Category: reason

Court Rejects Motion to Seal Litigation Finance Agreements

From List Interactive, Ltd. v. Knights of Columbus (D. Colo.), decided last Tuesday by Judge R. Brooke Jackson:

ORDER denying 268 Motion for Leave to Restrict. The moving party filed the documents without restriction. Even assuming that was the result of inadvertent attorney error, the Court is not convinced that the public access should be restricted. The public may well have an interest in how litigation is funded by third parties. While it is possible that specific dollar or percentage numbers might be actual trade secrets, the request to restrict access to exhibits B and C in their entirety [the litigation finance agreements] is grossly overbroad. No authorities were provided showing that courts have denied public access to such documents.

The agreements had been attached to a brief related to a fee dispute, which claims that the agreements violate Colorado usury laws; here is the heart of the argument, though note, of course, that this is just the law firm’s argument, and the litigation finance companies will presumably respond to it in the coming weeks:

On September 24, 2019, the Law Firm filed its Motion to Enforce its first position statutory attorneys’ charging lien …. The Law Firm has a first position priority lien against all claims to the funds deposited with the Court in an amount totaling $190,134.75….

Two Interested Parties/Intervenors, Theano Ventures, LLC and Themistius Ventures, LLC … have taken the position that they are entitled to receive some or all of the funds deposited with the Court, and plan to challenge the Law Firm’s first position lien under Colorado law. The Litigation Lenders are litigation funding companies that loaned funds to Plaintiff—on a non-recourse basis—to fund certain portions of this litigation. Nearly all of those funds were used and/or loaned long after the Law Firm’s withdrawal from the case.

On October 9, 2019, several days before entering appearances through counsel in this litigation, the Litigation Lenders purported to file an arbitration proceeding against the Law Firm and its three owners1 through the AAA, hoping to force the Law Firm and its owners to litigate the attorney charging lien issue in an arbitration proceeding in New York City. The Litigation Lenders claim—incorrectly—that the Law Firm subordinated its first position statutory lien to their interests in accordance with a letter that the Law Firm was required to submit to begin its representation of UKnight. The contracts between the Litigation Lenders and Plaintiff are attached as Exhibit B, and aforementioned letter is attached as Exhibit C.

The Law Firm now supplements its Motion to Enforce its Attorneys’ Lien to address the Litigation Lenders’ position and request that the Court enforce its attorney lien, interpret the rights and obligations of the parties under the contracts, and stay the arbitration proceeding pending in New York City. Specifically, it is well-settled Colorado law that the contracts by which the Litigation Lenders loaned money to UKnight are invalid because they violate Colorado’s criminal usury statute, Colo. Rev. Stat. § 18-15-104.

Colorado’s criminal usury statute prohibits the lending of money at more than 45 percent interest. As evidenced by the contracts attached as Exhibit B, the Litigation Lenders charged an interest rate in excess of 90 percent. The contracts, because they violate the criminal usury statute, are unenforceable. Moreover, in accordance with Amadeus Corp. v. McAllister, 232 P.3d 107, 109 (Colo. App. 2009) the purported arbitration clauses in those contracts (to which the Law Firm is not a party) are also unenforceable as a matter of law….

On or about August 29, 2017 and April 2, 2018, prior to representation by the Law Firm, UKnight entered into two loan contracts with the Litigation Lenders. (Exhibit B) The loan contracts identify a “target fundraising goal,” identify the commission to be paid from that fundraising goal to WealthForge Securities, LLC, and state the date and amount of repayment of the fundraising goal. (Exhibit B at ¶¶ 1(b), 2 and 5) The loan agreements further state that they are non-recourse if no “Recovery” is made in the litigation, and state that any disputes between

the Litigation Lenders and UKnight (the “Parties” to the contracts) shall be through AAA arbitration in New York. The loan agreements further require that all new attorneys of record (in this case, the Law Firm) “acknowledge this Agreement…and distribute the Recovery”, “keep the Purchaser updated” and “comply with all obligations…of the Agreement.”

