Daily Archives: October 7, 2020

SAN FRANCISCO (CN) University of California officials cannot be sued on claims of cheating students out of hundreds of millions of dollars in fees for on-campus services not provided due to the Covid-19 pandemic because they are immune from federal lawsuits, a judge said in court Monday.

Advancing two federal lawsuits over on-campus fees would allow every person who is unhappy with the services provided by state governments to sue in federal court, despite state officials right to immunity from federal lawsuits under the 11th Amendment, U.S. Magistrate Judge Sallie Kim said during a virtual hearing Monday on the UC systems motion to dismiss.

The door that youre opening is huge, Kim told a lawyer for students suing the University of California Regents and former UC President Janet Napolitano.

Lead plaintiffs Claire Brandmeyer and Noah Ritter, who attended UC Davis and UC Berkeley, respectively, in the spring of 2020, sued the university system in separate lawsuits this past April, claiming their colleges refused to refund fees of over $1,000 each student paid for on-campus activities, safety and health care, among other services they say were never provided.

The issue is theyve taken hundreds of millions of dollars from class members here for services they cant provide, said plaintiffs lawyer Adam Levitt of the firm DiCello Levitt Gutzler in Chicago.

Attorneys for the University of California say the state-funded institution and its officials are immune from federal liability unless they violate a clearly established constitutional right.

Students dont have a clearly established constitutional right in the fees they pay to the university, UC Regents attorney Karen Johnson-McKewan of the firm Orrick Herrington & Sutcliffe in San Francisco argued in court Monday.

Johnson-McKewan said these cases belong in state court, where six separate class actions seeking to recover on-campus fees from University of California schools were recently consolidated in Los Angeles Superior Court.

The plaintiffs say the millions of dollars in fees charged for services not provided represents an unjust taking of property in violation of the Fifth Amendment.

Noting that the U.S. Supreme Court has twice called out the Ninth Circuit for improperly limiting qualified immunity, Judge Kim said the nations highest court has made clear that a prior court decision is necessary to put a state official on notice that their conduct is clearly unconstitutional.

Levitt cited the Supreme Courts 2015 decision in Horne v. Department of Agriculture as establishing that taking without just compensation is unconstitutional. But Judge Kim accused Levitt of using that case to rely on general principles rather than specific, on-point case law.

Youre saying any time a state official or actor is accused of taking property in violation of the Takings Clause, that person cannot claim qualified immunity, Kim said.

Levitt then cited the First Appellate Districts 2007 decision in Kashmiri v. Regents of the University of California, which found the university system could not raise educational fee prices after students enrolled without warning them the prices were subject to change.

But Kim said that case was about breach of contract, not a constitutional violation.

Arguing for the university, Johnson-McKewan said the plaintiffs cannot claim a violation of the Takings Clause because the fees they paid for on-campus services belong to the university, not the students.

Their theory is the university doesnt own those fees until a later point, Johnson-McKewan said. Do they have to wait until the end of the academic term to claim those fees?

Johnson-McKewan also cited the Third Appellate Districts 1982 decision in Erzinger v. Regents of the University of California, in which the court found a policy requiring students to pay a health care services fee that included providing birth control and abortions did not violate a students religious freedom rights. In that case, the court also held that once the university collects mandatory student fees, such funds become university property.

Levitt argued that case covered a completely separate issue whether students can pick and choose what their campus fees are used for. This case involves paying a fee and receiving no services in return, he said.

When you pay fees for a specific service that cant be given and they dont give it back, thats actually a taking of your property, Levitt insisted.

After nearly an hour of debate, Kim said she believes University of California officials are entitled to qualified immunity.

Nothing you have said today has persuaded me to the contrary, Kim told the plaintiffs lawyer.

The judge said the only issue she was still wrestling with is whether to let plaintiffs amend their complaint, suggesting that she thinks any further attempts to prevent the case from being thrown out of federal court could be a waste of time.

Im just grappling with the question of whether amendment would be futile or not, Kim said.

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Judge: Federal Court Not the Place to Sue University of California Over Fees - Courthouse News Service

Mike Antonuccis Union Report appears most Wednesdays; see the full archive.

You wont often find the four largest public-sector unions the National Education Association, American Federation of Teachers, American Federation of State, County and Municipal Employees and the Service Employees International Union and the National Right to Work Legal Defense Foundation all on the same side of a major labor issue.

I take that back. Youll never find it.

But 2020 is a year where anything and everything can happen, so its in keeping with the times that these eternal adversaries should find common ground in the case of Sweeney v. Raoul.

The case is a response to the U.S. Supreme Courts 2018 ruling in Janus v. AFSCME, which banned public-sector unions from charging representation fees to nonmembers. Unions universally decried the 5-4 decision and immediately went to work to mitigate its effects. Though most of these measures were legislative or administrative in nature resignation windows, membership pitches during required orientation sessions for new employees, etc. several unions chose litigation.

Unions in Idaho and Wisconsin filed suit, claiming the loss of nonmember agency fees violated the Takings Clause of the Fifth Amendment of the Constitution. They were unsuccessful.

In Illinois, Local 150 of the International Union of Operating Engineers, which represents some public-sector workers, took a different route. The union claimed that being forced to file grievances on behalf of nonmembers was a violation of the unions First Amendment rights. The case was dismissed in trial court but was successfully appealed to a three-judge panel of the U.S. Court of Appeals for the Seventh Circuit. Oral arguments were heard last week.

The underlying principle of the suit is the unions duty of fair representation. Since the union is the exclusive bargaining agent for all employees in a unit, it must represent all equally, regardless of whether they are union members. Unions defended agency fees as a way to avoid free rider problems, but the Janus ruling changed that dynamic.

Voices on both the right and left began discussing the possibility of members-only unions. Common in Europe, these unions dont have exclusive representation rights and negotiate only on behalf of dues-paying members. This leaves individuals the freedom to set the terms of their own employment, and even allows for multiple unions in the same workplace.

No doubt Local 150 thought using the First Amendment arguments that won the case for the Janus plaintiff against it was a shrewd move. But a host of the nations largest public-sector unions saw the suit as a threat to exclusive representation.

In an amicus brief, attorneys for NEA, AFT, AFSCME, SEIU and their Illinois affiliates laid out their reasons for opposing the Local 150 lawsuit.

Though they stated that Janus was wrongly decided, NEA et al. argued in the brief that a Local 150 victory could undermine longstanding collective bargaining arrangements and even chip away at the validity of public-sector collective bargaining itself. The major unions went on to cite the majority ruling in Janus multiple times.

