worst of all, Kameron is not the first student to be “a victim of cyberbullying,” nor is he the last. In the Bluegrass State, Rachael Neblett, a seventeen-year old high school student took her life in 2006 under similar circumstances.FN5 The Internet has benefited teenagers in a number of ways, but, in conjunction with these benefits, courts have seen increased litigation regarding cyberbullying.FN6 The absence of Supreme Court precedent on this issue has resulted in an array of state and federal court decisions. State legislatures have amended or adopted new statutes to address this problem. I contend that in order to sufficiently address cyberbullying, Kentucky needs to recognize schools have an important interest in preventing cyberbullying and need broader authority to effectively address this problem. Kentucky needs to enact legislation, similar to Vermont or Massachusetts, permitting schools to regulate off-campus Internet student speech. This broadening of what it means to be “within” the “schoolhouse gates” is justified because of the nature of the interest and the legislature’s ability to tailor schools’ authority in order not to infringe on protected speech. In order to prove this thesis, Part I will begin by defining cyberbullying. Part II will then examine lower court decisions on the cyberbullying issue, beginning with relevant Supreme Court precedent, and the developing body of case law, identifying three standard cyberbullying approaches taken by lower courts. Part III will address state legislatures’ responses to cyberbullying. Part IV will analyze efforts by the House of the Kentucky General Assembly to amend existing statutes and their shortcomings, and finally Part V will conclude with an appeal for additional cyberbullying legislation in Kentucky.

I.      Cyberbullying and its Effects

Cyberbullying is distinguishable from traditional bullying in four ways. First, the aggressor can choose to remain anonymous by creating a false, online identity, establishing a sense of power and control.FN7 Second, the speed of dissemination ensures the victim will more readily experience the bullying.FN8 Third, the Internet has unlimited reach ensuring “cruel and sadistic behavior [will be] amplified and publicized, not just on the campus [of a school], but throughout the world.”FN9 Last, the victim’s torment is constant and inescapable because he or she experiences it every time they access the Internet.FN10

II.      Student Speech and The First Amendment: An Overview

A. Supreme Court Student Speech Jurisprudence

In the wake of increased litigation, lower courts have used four seminal Supreme Court cases to balance a student’s interest in freedom of speech and the school’s interest in regulation. The first of these cases, Tinker v. Des Moines Independent Community School District, established protection of in-school student speech, while the three subsequent cases carved out content-based exceptions. In effect, the Supreme Court has instituted four standards that lower courts may apply in determining the constitutionality of student speech.

1.      Tinker v. Des Moines Independent Community School District

In Tinker, the Court stated that students do not “shed their constitutional rights…at the schoolhouse gate,’” and struck down students’ suspensions for wearing black armbands in school because the school failed to show a “substantial disruption.”FN11Under this standard, a school may regulate student speech to provide a safe and productive learning environment only when the school can show the speech did, or could reasonably be foreseen to, materially and substantially disrupt the work and discipline of the school.FN12

2.      Bethlehem School District v. Fraser

Bethlehem School District v. Fraser established a separate standard restriction on student speech.FN13 The Fraser standard permits schools to prohibit vulgar, lewd, or obscene student speech regardless of whether or not it results in disruption because the Court recognized that schools have an interest in protecting minors from speech that is “inconsistent with the ‘fundamental values’ of public school education.”FN14

3.      Hazelwood School District v. Kuhlmeier

In Hazelwood, the Supreme Court upheld censoring student speech because it was part of a school-sponsored activity “bear[ing] the imprimatur of the school,” meaning the school was effectively being asked to promote student speech inconsistent with its basic educational mission.FN15 Hazelwood’s restriction permits public schools to regulate the content of a school-sponsored activity so long as it is reasonably related to legitimate pedagogical concerns.FN16

4.      Morse v. Frederick

This most recent case establishes a restriction acknowledging that public schools may limit student speech which could “reasonably [be] viewed as promoting illegal drug use” because schools have an important, and perhaps compelling, interest in discouraging such activity.FN17 Morse suggests that a school may limit student speech because of the school’s important interest in prohibiting the content itself.FN18

