Celebrity Criminals Are Leaving Prison Early Because of COVID-19. What About the Drug Offenders?

Several celebrity prisoners have made headlines this month after they were released from incarceration early in an effort to reduce the spread of COVID-19 within jails and prisons.

Tom Noe, an Ohio Republican operative who was sentenced to 18 years after stealing $13 million from a rare coin fund and illegally funneling money to George W. Bush’s reelection campaign; Ray Nagin, a former New Orleans Mayor sentenced to 10 years for corruption charges including wire fraud, bribery, and tax evasion; and Michael Avenatti, the celebrity lawyer who was charged with embezzling $300,000 from porn-star-turned-alleged-Trump-mistress Stormy Daniels and extorting $20 million from Nike, are just a few celebrities who have benefitted from commutations, early releases, or, in Avenatti’s case, temporary release.

These releases are smart. Neither Noe, Nagin, nor Avenatti poses a danger to the wider public. Corrections facilities, meanwhile, do pose a threat. Most are unable to implement basic recommendations to combat the rapid spread of COVID-19. Many facilities are overcrowded and lack access to adequate medical care and personnel, all problems that are exacerbated during a pandemic. Faced with few options, states are doing what they can to reduce their prison populations. 

The news of these releases is an opportunity to push for the speedy and early release of other types of nonviolent offenders, such as drug offenders.

Last month, the Prison Policy Initiative released its annual breakdown of the U.S. incarcerated population, now some 2.3 million people. It found, as it does each year, a disturbingly high number of inmates in state and federal prisons for drug offenses.

At the federal level, 78,000 people are incarcerated for drug offenses compared to 13,000 people serving sentences for violent crimes. At the state level, violent offenders outnumber drug offenders, but there are still 191,000 inmates in state prison serving time for drug offenses, 45,000 of them only for possession. There are also more people sitting in local jails for drug crimes (37,000) than violent crimes (34,000). Another 120,000 people are sitting in jail waiting for their day in court.

Keeping those people behind bars during the COVID-19 crisis is a recipe for tragedy.

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Celebrity Criminals Are Leaving Prison Early Because of COVID-19. What About the Drug Offenders?

Several celebrity prisoners have made headlines this month after they were released from incarceration early in an effort to reduce the spread of COVID-19 within jails and prisons.

Tom Noe, an Ohio Republican operative who was sentenced to 18 years after stealing $13 million from a rare coin fund and illegally funneling money to George W. Bush’s reelection campaign; Ray Nagin, a former New Orleans Mayor sentenced to 10 years for corruption charges including wire fraud, bribery, and tax evasion; and Michael Avenatti, the celebrity lawyer who was charged with embezzling $300,000 from porn-star-turned-alleged-Trump-mistress Stormy Daniels and extorting $20 million from Nike, are just a few celebrities who have benefitted from commutations, early releases, or, in Avenatti’s case, temporary release.

These releases are smart. Neither Noe, Nagin, nor Avenatti poses a danger to the wider public. Corrections facilities, meanwhile, do pose a threat. Most are unable to implement basic recommendations to combat the rapid spread of COVID-19. Many facilities are overcrowded and lack access to adequate medical care and personnel, all problems that are exacerbated during a pandemic. Faced with few options, states are doing what they can to reduce their prison populations. 

The news of these releases is an opportunity to push for the speedy and early release of other types of nonviolent offenders, such as drug offenders.

Last month, the Prison Policy Initiative released its annual breakdown of the U.S. incarcerated population, now some 2.3 million people. It found, as it does each year, a disturbingly high number of inmates in state and federal prisons for drug offenses.

At the federal level, 78,000 people are incarcerated for drug offenses compared to 13,000 people serving sentences for violent crimes. At the state level, violent offenders outnumber drug offenders, but there are still 191,000 inmates in state prison serving time for drug offenses, 45,000 of them only for possession. There are also more people sitting in local jails for drug crimes (37,000) than violent crimes (34,000). Another 120,000 people are sitting in jail waiting for their day in court.

Keeping those people behind bars during the COVID-19 crisis is a recipe for tragedy.

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Woman Banned from “Making Any … Public Allegations Against” Ex, a Police Sergeant, “on Social Media”

Monday, our invaluable local counsel Prof. David Hudson (Belmont University College of Law) filed an amicus brief written on behalf of the Electronic Frontier Foundation by UCLA Amicus Brief Clinic students Megan McDowell, Emily Rehm, and Brenna Scully and me. I thought our readers would find the issue interesting (I had blogged about the case several months ago), so I’m passing it along here—we are asking the Tennessee Supreme Court to review the case. (There’s also an important dispute here about mootness, but the petitioner’s lawyer, Daniel A. Horwitz, is handling that.)

Introduction and Summary of Argument

Pamela Stark was held in contempt for violating a broad and unconstitutional prior restraint that prohibited her from “making any … public allegations against … Joe Stark, on social media (on any platform).” R. at 80, ¶ 3. Based on this injunction, the court ordered Pamela Stark to delete her Facebook post that criticized the Memphis Police Department for its alleged mishandling of the investigation into Joe Stark, a police sergeant (and thus a public official) who had allegedly committed a crime against Pamela Stark.

This prior restraint violated Pamela Stark’s First Amendment rights. Some courts have held that an injunction against speech may become permissible after a final judgment that the enjoined speech is unprotected by the First Amendment (for instance, is a libel or a true threat of violence). But no such determination was made about Pamela Stark’s Facebook post.

Nor can the injunction be justified under Tenn. Code Ann. § 36-4-106(d)(3), even if this Court were to view that statute as constitutional. Under the statute, Pamela Stark may not make any statements that “harass[], threaten[], assault[] or abus[e]” Joe Stark, and she may not “mak[e] disparaging remarks about” him to his employer. But the trial court’s injunction prohibits Pamela Stark from making any allegations about Joe Stark to anyone—including the media, her friends, and the public generally—and not just to his employer. It also prohibits speech that is not harassment: speech that does not constitute “communicat[ions] with” Joe Stark “with the intent [to] annoy[], offend[], alarm[], or frighten[]” him, as defined by Tennessee’s harassment statute. Tenn. Code Ann. § 39-17-308(a)(2). This injunction, then, is an impermissible application of § 36-4-106(d)(3).

Divorces are regrettably common, and § 36-4-106(d)(3) automatically mandates an injunction in every divorce case. Other litigants are likely to seek similarly broad injunctions to silence their spouses, especially if the decision below is left in place and becomes well known among the family-law bar. And as this case illustrates, lower courts may be tempted to agree with such petitioners and restrict even more speech than the statute describes. This Court should thus grant review to provide guidance on when divorcing spouses’ otherwise constitutionally protected speech can be restricted, and when it remains protected.

Argument

[I.] The injunction is an unconstitutional prior restraint on Pamela Stark’s protected speech.

[A.] Prior restraints may not enjoin speech that is protected by the First Amendment.

“Temporary restraining orders and permanent injunctions—i.e., court orders that actually forbid speech activities—are classic examples of prior restraints.” Alexander v. United States, 509 U.S. 544, 550 (1993). “The special vice of a prior restraint is that communication will be suppressed … before an adequate determination that it is unprotected by the First Amendment.” Pittsburgh Press Co. v. Pittsburgh Comm. on Human Relations, 413 U.S. 376, 390 (1973). For that reason, injunctions against speech have been held unconstitutional when they restrict speech that the court has not found to be unprotected. See Vance v. Universal Amusement Co., 445 U.S. 308, 316-17 (1980); Org. for Better Austin v. Keefe, 402 U.S. 415, 417-19 (1971); cf. Pittsburgh Press, 413 U.S. at 390. And of course the First Amendment fully protects speech on social media. See, e.g., Packingham v. N.C., 137 S. Ct. 1730, 1735 (2017).

Thus, even the courts that allow narrowly crafted permanent injunctions against libel allow them only against speech that has been deemed libelous in a decision on the merits. Thus, such injunctions cover only defamatory “speech that has been determined to be false by a fact-finder,” Loden v. Schmidt, No. M2014-01284-COA-R3-CV, 2015 WL 1881240 at *8 (Tenn. Ct. App. 2015), enjoined only “after a determination that the speech is, in fact, false.” In re Conservatorship of Turner, No. M2013-01665-COA-R3-CV, 2014 WL 1901115 at *20 (Tenn. Ct. App. 2014). “[A] narrow and limited injunction” might in some situations restrict speech “which ha[s] been found … to be false and libelous.” Lothschuetz v. Carpenter, 898 F.2d 1200, 1208, 1209 (6th Cir. 1990) (Wellford, J., concurring in part and dissenting in part); see id. at 1209 (Hull, J., concurring in part and dissenting in part) (concurring with Judge Wellford “[o]n the issue of the injunction”).