The unions approvingly noted the Janus reasoning that exclusive representation gives them a privileged place in negotiations over wages, benefits and working conditions and that representing nonmembers is a necessary concomitant to that exclusivity. Exclusive representation without an obligation to represent nonmembers would leave those employees without any representation or means to gain it. That, according to the Janus ruling, would lead to serious constitutional questions.

NEA et al. also appear to have wholeheartedly accepted the Janus majoritys logic that no union is ever compelled to seek exclusive status. They stated that the duties involved in representing nonmembers do not impose substantial restrictions on a unions core rights of expression and association. Whats more, they said, performing those duties furthers the unions interests in keeping control of the administration of the collective-bargaining agreement.

Local 150 responded to these criticisms by saying it is being misunderstood. The union said it doesnt want to erode exclusive bargaining, merely charge nonmembers for services. But the major unions oppose this reasoning as well.

Many unions, they stated, believe that fee-for-service arrangements promote a detached, transactional view of the relationship between a union and the employees it represents, rather than the sense of solidarity and engagement within the workplace that is ultimately the most significant source of unions power.

NEA at al. concluded: Janus confirms the central role the duty of fair representation plays in ensuring the constitutionality of exclusive representation. That duty is also consistent with broad principles of First Amendment doctrine. Any conclusion to the contrary would jeopardize not only fundamental aspects of labor relations in the public sector but a broad array of duties that are well recognized under the law.

Union allies and opponents will continue to argue about whether exclusive representation infringes on individual rights. Whats clear from this brief is that unions prize their monopoly on bargaining above all else and will embrace the existence of nonmembers as a small price to pay for retaining that privilege.

See the original post here:
Analysis: To Preserve Their Exclusive Right to Representation, NEA, AFT and Other Major Unions Will Even Buy Into Janus Ruling - The 74

For the second time in as many weeks, a federal judge has halted President Trumpsimpositionofsanctionsagainst a mobile application on free speech grounds. The sanctions, supposedly based on national security concerns about China, would have rendered the apps WeChat and TikTok unavailable for download or updating in the United States. The underlying law on which the sanctions are based, the International Emergency Economic Powers Act (IEEPA), is broad and powerful, and the president must declare a national emergency to invoke it.

Usually the president has wide leeway under the law, so what could explain the judicial pushback in these two cases? It could be the nature of the claims at issue, but it could also be that the judiciary is growing weary of emergency actions that are based on scant evidence. Indeed, executive overreach in the use of IEEPA after the 9/11 attacks occasioned similar pushback.

On September 19, a judge in Californiaruledagainst the WeChat sanctions in a case brought by a group of U.S.-based users of the app. The court found that the plaintiffs had shown a likelihood of success on their claims that the shuttering of the app was a prior restraint of speech and that it was overly broad in the speech it would suppress.

Then, last Sunday night, as the clock neared the midnight deadline by which app stores would have to remove TikTok from their offerings, a judge in Washington, DC, granted an injunction to that company as well. The judge based his decision on two statutory exemptions in IEEPA, for informational materials and personal communications, that were themselves meant to protect free speech principles.

Trying to marshal what had historically been a fairly successful line of attack, the Department of Justice lawyer opposing the TikTok injunction cautioned that the company was challenging a national security determination by the president as well as the judgment of the secretary of commerce about whats necessary to mitigate those national security harms, adding that the court owes significant deference to that. Nevertheless, whatever deference the judge thought appropriate, it was not enough to stave off the injunction.

The government, for its part, denies that sanctions prohibiting business transactions with the apps have anything to do with free speech. But, rejecting that contention, one judge quoted Trumps own executive order issued in May under the title Preventing Online Censorship. It states that social media and other online platforms function in many ways as a 21st century equivalent of the public square.

Hovering in the background is the fact that the Trump administration has taken a number of actions with questionable evidentiary bases under aggressive interpretations of emergency or national security powers. They includedeclaring an emergencyat the border to fund a wall,sanctioningInternational Criminal Court personnel, and banning the admission into this country of people from six Muslim-majority countries. Such actions may be influencing judges to view Trumps emergency declarations with a justifiably more jaundiced eye.

The government itself prompted consideration of these precedents in the apps litigation by relying in their briefs on the Supreme Courts decision in the Muslim ban case,Trump v. Hawaii.In both the WeChat and TikTok cases, the Department of Justice quotedthat decisionto argue that a court should not substitute its assessment of national security concerns for the Executives predictive judgments on such matters, all of which are delicate, complex, and involve large elements of prophecy. The suggestion that courts accede to the executives mystical powers was unavailing. The judge in the WeChat decision held that while the governments overarching national-security interest is significant it had shown scant little evidence that banning WeChat for all U.S. users would address those concerns.

Whatever the reasons for the more thorough review of the presidents use of this emergency power, the decisions have echoes in the period following the 9/11 attacks, when the Bush administration used IEEPA to freeze the assets of a group of primarily Muslim charities in the United States, effectively bankrupting them. This was a step too far for some judges, whopushed backon its constitutionality. They held that the sanctions, as implemented,violatedthe plaintiffs Fourth and Fifth Amendment rights regarding unreasonable seizures and due process.

Not all of the plaintiffs in cases challenging the sanctions against the apps have been successful; a judge in Pennsylvaniarecently denieda group of TikTok users an injunction, rejecting their First Amendment claims. In addition, these latest decisions will surely be appealed.

But it is possible that there is a growing awareness among the judiciary that broad deference to the executive in the use of emergency powers is neither advisable nor salutary to our democracy.

See more here:
TikTok and WeChat Decisions Push Back on Trump Sanctions - brennancenter.org

President Donald Trump and his wife, Melania, have tested positive for the coronavirus, an announcement which is bound to throw the Presidential race into a state of grave uncertainty, if not chaos. The novel coronavirus pandemic has killed more than two hundred thousand Americans and more than a million people worldwide. On Friday morning, at 12:54 A.M. Eastern time, Trump tweeted, Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!

Trumps physician, Sean Conley, issued a statement saying that Trump and the First Lady were both well at this time. Trump had reportedly been hoarse during the day on Thursday, but his circle ascribed that to the rigors of rallies and other public events. Rest assured I expect the President to continue carrying out his duties without disruption while recovering, Conley wrote, and I will keep you updated on any future developments.

