Liu v. SEC: the short version

A friend recently asked for a two-sentence summary of my view of Liu v. SEC. (I’m not sure why the friend thought that once I got started answering a question about equity and restitution I might want to go on for more than two sentences!) At any rate, here was my answer:

I think the statutory reference to “equitable relief” authorizes a traditional accounting (so only profits, not revenues; payable to the victims at least in the first instance and not to the SEC), though without any limitation to fiduciaries. I also think disgorgement is a confusing term that hides the law/equity and proprietary/non-proprietary distinctions, and it would be good to abandon it.

If you want a longer version, Henry Smith and I filed an amicus brief in the case.

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Liu v. SEC: the short version

A friend recently asked for a two-sentence summary of my view of Liu v. SEC. (I’m not sure why the friend thought that once I got started answering a question about equity and restitution I might want to go on for more than two sentences!) At any rate, here was my answer:

I think the statutory reference to “equitable relief” authorizes a traditional accounting (so only profits, not revenues; payable to the victims at least in the first instance and not to the SEC), though without any limitation to fiduciaries. I also think disgorgement is a confusing term that hides the law/equity and proprietary/non-proprietary distinctions, and it would be good to abandon it.

If you want a longer version, Henry Smith and I filed an amicus brief in the case.

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My Daughter / My Sister / My Daughter / My Sister

Mother allows Grandmother to adopt Son—but then later (after Grandmother’s death) seeks visitation with Son as Son’s sister (since he is the adopted son of her mother), under a New Jersey statute (N.J.S.A. 9:2-7.1) that allows sibling visitation.

No, the N.J. Appellate Division held Thursday, in K.D. v. A.S. (opinion by Superior Court Judge Catherine Enright, joined by Appellate Division Judges Jose Fuentes and Jessica Mayer):

As our Supreme Court made clear …, N.J.S.A. 9:2-7.1 is subject to strict scrutiny because this statute intrudes on a parent’s fundamental right to raise a child as that parent sees fit. Permitting biological parents, who knowingly and voluntarily enter identified surrenders of their parental rights, to acquire the legal rights of siblings pursuant to N.J.S.A. 9:2-7.1 would ignore the Supreme Court’s admonition … and cause needless disruption and apprehension to countless families who have opened their homes and their hearts to children in need of adoption….

Sam was born in 2006. He was diagnosed with Autism Spectrum Disorder with combined repetitive and expressive language disorder, developmental fine motor coordination disorder and attention deficit hyperactivity disorder. The [Division of Child Protection and Permanency] removed Sam from his mother [K.D.]’s care at age three, after he was found crying in the middle of an intersection, while K.D. was intoxicated.

K.D. and Sam’s biological father [who is not involved in this appeal] entered into identified surrenders to allow Sam to be placed with his maternal grandmother, A.D. Once K.D.’s parental rights were terminated, along with those of Sam’s biological father, A.D. adopted Sam in March 2012. Unfortunately, A.D. passed away six weeks after adopting Sam. Carolyn, Sam’s biological sister, agreed to care for him. However, this arrangement proved to be short lived. A few months after A.D.’s death, Carolyn advised the Division she was unable to care for her special needs brother on a permanent basis. She agreed to temporarily care for him until the Division found a suitable permanent placement. In May 2013, Sam was placed in A.S.’s care, where he remains. {A.S. adopted Sam on December 3, 2018.}

K.D. engaged in treatment for her alcoholism after her parental rights were terminated. [She sought to vacate the adoption, but the family court rejected that attempt, and the court of appeals affirmed. -EV] … [T]he Family Part authorized K.D. to have limited visitation rights before A.S. adopted Sam, [but] A.S. decided not to continue the visits after the adoption became final. K.D. filed an order to show cause on December 11, 2018, seeking to reinstate her visits over A.S.’s objection….

As noted earlier, Sam began residing with his adoptive mother in May 2013, when he was six years old. He is now fourteen….

There are profound public policy ramifications to characterizing K.D. as the legal sibling of her biological son under these circumstances…. “Our law recognizes the family as a bastion of autonomous privacy in which parents, presumed to act in the best interests of their children, are afforded self-determination over how those children are raised. All of the attributes of a biological family are applicable in the case of adoption; adoptive parents are free, within the same limits as biological parents, to raise their children as they see fit, including choices regarding religion, education, and association. However, the right to parental autonomy is not absolute, and a biological family may be ordered to permit third-party visitation, over its objections, where it is necessary under the exercise of our parents patriae jurisdiction to avoid harm to the child. That principle governs adoptive families as well.”