The loan contracts do not require any new attorneys of record to subject themselves to arbitration or subordinate any statutory liens. Thus, when the Law Firm began its representation of UKnight, it issued a letter required by the Litigation Lenders acknowledging the existence of the loan contracts. The letter also does not expressly subordinate any statutory attorneys’ liens and does not submit any claims that the Law Firm may have to enforce its lien to arbitration through the AAA in New York. There are no such express terms in the letter. (Exhibit C)

The loan contracts between the Litigation Lenders and UKnight are both subject to, and violate, Colorado’s lending laws. First, the loan contracts are subject to Colorado’s lending statutes. In Oasis Legal Fin. Group v. Coffman, 361 P.3d 400 (Colo. 2015), the Colorado Supreme Court made clear that loans made by litigation finance companies are subject to Colorado’s lending statutes. In Oasis, several national litigation finance companies brought an

action against the Colorado Attorney General and Uniform Consumer Credit Code (UCCC) Administrator for a declaratory judgment that funding agreements for personal injury litigation were not loans. The Court disagreed and ruled that “litigation finance companies that agree to advance money to tort plaintiffs in exchange for future litigation proceeds are making loans subjects to Colorado’s UCC.” Thus, the Litigation Lenders’ loan contracts to UKnight are loans that are subject to Colorado’s lending laws.

Second, the loan contracts between the Litigation Lenders and UKnight violate Colorado’s criminal usury statute, Colo. Rev. Stat. § 18-15-104. In Colorado, the maximum amount that may be charged in a loan is 45 percent. The usury statute, in relevant part, provides: “Any person who knowingly charges, takes, or receives any money or other property as a loan finance charge where the charge exceeds an annual percentage rate of forty-five percent or the equivalent for a longer or shorter period commits the crime of criminal usury, which is a class 6 felony.” See Colo. Rev. Stat. § 18-15-104(a) (emphasis added).

The loan contacts between the Litigation Lenders and UKnight, however, charge effective interest rates in excess of 90 percent per annum. Though the loan contracts (likely intentionally) do not state an interest rate, when the repayment amounts and repayment dates are compared to the “funding targets,” the resulting interest rate is in excess of 90 percent per annum. Moreover, the Litigation Lenders cannot contract around Colorado’s criminal laws by incorporating New York law into their loan contracts. Making a loan to a Colorado resident (UKnight) subjects the Litigation Lenders and their respective principals to Colorado’s criminal usury laws. People v. Chase, 411 P.3d 740, 746 (Colo. App. 2013)….

I don’t know who’s right and who’s wrong on this, but it seems to be an interesting and practically important issue. And here, by the way, is the judge’s order urging the parties to mediate the case:

To counsel for the parties (past and present) and the interested parties: Please be advised that as of this date, the funds on deposit in the registry of the court, including interest, total $754,359.63. It appears that there may be multiple persons claiming entitlement to some or all of those funds, likely in amounts that collectively exceed the available funds. To date, to the Courts knowledge, the claimants are Condit Csajaghy (plaintiffs second counsel who were involved for a short period in 2018), and the Interested Parties (litigation funders). Others who potentially could assert a claim on the funds include plaintiffs initial counsel (who prosecuted the case for its first 15 months); plaintiffs third counsel (who prosecuted the case for the past year, including through trial and the motion for a new trial); and the plaintiffs themselves.

Without commenting on the interpretation or the validity of any of the contracts that exist among these various entities and individuals, the reasonableness of any fees or costs claimed, or the appropriateness of the pending arbitration proceeding initiated by the interested parties, the Court suggests that all of you consider mediating with a professional mediator to see if it might be possible to reach some type of equitable distribution of the available funds. Please confer and advise the Court if the parties are willing to give that a try before spending further time and expense litigating the issues.

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When Border Defense Becomes Border Offense

Empire of Borders: The Expansion of the U.S. Border Around the World, by Todd Miller, Verso Books, 304 pages, $29.95

Military contractors from across North America and the Middle East set up shop at a business park in southern Arizona, drawing up designs and testing their technology in the desert. Then they send orders to maquiladoras, factories just across the Mexican border, where workers assemble the drones and sensors to spec. Some of this equipment is shipped to the Middle East. The rest is deployed right on the Arizona-Sonora border, stopping the Mexicans who manufactured it from seeking better jobs a few miles north.