Indeed, in Hill v. Petrotech Resources Corp., the Kentucky Supreme Court expressly reversed a pretrial injunction against libel as an unconstitutional prior restraint, 325 S.W.3d 302, 306 (Ky. 2010), holding that “defamatory speech may be enjoined only after the trial court’s final determination … that the speech at issue is, in fact, false”—only then “could the speech be ascertained to be constitutionally unprotected, and therefore subject to injunction against future repetition.” Id. at 309, 311. In so holding, the court acknowledged that “the rule may temporarily delay relief for those ultimately found to be innocent victims of slander and libel.” Id. at 311. But because the rule “prevents the unwarranted suppression of speech of those who are ultimately shown to have committed no defamation,” the rule is essential to “protect[] important constitutional values.” Id.

Other state appellate courts take the same view. Thus, in Hartman v. PIP-Group, the Georgia Court of Appeals dissolved an order that “forb[ade the speaker] from making future statements” and “requir[ed the speaker] to remove his past speech from certain websites”; the order was “an impermissible prior restraint” because “a factfinder has not decided whether [the] statements are false or defamatory.” 825 S.E.2d 601, 606 (Ga. Ct. App. 2019). “We have found no Georgia case upholding an interlocutory injunction prohibiting speech. Our Supreme Court has noted that although ‘it has never been held that all injunctions against publication are impermissible,’ such an injunction has been upheld only when it ‘was entered subsequent to a verdict in which a jury found that statements made by [the defendant] were false and defamatory.'” Id. (citing High Country Fashions v. Marlenna Fashions, 357 S.E.2d 576, 577 (Ga. 1987)). And in O’Brien v. University Community Tenants Union, the Ohio Supreme Court held that an injunction against libel was constitutional only “[o]nce speech has judicially been found libelous”: “The judicial determination that specific speech is defamatory must be made prior to any restraint.” 327 N.E.2d 753, 755 (Ohio 1975).

And these cases actually mark the less speech-protective approach to the issue of injunctions as relief in defamation cases. For example, the Texas Supreme Court has held that even a full and final determination that a statement was defamatory cannot justify an injunction against future publication, though it may justify an order requiring the removal of that specific statement from a website on which it had already been posted. Kinney v. Barnes, 443 S.W.3d 87, 98 (Tex. 2014).

Here, the lower court did not even meet the lower threshold set forth by the Court of Appeals cases and the Kentucky, Georgia, and Ohio cases. The lower court did not determine that Pamela Stark’s Facebook post was false and defamatory and therefore constitutionally unprotected.

Indeed, there is no reason to think that it was. Disparaging speech is constitutionally protected, unless it is found to be defamatory. And that standard may be even higher for injunctive relief than for damages. In Organization for a Better Austin v. Keefe, 402 U.S. 415 (1971), the U.S. Supreme Court dissolved an injunction against distributing leaflets that criticized a local small businessman. Id. at 417-19. The Keefe Court rejected the argument that a private citizen was entitled to “be free from public criticism of his business practices.” Id. at 419. And the Court reasoned that the distribution of leaflets could not be enjoined even if it were viewed as “an invasion of privacy,” because the speech was made to the public rather than being specifically sent to the businessman “into his own household.” Id. at 419-20. (Whether or not the speech might lead to a damages award for invasion of privacy would be a different question.) Like the businessman in Keefe, Joe Stark may not get an injunction suppressing criticism simply on the grounds that the criticism may harm his professional reputation.

Nor was Pamela Stark’s post constitutionally unprotected on the theory that it was “harass[ing].” “‘[T]here is no categorical “harassment exception” to the First Amendment’s free speech clause.'” State v. Burkert, 174 A.3d 987, 1000 (N.J. 2017) (quoting Saxe v. State Coll. Area Sch. Dist., 240 F.3d 200, 204 (3d Cir. 2001) (Alito, J.)); Rodriguez v. Maricopa Cty. Cmty. Coll. Dist., 605 F.3d 703, 708 (9th Cir. 2010) (likewise).

But beyond that, Pamela Stark’s speech was not found to be harassment, and indeed would not be harassment under Tennessee law, which is limited to situations where the speaker “communicate[s] with another person … with the intent to annoy[], offend[], alarm[], or frighten[] the recipient,” and the communication in fact accomplishes these intentions. Tenn. Code Ann. § 39-17-308(a)(2). Like the speakers in Keefe, Pamela did not “communicate with” Joe: she did not send her post to him, tag him in the post, or otherwise direct him to read it. Instead, she spoke to the public using her social media account.

The Georgia Supreme Court’s decision in Chan v. Ellis, 770 S.E.2d 851 (Ga. 2015), is instructive on this point. In Chan, as in this case, a trial court issued a broad injunction restricting Chan from speaking about Ellis, based on a statute that barred people from “contact[ing] another person … for the purpose of harassing and intimidating the other person,” with “contact[ing]” defined as “communicat[ing] with another person.” Id. at 853. But such a harassment ban, the Georgia Supreme Court held, only extended to speech “directed to that person” and did not purport to forbid speech “about a particular person.” Id. at 854 (emphasis in original). Likewise, here Pamela Stark’s public speech about Joe Stark (said in the course of speaking about the police department) did not constitute “communicat[ing] with” him.

[B.] Pamela Stark’s speech, which criticizes the government, is protected speech.

“Criticism of government is at the very center of the constitutionally protected area of free discussion. Criticism of those responsible for government operations must be free, lest criticism of government itself be penalized.” Rosenblatt v. Baer, 383 U.S. 75, 85 (1966). Criticism of the government often involves criticism of a person, and it is protected even when it “include[s] vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials.” New York Times Co. v. Sullivan, 376 U.S. 254, 270 (1964). Even speech about private figures is still constitutionally protected, of course, and liability for false and defamatory statements about them is nevertheless subject to considerable First Amendment restraints, see, e.g., Gertz v. Robert Welch, Inc., 418 U.S. 323, 347-50 (1974); but the matter is especially clear for speech about public figures on matters of public concern.

Joe Stark is a “public official” because, as a police officer, he holds “a position of employment that carries with it duties and responsibilities affecting the lives, liberty, money or property of a citizen or that may enhance or disrupt his enjoyment of life, his peace and tranquility, or that of his family.” Press, Inc. v. Verran, 569 S.W.2d 435, 437, 441, 443 (Tenn. 1978) (so holding as to “a junior social worker,” who “had sufficient power to remove or cause their children to be taken from [parents’] custody and placed in a foster home”); see also Murray v. Lineberry, 69 S.W.3d 560, 563 (Tenn. Ct. App. 2001) (concluding that “any law enforcement officer” is “a public official”). And “[t]he commission of crime … [is] without question [an] event[] of legitimate concern to the public,” Cox Broad. Corp. v. Cohn, 420 U.S. 469, 492 (1975), as is the subsequent police investigation of the crime, see Connick v. Myers, 461 U.S. 138, 148 (1983).

Pamela Stark’s Facebook post was quintessentially protected speech. She explained that she was “a recent victim of domestic violence at the hands of a Memphis Police Officer.” R. at 41. She criticized the Memphis Police Department for “investigat[ing] a case where there is potential wrong doing and/or legal consequences for one of their own”—Joe Stark. Id. And she questioned the Memphis Police Department’s integrity: “Who do you turn to when those [s]worn to serve and protect and enforce the law, don’t.” Id. Contrary to the trial court’s view, her “references to [her] husband, about [her] husband, about [her] situation” did not render her speech unprotected or “off limits.” TE at 27.

Pamela Stark has a constitutional right to criticize the government, and to criticize her husband, especially since he was a government employee with important duties and powers. She does not lose that right merely because the government is also her husband’s employer.

[C.] Unjustified speech restrictions violate the First Amendment rights of Pamela Stark’s potential readers as well as of Pamela Stark herself.

An overbroad injunction against speech can “harm nonparties to the litigation because enjoining speech harms listeners as well as speakers.” McCarthy v. Fuller, 810 F.3d 456, 461 (7th Cir. 2015). “This right to receive information and ideas is a ‘corollary’ of the right to speak that triggers the First Amendment interests of not only speakers, but also audiences.”  David L. Hudson, Jr., First Amendment Right to Receive Information and Ideas Justifies Citizens’ Videotaping of Police, 10 U. St. Thomas J.L. & Pub. Pol’y 89, 89 (2016) (citation omitted). The First Amendment “embraces the right to distribute literature, and necessarily protects the right to receive it.” Martin v. City of Struthers, 319 U.S. 141, 143 (1943).

Domestic violence is a serious problem. So is police underenforcement of the laws against domestic violence. The public has a right to hear whether a police officer—someone sworn to uphold the law—has been accused of such violence, and whether his department has been accused of covering it up. Ordering the removal of such speech, without any prior finding on the merits that they are libelous, violates prospective readers’ rights as well as the speaker’s rights.

[II.] Even if this Court believes that § 36-4-106(d)(3) is constitutional, the injunction in this case prohibits more speech than is authorized by the statute.

