Legal Issues in the News Three faculty members of the University of Illinois College of Law will provide commentary for WILL-AM's Legal Issues in the News, airing Monday mornings at 7:35 am.

Legal Issues in the News

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Three faculty members of the University of Illinois College of Law will provide commentary for WILL-AM's Legal Issues in the News, airing Monday mornings at 7:35 am.More from Legal Issues in the News »

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Epic Systems versus Lewis

What if your employer e-mailed you with this deal: If you want to work here, you must agree that any disputes about wages will be decided outside of court in arbitration. And you have to bring your action alone – no class arbitrations or other group actions. Click here to agree. Can employers do this? We're about to find out. The US Supreme Court is deciding Epic Systems Corp. v. Lewis, and heard oral arguments from both sides in October 2017. This radio commentary previews the Supreme Court case and its implications for freedom of contract, fair bargaining power, and how much we value access to the public courts.

Colombia's Special Jurisdiction for Peace

After 52 years of conflict, the Final Agreement to End the Armed Conflict and Build a Stable and Lasting Peace (or Final Agreement) between the Colombian Government and The Revolutionary Armed Forces of Colombia (otherwise known as the FARC) is now being implemented. According to the state Victim's Unit, more than 8 million have been registered as victims since 1985. This includes individuals forcibly displaced, killed, taken as hostages, raped or subjected to other forms of sexual violence and/or tortured. Directly or indirectly all Colombians have been affected. One way the Final Agreement deals with such wrongdoing is calling for the establishment of a Special Jurisdiction for Peace (or JEP). The JEP is a set of judicial bodies that will investigate, try and, where applicable, levy penalties for the crimes that fall under its jurisdiction. In late September, 51 Colombian judges for the JEP were selected from 2300 applicants. Importantly, 28 of the judges are women, 6 are Afro-Colombian, and another 4 indigenous. There will also be 14 foreign judges selected to serve as observers, whose names will be announced in mid-October. The work of the JEP cannot begin until the Colombian Congress passes legislation to approve it. At the moment, Congress is delaying voting on this legislation in part because of disagreement with the structure of sentencing. Members of the military and police, the FARC and civilians are eligible to participate in the JEP. Perpetrators of wrongs which are not war crimes or crimes against humanity and were committed for political reasons are eligible for amnesty. To receive amnesty there must be a full confession of wrongs committed. There will be three tiers of penalties for perpetrators of gross human rights violations not eligible for amnesty and not committed for personal enrichment. Those who fully and immediately confess to wrongs committed can avoid prison, instead serving 5-8 years in zones of restricted liberty and performing acts of reparation and restoration. Those who recognize responsibility for wrongdoing late will be eligible for prison sentences of 5-8 years. Individuals who do not confess or recognize responsibility but are found guilty by the JEP will serve prison sentences of 15-20 years. Congress has until November 1 to approve the JEP through a "Fast Track" process. If it does not the JEP must be approved through the regular legislative process, which could delay its establishment by years.