That is the dystopia that journalist Todd Miller presents in Empire of Borders: free movement for government officials and well-connected businesses, walls and surveillance for the rest of us. The scene in Arizona and Sonora is still just a proposal, a joint U.S.-Israeli venture that exists mostly on paper. But in other places that Miller visits, from Morocco to the Philippines, the dystopian future is already here. Millions of dollars in U.S. security aid, hundreds of American boots on the ground, and dozens of Washington diplomats are hardening the borders of countries all over the world.

Along the edges of the United States, Americans are subjected to a police state of constant stops, searches, and surveillance. In Puerto Rico, a territory Americans often forget is part of their country, federal agents go door to door collecting “intelligence” on Caribbean migrants. In Washington, D.C., members of U.S. Customs and Border Protection (CBP) tell Miller bluntly that they’re “exempted from the Fourth Amendment.” Their main complaint is that other countries’ forces are too “constrained.”

So Washington is working hard to get other governments to beef up their powers in similar ways. In the Philippines, one anonymous trainer sent by the U.S. government complains to Miller that border officials are seen as simple “tax collectors,” “hampered by the lack of regulations.” Part of the trainer’s job is lobbying the Philippine border agency to “move forward in increasing their authority so that they’re able” to enforce their borders to America’s satisfaction.

As one CBP official tells Miller, the agency “understands that the U.S. border does not start at the U.S. border.”

Kenya, which did not have a dedicated border patrol agency before 2009, began taking U.S. security assistance after droughts and warfare caused an influx of refugees from neighboring Somalia. With the help of CBP advisors—who trained 15 departments in total across East Africa—and $53 million in U.S. security aid, the Kenyan state created a new militarized border police. Ten years later, Miller surveys the results: an intrusive system of internal checkpoints deep in the country, extending even to Somali neighborhoods inside the capital.

The CBP brags that its “personnel have been on the ground in Iraq for every twist and turn in the country’s rebirth and recovery.” An alphabet soup of federal agencies trains Jordan’s border force in order to “wall off the increasingly important American base from the disintegration of Syria and Iraq.” Morocco receives tens of millions in security aid from the United States and the European Union to stop African migrants—driven north, in part, by Western military interventions in Libya and the Sahel.

At a remote Guatemalan outpost, border guards initially expect Miller to give them security advice. After all, the previous American visitors had all come to provide “training sessions, consultations, more armored jeeps and guns.” A U.S. officer stationed there, named Miguel-Angel Juarez, watches exercises of a fearsome Guatemalan special forces unit known for literally eating puppies as part of its training, an act meant to desensitize its members to violence.

Miller notes that foreigners never gave him trouble for being American or a journalist. Only the U.S. government ever did, projecting a “double image of dominance and inaccessibility” to the rest of the world while keeping its work opaque to the American public.

The new conservative nationalists, some of whom denounce overseas wars and call for closed borders in the same breath, might be surprised by Miller’s findings. A closed American or European border is apparently impossible without the kinds of global interventions that “anti-globalists” supposedly abhor: rewriting foreign governments’ policies to cull the worldwide flow of people from poorer to richer countries. For all the talk about American hegemony protecting globalization and “free trade,” U.S. interventions have actually served to harden borders around the world.

More than once, Miller quotes a chilling line from The 9/11 Commission Report: “The American homeland is the planet.”

The long arm of the U.S. border extends into peacetime middle-class life, too. At “pre-clearance” stations in Canada, Ireland, the United Arab Emirates, and several Caribbean countries, passengers “cross the border” before they even get on a plane. Plainclothes U.S. agents roam foreign airports, ready to interrogate travelers, while the U.S. National Targeting Center spies on them through social media. (After the book was published, a Lebanese-Palestinian Harvard student became a cause célèbre when he was allegedly turned away at the airport because of his friends’ social media posts.) CBP agents in Canada humiliated a gay man by showing him his history on dating apps. They banned a journalist coming from the same country for “classified” reasons after an hourslong ordeal in a Vancouver airport.