From the very beginning of the pandemic, Trump has denied or diminished the seriousness of Covid-19, from its initial outbreak in China to its spread to Europe and beyond. In interviews with Bob Woodward, for the journalists book Rage, Trump admitted that he well understood from advisers how lethal and fast-spreading the disease could be, but in public statements he downplayed the danger, saying repeatedly that the virus would disappear with the summers warm weather and that there was little to worry about. To the despair of the scientific and medical communities, which have uniformly said that the disease can be best contained if people wear protective masks and maintain a social distance, Trump has repeatedly flouted their advice and touted disreputable treatments. As recently as Tuesdays Presidential debate, in Cleveland, Trump mocked his opponent, Joe Biden, for wearing masks and practicing social distancing. I dont wear masks like him, Trump said sarcastically of Biden, at the debate. Every time you see him, hes got a mask. He could be speaking two hundred feet away from him, and he shows up with the biggest mask Ive ever seen.

Covid-19 has proved particularly lethal for older people, especially those who are obese and have prexisting conditions. Trump is seventy-four and overweight. According to the Centers for Disease Control and Prevention, eight out of ten Covid-19-related deaths in the United States have been of people sixty-five and older. Trumps doctors say that he is generally healthythough, on November 16, 2019, Trump was taken to Walter Reed National Military Medical Center, and Vice-President Mike Pence was reportedly placed on standby. The reasons for that hospital visit remain obscure. At one point, the President went out of his way to deny that he had suffered mini-strokes.

The news that Donald and Melania Trump had tested positive for the coronavirus broke in stages. On Thursday evening, the White House confirmed that Trumps trusted aide Hope Hicks had contracted the virus, and for hours thereafter cable news networks played a clip of the Presidents advisers, and then Trump himself, all unmasked, walking across the South Lawn of the White House, to board Marine One, the Presidents helicopter; they were heading to a campaign rally in Minnesota. While that tape played in an eerie loop, commentators and doctors described just how perilous it was for people to be in such close proximity to one another while not wearing masks. At political rallies across the country, and on the Republican National Conventions climactic night, at which the President delivered his speech accepting the Republican Partys Presidential nomination, Trump and the great majority of his supporters flouted wearing masks, which he has called a sign of weakness. At a rally in Dayton, last month, Trump said that the virus affects virtually nobody.

After the news became public that Hicks had the virus, Trump told the Fox News host Sean Hannity, When soldiers and law enforcement comes up to her, you know, she wants to treat them great. Not say, Stay away, I cant get near you. Its a very, very tough disease. Hours later, after most people in Washington and on the East Coast had gone to bed, the President issued his tweet about his own diagnosis.

In the coming days, it is likely that commentators will respond to the demands of both decency and a sincere desire to wish anyone with a serious illness well and a quick recovery. They will also assess the perils ahead. The uncertainties range from whether the Presidents condition becomes such that, under the Twenty-fifth Amendment, his powers need to be transferred to his Vice-President, Mike Pence, to what will happen in the Presidential race. The Twenty-fifth Amendment, which was ratified in 1967, was invoked most recently by George W. Bush, in 2002 and 2007, when he underwent colonoscopies; he briefly handed over power in those instances to his Vice-President, Dick Cheney.

In polls, Biden leads Trump nationally and in many battleground states, and in recent weeks the President has responded to his political predicament with incendiary attacks on his opponent, conspiracy theories about the fairness of the ballot, and unsubtle calls to his most dangerous followerssuch as the Proud Boys, a far-right militia groupto stand back and stand by. Punctuating it all is his chilling refusal to say that he would definitely accept the results of the election and accede to a peaceful transfer of powerwell see what happens is a common statement.

If both Trump and Pence were to be incapacitated, the rules of succession in the U.S. Constitution dictate that the Speaker of the House is next in line to take over the powers of the Presidency. The Speaker, of course, is a Democrat and Trumps political adversary, Nancy Pelosi. Trump has repeatedly derided Pelosi, and the relationship between the two has grown so poisonous that they have not had any serious contact in months.

For some time, commentators have routinely discussed what the October surprise would be. It was assumed that an autumn drama would entail the President challenging the legitimacy of the ballot, and he has done that repeatedly. At the debate, he retailed false and exaggerated stories about mail-in ballots, all in a seeming effort to sow confusion and cast doubt on a contest that he appears to be losing. But now that October surprise is here, and it involves something no less alarmingthe state of the Presidents health and that of his wife and senior advisers, and what it all will mean for the governance of the United States, a nation that has been suffering multiple crises for so many months. In a speech that he delivered virtually on Thursday night, for the seventy-fifth annual Al Smith dinner, the President said, I just want to say that the end of the pandemic is in sight, and next year will be one of the greatest years in the history of our country.

Continued here:
Donald Trump Tests Positive for the Coronavirus, and a Nation Anticipates Chaos - The New Yorker

United States District Judge, Mary S. McElroy, sided with the American Civil Liberties Union (ACLU) and Rhode Island vanity plate-holder Sean Carroll this past Friday in a case that pits freedom of speech against state Department of Motor Vehicles (DMV) regulations. At issue is whether the vanity plate bearing the letter "FKGAS," shall be allowable.

View The Plate Here.

Mr. Carroll owns a 2019 Tesla Model 3 battery-electric vehicle. He and his daughter reportedly found the plate FKGAS humorous. One local newspaper that interviewed Mr. Carroll says that the plate reportedly meant "Fake Gas" to the owner and originator of the idea. However, we feel it is fair to say most people would choose another first word in that pairing. Therein lies the start of the difficulty.

Like many states, Rholde Island will allow a vehicle registrant to choose a combination of characters to personalize the plate they receive from the state. The plate does not belong to the individual. It is state property. So, in essence, the person who holds the registration actually rents the plate. The state of RI has a set of rules surrounding the message choice. The crux of which is "DMV may refuse to issue any combination of letters and numbers which might carry connotations offensive to good taste and decency." Before we go too much further, it would seem that Mr. Carroll should win his case. And the reason is that the DMV opted to issue the plate, which he currently has.

However, the DMV says that it received "a complaint." And it subsequently asked for its plate back. Mr. Carroll fought back with the help of ACLU, a group that helps some citizens fight for some civil rights (though they don't often back citizens in Second Amendment cases, or property owners in Fifth Amendment cases).

Friday's decision may not be the final say on the matter. It grants Mr. Carroll the temporary use of the plate. The decision says, in part, "...the Court finds that Mr. Carroll has satisfiedthe criteria for issuance of a preliminary injunction on his claims that the R.I.G.L. 31-3-17.1 is unconstitutional both as applied in this case and on its face as overbroadand void for vagueness. Having met the likelihood of success standard, he has, afortiori, met the less exacting standard of Fed. R. Civ. P. 12(b)(6) to withstand amotion to dismiss for failure to state a claim. Therefore, the plaintiffs motion forpreliminary injunction (ECF No. 4) is GRANTED and the defendants motion todismiss (ECF No. 12) is DENIED. "

The full text of the court's decision is fascinating if you are able to tollerate legalese. The constitutionality of vanity plates is still in question, despite many court battles on the topic. What say you readers? Should Mr. Carroll be able to express his opinion using abbreviated characters on the license plate that the State of Rhode Island charged him extra for, and issued? Or should "a complaint" trump one's First Amendment right to free speech? Tell us your opinion in the comments below.