B.  Applying these Standards: How Courts Approach Internet Student Speech Off-Campus

The absence of direct Supreme Court precedent has resulted in “a ‘state of tumult about the precise scope of First Amendment rights possessed by students.’” and lower courts have adopted three common approaches to address the matter.FN19

1.      The Geography Approach

This approach distinguishes between “on-campus” and “off-campus” speech. Courts will initially determine if the speech occurred on school grounds or during a school-sponsored activity to ensure there is a sufficient nexus for the court to rely on existing school-speech jurisprudence to render a decision.FN20 This approach has produced mixed results. In Mahaffey v. Aldrich, a district court found that a student website entitled “Satan’s webpage” encouraging violence and containing a death list was outside the school’s reach because the speech did not create an actual disruption under the Tinker standard.FN21 Conversely, in J.S. v. Bethlehem Area School District, the Pennsylvania Supreme Court found, under the Tinker standard, a school could punish off-campus speech because “where speech that is aimed at a specific school and/or its personnel is brought onto the school campus or accessed at school by its originator, the speech will be considered on-campus speech.”FN22

2.      The Foreseeability Test

Under the foreseeability test, courts justify extending Tinker to “off-campus” speech because of an excerpt in Tinker which states, [C]onduct by the student, in class or out of it, which for any reason- whether it stems from time, place, or type of behavior- materially disrupts the classwork or involves substantial disorder or invasion of the rights of other is, of course, not immunized by the constitutional guarantee of freedom of speech.FN23   Both the Second and Third Circuits have held that a school may regulate Internet student speech if it “poses a reasonably foreseeable risk of disruption.”FN24 The Second Circuit held in Wisniewski v. Board of Education Weedsport Central School District that a student-created image of a pistol firing at a teacher’s head was unprotected speech and the school could regulate it.FN25 In J.S. v. Blue Mountain School District, an eighth grader created a false profile of a school principal suggesting he was a pedophile and sex addict.FN26 The Third Circuit combined the Tinker and Fraser standards to hold that, under a different set of facts and circumstances, the school would be permitted to punish a student without constitutional violation. FN27

3.      The “Standard First” Approach

Under the “standard first” approach, courts apply existing Supreme Court standards to a particular fact pattern and determine if any of these standards permit the school to prohibit the speech.FN28 Using this approach, a district court in Killion v. Franklin Reg. School District held that a student e-mail with offensive remarks about the school’s athletic director was protected speech under Tinker because it did not run afoul of the “substantial disruption” test.FN29

III.      State Legislatures’ Response

The confusion in the judicial branch has generated a need for state legislatures to enact statutes more clearly delineating schools’ scope of authority. Currently, forty-nine states have bullying statutes.FN30 Sixteen of these specifically address the issue of cyberbullying, with seven including “off-campus” cyberbullying as a problem within schools’ purview.FN31 Cyberbullying statues provide courts with a definitive means of addressing Internet student speech. A uniform approach offers a sense of predictability and stability such that all affected parties are on notice of potential liability for violations. A statute permits state and district school boards to craft policies explicitly articulating schools’ authority over the Internet. Furthermore, cyberbullying statutes reduce the possibility of unreasonable infringement of non-student speech because they define the parameters for the balancing of the two interests occurs.

IV.      Kentucky’s Proposed Response: Amendments to KRS 158.148 and KRS 525.070

To date, Kentucky has not adopted a separate cyberbullying statute or included cyberbullying within its statutory definition of “bullying” or “harassment.” The General Assembly has considered the issue since 2007, proposing numerous amendments to existing statutes which have subsequently stalled in committee.FN32 This indicates that the House sees the need to formulate a response to cyberbullying.

