According to a report by the Congressional Budget Office, H.R. 3962, the bill that Speaker Nancy Pelosi brought to the House floor last week costs $343 billion less than the bill that it replaced, H.R. 3200.  How was this accomplished?

     Here is the CBO report on the new House bill, H.R. 3962, and here is the CBO report for the previous version of the House bill, H.R. 3200.   The new bill extends insurance coverage to 36 million people who are currently uninsured (a million fewer people than the previous bill) and, like the previous bill, it upgrades the insurance coverage of every American by prohibiting exclusions for preexisting conditions, abolishing lifetime limits in coverage, and requiring total coverage for preventive care. 

     These reforms will cost about $100 billion annually, or about $1 trillion over ten years.  There are two principal components to this cost: approximately $40 billion more per year for Medicaid and CHIP, and $60 billion more per year in federal subsidies for individuals earning less than four times the Federal Poverty Level to purchase private or public health insurance through the Exchange.

     The biggest change in the new bill is that the H.R. 3962 is expected to reduce the federal deficit by $104 billion over ten years, while the previous bill, H.R. 3200, would have increased the deficit by $239 billion.  How were these savings accomplished?

     The biggest losers under the new bill are physicians, to the tune of $245 billion over ten years.  H.R. 3200 would have changed the SGR formula that threatens to impose a 20% reduction in physician's fees under Medicare.  I addressed this topic in Posting Number 48 in this series.  Senator Debbie Stabenow (D-MI) has introduced legislation in the Senate to address this problem, and the original House bill made this change as well.  The new bill, H.R. 3962, drops the amendment to the SGR formula.  This means that unless separate legislation is adopted this year, Medicare will reduce its payments to physicians by over 20% in 2010 and there will be additional annual reductions of about 6% in each of the next several years.  Obviously this change has to be made.  It would make sense to include this change in the reform bill.

     The new bill also saves money by enrolling more people in Medicaid.  Under the new bill, everyone earning less than 150% of the Federal Poverty Level will be eligible for Medicaid; under the old bill the qualification requirement had been 133% of the poverty level or less.   The CBO estimates that as a result of this change four million more people will be insured by Medicaid instead of purchasing insurance through the Exchange.   This saves money because it is cheaper to enroll people in Medicaid than it is to pay for them to purchase private insurance through the Exchange.  Under the new bill direct subsidies to poor people to purchase health insurance will be reduced by $40 billion over ten years.  The new bill also reduces the share that the federal government would pay under Medicaid from 100% to 91%.  Because of this, the CBO estimates that over ten years the federal government will spend $13 billion less on Medicaid and CHIP under the new bill than under the old bill, despite enrolling four million more people.

     The other significant change to the House bill is that it will tax fewer and richer people.  The original bill raised the income taxes of individuals earning more than $280,000 and couples earning more than $350,000 annually.  H.R. 3962 increases these threshholds and imposes a surcharge of 5.4% on individuals earning more than $500,000 and couples earning more than $1,000,000 per year.  This will raise over $50 billion dollars annually and covers about two-thirds of the total cost of the bill.  The rest of the cost is covered by reductions in Medicare payments to health care providers other than physicians and changes in the fee-for-service formula for payments to physicians under Medicare Advantage.  The CBO estimates that these two changes will save about $40 billion annually.

     In short, H.R. 3962 increases spending on health care for poor people by about $100 billion per year, imposes increased taxes and fees of about $60 billion per year on wealthy people, and reduces spending in various areas amounting to about $50 billion per year.  Thirty-six million more people will have health insurance, and everybody's insurance coverage will be more comprehensive.

But this time it's not because of a technicality. A Pennsylvania judge has been sending children to jail on first-time misdemeanor offenses in order to provide financial support to the for-profit prison company that paid him millions under the table. Can you imagine losing two years of your childhood at the age of twelve for taking your mom's car on a joyride that injured nobody? It's a real crime.

     If Congress does nothing, physicians will experience a 20% reduction in the reimbursements that they receive from Medicare.  The cause of this reduction is a federal law that establishes the "Sustainable Growth Rate" formula for changes in Medicare payments.

     The SGR formula is established by law and is used to calculate annual changes to the rates that doctors may charge Medicare for services.  Instead of simply allowing the reimbursement rate to increase in line with inflation, adjustments are made on the basis of the average of several factors, including changes in national worker productivity and changes in the Gross Domestic Product. 

     The "long version" explaining how the SGR is calculated may be examined in this article from the Congressional Budget Office published in 2006 and this 2009 report from the Centers for Medicare and Medicaid.

     The "short version" is much simpler.  For the past several years, the SGR formula would have mandated low increases or even reductions in physician fee schedules under Medicare.  Congress responded by overriding the changes to the fee schedule that would have been required by the SGR formula, and year-by-year enacted ad hoc increases for physicians participating in Medicare.  However, Congress never repealed the SGR formula, and under the law the changes mandated by SGR are cumulative – the scheduled reductions have built up to the point that Congress does not act physician's fee schedules will have to be reduced by more than 20% in 2010, with further reductions of about 6% annually stretching into the future.  This would certainly discourage physicians – and might discouage them from caring for Medicare patients altogether.

     From the standpoint of physicians, the cure, of course, is to abolish the SGR formula.  This is precisely what Senator Debbie Stabenow tried to do with her bill, S. 1776, the "Medicare Physician Fairness Act of 2009."   This very short bill abolishes the SGR formula and freezes physician reimbursement rates at present levels.  On October 21 this bill was defeated on a cloture motion 47-53, and Senator Stabenow released this statement vowing to continue to fight to bring the bill to the floor of the Senate.

     How much more will we spend on Medicare if the SGR formula is abolished?  The CBO answered this question in a letter dated October 26, 2009.  The CBO estimated that the government would save tens of billions of dollars annually if the fee reductions go into effect this year – as much as $42 billion in the year 2019 alone.

     On the other hand, Stabenow's bill would certainly be cheaper than having Congress enact annual increases in the Medicare reimbursement rate.

     In this article by Emily Walker of MedPage Today, it is suggested that SGR reform is a hostage of the broader package of health care financing reform.  Walker states:

On Wednesday, a cloture vote to end debate on the bill that would eliminate the sustainable growth rate (SGR) formula used to determine Medicare reimbursements to physicians was defeated in the Senate 53 to 47. Had it passed, the cloture vote would have moved the bill itself, sponsored by Debbie Stabenow (D-Mich.), to a vote.

…

The AMA, a major backer of the SGR bill, said it was "deeply disappointed," but earlier in the week, the group's president had refused to back the Finance Committee's healthcare reform bill, the quid in a rumored quid-pro-quo deal trading a vote on the SGR bill for support on the broad reform package.

     If a physicians suddenly throw their backing behind one of the health care financing reform bills, it will probably be because the bill has been amended to abolish SGR.

     Ron Wyden (D-OR) offered an amendment to the Baucus bill that would have made it possible for all Americans to purchase health insurance through the Exchange.  The amendment was ruled out-of-order by Senate Finance Committe Chair Max Baucus (D-MT).  Presented below are arguments for and against the amendment – both from the U.S. Chamber of Commerce.

     As readers of this blog are aware, Senator Ron Wyden has for years championed legislation that would create a single, national marketplace, regulated by the federal government, through which all Americans could purchase health insurance.  Insurance policies would have to meet certain standards as to coverage (for example, they would have to cover preexisting conditions and pay for preventive care), and would have to offer consumers information in sufficient detail and in a standardized format so as to permit comparisons as to price and quality of the coverage of the various plans.  Here is Senator Wyden's description of his proposal:

More Choice for Workers: Workers who don't like their employer plans can choose to go to the exchange and choose any plan available through the exchange. If their employer currently provides health coverage, the workers will get a voucher equal to the money their employer currently pays to help pay the cost of an exchange plan. The voucher amount would be excluded from the employee’s income and the cost of the voucher would be deductible by the employer. If the workers choose a plan that costs less than they have currently, they get rewarded with extra money in their pockets.

More Choice for Employers: Employers also have more choices: they can give their workers the ability to buy health coverage in the exchange or bring their entire group to the exchange and get a discount. This choice could be phased in for the mid-sized and large employers over a few years after the exchange gets going. Employers with good health plans will be able to maintain their plans because they will offer their workers better value. Employers with high cost, low value plans can cut their costs by letting their workers go to the exchange.