This Court need not decide in this case whether § 36-4-106(d)(3) is constitutional, because the injunction goes beyond even that statute. Section 36-4-106(d)(3) calls for “[a]n injunction restraining both parties [in a divorce] from harassing, threatening, assaulting or abusing the other and from making disparaging remarks about the other to … either party’s employer.” Tenn. Code Ann. § 36-4-106(d)(3) (emphasis added). Much speech about an ex-spouse could indirectly damage the ex-spouse’s employment prospects (especially if the speech consists of accurate allegations of misconduct); but the statute deliberately did not purport to ban speech to friends or the media or the public at large. The injunction in this case, on the other hand, does impose the very sort of broad ban that the statute declines to: it forbids Pamela Stark from communicating to anyone on social media “any … public allegations against … Joe Stark … which may affect [Mr. Stark’s] reputation or employment,” R. at 80, ¶ 3.

In New Rivieria Arts Theatre v. State ex rel. Davis, this Court dissolved an injunction issued under a statute because it was “an unconstitutional application of the statute.” 412 S.W.2d 890, 894 (Tenn. 1967). An adult movie theater had been enjoined from showing “films and ‘Coming Attractions’ or ‘Trailers’ of the sort, kind or type which may be classified by the court as ‘obscene material.'” Id. at 892. But the relevant statute allowed the state courts only “to enjoin the sale or distribution of obscene material.” Id. at 893. Because the injunction applied to material that no court had yet found to be obscene, and thus was not included in the category of speech to be enjoined under the statute, the injunction was an incorrect “construction of the statute.” Id. at 895. Similarly here, the injunction forbids speech that no court has found to be covered by the statute, including speech that does not fall within any First Amendment exception.

[III.] This Court should grant review to provide guidance for future divorce cases, in which similar injunctions will likely be issued.

Injunctions issued under Tennessee Code Annotated § 36-4-16(d) “shall be in effect against both parties” “[u]pon the filing of a petition for divorce or legal separation.” More than twenty thousand couples filed for divorce in Tennessee in 2018, and all of them were supposed to be subjected to the statute’s injunction on speech. The statute already predisposes judges and litigants to turn to injunctive remedies in divorce disputes. If thousands of divorcing litigants can rely on the precedent set in this case—enjoining public allegations that a police sergeant committed a crime and that the police department failed to investigate it properly—those litigants may likewise seek to enjoin other types of protected speech.

Some such injunctions would similarly suppress speech about police officers and police departments. Others might apply even to speech about higher-placed government officials. And still more will cover less political, but still fully protected speech, such as a divorcing wife explaining to her friends on social media why she left her husband or that she is depressed because her husband mistreated her. People should be free to tell the story of their lives to their friends, even during family-law disputes. But if the decision below remains in place, such constitutionally protected speech will also likely end up being enjoined.

Because lower courts may issue a variety of injunctions that restrict speech protected by the First Amendment, this Court should grant review to “secure uniformity of decision,” “secure settlement of important questions of law,” and “secure settlement of questions of public interest.” Tenn. R. App. P. 11(a).

Conclusion

This Court should review this case because the injunction is an unconstitutional prior restraint. It enjoins speech that has not been determined to be unprotected by the First Amendment, and it goes far beyond the statute by prohibiting any public allegation made on social media. Without this Court’s guidance on the proper extent of such injunctions, lower courts will continue to issue them, even when they violate divorcing Tennesseans’ First Amendment rights.

 

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The Outrage Over Rhode Island’s State-Funded Coronavirus Art Is Overblown

At long last, Rhode Island’s state government has art to match its coronavirus response.

On Saturday, Rhode Island Gov. Gina Raimondo (D) unveiled the Rhode Island Angel of Hope and Strength, which is intended to inspire people whose lives have been disrupted by the state’s COVID-19 outbreak and subsequent shutdowns of most economic and social life.

The image was created by Shepard Fairey—the artist behind the iconic Obama ‘Hope’ image and an alum of the Rhode Island School of Design—who said in a post on his website that he was solicited by Raimondo to produce an uplifting image that incorporated the state’s “working-class roots” and paid homage to its healthcare and public safety workers.

However, the image he produced has irked some folks in the state. As the Providence Journal reports, Rhode Island conservative social media pages were filled with comments about the image’s similarity to the iconography of totalitarian regimes. The Journal also noted criticism from the local art community who denounced Raimondo’s decision to commission a California-based artist for the work.

The Rhode Island Center for Freedom & Prosperity, a conservative think tank, issued a press release in which it drew similarities between the image and propaganda images of Soviet dictator Joseph Stalin and Adolph Hitler.

The image is “a bastardization of the Statue of Liberty wearing a communist China-type cap and tunic, in a layout reminiscent of posters supporting fascist dictatorships of the past,” reads the Center’s press release.

“Consistent with her authoritarian plans to unilaterally impose harsh dictates on businesses, employees, and individuals during our state’s recovery process, the Governor, unbelievably, is asking us to accept such an overtly anti-American symbol of repression,” said Mike Stenhouse, the Center’s CEO.

The Center has called for businesses to be allowed to reopen, provided appropriate social distancing measures are put in place.

Rhode Island’s coronavirus response made headlines last month when the state National Guard began going door to door looking for New Yorkers in violation of a directive requiring travelers from out of state to register with the government and self-quarantine for 14 days, a policy that drew the ire of the Rhode Island chapter of the American Civil Liberties Union.

Like many other jurisdictions across the U.S., Rhode Island has also ordered all non-essential retail businesses to close and instructed residents to stay home unless they are leaving the house to get food, medicine, gas, or are going to work. This order is currently in effect until May 8.

Given the inordinate number of restrictions placed on people’s liberties right now—many of which have lasted past their expiration date, and some of which should never have been implemented in the first place—it’s a little difficult to get worked up by the thematic choices in Rhode Island’s state-sponsored artwork.

That said, it’s hard not to see the Angel of Hope’s stark similarities to propaganda images of old. While a different picture or artist might have resulted in less controversy, the state government should probably focus its attention on finding a safe way to restore its economy.

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Woman Banned from “Making Any … Public Allegations Against” Ex, a Police Sergeant, “on Social Media”

Monday, our invaluable local counsel Prof. David Hudson (Belmont University College of Law) filed an amicus brief written on behalf of the Electronic Frontier Foundation by UCLA Amicus Brief Clinic students Megan McDowell, Emily Rehm, and Brenna Scully and me. I thought our readers would find the issue interesting (I had blogged about the case several months ago), so I’m passing it along here—we are asking the Tennessee Supreme Court to review the case. (There’s also an important dispute here about mootness, but the petitioner’s lawyer, Daniel A. Horwitz, is handling that.)

Introduction and Summary of Argument

Pamela Stark was held in contempt for violating a broad and unconstitutional prior restraint that prohibited her from “making any … public allegations against … Joe Stark, on social media (on any platform).” R. at 80, ¶ 3. Based on this injunction, the court ordered Pamela Stark to delete her Facebook post that criticized the Memphis Police Department for its alleged mishandling of the investigation into Joe Stark, a police sergeant (and thus a public official) who had allegedly committed a crime against Pamela Stark.

This prior restraint violated Pamela Stark’s First Amendment rights. Some courts have held that an injunction against speech may become permissible after a final judgment that the enjoined speech is unprotected by the First Amendment (for instance, is a libel or a true threat of violence). But no such determination was made about Pamela Stark’s Facebook post.

Nor can the injunction be justified under Tenn. Code Ann. § 36-4-106(d)(3), even if this Court were to view that statute as constitutional. Under the statute, Pamela Stark may not make any statements that “harass[], threaten[], assault[] or abus[e]” Joe Stark, and she may not “mak[e] disparaging remarks about” him to his employer. But the trial court’s injunction prohibits Pamela Stark from making any allegations about Joe Stark to anyone—including the media, her friends, and the public generally—and not just to his employer. It also prohibits speech that is not harassment: speech that does not constitute “communicat[ions] with” Joe Stark “with the intent [to] annoy[], offend[], alarm[], or frighten[]” him, as defined by Tennessee’s harassment statute. Tenn. Code Ann. § 39-17-308(a)(2). This injunction, then, is an impermissible application of § 36-4-106(d)(3).

Divorces are regrettably common, and § 36-4-106(d)(3) automatically mandates an injunction in every divorce case. Other litigants are likely to seek similarly broad injunctions to silence their spouses, especially if the decision below is left in place and becomes well known among the family-law bar. And as this case illustrates, lower courts may be tempted to agree with such petitioners and restrict even more speech than the statute describes. This Court should thus grant review to provide guidance on when divorcing spouses’ otherwise constitutionally protected speech can be restricted, and when it remains protected.

Argument

[I.] The injunction is an unconstitutional prior restraint on Pamela Stark’s protected speech.

[A.] Prior restraints may not enjoin speech that is protected by the First Amendment.