A.    2008 Ky. House Bill No. 91

In 2008, Kentucky’s legislature attempted to pass four versions of Ky. House Bill No. 91; the first contained no reference to cyberbullying.FN33 KRS 158.148 stated school codes must prohibit harassment, intimidation, and bullying; these terms were defined narrowly by KRS 158.441 such that communications referred only to “written” communications occurring on-campus, during a school sponsored activity, or on school transportation.FN34 In the context of a cyberbullying case, a court could view this limitation as possibly including or excluding electronic media because the statute is unclear whether “written” communication means only physical communication. The geographic constraint presents the same shortcoming seen in other states because it would prohibit a court from granting schools the authority to regulate off-campus Internet student speech, like cyberbullying. The third and fourth versions contained a notable change. The amended version of KRS 525.080 specifically stated a student would be guilty of harassing communications if he or she sent an electronic communication “which a reasonable person . . . should know would cause the other student to suffer fear of physical harm, intimidation, humiliation, or embarrassment, and which serves not purpose of legitimate communication.”FN35 While it does not explicitly use the term cyberbullying, this marked the first time the Kentucky legislature acknowledged and addressed the issue.

B.     2011 Ky. House Bill No. 370

House Bill 370 proposed shifting some of the language discussed above. The amended version of 158.148 would specifically reference cyberbullying and require schools to include it in their discipline codes.FN36 The House defined cyberbullying as any electronic communication intended to: (1) physically harm a student or their property, (2) substantially interfere with educational opportunities, (3) create an intimidating or threatening education environment, or (4) cause a substantial disruption to the school.FN37 This expansive view of cyberbullying suggests the House was growing increasingly aware of the many ways cyberbullying manifests. Nevertheless, the continued geographical limitation on the school’s authority to address cyberbullying creates the risk that schools will be unable to address a significant amount of Internet student speech and will continue to see the types of disruptions the legislature seeks to avoid.

C.    2012 Ky. House Bill No. 490

House Bill 490 is the most recent set of amendments. “Cyberbullying” is now encapsulated in KRS 158.441’s definition of “bullying”; “electronic acts” is a type of bullying and is defined as “an act committed through the use of a cellular telephone, computer, pager, personal communication device, or other electronic communication device” to inflict mental or physical harm on another student.FN38

V.      Recommendation

The steps taken by the House of Kentucky’s General Assembly are commendable, but these proposals do not provide schools with the necessary tools to reach a significant amount of Internet student speech. The geographic constraint on schools’ authority means administrators will be unable to address an issue until it makes its way onto campus.

A.    Shortcoming of Proposed Kentucky Amendments and the Need to Recognize Cyberbullying as an Important, Perhaps Compelling State Interest

The proposed legislation discussed above, if enacted, means that Kentucky schools will be unable to address a potential disruption until it becomes an actual disruption. This would require administrators to act reactively rather than proactively. Such an approach undermines the notion that schools may act conducive to their primary objectives of safety and education.This limitation may generate more issues than it solves. For example, if schools are permitted to regulate only “on campus” Internet student speech, can schools only monitor speech on school computers or other electronic media? Is it relevant that a student posted a harmful remark during school hours using their cell phone? Would it matter if the school district’s discipline code prohibited the use of privately owned cell phones during regular school hours? The Supreme Court acknowledged schools have an important, if not compelling, interest in deterring drug use amongst students because it is essentially antithetical to schools’ education mission.FN39Similarly, cyberbullying is antithetical to schools’ education mission. Its constant and pervasive nature has a direct impact on schools manifesting in increased academic problems, anxiety, depression, severe isolation, a tendency to carry weapons, and suicide.FN40 Based on the problems caused by cyberbullying, it is imperative that the Kentucky General Assembly succeed in not only passing amended statutes recognizing cyberbullying as an issue in public schools, but also replacing the confining geographic language with a more flexible standard allowing schools to respond preemptively without being overly inclusive.