With a pilot program called Happy Flow, U.S. border officials plan to collect biometric data even further “down the chain,” reaching into other countries to build what they envision as a database of every single human being on earth.

This “global caste system,” in Miller’s view, is both older and newer than we think.

On one hand, it started long before Donald Trump became president. The current expansion of border imperialism began after September 11 and continued through the Bush and Obama administrations. When Miller visited southern Mexico, two years before Trump’s election, everyone was sure that the heightened border security was on “direct orders” from Washington. Parts of the surveillance and gunship diplomacy that uphold the global U.S. border go back further, to the Latin American interventions of the Reagan administration, the lesser-known post–World War I red scare, and even the U.S. conquest of the Philippines in the 1890s.

On the other hand, hard borders are a blip in human history. A century ago, as Miller notes, passports were rarely needed in peacetime. In most places, closed borders were imposed only from outside. Colonial empires pushed migrants “to seek the places where the extracted wealth of their lands had gone,” as Miller paraphrases the work of investigative reporter Juan Gonzalez. But the imperial authorities couldn’t allow that to happen unhindered, and the administrative boundaries they set up—which later became national borders—cut off the normal back-and-forth movement of communities. When capital can flow freely but workers can’t move for better wages, who benefits?

Meitamei Olol-Dapash, a Maasai political leader, complains to Miller that the Kenya-Tanzania border drawn by Britain “disrupts the community’s unity. It disrupts culture. It disrupts the political coordination of things.” Major Juarez, his own family split by the U.S.-Mexico border, notes that the same is true for the Mayans living along the present-day Honduran-Guatemalan frontier. Closer to home, leaders of the Tohono O’odham Nation along America’s southern boundary call the influx of Border Patrol agents an “occupation.”

The colonized world, Miller says, “acquired its international boundaries without most people who lived there even knowing it.”

For a vision of the future, Miller looks to the Israeli-Palestinian conflict. The Oslo Accords of the 1990s created hundreds of “islands” of Palestinian autonomy in a sea of Israeli military control. Bright red signs from the military authorities warn Israeli civilians to avoid Palestinian zones or risk death. Palestinian commuters wait for hours at checkpoints that resemble a combination of airport security and livestock pens. Israeli officers sit in cubicle farms for 12-hour shifts, watching feeds from the thousands of motion sensors and cameras that dot the Israeli-Palestinian landscape. The region is a perfect “laboratory”—as one Israeli brigadier general tells a delegation from the U.S. Department of Homeland Security—for governments interested in bringing that kind of control to their own soil.

Despite such dismal images, Miller sees rays of hope. Thousands of ordinary people subvert border controls every day. Miller sits in a Mexican minibus with a Guatemalan family making their way north illegally. Realizing that his passengers don’t have papers, the driver veers off road in a white-knuckle shortcut to get them around a looming checkpoint. They make it.

“It became apparent, even with the billions and billions spent, the investment, the technologies, the drug-sniffing dogs, the smart walls and checkpoints,” Miller writes, how fragile the empire of borders really is.

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When Border Defense Becomes Border Offense

Empire of Borders: The Expansion of the U.S. Border Around the World, by Todd Miller, Verso Books, 304 pages, $29.95

Military contractors from across North America and the Middle East set up shop at a business park in southern Arizona, drawing up designs and testing their technology in the desert. Then they send orders to maquiladoras, factories just across the Mexican border, where workers assemble the drones and sensors to spec. Some of this equipment is shipped to the Middle East. The rest is deployed right on the Arizona-Sonora border, stopping the Mexicans who manufactured it from seeking better jobs a few miles north.

That is the dystopia that journalist Todd Miller presents in Empire of Borders: free movement for government officials and well-connected businesses, walls and surveillance for the rest of us. The scene in Arizona and Sonora is still just a proposal, a joint U.S.-Israeli venture that exists mostly on paper. But in other places that Miller visits, from Morocco to the Philippines, the dystopian future is already here. Millions of dollars in U.S. security aid, hundreds of American boots on the ground, and dozens of Washington diplomats are hardening the borders of countries all over the world.