“Temporary restraining orders and permanent injunctions—i.e., court orders that actually forbid speech activities—are classic examples of prior restraints.” Alexander v. United States, 509 U.S. 544, 550 (1993). “The special vice of a prior restraint is that communication will be suppressed … before an adequate determination that it is unprotected by the First Amendment.” Pittsburgh Press Co. v. Pittsburgh Comm. on Human Relations, 413 U.S. 376, 390 (1973). For that reason, injunctions against speech have been held unconstitutional when they restrict speech that the court has not found to be unprotected. See Vance v. Universal Amusement Co., 445 U.S. 308, 316-17 (1980); Org. for Better Austin v. Keefe, 402 U.S. 415, 417-19 (1971); cf. Pittsburgh Press, 413 U.S. at 390. And of course the First Amendment fully protects speech on social media. See, e.g., Packingham v. N.C., 137 S. Ct. 1730, 1735 (2017).

Thus, even the courts that allow narrowly crafted permanent injunctions against libel allow them only against speech that has been deemed libelous in a decision on the merits. Thus, such injunctions cover only defamatory “speech that has been determined to be false by a fact-finder,” Loden v. Schmidt, No. M2014-01284-COA-R3-CV, 2015 WL 1881240 at *8 (Tenn. Ct. App. 2015), enjoined only “after a determination that the speech is, in fact, false.” In re Conservatorship of Turner, No. M2013-01665-COA-R3-CV, 2014 WL 1901115 at *20 (Tenn. Ct. App. 2014). “[A] narrow and limited injunction” might in some situations restrict speech “which ha[s] been found … to be false and libelous.” Lothschuetz v. Carpenter, 898 F.2d 1200, 1208, 1209 (6th Cir. 1990) (Wellford, J., concurring in part and dissenting in part); see id. at 1209 (Hull, J., concurring in part and dissenting in part) (concurring with Judge Wellford “[o]n the issue of the injunction”).

Indeed, in Hill v. Petrotech Resources Corp., the Kentucky Supreme Court expressly reversed a pretrial injunction against libel as an unconstitutional prior restraint, 325 S.W.3d 302, 306 (Ky. 2010), holding that “defamatory speech may be enjoined only after the trial court’s final determination … that the speech at issue is, in fact, false”—only then “could the speech be ascertained to be constitutionally unprotected, and therefore subject to injunction against future repetition.” Id. at 309, 311. In so holding, the court acknowledged that “the rule may temporarily delay relief for those ultimately found to be innocent victims of slander and libel.” Id. at 311. But because the rule “prevents the unwarranted suppression of speech of those who are ultimately shown to have committed no defamation,” the rule is essential to “protect[] important constitutional values.” Id.

Other state appellate courts take the same view. Thus, in Hartman v. PIP-Group, the Georgia Court of Appeals dissolved an order that “forb[ade the speaker] from making future statements” and “requir[ed the speaker] to remove his past speech from certain websites”; the order was “an impermissible prior restraint” because “a factfinder has not decided whether [the] statements are false or defamatory.” 825 S.E.2d 601, 606 (Ga. Ct. App. 2019). “We have found no Georgia case upholding an interlocutory injunction prohibiting speech. Our Supreme Court has noted that although ‘it has never been held that all injunctions against publication are impermissible,’ such an injunction has been upheld only when it ‘was entered subsequent to a verdict in which a jury found that statements made by [the defendant] were false and defamatory.'” Id. (citing High Country Fashions v. Marlenna Fashions, 357 S.E.2d 576, 577 (Ga. 1987)). And in O’Brien v. University Community Tenants Union, the Ohio Supreme Court held that an injunction against libel was constitutional only “[o]nce speech has judicially been found libelous”: “The judicial determination that specific speech is defamatory must be made prior to any restraint.” 327 N.E.2d 753, 755 (Ohio 1975).

And these cases actually mark the less speech-protective approach to the issue of injunctions as relief in defamation cases. For example, the Texas Supreme Court has held that even a full and final determination that a statement was defamatory cannot justify an injunction against future publication, though it may justify an order requiring the removal of that specific statement from a website on which it had already been posted. Kinney v. Barnes, 443 S.W.3d 87, 98 (Tex. 2014).

Here, the lower court did not even meet the lower threshold set forth by the Court of Appeals cases and the Kentucky, Georgia, and Ohio cases. The lower court did not determine that Pamela Stark’s Facebook post was false and defamatory and therefore constitutionally unprotected.

Indeed, there is no reason to think that it was. Disparaging speech is constitutionally protected, unless it is found to be defamatory. And that standard may be even higher for injunctive relief than for damages. In Organization for a Better Austin v. Keefe, 402 U.S. 415 (1971), the U.S. Supreme Court dissolved an injunction against distributing leaflets that criticized a local small businessman. Id. at 417-19. The Keefe Court rejected the argument that a private citizen was entitled to “be free from public criticism of his business practices.” Id. at 419. And the Court reasoned that the distribution of leaflets could not be enjoined even if it were viewed as “an invasion of privacy,” because the speech was made to the public rather than being specifically sent to the businessman “into his own household.” Id. at 419-20. (Whether or not the speech might lead to a damages award for invasion of privacy would be a different question.) Like the businessman in Keefe, Joe Stark may not get an injunction suppressing criticism simply on the grounds that the criticism may harm his professional reputation.

Nor was Pamela Stark’s post constitutionally unprotected on the theory that it was “harass[ing].” “‘[T]here is no categorical “harassment exception” to the First Amendment’s free speech clause.'” State v. Burkert, 174 A.3d 987, 1000 (N.J. 2017) (quoting Saxe v. State Coll. Area Sch. Dist., 240 F.3d 200, 204 (3d Cir. 2001) (Alito, J.)); Rodriguez v. Maricopa Cty. Cmty. Coll. Dist., 605 F.3d 703, 708 (9th Cir. 2010) (likewise).

But beyond that, Pamela Stark’s speech was not found to be harassment, and indeed would not be harassment under Tennessee law, which is limited to situations where the speaker “communicate[s] with another person … with the intent to annoy[], offend[], alarm[], or frighten[] the recipient,” and the communication in fact accomplishes these intentions. Tenn. Code Ann. § 39-17-308(a)(2). Like the speakers in Keefe, Pamela did not “communicate with” Joe: she did not send her post to him, tag him in the post, or otherwise direct him to read it. Instead, she spoke to the public using her social media account.

The Georgia Supreme Court’s decision in Chan v. Ellis, 770 S.E.2d 851 (Ga. 2015), is instructive on this point. In Chan, as in this case, a trial court issued a broad injunction restricting Chan from speaking about Ellis, based on a statute that barred people from “contact[ing] another person … for the purpose of harassing and intimidating the other person,” with “contact[ing]” defined as “communicat[ing] with another person.” Id. at 853. But such a harassment ban, the Georgia Supreme Court held, only extended to speech “directed to that person” and did not purport to forbid speech “about a particular person.” Id. at 854 (emphasis in original). Likewise, here Pamela Stark’s public speech about Joe Stark (said in the course of speaking about the police department) did not constitute “communicat[ing] with” him.

[B.] Pamela Stark’s speech, which criticizes the government, is protected speech.

“Criticism of government is at the very center of the constitutionally protected area of free discussion. Criticism of those responsible for government operations must be free, lest criticism of government itself be penalized.” Rosenblatt v. Baer, 383 U.S. 75, 85 (1966). Criticism of the government often involves criticism of a person, and it is protected even when it “include[s] vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials.” New York Times Co. v. Sullivan, 376 U.S. 254, 270 (1964). Even speech about private figures is still constitutionally protected, of course, and liability for false and defamatory statements about them is nevertheless subject to considerable First Amendment restraints, see, e.g., Gertz v. Robert Welch, Inc., 418 U.S. 323, 347-50 (1974); but the matter is especially clear for speech about public figures on matters of public concern.

Joe Stark is a “public official” because, as a police officer, he holds “a position of employment that carries with it duties and responsibilities affecting the lives, liberty, money or property of a citizen or that may enhance or disrupt his enjoyment of life, his peace and tranquility, or that of his family.” Press, Inc. v. Verran, 569 S.W.2d 435, 437, 441, 443 (Tenn. 1978) (so holding as to “a junior social worker,” who “had sufficient power to remove or cause their children to be taken from [parents’] custody and placed in a foster home”); see also Murray v. Lineberry, 69 S.W.3d 560, 563 (Tenn. Ct. App. 2001) (concluding that “any law enforcement officer” is “a public official”). And “[t]he commission of crime … [is] without question [an] event[] of legitimate concern to the public,” Cox Broad. Corp. v. Cohn, 420 U.S. 469, 492 (1975), as is the subsequent police investigation of the crime, see Connick v. Myers, 461 U.S. 138, 148 (1983).

Pamela Stark’s Facebook post was quintessentially protected speech. She explained that she was “a recent victim of domestic violence at the hands of a Memphis Police Officer.” R. at 41. She criticized the Memphis Police Department for “investigat[ing] a case where there is potential wrong doing and/or legal consequences for one of their own”—Joe Stark. Id. And she questioned the Memphis Police Department’s integrity: “Who do you turn to when those [s]worn to serve and protect and enforce the law, don’t.” Id. Contrary to the trial court’s view, her “references to [her] husband, about [her] husband, about [her] situation” did not render her speech unprotected or “off limits.” TE at 27.