As a “parent is entitled to a presumption that he or she acts in the best interests of the child, … the parent’s determination whether to permit visitation is entitled to ‘special weight.'” Thus, “the need to avoid harm to the child is ‘the only [S]tate interest warranting the invocation of the State’s parens patriae jurisdiction to overcome the presumption in favor of a parent’s decision and to force [third-party] visitation over the wishes of a fit parent[.]'”

“[A]bsent a showing that the child would suffer harm if deprived of contact with [the third party], the State [can]not constitutionally infringe on parental autonomy.” … “[T]he application of the best interests standard to a third party’s petition for visitation is an affront to the family’s right to privacy and autonomy and … interference with a biological or adoptive family’s decision-making can only be justified on the basis of the exercise of our parens patriae jurisdiction to avoid harm to the child.” …

Guided by these principles, we review the Grandparent and Sibling Visitation Statute, which provides in relevant part: “A grandparent or any sibling of a child residing in this State may make application before the Superior Court, in accordance with the Rules of Court, for an order for visitation. It shall be the burden of the applicant to prove by a preponderance of the evidence that the granting of visitation is in the best interests of the child.”

Accordingly, the question here is whether K.D. became Sam’s legal sibling when she voluntarily agreed to surrender her parental rights to Sam’s maternal grandmother. If so, she can pursue her rights as a sibling under N.J.S.A. 9:2-7.1(a).

We hold that to recognize K.D. as the legal sibling of her biological son under these circumstances would violate the public policy underpinning the Division’s role under Title 30 [of the N.J.S.A.]. We are also satisfied that the Legislature did not intend to sanction such an outcome when it adopted N.J.S.A. 9:2-7.1.

N.J.S.A. 30:4C-15.1(a) allows a court to permanently sever the legal relationship between a parent and child only after the court comes to the consequential decision that a child’s welfare has been or will continue to be endangered by the parental relationship and “proof of parental unfitness is clear.”

Here, K.D.’s decision to enter a voluntary surrender of her parental rights to her biological son in favor of the child’s maternal grandmother permanently and irrevocably severed all of her legally cognizable familial rights to her son. Thus, K.D. does not fall within the class of litigants empowered to bring a summary action under N.J.S.A. 9:2-7.1. Stated differently, K.D. does not have standing to bring a visitation action in the Family Part under N.J.S.A. 9:2-7.1 because she is not her biological son’s legal sibling…. [G]ranting K.D. legal standing to bring a visitation action as a biological parent would create the functional equivalent of an open adoption. Our Supreme Court has made clear that the subject of open adoptions “represents a significant policy issue which should be addressed in separate legislation.”

Accordingly, unless otherwise decided by the Legislature, the judiciary has no authority to compel A.S. to permit contact between K.D. and Sam based on K.D.’s biological connection to Sam or her identified surrender to Sam’s maternal grandparent. For the sake of completeness, we also find no basis to disturb either the motion judge’s determination that K.D. does not meet the criteria to be considered Sam’s psychological parent or his decision that no evidentiary hearing was required….

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My Daughter / My Sister / My Daughter / My Sister

Mother allows Grandmother to adopt Son—but then later (after Grandmother’s death) seeks visitation with Son as Son’s sister (since he is the adopted son of her mother), under a New Jersey statute (N.J.S.A. 9:2-7.1) that allows sibling visitation.

No, the N.J. Appellate Division held Thursday, in K.D. v. A.S. (opinion by Superior Court Judge Catherine Enright, joined by Appellate Division Judges Jose Fuentes and Jessica Mayer):

As our Supreme Court made clear …, N.J.S.A. 9:2-7.1 is subject to strict scrutiny because this statute intrudes on a parent’s fundamental right to raise a child as that parent sees fit. Permitting biological parents, who knowingly and voluntarily enter identified surrenders of their parental rights, to acquire the legal rights of siblings pursuant to N.J.S.A. 9:2-7.1 would ignore the Supreme Court’s admonition … and cause needless disruption and apprehension to countless families who have opened their homes and their hearts to children in need of adoption….