Along the edges of the United States, Americans are subjected to a police state of constant stops, searches, and surveillance. In Puerto Rico, a territory Americans often forget is part of their country, federal agents go door to door collecting “intelligence” on Caribbean migrants. In Washington, D.C., members of U.S. Customs and Border Protection (CBP) tell Miller bluntly that they’re “exempted from the Fourth Amendment.” Their main complaint is that other countries’ forces are too “constrained.”

So Washington is working hard to get other governments to beef up their powers in similar ways. In the Philippines, one anonymous trainer sent by the U.S. government complains to Miller that border officials are seen as simple “tax collectors,” “hampered by the lack of regulations.” Part of the trainer’s job is lobbying the Philippine border agency to “move forward in increasing their authority so that they’re able” to enforce their borders to America’s satisfaction.

As one CBP official tells Miller, the agency “understands that the U.S. border does not start at the U.S. border.”

Kenya, which did not have a dedicated border patrol agency before 2009, began taking U.S. security assistance after droughts and warfare caused an influx of refugees from neighboring Somalia. With the help of CBP advisors—who trained 15 departments in total across East Africa—and $53 million in U.S. security aid, the Kenyan state created a new militarized border police. Ten years later, Miller surveys the results: an intrusive system of internal checkpoints deep in the country, extending even to Somali neighborhoods inside the capital.

The CBP brags that its “personnel have been on the ground in Iraq for every twist and turn in the country’s rebirth and recovery.” An alphabet soup of federal agencies trains Jordan’s border force in order to “wall off the increasingly important American base from the disintegration of Syria and Iraq.” Morocco receives tens of millions in security aid from the United States and the European Union to stop African migrants—driven north, in part, by Western military interventions in Libya and the Sahel.

At a remote Guatemalan outpost, border guards initially expect Miller to give them security advice. After all, the previous American visitors had all come to provide “training sessions, consultations, more armored jeeps and guns.” A U.S. officer stationed there, named Miguel-Angel Juarez, watches exercises of a fearsome Guatemalan special forces unit known for literally eating puppies as part of its training, an act meant to desensitize its members to violence.

Miller notes that foreigners never gave him trouble for being American or a journalist. Only the U.S. government ever did, projecting a “double image of dominance and inaccessibility” to the rest of the world while keeping its work opaque to the American public.

The new conservative nationalists, some of whom denounce overseas wars and call for closed borders in the same breath, might be surprised by Miller’s findings. A closed American or European border is apparently impossible without the kinds of global interventions that “anti-globalists” supposedly abhor: rewriting foreign governments’ policies to cull the worldwide flow of people from poorer to richer countries. For all the talk about American hegemony protecting globalization and “free trade,” U.S. interventions have actually served to harden borders around the world.

More than once, Miller quotes a chilling line from The 9/11 Commission Report: “The American homeland is the planet.”

The long arm of the U.S. border extends into peacetime middle-class life, too. At “pre-clearance” stations in Canada, Ireland, the United Arab Emirates, and several Caribbean countries, passengers “cross the border” before they even get on a plane. Plainclothes U.S. agents roam foreign airports, ready to interrogate travelers, while the U.S. National Targeting Center spies on them through social media. (After the book was published, a Lebanese-Palestinian Harvard student became a cause célèbre when he was allegedly turned away at the airport because of his friends’ social media posts.) CBP agents in Canada humiliated a gay man by showing him his history on dating apps. They banned a journalist coming from the same country for “classified” reasons after an hourslong ordeal in a Vancouver airport.

With a pilot program called Happy Flow, U.S. border officials plan to collect biometric data even further “down the chain,” reaching into other countries to build what they envision as a database of every single human being on earth.

This “global caste system,” in Miller’s view, is both older and newer than we think.

On one hand, it started long before Donald Trump became president. The current expansion of border imperialism began after September 11 and continued through the Bush and Obama administrations. When Miller visited southern Mexico, two years before Trump’s election, everyone was sure that the heightened border security was on “direct orders” from Washington. Parts of the surveillance and gunship diplomacy that uphold the global U.S. border go back further, to the Latin American interventions of the Reagan administration, the lesser-known post–World War I red scare, and even the U.S. conquest of the Philippines in the 1890s.