Cost Containment: The plan would reward consumers for selecting more efficient lower cost plans by enabling them to retain the full amount saved by electing a lower-cost option.

     As a member of the Senate Finance Committee, Wyden framed his proposal as an amendment to the Baucus bill – he calls it the "Free Choice Amendment."  On September 22, Tony Romm of The Hill reported that Wyden's proposal was gaining support in Congress.  However, on October 2, Senator Max Baucus (D-MT),  ruled the Wyden amendment out of order on the ground that it had not been fully "scored" by the Congressional Budget Office, and the amendment was not submitted to a vote before the Committee.  Jon Walker at FireDogLake has posted an article stating that Baucus was mistaken, and that the CBO actually had scored the Wyden amendment and that it had found that the Wyden proposal would have saved $1 billion over ten years.

     The U.S. Chamber of Commerce supports the creation of the Exchange, seemingly along the lines proposed by Senator Wyden.  Here is what Dick Castner wrote in his column for the ChamberPost on September 4. 

We could create a vibrant marketplace with a health insurance exchange that connects consumers with insurance options, removing fragmentation and spurring choice and competition.

     On September 30, however, The Politico reported that the Chamber of Commerce opposed the Wyden amendment on the ground that it would interfere with the ability of employers to provide their own health insurance plans to employees.  If employees could "opt out" of employer plans and receive vouchers to pay for health insurance on a national market, it would be too difficult, the Chamber felt, for employers to develop and negotiate health insurance plans for their employees.  Chairman Baucus apparently agrees – according to an article by Allison Bell of National Underwriter, Baucus characterized Wyden's proposal as "destabilizing." 

     In my opinion, if the United States is going to retain the system of paying for health care by means of private health insurance, the only way to reduce cost and thereby widen access to health care is to make the market for health insurance more competitive – to remove barriers to entry and to improve the flow of relevant information as to price and quality.  The Wyden plan would move us down the road to a more competitive marketplace for the purchase of health care.

     Joe Markman of the Los Angeles Times reports today that five constitutional experts appeared yesterday before the Constitution subcommittee of the Senate Judiciary Committee and expressed their opinions regarding the constitutionality of President Obama's "czars" – officials who advise the President and coordinate policy among different agencies and departments of the federal government.  The experts agreed that the practice was constitutional so long as these officials operated in an advisory capacity only and exercised no legal authority.

     The Constitution provides that, with the advice and consent of the Senate, the President has the power to  nominate certain officers of the United States.  Article II, Section 2, Clause 2 of the Constitution (the "Appointment Clause") provides in part that the President:

shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

     A webcast of the hearing is available here from the website for the Constitution subcommittee.  Some of the points made by the expert witnesses follow:

1.  No person actually has the actual title of "czar."  They are instead "special envoys" or "presidential advisors."

2.  Almost all of the persons described as "czars" report to some other official who has been nominated by the President and confirmed by the Senate – for example, special envoy Richard Holbrook reports to Secretary of State Hillary Clinton.  These are accordingly "inferior officers" whose appointment may be vested in the President alone or in the heads of departments.

3.  Public Law 95-570 (3 U.S.C. 105) authorizes the President to hire white house staffers, including "Assistants to the President" such as environmental "czar" Carol Browner, without Senate approval.

4.  White House staff members have no legal authority, but serve simply as advisors to the President, analogous to the role played by law clerks to Justices of the Supreme Court.  Like the "special envoys," these are inferior officers and accordingly under the Constitution it is appropriate for the law to entrust their appointment to the President alone.

5.  These "czars" help  the President to oversee the actions of administrative agencies.  The President has the power to remove the heads of these agencies and to direct their actions, but to exercise this power effectively he must know what the agencies are doing and he must be able to coodinate policy among different agencies.  The agencies themselves are subject to congressional oversight, and if these advisors were, in effect, running the agencies, it would violate the laws creating those agencies and the requirement in the Constitution that the heads of executive departments must be confirmed by the Senate.

6.  Under the Constitution, principal officers of the United States must be confirmed by the Senate, inferior officers may be appointed by the President alone, and non-officers are not subject to the Appointment Clause at all.  A memorandum prepared by the Office of Legal Counsel of the Justice Department from the Bush administration states that officers are persons who have the power to excercise "delegated sovereign authority" – sovereign functions such as rulemaking, investigation and prosecution of wrongdoing, adjudication, the authority to speak for the United States, and the authority to command the armed forces of the United States.

7.  To be an officer, one must also have statutory authority – and no-one on the white house staff has actual legal authority.  This is different from practical influence or informal power.  Does a person have the power to actually bind the government – to take a legally effective action?

8.  It is common for members of the White House staff to be extremely influential, it is clear that this has been true for a long time, and it is perfectly constitutional.  Whether this is a good thing is another question.

9.  There is no indication that any of President Obama's advisors has been exercising legal authority.

10.  It would not be constitutional for Congress to prohibit a President from relying on the advice any persons he chooses, inside or outside the government. 

11.  Despite the assertions of "Executive Privilege" raised by the Bush Administration, Congress does have the power to compel the testimony of Presidential advisors before Congress.

     Several of the expert panelists stated that it would be difficult to write a law limiting the authority of the President to choose advisors, and it would difficult for the courts to develop a legal principle that could be used to  distinguish between the lawful and unlawful exercise of power by presidential advisors.

     The principal mechanism that the proposed health care legislation utilizes to broaden coverage and to bring down the cost of medical care is to increase competition in the market for health insurance.  In this respect the Baucus bill is woefully deficient in three respects.  The most important wrangling over the bill will involve changes to the bill intended to address these concerns.

     The most important feature of health care financing reform is the "Exchange," a market for health insurance that will allow individuals and employers a wide range of choice in the purchase of health insurance.  The most serious reservations against the Baucus bill all concern whether the proposed law will achieve its goal of opening up competition in the health insurance industry, thereby reducing cost and improving coverage.  Senator Baucus has yet to address three aspects of his bill that have been heavily criticized.  They are:

1. Will the law create a single, national market for health insurance or will the states retain the authority to control who may sell insurance within the state? At present, the Baucus bill contemplates fifty separate state health insurance "exchanges." In my opinion, the Exchange should be national in scope, with uniform national standards. Too many states authorize only a handful of insurance companies to do business within the state. Insurance regulation should be the responsibility of a single, national oversight panel with responsibility to design standards so that consumers can compare policies from the widest possible range of choices.

2. Who will be permitted to purchase health insurance through the Exchange – large employers, small employers, all individuals, or only individuals who are not otherwise covered? At present, the Baucus bill prohibits large employers and persons whose employers provide health insurance from purchasing insurance through the Exchange. This is nonesense. If everyone is permitted to purchase insurance on the Exchange like the Wyden-Bennett bill would allow, it will lower the cost of insurance for everybody.

3. Will the law permit the government to underwrite (not to fund) an insurance carrier – the so-called "public option"? At present, the Baucus bill only allows "co-ops" to be formed, but does not allow large employers to participate in these co-ops. I favor allowing taxpayers to create a non-profit insurance company that would compete with private insurers – it would not be allowed to sell insurance below cost, but by having private insurers bid to provide health insurance that would be backed by the government, it would increase competition in the market. Senator Snowe wants the bill to include a "trigger" – that is, if the cost of health insurance on the Exchange does not come down as expected, the "public option" would become operational. I agree with Snowe – if the first wave of reforms doesn't work, let's have something else waiting in the wings.

     As we move through this week towards a vote before the Senate Finance Committee, watch to see whether these concerns are addressed.

     Yesterday evening in his address on health care to the joint session of Congress the President revealed that Senator Edward Kennedy had written him a letter on "the great cause" of his life.

     In his address to Congress President Obama embraced many of the ideas contained in the Wyden-Bennett bill, the Dingell bill, and the Kennedy bill, which have been described in the previous postings of this series on health care financing reform.  These proposals include:

1.  Creation of a government-sponsored market for health insurance ("the Exchange") which will allow individuals and employers access to a statewide or even nationwide choice of private health insurance plans;

2.  Regulation of private health insurance sold through the Exchange, in particular requiring coverage for preexisting conditions and preventive care;

3.  Changing the tax treatment for private health insurance, at least for "high-end" plans or higher-income workers, and using the increased tax revenues to offer tax credits to lower-income workers to purchase insurance;

4.  An individual and employer mandate – every person will have to have health insurance, and every employer will have to offer it or pay a fee that would be used to help the company's workers purchase insurance.  There will be exemptions and credits for small employers and hardship cases;

5.  A "public option" – not nationalized health care as in Britain, but government health insurance modeled on Medicare.  Individuals and employers could purchase health insurance through a government agency essentially at cost.  The policies sold under the public option would have to conform to all of the requirements that private insurance policies would be subject to including coverage for preexisting conditions and preventive care.