B.     Vermont and Massachusetts: Models for New Kentucky Legislation

Unlike Kentucky, Vermont and Massachusetts have enacted legislation addressing cyberbullying that extends schools’ authority beyond campus premises.FN41 Vermont’s statute states that bullying includes cyberbullying that “does not occur during the school day on school property, on a school bus, or at a school-sponsored activity and can be shown to pose a clear and substantial interference with another student’s right to access educational programs.” Massachusetts’s legislation is similar.FN42 The Massachusetts legislation permits schools to regulate activity occurring off-campus “if the bullying creates a hostile environment at school for the victim, infringes on the rights of the victim at school or materially and substantially disrupts the education process or the orderly operation of a school.”FN43 The language of these statutes is similar to the foreseeability approach recognized by some courts because both permit school regulation when there is still the possibility of preventing a substantial disruption, thus preserving the school environment.FN44 Vermont and Massachusetts explicitly define the student actions which are considered cyberbullying, much like the definitions seen in Ky. House Bill No. 370.FN45 This specificity provides schools and courts with a clearer understanding of what speech the statute governs. Additionally, both states require local school districts to develop procedures to address cyberbullying including the response and investigation of possible cyberbullying, to define disciplinary actions for offenders, and to develop programs to raise awareness about cyberbullying.FN46 These requirements safeguard against overreach by public schools and demonstrate that it is possible for a state to enact cyberbullying legislation extending beyond the school’s physical parameters while still not trampling on freedom of speech.

C.    Proposed Kentucky Legislation for Online Student Speech

The Kentucky legislature’s primary focus should be recognizing cyberbullying as a distinct, unique issue in public schools. A good start would be combining the approaches taken by Massachusetts and Vermont to establish a separate definition for cyberbullying under KRS 158.441 because that combination would signal the General Assembly’s awareness of cyberbullying and would be consistent with the unique characteristics of cyberbullying. The current definition of cyberbullying in KRS 158.441 is susceptible to overreach by public schools because the only qualification on what constitutes actionable bullying is that it cause mental or physical harm.FN47 A school, for example, could determine a student was in violation if the victimized student claims to have been embarrassed or reduced to tears. A standard such easily manipulated would be improper because schools would have virtually unchecked policing powers. A better definition of cyberbullying in KRS 158.441 would read as follows: “Cyberbullying” is bullying through the use of technology or any electronic communication including, but not limited to, the transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted by, an electronic medium including those which the creator assumes another person’s identity or knowingly impersonates another as the author of posted content or messages. Additionally, it includes the distribution by electronic means of a communication to more than one person or the posting of material on an electronic medium that may be accessed by one or more persons. A student will be determined to have committed an act of cyberbullying against another student if the following conditions are met. The act: (1) is repeated over time; (2) is intended to ridicule, humiliate, or intimidate the victim; and (3) occurs during the school day on school property, on a school bus, or at a school-sponsored activity, or before or after the school day on a school bus or at a school-sponsored activity. (4) does not occur during one of the on-campus activities discussed above, but can be shown to pose a clear and substantial interference with another student’s right to access educational programs.FN48 This definition has several benefits. First, it narrows the scope of Internet speech subject to regulation, reducing potential infringement of constitutionally protected speech. Second, it recognizes the unique nature of student Internet speech. Third, it outlines a clear analytical framework for Kentucky courts to use in future cyberbullying lawsuits, resulting in increased predictability. Fourth, it puts all potential parties on notice of the types of Internet speech consider within the school’s purview. Last, this construction of cyberbullying is consistent with the standard articulated in Tinker. While Kentucky courts would be recognizing a school’s authority “beyond the schoolhouse gate,” this authority would stem from the likelihood the speech will negatively impact students within the school environment. Thus, widening the scope of school-regulated speech would permit the Kentucky legislature and courts to continue to respect the sanctity of the schoolhouse gate.

Conclusion

The Internet has radically changed the framework for student speech analysis causing lower courts to respond in varied, and sometimes surprising, ways. Previously, off-campus student speech was distinctly beyond the schoolhouse gate and free from constraint. This spatial distinction has declined with the prevalence and pervasiveness of the Internet, which has blurred the borders between many areas of regulation. While certainly not all off-campus speech is subject to schools’ authority, those that would create a substantial disruption should be subject to school regulation.FN49 In order to navigate the challenges presented in addressing off-campus Internet student speech, Kentucky’s General Assembly needs to enact an amended version of statutes 158.148 and 158.441. The geographical limitation contained within 158.148 needs to be replaced with more expansive language, similar to Massachusetts’ and Vermont’s statutes.FN50 Additionally, 158.441 needs to provide a definition of cyberbullying. Such changes would recognize that a geographical distinction is inadequate for schools to provide a safe and productive learning environment. Without these changes, courts will be left with little to base their decisions on except a “very tricky calculus,”FN51which will not produce the outcomes necessary to prevent future victims of cyberbullying.