On the other hand, hard borders are a blip in human history. A century ago, as Miller notes, passports were rarely needed in peacetime. In most places, closed borders were imposed only from outside. Colonial empires pushed migrants “to seek the places where the extracted wealth of their lands had gone,” as Miller paraphrases the work of investigative reporter Juan Gonzalez. But the imperial authorities couldn’t allow that to happen unhindered, and the administrative boundaries they set up—which later became national borders—cut off the normal back-and-forth movement of communities. When capital can flow freely but workers can’t move for better wages, who benefits?

Meitamei Olol-Dapash, a Maasai political leader, complains to Miller that the Kenya-Tanzania border drawn by Britain “disrupts the community’s unity. It disrupts culture. It disrupts the political coordination of things.” Major Juarez, his own family split by the U.S.-Mexico border, notes that the same is true for the Mayans living along the present-day Honduran-Guatemalan frontier. Closer to home, leaders of the Tohono O’odham Nation along America’s southern boundary call the influx of Border Patrol agents an “occupation.”

The colonized world, Miller says, “acquired its international boundaries without most people who lived there even knowing it.”

For a vision of the future, Miller looks to the Israeli-Palestinian conflict. The Oslo Accords of the 1990s created hundreds of “islands” of Palestinian autonomy in a sea of Israeli military control. Bright red signs from the military authorities warn Israeli civilians to avoid Palestinian zones or risk death. Palestinian commuters wait for hours at checkpoints that resemble a combination of airport security and livestock pens. Israeli officers sit in cubicle farms for 12-hour shifts, watching feeds from the thousands of motion sensors and cameras that dot the Israeli-Palestinian landscape. The region is a perfect “laboratory”—as one Israeli brigadier general tells a delegation from the U.S. Department of Homeland Security—for governments interested in bringing that kind of control to their own soil.

Despite such dismal images, Miller sees rays of hope. Thousands of ordinary people subvert border controls every day. Miller sits in a Mexican minibus with a Guatemalan family making their way north illegally. Realizing that his passengers don’t have papers, the driver veers off road in a white-knuckle shortcut to get them around a looming checkpoint. They make it.

“It became apparent, even with the billions and billions spent, the investment, the technologies, the drug-sniffing dogs, the smart walls and checkpoints,” Miller writes, how fragile the empire of borders really is.

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Brickbat: Women’s Work

The British Advertising Standards Authority has banned an ad for PC Specialist, which sells custom computers, because there are no women in the ad. The authority says the absence of women “strongly implied only men could excel in the specialisms and roles depicted” and “presented gender stereotypes in [a] way that was likely to cause harm.”  PC Specialist says the ad implied nothing about women. The company says its customers are “87.5% male, aged between 15 and 35 years” so that’s who its ads are aimed at.

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Brickbat: Women’s Work

The British Advertising Standards Authority has banned an ad for PC Specialist, which sells custom computers, because there are no women in the ad. The authority says the absence of women “strongly implied only men could excel in the specialisms and roles depicted” and “presented gender stereotypes in [a] way that was likely to cause harm.”  PC Specialist says the ad implied nothing about women. The company says its customers are “87.5% male, aged between 15 and 35 years” so that’s who its ads are aimed at.

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The fine line between deepfake legislation and deeply fake legislation

There’s a fine line between legislation addressing deepfakes and legislation that is itself a deep fake. Nate Jones reports on the only federal legislation addressing the deepfake problem so far. I claim that it is well short of a serious regulatory effort – and pretty close to a fake itself.

In contrast, India seems serious about imposing liability on companies whose unbreakable end-to-end crypto causes harm, at least to judge from the howls of the usual defenders of such products. David Kris explains how the law will work. I ask why Silicon Valley gets to impose the externalities of encryption-facilitated crime on society when we’d never let Big Tech leave us with the tab for water or air pollution just because their products are so cool. In related news, the FBI may be turning the Pensacola military terrorism attack into a slow-motion replay of its San Bernardino fight with Apple, this time with more top cover (and probably better lawyering).