     The emotional high point of the speech was when the President revealed that Senator Edward Kennedy had written him a letter in May whose contents were to be revealed in the event of his death.  Here is what the President said about Senator Kennedy, and what he expects from us as we move forward to reform our system of paying for health care:

Everyone in this room knows what will happen if we do nothing. Our deficit will grow. More families will go bankrupt. More businesses will close. More Americans will lose their coverage when they are sick and need it the most. And more will die as a result. We know these things to be true. 

That is why we cannot fail. Because there are too many Americans counting on us to succeed — the ones who suffer silently, and the ones who shared their stories with us at town halls, in e-mails, and in letters. 

I received one of those letters a few days ago. It was from our beloved friend and colleague, Ted Kennedy. He had written it back in May, shortly after he was told that his illness was terminal. He asked that it be delivered upon his death. 

In it, he spoke about what a happy time his last months were, thanks to the love and support of family and friends, his wife, Vicki, his amazing children, who are all here tonight. And he expressed confidence that this would be the year that health care reform — "that great unfinished business of our society," he called it — would finally pass. He repeated the truth that health care is decisive for our future prosperity, but he also reminded me that "it concerns more than material things." "What we face," he wrote, "is above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country." 

I've thought about that phrase quite a bit in recent days — the character of our country. One of the unique and wonderful things about America has always been our self-reliance, our rugged individualism, our fierce defense of freedom and our healthy skepticism of government. And figuring out the appropriate size and role of government has always been a source of rigorous and, yes, sometimes angry debate. That's our history. 

For some of Ted Kennedy's critics, his brand of liberalism represented an affront to American liberty. In their minds, his passion for universal health care was nothing more than a passion for big government. 

But those of us who knew Teddy and worked with him here — people of both parties — know that what drove him was something more. His friend Orrin Hatch — he knows that. They worked together to provide children with health insurance. His friend John McCain knows that. They worked together on a Patient's Bill of Rights. His friend Chuck Grassley knows that. They worked together to provide health care to children with disabilities. 

On issues like these, Ted Kennedy's passion was born not of some rigid ideology, but of his own experience. It was the experience of having two children stricken with cancer. He never forgot the sheer terror and helplessness that any parent feels when a child is badly sick. And he was able to imagine what it must be like for those without insurance, what it would be like to have to say to a wife or a child or an aging parent, there is something that could make you better, but I just can't afford it. 

That large-heartedness — that concern and regard for the plight of others — is not a partisan feeling. It's not a Republican or a Democratic feeling. It, too, is part of the American character — our ability to stand in other people's shoes; a recognition that we are all in this together, and when fortune turns against one of us, others are there to lend a helping hand; a belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise.

     Ted Kennedy's declaration that "What we face is above all a moral issue" recalls the statement of his brother Jack in his address to the nation on Civil Rights on June 11, 1963.  President Kennedy said:

We are confronted primarily with a moral issue. It is as old as the scriptures and is as clear as the American Constitution.

The heart of the question is whether all Americans are to be afforded equal rights and equal opportunities, whether we are going to treat our fellow Americans as we want to be treated. If an American, because his skin is dark, cannot eat lunch in a restaurant open to the public, if he cannot send his children to the best public school available, if he cannot vote for the public officials who will represent him, if, in short, he cannot enjoy the full and free life which all of us want, then who among us would be content to have the color of his skin changed and stand in his place? Who among us would then be content with the counsels of patience and delay?

One hundred years of delay have passed since President Lincoln freed the slaves, yet their heirs, their grandsons, are not fully free. They are not yet freed from the bonds of injustice. They are not yet freed from social and economic oppression. And this Nation, for all its hopes and all its boasts, will not be fully free until all its citizens are free.

     At the close of his speech Kennedy revealed that was sending to Congress a proposed law on Civil Rights, legislation that would eventually be enacted as the Civil Rights Act of 1964.  Jack Kennedy's great civil rights speech can be viewed on youtube here and here, and a high quality audio recording of the speech is available from the JFK Library here.

     In my opinion President Obama's speech on health care was magnificent.  The Civil Rights bill that JFK announced he was sending to Congress in his speech of June 11, 1963, did not become law until the following year.  There was great opposition to the civil rights measure, but ultimately it received bipartisan support and was adopted at least in part out of respect and admiration for JFK.  I believe that health care reform will come much faster.

UPDATE:  Here is the link to Senator Kennedy's letter on Talking Points Memo.

Here are some website lists you might find useful.

 1.   Top 10 Free Case Law Web Sites

Get Your Free Case Law on the Web.  Reviews written by Robert J. Ambrogi from Law Technology News.  Web sites review include:  Fastcase, FindACase, PreCYdent, Public Library of Law, FindLaw and Public.Resource.org are just a few.

 2.     10 Great dot-gov Web Sites

Here is an excellent article rating the top ten government web sites.  The article was written by Joab Jackson and published in the July issue of GCN: Government Computer News.  Standouts include: Recovery.com, USASpending.gov, Data.gov, and the new Federal Digital System.

3.   ABA Journal Blawg 100

 I know this is more than ten but it is still a great list!  These are the 100 best web sites by lawyers, for lawyers and chosen by the editors of the ABA Journal.  The 2009 list is not available yet. 

Also see the ABA Blawg Directory which can be sorted alphabetical by topic, region, or author type.   

4.   10  Essential Web Sites for Litigators

Review written by Genie Tyburski from The Virtual Chase.  Most of the sites she reviews are free and the few that do charge are relatively inexpensive. Web sites reviewed include: Justia, Cornell Legal Information Institute, Electronic Discovery Law, and GPO Access.

     Congress is considering measures that would repeal the policy prohibiting gays and lesbians from serving openly in the military.

     According to an article posted today by Jason Bellini of the Daily Beast, Senator Kristen Gillebrand of New York has secured a commitment from the Senate Armed Services Committee to hold hearings on the policy this fall.  Bellini stated that Gillebrand lacks the 60 votes necessary to overcome a filibuster against enacting a temporary ban on dismissals, but that she will at least have the opportunity to challenge the policy in public hearings.  Bellini also reports that support is building in the House of Representatives in favor of the Military Readiness Enhancement Act, a law that would repeal the current policy.

     "Don't Ask – Don't Tell" is a federal statute which is codified at 10 U.S.C. 654.  It was enacted pursuant to Congress' explicit power under Article I, Section 8, Clause 14 of the Constitution

To make Rules for the Government and Regulation of the land and naval Forces.

     The statute is not phrased in discretionary terms, but rather states that a member of the armed services "shall be separated from the armed forces" under any of the following three circumstances:

(1) That the member has engaged in, attempted to engage in, or solicited another to engage in a homosexual act or acts unless there are further findings, made and approved in accordance with procedures set forth in such regulations, that the member has demonstrated that—

(A) such conduct is a departure from the member’s usual and customary behavior;

(B) such conduct, under all the circumstances, is unlikely to recur;

(C) such conduct was not accomplished by use of force, coercion, or intimidation;

(D) under the particular circumstances of the case, the member’s continued presence in the armed forces is consistent with the interests of the armed forces in proper discipline, good order, and morale; and

(E) the member does not have a propensity or intent to engage in homosexual acts.

(2) That the member has stated that he or she is a homosexual or bisexual, or words to that effect, unless there is a further finding, made and approved in accordance with procedures set forth in the regulations, that the member has demonstrated that he or she is not a person who engages in, attempts to engage in, has a propensity to engage in, or intends to engage in homosexual acts.

(3) That the member has married or attempted to marry a person known to be of the same biological sex.

     According to Thomas (the Library of Congress database for tracking federal legislation) the Military Readiness Enhancement Act of 2009 was introduced in the house by Rep. Ellen Tauscher and is currently pending before the subcommittee on Military Personnel. The Bill is summarized as follows:

Military Readiness Enhancement Act of 2009 – Repeals current Department of Defense (DOD) policy concerning homosexuality in the Armed Forces.