FN1. Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503, 506 (1969).

FN2. New York 14-Year-Old Kameron Jacobsen Bullied to Death, CBS New York, http://newyork.cbsloc al.com/2011/09/15/exclusive-new-york-14-year-old-bullied-to-death/ (last visited June 3, 2013).

FN3. Id.; Parents Speak Out on Bullying After Son’s Death, CBS New York, http://www.cbsnews.com/2100-500172_162-20106690.html (last visited June 3, 2013).

FN4. New York 14-Year Old Kameron Jacobsen Bullied to Death, supra note 2.

FN5. Rachael was a Bullitt County student when she committed suicide after receiving threatening anonymous e-mails from classmates. Janelle McDonald, Family of Teen who Took Her Own Life Pushing Lawmakers for Anti-Bullying Ordinance, Wave3 News, http://www.wave3.com/story/6029598/family-of-teen-who-took-her-own-life-pushing-lawmakers-for-anti-bullying-ordinance (last visited June 3, 2013) (stating Rachael received an e-mail saying, “ ‘[I am not] going to put [you] in the hospital, [I’m] going to put [you] in the morgue.’”).

FN6. Katherine Ng, Digital Dilemmas: Responding to Cyberbullying in Nova Scotia, 22 EDUC. & L.J. 63, 65-66 (2012); see also Gwenn Schrugin O’Keeffe, Kathleen Clarke-Pearson, and the Council on Communications and Media, Clinical Report: The Impact of Social Media on Children, Adolescents, and Families, 127 Pediatrics 800, 800-01 (2011). (stating the internet has assisted in self-identification by adolescents).

FN7. Ng, supra note 6 at 68; see also Sameer Hinduja and Justin W. Patchin, Cyberbullying Research Summary: Cyberbullying and Strain, 1, 1 http://www.cyberbullying.us/cyberbullying_ and_strain_research_fact_sheet.pdf (last visited June 3, 2013).

FN8. Ng, supra note 6 at 69; see also Hinduja and Patchin, supra note 7 at 1.

FN9. Ng, supra note 6 at 70; Allison Belnap, Comment, Tinker at a Breaking Point: Why the Specter of Cyberbullying Cannot Excuse Impermissible Public School Regulation of Off-Campus Student Speech, BYU L. Rev. 501, 501 (2011) (quoting Jeff Lieberman, Rutgers Student’s Suicide Prompts privacy, Cyber-Bullying Debates (PBS NewsHour broadcast Oct. 1, 2010), transcript available at http://www.pbs.org/newshour/bb/social_issues/july-dec10/rutgers1_10-01.html); see also Hinduja and Patchin, supra note 7 at 1.

FN10. Ng, supra note 6 at 68.

FN11. Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503, 506, 514 (1969).

FN12. Id. at 514. (“As we have discussed, the record does not demonstrate any facts which might reasonably have led school authorities to forecast substantial disruption of or material interference with school activities, and no disturbances or disorders on the school premises in fact occurred.”).

FN13. See Bethlehem Sch. Dist. v. Fraser, 478 U.S. 675, 685-86 (1986). The Court later stated in a footnote the Fraser standard is separate and distinct from Tinker. Hazelwood Sch. Dist. v. Kuhlmeier, 484 U.S. 260, 271, n. 4. (“The decision in Fraser rested on the ‘vulgar,’ ‘lewd,’ and ‘plainly offensive’ character if a speech delivered at an official school assembly rather than on any propensity of the speech to ‘materially disrup[t] class work or involv[e] substantial disorder or invasion of the rights of others.”) (quoting Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503, 513 (1969)).

FN14. Fraser, 478 U.S. at 683, 685-86.

FN15. Hazelwood, 484 U.S. at 281.