John Goreham is a long-time New England Motor Press Association member and recovering engineer. Following his engineering program, John also completed a marketing program at Northeastern University and worked with automotive component manufacturers. In addition to Torque News, John's work has appeared in print in dozens of American newspapers and he provides reviews to many vehicle shopping sites. You can follow John on Twitter, and view his credentials at Linkedin

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RI Tesla Owner and ACLU Fight For Vanity Plate That Says FKGAS - Torque News

The Examiner

The lack of homicide charges against the three officers who executed the fateful no-knock warrant on Breonna Taylor's Louisville apartment is just another reason why we need to rid ourselves of grand juries.

Two officers were "no-billed" meaning grand jurors returned no bill of indictment and one Louisville officer, Brett Hankinson, was charged with wanton endangerment for firing bullets into the wall of a neighbor's apartment.

There's good reason to bury the grand jury. They uncheck government power and allow it to focus on someone without any due process.

Grand juries aren't like usual juries petit juries that hear evidence and argument from the government and the accused, moderated by a judge. Instead, grand juries are secret, non-adversarial which means no one cross examines witnesses or presents testimony that might exonerate the person about to be accused and entirely controlled by prosecutors. There's no judge or overseer to monitor what they do.

From 2009-10, the federal Department of Justice pursued 193,000 cases. Grand juries "no billed" 11 of them. That's a win rate of 99.99%.

Grand juries absolve prosecutors of responsibility. Lawyers like Daniel Cameron, the attorney general of Kentucky, absolve themselves by pointing to the grand jurors, who usually aren't allowed to discuss the evidence or instructions presented to them even though they were administrative marionettes, doing exactly what people like Cameron told them to do.

We can stop relying on these bodies. Connecticut and Pennsylvania have done away with them entirely. Only 25 statesrequire grand jury indictments before commencing a criminal case. Just 14 states require felonies to be charged by a grand jury.

Ridding ourselves of grand juries wouldnt slow any prosecutorial roll; they can secure the same indictments by presenting sworn affidavits to a judge who will act as a one-person grand jury and indict with his signature.

If anything, district attorneys will probably charge and prosecute more people because grand juries are expensive and slow, involving multiple people over several months.

We cant shake the grand jury requirement for federal crimes; its enshrined in the Fifth Amendment of the U.S. Constitution. Some states Kentucky is one of them include grand juries in their constitutions so amendments would be in order to extinguish these tribunals completely. Its hard to amend a constitution but not impossible.

But that doesnt mean we shouldnt get as close to that goal as possible now. Our Founding Fathers designed American justice to be fair and open. Grand juries are neither.

Chandra Bozelko writes theblog Prison Diaries. You can follow her on Twitter at @ChandraBozelko and email her at outlawcolumn@gmail.com.

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It's time to get rid of grand juries - Blue Springs Examiner

By Benjamin Morrell

Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our daily newsletters. Signing up for any of our section newsletters will opt you in to the daily Coronavirus briefing.

Law360 (October 5, 2020, 1:55 PM EDT) --

But some employers may object to participating in a trial conducted by videoconference for a variety of reasons, including the inability to effectively cross-examine investigative witnesses and the difficulty in presenting to the judge physical evidence that may be at issue, especially complex machinery and equipment.

In order to challenge these virtual settings, defense counsel may need to get creative. This article presents a constitutionally based option for effectively objecting to remote proceedings where workplace conduct gives rise to criminal charges.

Critical Background

In addition to its more widely known civil enforcement mechanisms, the Occupational Safety and Health Act includes criminal prohibitions. Section 17 of the act establishes criminal penalties for (1) willful violations of any standard resulting in an employee's death; (2) giving advance notice of an OSHA inspection; and (3) making false statements to OSHA.[1]

In addition to a hefty fine, a conviction under one of these provisions can lead to as many as six months in prison and if a defendant is convicted of a willful violation resulting in death a second or subsequent time, they may be imprisoned for up to a year.

Many states' occupational safety and health statutes contain similar criminal provisions. For example, North Carolina closely tracks the federal act but increases the maximum fine for a willful violation resulting in death if the deceased employee was under 18.[2] Because every state is different, it is critical to check the law in your local jurisdiction.

Generally applicable criminal laws may also come into play for certain workplace safety violations, like negligent homicide or manslaughter for deaths in the workplace. Moreover, the U.S. Supreme Court confirmed last year inGamble v. U.S. that a person can be prosecuted under state law and federal law in separate cases for the same conduct without violating the Fifth Amendment's double jeopardy clause.[3] As a result, prosecution under the federal OSH Act does not preclude subsequent prosecution under a state's similar laws.

Avenue for Objections: Confrontation Clause

While no employer welcomes criminal charges resulting from workplace conduct, such charges bring a unique opportunity for lodging an objection. That's because they trigger several constitutional protections, including the Sixth Amendment's confrontation clause, which provides the strongest basis for objecting to a virtual or remote trial.

According to the Supreme Court's 1988 decision in Coy v. Iowa, "the Confrontation Clause guarantees the defendant a face-to-face meeting with witnesses appearing before the trier of fact."[4] InMaryland v. Craig in 1990, the Supreme Court emphasized that physical presence is one of the core aspects of confrontation; it "ensur[es] that evidence admitted against an accused is reliable and subject to the rigorous adversarial testing that is the norm of Anglo-American criminal proceedings."[5]

Courts have consistently thrown out convictions where defendants were deprived of their face-to-face confrontation rights. This has often taken place in the form of prosecution witnesses testifying remotely.

For example, in U.S. v. Yates in 2006, the en banc U.S. Court of Appeals for the Eleventh Circuit vacated a defendant's conviction after the government called two witnesses who lived in Australia and had them testify via live, two-way video conferencing.[6] In doing so, the court declared that the "Sixth Amendment's guarantee of the right to confront one's accuser is most certainly compromised when the confrontation occurs through an electronic medium."[7]

This right is not unlimited, however. Courts may excuse a witness from testifying in person if two conditions are satisfied. First, the witness's absence must be necessary to advance an important public policy. Second, the reliability of the remote testimony must be otherwise assured.