Poor Nate seems to draw all the fake legislation in this episode. He explains a 2020 appropriations rider requiring the State Department to report on how it issues export licenses for cyber espionage capabilities; this is a follow-up to investigative reporting on the way such capabilities ended up being used against human rights activists in the UAE. As we agree, it’s an interesting and likely unsolvable policy problem, so the legislation opts for the most meaningless of remedies, requiring the Directorate of Defense Trade Control to report “on cybertools and capabilities licensing, including licensing screening and approval procedures as well as compliance and enforcement mechanisms” within 90 days.

Nate also gets to cover some decidedly un-fake requirements in the 2019 NDAA limiting how defense contractors can use Chinese technology. The other shoe is about to drop, and if the first one was a baby shoe, the second is a Clydesdale’s horseshoe.

It’s hard to call it fake, but the latest export control rule restricting sales of AI could hardly be narrower. Maury Shenk and I speculate that this is because a long-term turf war has broken out again in export control policy circles. Maury’s money is on the business side of that fight, and the narrowness of the AI rule gives weight to his views.

And here’s some Christmas cheer for DOJ and national security officials: A federal district court put a lump of coal in Fast Eddie Snowden’s stocking, denying him royalties from a book that violated his nondisclosure agreement. Nate thinks it’s safe for me to buy a copy, but I’m waiting for appellate confirmation.

Less festive news comes from the European Court of Justice’s advocate general opinion in Schrems II, a case that could greatly complicate EU-US data transfers by purporting to put Europeans in charge of how the US defends itself from terrorism. Maury explains; I complain.

David unpacks with clarity a complex Second Circuit decision on the constitutionality of FISA 702 collection. On the whole, Judge Lynch did a creditable job with a messy and unprecedented set of claims, though I question the wisdom of erecting a baroque mansion of judge-made limits on a slippery and narrow foundation like the Fourth Amendment’s requirement that searches be “reasonable.”

And in short hits:

Finally, to put everyone back in the Christmas spirit, LabMD won nearly a million dollars in fees from the Federal Trade Commission for the FTC’s bullheaded pursuit of the company despite the many flaws in its case. The master’s opinion makes clear just how badly the FTC erred in hounding LabMD.

Download the 295th Episode (mp3).

You can subscribe to The Cyberlaw Podcast using iTunes, Google Play, Spotify, Pocket Casts, or our RSS feed!

As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!

The views expressed in this podcast are those of the speakers and do not reflect those of their spouses, children, clients, firms, or institutions. 

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The fine line between deepfake legislation and deeply fake legislation

There’s a fine line between legislation addressing deepfakes and legislation that is itself a deep fake. Nate Jones reports on the only federal legislation addressing the deepfake problem so far. I claim that it is well short of a serious regulatory effort – and pretty close to a fake itself.

In contrast, India seems serious about imposing liability on companies whose unbreakable end-to-end crypto causes harm, at least to judge from the howls of the usual defenders of such products. David Kris explains how the law will work. I ask why Silicon Valley gets to impose the externalities of encryption-facilitated crime on society when we’d never let Big Tech leave us with the tab for water or air pollution just because their products are so cool. In related news, the FBI may be turning the Pensacola military terrorism attack into a slow-motion replay of its San Bernardino fight with Apple, this time with more top cover (and probably better lawyering).

Poor Nate seems to draw all the fake legislation in this episode. He explains a 2020 appropriations rider requiring the State Department to report on how it issues export licenses for cyber espionage capabilities; this is a follow-up to investigative reporting on the way such capabilities ended up being used against human rights activists in the UAE. As we agree, it’s an interesting and likely unsolvable policy problem, so the legislation opts for the most meaningless of remedies, requiring the Directorate of Defense Trade Control to report “on cybertools and capabilities licensing, including licensing screening and approval procedures as well as compliance and enforcement mechanisms” within 90 days.

Nate also gets to cover some decidedly un-fake requirements in the 2019 NDAA limiting how defense contractors can use Chinese technology. The other shoe is about to drop, and if the first one was a baby shoe, the second is a Clydesdale’s horseshoe.