Prohibits the Secretary of Defense, and the Secretary of Homeland Security with respect to the Coast Guard when it is not operating as a service in the Navy, from discriminating on the basis of sexual orientation against any member of the Armed Forces or any person seeking to become a member. Authorizes the re-accession into the Armed Forces of otherwise qualified individuals previously separated for homosexuality, bisexuality, or homosexual conduct.

Requires such Secretaries to ensure that regulations governing the personal conduct of members of the Armed Forces are written and enforced without regard to sexual orientation.

     There may be other steps that could be taken against "Don't Ask – Don't Tell" short of outright repeal of the statute.  In May of this year the Palm Center, a think tank associated with the University of California, issued a report concluding that the President could repeal "Don't Ask – Don't Tell" by issuing an executive order pursuant to his authority to suspend statutory policies regarding the retention of military personnel during periods of "national emergency."  The Washington Post was critical of this approach in this editorial.  In June Secretary of Defense Robert Gates expressed his dissatisfaction with the current policy.  Donna Miles of the American Forces Press Service reported on June 30 that Gates told reporters:

“What we have is a law, not a policy or regulation,” Gates said. “And as I discovered when I got into it, it is a very prescriptive law. It doesn’t leave a lot to the imagination or a lot of flexibility. So one of the things we are looking at is, Is there flexibility in how we apply this law?”

…

Gates said he believes there’s “at least a more humane way to comply with the law until the law gets changed.”

     In response to Gates' comments the Palm Center released a report by Diane H. Mazur proposing a number of steps that the Secretary of Defense could take to discourage or slow down the removal of gays and lesbians from the military.

     Your responses to the abortion question are amazing.  The question was, "What would happen if Roe v. Wade were overturned?"  There were several neat ideas presented in your comments.  I'll respond to these comments below the fold.

     Dave is absolutely correct that the consequences that would flow from overruling Roe depend on how the opinion would be worded.  Would the Court simply find that the state's interest in protecting fetal life overrides the interest of a woman in choosing whether to terminate a pregnancy (thus giving each state the power to prohibit abortions) or would it declare that the fetus is a person within the meaning of the 14th Amendment (thus making it unconstitutional for any state to permit abortions)?   I agree with Dave that it is not likely that a constitutional amendment would be adopted to reinstate Roe anymore than it is now possible for the pro-life movement to secure the adoption of a constitutional amendment overturning Roe - the country is too evenly divided, and there are at least 13 states in each camp.

     John's long and thoughtful post on the subject considers many of the sociological components of criminalizing abortion - a subject that people rarely like to talk about.  In particular, he speculates about whether women who perform self-abortions (for example, by illegally taking "Plan B") would be punished, and what our society would do (or fail to do) with the "unwanted" children who would be born if abortion were outlawed.  John, I salute your courage. 

     Jimmy James discusses the political ramifications and provides us with some useful studies of what the political impact of overturning Roe would be.  He suggests that the electorate will punish the political party responsible for prohibiting abortions – Republicans if Kennedy changes his mind, Democrats (or specifically Obama – Hillary, are you listening?) if Sotomayor votes to overrule Roe.  In answer to your question, Jimmy, no state could make it a violation of the law to leave the state to procure an abortion, although if Roe were overturned Congress would have the power to do that under the Commerce Clause.  Under the commercial speech cases it's probable that the states couldn't even prohibit the advertising within the state of the availability of abortion services in other states.

     Dan S. – you are against the states enforcing morality yet you seek a categorical definition of the concept "person."  I think there may be a contradiction in that position.  Does our understanding of who is a "person" arise from moral considerations?

     Jon raises a fascinating point.  I had always thought that overturning Roe would simply send the matter back to the state legislatures, but he points out that the Congress has the power under the Spending Clause (and I would add the Commerce Clause) to enact legislation that would influence or determine availability of abortions.  Whew!  Not only would every election for state office – every state senator and representative – but every race for Congress and U.S. Senator – would revolve around the abortion question. 

     Larry, if Jon is right, then I don't think that little would change.  Politics would become all about abortion all the time – abortion debate 24/7 – until one side or the other prevails.  At that point Jimmy James' political calculations would play out.

     Amazing.

     Next Monday's post will discuss the constitutionality of the Hate Crimes legislation pending before Congress.  Have a great weekend!

     Get ready for new methods of computing time periods in federal court litigation.  On March 26, 2009, the U.S. Supreme Court  approved proposed amendments to the Federal Rules of Appellate Procedure, Bankruptcy Procedure, Civil Procedure, and Criminal Procedure that will change many time periods set out in these rules and will also change the methods of computing time under these rules.  The rules will take effect on December 1, 2009, absent congressional action to reject, modify, or defer the amendments.   

     The Federal Rules' comprehensive time-computation project was undertaken in response to frequent complaints regarding the time and anxiety and the risk of error inherent in current time computation methods.  Billed as "minor" changes, most proposed rules will further the following principles (1) a "days are days" approach to counting time periods, which will eliminate the current method of omitting intermediate holidays and weekends when the time period is short; (2) a lengthening of shorter time periods to compensate for the new "days are days" approach; and (3) a preference for providing time periods that are less than 30 days in multiples of 7 so that deadlines will less frequently fall on weekends.

     In other time-computation changes, the proposed amendments to the civil rules will clarify how to count forward when a time period is measured after an event and a deadline falls on a weekend or holiday (e.g., 14 days after receipt of a motion); how to count backward when a time period is measured before an event and the deadline falls on a weekend or holiday (e.g., at least 21 days before a scheduling conference is to be held); and how to compute hourly time periods.  The proposed civil rules will also create filing deadlines for electronic filings:  Generally, unless a statute or rule provides otherwise, the last day of a time period for an electronic filing will end at midnight in the court's time zone.  Explanations of the new rules and the proposed language can be found here.

    Additionally, Congress passed H.R. 1626, which amends 28 statutory deadlines to conform with the proposed time-computation amendments to various Federal Rules,  and President Obama signed H.R. 1626 on May 7, 2009.  The statutory changes, like the proposed amendments to the Federal Appellate, Bankruptcy, Civil, and Criminal Procedural Rules, have an effective date of December 1, 2009.  The Act and the amended statutes can be viewed here. 

     At first glance, these rules appear to be no more than mere counting changes.  But take a closer look.  Each set of amended rules — appellate procedure, bankruptcy procedure, civil procedure, and criminal procedure — include rules of more substance.

     In addition to the relatively "minor" time-computation changes, for example, some of the proposed new Federal Rules would have greater impact as follows:

• Proposed Fed. R. Civ. P. 62.1 and Fed. R. App. P. 12.1 – Proposed Civil Rule 62.1 would provide a consistent procedure for obtaining an "indicative ruling" from a district court judge when a case is on appeal.  When a case is appealed from a district court, the district court loses jurisdiction to consider issues involving the case, but a practice has arisen in most circuits that permits district courts to make an "indicative ruling," i.e., to indicate the ruling it would make if it retained jurisdiction.  Proposed Civil Rule 62.1 will provide a uniform procedure for the federal courts that will permit the district court to defer ruling, deny the motion, or indicate either that the motion raises a substantial issue or that it would be inclined to grant the motion if the case were remanded.  Requests for indicative rulings are typically prompted by Rule 60(b) motions for relief from order or judgment that are filed after an appeal has been granted.  Proposed Fed. R. App. P. 12.1 is consistent with Civil Rule 62.1 and facilitates remand to the district court when the district court indicates that it would grant the motion if the appellate court remands for that purpose or indicates that the motion raises a substantial issue.
• Proposed Amendment to Fed. R. Civ. P. 15(a) — Changes the time period for amending, as of course, a pleading to which a responsive pleading is required.
• Proposed Amendment to Fed. R. Civ. P. 48 — Permits a court to poll the jury individually and requires the court to do so on request of a party.
• Proposed Amendment to Fed. R. Civ. P. 50, 52, 59(b), (d), (e) – Changes current 10-day time periods to 28-day time periods for the following:
  • motions for judgment notwithstanding the verdict (renewed motion for judgment as a matter of law) under Rule 50(b),
  • motions to amend a judge's findings of fact following the entry of judgment in a bench trial under Rule 52;
  • motions for a new trial or to amend or alter a judgment in a jury trial, under Rule 59.
• Proposed Amendment to Fed. R. Crim. P. 41 — Proposed Criminal Rule 41 is amended to provide clarification on how warrant procedures apply to seizure of electronically stored information (ESI).  Rule 41 adopts a "two-stage" procedure.  It authorizes (1) a first-stage seizure of the electronic storage media or seizure and copying of ESI; and (2) a second-stage review of the medium or ESI for information consistent with the scope of the warrant, at an offsite location.  