Sam was born in 2006. He was diagnosed with Autism Spectrum Disorder with combined repetitive and expressive language disorder, developmental fine motor coordination disorder and attention deficit hyperactivity disorder. The [Division of Child Protection and Permanency] removed Sam from his mother [K.D.]’s care at age three, after he was found crying in the middle of an intersection, while K.D. was intoxicated.

K.D. and Sam’s biological father [who is not involved in this appeal] entered into identified surrenders to allow Sam to be placed with his maternal grandmother, A.D. Once K.D.’s parental rights were terminated, along with those of Sam’s biological father, A.D. adopted Sam in March 2012. Unfortunately, A.D. passed away six weeks after adopting Sam. Carolyn, Sam’s biological sister, agreed to care for him. However, this arrangement proved to be short lived. A few months after A.D.’s death, Carolyn advised the Division she was unable to care for her special needs brother on a permanent basis. She agreed to temporarily care for him until the Division found a suitable permanent placement. In May 2013, Sam was placed in A.S.’s care, where he remains. {A.S. adopted Sam on December 3, 2018.}

K.D. engaged in treatment for her alcoholism after her parental rights were terminated. [She sought to vacate the adoption, but the family court rejected that attempt, and the court of appeals affirmed. -EV] … [T]he Family Part authorized K.D. to have limited visitation rights before A.S. adopted Sam, [but] A.S. decided not to continue the visits after the adoption became final. K.D. filed an order to show cause on December 11, 2018, seeking to reinstate her visits over A.S.’s objection….

As noted earlier, Sam began residing with his adoptive mother in May 2013, when he was six years old. He is now fourteen….

There are profound public policy ramifications to characterizing K.D. as the legal sibling of her biological son under these circumstances…. “Our law recognizes the family as a bastion of autonomous privacy in which parents, presumed to act in the best interests of their children, are afforded self-determination over how those children are raised. All of the attributes of a biological family are applicable in the case of adoption; adoptive parents are free, within the same limits as biological parents, to raise their children as they see fit, including choices regarding religion, education, and association. However, the right to parental autonomy is not absolute, and a biological family may be ordered to permit third-party visitation, over its objections, where it is necessary under the exercise of our parents patriae jurisdiction to avoid harm to the child. That principle governs adoptive families as well.”

As a “parent is entitled to a presumption that he or she acts in the best interests of the child, … the parent’s determination whether to permit visitation is entitled to ‘special weight.'” Thus, “the need to avoid harm to the child is ‘the only [S]tate interest warranting the invocation of the State’s parens patriae jurisdiction to overcome the presumption in favor of a parent’s decision and to force [third-party] visitation over the wishes of a fit parent[.]'”

“[A]bsent a showing that the child would suffer harm if deprived of contact with [the third party], the State [can]not constitutionally infringe on parental autonomy.” … “[T]he application of the best interests standard to a third party’s petition for visitation is an affront to the family’s right to privacy and autonomy and … interference with a biological or adoptive family’s decision-making can only be justified on the basis of the exercise of our parens patriae jurisdiction to avoid harm to the child.” …

Guided by these principles, we review the Grandparent and Sibling Visitation Statute, which provides in relevant part: “A grandparent or any sibling of a child residing in this State may make application before the Superior Court, in accordance with the Rules of Court, for an order for visitation. It shall be the burden of the applicant to prove by a preponderance of the evidence that the granting of visitation is in the best interests of the child.”

Accordingly, the question here is whether K.D. became Sam’s legal sibling when she voluntarily agreed to surrender her parental rights to Sam’s maternal grandmother. If so, she can pursue her rights as a sibling under N.J.S.A. 9:2-7.1(a).

We hold that to recognize K.D. as the legal sibling of her biological son under these circumstances would violate the public policy underpinning the Division’s role under Title 30 [of the N.J.S.A.]. We are also satisfied that the Legislature did not intend to sanction such an outcome when it adopted N.J.S.A. 9:2-7.1.

N.J.S.A. 30:4C-15.1(a) allows a court to permanently sever the legal relationship between a parent and child only after the court comes to the consequential decision that a child’s welfare has been or will continue to be endangered by the parental relationship and “proof of parental unfitness is clear.”