Pamela Stark has a constitutional right to criticize the government, and to criticize her husband, especially since he was a government employee with important duties and powers. She does not lose that right merely because the government is also her husband’s employer.

[C.] Unjustified speech restrictions violate the First Amendment rights of Pamela Stark’s potential readers as well as of Pamela Stark herself.

An overbroad injunction against speech can “harm nonparties to the litigation because enjoining speech harms listeners as well as speakers.” McCarthy v. Fuller, 810 F.3d 456, 461 (7th Cir. 2015). “This right to receive information and ideas is a ‘corollary’ of the right to speak that triggers the First Amendment interests of not only speakers, but also audiences.”  David L. Hudson, Jr., First Amendment Right to Receive Information and Ideas Justifies Citizens’ Videotaping of Police, 10 U. St. Thomas J.L. & Pub. Pol’y 89, 89 (2016) (citation omitted). The First Amendment “embraces the right to distribute literature, and necessarily protects the right to receive it.” Martin v. City of Struthers, 319 U.S. 141, 143 (1943).

Domestic violence is a serious problem. So is police underenforcement of the laws against domestic violence. The public has a right to hear whether a police officer—someone sworn to uphold the law—has been accused of such violence, and whether his department has been accused of covering it up. Ordering the removal of such speech, without any prior finding on the merits that they are libelous, violates prospective readers’ rights as well as the speaker’s rights.

[II.] Even if this Court believes that § 36-4-106(d)(3) is constitutional, the injunction in this case prohibits more speech than is authorized by the statute.

This Court need not decide in this case whether § 36-4-106(d)(3) is constitutional, because the injunction goes beyond even that statute. Section 36-4-106(d)(3) calls for “[a]n injunction restraining both parties [in a divorce] from harassing, threatening, assaulting or abusing the other and from making disparaging remarks about the other to … either party’s employer.” Tenn. Code Ann. § 36-4-106(d)(3) (emphasis added). Much speech about an ex-spouse could indirectly damage the ex-spouse’s employment prospects (especially if the speech consists of accurate allegations of misconduct); but the statute deliberately did not purport to ban speech to friends or the media or the public at large. The injunction in this case, on the other hand, does impose the very sort of broad ban that the statute declines to: it forbids Pamela Stark from communicating to anyone on social media “any … public allegations against … Joe Stark … which may affect [Mr. Stark’s] reputation or employment,” R. at 80, ¶ 3.

In New Rivieria Arts Theatre v. State ex rel. Davis, this Court dissolved an injunction issued under a statute because it was “an unconstitutional application of the statute.” 412 S.W.2d 890, 894 (Tenn. 1967). An adult movie theater had been enjoined from showing “films and ‘Coming Attractions’ or ‘Trailers’ of the sort, kind or type which may be classified by the court as ‘obscene material.'” Id. at 892. But the relevant statute allowed the state courts only “to enjoin the sale or distribution of obscene material.” Id. at 893. Because the injunction applied to material that no court had yet found to be obscene, and thus was not included in the category of speech to be enjoined under the statute, the injunction was an incorrect “construction of the statute.” Id. at 895. Similarly here, the injunction forbids speech that no court has found to be covered by the statute, including speech that does not fall within any First Amendment exception.

[III.] This Court should grant review to provide guidance for future divorce cases, in which similar injunctions will likely be issued.

Injunctions issued under Tennessee Code Annotated § 36-4-16(d) “shall be in effect against both parties” “[u]pon the filing of a petition for divorce or legal separation.” More than twenty thousand couples filed for divorce in Tennessee in 2018, and all of them were supposed to be subjected to the statute’s injunction on speech. The statute already predisposes judges and litigants to turn to injunctive remedies in divorce disputes. If thousands of divorcing litigants can rely on the precedent set in this case—enjoining public allegations that a police sergeant committed a crime and that the police department failed to investigate it properly—those litigants may likewise seek to enjoin other types of protected speech.

Some such injunctions would similarly suppress speech about police officers and police departments. Others might apply even to speech about higher-placed government officials. And still more will cover less political, but still fully protected speech, such as a divorcing wife explaining to her friends on social media why she left her husband or that she is depressed because her husband mistreated her. People should be free to tell the story of their lives to their friends, even during family-law disputes. But if the decision below remains in place, such constitutionally protected speech will also likely end up being enjoined.

Because lower courts may issue a variety of injunctions that restrict speech protected by the First Amendment, this Court should grant review to “secure uniformity of decision,” “secure settlement of important questions of law,” and “secure settlement of questions of public interest.” Tenn. R. App. P. 11(a).

Conclusion

This Court should review this case because the injunction is an unconstitutional prior restraint. It enjoins speech that has not been determined to be unprotected by the First Amendment, and it goes far beyond the statute by prohibiting any public allegation made on social media. Without this Court’s guidance on the proper extent of such injunctions, lower courts will continue to issue them, even when they violate divorcing Tennesseans’ First Amendment rights.

 

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The Outrage Over Rhode Island’s State-Funded Coronavirus Art Is Overblown

At long last, Rhode Island’s state government has art to match its coronavirus response.

On Saturday, Rhode Island Gov. Gina Raimondo (D) unveiled the Rhode Island Angel of Hope and Strength, which is intended to inspire people whose lives have been disrupted by the state’s COVID-19 outbreak and subsequent shutdowns of most economic and social life.

The image was created by Shepard Fairey—the artist behind the iconic Obama ‘Hope’ image and an alum of the Rhode Island School of Design—who said in a post on his website that he was solicited by Raimondo to produce an uplifting image that incorporated the state’s “working-class roots” and paid homage to its healthcare and public safety workers.

However, the image he produced has irked some folks in the state. As the Providence Journal reports, Rhode Island conservative social media pages were filled with comments about the image’s similarity to the iconography of totalitarian regimes. The Journal also noted criticism from the local art community who denounced Raimondo’s decision to commission a California-based artist for the work.

The Rhode Island Center for Freedom & Prosperity, a conservative think tank, issued a press release in which it drew similarities between the image and propaganda images of Soviet dictator Joseph Stalin and Adolph Hitler.

The image is “a bastardization of the Statue of Liberty wearing a communist China-type cap and tunic, in a layout reminiscent of posters supporting fascist dictatorships of the past,” reads the Center’s press release.

“Consistent with her authoritarian plans to unilaterally impose harsh dictates on businesses, employees, and individuals during our state’s recovery process, the Governor, unbelievably, is asking us to accept such an overtly anti-American symbol of repression,” said Mike Stenhouse, the Center’s CEO.

The Center has called for businesses to be allowed to reopen, provided appropriate social distancing measures are put in place.

Rhode Island’s coronavirus response made headlines last month when the state National Guard began going door to door looking for New Yorkers in violation of a directive requiring travelers from out of state to register with the government and self-quarantine for 14 days, a policy that drew the ire of the Rhode Island chapter of the American Civil Liberties Union.

Like many other jurisdictions across the U.S., Rhode Island has also ordered all non-essential retail businesses to close and instructed residents to stay home unless they are leaving the house to get food, medicine, gas, or are going to work. This order is currently in effect until May 8.

Given the inordinate number of restrictions placed on people’s liberties right now—many of which have lasted past their expiration date, and some of which should never have been implemented in the first place—it’s a little difficult to get worked up by the thematic choices in Rhode Island’s state-sponsored artwork.

That said, it’s hard not to see the Angel of Hope’s stark similarities to propaganda images of old. While a different picture or artist might have resulted in less controversy, the state government should probably focus its attention on finding a safe way to restore its economy.

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Markets & “Misguided Hopeful Bunkum”

Markets & “Misguided Hopeful Bunkum”

Authored by Bill Blain via MorningPorridge.com,

“I dinnae think she can take any more, Captain…”

I can’t understand why US stock markets didn’t hit record highs last night? What’s wrong with the Yanks? Didn’t they read Gilead Sciences report on a positive C-19 trial on Remdesivir? Surely that is worth a couple of hundred points up? Haven’t they listened to Trump describing Project Warp Speed and promising a vaccine available in just a few months? And, Tesla posted a profit when global car companies around the globe are in surrender mode. What’s not to like! Bring it on…. 

In the face of such overwhelmingly positive news – Markets should be Stratospheric.. (US Readers – Very Heavy Sarcasm Alert.)

What is real? What is not? What are hopes? What are just dreams? And, what is bona fide bunkum? That is the real story of this market – who will ultimately be the winners (a few), verus who will be the small, big and massive losers (most), and who are the fraudsters.  

What is real includes Microsoft. Just a few weeks ago I wrote about how the WFH revolution will provide a massive boost to cloud adoption, revenues and growth. Microsoft reported the last two months have seen cloud adoption on a massive scale (59% growth over Q1) and digital transformation on a scale they previously expected would take 2 years! That is real – and why the stock sits in my portfolio.  