     Obama just placed Sonia Sotomayor's name in nomination for the Supreme Court of the United States.    Will she be confirmed by the Senate?     Judge Sotomayor has impeccable educational credentials, practice as an assistant prosecutor and associate in a corporate firm, long experience on the federal District Court and Second Circuit Court of Appeals, and a compelling personal story of rise from poverty.  At this moment the only reason to oppose her confirmation would be if you disagree with how she is likely to interpret the broad phrases of the Constitution - which I believe to be a legitimate reason to oppose a judicial candidate, but which is unlikely to succeed unless the candidate's views are so extreme as to place her outside the mainstream of American legal traditions.  In short, whether conservative or liberal, a capable candidate is likely to be confirmed so long as he or she is not considered to be radical. 

     In future posts I will review some of Judge Sotomayor's past decisions and attempt to summarize her judicial philosophy.   Also, in about two hours the California Supreme Court will announce its decision in the Prop 8 case.  So there will be lots to discuss and debate in the coming days!

     Today we thank those who served and sacrificed so that we might live in freedom.

 - The patriots who fought to found a country where all men are created equal -

- The citizens of a young nation who battled off the major powers that tried to recolonize us -

- The soldiers of the grand armies of the republic that preserved the union and ended slavery -

- The roughriders and other soldiers who closed the book on the Spanish empire -

- The doughboys who stopped the Kaiser's march through France -

- The G.I.s who obtained victory over fascism in Europe and the Pacific -

- Those who served in Korea and Vietnam to halt the spread of communism -

- Those who have fallen in the middle east to defend Kuwait, remove Saddam Hussein from power, and fight the threat of terrorism -

-  And most of all, the brave men and women who protect us now in Iraq, in Afghanistan, and around the world. 

     Please contact your friends and relatives who serve or have served in the armed forces to convey your gratitude – our gratitude – for keeping us safe and preserving the democratic way of life.

1. What is my school district's rating?

2. Since our school levy didn't pass the school district is going to cut busing. Can they really do that?

3. What is the state government doing about our public schools?

School Districts' Report Cards

You can start at http://reportcard.ohio.gov/, which has a searchable database of school district ratings in the state of Ohio.  You can search either by school district or school building.  The school building option breaks down the ratings by each elementary, middle or high school.

The district's report card (about 7 pages long) gives an overall rating ranging from excellent with distinction,  excellent, effective, continuous improvement, down to the lower ratings of academic watch and academic emergency. The grade achievement scores and the graduation test scores are compared to similar districts and to the state average.  Attendance rates and graduation rates are also listed.  My public school district is rated "excellent."  How is yours rated?

There are additional Ohio achievement test and proficiency test scores on the Department of Education's website.

Can the school district cut busing?
Questions about the transportation requirements of a school district

Start by reading this document called "Transportation of Students" prepared by the Legislative Commission.  The Ohio Legislative Service Commission (LSC) was created by statute in 1953 to provide technical, research, and fiscal services to members of the Ohio General Assembly.  The document is only 11 pages long, explains the general responsibility of a school district, and lays out several exceptions for when the rule does not apply.

What is the state government doing about our public schools

Governor Ted Strickland released his Education Reform plan early this year and it has strong support from many education groups.  The first link on the page is a link to the Governor's plan called Reforming Ohio Education System for the 21^st Century (it is 6 pages).  The second link is to a shorter document listing the major highlights of the plan (it is 2 pages).  More information about the plan can be found here. 

Follow the Governor's progress on education reform weekly

The Governor launched a Weekly Video Address on Education Reform on Tuesday at this web page  http://www.conversationoneducation.org/    Listen to the Governor explain the plan and its progress through the legislature over the next several weeks.  "This week's address is focused on the importance of modernizing classrooms in order to prepare students for the jobs of the future and revive Ohio's economy."

How will the Governor's plan be funded?

The American Recovery and Reinvestment Act of 2009 provides new, one-time funding for several Ohio educations programs.  Here is how Ohio plans to spend funds from the federal stimulus plan. 

Ohio Dept. of Education Stimulus Updates can be found on this web page.

Education Reform Plan: 2010-2011 Budget Information can be found here.

Ask me a question

If you ever wondered where to find legal information on the web, post your question below.  I cannot answer legal questions, especially if the question contains facts about a personal situation.  I can direct you to sources of legal information on the web, particularly primary legal materials such as laws, legislation, court material and agency regulations.  So ask away!

I use delicious  (the social bookmarking site) to collect and save all links listed in my Akron Law Café postings.  The bookmark list works best if sorted alphabetically by title.

     Ben Smith at Politico has posted a report about the amendments to the New England gay marriage laws that exempt clergy and religious organizations from having to participate in same sex marriages.  Are these amendments constitutional?  And would it be constitutional for the states to extend the range of those amendments to apply to private parties?

     The  Connecticut same-sex marriage law exempts religiously affiliated organizations from nondiscrimination suits if they refuse to perform services or provide accommodations for wedding celebrations in connection with marriages that conflict with their beliefs.  The exemptions contained in the laws of the other states are more limited, essentially providing that clergy may not be forced to perform same-sex marriages.  In my opinion, these exemptions are redundant – both churches and clergy are already protected under the First Amendment from having to participate in marriages or any other sacraments against their will.  There is no harm in codifying these constitutional rights in statutes – there is instead the benefit that persons who are opposed to same sex marriage will be reassured that their ministers, congregations, and churches will not be required to allow the practice in their midst.

     Some persons opposed to same sex marriage do not believe that these exemptions go far enough.  Ben states:

advocates would like to extend [these laws] to protect private contractors – florists, bakers, and bands – from being sued for discrimination if they refuse to serve same-sex couples

     While the government cannot force religious institutions and members of the clergy to perform religious services, and while expressive associations cannot be forced to admit people to membership where their membership or participation in the actions of the association would interfere with the message that the organization is seeking to communicate, a private business which is open to the public does not have a constitutional right to refuse to serve patrons simply because the owners or employees of the business disapprove of those patrons for religious reasons.  To the contrary, both federal and state law prohibit private businesses from discriminating against members of the public based upon religion.  

     In addition to florists, bakers, and bands, there may be other businesses which might choose to discriminate against gay and lesbian couples.  Some employers, for example, might wish not to extend health insurance benefits to the spouses of gay employees, and some landlords might choose not to rent houses or apartments to gay and lesbian couples.  This raises a very difficult question of constitutional law.  Is it constitutional for the state to enact a statute that explicitly exempt certain private parties from the operation of the nondiscrimination laws? 

     In a "state of nature" before any nondiscrimination laws are adopted individuals and private organizations have no legal duty to refrain from discriminating on any basis whatsoever.  If the civil rights laws were repealed tomorrow, for example, employers could resume discriminating on the basis of race, gender, religion, and disability, and the persons who were discriminated against would have no remedy under the law – the statutes which formerly protected them from discrimination would no longer exist, and the Constitution is not applicable against private parties.

     However, we might have a different situation if the government were to adopt a law specifically providing that employers or landlords or businesses in general have the right to discriminate on the basis of race, religion, gender, disability, or sexual orientation.  In that situtation the courts might find that the government was not simply allowing discrimination to occur, but was actively encouraging or facilitating discrimination.  In other words, so long as the state remains "neutral" with respect to discrimination it is constitutional for discrimination to occur among private individuals and organizations, but if the government maintains or supports such discrimination then the government action is in violation of the Constitution.

     The closest case to this situation that I am aware of is Reitman v. Mulkey, decided by the Supreme Court in 1967.  In that case the people of the State of California adopted an amendment to the California Constitution that did two things:  (1)  The Amendment repealed a fair housing law (a law that prohibited racial discrimination in the sale or rental of real estate); and (2) The amendment prohibited the California legislature from adopting another fair housing law.  The Court ruled that it was constitutional for the people, acting by way of referendum, to have repealed the fair housing law, but the Court said that by preventing the future adoption of fair housing laws by the legislature the amendment "authorized" and "encouraged" acts of private discrimination in the housing market, and therefore "significantly involved" the state in those acts of discrimination.  Accordingly, the Court held that the second part of the amendment to the state constitution was in violation of the Equal Protection Clause.