Accessing Justice in the Bankruptcy System

Last week, ProPublica and The Atlantic magazine co-published an article showing that black Americans do not fare as well in the federal bankruptcy system as their white counterparts. The article sheds journalistic light on a problem identified in earlier academic studies by . . . well, my research collaborators and me. When consumers file bankruptcy, they must make a very important choice at the outset – should they file a chapter 7 or a chapter 13? For most consumers, chapter 7 will be a better deal because they are highly likely to have their unpaid debts wiped out in what is known as the bankruptcy discharge." For most every consumer, chapter 13 will make sense only if they have assets, such as a house or perhaps a car, that they would lose in a chapter 7. Consumers keep their assets in a chapter 13, but they must commit to a three- to five-year plan where they must use as much of their income as they can to repay creditors. In a chapter 13, unpaid debts are wiped out only if the consumer makes all the payments under the plan. Most do not, meaning they are left in the same place they were if they had not filed bankruptcy. Deciding which chapter to choose is a complicated decision. Who knows what to do? Bankruptcy lawyers. When a consumer files bankruptcy, the lawyer plays a huge role in deciding which chapter is used. Lawyers have a stake in the decision. First, the average chapter 13 fee is $3,500 as compared to $1,100 for a chapter 7. Second, because of the way bankruptcy law works, attorneys will want to be paid upfront in a chapter 7, but the attorney fee can be paid over time in a chapter 13 plan. Can't afford that chapter 7 fee? Your attorney can offer a convenient payment plan called a chapter 13. Blacks are twice as likely to file chapter 13 than debtors of other races. The ProPublica article puts faces on that disparity by focusing on bankruptcy filers in Memphis, Tennessee, but also finds the same disparity in many places across the country. Well-documented income and wealth gaps for black Americans might explain the disparity, but our studies find the disparity persists even after statistically controlling for financial and other variables. The original data came from 2007, and we recently replicated this analysis with more recent data. Perhaps more revealing, we sent hypothetical fact patterns to consumer bankruptcy attorneys from across the country. If the fact pattern suggested the clients were black, the attorneys were more likely to recommend chapter 13. When asked about their attitudes toward their hypothetical clients, the attorneys rated black clients who expressed an interest in chapter 7 lower than black clients who expressed an interest in chapter 13. In a separate study, we found how attorneys get paid play a major role. Black consumers are much more likely to find themselves in "no money down" chapter 13 cases where nothing is paid to the attorney before the case. The bottom line is that when blacks turn to the bankruptcy system for help, they are much more likely to find themselves in a more expensive and longer process that is less likely to relieve them from a crushing debt load. The fresh start for the honest but unfortunate debtor that American bankruptcy law has historically promised its citizens is unavailable. Black bankruptcy debtors find themselves less forgiven for their debts than their white counterparts. Changes to the rules in how attorneys get paid would help shrink the disparity, but more attention is needed to the problem. Nearly a million people turn to the bankruptcy system each year. It needs to offer not just the promise but the reality of equal justice for all.

Accessing Justice in the Bankruptcy System

The NFIP and Hurricanes Harvey and Irma

In the continental United States, the clouds are parting, and communities along the Gulf Coast can finally survey the devastation caused by hurricanes Harvey and Irma. After causing total losses of around $150 billion, they are currently the third and fourth costliest hurricanes in U.S. history, coming right after Katrina in 2005 and Sandy in 2012. The amount of insured losses is estimated to be around $40 billion for each of the two hurricanes. Private insurance companies often cover property damage from wind and rain, but exclude flood damage from their policies. Floods are hard to predict and can cause a lot of destruction in a single event, and paying out a lot of claims at once can endanger an insurer's solvency, so insurance companies just stopped covering flood damage. Because there was no private market for flood insurance, Congress enacted the National Flood Insurance Act of 1968, creating the NFIP, which is managed by FEMA. The NFIP makes flood insurance available to flood prone regions that complied with federal zoning and construction standards. These standards were designed to reduce losses from flooding, but some say that as flood insurance became more widely available, land developers built further into the flood plains, increasing the overall risk. The program was in good shape until it paid out over $17 billion for losses caused by hurricane Katrina in 2005, and since then, it has been in debt. The historical data shows that the number of premium-paying policies in the NFIP is slowly declining, while the number of claims is going up. This could be evidence that people living in low-risk areas are quitting their policies because they have been paying at higher premium rates than they should, while there are more people purchasing flood insurance because they know they will need it. This trend suggests that the NFIP will not be sustainable because it collects less money from premiums and meanwhile, pays out more for claims. Several reforms have been made to the NFIP, but it seems rather difficult to fix all the issues at once. The Biggert-Waters Act in 2012 tried to increase premium rates and eliminate subsidies in high-risk areas, but it was delayed by the Homeowner Flood Insurance Affordability Act in 2014, which set an 18% limit on the annual increase in premium. In addition, the NFIP began a reinsurance program in 2016 to transfer some excess risk to reinsurers. But the $1.04 billion cap of reinsurance is likely to be used up quickly, given the enormous losses caused by Harvey and Irma. It is expected that the NFIP will have to borrow from the U.S. Treasury, and then pay back these loans over time. Compared to the NFIP, private insurers have more flexibility in pricing, and are usually better at distinguishing between policyholders with different risk levels. So, the private market might be a good complement to the NFIP because it lightens the NFIP's burden by providing more capacity, and customers would also have more options. A decade after hurricane Katrina, some insurers saw a potential market for private flood insurance and started offering private coverage in 2014. With the losses caused by Harvey and Irma and the possibility that tropical cyclones may become more frequent, it is doubtful that the private market will have confidence in the private flood insurance market, and the challenges faced by the NFIP are greater than ever.