In Craig, the Supreme Court held that "a State's interest in the physical and psychological well-being of child abuse victims may be sufficiently important to outweigh, at least in some cases, a defendant's right to face his or her accusers in court."[8] The court indicated that this requirement is not easily met, and the lower courts have reliably rejected prosecutors' requests to have witnesses testify remotely based solely on the expense and inconvenience of traveling to the court.

Last year, the U.S. District Court for the Eastern District of North Carolina held inU.S. v. Rivera that "the inconvenience to the witness of traveling to Raleigh from Hawaii a second time" did not "rise to the level of an important public policy" under the Craig test.[9]

Applying Constitutional Standards in a Coronavirus World

Courts across the country are currently grappling with the application of Craig to the COVID-19 pandemic. The key question: whether the government's interest in limiting the spread of the coronavirus qualifies as an important public policy to justify witnesses testifying remotely in criminal trials.

In New York City, the U.S. District Court for the Southern District of New York recently held in U.S. v. Donziger that under "the Craig standard, there is no question that limiting the spread of COVID-19 and protecting at-risk individuals from exposure to the virus are critically important public policies."[10] There, the witness in question was in his 70s and suffered from a medical condition that increased the "risk of dangerous complications should he contract COVID-19."

The court allowed him to testify "via live video rather than in person, which would require boarding a plane and spending at least two weeks in New York City." The court then approved the government's proposed procedure of having the witness testify "under oath from a federal court in Texas in the presence of court personnel using a two-way video system," allowing the court, the defendant and his attorney to interact with him in real time.

But in U.S. v. Crittenden, the U.S. District Court for the Middle District of Georgia recently went a different route setting an in-person jury trial and requiring "all persons entering the courtroom, including parties, lawyers, witnesses, jurors, and spectators ... to wear masks that cover their nose and mouth."[11]

While the government expressed concern that this lesser requirement may violate the confrontation clause by preventing some aspect of face-to-face confrontation the court found it "necessary to further an important public policy: ensuring the safety of everyone in the courtroom in the midst of a unique global pandemic."

Conclusion

These two cases highlight the differences in available approaches and the factors upon which they are based. For one thing, New York City has been a notable hot spot for COVID-19 infections, while the more rural Columbus, Georgia, has seen a relatively low number of cases.

For another, the witness in question in the New York case was elderly and had a preexisting health condition both risk factors for an increased severity of COVID-19 symptoms while the court in the Georgia case made no mention of any witnesses that were acutely at risk.

Once a court determines that limiting the spread of the coronavirus qualifies as an important public policy under the Craig test, it will then consider whether a particular witness's absence is necessary to further that interest. As case law on this issue develops, courts will likely consider at this step the infection rate in its locale and the profile of the particular witness whose remote testimony the government seeks.

Returning to the OSHA context, it is important to note that the confrontation clause applies only in criminal prosecutions. Courts have consistently "rejected the argument that OSHA civil penalty assessment proceedings violate Sixth Amendment protections."[12]

Thus, if a business finds itself subject to a civil enforcement action, it cannot rely on the confrontation clause to object to a remote trial. The good news, however, is that employers do not face the risk of going to prison if their civil case goes poorly.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] 29 U.S.C. 666 (e)(g).

[2] N.C. Gen. Stat. 95-139(a)(c) (2018).

[3] Gamble v. United States , 139 S. Ct. 1960 (2019).

[4] Coy v. Iowa , 487 U.S. 1012, 1016 (1988).

[5] Maryland v. Craig , 497 U.S. 836, 846 (1990).

[6] United States v. Yates , 438 F.3d 1307 (11th Cir. 2006) (en banc).

[7] Id. at 1315.

[8] Craig, 497 U.S. at 853.

[9] United States v. Rivera , 372 F. Supp. 3d 311, 31617 (E.D.N.C. 2019).

[10] United States v. Donziger , No. 11-CV-691 (LAK), 2020 WL 5152162, at *2 (S.D.N.Y. Aug. 31, 2020).

[11] United States v. Crittenden , No. 4:20-CR-7 (CDL), 2020 WL 4917733, at *5 (M.D. Ga. Aug. 21, 2020).

[12] Savina Home Indus., Inc. v. Sec'y of Labor , 594 F.2d 1358, 1366 (10th Cir. 1979) (collecting cases).

For a reprint of this article, please contact reprints@law360.com.

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A Primer On Objecting To Virtual OSHA Trials - Law360

There are 27 amendments.

Chip Somodevilla/Getty

The US Constitution was written in 1787 and ratified in 1788.

In 1791, the Bill of Rights was also ratified with 10 amendments.

Since then, 17 more amendments have been added.

The amendments deal with a variety of rights ranging from freedom of speech to the right to vote.

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The Constitution of the United States was written in 1787 by 55 delegates at a Constitutional Convention. Its purpose was to revise the weaker Articles of Confederation that had held the 13 states together after they gained independence from Britain.

Before it could be put into place, it had to be ratified by conventions from each of the 13 states, where the delegates argued both for and against the binding document. One of the main arguments against the ratification of the US Constitution was the lack of specified individual rights and liberties, so James Madison drafted a set of amendments to add to the US Constitution if it was ratified.

By June 1789, Madison submitted 12 amendments, though only 10 were passed and ratified in 1791 as the Bill of Rights.

Since then, 17 more amendments have been passed and ratified by the process laid out in Article 5of the US Constitution, where an amendment is proposed by either a two-thirds vote in Congress or a national convention of two-thirds of the states.

Those proposals are then ratified by either three-fourths of the state legislatures or by state conventions in three-fourths of the states to become amendments added to the US Constitution.

Here are the 27 amendments to the US Constitution ranging from personal rights to procedural laws including their history and the lasting impact theyve left on the United States:

The First Amendment famously protects freedom of speech.

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Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

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The First Amendment lays out five basic freedoms: freedom of religion, freedom of speech, freedom of the press, freedom of assembly, and the freedom to petition the government.

These rights were important to establish because they ensured that individuals could think, speak, and act without fear of being punished for disagreeing with the government.

In addition to being arguably one of the most important amendments, the First Amendment is still very much at the center of Americas political discourse today from questioning whether or not Twitter bots have First Amendment rights to whether or not the White House banning a CNN reporter violates the Constitution.

The Second Amendment deals with the right to bear arms.

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A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

The Second Amendment supports the right to own firearms, though its been hotly debated whether the Constitutions framers only had in mind the militias use of guns or if any citizen had a constitutional right to a firearm (this confusion is largely due to the four commas in the amendment that are grammatically confusing).

It has since become one of the most politicized amendments. In 2008, the Supreme Court ruled 5-4 that US citizens have a constitutional right to keep a loaded handgun at home for self-defense. Justice Antonin Scalia, who wrote the majority decision, did lay out a number of provisions:

Nothing in our opinion should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, or laws imposing conditions and qualifications on the commercial sale of arms.