     The proposed laws exempting private businesses from having to serve same sex couples on a nondiscriminatory basis clearly "authorize" and "encourage" acts of private discrimination.  On the other hand, these exemptions could be characterized as simply returning the law to where it was before the same sex marriage laws were adopted – that gay and lesbian couples could not enter into a valid marriage.  It is possible that the constitutionality of these exemptions would turn upon the question whether same sex couples have a constitutional right to be treated the same as heterosexual couples with respect to marriage (as in Massachusetts), or whether this is a privilege granted by statute (as in Vermont).  If same sex marriage is a constitutional right then the courts might rule that the legislature may not limit the operation of that right by exempting private parties from having to extend equal treatment to gay and lesbian couples.

     Finally, the Supreme Court might decide that the a law exempting private businesses from having to recognize the validity of same sex marriages was invalid because its very purpose was unconstitutional.  In Romer v. Evans the Court ruled that it was unconstitutional for the state of Colorado to adopt a constitutional amendment (Amendment 2) which prevented the state legislature from adopting laws prohibiting discrimination in housing, employment, education, or health care on the basis of sexual orientation.  The Court ruled that the state's proferred jusficication for the law – protecting the liberty of other citizens not to associate with gays and lesbians – was not a sufficient reason to justify the sweeping nature of the state constitutional amendment.  The Court stated:

A second and related point is that laws of the kind now before us raise the inevitable inference that the disadvantage imposed is born of animosity toward the class of persons affected. "[I]f the constitutional conception of `equal protection of the laws' means anything, it must at the very least mean that a bare . . . desire to harm a politically unpopular group cannot constitute a legitimate governmental interest." …
The primary rationale the State offers for Amendment 2 is respect for other citizens' freedom of association, and in particular the liberties of landlords or employers who have personal or religious objections to homosexuality. Colorado also cites its interest in conserving resources to fight discrimination against other groups. The breadth of the Amendment is so far removed from these particular justifications that we find it impossible to credit them. We cannot say that Amendment 2 is directed to any identifiable legitimate purpose or discrete objective. It is a status-based enactment divorced from any factual context from which we could discern a relationship to legitimate state interests; it is a classification of persons undertaken for its own sake, something the Equal Protection Clause does not permit. "[C]lass legislation . . . [is] obnoxious to the prohibitions of the Fourteenth Amendment . . . ."
We must conclude that Amendment 2 classifies homosexuals not to further a proper legislative end but to make them unequal to everyone else. This Colorado cannot do. A State cannot so deem a class of persons a stranger to its laws.

     In summary, there is no doubt about the constitutionality of the exemptions which have already been adopted or proposed in the New England states exempting clergy and religious institutions from having to administer the sacrament of marriage to same sex couples or provide accommodations for same sex wedding ceremonies.  These laws are constitutional because they protect the Free Exercise rights of religious institutions.  But whether the law could go further in exempting private businesses from having to serve or recognize same sex marriages is a tough question.

If you've been following the matter of the "torture memos" recently released by the Obama administration you know that the President has determined that CIA operatives following legal guidance provided by the (previous) Administration should not be subject to prosecution. But apparently that leaves open the possibility that officials who approved the "enhanced interrogation" policies might be prosecuted. That means the lawyers.

There are a number of ideas involved. the Justice Department's Office of Professional Responsibility has already prepared a report regarding whether the White House attorneys who wrote the memos violated professional standards. Bush administration officials objected to the draft report being released a few months ago, but Indications are that the report will be issued soon, and will be quite harsh.

This report could be grounds for disciplinary action by a state bar. Since one of the lawyers involved is now a federal judge, there has been talk of impeachment.

What do you think?

On Wednesday, Feb. 18, the National Academy of Sciences issued a ground-breaking report titled, Strengthening Forensic Science in the United States: A Path Forward.  This report quite clearly sets forth the substantial shortcomings of forensic sciences, including the lack of standardization and overall quality among local, state, and federal providers of forensic science evidence. 

The Report highlights concerns about lack of laboratory accreditation and certification, the complicated problems inherent in "matching" a specific to an individual source, the lack of independent oversight of laboratories, and the dangers of many of the terms forensic scientists use to describe a match, such as "consistent with" or "similar in all respects tested."  Among the exceptionally troubling statements about the state of forensic science, the Report states the following:

[T]he quality of forensic forensic practice in most disciplines varies greatly because of the absence of adequate training and continuing education, rigorous mandatory certification and accreditation programs, adherence to robust performance standards, and effective oversight.  These shortcomings obviously pose a continuing threat to the quality and credibility of forensic science practice.

WIth the exception of nuclear DNA analysis, however, no forensic [individualization] method has been rigorously shown to have the capacity to consistently, and with a high degree of certainty, demonstrate a connection between evidence and a specific individual or source.. . .  The simple reality is that the interpretation of forensic science is not always based on scientific studies to determine its validity.

The concerns are systemwide, serious, and exceptionally troubling for the justice system.  The report also lists several recommendations to be discussed in a following post.

Professor Jane Campbell Moriarty is at the American Academy of Forensic Science today in Denver, Colo., speaking at their annual meeting.

     The Ohio Supreme Court recently ordered county commissioners to recover and provide previously deleted e-mails in response to a public records request, but the Court also indicated that, in some cases, those requesting deleted materials may have to pay the costs of forensic recovery.  The Court, in State ex rel. Toledo Blade Co. v. Seneca Cty. Bd. of  Commissioners, emphasized that a public office violates the Ohio public records statute when it deletes e-mails that it has a statutory obligation to maintain.  The Court further noted that the expense of recovering the deleted materials will not prohibit a court from ordering recovery of deleted information:  "No pleading of too much expense, or too much time involved, or too much interference with normal duties, can be used . . . to evade the public's right to inspect and obtain a copy of the public records within a reasonable time." 

     The Ohio Supreme Court, however, also likened responding to public records requests to discovery of electronically stored information (ESI).  With discovery comes not only the right to obtain deleted ESI, but also the possibility that the requesting party will have to pay, in whole or in part, for recovering the deleted materials.   Under the Federal Rules of Civil Procedure, deleted e-mails and other forms of ESI that are no longer readily available may be categorized as "not reasonably accessible because of undue burden or cost."   The "not reasonably accessible" category often includes deleted information, legacy systems, and information stored on backup tapes for disaster recovery purposes.  Federal and state courts alike have held that parties, who request ESI that is found to be "not reasonably accessible," may have to pay all or part of the cost of recovering that information.  The Ohio Supreme Court has also adopted rules permitting the shifting of costs of recovering ESI in appropriate circumstances.  (See Ohio Civ. R. 26(B)(2)(B)).

     In State ex rel. Toledo Blade v. Seneca Cty. Bd. of Commissioners, the Ohio Supreme Court established a list of factors to balance to determine whether the requesting party or the public office should pay the cost of forensic recovery of ESI that has been deleted in violation of a records retention policy.  Although stating that the shifting of costs was within court discretion, the Court appropriately listed more factors that favor placing the costs of recovery on the public office:  (1) under Ohio's public records statute, requesters of public records need not pay a fee to inspect public records; (2) the public office had failed to maintain the requested e-mails in accord with an applicable records retention policy; (3) access to public records under Ohio Revised Code 149.43 is to be liberally construed in favor of disclosure to the public; (4) expense does not justify nondisclosure of public records; and (5) the statutory entitlement of the public to public records is stronger than a litigant's right to discovery.   Weighing in favor of placing the cost of recovering the deleted e-mails on the requesting party were (1) the recovery process can be quite expensive; and (2) the recovered materials may be minimal. 

     In weighing these factors, the Supreme Court determined that the cost of recovering the deleted e-mails should be allocated to the county commissioners, rather than to the requesting party, the Toledo Blade.

     The Court appropriately determined not to impose costs on the party seeking public records in this case, and, in fact, the factors listed in the Court's cost-shifting analysis should create a narrow band of discretion for courts to impose costs on people requesting public records in any case.   State and federal public records laws serve important public interests.  They serve as a critical check on governmental power and also enhance the democratic process.  The laws are to be read broadly, and obstacles to obtaining public records should be read narrowly.  Further, many states are adopting policies for management of electronic public records, including e-mail, and some are adopting methods of archiving or otherwise maintaining the materials for easier and less expensive public access during the period that the records must be retained.