What is real includes the Fed. Last night Powell made clear the US central bank stands ready to do more… to anchor markets. US Q1 GDP fell 4.8% – more than expected.  French GDP fell 6% – the steepest decline in history. European growth is expected to have fallen nearly 4% in Q1. In the expectation of a 15% decline across Europe this year, the ECB will be lining up another couple of notional trillion Euro to throw at QEI – Legarde speaks this afternoon. What to do? Buy more Euro debt to sell to the ECB!  That’s real!

What is real is Shell cutting its dividend for the first time since second world war – that will shock a few pals who were hoping to retire on it’s dividends. This is a major shocker and could prove the straw that breaks the expectations back! Its massive significant for real money pension and insurance funds. What is real is Hertz preparing for bankruptcy after missing a series of lease payments despite laying off staff.

What is not real probably includes the significance of the latest US National Institute of Allergy and Infectious Diseases (NIAID) trial of Remdesivir, the Gilead drug being trumped as a wonder cure. “Quite Good News” is not exactly a ringing endorsement, but you’d think humanity is saved! I feel sorry for Dr Anthony Fauci – Head of NIAID. You can see it in his eyes.. “Please get me away from these idiots.. they are holding my family hostage…” as he was wheeled into the Oval Office and the Emperor’s presence to make positive noises. At the same time another Chinese trial was inconclusive. 

You can see where this is going. The markets desperately want to validate the recent gains by massively inflating anything that looks to positively solve Coronavirus and return the world they understand to normal. Meanwhile, the market is keeping its eyes tight shut to the economic reality. 

Into a new category I shall call misguided hopeful bunkum is Trump’s Operation Warp Speed. He has promised to vaccinate most Americans by January… with a vaccine we still don’t have. Words… words..words. Trump believes success is measured by what people will think, not what he achieves. Throwing around precedents like the Manhattan project does not guarantee success. His own advisors (including Prisoner No 6 – Dr Fauci) say the best case is 12-18 months to develop! 

(I would advise Boris to be very suspicious when Trump starts demanding preferential access to the promising UK Oxford virus project – remember how the Septics treated the UK after the last Manhattan project. The last 4 years has conclusively demonstrated just how much trust foreign allies should invest in the US presidency.) 

What is in the hopeful category? It includes Wizz and Ryan Air. Both are planning to ramp up low-cost European flights from the summer and expect a rapid reopening of air routes. It might be problematic to go on a weekend City-Break to Prague if you have to spend 2 weeks in quarantine when you arrive, and another 2 weeks when you fly back.. 

However, the fact some of the largest Low-Cost-Carriers anticipate pent up demand to travel, for holidays and business, does strike a chord. It rather depends on how the virus pans out. If it’s possible to travel, I rather suspect Jozsef Varadi of Wizz and the oh-so-amusing Michael O’Leary of Ryan Air could be right. Planning a ramp up when other airlines are sacking 30% of staff (BA), cancelling nearly all flights (Norwegian), or begging bailouts (about everyone else) is a smart move. If the virus means it can’t happen, they can stand down. If the Virus allows it – they have a march on the market. (I shall resist – I am thinking flying Ryan Air is even worse that catching SouthWest Trains!)

Also in the hopeful category might be Facebook. Better than expected results, but it’s been warning about declining advertising revenue which could well bite much deeper into Q2. Got to think FB is in the same bracket as Netflix – doing very well because people turn to their screens in Lockdown.. but will it be sustainable… ?

And what is in the Just Barmy category?

One can’t help but be impressed with Tesla’s stand out $16 mm Q1 profit. (US Readers – Sarcasm…) $16 is a very very small number. (I am currently raising money for relatively unknown SMEs that make more profit than that from secure markets in which they dominate price setting and supply with secure demand in view – and they ain’t worth gazillionbillions!) 

Tesla stock rocketed 10% on the news of its stupendously tiny profit – which was a gain in market cap of around $1.3 bln, or about 81 times the profit it made. Go figure… 

Its only ever positive with Tesla. There is absolutely nothing holding the company back – except of course the “God***m Fascists” in Government Musk says are denying the rights of American consumers to make him rich. He is in line for a $720 mm plus payday under the terms of his one-sided stock options bonus plan

Of course , expressing any doubts on the EV car maker means I am going to be trolled by Musk’s army of TeslaBot stock commentators. I bet someone posts something like: “I bought Tesla at $28, and then again all the way up, my last purchase at $600. I ain’t going to sell a single share till it hits $3000 – and all the numbers prove it will be there in just months.”  Of course you did. What a clever little lying troll you are. 

Line up the shills. 

Although Tesla claims to have plenty of cash to burn… expect to see it raise more debt and more capital… The Teslaphiles will praise Musk for vision and smarts… A variation on WeWork this way comes…. 

Full Disclosure: I own Tesla stock – by accident. The day Musk is quietly locked away in a secure government facility for Sociopaths will be the day I start to take the firm’s prospects seriously. Whatever the trolls say, I know many institutional investors share that view. There is nothing wrong with the cars – but I think I’ll keep my Landy, and the F500 is much more fun. 


Tyler Durden

Thu, 04/30/2020 – 08:05

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ECB Keeps Rates, QE Unchanged, Launches New Pandemic Refinancing Operation For Banks

ECB Keeps Rates, QE Unchanged, Launches New Pandemic Refinancing Operation For Banks

As expected, there were no changes to either the ECB’s rates or purchase program, or its €750BN expanded QE, aka the pandemic emergency purchase programme, with the ECB reiterating its willingness to do more, and clarifying that “the Governing Council will conduct net asset purchases under the PEPP until it judges that the coronavirus crisis phase is over, but in any case until the end of this year.”

The central bank also said the asset purchase programme plan will continue at a monthly pace of €20BN, together with the purchases under the additional €120BN temporary envelope until the end of the year, adding that “the Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.”

Separately, the ECB made the conditions for the previously announced TLTRO slightly more favorable by cutting the lowest interest rate on the TLTRO: “Specifically, the Governing Council decided to reduce the interest rate on TLTRO III operations during the period from June 2020 to June 2021 to 50 basis points below the average interest rate on the Eurosystem’s main refinancing operations prevailing over the same period.”

“Moreover, for counterparties whose eligible net lending reaches the lending performance threshold, the interest rate over the period from June 2020 to June 2021 will now be 50 basis points below the average deposit facility rate prevailing over the same period.”

Last but not least, the ECB also announced “a new series of non-targeted pandemic emergency longer-term refinancing operations (PELTROs)” which will be conducted to support liquidity conditions in the euro area financial system and contribute to preserving the smooth functioning of money markets by providing an effective liquidity backstop.

The PELTROs consist of seven additional refinancing operations commencing in May 2020 and maturing in a staggered sequence between July and September 2021 in line with the duration of the collateral easing measures. They will be carried out as fixed rate tender procedures with full allotment, with an interest rate that is 25 basis points below the average rate on the main refinancing operations prevailing over the life of each PELTRO.

While the introduction of the PELTROs was as some had expected, the lack of a more aggressive expansion in the QE may have come as a disappointment to some, and likely explains why the DAX and German bund yields dipped modestly lower on the news.

Full statement below:

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

(1) The conditions on the targeted longer-term refinancing operations (TLTRO III) have been further eased. Specifically, the Governing Council decided to reduce the interest rate on TLTRO III operations during the period from June 2020 to June 2021 to 50 basis points below the average interest rate on the Eurosystem’s main refinancing operations prevailing over the same period. Moreover, for counterparties whose eligible net lending reaches the lending performance threshold, the interest rate over the period from June 2020 to June 2021 will now be 50 basis points below the average deposit facility rate prevailing over the same period.

(2) A new series of non-targeted pandemic emergency longer-term refinancing operations (PELTROs) will be conducted to support liquidity conditions in the euro area financial system and contribute to preserving the smooth functioning of money markets by providing an effective liquidity backstop. The PELTROs consist of seven additional refinancing operations commencing in May 2020 and maturing in a staggered sequence between July and September 2021 in line with the duration of the collateral easing measures. They will be carried out as fixed rate tender procedures with full allotment, with an interest rate that is 25 basis points below the average rate on the main refinancing operations prevailing over the life of each PELTRO.

(3) Since the end of March, purchases have been conducted under the Governing Council’s new pandemic emergency purchase programme (PEPP), which has an overall envelope of €750 billion, to ease the overall monetary policy stance and to counter the severe risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the coronavirus pandemic. These purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions. The Governing Council will conduct net asset purchases under the PEPP until it judges that the coronavirus crisis phase is over, but in any case until the end of this year.

(4) Moreover, net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year. The Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.

(5) Reinvestments of the principal payments from maturing securities purchased under the APP will continue, in full, for an extended period of time past the date when the Governing Council starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

(6) The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively. The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

The Governing Council is fully prepared to increase the size of the PEPP and adjust its composition, by as much as necessary and for as long as needed. In any case, it stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.