FN16. Id. at 273.

FN17. Morse v. Frederick, 484 U.S. 393, 403 (2007).

FN18. See Caitlin May, Comment, “Internet-Savvy Students” and Bewildered Educators: Student Internet Speech is Creating New Legal Issues for the Educational Community, 58 Cath. U. L. Rev. 1105, 1111 (2009) (analyzing the Court’s rationale in Hazelwood); Harriet A. Hoder, Note, Supervising Cyberspace: A Simple Threshold for Public School Jurisdiction over Student’s Online Activity, 50 B.C. L. Rev. 1563, 1574-75 (2009).

FN19. Stephanie Klupinski, Note, Getting Past the Schoolhouse Gate: Rethinking Student Speech in the Digital Age, 71 Ohio St. L.J. 611, 625 (2010) (quoting Robert D. Richards & Clay Calvert, Columbine Fallout: The Long-Term Effects on Free Expression Take Hold in Public Schools, 83 B.U. L. Rev. 1089, 1139 (2003)); May, supra note 18 at 1128-31.

FN20. May, supra note 18 at 1128; Hoder, supra note 18 at 1583-85; see also Sandy S. Li, The Need for a New, Uniform Standard: The Continued Threat of Internet-Related Student Speech, 26 Loy. L.A. Ent. L. Rev. 65, 78; Belnap, supra note 9, at 510, Klupinski, supra note 19, at 627.

FN21. Mahaffey ex rel. Mahaffey v. Aldrich, 236 F. Supp. 2d 779, 782-84 (E.D. Mich. 2002) (“In the case at bar, there is no evidence that the website interfered with the work of the school or that any other student's rights were impinged.”).

FN22. J.S. v. Bethlehem Area Sch. Dist., 807 A. 2d 847, 865 (Pa. 2002).

FN23. Tinker v. Des Moines Indep. Cmty. Sch. Dist., 393 U.S. 503, 513 (1969) (emphasis added).

FN24. Wisniewski v. Bd. of Educ. Weedsport Cent. Sch. Dist., 494 F.3d. 34, 38 (2d Cir. 2007); J.S. ex rel. Snyder v. Blue Mountain Sch. Dist., 650 F.3d 915 (3d Cir. 2011).

FN25. Wisniewski, 494 F.3d at 36-40.

FN26. Blue Mountain, 650 F.3d at 920.

FN27. Id. at 928, 932-33 (holding J.S.’s suspension was a violation of the First Amendment because it did not cause a substantial disruption in the school under the Tinker standard).

FN28. Klupinski, supra note 19 at 638-39.

FN29. Killion v. Franklin Reg. Sch. Dist., 136 F. Supp. 2d 446, 455 (W.D. Penn. 2001) (“Although the intended audience was undoubtedly connected to Franklin Regional High School, the absence of threats or actual disruption lead us to conclude that Paul's suspension was improper.”).