Punishment Without a Crime?

Charles Kokesh took other peoples' money – almost $35 million of it. The Securities and Exchange Commission (SEC) sued him. A jury found that Kokesh had committed securities fraud by siphoning off millions of dollars from investors for more than a decade. The SEC is a government agency with civil power, so it can't send anyone to jail. So the main question was: How much did Kokesh have to pay? Did he have to give up money he took more than five years ago? These questions reached the U.S. Supreme Court in summer 2017. The Supreme Court's opinion – and what it implies about penalties and punishment – are the subject of this radio commentary.

Grey Market Goods (Re-Broadcast)

Paul Heald University of Illinois College of Law Have you ever thought hard about the billions of dollars of consumer goods that are imported into the United States every year? A lot of factors effect that flow: the relative strength of the US dollar, the level of tariffs imposed by the US government, the strictness of border control measures that regulate the safety of imports, and the enforcement of security regulations all play a role. One factor seldom considered, however, is the level of intellectual property protection that we afford the owners of US trademark, copyrights, and patents. In other words, when can a US rights holder stand at the border and keep out goods? The answer for counterfeit goods is easy: Any registered owner can keep out bogus goods. But what about legitimate goods originally manufactured overseas with the permission of the American owner, what we call gray market goods? Well, life gets quickly complicated. Let's start with copyrighted goods, like books. Two years ago the Supreme Court made this simple in a case involving an enterprising student in Florida who bought up cheap American textbooks in Thailand, imported them into the US, and sold them for much less than the US copyright owner. No problem, said the Court in Kirtsaeng v. Wiley. As long as the publisher consented to the Asian press run, the books can be imported here. Justice Breyer's opinion is telling—he worries about the 100's of billions of dollars worth of goods imported into the United States that contain copyrighted software (think of cars) or that bear some sort of protected artwork in their logo. Do we want all those goods kept out? With trademarked goods (which is pretty much all consumer goods), things get a little weird. If a US owner merely licenses the overseas production of the goods, then he or she can keep them from being imported. However, if the US owner and the overseas manufacturer have some sort of formal corporate relationship (imagine the overseas manufacturer is a subsidiary or affiliate of the US firm or they are both controlled by the same corporate parent), then the goods get in over the objection of the US rights holder. Sound like a trivial exception? Well, such goods account for more than $50 billion annually in imports. The story with patents is significantly more twisted, and the US Supreme Court has recently been asked to straighten things out. In 2005, the Federal Circuit Court of Appeals held that US patent owners could keep out all gray market patented goods made overseas, even if they were legitimately made with the permission of the US patent owner. And it reaffirmed the holding two months ago - just the opposite of the new rule for copyright goods. Imagine a Japanese car loaded with dozens or more patented parts. The case gives each owner of each patent the right to prevent importation of the car. Remember this is precisely the nightmare scenario that led Justice Breyer to deny such a right to copyright owners! To make matters worse, or at least more inexplicable and annoying, the 2005 decision never discussed or cited the only relevant precedent from the entire 20th Century that found patent owners had no statutory right to keep out legitimate goods. Why was their only one appellate case on this point in the 20th century, you ask? Well, because everyone knew what the rule was! If a patent owner wanted to keep goods out, then he or she would have to write contracts with foreign manufacturers forbidding import into the US. Now, you might have noticed that we still have plenty of Japanese cars puttering about. Japanese firms have good attorneys, and they make patentees promise to allow importation or they won't purchase their technology. But not all firms are so prescient, and we can only hope that the Supreme Court hears the newly filed appeal and returns us to the former rule which prevents importers from being surprised at the border by a patentee of a tiny component vigorously waiving a patent registration.