Further details on the amendments made to the terms of TLTRO III and on the new PELTROs will be published in dedicated press releases this afternoon at 15:30 CET.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

And now all eyes on Lagarde’s press conference at 830am ET.


Tyler Durden

Thu, 04/30/2020 – 07:53

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Airbus Reports Abysmal Earnings, Russian Mafia Busted For Smuggling Ventilators: Live Updates

Airbus Reports Abysmal Earnings, Russian Mafia Busted For Smuggling Ventilators: Live Updates

Summary:

  • LA becomes first US city to offer county-wide testing
  • Sri Lanka reimposes lockdown measures
  • Italy retakes mantle of second-deadliest outbreak in Europe from UK
  • South Korea says ‘zero’ cases of infection stemming from April 15 election
  • Airbus reports massive loss, signals distress
  • New data suggests 1 in 6 US nursing homes suffered COVID-19 clusters
  • 500k coronavirus tests obtained by Maryland from SK haven’t yet been used
  • NYT hammers Brazil’s Bolsonaro for denying outbreak
  • UN warns about virus spreading in Syria, Yemen
  • Eurozone GDP contracts 3.8%
  • UK NHS allows hospitals to remove minority workers off the front lines

*         *         *

German public health officials announced yesterday that Germany’s infection rate had ticked higher over last week since the German government started allowing some shops to reopen, raising the possibility that Germany – Europe’s undisputed leader in tamping down the outbreak – might need to reimpose the lifted lockdown measures.

Meanwhile, in Japan, local press reported yesterday that PM Shinzo Abe would extend his nationwide ‘state of emergency’ order for a month as the health officials discover more evidence that the virus has deeply penetrated Japanese society, despite jokes about Japanese culture, which isn’t big on inter-personal contact, is itself a form of social distancing.

But on Thursday morning, tiny Sri Lanka reimposed its 24-hour lockdown after officials detected a jump in infections.

After briefly taking the No. 2 spot from Italy yesterday, the UK is once again on track to clinch the mantle of “second-most deadly outbreak in Europe” following the latest revision to the UK death toll, announced yesterday, which added thousands of home deaths to the official tally.

Looking ahead on Thursday, the number of confirmed coronavirus cases has moved above 3.1 million, while the number of deaths is nearing 210k.

As far as the curve is concerned, both the pace of new deaths…

…and new cases…

Source: FT

…has begun to slow across the US and Europe.

With the number of domestically transmitted infections down to virtually zero, South Korean officials revealed Thursday morning that the country’s April 15 elections had resulted in no new coronavirus infections. And now that two weeks – the typical incubation period – have passed since since the vote, it’s become clear that none of the 29 million Koreans who cast ballots had been infected.

In the US, a new report has confirmed what many experts had suspected: the number of publicly reported coronavirus cases in US nursing homes has soared.

More than 1 in 6 facilities nationwide has detected infections among residents or staff, according to new data released by states such as Michigan, Maryland, Kentucky and South Carolina.

On Wednesday evening, LA Mayor Eric Garcetti said all Los Angeles County residents will be able to obtain free coronavirus testing, even if they are not displaying symptoms, as LA becomes the first city to offer county-wide testing.

As the battle to reopen America rages, a local Louisiana newspaper has uncovered a “secret plot” being organized by Republican state legislators to overturn Gov. John Bel Edwards’ decision to extend his state’s emergency order until May 15. Louisiana has been one of the hardest-hit states in the country, with 593 confirmed cases and 39 deaths for every 100,000 people, while also being ground-zero for the outbreak in the federal prison system that has killed dozens of prisoners already, including a female prisoner who gave birth by C-section.

A group of Republican legislators in Louisiana is quietly working to overturn the Democratic governor’s stay-at-home order, the Advocate newspaper reported.

Emails obtained by the Advocate revealed a plan to invoke an obscure provision that would allow a majority in either chamber of the Republican-controlled state to repeal Edwards’ public-health emergency. Edwards’ handling of the outbreak in his state has been widely praised, including by President Trump. But the devastating hit to the state’s economy, which relies heavily on tourism, have put hundreds of thousands of jobs and businesses in the state at risk.

After reporting dismal Q1 earnings on Wednesday, the CEO of European aerospace giant Airbus – the “Jewel of the European economy” as the NYT called it – warned “we are now in the midst of the gravest crisis the aerospace industry has ever known.”

The company reported a net loss of 481 million euros ($520 million) for Q1, a dramatic reversal from last year. In that period, it could not deliver 60 planes, partly because airlines are seeking to put off payment.

Following yesterday’s historic contraction in US Q1 GDP, the EU followed suit on Thursday and reported its sharpest economic reversal since pan-European record keeping began in 1995.

Eurostat data showed a “seasonally-adjusted” contraction of 3.8% for eurozone countries, and a 3.5% contraction for all EU member states (including those – like Switzerland and Norway – who don’t use the euro). 

European shares sloughed off the GDP reading, which was widely expected, as investors in Europe and Asia focused on the positive news from a study of remdesivir.

Early in April, UN workers raised the alarm about an outbreak in war-torn Syria as the coronavirus swept across the Middle East. Now, the UN is ringing the alarm once again, warning that the virus could be spreading more or less undetected across war-torn Yemen and Syria. Specifically, a new cluster has been discovered in Yemen, adding to the country’s already sizable array of problems.

We’d like to reminder our American readers that while governors have largely led their states through the outbreak, there have been several notable instances of grandstanding and perhaps undeserved PR spin. One such example arrived on Thursday as the Washington Post reported that the ~500,000 coronavirus tests obtained by Maryland Gov. Larry Hogan – something he called an “exponential, game-changing step forward” – have yet to be used.

Finally, in the UK, evidence that the virus is disproportionately deadly for NHS workers from minority backgrounds (1/5th of nurses and half of doctors in London are from minority backgrounds) has led it to allow hospitals to move minority workers off the front line to try and tamp down the “disproportionate” deaths among them.

Minorities make up nearly 3/4ths of the health care workers known to have died from the virus.

As Brazil develops into the world’s newest viral “hot spot”, the NYT bashed Brazilian President Jair Bolsonaro for his continued refusal to acknowledge the crisis: Nearly 500 Covid-19 deaths were reported in Brazil on Tuesday, the highest single-day death toll yet. When asked about the milestone, President Jair Bolsonaro replied: “So what? I’m sorry. What do you want me to do?”

Bolsonaro’s refusal to acknowledge the outbreak’s severity has left Brazil with one of the lowest testing rates in the world. But fears that the outbreak is far more widespread than official numbers suggest haven’t translated to the images of brutality and chaos seen in Wuhan earlier this year.

However, some hospitals have begun reporting familiar scenes of patients crammed into hallways, as the world waits to see if the outbreak will overwhelm Brazil’s health-care system.

We’ve been closely following the outbreak in Russia in recent days as the confirmed case total has soared, alongside a jump in deaths. And as the outbreak worsens, Russian criminal gangs are increasingly trafficking in vital medical equipment. Russian police on Thursday exchanged gunfire with members of a mafia crew suspected of trafficking in illicit ventilators during a raid in a suburb of Moscow.

The interior ministry told Dow Jones that seven people had been detained, and five placed under house arrest, for allegedly selling the “unregistered” ventilators in the Moscow suburb of Gzhel.

A Russian digital media website reported that eight suspected gangsters had been arrested while trying to sell 100 ventilators for 70 million rubles (about $96,000). President Vladimir Putin has repeatedly warned criminals against exploiting the outbreak for profits.


Tyler Durden

Thu, 04/30/2020 – 07:47

via ZeroHedge News https://ift.tt/2zKRtN1 Tyler Durden

ECB Preview: Don’t Expect Much

ECB Preview: Don’t Expect Much

Just like the Fed yesterday, don’t expect much from today’s ECB meeting. According to Saxobank’s Christopher Dembik, President Lagarde’s main goal today will be to explain what her strategy is and how she sees the shape of the recovery. There is no urgent need to beef up asset purchases yet.

Summary:

  • ECB policy announcement due Thursday 30th April; rate decision at 1245BST/745ET, press conference 1330BST/ 0830ET
  • Rates set to be left unchanged, tweaks to the PEPP could be on the cards
  • President Lagarde likely to stress the Governing Council’s willingness to “do whatever it takes” in the absence of any other policy adjustments

ECB Cheat Sheet courtesy of ING economics:

Context: If we omit Lagarde’s mistake on the ECB’s willingness to close spreads, the central bank has done a good job to address the financial and economic issues related to the COVID-19 outbreak.  Since the first week of March, the ECB has implemented more favorable terms for the already planned TLTRO III with a rate up to -0.75% and it has considerably expanded asset purchases. Including the new PEPP of about €750bn, previous measures and the relaunch of QE by Lagarde’s predecessor in 2019, the total asset purchases are expected to reach around €1tr in 2020. The ECB also showed high degree of flexibility in the design and the implementation of its several virus-fighting packages. The 33% limit does not apply under the PEPP and the ECB can purchase debt across all the yield curve, including Greek debt under waiver. In its most recent move, the ECB also acted to shield Italy from rating downgrade by accepting some junk-rated debt as collateral for loans to banks.