The decision was largely seen as a major win for those who believe the amendment refers to individuals rights to bear arms.

The Third Amendment prohibits forcing citizens to provide lodging for soldiers.

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No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.

The Third Amendment prohibits the government from forcing citizens to give lodging to soldiers in their homes without permission. Before the Revolutionary War, Americans were required to give food and lodging to British soldiers as part of the 1765 Quartering Act.

According to the National Constitution Center, the Third Amendment is the least litigated in the Bill of Rights and the Supreme Court has never decided a case based on it.

The Fourth Amendment deals with search and seizure.

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The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

The Fourth Amendment prevents the government or police from searching or seizing the homes, belongings, or bodies of citizens without probable cause or a warrant.

One of the most significant impacts of the Fourth Amendment was in the case of Weeks v United States (1914) when the Supreme Court decided that evidence taken in violation of the Fourth Amendment could not be used in court, which is called the exclusionary rule.

The Fifth Amendment is the source of the common phrase, I plead the Fifth.

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No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

The Fifth Amendment gives people accused of crimes a variety of rights and protections, including: the right to a grand jury indictment for felony offenses in federal court, the restriction on double jeopardy (being put on trial for the same crime after being found not guilty), protection against forced self-incrimination, the guarantee of due process of law and the prevention of the government taking private property for public use without proper compensation.

The most significant Supreme Court decision relating to the Fifth Amendment outside of criminal trials, according to the National Constitution Center, was Miranda v Arizona (1966), where the Supreme Court decided that police must give criminal suspects a set of warnings before they can be questioned. This is called their Miranda rights. These rights are in direct relation to the self-incrimination clause of the Fifth Amendment.

The Sixth Amendment includes the right to a speedy trial.

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In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

The Sixth Amendment guarantees people accused of a crime receive fair and accurate criminal proceedings, including: the right to a speedy, public trial by jury from the area where the crime was committed, the right to confront and question witnesses against the accused, the right to subpoena witnesses and have them testify at trial, and the right to a lawyer.

Although criminal institutions in America have changed since 1791 and something like a speedy trial could actually mean years in todays court system, the Sixth Amendment sets a standard for justice and criminal proceedings, particularly in specifying the rights of those accused of crimes.

The Seventh Amendment deals with jury trials for civil cases involving property worth more than $20.

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In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

The Seventh Amendment promises the right to a jury trial for civil cases that involve property worth more than $20. Even though criminal cases that go to trial always have juries, civil cases rarely do.

According to the National Constitution Center, jury trials for civil cases were an important way to protect against biased or corrupt judges. However, juries only decide less than 1% of civil cases filed in court today.

The Eighth Amendment prevents the government from imposing cruel and unusual punishment on criminal defendants.

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Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

The Eighth Amendment prevents the federal government from imposing excessive bail and inflicting cruel or unusual punishment on criminal defendants.

Some, including the American Civil Liberties Union, argue that the death penalty is a violation of the Eighth Amendments ban on cruel and unusual punishment.

The Ninth Amendment establishes that people have additional rights, even if they are not included in the US Constitution.

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The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

The Ninth Amendment essentially just clarifies that even though the US Constitution and the Bill of Rights names certain rights, that doesnt mean that people dont have other rights not specifically included in the US Constitution.

One of the supporters of the US Constitution, James Wilson, worried that by naming or enumerating specific rights, any powers not mentioned would be assumed to belong to the federal government, so the Ninth Amendment makes it clear that is not the case.

The 10th Amendment helps keep the federal government limited.

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The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

The 10th Amendment leaves any powers not specifically assigned to the federal government to each state or to the people. This amendment protects against the possibility of the national government assuming powers that have not already been assigned to it and is greatly important to keep the federal government limited as the US Constitution framers intended.

The 11th Amendment is the only amendment related to the judicial branch of the government.

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The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

The 11th Amendment prevents federal courts from hearing lawsuits against states, which changes part of Article III, Section 2 of the US Constitution. It was passed by Congress on March 4, 1794, and ratified on February 7, 1795.

The proposal for this amendment was introduced one day after the Supreme Court ruled that an individual could sue a state in federal court in the case of Chisholm v Georgia (1793). Today, these lawsuits are tried in state courts. This is also the only amendment related to the judicial branch of the government.

The 12th Amendment changed the presidential election process.

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This is a long one:

The Electors shall meet in their respective states and vote by ballot for President and Vice-President, one of whom, at least, shall not be an inhabitant of the same state with themselves; they shall name in their ballots the person voted for as President, and in distinct ballots the person voted for as Vice-President, and they shall make distinct lists of all persons voted for as President, and of all persons voted for as Vice-President, and of the number of votes for each, which lists they shall sign and certify, and transmit sealed to the seat of the government of the United States, directed to the President of the Senate;

The President of the Senate shall, in the presence of the Senate and House of Representatives, open all the certificates and the votes shall then be counted;

The person having the greatest Number of votes for President, shall be the President, if such number be a majority of the whole number of Electors appointed; and if no person have such majority, then from the persons having the highest numbers not exceeding three on the list of those voted for as President, the House of Representatives shall choose immediately, by ballot, the President. But in choosing the President, the votes shall be taken by states, the representation from each state having one vote; a quorum for this purpose shall consist of a member or members from two-thirds of the states, and a majority of all the states shall be necessary to a choice. And if the House of Representatives shall not choose a President whenever the right of choice shall devolve upon them, before the fourth day of March next following, then the Vice-President shall act as President, as in the case of the death or other constitutional disability of the President.

The person having the greatest number of votes as Vice-President, shall be the Vice-President, if such number be a majority of the whole number of Electors appointed, and if no person have a majority, then from the two highest numbers on the list, the Senate shall choose the Vice-President; a quorum for the purpose shall consist of two-thirds of the whole number of Senators, and a majority of the whole number shall be necessary to a choice. But no person constitutionally ineligible to the office of President shall be eligible to that of Vice-President of the United States.

The 12th Amendment which was passed by Congress on December 9, 1803, and ratified on June 15, 1804 changed the presidential election process as laid out in Article II, Section 1 of the US Constitution and fixed several problems that came up because of the development of political parties and how that affected the electoral college.

The 12th Amendment was passed in response to a tie vote in the 1800 election between Thomas Jefferson and Aaron Burr. However, the 20th Amendment, ratified in 1933, changed the dates of presidential terms and Congressional sessions.

The 13th Amendment freed all slaves and indentured servants throughout the United States.