FEMA and Disaster Aid

Four days after Hurricane Harvey's landfall in Houston, Texas Health and Human Services was trucking clean water to displaced residents, and taking other steps to reduce human suffering in southeast Texas. Other agencies worked to evacuate stranded residents, and to provide necessary medical care. But sweeping disasters that affect millions of people across a wide area require more support than state agencies can manage. The United States Federal Emergency Management Agency, called "FEMA," coordinates the national response to disasters that occur in the United States. To obtain FEMA help, the affected state's governor must declare a state of emergency, and then ask the President for federal help. And then, federal aid is sent to areas devastated by flooding, fire, and other natural disasters, such as Hurricane Harvey. FEMA is now one of 23 federal agencies that are part of the Department of Homeland Security. Before that department existed, FEMA was an independent governmental agency. Following the failed FEMA response to Hurricane Katrina, some called for FEMA to become independent again. One difficulty is that FEMA has many obligations, and these compete for a limited amount of funding. In addition to responding to disasters, FEMA is responsible for planning to reduce the risk and scope of potential disasters. The agency has programs that analyze flood and earthquake dangers, and that anticipate and plan for damages due to tropical storms and hurricanes. FEMA also makes sure that flood insurance is available to homeowners in flood plains, and works to relocate or elevate at-risk structures. But there has been neither uniform praise or abundant funding for FEMA's work. Following the devastation of Hurricane Katrina in 2005, a Bipartisan committee investigated FEMA's failed response. Its Final Report noted that federal funding for disaster preparedness was not awarded unless local agencies tagged the funding request as responding to "Just Terrorism." Emergency management personnel's testimony confirmed that counter-terrorism measures received priority in agency funding. Both counter-terrorism and disaster planning are compelling needs, and we reduce their funding at great peril to human safety. Homeland Security's current annual budget is $41 billion, and FEMA's share is $13 billion. This must cover training for its personnel, response coordination, the deployment of its Disaster Medical Assistance and Urban Search and Rescue Teams, pay for its overhead and equipment, and support its other missions, too. President Trump's proposed federal budget would increase Homeland Security's funding by $2.8 Billion. That increase, however, is to be spent building a wall between the United States and Mexico, and on greatly increasing the number of Border Patrol and Customs Enforcements agents. In fact, the President's proposed budget would cut $667 million from FEMA's grant programs to state and local agencies. These cuts include pre-disaster mitigation funding. Of course, we cannot plan for all dire contingencies. "Sometimes, history takes things into its own hands," as Supreme Court Justice Thurgood Marshall once said. But the quality of our government's response to Hurricane Harvey should inform our future FEMA spending.