     The following factors listed by the Court weigh in favor of placing the cost on the public office and will not change in subsequent cases — the Ohio statute does not require a fee to inspect public records, access to public records is to be liberally construed under the statute, and expense does not justify nondisclosure of public records.  Moreover, the Court correctly indicated and weighed in favor of not shifting costs to the requester that the statutory entitlement to public records is stronger than the right to discovery.  Finally, the court noted that the e-mails at issue were directly relevant and were deleted in violation of a record retention policy.  Indeed, the Court emphasized that there is no entitlement to public records that are disposed of in accord with a records retention policy.  Thus, the cost-shifting issue will arise only when public records are destroyed in violation of a records retention policy or in the absence of such a policy.  In such cases, courts should not lightly impose cost-sharing on the requesting party.

Yesterday, President Obama signed his first legislative action, endorsing the Fair Pay Act intended to give workers more time to sue in court for pay discrimination based on sex or race.  The new law passed by Congress, the “Lilly Ledbetter Fair Pay Act” reverses the Supreme Court decision in Ledbetter v. Goodyear which held that the 180-day statute of limitations for pay discrimination cases begins to run from the time of the first initial pay decision.  That rule meant that Lilly Ledbetter, a manager at a Goodyear plant in Alabama for 19 years, could not sue for her unequal pay that continued up until she filed suit, but which first began 19 years ago.  The Court was sharply divided, with Justice Alito writing the opinion for the conservative majority of 5.  Justice Ginsburg wrote the dissent, noting that that such pay disparities are “often hidden from sight.”  In signing the new legislation, the President cited Census Bureau figures demonstrating that women still earn about 78 cents for every dollar men earn for doing equivalent jobs, and the disparity is even greater for women of color.  Michelle Obama’s first official First Lady function was a luncheon yesterday for Ledbetter as the figurehead of the equal pay movement: “She knew unfairness when she saw it, and was willing to do something about it because it was the right thing to do—plain and simple.”

Goodyear issued a statement vehemently denying that it had discriminated against Lilly Ledbetter, saying that she was paid the same as similar male workers at the plant.  They criticized Ledbetter for ignoring Goodyear’s policy of reporting concerns about discrimination and suing only after she retired.  Ledbetter claims she did not know about the pay discrimination until then, which she discovered inadvertently when a co-worker’s paycheck ended up by mistake in her pay envelope.  Ledbetter was making $3,727 per month, while men doing the same job were paid $4,286 to $5,236 per month. Ledbetter filed a complaint with the EEOC and was then assigned to lift heavy tires, which she felt was retribution.  A jury originally awarded her $3.3million, which was later reduced to $300,000.  Opponents of the Fair Pay Act claim that the law will encourage frivolous lawsuits.  However, the Fair Pay Act simply reinstates the longstanding time rule that was in place prior to the Supreme Court’s 2007 decision in Ledbetter.  Ledbetter herself will not be able to benefit from the new law due to the Supreme Court’s conclusive decision in her case and her retirement (and thus cessation of pay) from Goodyear. 

Happy New Year!

This is a great time to look back, as well as forward.  Here are some links you may find interesting:

Time magazine reviews the top 10 financial collapses of 2008 here.

Professor Steven M. Davidoff ("The Deal Professor") blogs about what deal-makers learned from 2008 here.

Over at "The Race to the Bottom," they are blogging about (among other things–so you may have to scroll down) their annual review of the most anti-shareholder, anti-plaintiff decisions by the Delaware courts in 2008.

(Speaking of year-end lists, hours of potential fun await you here.)

Professor Gordon Smith blogs about "The Weekend That Wall Street Died" here.  My own take is that reports of Wall Street's demise have been greatly exaggerated (to the extent we can even agree on what "Wall Street" is) and that before too long it will rise from the ashes stronger (and more dangerous) than before due to consolidation and the government's commitment to "free" the market again as soon as possible.

But perhaps this cartoon sums thing up best.

All the best to you and yours in the coming year.

     Disgraced Illinois governor Rod Blagojevich has announced his intention to appoint Roland Burris to the United States Senate, and the democratic leadership in the Senate has expressed its opposition to the seating of Mr. Burris.  What does the Constitution have to say about this?

     Article I, Secton 5 of the Constitution vests each House of Congress with two separate and distinct powers in relation to the membership in each House – the power to exclude members (covered in Clause 1) and the power to expel members (provided for in Clause 2).  These provisions state:

Clause 1. Each House shall be the Judge of the Elections, Returns and Qualifications of its own Members, and a Majority of each shall constitute a Quorum to do Business; but a smaller Number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.

Clause 2. Each House may determine the Rules of its Proceedings, punish its Members for disorderly Behaviour, and, with the Concurrence of two thirds, expel a Member.

     These constitutional provisions received some attention from the Supreme Court forty years ago.  In 1966 a special subcommittee of the House of Representatives found that Congressman Adam Clayton Powell had submitted fraudulent travel expenses and had made illegal salary payments to his wife.  Despite these findings later that year Powell was reelected to Congress.  Consequently the House of Representatives voted to exclude Powell from taking his seat.  Powell challenged this action in court, and the litigation eventually reached the United States Supreme Court.  In Powell v. McCormack, 395 U.S. 486 (1969), the Court ruled that the House of Representatives could exclude a member pursuant to Article I, Section 5, Clause 1 only for the reasons set forth in that clause: for example, because Powell had failed to meet the qualifications for being a member of the House of Representatives, and not because he was corrupt.  Accordingly, the Court ruled that Powell had been improperly excluded.  For the same reason, it seems unlikely that any attempt by the Senate to exclude Mr. Burris from taking his seat would be successful.

     Under Clause 2 of Section 5, a House of Congress may expel a member if two-thirds of that House agrees.  However, it is not apparent what would constitute proper grounds for expulsion.  In Powell the Court noted that expulsion would be justified for misconduct that occurred during the current session of Congress, but perhaps not for misconduct that occurred during previous terms of Congress.   In the present case, of course, Mr. Burris is not even accused of any personal misconduct whatsoever – it is the fact of his appointment by Rod Blagojevich that taints his right to represent the State of Illinois.  It is not at all clear that this constitutes sufficient grounds for explusion under Clause 2.  If that is true then the Senate could not sucessfully expel Mr. Burris either.

     However, a final complicating factor may allow the Senate to expel Mr. Burris, because courts may take a "hands-off" approach to this issue.  In Powell v. McCormack the Supreme Court ruled that Powell's exclusion from the House of Representatives was not a "political question" primarily because the Constitution very clearly sets forth what the "qualifications" of a member of the House are.  Article I, Section 2, Clause 2 states:

No Person shall be a Representative who shall not have attained to the age of twenty five Years, and been seven Years a Citizen of the United States, and who shall not, when elected, be an Inhabitant of that State in which he shall be chosen.

The Court observed that Representative Powell clearly qualified under that provision, and that therefore this was a "legal question" and that the House of Representatives was powerless to exclude him.  However, the requirements for expulsion are not as clear as the requirements for exclusion, and accordingly the courts may decide that expulsion constitutes a "political question" similar to impeachment which the courts are powerless to decide.  In the case of Nixon v. United States (1993), for example, the Supreme Court ruled that the impeachment of a judge presented a "political question" and it refused to hear the judge's argument that the Senate had failed to "try" him in accordance with the Constitution.  If the courts decide that this is a "political question," then the Senate could expel Mr. Burris and there is no legal action he could take to prevent it. The strongest argument against finding this to be a "political question" is that to allow a House of Congress to expel a member for any reason whatsoever would give the Congress too much power to undo the results of the democratic elections - even though that principle would not be directly involved in this particular case.

     In light of all of the legal uncertainty regarding the power of the Senate to exclude or expel Mr. Burris, I predict that he will be seated as the Senator from Illinois to serve out the remainder of Barack Obama's original term, and that in 2010 the Democratic Party may very well support a different candidate to replace him.

Holidays can be a time for reflection, and it is hard for me to think about Thanksgiving without thinking about the Native Americans who make up so much of the popular imagery surrounding the holiday.  This reflection is often a somber one.  It is written that Wampsutta, an Aquinnah Wampanoag Elder, had this to say about Thanksgiving: "The National Day of Mourning":

This is a time of celebration for you – celebrating an anniversary of a beginning for the white man in America.  A time of looking back, of reflection.  It is with a heavy heart that I look back upon what happened to my People….