Here, K.D.’s decision to enter a voluntary surrender of her parental rights to her biological son in favor of the child’s maternal grandmother permanently and irrevocably severed all of her legally cognizable familial rights to her son. Thus, K.D. does not fall within the class of litigants empowered to bring a summary action under N.J.S.A. 9:2-7.1. Stated differently, K.D. does not have standing to bring a visitation action in the Family Part under N.J.S.A. 9:2-7.1 because she is not her biological son’s legal sibling…. [G]ranting K.D. legal standing to bring a visitation action as a biological parent would create the functional equivalent of an open adoption. Our Supreme Court has made clear that the subject of open adoptions “represents a significant policy issue which should be addressed in separate legislation.”

Accordingly, unless otherwise decided by the Legislature, the judiciary has no authority to compel A.S. to permit contact between K.D. and Sam based on K.D.’s biological connection to Sam or her identified surrender to Sam’s maternal grandparent. For the sake of completeness, we also find no basis to disturb either the motion judge’s determination that K.D. does not meet the criteria to be considered Sam’s psychological parent or his decision that no evidentiary hearing was required….

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Brickbat: A Failure to Communicate

Lucio Delgado was proud to have the chance to become a U.S. citizen. But his dreams were dashed when he flunked the reading portion of the naturalization test. Delgado is blind, but examiners refused to provide that portion of the exam in Braille. Delgado says he was told he would have to bring a doctor’s note saying he was blind, something he says he can’t afford.

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Brickbat: A Failure to Communicate

Lucio Delgado was proud to have the chance to become a U.S. citizen. But his dreams were dashed when he flunked the reading portion of the naturalization test. Delgado is blind, but examiners refused to provide that portion of the exam in Braille. Delgado says he was told he would have to bring a doctor’s note saying he was blind, something he says he can’t afford.

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The Law That Killed Freelance Work

Freelance jobs are “feudalism,” says Democratic California Assemblywoman Lorena Gonzalez.

She persuaded California’s legislature to pass a new law reclassifying freelance workers as employees. That means many people who hire them must now give them benefits like overtime, unemployment insurance, etc. Politicians said it would help freelancers a lot.

Of course, much of the media agreed. Vox called it “a victory for workers everywhere”!

Sigh. Young reporters just don’t understand that stifling economic freedom always creates nasty side effects.

Actually, more understand now, because they got a very personal lesson. Once the bill passed, Vox media cut hundreds of freelance writing jobs.

When Gonzalez was asked if she felt bad about that, she sneered, those weren’t “real jobs.”

The arrogance of politicians! People choose jobs. Freelancers like flexibility. Politicians have no right to say certain jobs aren’t good enough.

“You’re thinking you’re helping us, but you’re not,” says musician Ari Herstand in my new video. He says the anti gig-work law could “crash the California music economy.”

Why? Before the law passed, if he played a gig where he’d hire a drummer, bassist, and guitar player, “I just cut (each) a check for $200. Now, I have to take that drummer, put him on payroll, W2 him, get workers’ comp insurance, unemployment insurance. I have to pay payroll taxes. I also have to now hire a payroll company.”

All to hire musicians for one just night. The paperwork alone might cost more than the music.

The anti-gig-work law originally targeted rideshare companies like Uber and Lyft, because unions claimed the companies abuse drivers.

But now many rideshare drivers are upset because the law takes away their freedom.

“I liked being independent!” said one. “I don’t want a boss to tell me when or where to drive.”

Herstand says Uber and Lyft drivers would often tell him: “I’m a photographer and this is my fourth side gig. I want to do this when I want to do this, and if now I’m an employee, and I’m W2’d, they’re going to dictate my hours. I don’t want that. (The law is) preventing us from doing what we want to do.”

The law upset independent truck drivers, too. After some nosily drove big rigs in front of the legislature, they got an exemption from the law. Other politically connected professions, like lawyers and realtors, got exemptions as well.

Now Herstand’s working on getting an exemption for musicians, too.

“Why is that good law?” I asked him. “An exception for whoever is clever enough to get to the politicians?”

“It’s definitely not the solution,” laughed Herstand. “‘Write us out of this law and help us out? Here’s money for your next campaign.’ No, that doesn’t seem like that’s a way to legislate.”

But that’s how it’s often done. The more rules politicians pass, the more money they extract from people who are regulated.

Now other politicians want to copy California’s law. New York, New Jersey, and Illinois have their own versions of gig economy bills. The House of Representatives wants to nationalize the law. And, this week, Democratic front-runner Joe Biden cluelessly said such a law “will give workers the dignity they deserve.”

Democrats do what unions ask them to do. Politico points out that just a few years ago, New York Gov. Andrew Cuomo (D) called gig work “a great service for people, giving people jobs. I don’t think government should be in the business of trying to restrict job growth.” He even joked that Uber drivers might earn more than he does.