Data Breach Disputes and Constitutional Standing

The Constitution is a centuries old document that provides the framework for our country. Most people are familiar with the First Amendment and its protections for free speech. Recently, people have also become interested in what an emolument is. Today though, I will focus on the "standing" requirement in the Constitution and what it means in the digital world where information can become a weapon. "Standing" refers to the language in Article III of the Constitution that gives federal courts the power to decide "cases and controversies." When a person has standing, it means they can sue over the topic in court. The first requirement for standing is that the person have suffered an injury, and that injury must be actual or imminent. It is not enough to say that you might be injured at some undetermined future time. Standing issues come up frequently in lawsuits involving information-based injuries. In 2013, in Clapper v. Amnesty International, the Supreme Court in a 5-4 opinion said that potential future data collection under the Foreign Intelligence Surveillance Act – FISA – was too speculative to be an injury for standing purposes. Some lower courts have extended this reasoning to cases involving data breaches. If your personal data has been compromised by a data breach, then is the risk of future identity theft too speculative an injury for establishing standing to bring a lawsuit? This issue has created a split among federal appellate courts. They disagree about whether people whose personal information is stolen have standing in federal court. The Third Circuit, in an appeal from a federal court in New Jersey, said that the risk of future identity theft is too speculative. A federal court in Nevada similarly decided that customers of a company that suffered a data breach lacked standing to bring a lawsuit. Federal appellate courts in the Sixth and Seventh Circuits in appeals from Ohio and Illinois respectively have decided the same issue differently and concluded that data breach victims do have standing. Most recently, an influential appeals court in Washington D.C. said the increased risk of identity theft was substantial and not speculative. The courts that have found standing point to efforts that we might take if our personal information is compromised such as looking for fraudulent charges, obtaining new credit cards, and signing up to have our credit histories monitored. Some courts have noted that in the Clapper case, the data collection itself was speculative. But that is not the case with a data breach where someone has already stolen your information. However, what the persons who have stolen your data will eventually do with that information remains uncertain. The split among the circuits is significant enough that the Supreme Court might have to weigh in. So far, courts have been asking "Is an increased risk of identity theft enough of an injury to bring a case?" But maybe this is the wrong question. Perhaps courts should reconsider what an injury looks like when it involves data. Identity theft is obvious and has measurable economic impact, but what about other issues relating to data insecurity? Should courts recognize a legal right for people to control information about themselves? Are there things that you avoid doing because you would not want to risk your personal information? Should it be considered a violation of this right for a company to not adequately protect your data? Data insecurity interferes with our ability to engage fully with emerging technologies. Recognizing data insecurity as a legally addressable injury would fix the problem of standing for data breach victims. More importantly, it would provide a flexible framework that could expand with technology.

Data Breach Disputes and Constitutional Standing

Transitional Justice (ReBroadcast)

April 7 marked 23 years since the start of the Rwandan genocide, in which an estimated 800,000 to one million overwhelmingly ethnic Tutsi Rwandans were killed by predominantly ethnic Hutu militias in 100 days. Following the genocide, a variety of legal processes were established to deal with the legacy of the genocide, including the United Nations established International Criminal Tribunal for Rwanda (ICTR) as well as a gacaca process oriented around truth and reconciliation. The gacaca process has two stages, the first of which is information gathering and the second of which is a trial which is public and participatory that takes place in the accused's home village. Rwanda is one of dozens of countries in recent decades that have engaged in what is known as transitional justice. "The term "transitional justice" is generally taken to refer to formal attempts by post-repressive or post-conflict societies to address past wrongdoing in their efforts to democratize." As the Rwandan use of gacaca processes illustrates, "societies in transition have enacted a range of measures to confront these legacies of violence, such as amnesty, criminal trials, truth commissions which "are officially established committees directed to investigate and document patterns of human rights abuses during a specified period. Commissions produce a report that summarizes the findings of their investigation, but do not punish perpetrators" and reparations." "At the heart of debates about how societies in transition should deal with wrongdoing is... a question about the general standards that any response to wrongdoing must meet in order to qualify as just. Modern democracies generally hold that criminal punishment is the "first-best" moral response to wrongdoing, especially in the case of egregious wrongdoing such as rape and torture. Trials establish guilt and determine punishment, giving perpetrators "what they deserve." Justice is achieved when wrongdoers are punished. This is the basic idea of retributive justice. Yet, in transitional contexts both pragmatic and moral obstacles preclude the straightforward application of trial, conviction, and criminal punishment to many, indeed most, perpetrators of wrongdoing." This is why alternative legal processes are adopted. Are legal responses to wrongdoing that do not entail punishment just? In my view, they can be. As I argue in my new book, The Conceptual Foundations of Transitional Justice, transitional justice is its own distinctive type of justice. Transitional justice is concerned with societal transformation, that is, transforming the relationships among citizens and between citizens and officials so that genocide or other forms of wrongdoing do not happen again. Responses to wrongdoing are just insofar as they contribute to this transformation by, for example, promoting the rule of law or cultivating conditions under which minimum trust can be reasonable.

Chicago's Immigration Lawsuit

In this week's Legal Issues in the News, the University of Illinois College Of Law's Sean Anderson explains the immigration lawsuit from the city of Chicago.

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