* * *

Today’s meeting is not expected to yield much in the way of policy action. Basically, Lagarde’s challenge is to explain in the most simple manner the ECB’s strategy and how she sees the shape of the recovery – especially following the release of France’s horrific Q1 GDP figure at minus 5.8%. Like Fed Chairman Powell yesterday, Lagarde is likely to make it clear that she is not in the V-shape recovery camp.  She should also repeat over and over her readiness to act appropriately to tackle any market tensions, so much so she may feel like a broken record.

Expectations are very high that Lagarde stresses the door is open to new measures, likely announced in June. The ECB can afford to wait as the emergency work has been masterfully done. However, it seems inevitable that it will have to increase in the near term the scale and the scope of the PEPP in order to deal with the increase in gross issuance in 2020, notably in the periphery. Based on our calculations, eurozone government need to roll over almost €2tr in debt and finance new net issuance of about €1.5tr this year. The ECB’s commitment to buy only around €1tr is understandably insufficient. We expect that it will need to increase total asset purchases by at least 500bn this year to absorb coronavirus debts.

If new market tensions should materialize, the ECB is not running out of ammunition. Other innovations are possible, including a further loosening of lending benchmark which currently stands at minus 0.75%, a shift into junk bonds with the extension of the Greek waiver to other eurozone countries or even the inclusion of mortgage loans in the pool.

Courtesy of RanSquawk, here are the key expectations from today’s meeting:

OVERVIEW: The ECB is expected to stand pat on rates this week with focus instead likely to fall on the Bank’s balance sheet and how it views monetary and fiscal actions taken thus far. On the balance sheet, consensus leans in favor of the GC needing to expand the current scope of its Pandemic Emergency Purchase Programme (PEPP). Views are mixed on whether such an adjustment will be made this week or Lagarde will invoke strong rhetoric on the Bank’s preparedness to do more and defer the decision until June when lockdown measures have been eased across the Eurozone. As has been a common theme throughout Lagarde’s tenure, the President will likely use the press conference as a forum to call for further support from fiscal authorities.

PRIOR MEETING: In March, the ECB refrained from succumbing to market pricing and maintained the deposit rate at -0.5%. Instead, it tweaked existing measures, making the terms of the current TLTRO-III programme more favourable, with the rate on these operations (which run until June 2021) to be 25bps below the main refi rate, and in some cases, 25bps below the deposit rate. Further, it also unveiled a new series of LTROs which will ‘bridge the gap’ until the TLTRO-III operations resume in June. Additionally, the Governing Council also opted to expand the size of its Asset Purchase Programme by EUR 120bln until the end of the year. Note, the ECB maintained its forward guidance on rates and reinvestments.

FOLLOW UP MEASURES: On March 18th, the Bank unveiled a EUR 750bln PEPP in which purchases will be conducted until the end of 2020, whilst more recently, the Governing Council unveiled a package of temporary collateral easing measures and accepted the use of Greek government bonds (Apr 7th). Furthermore, on April 22nd, the ECB took steps to mitigate the impact of potential debt rating downgrades on collateral availability.

FISCAL EFFORTS: Monetary authorities have not been alone in their efforts to support the Eurozone economy with many national governments manufacturing domestic fiscal packages and Eurozone Finance Ministers agreeing to increase availability  of the ESM’s Credit Line, create a short-time work scheme and provide further support via the European Investment Bank. However, EU27 leaders are yet to sign off on plans for a bloc-wide long-term recovery plan and the debate about joint debt mutualisation continues to lay bare the divisions across the continent. The ECB’s view on fiscal efforts will likely be a key line of enquiry during the Q&A, on which, RBC believes that with details still pending, it is likely to be too early to draw any firm conclusions on progress. However, despite work still needing to be done, the Canadian bank takes a relatively optimistic view on proceedings and expects Lagarde to have a positive interpretation of efforts thus far.

RECENT DATA: The traditional backward-looking data points have largely been dismissed as “stale” by the market with participants instead favoring more timelier indicators. Last week saw the latest batch of PMI readings which saw the EZ-wide composite metric slip to an eye-watering reading of 13.5 (prev. 29.7); manufacturing 33.6 (prev. 44.5) and services 11.7 (prev. 26.4). Following the release, IHS Markit noted that the reading would be indicative of the Eurozone economy contracting at a quarterly rate of around 7.5%. ABN AMRO provided a scenario analysis framework in which they estimate that 1) if existing lockdowns continue until the end of April (base case) 2020 GDP would contract by 4.5%. 2) if existing lockdowns continue until the end of May (negative case) 2020 GDP would contract by 8%. 3) if existing lockdowns continue until the end of April but consumer behavior normalizes at a quicker pace (positive case), the real economy could recover sharply but would benefit less in 2021 as stimulus efforts will be less aggressive. On the inflation front, given the fallout from COVID-19 on consumer spending and the nosedive in oil prices, the outlook for price pressures in the Eurozone is relatively bleak with the 5y5y inflation expectations gauge sub-1%. ABN AMRO notes that “HICP inflation will drop in the coming months and will probably register a couple of negative numbers on a year-over-year basis during Q2 of this year”. However, assuming a recovery in oil prices later in 2020, “headline inflation should bounce back sharply towards 2% by mid-2021”.

RECENT COMMUNICATIONS: Since the prior meeting, asides from policymakers trying to airbrush President Lagarde’s comment about it not being the ECB’s job “to close spreads”, rhetoric from the Bank has largely centered around trying to reassure markets in the face of the ongoing crisis. In recent remarks, governor Lagarde (Apr 16th) stated that the ECB is “fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed. It will explore all options and all contingencies to support the economy”. Even some of the more traditionally hawkish members appear to be on board with such a stance with Dutch central banker Knot noting that adjustments to the PEPP cannot be excluded and the Bank will not allow spreads to widen too much. Germany’s Schnabel also echoed this sentiment and made the point that the Bank “‘needs to avoid fragmentation that may hamper the smooth transmission of our monetary policy’, again, a potential hat-tip to the perils of widening spreads. However, looking beyond the crisis, her domestic colleague Weidmann has cautioned that at some stage, focus must return to lowering debt.

RATES: From a rates perspective, consensus overwhelmingly looks for the deposit rate to be held at -0.5%, with the decision not to lower rates in March symbolic of scepticism over the efficacy of delving further into negative territory. UBS expects the ECB to stand pat on rates until the end of their forecast horizon (end-2021). The Swiss bank also suggests that as liquidity in the Eurozone rises, policymakers could opt to tweak the specifics of its tiered system (adjust the multiplier); such a move could be made this week or the June 4th meeting.

BALANCE SHEET: Instead, focus could fall on the ECB’s balance sheet with the current EUR 750bln size of its Pandemic Emergency Purchase Programme (PEPP) not deemed as sufficient to weather the course of the crisis given the surge in issuance by member states. Capital Economics suggests that at the current pace of purchases, PEPP would run out by October, however, since the ECB intends to run purchases until the end of the year, a reduction in the pace of buying would be required, something which could prove detrimental to the Eurozone economy and hinder the Bank’s ability to prevent spreads from widening further (despite the communication mishap from Lagarde in March). As such, Capital Economics suggests the Governing Council could opt to increase the size of its PEPP with an eventual size of over EUR 2trl. Alternatively, rather than setting a specific size for its PEPP, it could engage in purchasing bonds to cap yields at a desired level. Note, 1/4 economists in a recent newswire survey suggested that an announcement could be made this week, with expectations mounting over a potential EUR 500bln addition. Conversely, analysts at ING believe, that “If old patterns hold, the June meeting with a fresh round of economic projections, would be the right moment to announce such an increase”

ECONOMIC ASSESSMENT: Given the slightly dated nature of some of the economic indicators available, participants will likely take guidance from the GC’s current qualitative assessment of the Eurozone economy; note, no staff economic projections will be presented at this meeting. Ultimately, the Bank’s assessment of the Eurozone economy is likely to be particularly downbeat with March’s press conference already noting that “risks surrounding the euro area growth outlook are clearly on the downside” (this was during the early stages of the crisis), whilst last week it was reported that President Lagarde believes that Eurozone GDP could fall by as much as 15% this year. However, Lagarde will need to be careful in conveying the extent of the crisis, as too damming an assessment in the face of a lack of action this time around could stoke fears that policymakers are running out of ammo. Concerns that could also be exacerbated by any pessimistic language surrounding the Bank’s ability to hit its inflation goal; a target that has become even more opaque given the delays to the upcoming strategic review. As a guide, the ECB currently classifies measures of underlying inflation as “generally muted”.


Tyler Durden

Thu, 04/30/2020 – 07:31

via ZeroHedge News https://ift.tt/35gYEYW Tyler Durden