It’s hard to call it fake, but the latest export control rule restricting sales of AI could hardly be narrower. Maury Shenk and I speculate that this is because a long-term turf war has broken out again in export control policy circles. Maury’s money is on the business side of that fight, and the narrowness of the AI rule gives weight to his views.

And here’s some Christmas cheer for DOJ and national security officials: A federal district court put a lump of coal in Fast Eddie Snowden’s stocking, denying him royalties from a book that violated his nondisclosure agreement. Nate thinks it’s safe for me to buy a copy, but I’m waiting for appellate confirmation.

Less festive news comes from the European Court of Justice’s advocate general opinion in Schrems II, a case that could greatly complicate EU-US data transfers by purporting to put Europeans in charge of how the US defends itself from terrorism. Maury explains; I complain.

David unpacks with clarity a complex Second Circuit decision on the constitutionality of FISA 702 collection. On the whole, Judge Lynch did a creditable job with a messy and unprecedented set of claims, though I question the wisdom of erecting a baroque mansion of judge-made limits on a slippery and narrow foundation like the Fourth Amendment’s requirement that searches be “reasonable.”

And in short hits:

Finally, to put everyone back in the Christmas spirit, LabMD won nearly a million dollars in fees from the Federal Trade Commission for the FTC’s bullheaded pursuit of the company despite the many flaws in its case. The master’s opinion makes clear just how badly the FTC erred in hounding LabMD.

Download the 295th Episode (mp3).

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Gavin Newsom’s Solution to California’s Homelessness Problem: Throw Another Billion Dollars at It

California’s homeless population keeps skyrocketing, and so has the number of bills aiming at solving the homelessness problem. Last week, Gov. Gavin Newsom unveiled a billion-dollar plan designed to get more houses built for those who need it. But even that much money isn’t likely to help many people if the underlying problem remains unchanged. To solve California’s homelessness problem, you have to address inflexible zoning rules and ineffective municipal bureaucracies.

Newsom’s executive order allocates $750 million to build more affordable housing units and to establish a California Access to Housing and Services Fund within the state’s Department of Social Services. The goal is to pay rent for individuals facing homelessness and to make vacant state properties available immediately as shelter options. An additional $695 million will be used to boost preventative health care measures for the homeless through Medi-Cal Healthier California for All.

This follows 18 housing bills that Newsom signed into law last fall. The bills are supposed to accelerate housing production, but they don’t have much teeth. They require local jurisdictions to publicly share information about zoning ordinances and other building rules—not to roll the regs back, just to be more transparent about them. They also ask cities and counties to maintain an inventory of state surplus land sites suitable for residential development.

California voters also approved $4 billion in bonds last year for affordable housing programs.

“You can’t just throw money at homelessness and a lack of affordable housing and expect that you’re going to achieve the result that you’re hoping to achieve,” says David Wolfe, legislative director of the Howard Jarvis Taxpayers Association. After all, it hasn’t worked so far.

California is home to almost half of America’s homeless population, and the median price for a house there is more than twice the national level. Fixing that problem means building more houses, but zoning laws and anti-development activism make that difficult. Serious reform will require moves like modifying city codes to let developers build units that aren’t single-family homes. And dialing back rules, such as the California Environmental Quality Act, that let neighborhood activists block new construction with faux-environmental concerns. And, in general, clearing away the thicket of state and local regulations that get in the way of meeting the demand for housing.

“If you’re a city council,” San Francisco Assemblyman Phil Ting told Curbed San Francisco, “the people who vote for you oppose the housing you’re creating, and you’re creating housing for the people who have yet to move in.”

Californians also have to contend with a perverse incentive built into Proposition 13, a measure that limits property-tax increases on homes until they’re sold. This gives cities a reason to encourage commercial instead of residential development.

As legislators continue to pour money into housing programs, perhaps they should think more about how to address the broken system responsible for the mess. In the meantime, others will look for ways to route around the system. Silicon Valley giants have begun to propose their own housing projects, underscoring the state government’s inability to move forwards with its own reforms.

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