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SECTION 1

Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

SECTION 2

Congress shall have power to enforce this article by appropriate legislation.

The 13th Amendment passed by Congress on January 31, 1865, and ratified on December 6, 1865 abolished slavery and superseded a part of Article 4, Section 2 of the US Constitution, which set out that fugitive slaves be returned to their owners.

President Abraham Lincolns Emancipation Proclamation, which was issued on January 1, 1863, only freed slaves from the Confederate states that had seceded. The 13th Amendment was able to free all slaves and indentured servants throughout the country.

It did not, however, grant black Americans the right to vote.

The 14th Amendment defines what it means to be a citizen of the United States and also protects civil rights.

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Realizing the 13th Amendment didnt go far enough, the 14th Amendment was passed by Congress on June 13, 1866, and ratified on July 9, 1868:

SECTION 1

All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

SECTION 2

Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.

SECTION 3

No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

SECTION 4

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Read more:
The US Constitution has 27 amendments that protect the rights of Americans. Do you know them all? - Report Door

(Photo by Alex Wong/Getty Images)

* A federal judge has refused to dismiss a lawsuit filed by the federal government against John Bolton for publishing a memoir without prior approval. Guess the government doesnt celebrate the guys entire catalog [New York Times]

* A group of former Department of Justice lawyers are accusing Attorney General Barr of illicitly helping President Trump win reelection. [Hill]

* A Texas judge who admonished and grabbed at a paralegal for sitting in a seat designated for lawyers has been disciplined. [Texas Lawyer]

* Check out this primer on the Twenty-Fifth Amendment, which is being discussed after President Trump announced he has COVID-19 earlier this morning. [NPR]

* A new lawsuit accuses Kris Jenner of committing sexual harassment against a former bodyguard. [Fox News]

* A wrongful death lawsuit has been filed after a fan suffered a heart attack at a Philadelphia Eagles game. If he ate any Philly cheesesteaks, that probably also didnt help [Philadelphia Business Journal]

Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

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Morning Docket: 10.02.20 - Above the Law

Sensitive audits present the tax practitioner with unique challenges. They require the exercise of judgment and discretion, as well as an understanding of administrative procedure and even a command of constitutional and evidentiary rules. At times, they may also require that the practitioner carefully balance duties to a client with their own ethical and legal obligations.

Sensitive audits come in several forms. An eggshell audit, for instance, is a civil audit that has the potential to turn criminal. There are lurking issuespotential tax fraud or evidence of other legal violations such as money laundering or structuringthat the auditor may discover. A reverse eggshell audit involves a civil tax audit that is being conducted alongside a parallel criminal investigation. Sensitive audits may also involve undisclosed parallel investigations by other state or federal agencies.

Such audits often raise a host of issues. For instance, should the taxpayer file an amended return to correct prior mistakes? What about the obligation to file a current year return while the audit is ongoing? When does the taxpayer have a valid privilege against providing certain information or documents, and what steps or events might inadvertently waive that privilege? What are the signs that a taxpayer may have been referred criminally? Eggshell audits often bring these questions and others to the forefront.

Amended Returns, Current Returns, and Admissions

The question of whether to file an amended return is one that frequently surfaces in the context of sensitive audits. The decision is one that should be analyzed carefully. An amended return filed after an audit or investigation has begun will not remove tax fraud that exists with respect to an original return, although in certain circumstances an amended return may be a factor that potentially militates against a criminal prosecution or helps show a lack of willfulness. An amended tax return, or any tax return for that matter, is a sworn statement filed by a taxpayer under penalty of perjury. It can therefore be used as an evidentiary admission against the taxpayer, perhaps even relieving the government of the burden to produce other (more difficult to obtain) evidence that may be necessary to successfully bring a criminal case.

What about returns that come due during an audit? A pending audit or even a criminal investigation does not excuse a failure to file a current return, even where that return would require disclosures that make it clear that a prior return that is under audit was not filed correctly. It is a crime to willfully fail to file a tax return, and tax representatives have an ethical obligation under Circular 230 to advise a client of this requirement and the potential penalties for failing to do so. As a practical matter, it will often be advisable to obtain an extension of the deadline in order to buy time and to learn more about the focus of the audit. In some circumstances, a taxpayer may need to file a so-called Fifth Amendment return, a tactic that must be approached carefully. In doing so, taxpayers cannot, for example, make a blanket Fifth Amendment claim over their entire return, but instead must assert the privilege on an item-by-item basis. A failure to properly file such a return may compound existing problems, potentially subjecting the taxpayer to frivolous return penalties or even criminal prosecution for willfully failing to file a return.

Parallel Proceedings and Tweel-Violations

Sensitive audits inevitably involve the potential for parallel proceedings, which raise unique concerns. Courts have developed guidelines to police the IRS in this context, particularly when it conducts parallel civil and criminal tax investigations. Perhaps the seminal case in this arena is United States v. Tweel. Under that case and its progeny, simultaneous civil and criminal audits are not prohibited. Nor does the government have any outright duty to inform a taxpayer that matters arising in a civil audit could be used in a criminal investigation. At the same time, however, the IRS may not use its civil arm to conduct or further a criminal investigation and employ deceit, trickery or misrepresentation. That means, for instance, that an auditor cannot lie when asked if he or she has made a criminal referral or whether a parallel criminal investigation is ongoing. Violations of this ruleso-called Tweel violationscan lead to the suppression of evidence on Fourth Amendment grounds.

The Privilege

One of the first steps in properly handling a sensitive audit is to assess and ensure the preservation of the privilege. Does the client, for example, have information or possession of documents that could expose the client to criminal sanctions? If so, that information needs to be assessed and steps should be taken to avoid a waiver of the privilege. Taxpayers faced with an audit interview may need to consider invoking the privilege with respect to questions that would elicit incriminating responses. Where the IRS seeks documents that contain incriminating information (or where their very existence may prove incriminating), the act-of-production privilege may protect a taxpayer from being compelled to produce the documents. At the same time, the applicability of countervailing doctrines, such as the required records doctrine or the collective entity doctrine, should also be analyzed. Practitioners and their clients should carefully vet the risks and benefits of asserting a privilege, as well as the proper manner for doing so.

In the process of vetting sensitive issues, such as the very existence of a privilege, practitioners should be careful to ensure that those discussions themselves are privileged, lest the practitioner inadvertently convert him or herself into a key witness against the client that can be compelled to disclose the content of those discussions. Many an accountant has been compelled to provide documents and testimony against their client because communications that they believed to be privileged were, in fact, not. For example, United States v. Spencer, 700 F.3d 317 (8th Cir. 2012) presents a case where the accountant-CPA was required to testify against his client at the clients criminal trial. As a matter of risk management, practitioners handling sensitive audits should have a firm grasp of the limits of the accountant-client privilege.