FN30. See Ala. Code §16-28-3.1(b)(6) (2013); Alaska Stat. Ann. §14.33.200 (2013); Ariz. Rev. Stat. Ann. §15-341(37) (2013); Ark. Code Ann. §6-18-514(b)(2) (2013); Cal. Educ. Code §32261(d) (2013); Colo. Rev. Stat. §22-32-109.1(1)(b) (2013); Conn. Gen. Stat. §10-222d(a)(1) (2013); Del. Code Ann. tit. 14 §4112D(a) (2013); Fla. Stat. §1006.147(a) (2013); Ga. Code §20-2-751.4 (2013); Haw. Code R. § 8-19-2 (2013); Idaho Code Ann. §18-917A(2) (2013); 105 Ill. Comp. Stat. 5/27-23.7(b) (2013); Ind. Code §20-33-8-0.2 (2013); Iowa Code §280.28(2)(b) (2013); Kan. Stat. Ann. §72-8256(a)(1) (2013); Ky. Rev. Stat. Ann. §158.183(1)-(2) (2013); La. Rev. Stat. Ann. §17:416(d) (2013); Me. Rev. Stat. tit. 20-A(2)(B) §6554 (2013); Md. Code Ann. Education §7-424.3(a) (2013); Mass. Gen. Laws ch. 71, § 37O(a) (2013); Mich. Comp. Laws §380.1310b(8)b (2013); Minn. Stat. §121A.0695 (2013); Miss. Code Ann. §37-11-67(1) (2013); Mo. Rev. Stat. § 160.775(2) (2013); Neb. Rev. Stat. § 79-2, 137(2) (2013); Nev. Rev. Stat. §388.135 (2013); N.H. Rev. Stat. Ann. §193-F:3(I) (2013); N.J. Stat. Ann. §18A:37-14 (2013); N.M. Stat. Ann. §6.12.7 (2013); N.Y. Educ. Law §11(7) (McKinney 2013); N.C. Gen. Stat. §115C-407.15(a) (2013); N.D. Cent. Code §15.1-19-17(1) (2013); Ohio Rev. Code Ann. §3313.666(A)(2) (2013); 2013 Okla. Sess. Laws 311; Or. Rev. Stat. §339.351(2) (2013); 24 Pa. Cons. Stat. §13-1301.1-A(e) (2013); R.I. Gen. Laws §16-21-33(a) (2013); S.C. Code Ann. § 59-73-120(1) (2013); S.D. Codified Laws §13-32-15 (2013); Tenn. Code Ann. §49-6-1015(3) (2013); Tex. Educ. Code Ann. §37.0832(a) (2013); Utah Code Ann. §53A-11a-201 (2013); Vt. Stat. Ann. tit. 16, § 11(26), (32) (2013); Va. Code Ann. §22.1-279.6 (2013); Wash. Rev. Code Ann. §28A.300.285(2) (2013); W. Va. Code Ann. §18-2C-2(a) (2013); Wis. Stat. §118.46(1) (2013); Wyo. Stat. Ann. §21-4-312(a) (2013).

FN31. Statutes specifically referencing cyberbullying include: Arkansas, California, Connecticut, Hawaii, Kansas, Louisiana, Massachusetts, Missouri, Nevada, New Hampshire, New York, North Carolina, Oregon, Tennessee, Utah, and Washington. The following states have permitted schools to regulate and punish off campus behavior: Arkansas, Connecticut, Massachusetts, New Hampshire, New York, Tennessee, and Vermont. See Ark. Code Ann. §5-71-217(c) (West  (2013); Cal. Educ. Code §32261 (West 2013); Conn. Gen. Stat. Ann. §10-222d(a)(6), (b)(15) (West 2013); Haw. Code R. § 8-19-2 (2013); Kan. Stat. Ann. §72-8256(a)(2)-(3), (c) (West 2013); La. Rev. Stat. Ann. §40.7 (2013); Mass. Gen. Laws Ann. ch. 71, § 37O(b) (West 2013); Mo. Ann Rev. Stat. § 160.775 (West 2013); Nev. Rev. Stat. Ann. §388.135(7) (West 2013); N.H. Rev. Stat. Ann. §193-F:3(V) (2013); N.Y. Educ. Law §11(7) (McKinney 2013); N.C. Gen. Stat. Ann. §115C-407.15(a) (West 2013); Or. Rev. Stat. Ann. §339.351 (West 2013); Tenn. Code Ann. §49-6-1015 (West 2013); Utah Code Ann. §53A-11a-201(1)-(2) (West 2013); Wash. Rev. Code Ann. §28A.300.285 (West 2013).

FN32. H.B. 91, 2007 H.R., Reg. Sess. (Ky. Nov. 26, 2007); H.B. 91, 2008 H.R., Reg. Sess. (Ky. Jan. 8, 2008); H.B. 91, 2008 H.R., Reg. Sess. (Ky. Mar. 19, 2008); H.B. 91, 2008 H.R., Reg. Sess. (Ky. Apr. 15, 2008); H.B. 370, 2011 H.R., Reg. Sess. (Ky. 2011); H.B. 336, 2012 H.R., Reg. Sess. (Ky. 2012); H.B. 490, 2012 H.R., Reg. Sess. (Ky. 2012).