But now he wants to outlaw most gig work and calls it “exploitive, abusive!”

It’s no surprise that Gonzalez’s biggest political donors are unions. She talks a lot about “protecting our union jobs.” But now that her bill is killing jobs, she wouldn’t agree to an interview.

Neither would the California unions, or any of 75 law professors, political scientists, sociologists, etc., who published a letter in support of the law.

Yes, we contacted all 75.

Herstand says that’s because the law now embarrasses its supporters, but politicians won’t repeal it because “no politician ever wants to admit they did something wrong.”

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The Law That Killed Freelance Work

Freelance jobs are “feudalism,” says Democratic California Assemblywoman Lorena Gonzalez.

She persuaded California’s legislature to pass a new law reclassifying freelance workers as employees. That means many people who hire them must now give them benefits like overtime, unemployment insurance, etc. Politicians said it would help freelancers a lot.

Of course, much of the media agreed. Vox called it “a victory for workers everywhere”!

Sigh. Young reporters just don’t understand that stifling economic freedom always creates nasty side effects.

Actually, more understand now, because they got a very personal lesson. Once the bill passed, Vox media cut hundreds of freelance writing jobs.

When Gonzalez was asked if she felt bad about that, she sneered, those weren’t “real jobs.”

The arrogance of politicians! People choose jobs. Freelancers like flexibility. Politicians have no right to say certain jobs aren’t good enough.

“You’re thinking you’re helping us, but you’re not,” says musician Ari Herstand in my new video. He says the anti gig-work law could “crash the California music economy.”

Why? Before the law passed, if he played a gig where he’d hire a drummer, bassist, and guitar player, “I just cut (each) a check for $200. Now, I have to take that drummer, put him on payroll, W2 him, get workers’ comp insurance, unemployment insurance. I have to pay payroll taxes. I also have to now hire a payroll company.”

All to hire musicians for one just night. The paperwork alone might cost more than the music.

The anti-gig-work law originally targeted rideshare companies like Uber and Lyft, because unions claimed the companies abuse drivers.

But now many rideshare drivers are upset because the law takes away their freedom.

“I liked being independent!” said one. “I don’t want a boss to tell me when or where to drive.”

Herstand says Uber and Lyft drivers would often tell him: “I’m a photographer and this is my fourth side gig. I want to do this when I want to do this, and if now I’m an employee, and I’m W2’d, they’re going to dictate my hours. I don’t want that. (The law is) preventing us from doing what we want to do.”

The law upset independent truck drivers, too. After some nosily drove big rigs in front of the legislature, they got an exemption from the law. Other politically connected professions, like lawyers and realtors, got exemptions as well.

Now Herstand’s working on getting an exemption for musicians, too.

“Why is that good law?” I asked him. “An exception for whoever is clever enough to get to the politicians?”

“It’s definitely not the solution,” laughed Herstand. “‘Write us out of this law and help us out? Here’s money for your next campaign.’ No, that doesn’t seem like that’s a way to legislate.”

But that’s how it’s often done. The more rules politicians pass, the more money they extract from people who are regulated.

Now other politicians want to copy California’s law. New York, New Jersey, and Illinois have their own versions of gig economy bills. The House of Representatives wants to nationalize the law. And, this week, Democratic front-runner Joe Biden cluelessly said such a law “will give workers the dignity they deserve.”

Democrats do what unions ask them to do. Politico points out that just a few years ago, New York Gov. Andrew Cuomo (D) called gig work “a great service for people, giving people jobs. I don’t think government should be in the business of trying to restrict job growth.” He even joked that Uber drivers might earn more than he does.

But now he wants to outlaw most gig work and calls it “exploitive, abusive!”

It’s no surprise that Gonzalez’s biggest political donors are unions. She talks a lot about “protecting our union jobs.” But now that her bill is killing jobs, she wouldn’t agree to an interview.

Neither would the California unions, or any of 75 law professors, political scientists, sociologists, etc., who published a letter in support of the law.

Yes, we contacted all 75.

Herstand says that’s because the law now embarrasses its supporters, but politicians won’t repeal it because “no politician ever wants to admit they did something wrong.”

COPYRIGHT 2020 BY JFS PRODUCTIONS INC.

DISTRIBUTED BY CREATORS.COM

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