There are many misconceptions about the scope of the federal accountant-client privilege under Section 7525 of the Internal Revenue Code. In fact, many are not aware that the accountant-client privilege is not available where is needed most: It does not apply in criminal proceedings. Nor, for that matter, does it apply in other proceedings outside the federal tax contextfor example, divorce, SEC, or even state tax proceedings. In fact, courts have held that it does not even apply to communications engaged in for the purpose of preparing a tax return, raising the question of what exactly it does protect. Against this background, care must be taken to protect communications about sensitive matters.

Despite the extremely limited scope of the federal accountant-client privilege, an accountant can often be cloaked with an actual common law attorney-client privilege through the use of a Kovel arrangement. Under United States v. Kovel, the federal case that lends its name to the arrangement, an attorney may engage an accountant to assist with the audit and thereby extend the more robust attorney-client privilege to the accountant. Where properly employed, this tool brings an accountant under the umbrella of the attorney-client privilege and protects accountant communications, helping to ensure that the accountant cannot later be compelled to testify against the client.

Beware of Potential Pitfalls

Sensitive audits often create potential pitfalls for the representative themselves. The practitioner must always take steps to ensure that they abide by both governing ethical rules and statutes. For instance, a practitioner cannot make a false representation to an IRS agent, but at the same time may be prohibited from disclosing privileged information without the clients consent. Practitioners who violate these rules (and others) risk disbarment from practice before the IRS or, worse yet, committing a federal crime themselves. Among the more commonly encountered criminal statutes that have been turned against practitioners in this context, Section 7206(2) of the Internal Revenue Code makes it a crime to aid or assist in the presentation of a false or fraudulent document. Similarly, Section 7212, a broadly-worded statute, makes it a crime to attempt to obstruct or impede the administration of the Internal Revenue laws. The government will use these provisions and others to bring criminal charges against practitioners where it believes a violation exists. Practitioners must therefore take all necessary steps to ensure that they abide by any governing rules throughout the proceedings. This requires a more concerted and proactive effort than may generally be necessary outside of the sensitive-audit context.

The Fraud Development Process Generally

When a field auditor uncovers indicators of fraud, IRS procedures require the auditor to meet with his or her group manager and, where the manager concurs, to initiate contact with a Fraud Technical Advisor (FTA). The FTA plays a central role in the development of potential fraud cases, and is involved in all cases with potential criminal fraud or civil fraud penalties. If the auditor, group manager and FTA agree that there is a potential for fraud, the auditor prepares Form 11661, Fraud Development Recommendation Examination, the case is placed in fraud development status, and a fraud development plan is formulated.

If an auditor subsequently identifies affirmative acts of fraud, the auditor is required to suspend examination activity without disclosing the reason for the suspension. Radio silence (or an auditors abrupt cancellation of a scheduled meeting or extended failure to respond) can thus imply a potential criminal referral.

If criminal criteria are met, the FTA will ultimately recommend a referral to the IRS Criminal Investigation Division (CI), and the auditor will refer the case through the FTA to CI via Form 2797, Referral Report of Potential Criminal Fraud Cases. Shortly thereafter, the CI special agent assigned to the case will initiate a conference with the auditor, his/her group manager, the supervisory special agent, and the FTA to review the evidence gathered to support the charges. The conference will cover a number of issues that bear on CIs decision whether to accept the referral, including the amount of the additional tax due, the flagrancy of the alleged violation, any public interest in the matter, and the deterrent effect that would be achieved from proceeding. Generally, within 30 days of this conference, the same group will confer again to discuss CIs decision to accept or decline the referral.

Badges of Fraud

In developing fraud cases, auditors look for indicators of fraudknown as badges of fraudto establish fraudulent behavior. Most fraud cases involve individuals and business taxpayers with poor or nonexistent internal controls or a lack of separation of duties, but tax fraud can occur in many contexts. While by no means an exhaustive list, some of the common badges or indicators of fraud that the IRS looks for include the following: Omitting specific items where similar items are included; omitting entire sources of income; an inability to explain substantial increases in net worth; inadequately explaining dealings in large sums of currency; dealings in cash; failing to file a tax return, especially for a period of several years, despite evidence of substantial amounts of taxable income; claiming fictitious or substantially overstated deductions; claiming substantial business expense deductions for personal expenditures; providing false or altered documents; keeping multiple sets of books; failing to keep adequate records; the existence of false book entries or alterations, back-dated documents, or false invoices; variances between the tax return and books; inclusion of income or deductions in the tax return of a related taxpayer when tax rate differences are a factor; the use of secret bank accounts; conducting business transactions in false names; making false statements; attempting to obstruct the examination; failing to make full disclosure; holding assets in the name of others; and a pattern of consistent failures to report income over multiple years. Again, this is only a partial list of the potential indicators of fraud that the IRS looks to, but where any such indicators exist, a taxpayers risk of criminal referral may increase.

Signs of a Criminal Referral

At all times during the audit, a practitioner should remain alert to signs that the civil audit may have gone criminal. The signs will vary depending on the context and the nature of the case. However, there are several indicators that have traditionally been signs that a potential referral may have taken place or may be imminent. For instance, where a revenue officer copies extensive documents or requests original documents rather than copies, these may be signs that the auditor is building the basis for a referral. If the agent focuses on intent-based questions, such as what the taxpayer knew or why certain items were deducted, this may also be a sign. Other signs include excessive interest or focus on sensitive transactions, efforts to obtain information from third parties that could have easily been obtained from taxpayer records, seeking to meet with the taxpayer more than once, requesting sworn affidavits from the taxpayer or third parties, conducting a large number of third-party interviews, and questions about the taxpayers lifestyle and financial status. Of course, a visit from a CI special agent is the ultimate sign that a civil audit has turned criminal.

Conclusion

Sensitive audits require a unique skillset and knowledge base. In order to navigate the process and maximize a clients prospect for success, the practitioner must be able to identify trouble spots ahead of time and assess any applicable procedural rights, as well as formulate an adaptive strategy. Throughout the process, the practitioner must be attuned to a host of subtle signs and clues, and be able to identify the opportunities to help steer the audit in the right direction. And, of course, along with a firm grasp of the background principles and administrative processes, the practitioner must fully understand, and always remain mindful of, their own ethical and legal obligations.

Originally published inTodays CPA - July/August 2017.

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Representing Taxpayers in Sensitive Audits: A Look at the Fundamental Challenges of an Eggshell Audit - JD Supra