FN33. H.B. 91, 2007 H.R., Reg. Sess. (Ky. Nov. 26, 2007); H.B. 91, 2008 H.R., Reg. Sess. (Ky. Jan. 8, 2008); H.B. 91, 2008 H.R., Reg. Sess. (Ky. Mar. 19,2008); H.B. 91, 2008 H.R., Reg. Sess. (Ky. Apr. 15, 2008).

FN34. H.B. 91, 2007 H.R., Reg. Sess. (Ky. Nov. 26,2007) (“‘Harassment, intimidation, or bullying’ means a repeated verbal, nonverbal, or written communication transmitted; repeated physical acts committed; or any other repeat behavior committed by a student against another student on school premises, on school-sponsored transportation, or at a school-sponsored event…”).

FN35. H.B. 91, 2008 H.R., Reg. Sess. (Ky. Mar. 19, 2008); H.B. 91, 2008 H.R., Reg. Sess. (Ky. Apr. 15, 2008).

FN36. H.B. 370, 2011 H.R., Reg. Sess. (Ky. 2011) (“Amend KRS 158.148 to require the discipline code to prohibit harassment, intimidation, bullying, or cyberbullying against students…”) (emphasis added).

FN. 37.Id.

FN. 38. H.B. 490, 2012 H.R., Reg. Sess. (Ky. 2012).

FN 39. Morse v. Frederick, 551 U.S. 393, 407 (2007) (stating that prior Supreme Court cases have recognized the dangers of illegal drug use and schools’ interest in protecting students from the dangers of drug abuse).

FN. 40. See Ng, supra note 6 at 70; see also Natasha Rose Manuel, Cyber-bullying: Its Recent Emergence and Needed Legislation to Protect Adolescent Victims, 13 Loy. J. Pub. Int. L. 219, 225-28 (2011), Hoder, supra note 18 at 1566.

FN. 41. Mass. Gen. Laws. ch. 71, § 37O(b) (2013); Vt. Stat. Ann. tit. 16, § 11(a)(32) (2013).

FN. 42. Tit. 16, § 11(a)(32)(C)(ii) (emphasis added); ch. 71, § 37O(b).

FN. 43. Ch. 71, § 37O(b).

FN. 44. Compare ch. 71, § 37O(b) and tit. 16, § 11(a)(32)(C))(ii) with Wisniewski v. Bd. of Educ. Weedsport Cent. Sch. Dist., 494 F.3d. 34, 38-39 (2d Cir. 2007) and J.S. v. Blue Mountain Sch. Dist., 650 F.3d 915, 932-33 (3d Cir. 2009).

FN. 45. Compare H.B. 336,  H.R., Reg. Sess. (Ky. 2012) and H.B. 370, H.R., Reg. Sess. (Ky. 2012) with ch. 71, § 370 and tit. 16, § 11.

FN. 46. Ch. 71, § 37O(c)-(h); tit. 16, § 11.

FN. 47. KRS 158. 441 states “‘Harassment, intimidation, or bullying means: Any intentional written, verbal, electronic, physical act that a student has exhibited toward another student more than once that causes mental or physical harm to the other student.” H.B. 490, H.R., Reg. Sess. (Ky. 2012) (emphasis added).

FN. 48. This proposed statutory construction is based on the legislation in Kentucky, Massachusetts, and Vermont. See H.B. 370, H.R., Reg. Sess. (Ky. 2011); ch. 71 § 37O(a)-(b); tit. 16, § 11(a)(32).

FN. 49. May, supra note 18 at 1141, Li, supra note 20 at 87-91, Klupinski, supra note 20 at 643-50.

FN. 50. Compare H.B. 336, H.R., Reg. Sess. (Ky. 2012) and H.B. 490, H.R., Reg. Sess. (Ky. 2012) with ch. 71, § 37O(b) and tit. 16, § 11(a)(32)(C)(ii).

FN. 51 May, supra note 18 at 1141. (quoting Victoria Kim, Suit Blends Internet, Free Speech, School, L.A. Times, Aug. 3, 2008, at B1).