We, the Wampanoag, welcomed you, the white man, with open arms, little knowing that it was the beginning of the end; that before 50 years were to pass, the Wampanoag would no longer be a free people.

But at the same time, I can think of no better expression of the spirit of Thanksgiving than the The Iroquois Thanksgiving Address, which states:

Today we have gathered and we see that the cycles of life continue.  We have been given the duty to live in balance and harmony with each other and all living things.  So now, we bring our minds together as one as we give greetings and thanks to each other as people.

There is much to be anxious about during this time of financial crisis.  But I try to stop at least once each day and give thanks for things like food, clothing, shelter, health, and the company of friends and family (my Buddhist friend would simply say, "My heart is beating and my lungs are filled with air.").  What do you have to be thankful for today?

This past Sunday, the Plain Dealer asked some troubling questions regarding the sale of National City:

How can PNC pay $5.6 billion for National City and get back more than $5 billion in tax breaks?

Why can PNC pay nearly 20 percent less for National City than the bank's stock traded for the day before?

How did loss estimates on National City's risky loans jump by 200 percent in three days?

Over at the Business Law Prof Blog, Professor Oesterle takes the management of National City to task for their "totally opaque disclosure" and concludes:

This is a scandal….  Prosecutors will be very, very busy with all the new financial disclosure cases; I hope they can make room for this one.

As a Securities Regulation professor, one of the things I am interested in is the question of whether National City could be liable for misleading disclosures leading up to the sale of the company at $2.23 per share (the Plain Dealer reports most analysts valued the company at $4 to $5 per share).

Let's take a look at some of the statements made by corporate officers in the days leading up to the sale of National City, along with the corresponding stock price (the disclosures are taken from the Plain Dealer article linked to above–I have inserted the closing stock price):

July 24 [$4.67]:  National City says its second-quarter loss was $1.8 billion.  But CEO Peter Raskind says the turnaround is working.  "We're pleased with the progress we've made."

Sept. 28 [markets closed]:  National City Treasurer Tom Richlovsky says the bank is "absolutely" interested in potentially selling some of its troubled loans to the federal government, but says the bank isn't desperate.

Sept. 29 [$1.36]:  The U.S. House of Representatives rejects the Treasury's bank rescue plan, causing panic and chaos.  Stocks plunge.  National City shares dip to $1.25 a share before closing at an all-time low of $1.36.  Raskind says traders are irrational.  "The [bank's] fundamentals are no different than they were four days ago."  He says National City is very different from Washington Mutual and Wachovia.

Oct. 15 [$3.19]:  In a speech to the CFA Society of Cleveland, Raskind says the board will sell National City if it's the best alternative for shareholders.  But though the bank "has some obstacles … I actually feel quite optimistic about National City," he says.

Oct. 21 [$2.99]:  National City says it lost $729 million in the third quarter, its fifth straight quarterly loss, and plans to cut 4,000 jobs nationwide in the next three years. Raskind says the bank is stable.

Rule 10b-5, promulgated by the SEC under § 10 of the Securities Exchange Act of 1934, prohibits material misstatements in connection with the purchase or sale of a security.  While a successful 10b-5 claim rests on more than simply showing the presence of a material misstatement, I'd like to focus on the question of whether any of the statements excerpted above were "material" in the eyes of the law.

In order for a misstatement to be material for purposes of Rule 10b-5, there must be a substantial likelihood that a reasonable investor would consider it important in deciding whether to buy or sell shares.  Another formulation of this standard is that a statement is material if there is a substantial likelihood that the statement was viewed by the reasonable investor as having significantly altered the "total mix" of information made available.

So, if you were a "reasonable investor" deciding whether to buy National City during the relevant period, would assurances from top management that they were "pleased with the progress we've made," or that "the bank isn't desperate," or that the CEO feels "quite optimistic about National City" and that "the bank is stable"–would those statement be material to you?

There are some good arguments for why the law might not deem such statements material.  First, there is the "puffery" doctrine, which states that no reasonable investor is going to be swayed by overly optimistic "sales talk" that is difficult to verify.  Second, there is the "truth on the market" doctrine, which states that misstatements everyone knows to be untrue are immaterial.  In this case, one could argue that the market was on notice as to the riskiness of all banks in light of the on-going economic crisis.

Ultimately, however, I believe this is a question that should be answered empirically.  The Supreme Court has stated that "[o]nly if the established [misstatements] are ‘so obviously important to an investor, that reasonable minds cannot differ on the question of materiality' is the ultimate issue of materiality appropriately resolved ‘as a matter of law' by summary judgment."  TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 451 (1976).  In other words, whether a given statement is material is generally a fact-intensive search to divine the reactions of reasonable investors.  I have argued elsewhere that one of the best ways to determine what reasonable investors think is to ask them.

So, what do you think?

I was a poll observer on election day. I saw:

One poll worker who called everybody "baby," as in: "Have you ever voted before, baby? Well, sweetie, you just fill out the bubble for the person you want, OK baby? But don't write anybody's name down there where it says 'write-in,' baby, because then you're voting twice. OK, baby?"

Lots of people who filled in the bubble and then also wrote in Obama and Biden. The machine spits out their ballot and they have to start all over with a new ballot.

One polite young man who had voted in the primary but was no longer on the rolls. We called the Board of Elections and they had canceled his registration due to a felony conviction on July 1. No notice, no opportunity to re-register. He is in fact eligible to vote as long as he is not incarcerated.

One Hispanic couple who didn't have any idea they had to register in advance. They couldn't vote.

Many people who were at the wrong precinct. I think we caught most of them because we had internet access at the library where this polling location was, and between my laptop and two other outside volunteers, we were able to find where people were supposed to go vote, rather than having them cast a provisional ballot at the wrong precinct, which would not have been valid.

One person who had no ID, only the last four digits of her Social Security number, which should have entitled her to vote provisionally. I had to rather firmly persuade the Presiding Poll Judge not to check the box that says she has to come back to confirm her identity within 10 days in order for her vote to count.

Poll workers very prone to just issue a provisional ballot at the drop of a hat–which are less likely to get counted, due to technical errors in filling out the required form.

A half-hour to 45-minute wait right when the polls opened at 6:30, but no lines at all at the usual rush time, 5 to 7:30 close. We were worried about turnout. The tentative summary currently shows that this precinct had 108 percent turnout, which can't be right.

Lots of first-time voters.

A friendly, helpful environment, even with the Republican observer there. (In Ohio, we have bipartisan rather than nonpartisan observers–I was appointed by Barack!)

Summit County's 57-40 margin and 45,000 vote edge contributed greatly to Ohio's 200,000 vote margin for Obama.

I, for one, don't think an Obama administration would be that much different than a McCain administration on gun-control issues.  Both candidates have come out in support of closing the gun-show loophole in the Brady Law background-check requirement.  McCain is against assault-weapons regulation, but most people know that the 1994-2004 assault-weapons ban didn't do much but change the way a few weapons were configured (in order to get around the simplistic express definitions of the ban).  Most importantly, D.C. v. Heller (pdf) has been decided, so the most basic question — Is there an individual right to bear arms in self defense? — has been answered affirmatively.  As the Brady Campaign has opined, Heller, which takes the extreme positions of both sides of the gun-control debate off the table, should help clear some of the wedge politics that have marked the debate.  Whether there's much federal movement on gun control probably has more to do with 1) whether the Dems get a filibuster-proof majority in the Senate, and 2) whether the Dems really want to take on this relatively toxic issue.

But don't bother telling that to Dan Cooper.

Mr. Cooper, co-founder and president of Cooper Firearms of Montana, Inc., was asked by his board of directors to resign "after word that he supports Democratic presidential candidate Barack Obama led to calls on pro-gun Web sites to boycott the company’s products."  Mr. Cooper went along with the request in an attempt to help the company and its 40 employees avoid a backlash over his personal views.

So much for clearing some of the wedge politics…  Of course, people have every right to boycott.  By the same token, I suppose Obama supporters in the market for a beautiful long gun should consider making their next purchase from Cooper Firearms.  Maybe Biden could buy one to put in his gun safe next to those Beretta shotguns of his…